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NATIONAL MUNICIPAL ACCOUNTS MANUAL
Government of India
Ministry of Urban Development
NOVEMBER 2004
Government of India
Ministry of Urban Development
Supported by
Office of The Comptroller & Auditor General of India
National Institute of Urban Affairs (NIUA) and Indo - USAID FIRE-D Project
Committee to Oversee the Development of the Manual
Shri S. Satyamoorthy - Chairman
Deputy Comptroller & Auditor General (Local Bodies)
Shri M. Rajamani - Member
Joint Secretary, Ministry of Urban Development, Government of India
Shri R.N. Ghosh - Member
Principal. Director (Local Bodies), Office of C & A. G of India
Mrs. C.K. Gariyali- Member
Secretary, Municipal Administration & Water Supply, Government of Tamil Nadu
Shri Sunil Soni - Member
Director, Municipal Administration Government of Maharashtra
Shri Rajesh Singh - Member & Convener of the Committee
Director (Local Bodies), Office of the C & A.G of India
Shri Subhash Chandra - Member
Under Secretary, Ministry of Urban Development
Prof Vinod Tewari – Member
National Institute of Urban Affairs, Ministry of Urban Development, GOI
Shri N. Bhattacharjee-Member
Programme Manager & Regional Training Advisor, USAID
Shri Lee Baker – Member
Chief of Party, Indo-USAID FIRE-D Project
Shri Alok Shiromany – Member
Senior Financial Management Specialist, Indo-USAID FIRE-D Project
Consultant
A.F. Ferguson & Co.
Mr. C.K. Mohan
Ms. Sasikala
Foreword
With the 74th Constitutional Amendment Act, the Urban Local Bodies in India
have a constitutional status and are empowered to function as local self-governments to
provide good urban governance.
In terms of the XIth Finance Commission recommendations and the Guidelines
issued by the Ministry of Finance, Government of India, Comptroller and Auditor
General of India (CAG) constituted a Task Force to recommend budget and accounting
formats for Urban Local Bodies (ULBs) in India. The CAG Task Force issued a ‘Report
on Accounting and Budget Formats for ULBs’ suggesting accrual basis of accounting and
Budget and Accounting Formats, Significant Accounting Policies, Cost of important
utilities and services and MIS reports.
Some State Governments have taken initiatives in the past to reform Urban
Accounting. However, over the years it has been felt that to align the National Level
perspectives of reforms in municipal finance and financial management with that of the
State Governments, a generic framework of National Municipal Accounting was
essential.
With this objective the Ministry of Urban Development, Government of India
launched the formulation of this National Municipal Accounts Manual, based on the
TASK Force Report. The Comptroller & Auditor General of India has facilitated and
overseen the development of this manual. The Indo-USAID FIRE-D project and National
Institute of Urban Affairs have supported the initiative.
The National Municipal Accounts Manual is comprehensively details the
accounting policies, procedures, guidelines designed to ensure correct, complete and
timely recording of municipal transactions and produce accurate and relevant financial
reports. The manual is to be adopted and followed by the various State Governments
while drafting their state specific municipal accounts manuals.
It is hoped that this manual would provide a beacon to various State
Governments, municipal administrators and accountants and other stakeholders to
provide good urban governance.
S. Satyamoorthy
Deputy Comptroller & Auditor General of India
ACKNOWLEDGEMENTS
NIUA and USAID-Fire project would like to acknowledge with thanks the help
and support received from the following institutions and officials in carrying out this
study:
¾Office of Comptroller & Auditor General of India (CAG)
¾Ministry of Urban Development & Poverty Alleviation
¾Committee to oversee the Development of Municipal Manual
¾Municipal Commissioners / Officers of the seven local bodies
¾All team members of AFF
¾Associates of AFF and
¾Several other experts who contributed to the preparation of this manual.
iv
National Municipal Accounts Manual
NATIONAL MUNICIPAL ACCOUNTS MANUAL
TABLE OF CONTENTS
Chapter
Contents
Part I – General
Introduction
1
Definitions, Accounting Concepts
2
Conventions
Page No.
1.1
&
Accounting
2.1
3
Significant Accounting Principles
3.1
4
Codification Structure & Chart of Accounts
4.1
General Accounting Procedures
5
Part II - Accounting for Transactions
Property & Other Taxes
6
5.1
6.1
7
Octroi
7.1
8
Cess
8.1
9
Water Supply
9.1
10
Assigned Revenues
10.1
11
Rentals, Fees & Other Incomes
11.1
12
Public Works
12.1
13
Stores
13.1
14
Employee Related Transactions
14.1
15
Health & Sanitation
15.1
16
Other Revenue Expenditures
16.1
17
Grants
17.1
18
Borrowings (Loans Received)
18.1
19
Special Funds
19.1
20
Investments
20.1
21
Fixed Assets
21.1
22
Lease & Hire Purchase
22.1
23
Loans & Advances
23.1
24
Special Transactions
24.1
25
Addition/Merger of Local Bodies
25.1
v
National Municipal Accounts Manual
Chapter
26
Contents
Inter-Unit transactions
Page No.
26.1
27
Transactions relating to Municipal School Board
27.1
28
Transactions relating to Transport Undertaking
28.1
Part III – Period-end Requirements
29
Period-end Procedures
29.1
30
Reconciliation Procedures
30.1
31
Financial Statements
31.1
Audit Report
32
Part IV – Others
32.1
33
Budgeting & MIS reports
33.1
34
Guidelines for preparation of Opening Balance Sheet
34.1
Annexure I
List of Forms and Registers
vi
National Municipal Accounts Manual
LIST OF TABLES
Table
Contents
Page No.
5.1
Other General Registers and Forms
5.4
5.2
Functionwise Income - Subsidiary Ledger
5.10
5.3
Summary of Major Headwise Income- Subsidiary Ledger
5.10
5.4
Functionwise Expense - Subsidiary Ledger
5.16
5.5
Summary of Major Headwise Expense- Subsidiary Ledger
5.17
6.1
Computation of Additional Provision at the Period end
6.12
6.2
Excess Provision at the period end
Entries in Stores Ledger for the financial year 20XX 20XX
6.13
21.1
Computation of Depreciation at Year-end on an asset class
21.2 & 3
Computation of Profit or Loss on Disposal of Fixed Asset
21.7
21.10&
21.13
27.7
13.1
13.8
27.1
Income and Expenditure Statement
27.2
Balance Sheet
27.8
27.3
Statement of Cash Flow
27.9
27.4
Receipts and Payments Account
27.11
28.1
Income and Expenditure Statement
28.10
28.2
Balance Sheet
28.11
28.3
Statement of Cash Flow
28.12
28.4
Receipts and Payments Account
28.15
30.1
Factors necessitating Bank Reconciliation
30.3
30.2
Bank Reconciliation Statement
30.5
30.3
Inter AU Reconciliation Statement
Reconciliation Statement of Deposits Outstanding with
the ULB
Reconciliation Statement of Receivables and Collection
30.6
30.4
30.5
30.6
Reconciliation Statement of
provided to Contractor/Supplier
Advance
Outstanding
30.7
Reconciliation Statement of Permanent Advance
30.7
30.8
30.10
30.11
vii
National Municipal Accounts Manual
Table
Contents
Page No.
30.8
Reconciliation Statement of Personal Advance
30.11
30.9
Reconciliation Statement of Miscellaneous Advance
30.12
30.10
Confirmation Statement of Loan borrowed
30.12
30.11
Reconciliation Statement of Payables
30.13
30.12
Confirmation Statement of balances receivable
30.15
30.13
Confirmation Statement of balances payable
30.15
31.1
Trial Balance
31.3
31.2
Trial Balance (accounting units)
31.6
31.3
Income and Expenditure Statement
31.8
31.4
Balance Sheet
31.9
31.5
Statement of Cash Flow
31.34
31.6
Receipts and Payments Account
31.38
31.7
Subsidy Report
31.45
31.8
Financial Ratios
31.47
31.9
Financial Ratio Analysis
31.49
viii
National Municipal Accounts Manual
LIST OF EXHIBITS
Exhibit
Contents
Page No.
4.1
Mandatory Structure
4.3
4.2
Overall Structure
4.3
4.3
4.4
5.1
Sample Flow of Accounting Information
Cash Book
5.2
Journal Book
5.2
5.3
Ledger
5.3
5.2
LIST OF APPENDIX
Appendix
Contents
Page No.
Appendix 1
List of Codes of ULB’s functions
4.14
Appendix 2
Chart of Accounts Listing
4.17
ix
LIST OF ABBREVIATIONS
AFF
A.F.Ferguson & Co.
ATC
Advice Transfer Credit
ATD
Advice Transfer Debit
AU
Accounting Unit
BPV
Bank Payment Voucher
BRV
Bank Receipt Voucher
BRS
Bank Reconciliation Statement
CAG
Comptroller and Auditor General of India CAG)
CoA
Chart of Accounts
CWIP
Capital Work In Progress
DDO
Drawing and Disbursing Officer
EMD
Earnest Money Deposit
FIFO
First In First Out
GoM
Government of Maharashtra
GPF
General Provident Fund
HP
Hire Purchase
ICAI
Institute of Chartered Accountants of India
IUT
Inter Unit Transaction
JV
Journal Voucher
MAM
Maharashtra Accounting Manual
MCA
Municipal Chief Auditor
MIS
Management Information System
MOUD&PA Ministry of Urban Development & Poverty Alleviation
MOU
Memorandum of Understanding
MRN
Material Receipt Note
MRIN
Material Receipt cum Issue Note
NAM
National Accounts Manual
NAV
Net Assets Value
NIUA
National Institute of Urban Affairs
P&OT
Property & Other Taxes
PO
Payment Order
PPO
Pension Payment Order
PPP
Public Private Partnerships
RIUTDC
Register of Inter Unit Transfer Advice
TDS
Tax Deducted at Source
SLM
Straight Line Method
ULBs
Urban Local Bodies
WDV
Written Down Value
WIP
Work-In-Progress
National Municipal Accounts Manual
Introduction
CHAPTER 1
,1752'8&7,21
Project Background
1.1
A Task Force was constituted by Comptroller and Auditor General of India (CAG) to
recommend budget and accounting formats for Urban Local Bodies (ULBs) in India. The
CAG Task Force had issued a ‘Report on Accounting and Budget Formats for ULBs’. The
Task Force report covered Budget and Accounting Formats and Significant Accounting
Principles, Cost of important utilities and services and MIS reports. Following
recommendations were made by the Task Force:
a. The ULBs should uniformly follow the suggested formats for presentation of
annual financial statements.
b. Budget formats with codification needs to be adopted uniformly by all ULBs.
c. Suggested formats for determining the cost of important utilities and services like
Water Supply, Primary Schools & Hospitals, etc be adopted by all the ULBs and
presented as supplementary information.
d. Significant accounting principles to be followed by the ULBs shall be given as a
separate schedule forming part of the accounts.
1.2
Government of India had accepted the Task Force Report and forwarded the same to
the State Governments for implementation in April 2003. During the review of the progress
made by MOUD, in September 2003, it was agreed that CAG with USAID - FIRE (D)
support, should prepare a model National Accounting Manual which will be provided to the
state governments by MOUD. Based on this, states will be expected to develop state
municipal accounting manual according to their specific requirements. In order to oversee the
development of the National Accounting Manual, a committee was formed consisting of the
following members:
1.1
National Municipal Accounts Manual
Introduction
1.
Shri S. Satyamoorthy - Chairman
Deputy Comptroller & Auditor General (Local Bodies)
2.
Shri M. Rajamani - Member
Joint Secretary, Ministry of Urban Development, Government of India
3.
Shri R.N. Ghosh - Member
Principal Director (Local Bodies), Office of C & A. G of India
5.
Late Shri R.S. Prasad - Member
Joint Secretary & Financial Advisor, Ministry of Urban Development, GOI
6.
Mrs. C.K. Gariyali- Member
Secretary Municipal Administration & Water Supply, Government of Tamil
Nadu
7.
Shri Sunil Soni - Member
Director Municipal Administration Government of Maharashtra
8.
Shri Rajesh Singh - Member & Convener of the Committee
Director (Local Bodies), Office of the C & A.G of India
9.
Shri Subhash Chandra - Member
Under Secretary, Ministry of Urban Development
10.
Prof Vinod Tewari – Member
National Institute of Urban Affairs, Ministry of Urban Development, GOI
11.
Shri N. Bhattacharjee - Member Programme Manager, USAID
12.
Shri Lee Baker - Member Chief of Party USAID – FIRE Project
13.
Shri Alok Shiromany – Member, USAID FIRE Project
1.3
The Government of Maharashtra (GoM) has developed accrual based municipal
accounting manual for the state. This has been revised in accordance with the
recommendations of CAG’s Task Force Report for state’s ULBs. Hence, Maharashtra
Accounting Manual (MAM) was taken as a starting point for preparation of National
Municipal Accounting Manual. Further the experience gained out of implementation of
computerised accounting system in Municipal Corporation of Hyderabad has also been
considered.
1.4
A.F.Ferguson & Co (AFF) was awarded an assignment by the National Institute of
Urban Affairs (NIUA) under the Ministry of Urban Development & Poverty Alleviation
(MOUD&PA) for providing consultancy services to develop a National Municipal Accounts
Manual.
1.2
National Municipal Accounts Manual
Introduction
Brief Description of the Assignment
1.5
The assignment was carried out in two phases, as follows:
¾ Phase I Review of existing Maharastra Accounting Manual and assessment of
changes required in Maharstra Accounts Manual.
¾ Phase II- Preparation of Accounts Manual, involving
Development of the National Accounts Manual (NAM)
Guidelines for Preparation of Opening Balance Sheet
Design of Chart of Accounts
1.6
For the Phase I of the assignment, NIUA, CAG and USAID FIRE (D) have selected
seven urban local bodies across India for assessment of adequacy and appropriateness of
MAM. The seven local bodies visited by AFF team were:
¾ Ahmedabad Muncipal Corporation (AMC)
¾ Bangalore Mahanagara Palike (BMP)
¾ Dehradun Municipal Corporation (DMC)
¾ Guwahati Municipal Corporation (Guwahati)
¾ Gwalior Municipal Corporation (GMC)
¾ Ludhiana Municipal Corporation (LMC)
¾ Trichy Municipal Corporation (TMC)
1.7
AFF submitted the assessment report based on the review and analysis highlighting
the suggestions/ recommendations to the National Manual on the grounds mentioned below:
a.
Adherence to the CAG Task Force Report
b.
Generally accepted accounting practices with limitations of practicality of
situation/ circumstances of ULB operation and the level of expertise available
in the ULBs.
c.
Knowledge and understanding developed by AFF from the vast/ varied
experience of local body functions and activities and the operating
environment.
1.8
AFF submitted a Draft National Accounts Manual. Discussions were held with office
of CAG and the committee. Based on the feedback received, the Draft Accounts Manual was
revised and final manual prepared.
1.3
National Municipal Accounts Manual
Introduction
Applicability
1.9
The manual is applicable to all urban local bodies. Accounting principles placed in the
manual are primarily focussed on the concept of accrual basis of accounting. The accounting
principles adopted for preparation of the financial statements of the ULBs shall be followed
uniformly unless stated otherwise in the manual. States can develop state level manual based
on this to suit their requirements. However, the principles laid down in this manual should be
complied with. Similarly, the manual provides for integrating the budgeting and accounting
systems to enable better control.
Accounting for Funds
1.10 Funds are instituted for achieving certain objectives. For e.g. in some States there may
be dedicated Water and Sewerage Fund and income from these services (taxes and charges) is
kept in this fund and expenditure are also met out of the fund. The concept of funds brings
accountability and better transparency. Such types of funds are normally treated as a separate
accounting entity and separate books are maintained for the same. Hence, separate financial
statements are prepared for each fund. In such a case each fund shall follow the principles
and procedures given in this manual. In addition ULBs may have special funds to meet
specific objectives. The treatment for these is provided in the Chapter 24 of this manual.
1.11 Irrespective of the method chosen for disclosure, the Accounting principles
recommended in this manual shall be applicable uniformly across all Funds.
1.12 Urban Local Bodies may also set up separate undertaking like School Board,
Transport undertaking etc to undertake certain functions of the ULB. The recommendations
made herein and in all the other Chapters will also be applicable to such undertakings, if
constituted by the ULB.
1.13 The codification structure and input forms recommended are amenable to
computerisation also. However, the registers are designed keeping in mind that ULBs will be
implementing the recommended system mostly in a manual environment to begin with.
Changes to the formats may be required for IT enablement.
National Accounts Manual
1.14 The National Accounts Manual contains the required forms, formats, procedures,
accounting entries, periodical statements, reconciliation procedures, etc. The recommended
principles for accounting have also been included. The manual also contains a section on
“Chart of Accounts”.
1.4
National Municipal Accounts Manual
1.15
Introduction
This Manual has been structured as follows:
Part I - General
¾ Chapter 1 - Introduction (this Chapter)
¾ Chapter 2 - Definitions, Accounting Concepts & Accounting Conventions
¾ Chapter 3 - Significant Accounting Principles
¾ Chapter 4 - Codification Structure and Chart of Accounts
¾ Chapter 5 - General Accounting Procedures
Part II - Accounting for Transactions
¾ Chapter 6 - Property & Other Taxes
¾ Chapter 7 - Octroi
¾ Chapter 8 - Cess
¾ Chapter 9 - Water Supply
¾ Chapter 10 - Assigned Revenues
¾ Chapter 11 - Rental, Fees & Other incomes
¾ Chapter 12 - Public Works
¾ Chapter 13 - Stores
¾ Chapter 14 - Employee Related Transactions
¾ Chapter 15 - Health & Sanitation
¾ Chapter 16 - Other Revenue Expenditures
¾ Chapter 17 - Grants
¾ Chapter 18 - Borrowings (Loans Received)
¾ Chapter 19 - Special Funds
¾ Chapter 20 - Investments
¾ Chapter 21 - Fixed Assets
¾ Chapter 22 - Lease & Hire Purchase
¾ Chapter 23 - Loans & Advances
¾ Chapter 24 - Special Transactions
¾ Chapter 25
Addition/Merger of Local Bodies
¾ Chapter 26 - Inter-Unit transactions
¾ Chapter 27 - Transactions relating to Municipal School Board
¾ Chapter 28 - Transactions relating to Transport Undertaking
1.5
National Municipal Accounts Manual
Introduction
Part III - Period-end Requirements
¾ Chapter 29 - Period-end Procedures
¾ Chapter 30 - Reconciliation Procedures
¾ Chapter 31 - Financial Statements
¾ Chapter 32 - Audit Report
Part IV – Others
¾ Chapter 33 - Budgeting & MIS reports
¾ Chapter 34 - Guidelines for prepartion of Opening Balance Sheet
Annexure I : List of Forms and Registers
1.6
National Municipal Accounts Manual
Definitions, Accounting Concepts & Conventions
CHAPTER 2
'(),1,7,216
$&&2817,1*&21&(376
$&&2817,1*&219(17,216
2.1
The various terms used in this Accounting Manual, the Accounting Concepts and
Accounting Conventions under the Accrual System of Accounting are defined in this chapter.
The objective of this chapter is to ensure a common understanding of the terms often used in
the Manual as well as to promote consistency and uniformity in their usage.
DEFINITIONS
2.2
The definitions of the terms used in this manual are those which are commonly
understood and used. These have been taken, if available and appropriate, from:
a. “A Dictionary for Accountants” by Eric L. Kohler; or
b. “Guidance Note on Terms used in Financial Statements” issued by the Institute of
Chartered Accountants of India (ICAI).
c. In other cases, the description/definition used by AFF has been adopted.
2.3
The definitions/descriptions/meanings of the various terms used in this manual are as
follows.
1.
Account - A formal record of a particular type of transaction expressed in
money or other unit of measurement and kept in a ledger. (Kohler)
2.
Accounting Entry - A record of financial transaction in the books of account
like journal, ledger, cash book, etc. (AFF)
2.1
National Municipal Accounts Manual
Definitions, Accounting Concepts & Conventions
3.
Account Payable - Amount owed by an enterprise on account of goods
purchased or services received or in respect of contractual obligations. Also
termed as trade creditor or sundry creditor. (ICAI)
4.
Accounting Period - The period of time for which an operating statement is
customarily prepared. (Kohler)
5.
Accounting Principle - The general principles and procedures under which the
accounts of an individual organisation are maintained; any one such principle or
procedure. An accounting principle is an adaptation or special application of a
principle necessary to meet the peculiarities of an organisation or the needs of
its management. Thus, principles are required for the computation of
depreciation, the recognition of capital expenditures, and the disposal of
retirements. (Kohler)
6.
Account Receivable - Person from whom amounts are due for goods sold or
services rendered or in respect of contractual obligations. Also termed as debtor,
trade debtor, sundry debtor. (ICAI) The words ‘Receivables’ and ‘Debtors’ are
used interchangeably.
7.
Accounting Unit – An accounting unit shall be defined as a Zone, Circle,
Divisional or Ward office identified by the ULB as an unit for maintenance of
accounting records.(AFF)
8.
Accounting Year - The “Official Year” or “Year” means a year commencing
on the first day of the Accounting period. (AFF)
9.
Accrual - Recognition of revenues and costs as they are earned or incurred (and
not as money is received or paid). It includes recognition of transactions relating
to assets and liabilities as they occur irrespective of the actual receipts or
payments. (ICAI)
10.
Accrual Basis of Accounting - The method of accounting whereby revenues
and expenses are identified with specific periods of time, such as a month or
year, and are recorded as incurred, along with acquired assets, without regard to
the date of receipt or payment of cash; distinguished from cash basis. (Kohler)
11.
Accrued & Due - In respect to an asset (or a liability) it means a claim which
has become enforceable, which arises from the sale/rendering (purchase) of
goods/services or otherwise and has become receivable (payable).
In respect to an income (or an expense) it means the amount earned (incurred)
in an accounting period, for which a claim has become enforceable, and it arises
from the sale/rendering (purchase) of goods/services or otherwise and has
become receivable (payable). (AFF)
2.2
National Municipal Accounts Manual
12.
Definitions, Accounting Concepts & Conventions
Accrued But Not Due - In respect to an asset (or a liability) it means a claim
which has not yet become enforceable, which accumulates with the passage of
time or arises from the sale/rendering (purchase) of goods/services which, on
the date of period-end, have been partly performed and are not yet receivable
(payable).
In respect to an income (or an expense) it means the amount earned (incurred)
in an accounting period, but for which no enforceable claim has become due in
that period. It accumulates with the passage of time or arises from the
sale/rendering (purchase) of goods/services goods which, at the date of
accounting, have been partly performed and are not yet receivable (payable).
(AFF)
13.
Accumulated Depreciation - The total to date of the periodic depreciation
charges on depreciable assets. (ICAI)
14.
Advance - Payment made on account of, but before completion of, a contract,
or before acquisition of goods or receipt of services. (ICAI)
15.
Amortisation - The gradual and systematic writing off of an asset or an account
over an appropriate period. The amount on which amortisation is provided is
referred to as amortisable amount. Depreciation accounting is a form of
amortisation applied to depreciable assets. Depletion accounting is another form
of amortisation applied to wasting assets. Amortisation also refers to gradual
extinction or provision for extinction of a debt by gradual redemption or sinking
fund payments or the gradual writing off to revenue of miscellaneous
expenditure carried forward. (ICAI)
16.
Annual Report - Any report prepared at yearly intervals.
A statement of the financial condition and operating results of an ULB, prepared
yearly for submission to interested parties; summarising its operations for the
preceding year and including a balance sheet, income & expenditure statement,
often a receipts & payment statement, and the auditor' s report, together with
comments by the Head of Council or the Municipal Commissioner of the ULB
on the year' s operations.(Kohler)
17.
Assets - Tangible objects or intangible rights owned by the ULBs and carrying
probable future benefits. (ICAI)
18.
Assigned Revenues - Assigned revenues are revenues in the nature of a share in
the revenues of the state government, to compensate for certain losses in
revenue and arrangement of resources of the ULBs. The ratio of the share in
revenues is determined on the basis of the revenues collected by ULBs and the
2.3
National Municipal Accounts Manual
Definitions, Accounting Concepts & Conventions
recommendations of the State Finance Commissions and devolution of funds to
ULBs.(AFF)
19.
Asset Replacement Fund - A fund created for the purpose of replacement of an
asset. The fund shall normally be equal to the amount of depreciation provided
on the Fixed Assets and shall be utilised only for the purpose of replacement of
those Fixed Assets or for any other purpose as resolved by the ULBs. (AFF)
20.
Bad Debts - Debts owed to the ULBs, which are considered to be irrecoverable,
e.g., arrears of taxes, fees and other revenue left uncollected and considered to
be irrecoverable. (ICAI)
21.
Balancing - In order to balance an account, the two sides, namely Debit and
Credit are totalled up separately and the difference is ascertained. This
difference is put on the side that is lower to balance the two sides of an account.
(AFF)
22.
Balance Sheet - A statement of the financial position of an ULB as at a given
date, which exhibits its assets, liabilities, capital, reserve and other account
balances at their respective book values. (ICAI)
23.
Bank Reconciliation Statement - A statement, which reflects the nature and
amount of transaction not responded either by the ULB or the Bank as on a
particular date. Such statement may also reflect errors/omission in the recording
of transaction inter-se between the ULB and the Bank. (ICAI)
24.
Books of Original Entry - A record book, recognised by law or custom, in
which transactions are successively recorded, and which is the source of
postings to ledgers; a journal. Books of original entry include general and
special journals, such as cash books. (Kohler)
25.
Budget - It means quantitative plan of activities and programs expressed in
terms of money in respect of assets, liabilities, revenues and expenses. The
budget expresses the ULB goals in terms of specific financial and operating
objectives. (ICAI)
26.
Capitalisation - An expenditure for a fixed asset or addition thereto that has the
effect of enlarging physical dimensions, increasing productivity, lengthening
future life, or lowering future costs. (Kohler)
27.
Capital Expenditure - An expenditure intended to benefit future period in
contrast to a revenue expenditure, which benefits a current period. The term is
generally restricted to expenditure that adds fixed asset units or that has the
effect of improving the capacity, efficiency, life span or economy of operations
of an existing asset. (Kohler)
2.4
National Municipal Accounts Manual
Definitions, Accounting Concepts & Conventions
28.
Capital Work in Progress - Expenditure on capital assets which are in the
process of construction or completion. (ICAI)
29.
Cash Book - A book of original entry for cash receipts, disbursements, or both.
(Kohler)
30.
Cash flow Statement - A financial statement prepared for an accounting period
to depict the inflows and outflows of cash and cash equivalents of an enterprise.
The cash flow statement reports cash flows classified by operating, investing
and financing activities.(ICAI)
31.
Casting - It means totalling of the amounts in the books of account. (AFF)
32.
Chart of Accounts - A systematically arranged list of accounts applicable to a
specific concern, giving account names and numbers, if any. (Kohler)
33.
Code of Account - A unique numeric or alphanumeric identification given to
each Account to facilitate classification and ease of recording. (AFF)
34.
Contingent Liability - An obligation relating to an existing condition or
situation which may arise in future depending on the occurrence or nonoccurrence of one or more uncertain future events. (ICAI)
35.
Contra Entry - An item on one side of an account which offsets fully or in part
one or more items on the opposite side of the same account. (Kohler)
36.
Control Account - Control account is an account in the general ledger that consists
of related sub-accounts. The total of the related sub-accounts should total the balance
in the related control account. (AFF.)
37.
Cost - The amount of expenditure incurred on or attributable to a specified
article, product or activity. (ICAI)
38.
Cost of Acquisition - The cost of acquisition of a Fixed Asset comprises its
purchase price and includes import duties and other non-refundable taxes or
levies and any directly attributable cost of bringing the asset to its working
condition for its intended use; any trade discounts and rebates are deducted in
arriving at the purchase price. (ICAI)
39.
Cost of Investment - The amount of expenditure incurred on or attributable to
the purchase/acquisition of an investment. The cost of an investment amongst
others includes acquisition charges such as brokerage, fees and duties. (AFF)
40.
Credit - A book-keeping entry recording the reduction or elimination of an asset
or an expense, or the creation of or addition to a liability or item of net worth or
revenue; an entry on the right side of an account; the amount so recorded.
(Kohler)
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41.
Current Assets - Cash and other assets that are expected to be converted into
cash or consumed in rendering of services in the normal course of operations of
the ULBs. (ICAI)
42.
Current Liability - Liability including loans, deposits and bank overdrafts
which fall due for payment in a relatively short period, normally not more than
twelve months. (ICAI)
43.
Debenture - A formal document constituting acknowledgement of a debt by an
ULB, usually given under its common seal and normally containing provisions
regarding payment of interest, repayment of principal and security, if any. It is
transferable in the appropriate manner. (ICAI)
44.
Debit - The goods or benefit received from a transaction; a book-keeping entry
recording the creation of or addition to an asset or an expense, or the reduction
or elimination of a liability, or item of net worth or revenue; an entry on the left
side of an account; the amount so recorded. (Kohler)
45.
Deferred Revenue Expenditure - Expenditure for which payment has been
made or a liability incurred but which is carried forward on the presumption that
it will be of benefit over a subsequent period or periods. This is also referred to
as Deferred Expenditure. (ICAI)
46.
Deficit - The excess of expenditure over income of the ULB for an Accounting
Period under consideration. (AFF)
47.
Depreciable Amount - The historical cost, or other amount substituted for
historical cost of a depreciable asset in the financial statements, less the
estimated residual value. (ICAI)
48.
Depreciable Asset – An asset which is expected to be used during more than
one accounting year, has a limited useful life, and is held by the ULBs for use in
the supply of goods and services, for rental to others, or for administrative
purposes and not for the purpose of sale in the ordinary course of operations of
the ULB. (ICAI)
49.
Depreciation - A measure of the wearing out, consumption or other loss of
value of a depreciable asset arising from use, effluxion of time or obsolescence
through technology and market changes. It is allocated so as to charge a fair
proportion in each accounting period during the useful life of the asset. It
includes amortisation of assets whose useful life is predetermined and depletion
of wasting assets. (ICAI)
50.
Depreciation Method - The arithmetic procedure followed in determining a
provision for depreciation (an expense) and maintaining the accumulated
balance. (Kohler)
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51.
Depreciation Rate - A percentage which when applied to the depreciable
amount will yield depreciation expense for a year. (Kohler)
52.
Dividend Income. An income received from investments by a ULB in
shares/units. (AFF)
53.
Earmarked Funds – Funds representing Special Funds to be utilised for
specific purposes. (AFF)
54.
Expenses - A cost relating to the operations of an accounting period or to the
revenue earned during the period or the benefits of which do not extend beyond
that period. (ICAI)
55.
Financial Statement - A balance sheet, income statement (income and
expenditure), receipts & payment statement or any other supporting statement or
other presentation of financial data derived from accounting records. (ICAI)
56.
Finished Goods - Goods held for sale in the ordinary course of business. (ICAI)
57.
Fixed Asset - Asset held for the purpose of providing services and that is not
held for resale in the normal course of operations of the ULB. (ICAI)
58.
Fixed Deposit - Deposit for a specified period and at specified rate of interest.
(ICAI)
59.
Fund - The term fund refers to amount set aside for a general or specific
purpose, whether represented by specifically earmarked assets or not. (ICAI)
60.
Folio reference - A page number or voucher or other number in a book or
document of original or final entry, which refers to the disposition or source of
an entry or posting. (Kohler)
61.
Grants - Grants are assistance by government in cash or kind to an enterprise
for past or future compliance with certain conditions. They exclude those forms
of government assistance which cannot reasonably have a value placed upon
them and transactions with government which cannot be distinguished from the
normal trading transactions of the enterprise. (ICAI)
62.
Gross Block - The total cost of acquisition/purchase of all the Fixed Assets of
the ULB. (AFF)
63.
Hire Purchase - Hire purchase agreement is a contract (more fully called
contract of hire with an option of purchase) in which a person hires goods for a
specified period and at a fixed rent, with the added condition that if he shall
retain the goods for the full period and pay all the installments of rent as they
become due the contract shall determine and the title vest absolutely in him.
(AFF)
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National Municipal Accounts Manual
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64.
Income - Money or money equivalent earned or accrued during an accounting
period, increasing the total of previously existing net assets, and arising from
provision of any type of services and rentals. (Kohler)
65.
Income and Expenditure Statement - A financial statement, often prepared by
non-profit making entities like clubs, associations, ULBs, etc., to present their
revenues and expenses for an accounting period and to show the excess of
revenues over expenses (or vice-versa) for that period. It is similar to profit and
loss statement and is also called revenue and expense statement. (ICAI)
66.
Interest - The service charge for the use of money or capital, paid at agreed
intervals by the user, and commonly expressed as an annual percentage of
outstanding principal. (Kohler)
67.
Investments - Assets held not for operational purposes or for rendering
services, i.e., assets other than fixed assets or current assets (e.g. securities,
shares, debentures, immovable properties). (ICAI)
68.
Inter unit transactions - Transactions between one or more accounting units
of the Urban Local bodies.(AFF)
69.
Infrastructure Assets – Those assets with the characteristics of being, a part of
a system or network, specialised in nature and do not have alternative uses,
immovable, and subject to constraints on disposal. (AFF)
70.
Journal Book - The book of original entry in which are recorded transactions
not provided for in specialised journals. (Kohler)
71.
Joint Venture - Joint Venture is a contractual arrangement whereby two or
more parties undertake an economic activity to share expertise in a single
defined project, which is subject to joint control. (AFF)
72.
Lapsed Deposits - Deposits unclaimed for more than such period or periods as
defined in the act or provisions governing the ULBs. (AFF)
73.
Ledger - A compilation of all accounts used for accounting purposes. (AFF)
74.
Lease - A lease is an agreement whereby the lessor conveys to the lessee in
return for a payment or series of payments the right to use an asset for an agreed
period. A lease agreement also includes a Hire Purchase agreement. A lease is
classified as a finance lease if it transfers substantially the entire risks and
rewards incident to ownership. All other leases are classified as operating leases.
(ICAI)
75.
Liability - An amount owing by one person to another, payable in money, or in
goods or services: the consequence of an asset or service received or a loss
incurred or accrued; particularly, any debt (a) due or past due (current liability),
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Definitions, Accounting Concepts & Conventions
(b) due at a specified time in the future (e.g. funded debt, accrued liability), or
(c) due only on failure to perform a future act (contingent liability). (Kohler)
76.
Long term investments - Any investment falling outside the ambit of current
investments are treated as long-term investments.(ICAI)
77.
Mortgage - A lien on land, buildings, machinery, equipment, and other
property, fixed or movable, given by a borrower to the lender as security for his
loan; sometimes called a deed of trust. (Kohler)
78.
Municipal fund - The municipal or general fund is the general operating fund
of an ULB. It is used to account for all financial resources except those related
to any special or trust funds.(AFF)
79.
Narration - A brief description written below an Accounting Entry. It is
normally written in brackets and starts with the word Being . It explains as to
why the entry has been recorded and other related aspects of the entry. (AFF)
80.
Net Assets - The excess of the book value of the assets of an accounting unit
over its liabilities to outsiders. (Kohler)
81.
Net Block - Gross Block less Accumulated Depreciation of all the Fixed Assets
of the ULB. (AFF)
82.
Period End - the last day of any Accounting Period, e.g., quarter, half-year,
year-end. (AFF)
83.
Pooling of interest method - Pooling of interests is a method of accounting for
amalgamations the object of which is to account for the amalgamation as if the
separate operations of the amalgamating entities were intended to be continued
by the transferee entity. Accordingly, only minimal changes are made in
aggregating the individual financial statements of the amalgamating
entities.(ICAI)
84.
Posting - An act of entering separately the debit and credit aspect of
transactions from the books of original entry in respective accounts maintained
in the ledger. (ICAI)
85.
Prepaid Expense - Payment for expense in an accounting period, the benefit for
which will accrue in the subsequent accounting period(s). (ICAI)
86.
Provision for Expense - An amount written off or retained by way of providing
for depreciation or diminution in value of assets or retained by way of providing
for any known liability the amount of which cannot be determined with
substantial accuracy. (ICAI)
87.
Provision for Unrealised Revenue - A provision made for revenue considered
doubtful of recovery. (ICAI)
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National Municipal Accounts Manual
Definitions, Accounting Concepts & Conventions
88.
Qualifying Fixed Asset – A Qualifying Fixed Asset is an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale.
Ordinarily a period of twelve months is considered as substantial period unless a
shorter or longer period can be justified on the basis of facts and circumstances
of the case. In estimating the period, the time which an asset takes,
technologically and commercially, to get it ready for its intended use or sale
should be considered. (ICAI)
89.
Receipt - A written acknowledgement of something acquired; hence, an
accounting document recording the physical receipt of cash/cheques. (Kohler)
90.
Receipts & Payments Statement - A financial statement prepared for an
accounting period to depict the changes in the financial position and to present
the cash received in and paid out in whatever form (cash, cheques, etc.) under
certain headings. All non-cash related transactions are ignored while preparing
this Statement.(AFF)
91.
Reconciliation - It means adjusting the difference between two items (i.e.
amounts, balances, accounts or statements) so that the figures agree. (ICAI)
92.
Report of the Municipal Chief Auditor - The formal expression of opinion by
the Municipal Chief Auditor on the Financial Statements, books of accounts and
transactions of the ULB. (AFF)
93.
Revenue Expenditure - It means outlay benefiting only the current year. It is
treated as an expense to be matched against revenue. (ICAI)
94.
Sinking Fund - A fund created for the repayment of a liability or for the
replacement of an asset. (ICAI)
95.
Special Fund - An amount set aside for a specific purpose represented by
specifically earmarked assets. (ICAI)
96.
Straight Line Method (SLM) - The method under which the periodic charge
for depreciation is computed by dividing the depreciable amount of a
depreciable asset by the estimated number of years of its useful life. (ICAI)
97.
Sub-Account: One or more accounts that make up the Control Account. These subaccounts are related to the control account and provide more detail of the Control
Account. The total of the related sub-accounts will equal the related Control Account.
(AFF)
98.
Surplus - The excess of income over expenditure of the ULB for an Accounting
Period under consideration. (AFF)
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National Municipal Accounts Manual
99.
Definitions, Accounting Concepts & Conventions
Short term investments - Those investments which are readily realisable, and
are intended to be held for not more than twelve months from the date of
investment (ICAI)
100. Trial Balance - A list or abstract of the balances or of total debits and total
credits of the accounts in a ledger, the purpose being to determine the equality
of posted debits and credits and to establish a basic summary for financial
statements. (Kohler)
101. Useful Life - The period over which a depreciable asset is expected to be used
by the enterprise; or (ii) the number of production or similar units expected to be
obtained from the use of the asset by the enterprise.(ICAI)
102. Voucher - A document which serves as an authorisation for any financial
transaction and forms the basis for recording the accounting entry for the
transaction in the books of original entry, e.g., Cash Receipt Voucher, Bank
Receipt Voucher, Journal Voucher, Payment Voucher, etc. (AFF)
103. Work in progress - Goods in the process of production for their sales or usage.
(ICAI)
104. Written Down Value (WDV) - In respect of a fixed asset means its cost of
acquisition or substituted value less accumulated depreciation. (ICAI)
105. Written Down Value (WDV) Method - A method under which the periodic
charge for depreciation of an asset is computed by applying a fixed percentage
to its historical cost or substituted amount less accumulated depreciation (net
book value). This is also referred to as Diminishing Balance Method . (ICAI)
ACCOUNTING CONCEPTS & ACCOUNTING CONVENTIONS
2.4
The Accounting Concepts and Accounting Conventions have been developed over the
years from experience, reason, usage and necessity and are generally accepted for accounting
of transactions and preparation of Financial Statements.
2.5
Accounting Concepts are the necessary assumptions, conditions or postulates upon
which the accounting is based. They are developed to facilitate communication of the
accounting and financial information to all the readers of the Financial Statements, so that all
readers interpret the statements in the same meaning and context.
2.6
The Accounting Concepts are as follows:
a. Entity Concept;
b. Dual Aspect or Accounting Equivalence Concept;
c. Going Concern Concept;
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Definitions, Accounting Concepts & Conventions
d. Money Measurement Concept;
e. Cost Concept;
f. Accounting Period Concept;
g. Accrual Concept;
h. Periodic Matching of Cost and Revenue Concept; and
i. Realisation Concept.
2.7
Accounting conventions are the customs or traditions guiding the preparation of
accounts. They are adopted to make financial statements clear and meaningful. The
Accounting Conventions are as follows:
a. Convention of Disclosure;
b. Convention of Materiality;
c. Convention of Consistency; and
d. Convention of Conservatism.
ACCOUNTING CONCEPTS
2.8
Each of the Accounting Concepts is discussed below:
Entity Concept
2.9
For accounting purposes, an organisation is treated as a separate entity from the
owners or stakeholders . This concept helps in keeping private affairs of the owners and
stakeholders separate from the business affairs. For example, a ULB is a separate,
independent and autonomous entity and is governed by a separate legislation and the
regulations formed by it. The various stakeholders of the ULBs, including citizens, State
Government, environmentalists, etc., do not own the ULBs. Thus, a separate Balance Sheet
and Income & Expenditure Statement is prepared in respect of the operations of the ULB.
This concept is applicable to all forms of organisations.
Dual Aspect or Accounting Equivalence Concept
2.10 This concept follows from the Entity Concept. All entities own certain assets. Such
assets are acquired through contributions of those who have provided the funds for the
purpose. Funds are made available either through the surpluses of the entity or loans or
payables. In a sense, such providers of funds are claimants to the assets. At any point in time,
the assets will be equal to the claims. Since the claims on the assets could be those of
outsiders (i.e. liabilities) or owners (i.e. capital, reserves, etc.), it results in the accounting
equation:
Assets = Own Funds + Liabilities
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Going Concern Concept
2.11 It is assumed that the organisation will continue for a long time, unless and until it has
entered into a state of liquidation. It is as per this concept, that the accountant does not take
into consideration the market value of the assets while valuing them, irrespective of whether
the market value is higher or lower than the book value. Similarly, depreciation on fixed
assets is provided on the basis of expected lives of the assets rather than on their market
values. Also, the financial statements are prepared at defined period-end to measure the
performance of the entity during that period and not only on the closure or liquidation of the
entity.
Money Measurement Concept
2.12 In accounting, every transaction is recorded in terms of money. Events or
transactions that cannot be expressed in terms of money are not recorded in the books of
accounts. Receipt of income, payment of expenses, purchase and sale of assets, etc., are
monetary transactions that are recorded in the books of accounts. For example, the event of a
machinery breakdown is not recorded as it does not have a monetary value. However, the
expenditure incurred for the repair of the machinery can be measured in monetary value and
hence is recorded.
Cost Concept
2.13 As per this concept, an asset is ordinarily recorded at the price paid to acquire it, i.e.,
at its cost and this cost is the basis for all subsequent accounting for the asset. The cost
concept does not mean that the asset will always be shown at cost. This basically signifies
that each time the financial statements are prepared, the fixed assets need not be revised and
recorded at its realisable or replacement or market value. The assets recorded at cost at the
time of purchase may systematically be reduced through depreciation.
Accounting Period Concept
2.14 An accounting period is the interval of time at the end of which the financial
statements are prepared to ascertain the financial performance of the organisation. Although
the going concern concept stresses the continuing nature of the entity, it is necessary for an
organisation (e.g. ULB) to review how it is performing. The preparation of financial
statements at periodic intervals helps in taking timely corrective action and developing
appropriate strategies. The accounting period is normally considered to be of twelve months.
Accrual Concept
2.15
Under the cash system of accounting, the revenues and expenses are recorded only if
they are actually received or paid in cash, irrespective of the accounting period to which they
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Definitions, Accounting Concepts & Conventions
belong. But under the accrual concept, occurrence of claims and obligations in respect of
incomes or expenditures, assets or liabilities based on happening of any event, passage of
time, rendering of services, fulfillment (partially or fully) of contracts, diminution in values,
etc., are recorded even though actual receipts or payments of money may not have taken
place. In respect of an accounting period, the outstanding expenses and the prepaid expenses
and similarly the income receivable and the income received in advance are shown separately
in the books of accounts under the accrual method.
Periodic Matching of Cost and Revenue Concept
2.16 To ascertain the surplus or deficit made by the entity during an accounting period, it is
necessary that the costs incurred are matched with the revenue earned by the entity during that
accounting period. The matching concept is a corollary drawn from the accrual concept. To
ascertain the correct surplus or deficit, it is necessary to make adjustments for all outstanding
expenses, prepaid expenses, income receivable and income received in advance to correctly
depict and match the income and expenditure relating to that accounting period.
Realisation Concept
2.17 According to this concept, revenue should be accounted for only when it is actually
realised or it has become certain that the revenue will be realised. This signifies that revenue
should be recognised only when the services are rendered or the sale is effected. However, in
order to recognise revenue, actual receipt of cash is not necessary. What is important is that
the organisation should be legally entitled to receive the amount for the services rendered or
the sale effected.
ACCOUNTING CONVENTIONS
2.18
Each of the accounting conventions are discussed below.
Convention of Disclosure
2.19 The term disclosure implies that there must be a sufficient revelation of information
which is of material interest to owners, creditors, lenders, investors, citizen and other
stakeholders. The accounts and the financial statements of an entity should disclose full and
fair information to the beneficiaries in order to enable them to form a correct opinion on the
performance of such entity, which in turn would allow them to take correct decisions. For
example, the Accounting Principles that have been followed for preparation of the Financial
Statements should be disclosed along with the Financial Statements for proper understanding
and interpretation of the same.
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Definitions, Accounting Concepts & Conventions
Convention of Materiality
2.20 An item should be regarded as material, if there is a sufficient reason to believe that
knowledge of it would influence the decision of informed creditors, lenders, investors, citizen
and other stakeholders. The accounts and the financial statements should impart importance
to all material information so that true and fair view of the state of affairs of the entity is
given to its beneficiaries. Hence, keeping the convention of materiality in view, unimportant
items are not disclosed separately and are merged with other items. For example, the
expenditure incurred on repairs and maintenance of a certain asset of the ULBs, which are
small, may not be disclosed separately in respect of each such small item but may be grouped
together and shown as a single item of expenditure.
Convention of Consistency
2.21 The convention of consistency facilitates comparison of financial performance of an
entity from one accounting period to another. This means that the accounting principles
followed by an entity should be consistently applied by it over the years. For example, an
organisation should not change its method of depreciation every year, i.e., from Straight Line
Method to Written Down Value Method or vice-versa. Similarly, the method adopted for
valuation of stocks, viz., First In First Out (FIFO) or Weighted Average should be
consistently followed. In case a change is made, it should be disclosed.
Convention of Conservatism
2.22 As per this convention, the anticipated profits should be ignored but all anticipated
losses should be provided for in the books of accounts of an entity. This means that all
prospective losses are taken into consideration, however, no doubtful income is taken into
consideration in recording of transactions by an entity. For example, while provision for
doubtful debts and discount is made on debtors or Accounts Receivable, no provision is made
for likely discount receivable from creditors or Accounts Payable. Similarly, provision is
made for diminution in value of investments, however, no provision is made for any
appreciation in value of investments.
ACCRUAL SYSTEM OF ACCOUNTING
2.23 Accrual system of accounting means a method of recording financial transactions
based on accrual, i.e., on occurrence of claims and obligations in respect of incomes or
expenditures, assets or liabilities based on happening of any event, passage of time, rendering
of services, fulfillment (partially or fully) of contracts, diminution in values, etc., even though
actual receipts or payments of money may not have taken place.
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Definitions, Accounting Concepts & Conventions
2.24 In this system, there is a change in accounting for transactions and reporting the
financial results so as to provide the ULBs and the Government with the Financial Reports, in
the form of two important financial statements for the purposes noted against each:
Statement
Purpose
Income & Expenditure Statement
To determine the financial performance
of the ULBs
Balance Sheet
To assess the financial status of the ULBs
BENEFITS OF ACCRUAL SYSTEM OF ACCOUNTING
2.25 The accrual basis of accounting helps in determination of correct income and
expenditure of the municipal bodies. The main benefits of accrual based accounting system
are enumerated below:
¾ Revenue is recognised as it is earned and thus “Income” constitutes both revenue
received and receivable. The accrual basis not only records the actual income but
also highlights the level and efficacy of revenue collection, thereby assisting
decision makers in taking financial decisions.
¾ Expenditure is recognised as and when the liability for payment arises and thus it
constitutes both amount paid and payable. In accrual basis of accounting,
expenditure incurred on repairs and maintenance shall be recognised as expense of
the period in which they are incurred and, if not paid for during the year, shall be
treated as a liability (payable) and be disclosed as such in the Balance Sheet.
¾ Expenses are matched with the income earned in that year. Thus, it provides a very
effective basis to understand the true performance of the organisation for the
operations that is conducted in that year.
¾ A distinct difference is maintained between items of revenue nature and capital
nature. This helps in correct presentation of financial statements, viz., the Income
and Expenditure Statement and the Balance Sheet.
¾ Costs which are not charged to Income & Expenditure Account are carried
forward and kept under continuous review. Any cost that appears to have lost its
utility or its power to generate future revenue is written-off.
¾ The surplus or deficit as shown at the year-end represents the correct financial
position of the organisation arising out of the various transactions during that year.
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Definitions, Accounting Concepts & Conventions
¾ It facilitates proper financial analysis and reporting.
¾ It captures “full” cost of servicing and helps in identifying financial viability of
rendering services.
¾ It helps in providing timely, right quality and nature of information for planning,
decision-making and control at each level of management.
¾ It assists in effective follow-up of receivables by the municipal body and proper
ascertainment of payables by the municipal body.
¾ One of the distinct advantages of adopting accrual accounting system is ease in
financial appraisals by the financial institutions. It also facilitates credit rating
through approved Credit Rating Agencies, which is a pre-requisite for mobilising
funds in the financial markets through debt instruments.
¾ It presents a true picture of the financial position of an organisation and helps in
better financial management.
2.26 Thus, accrual basis of accounting results in recording of transactions and events on the
basis of their substance, rather than merely when cash is received or disbursed, and thus,
enhances their relevance, neutrality, timeliness, completeness and comparability.
RULES OF ACCOUNTING
2.27
The basic rules of accounting flow from the accounting equation:
Assets = Own Funds + Liabilities
2.28
An increase in the asset, e.g., Vehicle can be brought about by:
a. Decrease in another asset, e.g., Bank Account, or
b. Increase in liability, e.g., Loans or Payables.
2.29
An decrease in the asset, e.g., Cash may result in:
a. Increase in another asset, e.g., Medical Equipment
b. Decrease in liability, e.g., Payment of Loans or payment of suppliers
outstanding
c. Decrease in own funds through expenditure.
2.30 It is customary to use the term “Debit” and “ Credit” to communicate the above
phenomenon. The rules of debits and credits are as follows:
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National Municipal Accounts Manual
Type of Account
Definitions, Accounting Concepts & Conventions
Debit Signifies
Credit Signifies
Asset Accounts
Increases
Decreases
Liability Accounts
Decreases
Increases
Own Funds
Decreases
Increases
2.31 An Accounting Entry would be a combination of a single debit and a single credit or a
set of debits and a set of credits, as may be appropriate. Following the accounting equation of
Assets = Claims, the debits will always equal credits.
2.32
If we were to expand on the above, the following will be the rules applicable to
incomes, expenditures, grants, etc.
Type of Account
Debit Signifies
Credit Signifies
Income (which will increase
Own Funds)
Decreases
Increases
Expenditure
(which
decrease Own Funds)
Increases
Decreases
Decreases
Increases
Grants Received
will
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National Municipal Accounts Manual
Significant Accounting Principles
CHAPTER 3
SIGNIFICANT ACCOUNTING
PRINCIPLES
3.1
This chapter contains a compilation of the Significant Accounting Principles to be
followed in preparation of the accounts of the Urban Local Body.
3.2
The Financial Statements of the Local Body shall contain a Statement of Significant
Accounting Principles as notes to accounts in respect of important Accounting Principles
adopted in preparing and presenting such information. The Significant Accounting Principles
as mentioned in this chapter shall be followed consistently each year.
3.3
Where any of the Accounting Principles adopted by the local body while preparing its
Financial Statements is not in conformity with the principles prescribed in this chapter and
the effect of deviation from the Accounting Principles is material, the particulars of the
deviation shall be disclosed, together with the reasons and the financial effect thereof, except
where such effect is not ascertainable. In case the financial effect thereof is not ascertainable,
either wholly or in part, the fact that it is not so ascertainable shall be indicated.
3.4
Likewise, any change in the Accounting Principles which has no material effect on
the Financial Statements for the current period but which is reasonably expected to have a
material effect in later periods, the fact of such change should be appropriately disclosed in
the Financial Statements of the period in which the change is adopted.
3.5
The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to various activities as given below:
3.1
National Municipal Accounts Manual
3.6
Significant Accounting Principles
Property and Other Taxes
a. Revenue in respect of Property and Other Taxes shall be recognised in the period
in which they become due and demands are ascertainable.
b. In case of new or changes in assessments, it can be accrued in the month in which
the demand is served.
c. Interest element and Penalties, if any, in demand shall be reckoned only on receipt.
d. Revenue in respect of Notice Fee, Warrant Fee and Other Fees charged shall be
recognised when the bills for the same are raised.
e. Revenue in respect of Property Transfer Charges shall be recognised on actual
receipt.
f. Collections to be made on behalf of state Government i.e., State Education Cess,
Employment Guarantee Cess and Library Cess and included in the Property tax
demand shall be reckoned together with Property tax demand and credited to a
control account called “State Government Levies in Taxes- Control Account.”
g. The liability towards dues to the State Government for collections on its behalf
shall be recognised as and when they are collected.
h. Revenue in respect of Rebate from State Government for collection made on their
behalf shall be recognised at the rates prescribed by the State Government at the
time of creating the liability to the State Government.
i.
In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of the ULB in the demand, based on the following
provisioning norms:
¾ Outstanding for more than 2 year but not exceeding 3 years: 25%
¾ Outstanding for more than 3 years but not exceeding 4 years: 50% (additional
25%)
¾ Outstanding for more than 4 years but not exceeding 5 years: 75% (additional
25%)
Outstanding for more than 5 years: 100% (additional 25%)
j. While making provision for receivables as stated above, the relevant proportion
‘State Govt. Cesses/ levies in Property Taxes - Control account’ shall also be
provided by debiting to a separate account.
k. Any additional provision for demand outstanding (net on overall basis) required to
be made during the year shall be recognised as expenditure and any excess
provision written back during the year shall be recognised as income of the ULB.
3.2
National Municipal Accounts Manual
Significant Accounting Principles
l. Refunds, remissions of taxes for the current year shall be adjusted against the
income and if pertain to previous years then it shall be treated as prior period item
m. Write-offs of taxes shall be adjusted against the provisions made and to that extent
recoverable gets reduced.
n. Any subsequent collection or recovery of ‘Receivables for Property & Other
Taxes,” which were already written off shall be recognised as a ‘Prior Period
Income’.
o. Demands raised with retrospective effect will be treated as prior period income to
the extent it pertains to earlier years.
p. Part-payments received in respect of Property and Other Tax levies shall be
adjusted as per applicable Act of the state.
q. Wherever self-assessment of taxes are prevalent, income can be accrued based on
records available with the local body when it becomes due as per the provisions of
the respective municipal Acts. Further, changes arising out of self-assessment will
be treated as ‘Change in Demand’ and will be accounted accordingly
3.7
Octroi
a. Revenue in respect of octroi payable on spot assessment for non-current account
importers shall be recognised on actual receipt.
b. Revenue in respect of penalties, transit fees, etc., shall be recognised on actual
receipt.
c. In case of Account Current facility holders, revenue in respect of octroi shall be
recognised on a valuation/assessment being done at the time of the entry of the
goods within the municipal limits.
d. In cases where a provisional assessment is made, revenue shall be recognised in
respect of the entire amount received provisionally or by way of deposit. At the
time of final assessment, the additional amount recovered, if any shall be
recognised as revenue when recovered.
e. Refunds shall be recognised as expenditure as and when the amounts are
determined.
f. Transit Deposits and/or any other deposits collected, including Security Deposit
collected from account current importers, shall be recognised as a liability when
received and such liability shall be settled on its refund.
g. The Transit Deposit and/or any other deposit received if forfeited shall be
recognised as income in the year in which the right for claiming refund of deposit
has expired.
3.3
National Municipal Accounts Manual
Significant Accounting Principles
h. Octroi on Consumption of electricity shall be recognised as income on actual
receipt during the year. However, at year-end alone, it shall be accrued if sanction
order (or proceedings) is passed and the amount is ascertained.
3.8
Cess
a. Revenue in respect of collection of Cess Income with Returns (on filing of returns
by the dealers) shall be recognised on actual receipt.
b. Revenue in respect of Cess Income on Assessment shall be recognised in the
period in which they become due, i.e., when the demand is raised.
c. Revenue in respect of Cess Registration Fee, Interest and Penalties levied on
assessment shall be recognised on actual receipt.
d. In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of the ULB in the demand, based on the following
provisioning norms:
¾ Outstanding for more than 2 year but not exceeding 3 years: 50%
¾ Outstanding for more than 3 years: 100% (additional 50%)
e. Any additional provision for demand outstanding (net on overall basis) required to
be made during the year shall be recognised as expenditure and any excess
provision written back during the year shall be recognised as income of the ULB.
f. Refunds, remissions of Cess for the current year shall be adjusted against the
income and if pertain to previous years then it shall be treated as prior period item.
g. Write-offs of Cess shall be adjusted against the provisions made and to that extent
recoverable gets reduced
h. Any subsequent collection or recovery of Receivables of Cess Income which
were already written off shall be recognised as a Prior Period Income .
i. Demands raised with retrospective effect will be treated as prior period income to
the extent it pertains to earlier years
3.9
Water Supply
a. Revenue in respect of Water Tax, Water Benefit Tax, Water Supply Charges,
Water Meter Rent, Sewerage charge, Disposal charges shall be recognised in the
period in which they become due, i.e., when the bills are raised. It is to be noted
that the water tax and the related taxes may also be included in the bill raised for
the property tax.
b. Revenue in respect of Notice Fee, Warrant Fee, Other Fees shall be recognised
when the bills for the same are raised.
3.4
National Municipal Accounts Manual
Significant Accounting Principles
c. Revenue in respect of Connection Charges for Water Supply shall be recognised
on actual receipt.
d. Revenue in respect of Water Tanker Charges and Road Damage Recovery
Charges, Penalties shall be recognised on actual receipt.
e. In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of the ULB in the demand as follows
¾ If water tax is collected as a component in Property Tax, provisioning shall be
made in the same way as unrealised Property Tax, which is as follows:
•
Outstanding for more than 2 year but not exceeding 3 years: 25%
•
Outstanding for more than 3 years but not exceeding 4 years: 50%
(additional 25%)
•
Outstanding for more than 4 years but not exceeding 5 years: 75%
(additional 25%)
•
Outstanding for more than 5 years: 100% (additional 25%)
¾ If water tax demand is raised separately, the taxes and charges shall be
provided as follows:
•
Outstanding for more than 2 year but not exceeding 3 years: 50%
•
Outstanding for more than 3 years: 100% (additional 50%)
f. Any additional provision for demand outstanding (net on overall basis) required to
be made during the year shall be recognised as expenditure and any excess
provision written back during the year shall be recognised as income of the ULB.
g. Refunds, remissions of taxes for the current year shall be adjusted against the
income and if pertain to previous years then it shall be treated as prior period item.
h. Write-offs of taxes shall be adjusted against the provisions made and to that extent
recoverable gets reduced
i. Any subsequent collection or recovery of Receivables of Water Supply Income
which were already written off shall be recognised as a Prior Period Income .
3.10
Assigned Revenues
a. Assigned revenues like Entertainment Tax, Duty / Surcharge on transfer of
Immovable properties, shall be accounted during the year only upon actual
collection. However, at year-end alone, these shall be accrued if sanction order (or
proceedings) is passed and the amount is ascertained.
b. Based on the review of recoverable position of the Receivables of Assigned
Revenues , the amount of outstanding assigned revenues to be provided or written
3.5
National Municipal Accounts Manual
Significant Accounting Principles
off shall be ascertained and accounted accordingly on obtaining the relevant
approval.
3.11
Rentals, Fees and Other Sources of income
a. Revenue in respect of Advertisement rights shall be accrued either based on
Demand or based on the contract.
b. Revenue in respect of Trade License Fees shall be accrued in the year to which it
pertains and where the Demand is raised based on applicable Acts of the state.
c. Revenues in respect of Profession Tax on Organisations / entities shall be accrued
in the year to which it pertains where the demand is raised based on applicable
Acts of the state.
d. Revenues in respect of rents from properties shall be accrued based on terms of
agreement.
e. Other income, in respect of which demand is ascertainable and can be raised in
regular course of operations of the ULB, shall be recognised in the period in
which they become due, i.e., when the bills are raised.
f. The Other Incomes, which are of an uncertain nature or for which the amount is
not ascertainable or where demand is not raised in regular course of operations of
the ULB, shall be recognised on actual receipt.
g. Revenue in respect of Notice Fee, Warrant Fee, Other Fees shall be recognised
when the bills for the same are raised.
h. Interest element and Penalties, if any, in demand shall be reckoned only on
receipt.
i.
In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of ULB in the demand, based on the following
provisioning norms:
¾ Outstanding for more than 2 year but not exceeding 3 years: 50%
¾ Outstanding for more than 3 years: 100% (additional 50%)
j.
Any additional provision for demand outstanding required to be made during the
year shall be recognised as expenditure and any excess provision written back
during the year shall be recognised as income of the ULB.
k. Refunds, remissions of Other Incomes for the current year shall be adjusted
against the income and if pertain to previous years then it shall be treated as prior
period item.
l.
Write-offs of Other Incomes shall be adjusted against the provisions made and to
that, extent recoverable is reduced.
3.6
National Municipal Accounts Manual
Significant Accounting Principles
m. Any subsequent collection or recovery of ‘Receivables of Rental, Fees and Other
Incomes’ which were already written off shall be recognised as a ‘Prior Period
Income’.
3.12
Public Works
a. The cost of fixed assets shall include cost incurred/money spent in acquiring or
installing or constructing fixed asset, interest on borrowings attributable to
acquisition or construction of qualifying fixed assets up to the date of
commissioning of the assets and other incidental expenses incurred up to that date.
b. Any addition to or improvement to the fixed asset that results in increasing the
utility or capacity or useful life of the asset shall be capitalised and included in the
cost of asset. Revenue expenditure in the nature of repairs and maintenance
incurred to maintain the asset and sustain its functioning or the benefit of which is
less than for a year, shall be charged off
c. Assets under erection/installation on existing projects and capital expenditures on
new projects (including advances for capital works and project stores) shall be
shown as "Capital Work-in-Progress".
d. The Earnest Money Deposit and Security Deposit received if forfeited shall be
recognised as income when the right for claiming refund of deposit has expired.
e. Deposit received under Deposit works shall be treated as a liability till such time
the projects for which money is received is completed. Upon completion of the
projects, the cost incurred against it shall be reduced from the liability.
f. Revenues (percentage charges) in respect of Deposit works shall be accrued along
with expenditure of Deposit works.
3.13
Stores
a. Expenditure in respect of material, equipment, etc., procured shall be recognised
on accrual basis, i.e., on admission of bill by the ULB in relation to materials,
equipment, etc., delivered.
b. Accounting of ‘goods received & accepted but no bills received’ as at the cut off
date shall be accounted based on purchase orders.
c. The stock lying at the period-end shall be valued at cost in accordance with the
First in – First out Method.
d. Revenue in respect of disposal of material shall be recognised on actual receipt.
e. Finished goods and work- in progress related to production produced for sale will
be valued at cost. Cost of finished and work-in-progress includes all direct costs
3.7
National Municipal Accounts Manual
Significant Accounting Principles
and applicable production overheads to bring the goods to the present location and
condition.
3.14
Employee Related Transactions
a. Expenses on Salaries and other allowances shall be recognised as and when they
are due for payment (i.e. at the month end).
b. Statutory deductions from salaries including those for income tax, profession tax,
provident fund contribution, etc., shall be recognised as liability in the same period
in which the corresponding salary is recognised as expense.
c. Formation of Trusts shall be considered for management of Provident Funds.
However it will be the responsibility of the Urban Local Body to form the trusts
and meet the shortfall of the fund if any.
d. Provident Funds money shall be invested as per the guidelines applicable to any
Employee Provident Fund.
e. Separate Funds may also be formed for meeting the pension and other retirement
benefits including Gratuity and Leave encashment. State Governments can decide
on this and can define the modus operandi also. State may form Trusts either at the
state level or at the municipal level.
f. Contribution due towards Pension and other retirement benefit funds shall be
recognised as an expense and a liability. State Government to define the rate of
contribution. One basis for such rate could be at the rate generally prescribed for
state government employees on deputation. Actuarial valuation has not been
considered due to practical limitations of the ULBs. If an ULB wants to make an
actuarial valuation, their applicable state laws can guide this.
g. Interest receivable on loans given to employees shall be recognised as revenue at
the end of the period in which these have accrued.
h. In respect of loans to employees, penal interest leviable on default in repayment of
principal or payment towards interest shall be recognised on accrual basis.
i. Bonus, ex-gratia, overtime allowance, other allowances and reimbursements to the
employees shall be recognised as an expense as and when they are due for
payment.
3.8
National Municipal Accounts Manual
3.15
Significant Accounting Principles
Health and Sanitation:
a. Revenue in respect of the following shall be recognised on actual receipt.
i. Hospital fees, maternity homes fees, diagnostic centre fees and dispensaries
fees
ii. Hospital training fees
iii. Rent and/or hire charges in respect of ambulance, hearse, suction unit, meat
van and road roller
iv. Sale of fertilisers and waste, sale of animals and sale of scrap.
b. Revenue in respect of Trade License Fees shall be accrued in the year to which it
pertains and where the Demand is raised based on applicable Acts of the state.
c. Revenue in respect of rent of equipment provided to the contractors, deducted
from their bills, shall be recognised as and when the deductions are made.
d. All revenue expenditures incurred shall be recognised on admission of the bills for
payment by the ULB.
e. Provision shall be made at the year-end for all bills received upto a cut off date
(30th April of next financial year). However state governments depending on
practicality and materiality involved can decide on this.
3.16
Other Revenue Expenditures
a. Other Revenue Expenditures shall be treated as expenditures in the period in
which they are incurred.
b. Provisions shall be made at the year-end for all bills received upto a cut off date
(30th April of next financial year). However state governments depending on
practicality and materiality involved can decide on this.
c. Any expenditure for which the payment has been made in the current period but
the benefit and/or service is likely to arise in a future period shall be treated as an
expenditure for the period in which its benefit arises and/or services are received.
d. The expenditure for the current period shall include the proportionate value of the
benefits and/or services arising in the current period even if the payment therefor
has been made in the previous period.
3.17
Grants
a. General Grants, which are of a revenue nature, shall be recognised as incomes on
actual receipt.
3.9
National Municipal Accounts Manual
Significant Accounting Principles
b. Grants towards revenue expenditure, received prior to the incurrence of the
expenditure, shall be treated as a liability till such time that the expenditure is
incurred.
c. Grants received or receivable in respect of specific revenue expenditure shall be
recognised as income in the accounting period in which the corresponding revenue
expenditure is charged to the Income and Expenditure Account.
d. Grants received towards capital expenditure shall be treated as a liability till such
time that the fixed asset is constructed or acquired. On construction/acquisition of
a fixed asset out of the grants so received, the extent of liability corresponding to
the value of the asset so constructed/acquired shall stand reduced and the amount
shall be treated as a capital receipt and shall be transferred from the respective
Specific Grant Account to the Capital Contribution.
e. Capital Grants received as a nodal agency or as implementing agency for an
intended purpose, which does not, result in creation of assets with ownership
rights for the ULB shall be treated as a liability till such time it is used for the
intended purpose. Upon utilisation for the intended purpose, the extent of liability
shall stand reduced with the value of such utilisation and no further treatment, as a
capital receipt shall be required.
f. Grants in the form of non-monetary assets (such as fixed assets given at a
concessional rate) shall be accounted for on the basis of the acquisition cost. In
case a non-monetary asset is received free of cost, it shall be recorded at a nominal
value (e.g. Rupee One).
g. Income on investments made from Specific Grants received in advance shall be
recognised and credited to the Specific Grant, whenever accrued. Profit/loss, if
any, arising on disposal of investments made from the Specific Grant received in
advance shall also be recognised and credited/debited to the Specific Grant.
3.18
Borrowings or Loans received
a. Interest expenditure on loan shall be recognised on accrual basis.
b. Interest on borrowings directly attributable to acquisition or construction of
qualifying fixed assets up to the date of commissioning of the assets shall be
capitalised.
c. A provision shall be made for the interest accrued between the date of last
payment of interest and the date of financial statements and shall be charged to the
current period s Income and Expenditure Statement.
d. The expenses incurred while issuing debentures or Bonds (Issue Expenses) shall
be deferred and amortised in equal installments over a period of 5 years or the
3.10
National Municipal Accounts Manual
Significant Accounting Principles
tenure of the loan whichever is earlier. In case, the debentures and bonds are
prematurely redeemed, the amount of issue expenses outstanding during the year
shall be written-off and charged to the Income and Expenditure Statement as
expense of the year when this happens. However, all other expenses in respect of
raising loans other than those considered, as issue expenses shall be expensed off
in the year in which they are incurred.
3.19
Special Funds
a. Special Funds shall be treated as a liability on their creation.
b. Income on investments made from Special Fund shall be recognised and credited
to Special Fund, whenever accrued. Profit/loss, if any, arising on disposal of
investments made from the Special Fund shall be recognised and credited/debited
to Special Fund Account.
c. Any expenditure of a revenue nature, which is incurred specifically on
scheme/project for which a Special Fund has been created, shall be charged to that
Special Fund.
d. On completion of the construction of a fixed asset and/or on acquisition of a fixed
asset out of a Special Fund, the amount equivalent to the cost of such fixed asset
shall be transferred from the respective Special Fund to the Special Fund
(Utilised).
3.20
Investments
a. Investment shall be recognised at cost of investment. The cost of investment shall
include cost incurred in acquiring investment and other incidental expenses
incurred for its acquisition.
b. All long-term investments shall be carried / stated in the books of accounts at their
cost. However in the event of any permanent diminution in their value as on the
date of balance sheet, these shall be provided for.
c. Short-term investments shall be carried at their cost or market value (if quoted)
whichever is lower.
d. Interest on investments shall be recognised as and when due. At period-ends,
interest shall be accrued proportionately.
e. Dividend on investments shall be recognised on actual receipt.
f. Profit/loss, if any, arising on disposal of investment (net of selling expense such as
commission, brokerage, etc) from the Municipal Fund shall be recognised in the
year when such disposal takes place.
3.11
National Municipal Accounts Manual
Significant Accounting Principles
g. Income on investments made from Special Fund and Grants under specific
Scheme shall be recognised and credited to Special Fund and Grants under
Specific Scheme respectively, whenever accrued. Profit/loss, if any, arising on
disposal of investments (net of selling expense such as commission, brokerage,
etc) made from the Special Fund and Grants under specific Scheme shall be
recognised and credited/debited to Special Fund Account and Grant under specific
scheme Account respectively. However, interest or gains from an investment made
from grants received as reimbursements, shall be credited to Municipal / General
fund of the ULB instead of the Grant account.
3.21
Fixed Assets
a. All Fixed Assets shall be carried at cost less accumulated depreciation. The cost of
fixed assets shall include cost incurred/money spent in acquiring or installing or
constructing fixed asset, interest on borrowings directly attributable to acquisition
or construction of qualifying fixed assets up to the date of commissioning of the
assets and other incidental and indirect expenses incurred up to that month.
b. Any addition to or improvement to the fixed asset that results in increasing the
utility or useful life of the asset shall be capitalised and included in the cost of
fixed asset.
c. Any Fixed Asset, which has been acquired free of cost or in respect of which no
payment has been made, shall be recorded at nominal value of Re. 1/-.
d. All assets costing less than Rs.5,000 (Rupees Five thousands) would be expensed
/ charged to Income & Expenditure Account in the year of purchase
e. An increase in net book value arising on revaluation shall be credited to a reserve
account under the Municipal fund as Revaluation Reserve Account . A decrease
in net book value arising on revaluation of fixed assets is charged to Income and
Expenditure accounts.
f. Revaluation of a class of assets shall not result in the net book value of that class
being greater than the recoverable amount of the assets of that class.
g. Revaluation reserve shall be reduced by transfer of equivalent amount of
depreciation charged on the revalued portion of the cost of the fixed assets.
h. Depreciation shall be provided at the rates prescribed by the state. Depreciation on
all fixed assets is to be provided consistently on either Written down Value or
Straight Line Method. (A task Force is being set up to prescribe life and rates of
Depreciation for different type of assets of ULBs).
3.12
National Municipal Accounts Manual
Significant Accounting Principles
i.
Depreciation shall be provided at full rates for assets, which are
purchased/constructed before October 1 of an Accounting Year. Depreciation shall
be provided at half the rates for assets, which are purchased/constructed on or
after October 1 of an Accounting Year.
j.
Depreciation shall be provided at full rates for assets, which are disposed on or
after October 1 of an Accounting Year. Depreciation shall be provided at half the
rates for assets, which are disposed before October 1 of an Accounting Year.
k. Assets recorded in the register but not physically available shall be written off
after a specified period as defined by the State/Municipal act or rules governing
the ULBs. The authority levels for the respective State/Municipal act or rule shall
also define authorising the write off. However the specified period shall not
exceed five years.
3.22
Lease and Hire Purchase
a.
Finance lease in the books of lessee
¾ At the commencement of the lease term, finance leases shall be recorded as
an asset and a liability. Such recognition shall be at an amount equal to the
cost.
¾ Finance lease payments shall be apportioned between the finance charge
and the reduction of the outstanding liability. The finance charge shall be
allocated as to produce a constant periodic rate of interest on the remaining
balance of the liability for each of the period.
¾ Depreciation on such assets shall be provided at the same rates as in case
of owned assets.
b.
Operating lease in the books of Lessor
¾ Assets given under operating lease shall be accounted as own assets in the
same manner similar to any other fixed assets owned and used by the ULB.
¾ Lease income from operating leases shall be recognised as income on a
straight-line basis over the lease term. Lease income shall be accrued on
the respective due dates.
¾ Any amount incurred that results in improvement or increase of the useful
life of the assets under operating lease shall be capitalised as like any other
asset used by the ULB for its own operations;
3.13
National Municipal Accounts Manual
Significant Accounting Principles
¾ Depreciation on such assets shall be provided at the same rates as in case
of owned assets.
c.
Hire purchase in the books of buyer
¾ The purchase price shall be capitalised as the cost of fixed assets
¾ Hire Purchase (HP) installments shall be apportioned between the finance
charge and the reduction of the principal outstanding. The finance charge
shall be allocated so as to produce a constant periodic rate of interest on
the remaining balance of the liability;
¾ The total amount of interest portion out of the HP Payable shall be
accounted by debiting to a control account under current assets. This
amount will be adjusted on accounting of finance charges
¾ The depreciation principle for assets purchased under HP should be
consistent with that for owned assets.
d.
Hire purchase in the books of seller
¾ The sale price (including the interest portion) shall be accounted as
receivable from HP agreement;
¾ HP installments shall be apportioned between the interest income and the
reduction of the principal amount receivable (the finance income to be
allocated so as to produce a constant periodic rate of interest on the
remaining balance of the receivable);
¾ The total amount of interest portion out of the HP Receivable shall be
accounted by crediting to a control account under current assets. This
amount will be adjusted while accounting for finance charges
3.23
Loans
a. Interest/penal interest on loans shall be recognised as and when due. At periodends, interest shall be accrued up to the date of the period-end.
b. Interest / penal interest earned on loans given out of specific fund/grant shall be
directly credited to the specific fund/grant account.
c. Provision against bad and doubtful loans shall be made according to the
provisioning principle of the ULB based on norms or guidelines issued by the
state government in this regard.
3.14
National Municipal Accounts Manual
Significant Accounting Principles
d. Any additional provision for loans outstanding (net on overall basis) required to
be made during the year shall be recognised as expenditure and any excess
provision written back during the year shall be recognised as income of the ULB.
e. Write-offs of bad and doubtful loans shall be adjusted against the provisions made
and to that extent, loan outstanding get reduced. In case of inadequate provisions,
the write off shall be recognised as expenditure.
3.24
Addition / Merger of Local Bodies for up-gradation
a. The financial statements of the merging local bodies shall be consolidated at the
cut-off dates under the pooling of interest method. The assets, liabilities, reserves
and fund balances of the merging local bodies are recorded at their existing
carrying amounts. However it must be ensured that accounting principles adopted
for preparation of financial statements of merging local bodies should be same.
b. The financial statements prepared on consolidation shall disclose
i.
ii.
iii.
iv.
3.25
Names of the local bodies merged
Authority under which the merger has taken place
Effective date of merger
Principles adopted for consolidation
Inter Unit Transactions
a. All Inter Unit Transactions shall be recorded on cost basis and no mark up shall be
included in Inter Unit Transactions.
b. At the year-end, the inter-unit accounts are knocked off / adjusted in the
consolidated accounts of the ULB.
3.26
Municipal School Board
a. Fees and fines received from primary schools shall be recognised on actual
receipt.
b. Contribution receivable from other local bodies/ municipalities shall be
recognised in the period in which they become due.
3.27
Transport Undertaking:
a. Revenue in respect of ticket charges and monthly passes shall be recognised on
actual receipt.
b. The liability towards dues to the State Government for collections on its behalf,
i.e., Child Welfare Surcharge, shall be recognised as and when it is collected.
3.15
National Municipal Accounts Manual
Significant Accounting Principles
c. Revenue in respect of Rebate from State Government for collection made on their
behalf, i.e., Child Welfare Surcharge, shall be recognised at the rates prescribed by
the State Government on creating the liability to the State Government.
d. Payments to be made by the Transport Undertaking to the Municipal Fund shall be
accounted on actual payment
3.16
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
CHAPTER 4
&2',),&$7,21 6758&785(
&+$572) $&&28176
INTRODUCTION
4.1
This chapter contains the recommendations relating to the Chart of Accounts and the
Codification structure.
4.2
Chart of Accounts (COA) defines the heads under which the income and expenditure
of local bodies are classified and facilitates maintenance of accounts and preparation of
financial statements. A well designed COA shall not only fulfill accounting requirements but
also the Budgeting and MIS requirements and shall be flexible enough to consolidate and
collapse to facilitate generation of various information reports. The structure suggested in this
chapter, have been developed based on the recommendations of Task Force Report with
limited modifications to meet the above said requirements.
4.3
Detailed heads and codes have been provided in this chapter for all mandatory levels
of information.
CODIFICATION STRUCTURE
4.4
The codification structure proposed facilitates capture of all type of financial
information within an ULB, which are essential in a government set-up. Each type of
classification is considered as a group. Considering the capacity and size of local bodies at an
all India level, to which this manual pertains and the minimum requirements of various
stakeholders’ certain mandatory information are prescribed. The mandatory groups for all
local bodies are
¾ Functions
4.1
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
¾ Account Heads
4.5
Functions shall represent the various functions or services carried out by the local
body. Account Heads shall represent the nature of the income or expenditure.
4.6
Budgets in ULBs are centered around its functions. Functions are provided through
various responsibilities centres called Departments. Geographical dispersion of these
activities may also be monitored more so in the context of introduction of Ward committees
and decentralisation. Hence, some ULBs identify its income and expenditure budgets at
function, functionary (department) and field level.
4.7
ULBs set up various funds for meeting certain objectives. Income and expenditure
under these funds are to be identified and disclosed separately. However the method of
disclosure may be different. When they adopt the integral concept, separate books of accounts
are not maintained for the funds. Identity is created by providing separate account heads to
capture the income and expenditure for each such fund. In some states, separate books of
accounts and financial statements are maintained considering it as a separate accounting
entity. In such cases, the identity of the fund (entity) is required as an additional classification.
4.8
Thus, in addition there shall be three other optional groups apart from the mandatory
groups of Functions and Account Head.
¾ Functionary (Responsibility centre/department)
¾ Field (Geographical centre)
¾ Funds
4.9
In all, there can be five groups. Funds, Function, Functionary, Field and Account
Heads. Functions, Functionary and Field are called Budgeting centres.
4.10 Each group can have various levels within it to drill down further information. The
levels even in the mandatory groups can be either mandatory or optional based on the
requirements. First level in function and Account Heads are mandatory for all ULBs and other
levels are left to the states to define. This would mean that all ULBs would have to use the
function codes and account codes as defined in this manual only. For other levels each State
can define the codes though some of them may be mandatory at the State level. Similarly for
budgeting the functionary group, would be mandatory though each State can define these
heads based on its internal organisation structure. Similarly, States or cities, which have
decentralised accounting zones/boroughs etc and prepares budgets at these levels, would have
to use the field group as mandatory.
4.2
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
4.11 An overview of the suggested structure for mandatory information and overall
structure is provided in the exhibits given below as Exhibit 4.1 and 4.2.
Exhibit 4.1
Mandatory
Mandatory Structure
Structure
ULB
ULB Overall
Overall
Budgeting
Budgeting Centres
Centres
Functions
Functions
Accounting
Accounting Subjects
Subjects
Account
Head
Account Head -Primary
Primary
Exhibit 4.2
Overall
Overall Structure
Structure
ULB
ULB OOverall
verall
Funds
Funds
Budgeting
Budgeting Centres
Centres
Functions
Functions Functionaries
Functionaries Field
Field
Accounts
Accounts subjects
subjects
Primary
Primary
Secondary
Secondary
4.3
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
4.12 Each of the two mandatory and the three optional categories can be placed in any
sequence for the sake of MIS reports /Budget reports. These groups are mutually exclusive
and can be operated individually or in a combined way.
4.13 In some local bodies, accounts are maintained in a decentralised set up. Each of the
locations in which accounts are maintained is called Accounting Unit. For example in some
big local bodies, accounts are maintained at Zones. In this case each Zone and the Head
Office are called Accounting units. Each accounting unit will maintain accounts in the same
way. All transactions are identified under the groups mentioned above at the Accounting Unit
level. Then it is consolidated at Head Office level to present the information at the ULB level.
4.14 The overall flow of Financial Information is illustrated with the example of a ULB
visited and is provided as Exhibit 4.3.
Exhibit 4.3
Sample Flow of Accounting Information
Trichy
TrichyCorporation
Corporation
Zone
Zone
Srirangam
Srirangam
Zone
Zone
AAriyamangalam
riyamangalam
GGeneral
eneral
Fund
Fund
Budgeting
Budgeting Centres
Centres
Public
PublicW
Works,
orks,
Public
PublicHHealth,
ealth,…
…. .
Zone
Zone
GGolden
oldenRock
Rock
W
Water
aterSupply
Supply&&
Sew
erage
Sew erageFund
Fund
Zone
Zone
AAbishekapuram
bishekapuram
Education
Education
Fund
Fund
AAccounting
ccountingSubject
Subject
Salaries,
Salaries,Civil
Civil
W
Works,
orks, …
…. .
4.15 In this case, the lowest Accounting unit is Zones. If the accounting unit is lower than
that say circles, then accounts are prepared Circle wise and can be consolidated Zone wise as
well at the ULB level. The same process can be continued at any lower level. The intention
here is to facilitate decentralisation.
4.4
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
CODING LOGIC AND PROCEDURE
4.16
The codification logic for each of these groups is explained below.
Functions
4.17 Functions of the ULB can have three levels within it. First level under this group can
represent various functions both obligatory and discretionary. Second Level in function could
represent the particular type of service under a function and third level can represent a
particular cost center, which provides the service. The first level of Functions/codes is
mandatory for all ULBs. All functions of the ULB are broadly classified under 10 major
groups. Within this long listing of functions has been made. These functions are fitted within
the group with each group having a flexibility to go upto 9 sub functions. The detailed codes
for each of the functions as referred above is defined and given as Appendix 1 enclosed with
this manual. New codes or additions to this list of functions shall be made only at the national
level. A committee is likely to be set up under Ministry of Urban Affairs to which C& AG
will also be a member who shall act as the authority to add new functions in the list. This can
be triggered by a request from states. States can introduce two sub –levels of 2 digits each to
suit their requirements.
Accounting subjects
4.18 Accounting subjects can be divided into two levels: Primary and Secondary. Primary
account code represents the subject of the income and expenditure.
4.19 Primary Account Codes: The Code of an Account head shall be numeric and shall be
7 digits. A 7 digit code is suggested to give flexibility to add new codes and for each State to
define certain of its unique requirements. The code is structured into:
¾ Major Head Code;
¾ Minor Head Code; and
¾ Detailed Head Code.
4.20
The structure of the Code of Accounts is schematically presented below:
Major Head Code
Minor Head Code
X
X
X
X
X
X
X
1
2
3
4
5
6
7
Detailed Head Code
4.5
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
Major head code
4.21 The first digit of the Major Head Code shall indicate the nature or type of the account.
The first digit shall be assigned one of the following numbers depending on the nature of the
account:
¾
¾
¾
¾
'1'
'2'
'3'
'4'
shall denote an account relating to ' Revenue Income'
shall denote an account relating to ‘Revenue Expenditures’
shall denote an account relating to ' Capital Receipts & Liabilities'
shall denote an account relating to ' Capital Expenditures & Assets'
4.22 The next 2 digits of the Major Head Code shall denote the group codes for the various
head of accounts. For example,
¾
¾
¾
¾
Code 1-10 shall denote ‘Tax Revenue’ related accounts
Code 2-10 shall denote ‘Establishment Expenses’ related accounts
Code 3-50 shall denote ‘Other Liabilities’ related accounts
Code 4-10 shall denote ‘Fixed Assets’ related accounts
4.23 It is to be noted that the financial statements of an ULB are drawn at Major Head
codes of account and hence this is a mandatory level of information. No major code addition
is likely to happen, as this format is the final one. In case the same is required it has to be
approved by the committee only.
Minor head code
4.24 The Minor Head Code shall be of 2 digits. An item covered by a Minor Head Code is
a subset of the Major Head Code. Thus, it shall be necessary to refer the Minor Head Code in
conjunction with the associated Major Head Code.
4.25 The Minor Head Codes provide further details of transactions in respect of the Major
Head Code it is associated with. For example,
¾ Under the Major Head Code 110 relating to ‘Tax Revenue’, the Minor Head Code
01 shall denote ‘Property Tax’
¾ Under the Major Head Code 210 relating to ‘Establishment Expenses’, the Minor
Head Code 10 shall denote Salries & Allowances
¾ Under the Major Head Code 350 relating to ‘Other Liabilities’, the Minor Head
Code 10 shall denote ‘Creditors’
4.6
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
¾ Under the Major Head Code 410 relating to ‘Fixed Assets’, the Minor Head Code
20 shall denote ‘Buildings’.
4.26 It is to be noted that the schedules to financial statements of an ULB are drawn at
minor head codes of account and hence this is a mandatory level of information. Minor codes
provided in the manual are mandatory. Additions to minor codes can be made by the state
governments as per the logic provided in the manual. All additions made shall be intimated to
the committee. Committee may introduce additional minor codes as mandatory at some
periodicity based on the intimations received.
Detailed head code
4.27 The Detailed Head Code shall be of 2 digits. An item covered by a Detailed Head
Code is a subset of the Minor Head Code. Thus it shall be necessary to refer the Detailed
Head Code in conjunction with the associated Minor Head Code.
4.28 The Detailed Head Codes provide further details of transactions in respect of the
Minor Head Code it is associated with. For example,
¾ Under the Minor Head Code of Account 110-01 covering Property Tax, the
Detailed Head Code 01 shall denote ‘Property Tax from Residential Properties’.
Thus, under the Minor Head Code of Account 110-01 in respect of ‘Tax Revenues
from Property Tax’, the Detailed Head Code 01 shall represent ‘Property Tax from
Residential Properties’. The Account Code for this will be 110-01-01.
¾ Under the Minor Head Code of Account 210-10 covering ‘Establishment
Expenses under Salaries, Wages and Bonus, the Detailed Head Code 10 shall
denote ‘Salaries & Allowances – Officers’
¾ Under the Minor Head Code of Account 350-10 covering Creditors, the Detailed
Head Code 01 shall denote ‘Suppliers’
¾ Under the Minor Head Code of Account 410-20 covering Buildings, the Detailed
Head Code 01 shall denote ‘Art Gallery Building’
4.29 It is to be noted that the detailed heads are to be identified by the States. States can
also give flexibility to the ULB to add new heads. An illustrative listing of detailed heads
under minor heads are listed in Appendix 2.
4.30 Secondary Account codes: This is optional and would depend on requirements of a
local body. These would typically represent the subsidiary ledgers and other analysis ledgers.
For example, contractors control account can be maintained contractor wise at this level. This
4.7
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
level is needed only for the internal control of the ULB and has no relevance at the state or
national level. It is therefore not proposed to prescribe any codification structure for the same.
Funds
4.31 Depending on requirements, levels can be introduced. Funds can have sub- level
within it. The codification structure for the funds may consist of the following:
¾ Major Fund and
¾ Minor Fund
4.32 Major Fund code would represent the broad categorisation of Funds and minor Fund
within it represents a particular Fund.
4.33 The Code of a Fund shall be numeric and can be 4 digits. The structure of the Code
for Fund is schematically presented below:
Major Fund Code (2)
Minor Fund Code (2)
X
X
X
1
2
3
X
4
4.34 For example, Employee Funds can be a major fund and Pension fund can be Minor
Fund within that.
Functionary
4.35 In the government set-up, demands for expenditure are drawn by the department
discharging the functions and become the responsibility center for the assigned functions.
Functionary group represents this. Each sub-level within this group typically can represent the
organisational structure within the ULB. This level is used only for the internal control of the
ULB. It is therefore not proposed to prescribe any codification structure for the same.
Field
4.36 Field represents the way the ULBs are aligned geographically. Sub-levels in this group
will be based on the Territorial hierarchy. Number of digits at each level can range from 1-3
depending on the size of the local body. This is different from Accounting unit as explained
under the overview section of this chapter. Field represents the area to which the expenditure
or payment relates. Location or Accounting unit represents the unit at which it is accounted.
4.8
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
This level is needed only for the internal control of the ULB. It is therefore not proposed to
prescribe any codification structure for the same.
ULB Codes
4.37 In addition to this to facilitate state level or national level aggregation, each ULB can
be assigned a code. This could represent the state to which it is attached and the unique code
assigned by the State. While state code can be assigned at the national level, the state
governments shall prescribe a code for each Municipal body. This can be in the following
format
STATE – DISTRICT – CATEGORY- CODE
4.38 Category can represent the way local bodies are classified within the state. (e.g.
Corporations, Municipality etc.)
GENERAL GUIDELINES AND INSTRUCTIONS FOR USAGE OF CHART OF
ACCOUNTS
4.39
The following guidelines should be followed while using the chart of accounts:
¾ Function codes, Major and Minor Head Codes given in the manual would apply
uniformly to all Urban Local Bodies.
¾ Any requirement for an addition to Function head shall be requested by the States
to the committee. Only the committee set up in this regard can add new codes
under this head
¾ No major code addition is likely to happen as this format is more or less the final
one. In case the same is required it has to be approved by the committee only.
¾ States can add minor heads at the state level. All additions made shall be intimated
to the committee. Committee may introduce additional minor codes as mandatory
at some periodicity based on the intimations received.
¾ States shall identify the detailed heads.
¾ ULBs shall identify the operative Detailed Heads, with the same description and
code number for accounting purposes. These Heads will be commonly used in all
the ULBs within a State. Detailed Heads unique to a particular ULB can also be
added with the approval of the State Government.
¾ Some Urban Local Bodies may have further break up in their activities requiring
sub-heads at a level above Detailed Heads. ULBs can induct sub-heads under
4.9
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
Minor Head and thereafter Detailed Heads may be suitably opened, with the
approval of State Government.
¾ The Accounts Department shall maintain a master index of all the Code of
Accounts being utilised by the Municipal Body.
¾ Ledger Accounts corresponding to the Account Codes need to be opened by an
ULB only in respect of those transactions which arise at that ULB. Thus all the
Account Codes given in this Report may not be used by every ULB.
CODING APPLICABILITY TO TRANSACTIONS AND ILLUSTARTIONS
4.40 For better appreciation of coding logic in recording transactions, a few illustrations are
provided below. This primarily covers the two mandatory groups and Fund group. The logic
adopted for Function group can be extended to other groups in Budgeting centres like
Functionary or Field.
4.41 Recording of transactions under these codification levels is explained with some
illustrations.
a. Tuition Fee of Rs. 1,000/- collected by the ' Primary school in an ULB where they
maintain separate Fund for Education. Information to be captured under all three
levels of codification structure is given below.
Debit: Cash / Bank
Level 1 Funds: Education Fund is a separate fund under the Municipal Fund
Group. (Code for Municipal Fund – Education: 10-03)
Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts
Level 3 Accounting subjects: Cash account under the Asset head cash and Bank
Balances. (Code for Cash and bank Balances – Cash: 450- 10)
Credit: Income
Level 1 Funds: Education Fund is a separate fund under the Municipal Fund
Group. (Code for Municipal Fund – Education: 10-03)
Level 2 Budgeting Centres: This is an income under the Education function/
service collected by the Primary schools department. (Code for Education –
Primary Schools: 82)
Level 3 Accounting subjects: Tuition Fee is a user Charge under the Income from
Fees and User Charges. (Code for Fees and User Charges – Other Fees: 140-40)
4.10
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
Accounting Entry to be passed is given below:
Fund Budgeting
Account
Code *
Centre
Code
Code **
10-03
10-03
08-82
450-10-(a)
140-40-(a)
Accounting Entry
(Illustrative Heads)
Cash account
To Fees & user charges
Other Fees
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
1,000
Cr.
1,000
* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be
defined by ULB based on logic provided earlier in the chapter and codes provided here are
illustrative only.
** Except Function code, other code numbers are defined by the ULB depending on its
requirements and codes provided are illustrative.
(a) Insert Detailed Head Codes of Account as applicable
b. ‘Electricity charges for Machinery’ paid amounting to Rs.20,000 for motor
pumps of water where separate Fund for Water Supply and sewerage is maintained
for Rs.50,000/Debits: Revenue Expense
Level 1 Funds: Water Supply and Sewerage Fund is a separate fund under the
Municipal Fund Group. (Code for Municipal Fund Water Supply and Sewerage
10-02)
Level 2 Budgeting Centres: This is an expense under the water supply function by
the Public Works department. (Code for Water Supply 51)
Level 3 Accounting subjects: Electricity charges paid are revenue expenditure
under the Operations and Maintenance Expense. (Code for Operations and
Maintenance Power & Fuel: 2-30-10)
Credit: Cash / bank
Level 1 Funds: Water Supply and Sewerage Fund is a separate fund under the
Municipal Fund Group. (Code for Municipal Fund Water Supply and Sewerage
10-02)
Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts
Level 3 Accounting subjects: Cash account under the Asset head cash and Bank
Balances. (Code for Cash and bank Balances Cash: 450- 21)
4.11
National Municipal Accounts Manual
Fund Budgeting
Code * Centre
Code **
10-02
51
10-02
Codification Structure & Chart of Accounts
Account
Code
230-10-(a)
450-21-(a)
Accounting Entry
(Illustrative Heads)
Operations & Maintenance
Power & Fuel
To Bank account***
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
2,000
Cr.
2,000
* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be
defined by ULB
based on logic provided earlier in the chapter and codes provided here are illustrative only.
** Except Function code, other code numbers are defined by the ULB depending on its
requirements and codes provided are illustrative.
*** Specify name of the Bank and the account number
(a) Insert Detailed Head Codes of Account as applicable
c. Purchase of Ambulance for Hospital run by the ULB for Rs. 2,00,000/.
Debits: Capital Expense
Level 1 Funds: General Fund under the Municipal Fund Group. (Code for
Municipal Fund General Fund 10-01)
Level 2 Budgeting Centres: This is an expense under Hospital Services. (Code for
Hospital Services: 35)
Level 3 Accounting subjects: Ambulance is an asset under the Vehicles. (Code
for Fixed asset Vehicles Ambulance: 410-50)
Credit: Liability
Level 1 Funds: General Fund under the Municipal Fund Group. (Code for
Municipal Fund General Fund 10-01)
Level 2 Budgeting Centres: Not applicable for control/ suspense accounts.
Level 3 Accounting subjects: Suppliers control account under the Liability head
Other Liabilities (Code for Other Liabilities Creditors: 350-10)
Fund Budgeting
Code *
Centre
Code **
10-01
10-01
35
Account
Code
410-50-(a)
Accounting Entry
(Illustrative Heads)
Fixed assets-VehiclesAmbulances
350-10(a)*** Other liabilities (Sundry
creditors)***
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
200,000
Cr.
200,000
* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be
defined by ULB based on logic provided earlier in the chapter and codes provided here are
illustrative only.
** Except Function code, other code numbers are defined by the ULB depending on its
requirements.
(a) Insert Minor & Detailed Head Codes of Account as applicable
4.12
National Municipal Accounts Manual
Codification Structure & Chart of Accounts
d. Payment of Other Liabilities (Sundry Creditors) for purchase of Ambulance
amounting to Rs. 200,000 through Main Bank account.
Debits: Other Liabilities Account
Level 1 Funds: General Fund under the Municipal Fund Group. (Code for
Municipal Fund – General Fund 10-01)
Level 2 Budgeting Centres: Not applicable for control/ suspense accounts.
Level 3 Accounting subjects: Suppliers control account under the Liability head
Other Liabilities (Code for Other Liabilities –Creditors: 350-10)
Credit: Cash/Bank
Level 1 Funds: General Fund under the Municipal Fund Group. (Code for
Municipal Fund – General Fund 10-01)
Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts
Level 3 Accounting subjects: Main Bank account under the Asset head cash and
Bank Balances. (Code for Cash and bank Balances – Cash: 450-21)
Fund
Code *
10-01
10-01
Budgeting
Centre
Code **
Account
Code
Accounting Entry
(Illustrative Heads)
350-10-(a)
450-21-(a)
Creditors – Suppliers
Bank Account***
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
200,000
Cr.
200,000
* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be
defined by ULB based on logic provided earlier in the chapter and codes provided here are
illustrative only.
** Except Function code, other code numbers are defined by the ULB depending on its
requirements.
***Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
4.42 It may be noted that two levels that is Fund and Accounting subjects are to be
captured for every debit and credit in an entry, whereas Budgeting centers details are captured
only for the respective budgetary control accounts for example Revenue Expenditure, Income,
Capital Expenditure. Whenever Budgeting centres are not applicable “00” may be used to
denote the field in an IT environment. Once a transaction is identified to a fund all debits and
credits in the transaction is attached to the same Fund and hence common for the entire entry.
4.43 To summarise, Fund code shall be same for all debits and credits in a transaction,
Budget Codes will be applicable only for certain debits and credits in a transaction; Account
codes shall vary for every debit and Credit in a transaction.
4.13
National Municipal Accounts Manual
Appendix 1 to Codification Structure & Chart of Accounts
Functions Listing
Function
Group
Code
00
10
20
30
Function Group
Function
Code
Function Description
Illustrative List of
Other functions
possible grouping
General
Administration
01
Municipal Body
General Body, All
Committees, Mayor /
Council Members
office, Secretariat
General Admin,
Public Relations, IT,
Legal, Vigilance
02
Administration
03
04
05
06
07
08
09
Finance, Accounts, Audit
Election
Record Room
Estate
Stores & Purchase
Workshop
Census
11
12
13
14
15
City and Town Planning
Building Regulation
Economic Planning
Encroachment Removal
Trade License / Regulations
21
22
23
24
25
26
27
Roads and Pavement
Bridges and Fly overs
Subways & Causeways
Street Lighting
Storm water Drains
Traffic Signals
Guest Houses
31
32
33
34
35
36
Public Health
Immunisation, Polio,
Epidemic / Prevention Control Malaria Control
Family Planning
Primary Health Care
Hospital Services
Burial and Cremations
Planning &
Regulations
Public Works
Health
4.14
National Municipal Accounts Manual
Function
Group
Code
Function Group
Appendix 1 to Codification Structure & Chart of Accounts
Function
Code
37
38
40
50
60
70
Function Description
39
Vital Statistics
Prevention of Food
Adulteration
Ambulance / Hearse Services
41
42
43
44
45
Solid Waste Management
Public Convenience
Veterinary Services
Cattle Pounding
Slaughter Houses
51
52
53
54
55
56
57
58
Water Supply
Sewerage
Fire Services
Arts & Culture
Community / Marriage Centers
Amusement
Museums
Municipal Markets
61
62
63
64
65
66
Parks, Gardens
Play Grounds
Lakes and Ponds
Urban Forestry
Environment Conservation
Zoos
71
72
73
74
75
76
77
78
79
Welfare of Women
Welfare of Children
Welfare of Aged
Welfare of Handicapped
Welfare of SC/ST/OBC
Slum Improvements
Housing
Urban Poverty Alleviation
Others
Illustrative List of
Other functions
possible grouping
Sanitation and
Solid Waste
Management
Civic Amenities
Urban Forestry
Urban Poverty
Alleviation &
Social Welfare
4.15
National Municipal Accounts Manual
Function
Group
Code
80
90
Function Group
Appendix 1 to Codification Structure & Chart of Accounts
Function
Code
Function Description
Illustrative List of
Other functions
possible grouping
Other Services
81
82
83
84
Electricity
Education
Transportation
Facility for pilgrims
91
92
93
94
95
96
97
99
Property Taxes
Octroi / Entry Cess
Advertisement Tax
Professional Tax
Tax on Animals
Tax on Vehicles
Toll
Other Taxes
Revenues
4.16
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
CoA Listing – Income
Major
Code
110
120
Major Head
Description
Minor
Code
Minor Head
Description
Detailed Heads
Remarks
Tax Revenue
01
Property Tax
02
03
04
05
06
07
08
09
10
11
Water Tax
Sewerage Tax
Conservancy Tax
Lighting Tax
Education Tax
Vehicle Tax
Tax on Animals
Electricity Tax
Professional Tax
Advertisement Tax
12
Pilgrimage Tax
51
Octroi & Toll
52
Cess
80
Others Taxes
90
Tax Remission &
Refund
10
Taxes and Duties
collected by others
Residential,
Commercial, Land,
Service Charges
Land hoarding, Bus
Shelters, Traffic signals
Octroi, Toll,
Provisional Octroi,
Account current
Importers
Gross Cess, Net Cess
All Types of Taxes
Assigned
Revenues &
Compensations
20
30
Entertainment Tax,
Duty on Transfer of
Properties
Compensation in
Compensation in lieu
lieu of Taxes /
of Octroi, Octroi in lieu
duties
of Electricity
Compensations in
Property Tax
lieu of Concessions compensations due to
concessions certain set
of tax payers
4.17
National Municipal Accounts Manual
Major
Code
Major Head
Description
130
Rental Income
from Municipal
Properties
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
Detailed Heads
10
Rent from Civic
Amenities
20
Rent from Office
Buildings
Rent from Guest
Houses
Rent from lease of
lands
Other rents
Lease Rentals
Rent remission and
refund
30
40
80
90
140
Minor Head
Description
Remarks
Markets, Shopping
complexes,
Auditorium, Art
Galleries, Marriage/
community halls,
Playgrounds, Nurseries
Quarters
Fees & User
Charges
10
11
12
13
14
Empanelment &
Registration
Charges
Carts, Contractors,
Patients, Professionals,
P W contractors, Cess
Registration,
Licensing Fees
D &O, Hawking,
Shops, Bazaars, Staff
Quarters, Plumbing
License, Cattle
Pounding,
Slaughtering, Butchers
and Traders of meat,
Poultry,
Fees for Grant of
Transit, Escort, Layout,
Permit
sub-division, Plan
Fees for Certificate Copying, Birth &
or Extract
Death certificates,
Occupancy Certificate,
Development
Development,
Charges
Betterment,
Demolition, Open
space contribution,
Parking Contribution
4.18
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
15
20
40
50
60
Minor Head
Description
Detailed Heads
Remarks
Regularization Fees Encroachment,
Regularization,
Revalidation,
Conversion fees
Penalties and Fines Octroi, Cess
Other Fees
Advertisement Fees,
Tuition Fees, Sports
Fee, Library Fees,
Survey fees,
Connection,
Disconnection charges,
Notice Fees, Warrant
Fees, Mutation Fees,
Property Transfer
Charges
User Charges
Medicines,
Examination charges,
Ambulance, Funeral
Van, Garbage
Collection Charges,
Littering and Debris
collection, Septic Tank
clearance, Sewerage
clearance charges,
Crematorium Charges,
Burial Ground Charges,
Pay & use toilets,
Water Supply, Sale of
Electricity, Water
Tanker, Meter charges,
Fire Extinguishing,
Lighting charges,
Ticket charges,
Luggage charges,
parking fees
Entry Fees
Parks, Playgrounds,
Swimming Pool, Zoo,
Museum, Library,
Parking Lots
4.19
National Municipal Accounts Manual
Major
Code
150
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
Detailed Heads
70
Service /
Administrative
Charges
80
90
Other Charges
Fees Remission and Water Supply
Refund
10
Sale of Products
11
Sale of Forms &
Publications
Sale of stores &
scrap
Sale of Others
Hire Charges for
Vehicles
Hire Charges on
Equipments
Remarks
Service Charges,
Percentage on Deposit
works, Plan Preparation
charges, Road Damage
Recovery charges,
stacking, Rebate from
state Government
Sale & Hire
Charges
12
30
40
41
160
Minor Head
Description
Tree-Guards, Garbage,
Manure, Rubbish,
Compost, Nursery
plants, Fruits, Flowers,
Grass, Trees, etc
Tenders, Data, Plans,
Maps
Obsolete stores,
Obsolete assets
Old newspaper
Buses
Rollers, Tools &
Equipments, Medical
Equipments
Revenue
Grants,
Contribution
and Subsidies
10
Revenue Grant
20
Re-imbursement of
expenses
Contribution
towards schemes
30
Road Development
grants, Family welfare
Grant, Census Grant
etc
4.20
National Municipal Accounts Manual
Major
Code
170
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
10
Interest
20
30
Dividend
Income from
projects taken up
on commercial
basis
Profit in Sale of
Investments
Others
80
Remarks
Fixed Deposits,
Government Securities,
Post office deposits
Interest Earned
10
20
30
80
180
Detailed Heads
Income from
Investments
40
171
Minor Head
Description
Interest from Bank
Accounts
Interest on Loans
and advances to
Employees
Interest on loans to
others
Other Interest
SB accounts
HBA, Conveyance,
Computer, Festival,
Vehicle
Interest on HP
Other Income
10
11
20
30
40
50
60
80
Deposits Forfeited
Lapsed Deposits
Insurance Claim
Recovery
Profit on Disposal
of Fixed asses
Recovery from
Employees
Unclaimed Refund
Payable/ Liabilities
Written Back
Excess Provisions
written back
Contractors, Suppliers
Stale Cheques
Property Tax, Octroi,
Cess, Water Supply,
Advertisement Tax,
Rent
Miscellaneous
Income
4.21
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
CoA Listing – Expense
Major
Code
Major Head
Description
Minor
Code
Minor Head
Description
Detailed Heads
Remarks
210 Establishment
Expenses
10
Salaries, Wages
and Bonus
Salaries &
Allowances- Officers,
staff, Wages, Exgratia,
bonus, Octroi
Performance Bonus
Overtime Allowance,
LTC, Medical Reimbursement, Tuition
Fees, Education
Allowance, Uniform to
staff, Compensation to
staff, Honorarium to
Corporators, Officers
and Staff, Training,
staff welfare expenses,
HRD activities,
Pension, Family
Pension, Pension
contribution, Pension
Fund Deficit
Contribution,
Contribution to other
funds
Leave encashment,
Death cum Retirement
gratuity, Contribution
to PF or other Funds.
Leave Salary
contribution
20
Benefits and
Allowances
30
Pension
40
Other Terminal &
Retirement
Benefits
10
Rent, Rates and
Taxes
Office maintenance Electricity, Water,
Security expenses
Communication
Telephone, Mobile,
Expenses
Fax
Books &
Magazines,
Periodicals
Newspapers, Journals,
220 Administrative
Expenses
11
12
20
4.22
National Municipal Accounts Manual
Major
Code
Major Head
Description
Minor
Code
Appendix 2 to Codification Structure & Chart of Accounts
Minor Head
Description
21
Printing and
Stationery
30
Travelling &
Conveyance
Insurance
Audit Fees
Legal Expenses
40
50
51
52
60
61
80
Detailed Heads
Remarks
Service postage,
Printing, Stationery,
computer consumables
Fuel, Travelling ,
Petrol & Diesel
Legal Fees, Cost of
recoveries of tax
revenue, suit
compromises
Professional and
Architect, Engineer,
other Fees
Technical Fees,
Consultancy charges,
Advertisement and Hospitality Expenses,
Publicity
Advertisement,
Organisation of
Festivals
Membership &
subscriptions
Others
230 Operations &
Maintenance
10
20
30
40
50
51
Power & Fuel
Bulk Purchases
Consumption of
Stores
Hire Charges
Repairs &
maintenance Infrastructure
Assets
Repairs &
maintenance Civic Amenities
Electricity, Water
Stores
Machinery Rent
Roads & Bridges, FlyOvers, Water Supply &
sewerage, Street
Lighting, Storm water
Drains, , traffic signals,
Parks, Gardens, Lakes,
Play Grounds, Arts &
Culture , Parking Lots,
Markets, Houses,
Commercial complex,
Hospitals, Swimming
Pools, Stadium,
Nursery, Play
materials, Public
Toilets,
4.23
National Municipal Accounts Manual
Major
Code
Major Head
Description
Minor
Code
52
53
59
Appendix 2 to Codification Structure & Chart of Accounts
Minor Head
Description
Repairs &
maintenance Buildings
Repairs &
maintenance Vehicles
Repairs &
maintenance Others
Detailed Heads
Remarks
Office Buildings,
Furniture Fixture,
electrical appliances,
Office equipment,
other FA, Survey &
Drawing equipments,
Testing & inspection,
Water Purification,
Garbage Clearance,
Patients food, Patients
laundry, Tax for Public
Transport vehicles,
80
Other operating &
maintenance
expenses
10
Interest on Loans
from Central
Government
Interest on Loans
from State
Government
Interest on Loans
from Government
Bodies &
associations
Interest on Loans
from International
Agencies
Interest on Loans
from Banks &
Other Financial
Institutions
Other Interest
Leases , HP
Bank Charges
Other Finance
Discount on early /
Expenses
prompt payment,
Commitment charges
240 Interest &
Finance
Charges
20
30
40
50
60
70
80
4.24
National Municipal Accounts Manual
Major Major Head
Code Description
250
260
270
Minor
Code
Minor Head
Description
10
20
30
Election
Expenses
Own Programme
Share in
programme of
others
10
20
30
Grants
Contributions
Subsidies
10
Provisions for
Doubtful
receivables
Provision for
other Assets
Revenues
written off
Assets written
off
Miscellaneous
Expense written
off
Detailed Heads
Remarks
Programme
Expenses
Revenue
Grants,
Contribution
and Subsidies
Provisions
and Write off
20
30
40
50
271
Appendix 2 to Codification Structure & Chart of Accounts
Property Tax, Cess, Fees
and User Charges, Rent
Stores,
Fixed
assets,
Investments
Property Tax, Assigned
Revenues, Grants
Stores, Fixed assets
Issue expenses
Miscellaneous
Expenses
10
20
30
Loss on disposal
of Assets
Loss on disposal
of Investments
Decline in Value
of Investments
4.25
National Municipal Accounts Manual
Major Major Head
Code Description
272
Minor
Code
Minor Head
Description
20
30
31
Buildings
Roads & Bridges
Sewerage and
Drainage
Waterways
Public Lighting
Plant &
machinery
Vehicles
Office & Other
Equipments
Furniture,
Fixtures, Fittings
and Electrical
Appliances
Other Fixed
Assets
50
60
70
80
Remarks
Prior Period
Item
10
20
30
40
50
60
80
290
Detailed Heads
Depreciation
32
33
40
280
Appendix 2 to Codification Structure & Chart of Accounts
Income
Taxes
Taxes, Octroi, Toll, Cess
Other Revenues
Recovery of
All types of Taxes, Fees &
revenues written User Charges
off
Other Income
Expenses
Refund of Taxes All types of Taxes
Refund of Other Water Supply, Rent
- Revenues
Other Expenses
Transfer to
Reserve
Funds
4.26
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
CoA Listing – Liability
Major Major Head Minor Minor Head
Detailed Heads
Code Description Code
Description
310 Municipal
(General)
Fund
10
Municipal Fund Closing Balance,
Adjustments to Opening
balance sheet
90
Excess of
Income and
Expenditure
311 Earmarked
Funds
10- 49 Special Funds
All developmental funds
(Specify each
and special purpose
Fund name)
funds. E.g.. Examples
Road Fund, Water Supply
Fund, City Development
Fund etc)
50 - 69 Sinking Funds
All Borrowing
(Specify each
repayments funds, Asset
Fund Name)
Replacement Funds
70-99 Trust or Agency Examples, all employee
Funds (Specify related funds like PF,
each Fund
Pension etc.
Name)
Remarks
0 - Opening
Balance, 1- 9
Additions to
Grants
during the
period, 11 29 Revenue
Income
earned, 3049 Capital
Income
earned, 5069 Revenue
Expenses
payments,
70-89 capital
expenses
payments
312 Reserves
10
11
20
30
40
Capital
Contribution
Capital Reserve
Borrowing
Redemption
reserve (if no
sinking fund is
created)
Special Funds
(Utilised)
Statutory
Reserve
4.27
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
Major Major Head Minor Minor Head
Detailed Heads
Code Description Code
Description
50
General Reserve
60
Revaluation
Reserve
320 Grants ,
Contribution
for specific
purposes
10
Central
Specify Name of each
Government
specified grant
20
State
Government
30
Other
Government
Agencies
40
Financial
Institutions
50
Welfare Bodies
60
International
Organizations
80
Others
10
Loans from
Central
Government
Loans from
State
Government
Loans from
Government
Bodies &
Association
Loans from
International
Agencies
Loans from
Banks & Other
Financial
Institutions
Remarks
0- Opening
Balance, 1- 9
Additions to
Grants
during the
period, 11 29 Revenue
Income
earned, 3049 Capital
Income
earned, 5069 Revenue
Expenses
payments,
70-89 capital
expenses
payments
330 Secured
Loans
20
30
40
50
[Use detailed head codes
for different loans]
4.28
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
Major Major Head Minor Minor Head
Detailed Heads
Code Description Code
Description
60
Other Term
HP
Loans
70
Bonds &
Debentures
80
Other Loans
331 Unsecured
Loans
10
Loans from
[Use detailed head codes
Central
for different loans]
Government
20
Loans from
State
Government
30
Loans from
Government
Bodies &
Association
40
Loans from
International
Agencies
50
Loans from
Banks & Other
Financial
Institutions
60
Other Term
Loans
70
Bonds &
Debentures
80 Other Loans
340 Deposits
Received
10
From
EMD, Security Deposit
Contractors /
Suppliers
20
Deposits –
Octroi, Transit, Water,
Revenues
Electricity, Rental etc
30
From Staff
80
From Others
10
20
80
Civil works
Electrical works
Others
Remarks
341 Deposit works
4.29
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
Major Major Head Minor Minor Head
Code Description Code
Description
350 Other
Liabilities
10
Creditors
11
12
20
30
40
41
80
90
Detailed Heads
Remarks
Suppliers, Contractors,
Expenses, Payables
against funds, Payables
against grants, Payable
against Specific Scheme,
Contractors Advance
Control account
Employee
Gross Salary, Net
liabilities
Salaries, Salaries unpaid,
P.F. payable, Pension,
Gratuity, Welfare Funds,
Leave Salary payable
Interest Accrued Loans, HP
and due
Recoveries
P.F deductions, LIC,
payable
Loans, Societies, Service
Tax, Profession Tax,
TDS, Contract Tax, Trade
Tax, Sales Tax, Service
Tax, Works Contract etc
Government
Library Cess, Education
Dues payable
Cess, Court Attachment
etc
Refunds payable Taxes, Other Revenues,
Grants, Deposit Works,
Attached Properties,
Octroi, Cess, Water
Supply, Rent
Advance
Property Tax, Water
Collection of
Supply, Cess, License
Revenues
Fees, Rent,
Advertisement charges
Others
Compensation payable,
Stale Cheque, HP
Payable, Lease Charges
payable, HP Interest
receivable Control
Account etc.
Sale Proceeds
Assets, Investments,
Note: This
Attached properties
account will
not have
balance at the
year end
4.30
National Municipal Accounts Manual
Major Major Head Minor Minor Head
Code Description Code
Description
360 Provisions
10
Provisions for
Expenses
20
Provision for
Interest
30
Provision for
Other Assets
Appendix 2 to Codification Structure & Chart of Accounts
Detailed Heads
Remarks
Interest Accrued but not
due
Stores, Investments
4.31
National Municipal Accounts Manual
Appendix 2 to Codification Structure & Chart of Accounts
CoA Listing - Asset
Major
Code
410
Major Head
Description
Minor
Code
Detailed Heads
Remarks
Fixed Assets
10
Land
20
30
Buildings
Roads & Bridges
31
32
Sewerage and
Drainage
Waterways
33
Public Lighting
40
Plant &
Machinery
Vehicles
50
60
Office & Other
Equipments
70
Furniture,
Fixtures, Fittings
and Electrical
Appliances
Other Fixed
Assets
80
411
Minor Head
Description
90
Assets under
Disposal
20
30
31
Buildings
Roads & Bridges
Sewerage and
Drainage
Waterways
Grounds, Open
markets, Parks,
Gardens
Concrete , Black
Topped, Others
Open, Underground,
Borewells, Open
wells, Reservoirs
Lamp posts,
Transformers
Ambulance, Buses,
Cars, Jeeps, Cranes,
Trucks, Tankers
Air conditioners,
Computers, Faxes,
Photocopiers,
Refrigerators
Cabinets, Cupboards,
Chairs, Fans,
Electrical Fittings
Note: This
account will
not have
balance at the
year end
Accumulated
Depreciation
32
4.32
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
33
40
50
60
70
80
412
420
Detailed Heads
Remarks
Capital Work in - progress
10
20
30
Specific Grants
Special funds
Specific Schemes
10
Central
Government
Securities
State Government
Securities
Debentures and
Bonds
Preference Shares
Equity Shares
Units of Mutual
Funds
Other Investments
Accumulated
Provision
Investments General Fund
20
30
40
50
60
80
90
421
Minor Head
Description
Public Lighting
Plant &
machinery
Vehicles
Office & Other
Equipments
Furniture,
Fixtures, Fittings
and Electrical
Appliances
Other Fixed
Assets
Investments Other Funds
10
20
30
40
50
Central
Government
Securities
State Government
Securities
Debentures and
Bonds
Preference Shares
Equity Shares
4.33
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
60
80
90
430
431
Minor Head
Description
Units of Mutual
Funds
Other Investments
Accumulated
Provision
Detailed Heads
Remarks
Stock - inhand
10
Stores
20
80
Loose Tools
Others
Opening
Closing
Purchases
Stock, Opening
stock, stock and
Purchases to
have nil
balance
Sundry
Debtors
(Receivables)
10
19
20
30
40
Receivables
Receivables for
Property Taxes
Receivable for
Other Taxes
Receivables for
Cess
Receivable for
Fees & User
Charges
Receivable from
other sources
50
Receivable from
Government
80
Receivables
control accounts
Year wise
Octroi Account Current
from Importers
License
Fees,
Advertisement Fees,
water Supply
Rent, Interest accrued
&
due,
Interest
accrued & not due,
Undertakings, Interest
due from employees,
Grants,
Assigned
Revenues
Property Taxes, Cess, Note: This
Water Supply
account will
not have
balance at
the year end
State Govt Cesses/
levies in Taxes Control accounts
4.34
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
91
92
99
432
Minor Head
Description
State Govt Cesses/
levies in Property
Taxes - Control
account
State Govt Cesses/
levies in Water
Taxes - Control
account
State Govt Cesses/
levies in Other
Taxes - Control
account
Detailed Heads
Remarks
Accumulated
Provisions
against
Debtors
(Receivables)
10
11
12
20
30
40
91
Provision for
outstanding
Property Taxes
Provision for
outstanding
Water Taxes
Provision for
outstanding Other
Taxes
Provision for
outstanding Cess
Provision for
Water Supply
outstanding Fees
& User Charges
Rent
Provision for
outstanding other
receivable
State Govt. Cesses/
levies in Taxes Provision accounts
State Govt Cesses/
levies in Property
Taxes - Provision
account
4.35
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
92
99
440
Detailed Heads
Remarks
Pre-paid
Expenses
10
20
30
450
Minor Head
Description
State Govt Cesses/
levies in Water
Taxes - Provision
account
State Govt Cesses/
levies in Other
Taxes - Provision
account
Establishment
Administration
Operations &
Maintenance
Cash and
Bank balance
10
21
22
23
24
41
42
43
44
61
62
63
Cash
Balance with Bank
- Municipal Fund
Nationalised
Banks
Other Scheduled
Banks
Scheduled Cooperative Banks
Post Office
Balance with Bank
- Special Funds
Nationalised
Banks
Other Scheduled
Banks
Scheduled Cooperative Banks
Post Office
Balance with Bank
- Grant Funds
Nationalised
Banks
Other Scheduled
Banks
Scheduled Cooperative Banks
4.36
National Municipal Accounts Manual
Major
Code
Major Head
Description
460
Loans,
Advances and
Deposits
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
64
10
Loans and
advances to
employees
20
Employee
Provident Fund
Loans
Loans to Others
Advance to
Suppliers and
contractors
30
40
461
470
Minor Head
Description
Post Office
50
Advance to
others
60
Deposits with
external Agencies
80
Other current
assets
10
20
30
Loans to Others
Advances
Deposits
10
Deposit Works Expenditure
Detailed Heads
Remarks
HBA, Conveyance,
Computer advance,
Festival
advance,
Vehicle Advance
Public Works, Stores,
Materials Issued to
Contractors/Stores,
Lease Rentals, HP
accounts
Permanent Advance,
Advance
against
projects,
Advance
against
scheme,
Grants
Electricity,
Telephones, Water,
Petrol Pumps,
HP
Instalments
received,
Interest
Receivable on Loans
& advances, Scheme
Expenses
Accumulated
Provisions
against Loans,
Advances and
Deposits
Other Assets
Civil,
Others
Electrical, Note: This
account will
not have
balance at
the year end
4.37
National Municipal Accounts Manual
Major
Code
Major Head
Description
Appendix 2 to Codification Structure & Chart of Accounts
Minor
Code
20
30
480
Minor Head
Description
Inter Unit
Accounts
Interest Control
Payable
Detailed Heads
Remarks
Note: This
account will
not have
balance after
consolidatio
n of all AUs
accounts
Lease, HP
Miscellaneous
Expenditure to
be written off
10
20
30
Loan Issue
Expenses
Discount on Issue
of loans
Others
4.38
National Municipal Accounts Manual
General Accounting Procedures
CHAPTER 5
GENERAL ACCOUNTING PROCEDURES
INTRODUCTION
5.1
This chapter discusses the Books of Accounts to be maintained and the General
Accounting Procedures to be followed by the ULB under the accrual based accounting system.
BOOKS OF ACCOUNTS
5.2
The books of accounts shall be maintained separately for each financial year as prescribed
in the State Act/Rules.
5.3
The following are the primary Books of Accounts that shall be maintained at the ULB:
a.
Cash Book (Form GEN-1) shall be the Book of Original Entry for recording
transactions involving cash and/or bank. The Cash Book may also be referred to
as the Cash and Bank Book. The Cash Book has two sides, viz., “Receipt” and
“Payment”. All collections on behalf of the ULBs shall be recorded on the
“Receipt” side and all payments shall be recorded on the “Payment” side. Separate
Cash Books shall be maintained in respect of each bank account. Designated Bank
Accounts may be operated for deposit of collections pertaining to Property &
Other Taxes, Octroi, Water Supply, Cess, Public Works, Special Funds etc., as has
been provided in the applicable rules and regulations. Exhibit 5.1 provides the
format of the Cash Book.
5.1
Date
Rcpt.
Vchr.
No.
Code of
Account
Balance
B/F
Particulars
of Receipt
L/
F
Cash
Amount
(Rs.)
No. of
Bank
Challan
Bank
Account
Amount
(Rs.)
Sr.
No
Exhibit 5.1
Cash Book
Date
Pymt.
Vchr.
No.
Code of
Account
Particulars
of
Payment
L/F
Cash
Amount
(Rs.)
Payment
Bank
Account
Amount
(Rs.)
General Accounting Procedures
Sr.
No.
Date
Jrnl.
Vchr.
No.
Code of
Account
Particulars
Exhibit 5.2
Journal Book
L/F
Debit
Amount
(Rs.)
Credit
Amount
(Rs.)
5.2
b. Journal Book (Form GEN-2) shall be the book of original entry for recording all transactions other than those involving cash and/or bank.
A non-cash/bank transaction is first recorded in the Journal Book by dividing into its debit and credit aspects, from which a posting is
done in the relevant ledger account. Recording of income in respect of Property & Other Taxes Bills raised, recording of liability on
receipt of supplier’s bills are examples of transactions, which shall be first recorded in the Journal Book. Exhibit 5.2 provides the format
of the Journal Book.
Sr.
No.
Receipt
National Municipal Accounts Manual
National Municipal Accounts Manual
c.
General Accounting Procedures
Ledger (Form GEN-3) shall be the book that shall contain all the accounts as
specified in the Chart of Accounts. The Ledger has two sides, viz, “Debit”
(Dr.) and “Credit” (Cr.). The head of account which is “Debited” while
recording the accounting entry in the Journal Book (Form GEN-2) or which is
recorded on the “Payment” side of the Cash Book (Form GEN-1) shall be
posted on the “Debit” side of the Ledger. Similarly the head of account which
is “Credited” while recording the accounting entry in the Journal Book or
which is recorded on the “Receipt” side of the Cash Book shall be posted on
the “Credit” side of the Ledger. Each entry in the Cash Book and the Journal
Book shall have a posting in the Ledger (except transactions relating to deposit
into or withdrawal of cash from bank or transfer of amount from one bank to
another bank account). The Ledger shall provide a listing of all the
transactions in respect of a head of account during an accounting period. The
posting of the entries from the books of original entry to the Ledger has been
explained later in this chapter. Exhibit 5.3 provides the format of the Ledger.
Exhibit 5.3
Ledger
Dr.
Date
Cr.
Code of
Account
Particulars
Folio
Amount
(Rs.)
Date
Code of
Account
Particulars
Folio
Amount
(Rs.)
ACCOUNTING DOCUMENTS
5.4
Vouchers prepared at the ULBs shall form the base documents for recording the
transactions in the Books of Original Entry. The vouchers shall be numbered serially. The
accounting documents to be prepared by the ULBs are described below:
a. Cash/Bank Receipt Voucher (Form GEN-4) shall be the document prepared
for recording receipt entries in the Cash Book. The Cash Receipt Voucher
shall be prepared for receipts in cash and the Bank Receipt Voucher for
receipts by cheques, demand drafts, banker' s cheques, etc., which need to be
deposited in the bank for realisation. Separate series of numbers shall be
5.3
National Municipal Accounts Manual
General Accounting Procedures
maintained for cash transactions and for each bank account. For example,
the Bank Receipt Vouchers in respect of Bank Account A and B may have the
series BRV-A-1 onwards and BRV-B-1 onwards respectively.
b. Cash/Bank Payment Voucher (Form GEN-5) shall be the document prepared
for recording payment entries in the Cash Book. Separate series of numbers
shall be maintained for cash transactions and for each bank account. For
example, the Bank Payment Vouchers in respect of Bank Account M and N
may have the series BPV-M-1 onwards and BPV-N-1 onwards respectively.
c. Contra Voucher (Form GEN-6) shall be the document prepared for recording
transactions involving deposit of cash into the bank, withdrawal of cash from
bank or transfer of amount from one bank to another.
d. Journal Voucher (Form GEN-7) shall be the document prepared for recording
entries in the Journal Book. These entries would not involve any cash/bank
related transactions.
OTHER REGISTERS/FORMS
5.5
The specific books of accounts, forms and registers to be maintained at the various
departments of the ULB can be defined in the State Manual depending on the rules and
regulations governing them. However inputs required from various departments for recording
the transactions are prescribed in the subsequent chapters. Some of the other general registers
and forms which shall be required to be maintained are provided in Table 5.1 below:
Table 5.1
Other General Registers and Forms
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Name of the Form
Receipt
Receipt Register
Statement on Status of Cheques Received
Collection Register
Summary of Daily Collection
Register of Bills for Payment
Payment Order
Cheque Issue Register
Register of Advance
Register of Permanent Advance
Deposit Register
Summary Statement of Deposits Adjusted
Demand Register
Bill for Municipal Dues
Summary Statement of Bills Raised
Register of Notice Fee, Warrant Fee, Other Fees
Summary Statement of Notice Fee, Warrant Fee, Other Fees
Form
Number
GEN-8
GEN-9
GEN-10
GEN-11
GEN-12
GEN-13
GEN-14
GEN-15
GEN-16
GEN-17
GEN-18
GEN-19
GEN-20
GEN-21
GEN-22
GEN-23
GEN-24
5.4
National Municipal Accounts Manual
Sr.
No.
18
19
20
21
22
23
24
25
26
27
28
29
General Accounting Procedures
Name of the Form
Register of Refunds, Remissions and Write-offs
Summary Statement of Refunds and Remissions
Summary Statement of Write-Offs
Statement of Outstanding Liability for Expenses
Documents Control Register/Stock Account of Receipt/Cheque Book
Register of Immovable Property
Register of Movable Property
Register of Land
Function-wise Income Subsidiary Ledger
Function-wise Expense Subsidiary Ledger
Asset Replacement Register
Register of Public Lighting System
Form
Number
GEN-25
GEN-26
GEN-27
GEN-28
GEN-29
GEN-30
GEN-31
GEN-32
GEN-33
GEN-34
GEN-35
GEN-36
5.6
The formats of all books, registers, and forms referred in this chapter and those listed
(Form GEN-8 to GEN-36) above are annexed to this chapter.
PROCEDURE TO BE FOLLOWED FOR ACCOUNTING OF COLLECTIONS
5.7
The collections in respect of the receipts of the ULB may be made at Collection
Offices (i.e. at the department, Ward Offices, Single-Window, etc.) or at other Collection
Centres (i.e. branches of Designated Banks and other Collection Centres). The general
procedure for the receipt, deposit and accounting of the collections shall be as follows:
a. Collection at Counters: For receipt of cash or any amount received in the form of
cheques/draft, a Receipt, duly signed and dated shall be issued in Form GEN-8. In
cases where the payer has to submit Bills/Challans, one copy shall be returned to
the payer along with the Receipt. All cheques/drafts received shall be recorded in a
Receipt Register, maintained in Form GEN-9. Receipt Register can be maintained
in perforated sheets, so that the second copy can be used for depositing cheques
with Bank or other Collection Offices of the ULB.
b. Deposit of amount collected: The amount collected (cash, cheques as well as
drafts) shall be deposited into Designated Bank Accounts or with the other
designated Collection Offices of ULBs, by the end of the day. The amount shall be
deposited in the bank on the same day or on the next working day.
c. Remittance of collections to other Collection Offices: The Collection Office
receiving the cash/cheque/demand draft/ banker’s cheque from other collection
centers, shall issue a Receipt (Form GEN-8) to acknowledge the receipt of
cash/cheque/demand draft/banker’s cheque from other collection offices. The
5.5
National Municipal Accounts Manual
General Accounting Procedures
receiving Collection Centre shall record the receipt issued for receipt of the
cheques/drafts received from other collection centers in its receipt register
maintained in Form GEN -9.
d. Entry in Collection Register. The Collection Offices and Collection Centres shall
record the particulars of each Receipt issued in the Collection Register, maintained
in Form GEN-11, on a daily basis. The Collection to be maintained in Form GEN11 is to be account head wise details of the daily collections. This collection
register shall be maintained in triplicate where in one copy can be sent to the
concerned departments along with one copy of the Bill/Challan collected, if any,
one can be sent to the Accounts and other one will be retained as book copy.
e. Preparation of a Summary of Daily Collection. Based on the details from the
collection register, the collection offices shall prepare a Summary of Daily
Collection in Form GEN-12. The Summary of Daily Collection is a covering sheet
that provides a summary of the total revenues collected by the Collection
Office/Centre.
f. Collections at branches of Designated Banks directly from the payers. The
officers, designated for the purpose of co-ordinating with the branches collecting
the receipt directly from the payers, shall also prepare a Summary of Daily
Collection in Form GEN – 12.
g. Preparation of Bank Receipt Voucher. The Accounts Department shall prepare a
Bank Receipt Voucher (Form GEN-4) and pass the entry for recording the
collections based on the Summary of Daily Collection (Form GEN-12) received.
For example, the following entry shall be passed in respect of receipt of Security
Deposit received by cheque and deposited in Main Bank Account:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book, Ledger
10,000
Dr.
Bank Account *
Cr.
To Deposit
Contractors –
Security Deposit
* Specify name of the Bank and Account number
(a) Insert Minor Head Codes of Account as applicable
450-21 (a)
340-10-(a)
h. Entry in Cash Book. In practice, the above entry shall be passed in the Main
Cash Book (Form GEN-1), in the “Bank” column on the “Receipt” side, as
follows:
5.6
1/1/04
Date
Rcpt.
Vchr.
No.
L/
F
Bank
Amount
(Rs.)
Illustrative
figures
10,000
Sr.
No.
Date
Pymt.
Vchr.
No.
Code of
Account
Particular
s of
Payment
L/F
Cash
Amount
(Rs.)
Illustrative
figures
Bank
Amount
(Rs.)
Illustrative
figures
Payment
General Accounting Procedures
Particulars
Folio
Amount (Rs.)
(Illustrative
figure)
Code of
Account
450-21-01
Date
1/1/04
By Bank Account
Particulars
Folio
10,000
Amount (Rs.)
(Illustrative figure)
Cr.
5.7
In practice, the above entry shall be passed in the relevant Cash Book (Form GEN-1), in the “Bank” column on the “Receipt”
side and posted to the Ledger (Form GEN-3), as follows:
Dr./ Debit Amount (Rs.) Credit Amount (Rs.)
Books to be entered into
Cr. Illustrative figures
Illustrative figures
Dr.
25,000
Cash Book, Ledger
Cr.
25,000
j. Similarly, collections in respect of Property & Other Taxes shall be accounted as follows:
Code of
Account
Deposit from contractors - Security Deposit
i. Posting in the Ledger. From the Cash Book, a posting shall be made to the Ledger (Form GEN-3) in the “Deposit from
Contractors - Security Deposit t” Account on the “Credit” side, as shown below:
To Deposit from
contractors
Security Deposit
Particulars of
Receipt
Cash
Amount
(Rs.)
Illustrative
figures
Cash Book of _______ Name of ULB (Main)
Code of
Accounting Entry
Account
450-21-(a)
Bank Account *
431-80-(a)
To Receivables control account - Property Tax
* Specify Name of Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Date
Dr.
Code of
Account
340-10-(a)
(Extracted Cash Book)
Sr.
No.
Receipt
National Municipal Accounts Manual
1/1/04
Date
Rcpt.
Vchr.
No.
431-80-(a)
Code of
Account
Date
Dr.
Code of
Account
(Extracted Cash Book)
Sr.
No.
Receipt
National Municipal Accounts Manual
Particulars
To Recevables
control account
Property Tax
Particulars of
Receipt
L/
F
Folio
Bank
Amount
(Rs.)
Illustrative
figures
Sr.
No.
Date
Pymt.
Vchr.
No.
Amount
(Rs.)
(Illustrative
figure)
1/1/04
Date
450-21(a)
Code of
Account
Receivables Control account
Bank
Amount
(Rs.)
Illustrative
figures
25,000
Particulars
of Payment
By Bank Account
Particulars
Code of
Account
Cash Book of _______ (Name of Bank)
L/
F
Folio
Bank
Amount
(Rs.)
Illustrative
figures
5.8
25,000
Amount (Rs.)
(Illustrative
figure)
Cr.
Bank
Amount
(Rs.)
Illustrative
figures
Payment
General Accounting Procedures
National Municipal Accounts Manual
General Accounting Procedures
k. The entries to be passed for recording the collection of revenues have been
provided in the subsequent chapters, e.g., Chapter 6 - Property and Other Taxes,
Chapter 7 Octroi, Chapter 8 - Cess, Chapter 9 - Water Supply, Chapter 10
Assigned revenues, Chapter 11 Rents, Fees and Other Incomes, etc.
l. Updation of Subsidiary Ledgers. The Accounts Department shall maintain
separate Subsidiary Ledger for each of the Major revenues in Form GEN 33. The
Subsidiary Ledgers would provide function-wise break-up of above-mentioned
income earned/received by the ULBs on a daily basis. Separate folios shall be
maintained for each function within the Subsidiary Ledger for recording incomes
in respect of each function. When some income is earned, it will be first recorded
in the Cash Book on the receipt side or in the journal from bills submitted by the
concerned departments. Thereafter the entry will be posted to the credit of the
appropriate income account in the Main Ledger. Simultaneously, the amount will
also be recorded in the folio for the concerned function in the Subsidiary Ledger
under the respective income column.
m. This is illustrated with reference to the Function Health Department which have
received from various type of heads as listed below:
Day 1
License fee: Rs. 1,000
Registration fees from patients: Rs. 500
Sale of Medicines: Rs. 10,000
Day 2
X-ray and Pathology Charges: Rs. 2,000
Sale of Tender Forms: Rs. 500
Receipt of Malaria Control Grant Rs.5,000
n. The folio for the Revenue in the Subsidiary Ledger shall provide for separate
columns for various major heads on Income for which the incomes are received.
The details of income received, after being posted in the general ledger, shall be
posted in the relevant Subsidiary Ledger as follows:
5.9
National Municipal Accounts Manual
General Accounting Procedures
Table 5.2
Function wise Income Subsidiary Ledger
Function : Health
Date
1
2
Ref.
No.
1
2
3
4
5
6
:
:
Total
Amount
Particulars
License Fees
Registration Fees from
patients
Birth & Death Fees
X-Ray and Pathology
Charges
Sale of Forms
Malaria Control grant
Income
Fees & User Sale & Hire
charges
Charges
1,000
500
Revenue
Grants
1,000
500
10,000
2,000
Total for the month
Cum. total at the
beginning of the month
Cum. Total at the end of
the month
…
10,000
2,000
500
5,000
5,000
500
19,000
NIL
5,000
NIL
13,500
NIL
500
NIL
21,000
5,000
13,500
500
NIL
o. Each of the above entries will be first posted in the respective ledger accounts in
the Main Ledger. Thus, the Main Ledger will be a complete record from which a
Trial Balance can be prepared. However, for ascertaining function-wise details
the Subsidiary Ledger will need to be referred.
p. Summary of major head wise income for each of the function may be prepared
from the Subsidiary Ledgers in the following format (Table 5.3).
Table 5.3
Summary of major head wise Income
Sl.
No
Function
code
Functions
Head
Health
Public Works
Civic
Amenities
……
Total for the major Heads of
Income
Total
Income
19,000
Revenue
Grants
5,000
19,000
5,000
Major Heads of Income
Fees & User
Sale & Hire
charges
Charges
13,500
500
13,500
…
500
q. Summary total of major heads of Income prepared as stated above must agree with
the major income head wise schedules prepared from Trial Balance.
r. Updation of details regarding cheques/drafts deposited. The realisation/return of
the cheques/drafts shall be followed up with the bank. The details of the
realisation/non-realisation of the cheques/drafts shall be updated in the Receipt
Register (Form GEN-9) as well as communicated to the concerned officer for
follow-up. The details should be intimated to the Accounts Department by the
5.10
National Municipal Accounts Manual
General Accounting Procedures
Collection Office/Centre who have actually deposited the cheques and coordinating with the bank, through a Statement on Status of Cheques Received,
prepared in Form GEN-10.
s. Based on the Statement on Status of Cheques Received (Form GEN-10), the
Accounts Department shall reverse the entry passed in “g” above i.e. on
preparation of Bank Receipt Voucher.
For e.g. Security Deposit received by cheque and deposited in Main Bank Account
is dishonoured. The Accounts Department shall pass the following entry for
reversal of receipt.
Debit
Credit
Amount
Amount
Code of
Books to be
Accounting Entry
Dr./ Cr.
(Rs.)
(Rs.)
Account
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
340-10-(a) Deposit from contractors – Dr.
Ledger
Security Deposit
To Bank Account*
Cr.
10,000
450-21-(a)
* Specify name of the bank and Account number
t. Subsidiary Ledgers shall be adequately updated for the reversal entry to be passed
in respect of Fees & User Charges and Sale & Hire Charges due to dishonour of
cheques.
u. An administrative charge (as per ULBs operations manual) of is normally levied
on the dishonored cheques.
v. Transfer of funds from one Bank Account to other Bank Account. Transfers from
one Bank account to another will be governed by the applicable rules. On the basis
of the cheque prepared for the transfer or on the basis of the bank intimation
received, in case of standing instructions being given to the banks for transfer of
funds, the Accounts Department shall prepare a Contra Voucher (Form GEN-6).
Accounting entries relating to this is explained below under ‘Accounting for
Contra entries.’
PROCEDURE TO BE FOLLOWED FOR ACCOUNTING OF PAYMENTS
5.8
The general procedure in respect of payments, which shall be applicable for all
payments made by the ULB including payment of supplier' s/ contractor’s bills, refund of
taxes, payment of advance, refund of deposits, investments made, loan repayments, etc., is
described below:
a. Receipt of bills/claims. The bills or claims against the ULB shall be received at the
various functions of the ULBs or at the Accounts Department as per the
procedures laid down for ULBs in this behalf. The concerned department shall
5.11
National Municipal Accounts Manual
General Accounting Procedures
verify the bills/claims received. On satisfactory verification, the bills/claims shall
be entered into the Register of Bills for Payment, maintained in Form GEN-13.
b. Preparation of Payment Order. On approval of the payment by the concerned
authorities at the respective departments, the department shall forward the bills for
payment. To facilitate capture of details a model Payment Order (Form GEN-14)
is suggested. The state governments can modify this based on their requirements.
c. Bill Passing/ Approval of bills: Before release of a payment, the Accounts/ Audit
department whoever is responsible for passing shall verify and ensure the
following relating to a payment order:
¾ Whether the supporting documents such as invoices, bills, etc are stamped
with ‘certified for payment’ and signed by the authorities of the concerned
department;
¾ Whether adequate budget appropriation/provision is available under the
particular head.
¾ Whether evidence of entry into purchase /fixed assets/ investments register
with folio and reference numbers are attached/ available;
¾ A work / job completion certificate is received and a copy is attached with the
payment voucher in the case of release of security or other caution deposits
relating to construction or acquisition of fixed assets;
¾ Whether a copy of the purchase order with update of items / stocks received
along with the reference to goods in good condition / satisfactory condition as
per specification receipt/ gate pass note, etc is attached with the payment
voucher.
¾ Further, physical verification of the concerned registers such as fixed assets/
stocks/ investments, etc. may also be carried out to ensure that the bills under
‘payment order’are entered in the registers.
d. In case of any queries in the process of verification of ‘payment order’ explained
above, including non-reference to the relevant folio/page number of the
Stock/Measurement Book or Fixed Asset Register or Register of Bills for
Payment, the same shall be noted on the Payment Order and shall be forwarded
back to the respective department.
e. The concerned department shall resolve the query raised (in d. above), make the
necessary changes in the Payment Order and the other registers/forms, if required,
and forward the documents back to the Bill Passing authority for review of the
revised payment order.
5.12
National Municipal Accounts Manual
General Accounting Procedures
f. Forwarding for payment. After a satisfactory verification of the payment order and
its supporting, the payment order shall be released for payment
g. On approval of payment, entry shall be made in the Register of Bills for Payment
maintained at Accounts Department (Form GEN-13) journal voucher is prepared.
h. Preparation of a Cash/Bank Payment Voucher. A Cash/Bank Payment Voucher
(Form GEN-5) shall be prepared for payment and verified.
i. The entries to be passed for recording the expenditure and payments have been
provided in the subsequent chapters, e.g., Chapter 11 - Public Works, Chapter 12Stores, Chapter 13-Employee Related Transactions, Chapter 15-Other Revenue
Expenditures, etc
j. Preparation of cheque. On verification of the Cash/Bank Payment Voucher, a
cheque shall be prepared. The date of preparation of the Bank payment voucher
shall be the date of the cheque. The person preparing the cheque shall mention the
date of the cheque. An entry of the cheque prepared shall be made in the Cheque
Issue Register, maintained in Form GEN-15.
k. Signing of the cheque. The authorised signatories shall sign the cheque,
Cash/Bank Payment Voucher and Cheque Issue Register. It is suggested that one
of the authorised signatories shall be from Accounts Department.
l. Recording of entry for payment. After the signing of the Cash / Bank Payment
Voucher, the Accounts Department shall pass the entry for the payment.
For example, the Accounts Department shall pass the following entry for payment
of rent in respect of municipal building:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
220- 10-(a)
Rent, Rates & Taxes Dr.
5,000
Cash Book, Ledger
450-21-(a)
To Bank Account* Cr.
5,000
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
m. Entry in Cash Book. In practice, the above entry shall be passed in the Cash Book
(Form GEN-1), in the “Bank” column on the “Payment” side, as follows:
5.13
Dr.
Code of
Account
Particulars of
Receipt
L/
F
Cash
Amount
(Rs.)
Illustrative
figures
Bank
Amount
(Rs.)
Illustrative
figures
Sr.
No.
1/1/04
Date
Pymt.
Vchr.
No.
Cash Book of _______
220-10-(a)
Code of
Account
By Rent, Rates
& Taxes
Particulars of
Payment
L/
F
Cash
Amount
(Rs.)
Illustrative
figures
Payment
Bank
Amount
(Rs.)
Illustrative
figures
5,000
General Accounting Procedures
Code of Account
Particulars
Folio
Amount (Rs.) (Illustrative figure)
Cr.
5.14
Similarly, payment made to a contractor towards construction of a building block shall be accounted as follows (separate Cash
Book shall be maintained for Designated Public Works Bank Account):
Date
Rent, Rates & Taxes Account
n. Posting in the Ledger. From the Cash Book, a posting shall be made to the Ledger (Form GEN-3) in the “Rent, Rates & Taxes”
Account on the “Debit” side, as shown below:
Date
Rcpt.
Vchr.
No.
Code
Amount
of
(Rs.)
Date
Particulars
Folio
Accou
(Illustrative
nt
figure)
1/1/04
450To Bank Account*
5,000
21- (a)
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Sr.
No.
Receipt
National Municipal Accounts Manual
Dr.
Date
Debit Amount (Rs.)
Credit Amount (Rs.)
Books to be
Illustrative figures
Illustrative figures
entered into
1,00,000
Cash Book, Ledger
1,00,000
Code of
Account
Rcpt.
Vchr.
No.
Code of
Account
Particulars
Particulars
of Receipt
L/F
Folio
Sr.
No.
1/1/04
Date
Pymt.
Vchr.
No.
350-10-(a)
Code of
Account
Amount
(Rs.)
(Illustrative
figure)
1,00,000
Date
Code of
Account
Contractors Control Account
Bank
Amount
(Rs.)
Illustrative
figures
Particulars
By Contractors
Control Account
Particulars of
Payment
Cash Book of _______ the name of the ULB (Public Works)
450-21To Bank Account *
(a)
(a) Insert Minor Head Codes of Account as applicable
1/1/04
Date
Sr.
No.
Receipt
Dr.
Cr.
Dr./ Cr.
General Accounting Procedures
Amount
(Rs.)
(Illustrative
figure)
5.15
1,00,000
Bank
Amount (Rs.)
Illustrative
figures
Cr.
Folio
L/F
Payment
In practice, the above entry shall be passed in the Public Works Cash Book (Form GEN-1), in the “Bank” column on the
“Payment” side and posted to the Ledger (Form GEN-3), as follows:
Code of
Accounting Entry
Account
350-10-(a) Creditors - Contractors Control Account
450-21-(a)
To Bank Account*
* Specify name of the Bank and Account number
(a) Insert Minor Head Codes of Account as applicable
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
o. Updation of Subsidiary Ledgers for expenditures. The Accounts Department shall
maintain separate Subsidiary Ledger for each of the Major expense head in Form
GEN
34. The Subsidiary Ledgers would provide function-wise break-up of
above-mentioned expenses incurred by the ULBs on a daily basis. Separate folios
shall be maintained for each function. When some expenditure is incurred, it will
be first recorded in the Cash Book on the payment side or in the credit side from
journal bills submitted. Thereafter the entry will be posted to the credit of the
appropriate expense account in the Main Ledger. Simultaneously, the amount will
also be recorded in the folio for the concerned function in the Subsidiary Ledger
under the respective expense column.
p. This is illustrated with reference to the Function Public works, which have
incurred various types of expenses as listed below.
Day 1
Salaries of staff Rs. 10,000
Books & Periodicals Rs. 1,000
Consumption of stores Rs.3,000
Day 2
Repairs to Roads Rs.20,000
Communication expenses Rs.1,000
Computer consumables Rs.2,000
q. The folio for the Expense in the Subsidiary Ledger shall provide for separate
columns for various major heads of expenses. The details of expenses incurred,
after being posted in the general ledger under the respective expense head, shall be
posted in the relevant Subsidiary Ledger as follows:
Table 5.4
Function wise Expenses Subsidiary Ledger
Function:
Date
1
2
Ref.
No.
1
2
3
4
5
6
:
:
Particulars
Total
Amount
Salaries of staff
Books & Periodicals
Consumption of Stores
Repairs to Roads
Communication expenses
Computer Consumables
10,000
1,000
3,000
20,000
1,000
2,000
Total for the month
37,000
Major Heads of Expenses
Operations
Establishment Administration
&
maintenance
10,000
1,000
3,000
20,000
1,000
2,000
10,000
4,000
23,000
5.16
National Municipal Accounts Manual
Ref.
No.
Date
Particulars
Cum. total at the
beginning of the month
Cum. Total at the end of
the month
General Accounting Procedures
Total
Amount
NIL
Major Heads of Expenses
Operations
Establishment Administration
&
maintenance
NIL
NIL
NIL
37,000
10,000
4,000
NIL
23,000
r. Each of the above entries will be first posted in the respective ledger accounts in
the Main Ledger. Thus, the Main Ledger will be a complete record from which a
Trial Balance can be prepared. However, for ascertaining function-wise details
the Subsidiary Ledger will need to be referred.
s. Summary of major head wise expenses for each of the function may be prepared
from the Subsidiary Ledgers in the following format (Table 5.5).
Table 5.5
Summary of major head wise expenses
Sl.
No.
1
2
3
Function
code
Functions
Head
Total
Income
Public Works
37,000
Total for the major Heads of
Expenses
37,000
Major Heads of Expenses
Operations
Establishment Administration
&
maintenance
10,000
4,000
23,000
10,000
4,000
23,000
t. Summary total of major heads of Expenses prepared as stated above must agree
with the major expenses detailed head wise schedules prepared from Trial
Balance.
ACCOUNTING FOR JOURNAL ENTRIES
5.9
For transactions other than those involving cash and/or bank, the Accounts
Department shall prepare a Journal Voucher (Form GEN-7) for recording the entry in the
Journal Book. The following example illustrates the recording of entry in the Journal Book:
5.10 For recording the entry in respect of the raising of demand in respect of Property and
Other Taxes, the Accounts Department shall prepare a Journal Voucher (Form GEN-7) and
pass the following entry in the Journal Book (Form GEN-2):
5.17
National Municipal Accounts Manual
General Accounting Procedures
Journal Book of _______ name of the ULB
Sr.
No.
Date
Jrnl.
Vchr.
No.
1
1/1/04
XXX
Code of
Account
431-10-(a)
Particulars
Receivables for Property
Taxes (Year )
110-01-(a)
To Property tax
Residential Properties
(a) Insert Detailed Head Codes of Account as applicable
.
L/F
Debit
Amount
(Rs.)
Illustrative
figures
50,000
Credit
Amount
(Rs.)
Illustrative
figures
50,000
Posting in the Ledger. From the Journal Book, a posting shall be made to the Ledger
(Form GEN-3) as shown below:
5.18
Code of
Account
110-01(a)
Code of
Account
Particulars
To Property Tax - residential
Properties
Particulars
Date
Code of
Account
Folio
Amount
(Rs.)
(Illustrative
figure)
1/1/04
Date
431-10(a)
Code of
Account
Particulars
Particulars
Cr.
Cr.
By Receivables of Property
Taxes (Year )
Property tax – Residential properties Account
Folio
Amount
(Rs.)
(Illustrative
figure)
50,000
Receivables for Property Tax (Year…) Account
* Insert Detailed Head Codes of Account as applicable.
Date
Dr.
1/1/04
Date
Dr.
National Municipal Accounts Manual
Folio
Folio
5.19
Amount
(Rs.)
(Illustrative
figure)
50,000
Amount
(Rs.)
(Illustrative
figure)
General Accounting Procedures
National Municipal Accounts Manual
General Accounting Procedures
5.11 The Journal Entries are also passed for rectification of errors in recording of earlier
transactions.
For example, if the income in respect of sale of Forms has been taken as Registration
Fees from PW contractors:
a. The entry which should have been actually passed would be:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger
Dr.
Bank Account*
Cr.
To Sale Forms Tenders
* Specify name of the bank and account number
(a) Insert Minor Head Codes of Account as applicable
450-21 (a)
150-11-(a)
If the entry has been wrongly passed as follows:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Cash Book,
Cr.
1,000 Ledger
450-21- (a) Bank Account*
140-10-(a)
To Registration Charges
PW contractors
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
b. To rectify the above, the Accounts Department shall prepare a Journal Voucher
(Form GEN-7) and pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Journal Book,
Ledger
Cr.
1,000
140-10-(a) Registration Charges PW
contractors
150-11-(a)
To Sale of Forms
Tender
(a) Insert Detailed Head Codes of Account as applicable
PERMANENT/OFFICIAL ADVANCE
5.12 For permanent advance (imprest cash) provided to the various officers/departments of
the ULB, such payments shall be initially recorded as an advance provided. The details of the
expenditure incurred against the advance shall be recorded in a Register of Permanent
Advance maintained at the various departments in Form GEN-16. The details of the advances
given shall be recorded in the Register of Advance maintained in Form GEN-16. The
concerned department shall prepare Payment Order (Form GEN-15) for replenishment of the
permanent advance.
5.20
National Municipal Accounts Manual
General Accounting Procedures
5.13 Similarly, the employees of the ULB to whom official advances are provided for
incurring expenditure on behalf of the ULB, shall prepare a Payment Order for the
expenditure incurred as soon as the purpose for which the advance was provided is
accomplished.
5.14 The Payment Order prepared for expenditure incurred against the permanent advance
or against the official advance shall be approved in the same manner as the Payment Order
prepared for normal expenditure.
BANK CHARGES:
5.15 Based on the nature of banking services availed by an ULB, service charges or
transaction processing charges (for example demand draft commission, outstation cheque
clearing charges, etc) are charged by the Banks.
5.16 The Bank through an Advice gives details of their charges. ULBs shall account for the
Bank Charges based on the Debit Advices. In the absence of receipt and accounting for bank
charges, these will be listed in the bank reconciliation statements prepared as explained in
Chapter 29 on Reconciliation Procedures, as items not accounted by the ULB. Accounting
entry for Bank Charges shall be as follows:
Code of
Account
240-70-(a)
450-21-(a)
Accounting Entry
Bank Charges
To Bank Account*
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Cash Book,
Cr.
1,000 Ledger
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
STALE/OBSOLETE CHEQUES
5.17 The normal validity period of a cheque is six (6) months or such shorter period as
specified on the cheque, from the date of the cheque. On expiry of the validity period, in case
the cheque has not been realised, it becomes a stale cheque.
5.18 At period end, the Accounts Department shall review the Cheque Issue Register
(Form GEN-15) and the Bank Reconciliation Statements (format provided in Table 30.2 of
Chapter 30 on Reconciliation Procedures) to identify the cheques, which have become stale.
It shall prepare a Bank Receipt Voucher (Form GEN-4) for recording a notional receipt in
respect of the stale cheques. The necessary details shall be updated in the Cheque Issue
Register (Form GEN-15). In respect of the stale cheques, the Accounts Department shall pass
the following entry:
5.21
National Municipal Accounts Manual
Code of
Account
General Accounting Procedures
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book
10,000
Dr.
Bank Account*
Cr.
To Other Liability
Others - Liability in
respect of Stale Cheques
* Specify name of the Bank and Account number
(a) Insert detailed Head Codes of Account as applicable
450-21- (a)
350-80-(a)
5.19 When the cheques are revalidated or a fresh cheque is issued against the stale cheques,
the Accounts Department shall prepare a Bank Payment Voucher (Form GEN-5). After
approval and signing of the Bank Payment Voucher by the concerned authorities, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
350-80-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Cash Book,
Ledger
Other Liability Others Liability in respect of Stale
Cheques
To Bank Account*
Cr.
450-21- (a)
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
10,000
5.20 Liability in respect of Stale Cheques account shall be reviewed periodically and those
Stale cheques which were not revalidated for a period of 3years or such period as may be
specified by the state government from the date of original issue shall be reversed as Write
back of Liability for Stale Cheques under Other incomes of the ULB. Accounts Department
shall pass the following entry for recognition of other income:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
5,000
Journal Book,
Ledger
350-80-(a) Other Liability Others
Liability in respect of Stale
Cheques
To Unclaimed Liabilities
Cr.
180-50-(a)
written back Stale
Cheques
(a) Insert Detailed Head Codes of Account as applicable
5,000
5.22
National Municipal Accounts Manual
General Accounting Procedures
GENERAL INSTRUCTION FOR PAYMENTS
5.21 All payments made by the Accounts Department shall be recorded in the Cash Book
(Form GEN-1) on a daily basis.
5.22 Payments exceeding Rs. 100/- or such other sum as may be prescribed by the ULB
rules shall be made only by “Account Payee Crossed” cheque.
5.23 All claims against the ULB, which are barred by time under any provisions of law
relating limitation, are ordinarily to be refused and no claim on account of such time barred
items is to be paid without the sanction of the Authorities as prescribed in the applicable Act /
Rules. This question shall be decided on the merits of each case.
5.24 In case of payments made by drafts that are issued by banks through a written
instruction other than a cheque, i.e., an authorisation letter, etc., the copy of the authorising
document shall be attached to the Payment Order (Form GEN-14). The entry for payments
made in this manner shall be recorded on receiving the drafts from the bank. A copy of the
draft shall also be attached to the Payment Order.
5.25 At period end, the officers/departments to whom the permanent advance is provided
shall prepare a Payment Order for the replenishment of the expenditure incurred up to the
period end and submit it to the Accounts Department within 5 days from the end of the
period.
5.26 In respect of cheques, which are cancelled or lost, the Accounts Department shall
update the Cheque Issue Register (Form GEN-15) against the specific cheque numbers. The
cheques cancelled shall bear the approval of the authorised signatories on the cheque and in
the Cheque Issue Register.
5.27 States shall define the rules and procedures for processing of duplicate bills. However
it shall be ensured that no claim is processed or paid twice. E.g. payment both against original
bill and against copies of bills etc
5.28 ULBs may also bring in additional internal control procedures. Some ULBs operate
centralised cheque issue section for delivery of cheques to the parties. Parties coming to
collect cheques need not go to any department and instead collect it from this central section.
ACCOUNTING FOR CONTRA ENTRIES
5.29 Contra entry means an Accounting Entry that is recorded on both the sides of a Cash
Book, showing inflow and outflow of funds at the same time. Contra entries are the entries
for recording deposit of cash in the bank, withdrawal of cash from the bank or transfer of
5.23
National Municipal Accounts Manual
General Accounting Procedures
funds from one bank to another. For example, cash deposited with bank would be reflected as
inflow in “Bank” Column on “Receipt” side and simultaneously as outflow in “Cash”
Column on “Payment” side. Similarly, balances transferred from one bank account to another
would be shown as inflow in “Bank” Column on “Receipt” side in the receiving bank account
and simultaneously as outflow in “Bank” Column on “Payment” side in the paying bank
account. For recording of a Contra Entry, the Accounts Department shall prepare a Contra
Voucher (Form GEN-6). In respect of Contra Entries, the following entries shall be passed:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
For recording cash deposited into bank
450-21- (a) Bank Account*
450-10-(a)
To Cash
For recording cash withdrawn from bank
Dr.
Cr.
450-10-(a) Cash
Dr.
450-21-(a)
To Bank Account*
Cr.
For recording transfer of funds from one
bank to another
450-21-(a) Main Bank Account*
Dr.
450-21- (a)
To Designated Bank
Cr.
Account*
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
10,000
Cash Book
10,000
10,000
Cash Book
10,000
10,000
Cash Book
10,000
5.30 Contra Entries shall also be recorded for rectification of entries involving cash and/or
bank transactions. For example, if the amount deposited in the Designated Property Tax Bank
Account has been wrongly debited to Designated Water Supply Bank Account, then the
following entry shall be passed to rectify the error:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Cash Book
450-21-(a) Designated Property Tax Bank
Account*
Cr.
450-21- (a)
To Designated Water Supply
Bank Account*
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
10,000
5.24
Date
Code of
Account
450-21(a)
Code of
Account
Particulars of
Receipt
L/
F
Particulars of
Receipt
L/
F
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Sr.
No.
Rcpt.
Vchr.
No.
Receipt
1/1/04
Date
To Designated
Health Fund
Bank
Account*
* Specify name of the bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Sr.
No.
Rcpt.
Vchr.
No.
Receipt
National Municipal Accounts Manual
Bank
Amount
(Rs.)
Illustrative
figures
Cash
Amount
(Rs.)
Illustrative
figures
Sr.
No.
Date
Pymt.
Vchr.
No.
Code of
Account
Bank
Amount
(Rs.)
Illustrative
figures
Sr.
No.
1/1/04
Date
Pymt.
Vchr.
No.
450-21(a)
Code of
Account
Cash Book of _______ (Health Fund)
Bank
Amount
(Rs.)
Illustrative
figures
25,000
Cash Book of _______ Name of ULB (Main)
By Main Bank
Account*
Particulars of
Payment
Particulars of
Payment
Cash
Amount
(Rs.)
Illustrative
figures
L/
F
Bank
Amount
(Rs.)
Illustrative
figures
Payment
L/
F
Payment
5.25
Bank
Amount
(Rs.)
Illustrative
figures
25,000
Bank
Account
(Rs.)
Illustrative
figures
General Accounting Procedures
National Municipal Accounts Manual
General Accounting Procedures
Banking arrangements
5.31 ULBs may enter arrangements with their bankers as listed below in respect of
collections and payments. Such arrangements would enable ULBs in improvement of funds
management.
5.32
Illustrative list of arrangements with Banks:
¾ Acting as an authorised collection agency for direct collection. This facilitates
collection at all authorised branches of the Bank providing easy access.
¾ Operation of collection counter at ULB s offices
¾ Arrangement for collection of Deposits from authorised collection centres at a
fixed time (say end of the day)
¾ Issuing daily Debit/Credit Advises
¾ Issue Account Statements on a weekly basis or for such other periods
¾ Tele banking facilities
¾ Salary Credit for employees
INTERNAL CONTROLS
5.33
The following general internal controls shall be observed by the ULBs:
a. The closing balance of cash as per the Cashier s Cash Book shall be verified daily
with the physical cash balance at all the Collection Offices and must be signed by
the person verifying the cash.
b. The cash chest should have two keys. One key will be with the cashier of the
collection office and the other will be with another officer designated for this
purpose by the ULB.
c. Cash in chest should be insured for theft, fire etc.
d. The officers designated by the ULB for operating the Designated Bank Accounts
shall co-ordinate with the banks on a daily basis and ascertain the status of the
cheques/drafts deposited by them.
e. Bank reconciliation shall be carried out monthly by the officers of the ULB
designated for the purpose of handling the bank accounts and the same shall be
duly verified and signed by the designated senior officer.
f. Original copy of the cancelled Receipt shall be attached with the duplicate copy
with the words “Cancelled” marked on it.
5.26
National Municipal Accounts Manual
General Accounting Procedures
g. At the time of approving payment, the Accounts Department shall ensure that the
Payment Order provides reference of Register of Bills for Payment, Measurement
Book, Stock Ledger or Fixed Asset Register, as the case may be, depending on the
purpose for which payment is made.
h. At the time of recording collections, the Accounts Department shall ensure that
the total amount of collections as per the collection register tallies with the total
amount as per Receipt register for cheques received and total of cash collections as
per summary of daily collection in form GEN - 12.
i. Original copies of all the cancelled documents such as receipts, payment vouchers
shall be retained in the office file with reasons / justification for cancellation
written on the cancelled documents.
j. At the end of each month, the Accounts Department shall ensure compliance with
the month-end procedure described in Chapter 11
Rents, Fees and Other
Incomes in respect of Fees & User Charges and Sale & Hire Charges, reference to
which is invited.
k. At the end of each month, the Accounts Department shall comply with the monthend procedure in respect of:
Operations and Maintenance Expenses as described in Chapter 12 Public
Works,
Employee related expenses as described in Chapter 13 Employee Related
Transactions, and
Administrative Expenses as described in Chapter 16
Other Revenue
Expenditures.
l.
Liability for Stale Cheques account should be reviewed at the end of every
quarter and all the stale cheques dated more than 3 years or such period as may be
specified by the state government from the date of original issue shall be identified
and reversed as other income of the ULB.
m. The Head of Accounts Department shall ensure stamping of all the bills once
approved for approval and then for payment to ensure the same bill is not
processed once again.
n. The Head of the Accounts Department shall ensure that all the bank charges
accounted based on the bank reconciliation statement are supported with original
bank debit advises.
5.34
The Head of Accounts Department shall certify all Reconciliation Statements.
5.27
Date
Rcpt.
Code of
Vchr.
Account
No.
Particulars
of Receipt
L/F
Cash
Amount
(Rs.)
Bank
Account
Amount
(Rs.)
Sr.
No.
Date
CASH BOOK
Pymt.
Code of
Vchr.
Account
No.
_________________Name of the ULB
Particulars
of Payment
L/F
Cash
Amount
(Rs.)
5.28
Bank
Account
Amount
(Rs.)
Form GEN-1
General Accounting Procedures
Payment
Notes
• Balance brought forward is the opening balance to be entered
• The date of receipt to be shown in Cash book shall be the date on which amount has actually been received
• All moneys received shall immediately and without reservations be entered in the Cash book
• The receipts shall be classified in the column provided according to budget heads
• The payment side of Cash book shall be posted from the details of vouchers and of the cheque drawn
• The amount side of each cheque shall be entered as soon as the cheque is signed
• Each entry in the cash book should be attested by the authorised officer
• The classification and totals of cash book should be initialled by some responsible officer other than the writer of Cash book
• Cash book should be closed daily
Sr.
No.
Receipt
National Municipal Accounts Manual
Sr.
No.
Date
Jrnl.
Vchr.
No.
National Municipal Accounts Manual
Code of
Account
Particulars
JOURNAL BOOK
L/F
_________________Name of the ULB
Debit
Amount (Rs.)
Credit
Amount (Rs.)
5.29
Form GEN-2
General Accounting Procedures
Date
Dr.
Code of
Account
Particulars
National Municipal Accounts Manual
Folio
Amount
(Rs.)
Date
Code of
Account
_______________ Account
LEDGER
_______________Name of the ULB
Particulars
Cr.
Folio
5.30
Amount
(Rs.)
Form GEN-3
General Accounting Procedures
Functionary
2
Verified by:
3
Code of
Account
4
Account Description
Approved by:
5
Posted by:
6
Amount (Rs.)
CRV/BRV No:____
NAME OF THE FUND:
__________
Chalan for Remittance of
Money No.
Date:______
CASH/BANK RECEIPT VOUCHER
________________ Name of the ULB
Form GEN-4
General Accounting Procedures
5.31
Date:
Date:
Date:
Date:
Notes:
1. A separate Bank Receipt Voucher shall be prepared in respect of each separate Bank Book maintained.
2. All the Challans for Remittance of Money, the details of which are included in this Bank Receipt Voucher, shall be attached to it.
Total
Prepared by:
`Function
1
Budget
Name of the Bank: __________
Pay-in-slip Ref. No./Date: ________
National Municipal Accounts Manual
Verified by:
Date:
3
Code of Account
Account
Description
4
6
Cheque No.
Posted by:
Date:
7
Amount (Rs.)
5.32
CPV/BPV No:__________
P.O./W.O. No.: _________
NAME OF THE FUND: ___________
Approved by:
Date:
Received Payment
Signature of Receiver
Payment
Order No.
5
CASH/BANK PAYMENT VOUCHER
________________ Name of the ULB
Form GEN-5
General Accounting Procedures
Notes:
1.
A separate Bank Payment Voucher shall be prepared in respect of each separate Bank Book maintained.
2.
Payment Order for which payment is made shall be attached to the Bank Payment Voucher.
3.
The payment vouchers and its supportings shall be cancelled with 'paid' stamp.
Total (in words):
Prepared by:
Date:
Budget
Function Functionary
1
2
Name of the Bank: _________
Date: ______________
Department: ________________
Name of Claimant: ________________
National Municipal Accounts Manual
Date
Date
Date
Approved By
3
Debit Amount (Rs.)
Date
4
Credit Amount (Rs.)
5.33
Form GEN-6
General Accounting Procedures
Posted By
Note:
1.
The supporting documents forming the basis of the entry shall be attached to the Contra Voucher.
Verified By
2
1
Total
Prepared By
Account Description
Contra Voucher No: ______________
CONTRA VOUCHER
________________ Name of the ULB
Code of Account
Date: _________________
National Municipal Accounts Manual
Note:
1.
2.
Verified By
Date
Date
4
3
Total
Prepared By
Account Description
Code of Account
5
Date
Date
Posted By
6
5.34
Debit Amount (Rs.) Credit Amount (Rs.)
Journal Voucher No: ____________
NAME OF THE FUND: ___________
Approved By
JOURNAL VOUCHER
________________ Name of the ULB
Form GEN-7
General Accounting Procedures
The supporting documents forming the basis of the entry shall be attached to the Journal Voucher.
The narration for the entry should be clearly (understandably) stated.
Budget
Function
Functionary
1
2
Date: _________________
National Municipal Accounts Manual
from
Shri
__________________
a
sum
of
Rs.
_________
RECEIPT
(in
________________ Name of the ULB
words)
towards
_____________
Form GEN-8
General Accounting Procedures
Note: Separate receipt books can be maintained for Cash / Cheques.
N.B. Cheque/Draft/Banker's cheque are subject to realisation
---------------------------------------Entered in Collection Register
------------------------Signature of Clerk
drawn on ________Bank, ____________Place of the Bank.
-------------Page No.
5.35
--------------------------------------Signature of Authorised Officer
_______________________________vide cash/cheque/demand draft/Banker' s cheque no_____________ dated ____________
Received
Date : ___________
National Municipal Accounts Manual
2
Opening total
1
3
Receipt
Date
Bank (for
amounts
Mode of
Name of
Cheque/ received
receipt Cash/
the Drawer Draft No. through
Cheque/draft
Cheque/
draft
4
5
6
7
Form GEN-9
8
9
10
11
13
5.36
Note:
1. For each entry made; record the Name, Designation, and Signature of the person making the entry in the register and the person checking the entry.
2. This can be prepared in perforated sheets, as the same shall be used for making support to the deposit slip into the designated bank account or to other
collection offices.
3. Separate sheets shall be used in respect of Cash and Cheques/drafts received
12
Cash (for
amounts Deposited
received into Bank Date of
Date of
Whether
Remarks*
by Cash) Account Deposit Realisation Returned
No.
RECEIPT REGISTER
________________ Name of the ULB
General Accounting Procedures
Days total **
Closing total
* Specify the details of the substitute cheque received in case of dishonour of the cheque.
** This total shall be tallied with total as per the Collection Register for the day and also the amount as per the 'Summary of daily collections'
Receipt
Number
Sr.
No.
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-10
________________ Name of the ULB
STATEMENT ON STATUS OF CHEQUES RECEIVED
FROM ____________________ BY ________________________
Date: ______________
Sr. No.: ___________
Date of
Sr. No. of the Date of the
Deposited
Realisation/
Statement of Statement of Cheque/
Sr.
Amount into Bank Realised/
Return
Cheques
Cheques
Draft
Account Returned intimation
No.
(Rs.)
No.
Deposited
Deposited
No.
from the
received
received
bank
1
2
3
4
5
6
7
8
Prepared By* : _____________________ Received By*: ______________________
Checked By* : ______________________ Dated:
Dated:
* Record the name, designation and signature of the person.
5.37
________________ Name of the ULB
2
Opening total
1
3
Receipt No.
with book
no.
Name of the
payer
4
Reference
number **
Account
Head *
(Rs.)
6
Account
Head *
(Rs.)
7
Account
Head *
(Rs.)
8
Others
(Specify)*
(Rs.)
9
Entered By :*** ________________________________
Checked By :*** ________________________________
Account
Head*
(Rs.)
5
10
Total
(Rs.)
11
Remarks
Note: Each day' s collection should be recorded on a separate page of the Register and every page should be signed as provided.
# This total shall be tallied with total as per the Receipt Register for the day and also the amount as per the ‘Summary of daily collections’
5.38
* Specify the head of Income under which collection is made
** Specify the identification details in respect of the cheque, e.g., Bill No. in case of Property & Other Tax Collections, Tender No./Work Order No. in case of Earnest Money Deposit
or Security Deposit, etc.
*** Record the name, designation and signature of the person.
Days total #
Closing total
Prepared By*** : ___________________________________
Checked By*** : ___________________________________
Date:
Date of
Receipt
Sr.
No.
Particulars of Income
___________________ Department
Form GEN-11
General Accounting Procedures
COLLECTION REGISTER OF ______________________________ FOR THE YEAR 20__ to 20__
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-12
________________ Name of the ULB
SUMMARY OF DAILY COLLECTION OF
__________________________ COLLECTION OFFICE/COLLECTION CENTRE
Date: _______________
Sr. No. : ___________
1
2
Name of the
Name of the Revenue Head
Department
2
3
Revenue accounted for on Cash basis #
Tax Department
Property Transfer Charges
Octroi
Penalties and transit fees
3
Water Supply
Sr. No.
1
Amount (Rs.)
4
Amount (Rs.) Deposited With*
5
6
Water Connection Charges
Water Tanker Charges
Road Damage Charges
Revenue accounted for on Accrual basis
Water Supply
Water Tax, Water Benefit tax
Notice fees, Warrant fees
Grand Total
Amount in Words : Rupees ______________________________________________
4
Receipt No. issued by the Collection Office:
(in case collections are deposited with Collection Office)
Cash
_____________
Rs: _________
Cheque
_____________
Rs: _________
(For cheques realised)
Total
Rs. _________
Examined and entered
Prepared By** : ____________________
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Specify the Bank Name and Account Number in case of amount directly deposited with bank.
** Record the name, designation and signature of the person.
# For revenues accounted for on Cash basis, one consolidated figure for the total collections may be given instead of
giving a receipt-wise entry.
#
Examples of cash basis of accounting of the few of the revenue items are as follows:
a. Transfer charges relating to Transfer of Properties has to be recognised only on actual receipt basis
5.39
________________ Name of the ULB
Note: For each entry made; record the Name, Designation, and Signature of the person making the statement and the person checking the entry.
5.40
* In respect of the register maintained at the Accounts Department, mention the date of presentation of the bill by the concerned department and the name of the
department.
Date of
Amount Date of Amount
Balance
Reason
presentation
Name of
Amount Initials of
Disoutstanding for delay
Date of Voucher Sanct- Payment
Sr.
by the
Particulars of Bill Authorised
Remarks
Party/
ioned or issue of allowed at the end of
in
Sanction
No.
No. Supplier/
Department*
(Rs.)
Officer
(Rs.)
cheque
(Rs.) the year (Rs.) payment
Department
*
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Form GEN-13
General Accounting Procedures
REGISTER OF BILLS FOR PAYMENT FOR THE YEAR __________________
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-14
________________ Name of the ULB
PAYMENT ORDER
Bill No.:
Voucher No.:
Date:
Name and address of Payee:
Stock / Bills for Payment:
Reference to _________________Book / Register
Head of Account:
Measurement / Fixed Asset:
Sr. No.
Particular of work or articles
1
2
Total amount (in words)
Rs.
(1) Amount allotted
..
(2) Previous expenditure ..
Rs.
(3) Expenditure shown in the bill.. Rs.
Total of 2 and 3
..
Rs.
Balance available
..
Quality or
weight
3
Rate
Unit
4
5
Amount
(Rs.)
6
Certified that the rate and quantities shown in this bill are
correct and the materials, articles have been received in good
condition and have been entered in the appropriate supplies
register
on
numerical
account
at
page
...............................................
Rs.
Date . . . . . . . . . . . . . . . . . .
..
Signature of Officer
Receiving the articles
Submitted to the Designated Authority
Resolution No. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . Date . . . . .
for sanction
. . . . . . . . . . . . . . . . . . . . . . the`
sum of Rs. . . . . . . . . . . . . . . .(in words) . . . . . . . . . . . . . . . . . . . .
..............................
shown in the bill is
sanctioned.
I have examined the claim and found it correct in all respects.
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date . . . . . . . . . . . . . . . . . . . . . . . . .
...
Chief Accounts Officer
Commissioner
or the Authorised Officer
Pay Rupees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(in words) To
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
The Accountant for payment.
..........................................
. . . .. .
Date
Authorised Officer Date
Commissioner
or the
Authorised Officer
Received payment of Rs. . . . . . . . . . . .. . . .. . . ( Paid by cheque/draft No. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .
in words)
date . . . . . . . . . . . . . . . . . . . .
……………………………………………
and entered in the cash book on Page . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . ... in . . . . . . . . . . . . . . . .
full settlement of the claim.
Stamp
Chief Accounts Officer
Commissioner
or
the Authorised Officer
Payees Signature
5.41
CHEQUE ISSUE REGISTER
________________ Name of the ULB
Form GEN-15
General Accounting Procedures
* Specify the details of the stale cheques and the subsequent revalidation of the cheque or issue of the fresh cheques.
Note: For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
5.42
Bank
Signature
Signature Signature of Date of
Payment
Date of
Payment
Name of Nature Cheque/
of the
Amount Entered of the First the Second Issue of
Date of Remarks
Sr.
Order
the
Date Voucher
Recipient
the
of
Draft
By
Authorised Authorised Cheque/
Clearance
*
No.
Number
Cheque/ (Rs.)
No. &
Payee Payment No.
of Cheque/
Signatory Signatory
& Date
Draft
Draft
Date
Draft
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
National Municipal Accounts Manual
2
1
3
4
Particulars
Name of the
of the
person to whom
the advance is paid Advance
Bank Payment
Voucher
Number &
Date
5
Payment
Order
Number &
Date
6
7
Amount
(Rs.)
8
Date of
Repayment/
Adjustment
Voucher
Number of
Repayment/
Adjustment
9
REGISTER OF ADVANCES FOR THE YEAR 20 ____to 20____
________________ Name of the ULB
Balance
remaining
unadjusted at the
end of the year
10
11
Remarks
Form GEN-16
General Accounting Procedures
5.43
Note:
1. After each entry, leave few blank spaces depending on the repayment/adjustment schedule of the Advance
2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the
entry.
Date
Sr.
No.
National Municipal Accounts Manual
11
Note:
For each entry made; record the Name, Designation and Signature of the person making the statement and the person checking the entry.
10
(5-9)
12
5.44
Remarks
Form GEN-17
General Accounting Procedures
Initials of
Daily
the officer
Balance
holding the
(Rs.)
advance
Of _________________ for the year _________________________
REGISTER OF PERMANENT ADVANCE
________________ Name of the ULB
Initial disbursement/Recoupment of the Permanent
Expenditure
Advance
Sr. No. of
Amount
Sr.
Payment
Amount Nature of Date of To whom
Expenditures for
Date
Paid
No.
Order No.
which Payment
(Rs.) Expenditure
Bill
paid
(Rs.)
Order is submitted
1
2
3
4
5
6
7
8
9
National Municipal Accounts Manual
2
1
3
Name of
the Party
4
5
6
Nature/
Receipt Amount
Type/Kind
Number
(Rs.)
of Deposit
Refund or Adjustments
Adjusted against demand of
Date &
Voucher
Amount
Income* Year
No.
(Rs.)
7
8
9
10
DEPOSIT REGISTER FOR THE YEAR ENDED 20_to 20
In respect of ___________________________
________________ Name of the ULB
11
Amount
(Rs.)
12
Balance
Deposit
(Rs.)
13
5.45
Remarks**
Form GEN-18
General Accounting Procedures
Note: For each entry made; record the Name, Designation and Signature of the person making the statement and the person checking the entry.
* Specify the head of account of the income against which the deposit is adjusted
** Details of the Lapsed Deposits should be given in the "Remarks" column.
Date
Sr.
No.
National Municipal Accounts Manual
Year
(Others)
2
3
Year (-3)
4
Year (-2)
Arrears (Rs.)
5
Year (-1)
In respect of ___________________________
* Record the name, designation and signature of the person.
Dated:
Accountant/Authorised Officer
Checked By :* _______________________
Dated:
Examined and entered
7
8
5.46
Deposits Adjusted
Register No.
Sr. No. __________
Form GEN-19
General Accounting Procedures
Total (Rs.)
Prepared By :* _______________________
Current
Demand
(Rs.)
6
SUMMARY STATEMENT OF DEPOSITS ADJUSTED
DURING THE PERIOD _____________________
________________ Name of the ULB
Total
Amount in Words: Rupees _______________________________________________
1
Particulars (Revenue
Head-wise)
Date :
National Municipal Accounts Manual
2
1
Revenue*
(Rs.)
25
Revenue*
(Rs.)
24
Remission/Write-off
26
27
28
29
Notice Fee Warrant
Other
Penalty
(Rs.)
Fee (Rs.) Fees (Rs.)
(Rs.)
Others
(Specify)
(Rs.)
30
31
Total
(Rs.)
13
Total
(Rs.)
32
33
34
Revenue* Revenue Notice
(Rs.)
* (Rs.) Fee (Rs.)
12
Others
(Specify)
(Rs.)
Form GEN-20
35
Warrant
Fee (Rs.)
36
37
Other
Penalty
Fees (Rs.) (Rs.)
Balance
Others
(Specify)
(Rs.)
38
20
Penalty
(Rs.)
5.47
39
40
Total Remarks
(Rs.)
Collections
Receipt
Other
Number Revenue* Revenue* Notice
Warrant
Fees
(Rs.)
(Rs.)
Fee (Rs.) Fee (Rs.)
& Date of
(Rs.)
collection
14
15
16
17
18
19
___________ Ward or Circle
* Separate columns shall be maintained in respect of each revenue for which demand is raised in the same bill.
** Entries shall be separately made for each bill raised. Entry shall be made only for the current demand raised.
Notes:
1.
Please provide a reference of the Bill No. for Notice Fee, Warrant Fee, Other Fees and Penalty in Column No. 3.
2.
Please provide a reference of Form GEN-30 (Register of Refunds, Remissions and Write-offs for remission and write-offs in Column No. 23.
For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
3.
No. and
date of
order
23
Demand
Name of the
person from
Bill No.
whom
Particulars Revenue* Revenue* Notice Warrant Other
Penalty
income is
(Rs.)
(Rs.)
Fee (Rs.) Fee (Rs.) Fees (Rs.) (Rs.)
due
3
4
5
6
7
8
9
10
11
Arrears
Year (Others)
Year (-3)
Year (-2)
Year (-1)
Current Year
Bill **
_____________ Department
Collections
Others
Total
(Specify)
(Rs.)
(Rs.)
21
22
Date
Sr.
No.
________________ Name of the ULB
General Accounting Procedures
DEMAND REGISTER OF _____________ INCOME FOR THE YEAR 20__ to 20__
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-21
________________ Name of the ULB
BILL OF __________ INCOME
FOR THE PERIOD _____________________________
No. _________________________________________
Name _______________________________________
Address _____________________________________
Serial No. in Demand Register ____________________
The incomes shown below amounting to Rs. ______________ are due from you in respect of
__________________ and you are requested to pay the same within ___ days of presentation of this
bill.
Particulars*
Year
(Others)
Year
(-3)
1
2
3
Arrears (Rs.)
Year
Year
(-2)
(-1)
4
5
Current
Year's First
Bill
6
Current
Demand
(Rs.)
Total (Rs.)
7
8
Notice Fee
Warrant Fee
Other Fees
Penalty
Others, Specify ______________
Total Bill Raised
Less: Advance
Adjusted
Balance Payable
Amount in Words : Rupees _______________________________________________________________
If, within the said period of _________ days:
(a) the sum demanded in this bill is not paid; or
(b) no cause is shown to the satisfaction of the Commissioner, why the same should not be paid; or
(c) no appeal is preferred according to section ____ of the Act governing the ULB ; a notice of demand will be
served upon you for the payment of the said sum.
The ULB reserves the right to adjust any deposits/sum lying with it, if the amount of this bill is not paid
Prepared By:***
___________________
Office: _____________
Checked By:*** ___________________
Dated:
Commissioner/Authorised Officer
* Specify each & every income head separately for which bill is raised, if raised in the same bill.
** Amount to be inserted in words.
*** Record the name, designation and signature of the person.
5.48
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-22
________________ Name of the ULB
SUMMARY STATEMENT OF BILLS RAISED FOR THE PERIOD
_____________________in respect of ___________________________
Date:
Sr. No. _____________
Arrears (Rs.)
___________ Ward
Year
Year
(Others) (-3)
Year
(-2)
Year
(-1)
Current
Current
Demand
Year's
(Rs.)
First Bill
Particulars (Revenue
Head-wise)
1
2
3
Property & Other Taxes
Tax revenues (specify)
Notice Fee
Warrant Fee
Other Fees
Penalty
Other, Specify ________________
Total bill raised for income of ULB
Revenue collected in Advance Adjusted
Total
Amount in Words: Rupees _______________________________________________
Prepared By :* _______________________
Examined and entered
Checked By :* _______________________
Accountant/Authorised Officer
Dated:
Dated:
Total
(Rs.)
4
* Record the name, designation and signature of the person.
Note: This statement should be prepared separately for each ward and then consolidated.
5.49
1
Sr.
No.
________________ Name of the ULB
Other Fee
Note:
1. A reference of the Bill No. and fees charged should be made in Form GEN-23 (Demand Register).
2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
Warrant Fee
Penalty
Bill No./
Name and
Fresh
Date
Fee
Date
Fee
Fee
Docu- Date of
Date Address of Particulars Bill Notice
Date of
WarDate of
Particu- Date of
Amt.
of
Charged
of
Charged
Charged ment No. Docuthe payer
No.
No.
Service
rant No.
Service
lars
Charge
(Rs.)
Issue
(Rs.)
Issue
(Rs.)
(Rs.)
by which ment
levied
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Notice Fee
In respect of ________________________________________
5.50
20
Remarks
Form GEN-23
General Accounting Procedures
REGISTER OF NOTICE FEE, WARRANT FEE, OTHER FEES AND PENALTIES CHARGED
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-24
________________ Name of the ULB
SUMMARY STATEMENT OF NOTICE FEE, WARRANT FEE, OTHER FEES AND
PENALTIES CHARGED
FOR THE PERIOD ____________________
in respect of ________________ Income
Sr. No. _______________
Particulars
1
Amount (Rs.)
2
Notice Fee
Warrant Fee
Other Fees
Penalty
Total
Amount in Words : Rupees : ____________________________________________________
Prepared By* : ____________________
Examined and entered
Checked By* : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Record the name, designation and signature of the person
5.51
in respect of ___________________________
REGISTER OF REFUNDS, REMISSIONS & WRITE-OFF
________________ Name of the ULB
Form GEN-25
General Accounting Procedures
Note:
1. A reference of the folio no. of this Register for remissions and write-offs should be made in the Demand Register (Form GEN-23).
2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
Arrears
Year (Others)
Year (-3)
Year (-2)
Year (-1)
Current Year
5.52
Amount
Date of
Name and
Payment
Name and Particulars Year in
Order
Designation
&
Address of (Refunds/ respect of
Sr.
Under
Reve Reve Reve Reve Notice Warran Other
Other
Number
Date
of the
Penalty
Total Voucher Remarks
No.
the person/ Remission/
which
Section
-nue -nue -nue -nue Fee
t Fee
Fees
(Specify)
& Date
Sanctioning
(Rs.)
(Rs.) No. (in
party
Write-offs) granted
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
(Rs.)
(Rs.)
(Rs.)
Authority
case of
Refunds)
1
2
3
4
5
6
7
8
9
10
11 12
13
14
15
16
17
18
19
20
National Municipal Accounts Manual
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-26
________________ Name of the ULB
SUMMARY STATEMENT OF REFUNDS AND REMISSIONS
FOR THE PERIOD ____________________
in respect of _____________________________________________
____________________ Department
Particulars
1
Sr. No. ______
Refunds
Receivables of
Revenue
2
Remissions
Revenue received
Refunds
in advance
payable
3
4
Arrears
Year (Others)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
Amounts in Words : Rupees ___________________________________________________
Prepared By :*** __________________ Examined and entered
Checked By :*** __________________
Accountant/Authorised Officer
Dated:
Dated:
* Separate Statements shall be prepared for each income in respect of which demand is raised
** Including remission of interest charged on delayed payment
*** Record the name, designation and signature of the person
5.53
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-27
________________ Name of the ULB
SUMMARY STATEMENT OF WRITE-OFFS
FOR THE PERIOD ____________________
in respect of _____________________________________________
____________________ Department
Particulars
1
Sr. No. ______
Taxes
2
Write-offs
State Education
Employment
Cess
Guarantee Cess
3
4
Arrears
Year (Others)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
Amounts in Words : Rupees ___________________________________________________
Prepared By :*** __________________ Examined and entered
Checked By :*** __________________
Accountant/Authorised Officer
Dated:
Dated:
* Separate Statements shall be prepared for each income in respect of which demand is raised
** Including write-offs of interest charged on delayed payment
*** Record the name, designation and signature of the person
5.54
National Municipal Accounts Manual
General Accounting Procedures
Form GEN-28
________________ Name of the ULB
STATEMENT OF OUTSTANDING LIABILITY FOR EXPENSES
As on ____________________
Date : _________________________
Sr.
No.
Name of the
Supplier/
Contractor
Nature of
Payable
1
2
3
Department _______________
Bill
Code of Date of
Amount
Account
Bill
(Rs.)
4
5
6
In respect
of Grant/
Special
Fund
7
Remarks
8
Total
Amount (in words) : Rupees ____________________________________________________
Prepared By :* _______________________
Checked By :*
* Record the name, designation and signature of the person.
5.55
________________ Name o the ULB
2
Date
1
3
Number of
Forms
17
Date
4
No.
6
7
Voucher
Number
No. and
of Forms
Date
Return of books and forms
Books
Number
No. of
of Forms
No.
pages
18
19
20
5
No. of
pages
Books
Clerk
Initials of
the person
returning
the books
21
22
9
No. of
pages
8
No.
Issue
Books
23
Authorised
officer
Initials
24
Remarks
5.56
To whom issued
Signature of
person
Designation
receiving forms
or books
10
11
Note : For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
Books
Initials
Number
No. of
Authorised
of Forms No.
Clerk
pages
Officer
12
13
14
15
16
Balance
From whom
received
Receipt
Form GEN-29
General Accounting Procedures
DOCUMENT CONTROL REGISTER/STOCK ACCOUNT OF RECEIPT/CHEQUE BOOK
Kind of Document ____________________
National Municipal Accounts Manual
________________ Name of the ULB
REGISTER OF IMMOVABLE PROPERTY
2
Sr.
No.
1
Total for the year 20**-20**
3
Payment
Order No.
Total for the year 20**-20**
Date of
acquisition /
construction /
improvement
Cost of acquisition/
Ref. No. of
Cash Book /
construction /
Ref. No.
To whom paid
of
Journal Book /
Purpose of
improvement (Rs.)
/ Name of the
Expenditure
Ledger where Register
(please specify
contractor
of Land
entry is
incidental cost
recorded
separately)
4
5
6
7
8
Asset Identification No.:
Description of the Structure:
Location of the Structure:
Survey No. of the land on which Structure is located:
Dimensions of the Structure:
Area of land on which constructed (sq. mtr.):
Title documents available:
Mode of acquisition:
Warranty / Defects Liability Clause:
Security Deposit retained:
Date and amount of Security Deposit released:
National Municipal Accounts Manual
9
Source of
Funds
10
5.57
In case of Building,
specify how building
is being currently
used
Form GEN-30
General Accounting Procedures
12
11
7.
4.
5.
6.
2.
3.
Notes:
1.
13
Depreciation
provided (Rs.)
14
(11-13)
Closing
Written
Down Value
(Rs.)
15
Date of
Disposal
16
Receipt
Voucher No.
Name of the
person to
whom
Structure is
disposed
17
18
Sale
Value
(Rs.)
19
Initials of the
Authorised
Officer
20
Remarks
General Accounting Procedures
5.58
All the structures should be categorised into relevant asset class. Unique asset identification numbers are to be provided for all assets initially. Separate
Registers shall be maintained for each class of structures owned by the ULB.
Each structure shall be recorded on a separate page in the register.
At the end of the accounting year, the amount in column 14 in respect on the current year shall be the amount to be entered in column 11 of the next
year (next row).
In the year in which there is any improvement to the asset, add the cost of improvement to the current year' s opening written down value.
For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person checking the entry.
Totals should be taken at the end of each year in respect of total cost incurred on acquisition / construction / improvement (from the date of
acquisition/construction) for each of the Structure owned by the Municipal Body.
In Remarks column, indicate whether the Municipal Body has the ownership right to the property or have only utilisation rights.
Total for the year 20**-20**
Total for the year 20**-20**
Year of
Depreciation
Opening Written
Down Value (Rs.)
(equal to column
6 in first year)
National Municipal Accounts Manual
REGISTER OF MOVABLE PROPERTY
________________ Name of the ULB
Form GEN-31
General Accounting Procedures
Total for the year 20**-20**
Total for the year 20**-20**
5.59
Ref. No. of
Cost of
Particulars
Date of
Cash Book /
To
acquisition/
Asset
Source
Location Number
Purpose of
Sr.
Mode of
Payment Journal Book /
and
acquisition /
construction / whom
Identification
of
of the
or
Expenditure
No.
description of
construction/ acquisition Order No. Ledger where
improvement paid
No.
Funds
Property quantity
improvement
entry is
the Property
(Rs.)
recorded
1
2
3
4
5
6
7
8
9
10
11
12
13
National Municipal Accounts Manual
15
Total for the year 20**-20**
Total for the year 20**-20**
14
16
17
(14-16)
18
Opening
Written Down
Closing
Value of the
Depreciation Written
Year of
Date of
property (Rs.)
provided
Down
Depreciation
Disposal
(equal to
(Rs.)
Value
column 10 in
(Rs.)
first year)
National Municipal Accounts Manual
5.60
Amount
realised
Date and
To whom
if sold,
No. and Number
Security amount Initials of
Disposed
& date
date of
or
Balance Deposit
of
the
and
of credit
Remarks
Disposal quantity
quantity retained Security Authorised
in
Nature of
Order disposed
(Rs.)
Deposit
Officer
Disposal
treasury
released
or bank
(Rs.)
19
20
21
22
23
24
25
26
27
General Accounting Procedures
10.
11.
9.
8.
7.
6.
5.
4.
3.
2.
1.
Note:
General Accounting Procedures
5.61
All the movable assets should be categorised into relevant asset class with unique ID nos. Separate Registers shall be maintained for each
class of movable assets owned by the Municipal Body.
At the end of the accounting year, the amount in column 17 in respect on the current year shall be the amount to be entered in column 14
of the next year (next row).
In the year in which there is any improvement to the asset, add the cost of improvement to the total of current year' s opening written down
value and cost of improvement.
For each entry made; record the Name, Designation, and Signature of the person making the entry in the register and the person checking
the entry.
In case of Plant & Machinery, the details should be given department-wise, location-wise. Separate folios should be allotted for each of
the locations.
Plant & Machinery of Water Works and Drainage System and sub-station and transformers of the Public Lighting System shall be
recorded in this form.
Details of any improvements to the plant and machinery, which has resulted into increasing the capacity of the plant and machinery,
should be mentioned separately.
In case of Plant & Machinery, specify the date of commencement of operations and the number of shifts for which plant & machinery is
operated alongwith the description of the property in column no. 3.
In case of Vehicles, specify the vehicle no., registration no., engine no. and chasis no. alongwith the description of the vehicle, year of
manufacture and ' make' in column no. 3.
In Remarks column, indicate whether the Municipal Body has the ownership right to the property or have only utilisation rights.
Totals should be taken at the end of each year in respect of total cost incurred on acquisition / construction / improvement (from the date
of acquisition / construction) for each of the movable asset owned by the Municipal Body.
National Municipal Accounts Manual
Ref. No. of
Cash Book
/ Journal
Date of
Book /
Sr. acquisition / Payment
No.
improve Order No. Ledger
where
ment
entry is
recorded
1
2
3
4
Form GEN-32
General Accounting Procedures
5
6
7
8
9
10
11
12
13
14
15
5.62
16
Name of
Specify
Initials
Ref. No. of
Cost of
the
To Purpose of Source how land Date of Receipt
Value of the
person
Register of acquisition /
is being Dispo- Voucher
whom Expendiof
Realised Author Remarks
Immovable improve
to whom
paid
ture
Funds currently sal
No.
(Rs.)
ised
Property ment (Rs.)
land is
used
Officer
disposed
Sketch the boundaries of the Land:
REGISTER OF LAND
________________ Name of the ULB
Asset Identification No.:
Description of the Land:
Specify, if leasehold/freehold:
Location of the Land:
Survey No. of the Land:
Area (sq. mtr.):
Title documents available:
Mode of acquisition:
Specify whether any building, trees, etc., acquired with land:
Value paid for acquiring building, trees, etc:
Security Deposit retained:
Date and amount of Security Deposit released:
National Municipal Accounts Manual
5
6
7
8
9
10
11
12
13
14
15
16
Name of
Initials
Specify
the
Ref. No. of
Cost of
Value of the
To Purpose of Source how land Date of Receipt
person
Register of acquisition /
is being Dispo- Voucher
Realised Author Remarks
whom Expendiof
to whom
Immovable improve
(Rs.)
ised
paid
ture
Funds currently sal
No.
land is
Property ment (Rs.)
Officer
used
disposed
General Accounting Procedures
5.63
Notes:
1.
Details of all the land belonging to the municipal body, irrespective of the fact, whether it is vacant or any structure has been constructed on that, should
be included here. Unique asset ID Nos. to be allotted to each item.
2.
Each plot of land shall be recorded on a separate page in the register.
3.
Specify if land is industrial/agricultural/residential in ' Description of Land' .
4.
For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person checking the entry.
5.
Totals should be taken at the end of each year in respect of total cost incurred on acquisition / improvement (from the date of acquisition) for each of the
land owned / utilised by the Municipal Body.
Total for the year 20**-20**
Total for the year 20**-20**
Ref. No. of
Cash Book
/ Journal
Date of
Book /
Sr. acquisition / Payment
No.
improve Order No. Ledger
where
ment
entry is
recorded
1
2
3
4
National Municipal Accounts Manual
Function
code
Functions Total Income
Head
(Rs.)
Tax
Revenue
Code:
Assigned
Revenue
Revenue
Grants
5.64
…….
Form GEN - 33
General Accounting Procedures
Major Heads of Income
Rental
Fees & User
Sale & Hire
Income
from
Charges
Charges
Properties
FUNCTION –WISE INCOME SUBSIDIARY LEDGER
________________ Name of the ULB
Cumulative total at the beginning of the
month (Rs.)
Cumulative total at the end of the month
(Rs.)
* For each Major Revenue, columns for functions relevant to revenue will only be opened.
Sl.
No
Function:
National Municipal Accounts Manual
Function
code
Functions
Head
Total
Income
(Rs.)
Major Heads of Income
Operations & Interest &
Establishment Administrative
Maintenance
Finance
FUNCTION –WISE EXPENDITURE SUBSIDIARY LEDGER
________________ Name of the ULB
Total for the month (Rs.)
Cumulative total at the beginning of the
month (Rs.)
Cumulative total at the end of the month
(Rs.)
* For each major expenditure, columns for functions relevant to the expenditure will only be opened.
SI.
No.
Function:
National Municipal Accounts Manual
Programme
5.65
Revenue
…….
Grants
Form GEN - 34
General Accounting Procedures
2
3
4
5
6
7
8
9
10
5.66
11
Cost of
Ref. No. of
acquisition/
Cash Book /
Date of
To whom
construction /
Ref. No. of Balance
Amount acquisition / Payment Journal Book
paid / Name
improvement
Fixed Asset (Rs.)
(Rs.)
construction / Order No.
/ Ledger
of the
(Rs.) (please
Register *
improvement
contractor
where entry is
specify incidental
recorded
cost separately)
Utilised
ASSET REPLACEMENT REGISTER
________________ Name of the ULB
Form GEN-35
General Accounting Procedures
Notes:
1. Separate folio should be used for different Asset-class.
2. For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person
checking the entry.
* Reference shall be provided for Register of Immovable property, Register of Movable property, etc.
1
Date of
Sr. transfer to
Voucher
No.
Asset
No.
Replacemen
t Bank
Source
National Municipal Accounts Manual
REGISTER OF PUBLIC LIGHTING SYSTEM
________________ Name of the ULB
Form GEN-36
General Accounting Procedures
2
3
Total for the year 20**-20**
Total for the year 20**-20**
1
4
5
6
7
8
9
10
11
5.67
12
Ref. No. of
Cash Book /
Cost of
To
Payment
Date of
Number Meters of
Asset
Journal Book acquisition /
Purpose of Source of
Mode of
Sr.
whom
Order
acquisition /
Identification of lamp cables
/ Ledger improvement
Expenditure Funds
acquisition
No.
paid
improvement
No.
No.
posts
used
where entry
(Rs.)
is recorded
Area / Location / Survey No.:
Title documents available:
Mode of acquisition
Warranty / Defects Liability Clause:
Security Deposit retained:
Date and amount of Security Deposit released:
National Municipal Accounts Manual
14
15
16
(13-15)
17
18
19
20
21
22
Name of the
Value Initials of
person to
Date of
Receipt
Realis
the
whom
Remarks
Disposal Voucher No.
ed
Authorised
Property
(Rs.)
Officer
disposed
General Accounting Procedures
5.68
Note :
1.
Separate Registers shall be maintained in respect of each location.
2.
At the end of the accounting year, the amount in column 16 in respect on the current year shall be the amount to be entered in column 13
of the next year (next row).
3.
In the year in which there is any improvement to the asset, add the cost of improvement to the current year' s opening written down value.
4.
Cost incurred in acquisition and erection of lampposts and that in respect of cables shall be indicated separately.
5.
For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking
the entry.
6.
Totals should be taken at the end of each year in respect of total cost incurred on acquisition / improvement (from the date of acquisition)
for each of the location.
Total for the year 20**-20**
Total for the year 20**-20**
13
Closing
Written
Opening Written Down
Year of
Down
Depreciation
Value (Rs.) (equal to column Depreciat
Value of
provided (Rs.)
9 in first year)
ion
the
property
(Rs.)
National Municipal Accounts Manual
National Municipal Accounts Manual
Property & Other Taxes
CHAPTER 6
3523(57< 27+(5 7$;(6
INTRODUCTION
6.1
This chapter contains the recommended accounting system for Property and
Other Taxes related transactions.
6.2
Property Tax is the main source of income of most ULBs. Property tax is
levied on residential and commercial properties. Property tax is collected from the
citizens and organisations, which own the properties. In respect of property tax on
State or Central Government departments or undertakings, the property tax is received
from the State or Central Government, as the case may be and in respect of
Government undertakings, property tax is received directly from such undertakings or
from the State or Central Government.
6.3
Property Tax may comprise of the following:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
General Tax
Water Tax
Water Benefit Tax
Conservancy Tax or Sewerage Tax
Sewerage Benefit Tax
Education Cess
Development Cess
Street Tax
Fire Brigade Tax
Tax on Vehicles, Boats and Animals
Light Tax
6.1
National Municipal Accounts Manual
xii.
xiii.
xiv.
xv.
xvi.
Property & Other Taxes
Health Tax
Dog Tax
Tree Cess
Fire Cess
Any other taxes
6.4
In addition to the taxes referred above, following may be collected by the
Property Tax Department:
a. Property Transfer Charges
b. Notice Fee, Warrant Fee, Other Fees and interest and penalties charged for
delays and defaults made by the taxpayers
ACCOUNTING PRINCIPLES
6.5
The following Accounting Principles shall govern the recording, accounting
and treatment of transactions relating to Property and Other Taxes:
a. Revenue in respect of Property and Other Taxes shall be recognised in
the period in which they become due and demands are ascertainable.
b. In case of new or changes in assessments, tax can be accrued in the
month in which the demand is served;
c. Interest element and Penalties, if any, in demand shall be reckoned only
on collection;
d. Revenue in respect of Notice Fee, Warrant Fee, and Other Fees charged
shall be recognised when the bills for the same are raised;
e. Revenue in respect of Property Transfer Charges shall be recognised on
actual receipt;
f. Collections to be made on behalf of state Government i.e., State
Education Cess, Employment Guarantee Cess and Library Cess and
included in the Property tax demand shall be reckoned together with
Property tax demand and credited to a control account called “State
Government Levies in Taxes- Control Account.”
g. The liability towards dues to the State Government for collections on its
behalf shall be recognised as and when they are collected;
h. Revenue in respect of Rebate from State Government for collection made
on their behalf shall be recognised at the rates prescribed by the State
Government at the time of creating the liability to the State Government;
6.2
National Municipal Accounts Manual
i.
Property & Other Taxes
In respect of the demand outstanding beyond two (2) years, provision
shall be made in the Demand, based on the following provisioning
norms:
¾ Outstanding for more than 2 year but not exceeding 3 years: 25%
¾ Outstanding for more than 3 years but not exceeding 4 years: 50%
(additional 25%)
¾ Outstanding for more than 4 years but not exceeding 5 years: 75%
(additional 25%)
Outstanding for more than 5 years: 100% (additional 25%)
j. While making provision for receivables as stated above, the relevant
proportion ‘State Govt. Cesses/ levies in Property Taxes - Control account’
shall also be provided by debiting to a separate account.
k. Any additional provision for demand outstanding (net on overall basis)
required to be made during the year shall be recognised as expenditure of
the current year and any excess provision written back during the year shall
be recognised ‘as other income’ of the ULB for the current year.
l. Refunds, remissions of taxes for the current year shall be adjusted against
the income and if pertain to previous years then it shall be treated as prior
period item
m. Write-offs of taxes shall be adjusted against the provisions made and to
that extent recoverable and ‘State Government dues control’ account
balance gets reduced.
n. Any subsequent collection or recovery of ‘Receivables for Property Taxes
which were already written off” shall be recognised as a ‘Prior Period
Income’.
o. Demands raised with retrospective effect will be treated as prior period
income to the extent it pertains to earlier years.
p. Part-payments received in respect of Property and Other Tax levies shall
be adjusted as per applicable Act of the state.
q. Wherever self-assessment of taxes are prevalent, income can be accrued
based on records available with the ULB when it becomes due as per the
provisions of the respective Municipal Acts. Further changes arising out of
self-assessment will be treated as ‘Change in Demand’ and will be
accounted accordingly.
6.3
National Municipal Accounts Manual
Property & Other Taxes
ACCOUNTING RECORDS AND PROCEDURES
6.6
This section describes the records, registers, documents, forms, accounting
entries, etc., in respect of accounting for transactions related to Property & Other
Taxes For the purposes of accounting of Property & Other taxes there are certain
forms, registers, etc., which are specific to Property & Other Taxes, e.g., Summary
Statement of Year-wise & Head-wise Collection of Property & Other Taxes (Form
POT-3). These (Form POT-1 to POT-5) are annexed to this chapter
TAX BILLS
6.7
A Summary Statement of Bills Raised shall be prepared ward-wise and taxhead-wise, in Form P&OT-1 on monthly basis within 7 days from the end of the
previous month. This forms the base for accounting and the following entry shall be
passed.
a.
Recording of demand raised on existing assessments:
Code of
Account
Accounting Entry
(Illustrative Heads)
Debit
Credit
Amount
Amount
Books to
Dr./
(Rs.)
(Rs.)
be entered
Cr.
Illustrative Illustrative
into
figures
figures
Journal
7,70,000
Dr.
Book,
2,00,000 Ledger
Cr.
Receivable for Property
Taxes (Year…)
To Property Tax –
110-01-(a)
Residential
3,00,000
Cr.
To Property Tax –
110-01-(a)
Commercial
1,00,000
Cr.
To Water Tax
110-02-(a)
50,000
Cr.
To Sewerage Tax
110-03-(a)
50,000
Cr.
To Others*
110-(b)
70,000
Cr.
To State Govt. Cesses/
431-91-(a)
levies in Property Taxes
– Control account **
* Specify the heads of each income for which demand is raised.
** Specify the name of the cess
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Account of “Receivables for Property Tax” Account
and Revenue accounts shall be carried out as indicated in Chapter 5 – General
Accounting Procedures. The postings in the Ledger Accounts shall be similarly carried
out in respect of all other accounting entries described subsequently in this chapter.
Whenever, the cash or the bank account is involved, there will be no entry in the Journal
Book.
431-10-(a)
1. It is a normal practice for the ULB to include the arrears of the tax dues
while issuing the fresh demand. Entries in respect of the arrears would
have already been recorded in the earlier years. The above entry to be
passed is only in respect of the current year demand.
6.4
National Municipal Accounts Manual
Property & Other Taxes
2. Cesses/Levies collected on behalf of State Government together with
property tax demand shall be reckoned and credited to control account,
“State Govt. Cesses/ levies in Property Taxes - Control account”
above. However the liability to the State Government arises only upon
collection. The treatment of this is discussed subsequently.
b.
Recording of demand raised in case of new assessments:
1. In case of new assessments, demand may be raised for a period earlier
to the financial year in which the assessment is made. In such case the
demand should be split according to the period to which it relates and
income related to earlier period be accounted as Prior period Income as
provided below.
Debit
Credit
Amount
Amount Books to be
Code of
Accounting Entry
Dr./
(Rs.)
(Rs.)
entered
Account
(Illustrative Heads) Cr.
Illustrative Illustrative
into
figures
figures
Journal
4,400
431-10-(a) Receivables for Property Dr.
Book,
Taxes (Year…)
2,000 Ledger
Cr.
To Property Tax –
110-01-(a)
Residential
2,000
Cr.
To Prior period
280-10-(a)
Income – Taxes*
400
Cr.
To State Govt.
431-91-(a)
Cesses/ levies in
Property Taxes –
Control account **
* Specify the heads of each income for which demand is raised.
** Specify the name of the cess
(a) Insert Detailed Head Codes of Account as applicable
Note: The demand raised is for 2 assessment periods for Rs.2,200 each of which Rs.
200 is towards state cess.
c.
Recording of Change in assessments:
Any demand raised earlier may undergo changes by court order / by the
order of Commissioner / by any other competent authority. This may
either lead to increase or decrease in demand amount. A summary
statement of all changes in Demand Raised shall be prepared, in Form
P&OT- 2 on monthly basis within 7 days from the end of the previous
month. This forms the base for accounting and the following entry
shall be passed.
i. In case the revised demand is more than what was recorded earlier,
then, the entry to be passed is same as accounting of existing
demand, for the difference amount.
6.5
National Municipal Accounts Manual
Property & Other Taxes
ii. In case the revised demand is less than what was recorded earlier,
the entry passed earlier has to be reversed for the difference. The
reversal shall be reflected in the current year revenue incase the
revision in demand relates to the current year and in any other case
the reversal shall be accounted as prior period expenses. The
remission / refund amount shall be adjusted against Receivables if
the demand is outstanding. The accounting entry for the same is as
follows.
Debit
Credit
Amount
Amount
Code of
Accounting Entry
Dr./
Books to be
(Rs.)
(Rs.)
Account
(Illustrative Heads)
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
500
110-90-(a) Tax Remission & Refund - Dr.
Ledger
Property & Other Taxes
500
Dr.
280-50-(a) Prior period expenses –
Refund of Taxes*
100
431-91-(a) State Govt. Cesses/ levies Dr.
in Property Taxes –
Control Account **
1,100
Cr.
To Receivables for
431-10-(a)
Property Taxes
(Year…)
* Specify the heads of each income for which demand is raised.
** Specify the name of the cess
(a) Insert Detailed Head Codes of Account as applicable
iii. If the demand is already paid, it will either be taken as credit and
adjusted against future payments or will be paid to the tax payee as
refund depending on the governing principle of the ULB. The
amount of refunds/remissions shall be credited to the account
‘Advance Collection of Revenues’ with account code 350-41-(a)
(instead of 431-10-(a) as indicated in the above entry) when it is to
be adjusted against future payments. If it is to be refunded then it
shall be credited to the Refunds payable account with account code
350-40-(a).
SELF ASSESSMENT
6.8
Self-Assessment of taxes is a method of bringing better compliance and
improved collection. In such cases, income shall be accrued on the due date (as per
provisions of respective Municipal Acts) based on the information available with the
ULB in the assessment records. On due date, a Summary Statement of Bills Raised
shall be prepared by the Tax Department as provided earlier and income shall be
accrued as in the normal case.
6.6
National Municipal Accounts Manual
Property & Other Taxes
6.9
However on submission of self- assessment forms, upon scrutiny and approval
as per the rules and regulations laid down for this purpose, it shall be recorded in the
books of accounts. The effect of this could either lead to increase or decrease in
demand. The accounting procedure to be adopted will be same as change in
assessment.
COLLECTION OF TAXES
6.10
The procedure for accounting of collections is described below:
a.
Recording of tax collections. Based on Summary of Daily Collection
(Form GEN-12) received from the various Collecting Offices / Centers,
the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,10,000
Cash Book,
5,10,000 Ledger
Dr.
450-21-(a) Bank Account*
Cr.
431-80-(a) To Receivables
Control Accounts –
Property Taxes
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
b.
The Summary of daily collection (Form GEN-12) does not provide the
details in respect of the year-wise head-wise collections made in respect
of Property and Other Taxes. Hence, the total amount collected should
be credited to “Receivables Control Accounts - Property Taxes”
Account. The collection made shall be segregated into year wise, head
wise collection on a monthly basis.
c.
Recording of break-up of collections: A Summary Statement of Yearwise/ Head-wise Collection of Property & Other Taxes in Form P&OT3 on a monthly basis shall be prepared and sent to the Accounts
Department to record the details of collection. Interest on delayed
payment may be charged to the taxpayer in accordance with relevant
provisions. Interest shall be recognised as income only on collection.
d.
To record the break-up of collections into year-wise recovery, tax
received in advance and to record the interest income the Accounts
Department shall pass the following entry:
6.7
National Municipal Accounts Manual
Property & Other Taxes
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
431-80-(a) Receivables Control Accounts Dr.
5,10,000
Journal Book,
-Property Taxes
Ledger
431-10-(a)
To Receivables for Property Cr.
4,40,000
Taxes (Year…)
431-10-(a)
To Receivables for
Cr.
55,000
Property Taxes (Year…)
To Advance Collection of
11,000
350-41-(a)
Cr.
Revenues –Property
Taxes*
To Other Interests –
1,000
171-80-(a)
Cr.
Receivables
To Penalties and Fines
3,000
140-20-(a)
Cr.
* Adjustment of tax collected in advance is discussed separately under section ‘Adjustment of
Tax Received in Advance’ below.
(a) Insert Detailed Head Codes of Account as applicable
RECOGNITION OF LIABILITY AND PAYMENT OF SPECIFIC STATE
GOVERNMENT DUES
6.11 Recording of liability to State Government and rebate income earned: The
specific head-wise liability in respect of the amount collected on behalf of the State
Government shall be recognised on collection based on the Summary Statement of
Year-wise Head-wise Collection of Property & Other Taxes (Form P&OT 3). Further
the ULB may be entitled to a rebate for the collections made on behalf of the State
Government. It shall be accounted as income on creation of specific head wise
liability. To record the liability and income the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
45,000
Journal Book,
Ledger
Dr.
State Govt. Cesses/ levies in
Property Taxes – Control
account *
Cr.
To Government Dues
350-30-(a)
Payable *
Cr.
To Service/
140-70-(a)
Administrative Charges
–Rebate from State
Government
* Specify the name of the cess
(a) Insert Detailed Head Codes of Account as applicable
431-91-(a)
40,500
4,500
6.8
National Municipal Accounts Manual
Property & Other Taxes
6.12 Recording of payment made to State Government: A Payment Order (Form
GEN-14) is made for remittance of payment of collections made on behalf of the State
Government. Based on Payment Order the following entry shall be made to record the
payment order.
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
40,500
350-30-(a) Government Dues Payable
Dr.
Cess*
450-21-(a)
To Bank Account **
Cr.
* Specify the name of the cess
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Cash Book,
Ledger
40,500
DISCOUNT ALLOWED
6.13 The ULB may provide for discount on property & other taxes for payment
within a certain period, if allowed by its rules. Discount allowed shall be reckoned
along with the details of collection and be recorded from the Summary Statement of
Year-wise Head-wise Collection of Property & Other Taxes. To record the discount
allowed, the following accounting entry to be passed.
Code of
Account
240-80-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
100
Journal Book,
Ledger
Cr.
100
Other Finance Expenses
Discount on early payment
431-10-(a)
To Receivables for
Property Taxes (Year )
(a) Insert Detailed Head Codes of Account as applicable
NOTICE FEE, WARRANT FEE, OTHER FEES AND PENALTIES
6.14 Notices of demand and warrants shall be issued and penalties may be charged
as per the relevant provisions.
6.15 Recording of demand raised: A Summary Statement of Notice Fee, Warrant
Fee and Other Fees in Form P&OT-1 shall be prepared on a monthly basis. The
following entry shall be passed to record the demand raised. :
6.9
National Municipal Accounts Manual
Property & Other Taxes
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
600
Journal Book,
431-10-(a) Receivables for Property Taxes
Ledger
(Year )
To Other Fees Notice Fees Cr.
300
140-40-(a)
To Other Fees - Warrant Fee Cr.
300
140-40-(a)
(a) Insert Detailed Head Codes of Account as applicable
REFUNDS AND REMISSIONS
6.16 All refunds and remissions arising under eligible circumstances as provided in
the Act and regulations governing the revenues shall be duly recorded in the Demand
registers maintained and the details of the same shall also be communicated to the
Accounts Department. It is to be noted that refund/ remission on account of the
reasons referred above generally granted for the tax amounts only and the portion of
any other levy/cess in the original demand is not refunded/remitted. The reversal shall
be reflected in the current year revenue incase the revision in demand relates to the
current year and in any other case the reversal shall be accounted as prior period
expenses.
6.17 Recording of refunds/remissions payable: A Summary Statement of Refunds
and Remissions in Form P&OT- 4 on a monthly basis shall be prepared.
Refunds/Remissions pertaining to prior period shall be identified separately from the
current period based on which the Accounts Department shall pass the following
entry:
Code of
Account
110-90-(a)
280-50-(a)
350-40-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal
300
Dr.
Tax Remission and Refund
Book, Ledger
Property Taxes
200
Prior period expenses Refund Dr.
of Taxes Property Taxes
500
To Refunds Payable-Taxes* Cr.
*Refunds/Remissions arising on account of change in provisions shall be either passed for
‘Payment’ (Refund payable account) or credited to the account ‘Advance collection of
Revenues’ (under the account code 350-41-(a)) in accordance with the principles of the ULB.
(a) Insert Detailed Head Codes of Account as applicable
6.10
National Municipal Accounts Manual
Property & Other Taxes
6.18 Recording of payment refunds/remissions granted: The Accounts Department
shall prepare a Payment Order (Form GEN-14) in respect of the refunds and
communicate the details of refunds made to the Tax Department for updating the
Register of Demand and other registers. To record payment of refunds/remissions
granted, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
500
Credit
Amount
(Rs.)
Illustrative
figures
350-40-(a) Refunds Payable Taxes
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Minor Head Codes of Account as applicable
500
Books to be
entered into
Cash Book,
Ledger
PAYMENT TO THE URBAN LOCAL BODY FOR PROPERTIES OCCUPIED
BY THE STATE GOVERNMENT IN LIEU OF GENERAL TAX AND
EDUCATION CESS:
6.19 Recording of demand raised: In case there are separate provisions under the
law for charging property tax on properties occupied by State Government, a
Summary Statement of Bills Raised (Form P&OT- 1) in this regard be prepared in the
same way as in case of other properties based on which following accounting entry
will be passed
Code of
Account
Accounting Entry
431-10-(a)
Debit
Amount
Dr./
(Rs.)
Cr.
Illustrative
figures
Dr.
1,000
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Journal Book,
Ledger
Receivables for Property
Taxes (Year )
Cr.
110-01-(a)
To Property Taxes Service Charges
(a) Insert Detailed Head Codes of Account as applicable
1,000
6.20 The procedure for collection and accounting of sums received from the State
Government in this regard shall be the same as discussed for Property and Other
Taxes collected other wise.
PROVISION FOR UNREALISED
RECEIVABLES AND WRITE-OFFS
PROPERTY
AND
OTHER
TAX
6.21 Recording of provision for unrealised tax. The demand outstanding beyond
two (2) shall be provided for as per provisioning norms given below:
a.
Outstanding for more than 2 year but not exceeding 3 years: 25%
6.11
National Municipal Accounts Manual
6.22
Property & Other Taxes
b.
Outstanding for more than 3 years but not exceeding 4 years: 50%
(additional 25%)
c.
Outstanding for more than 4 years but not exceeding 5 years: 75%
(additional 25%)
d.
Outstanding for more than 5 years: 100% (additional 25%)
For example, provision for the Period ended 31 March, 2004 is as under:
a.
25% of outstanding Receivables of Property & Other Taxes for the year
ended March 31, 2002
b.
50% of outstanding Receivables of Property & Other Taxes for the year
ended March 31, 2001
c.
75% of outstanding Receivables of Property & Other Taxes for the year
ended March 31, 2000
d.
100% of outstanding Receivables of Property & Other Taxes for the year
ended March 31, 1999 and before
While making provision for receivables as stated above, the relevant proportion State
Govt. Cesses/ levies in Property Taxes - Control account shall also be provided by
debiting to a separate account.
6.23 The amount required being provided as per provisioning norms stated above,
shall be compared with the balance lying in the Provision for outstanding Tax-PTD. If
the amount to be provided is more than the balance, then additional provision shall be
made for the difference amount. If the amount to be provided is less than the balance,
it reflects the amounts provided for has been collected, and the provision made
towards that can be written back. This process has to be carried over at every
period/yearend.
6.24 Computation of provision or write back of as at the period end date is
explained with the example given below in Table 6.1 & 6.2.
Table 6.1
Computation of Additional Provision at the Period end
Sl. No.
a.
b.
c.
(a-c)
Particulars
Balance in the Provision for Outstanding Property Taxes
account as at 31 March 2003
Cumulative provision required to be made as at 31 March
2004
Additional provision to be made as at 31 March 2004
Taxes
(Rs.)
10,000
Stat e Govt.
Dues (Rs)
1,000
11,500
1,150
1,500
150
6.12
National Municipal Accounts Manual
Property & Other Taxes
Table 6.2
Excess of provisions at the Period end
Sl.
No.
a.
b.
c.
(b-a)
Particulars
Balance in the Provision for Outstanding Property Taxes
account as at 31 March 2003
Cumulative provision required to be made as at 31 March
2004
Excess provision to be written back as at 31 March 2004
Taxes
(Rs.)
10,000
Stat e Govt.
Dues (Rs)
1,000
9,500
950
(500)
(50)
6.25 For any additional provision to be made for the period as computed in Table
6.1, the following entry shall be passed by the Accounts Department:
Code of
Account
270-10-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,500
Journal
Book, Ledger
Dr.
150
Provisions for Doubtful
Receivables Property Taxes
432-91-(a) State Govt Cesses/ levies in
Property Taxes Provision
account
To Provision for Outstanding Cr.
432-10-(a)
Property Taxes
(a) Insert Detailed Head Codes of Account as applicable
6.26
1,650
The effect of the above entry will be as follows:
a. Provision for Doubtful Receivables- Property Taxes shall be shown as
an expense under the schedule Provision & write offs.
b. State Govt. Dues provided will be a adjusted against State Govt
Cesses/ levies in Property Taxes - Control account
c. Provision for Outstanding Tax will be shown as a deduction from
Receivables for Property Taxes in the Balance Sheet as at March 31,
2004.
6.27 For any excess provision arrived for the period as computed in Table 6.2, the
following entry shall be passed by the Accounts Department:
6.13
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Property & Other Taxes
Dr./
Cr.
432-10-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
550
Journal Book,
Ledger
500
Dr.
Provision for Outstanding
Property Taxes
180-60-(a)
To Excess Provision
Cr.
Written Back Property
Taxes
To State Govt. Cess/
432-91-(a)
Cr.
Levies in Property Taxes
Provision account
(a) Insert Detailed Head Codes of Account as applicable
50
6.28 Recording of write-offs: If for any reason, it is decided by the ULB to write-off
property and other taxes, which was earlier treated as an income, the write off shall be
adjusted against the provision made and the following entry will be passed based on
summary statement of write off in form P & OT 5.
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
1,100
Ledger
100
Dr.
Provision for Outstanding
Property Taxes
Dr.
431-91-(a) State Govt. Cesses/ levies in
Property Taxes Control
account *
Cr.
To Receivables for
431-10-(a)
Property Taxes (Year )
To State Govt. Cess/ levies Cr.
432-91-(a)
in Property Taxes
Provision account
* Specify the name of the cess
(a) Insert Detailed Head Codes of account as applicable
432-10-(a)
1,100
100
6.29 Recording of subsequent collection/ recovery of Receivables of Property and
Other Taxes written off : In case of a Receivable of Property & Other taxes written
off already were recovered/collected during the year, the accounts department shall
pass the following entry:
6.14
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Property & Other Taxes
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
1,100
431-80-(a) Receivable Control Account Dr.
–Property Taxes
Cr.
280-30-(a)
To Recovery of
Revenues written off –
Property Taxes
To Government Dues
Cr.
350-30-(a)
Payable – Cess
(a) Insert Minor Head Codes of Account as applicable
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Journal Book,
Ledger
1,000
100
6.30 Recording of payment made to state government dues has already been
explained in para 6.12.
TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS
FROM SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT
6.31 The arrears of Property and Other Taxes shall be carried forward year-wise,
i.e., in “Receivables for Property Taxes (Year…)” account up to five years. On
completion of the fifth year, the amount outstanding in the specific year-wise
receivable account shall be transferred to a general arrears account, i.e., “Receivables
for Property Taxes (Others)” Account. For example, the tax receivable in respect of
the demand raised during the accounting year 1998-99 shall be carried forward in
“Receivables for Property Taxes (1999)” Account up to the year ending March 31,
2004. On March 31, 2004, the balance outstanding in this account shall be transferred
to “Receivables for Property Taxes (Others)” Account.
6.32 Recording of transfer of arrears to general account. To record this transfer, the
Accounts Department shall pass the following entries:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Journal Book,
Ledger
10,000
Dr.
431-10-(a) Receivables for Property
Taxes (Others)
Cr.
431-10-(a)
To Receivables for
Property Taxes (Year…)
(a) Insert Minor Head Codes of Account as applicable
6.15
National Municipal Accounts Manual
Property & Other Taxes
ADJUSTMENT OF TAX RECEIVED IN ADVANCE
6.33 The Tax Department shall intimate the Accounts Department of the advance
adjusted against the subsequent demand raised through the Summary Statement of
Bills Raised (Form P&OT-1).
a. Recording of subsequent demand raised. To record the demand raised for
tax, the Accounts Department shall pass the same entry as in the case of
existing assessments. The accounting entry to be passed is explained in
Para 6.7 a.
b. Recording of adjustment of advance. To record the adjustment of tax
received in advance, the Accounts Department shall pass the following
entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal
Book, Ledger
1,000
Dr.
Advance Collection of
Revenues Property Taxes
Cr.
431-10-(a)
To Receivables for
Property Taxes (Year )
(a) Insert Minor Head Codes of Account as applicable
350-41-(a)
RECOVERY OF PROPERTY AND OTHER TAXES THROUGH LEGAL
PROCEEDINGS
Cost of Recovery
6.34 Recording of cost of recovery: Expenditure incurred in respect of attachment
and sale of the properties of the defaulter shall be recorded as cost incurred on
recovery, and the accounting entry is as follows.
Code of
Account
220-51-(a)
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
300
Legal Expenses Cost of
Dr.
Recovery Tax Revenues
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Cash Book,
Ledger
300
6.16
National Municipal Accounts Manual
Property & Other Taxes
Collections on Sale of Attached Property
6.35 Recording of collection: On the basis of the Summary of Daily Collection
(Form GEN-12) received from the various Collection Offices and Collection Centres,
the following entry shall be passed:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
5,00,000
Dr.
Bank Account*
Cr.
To Sale Proceeds
Attached Properties
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
450-21-(a)
350-90-(a)
Credit
Amount
(Rs.)
Illustrative
figures
5,00,000
Books to be
entered into
Cash Book,
Ledger
6.36 The Tax Department shall send the details of the adjustment of the amount
collected to the Accounts Department. Based on the intimation received from the Tax
Department, to record the adjustment of the amount collected on sale of attached
property, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
5,00,000
Ledger
1,00,000
Dr.
Sale Proceeds - Attached
Properties
To Receivable Control Cr.
431-80-(a)
Accounts Property
Taxes
Cr.
To Government Dues
350-30-(a)
Payable Court
Attachments
350-40-(a)
To Refunds Payable Cr.
Attached Properties
(a) Insert Detailed Head Codes of Account as applicable
350-90-(a)
50,000
3,50,000
6.37 The Tax Department shall prepare the Payment Orders (Form GEN-14) in
respect of the amounts payable subsequent to the sale of the attached property and
send it to the Accounts Department for payment. On making the payment, the
Accounts Department shall pass the following entry:
6.17
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Property & Other Taxes
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Cash Book,
50,000
Dr.
Ledger
3,50,000
Dr.
Government Dues Payable
Court Attachments
Refunds Payable 350-40-(a)
Attached Properties
Cr.
To Bank Account*
450-21-(a)
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
350-30-(a)
4,00,000
6.38 The amount to be credited to the Receivable Control Accounts - Property
Taxes shall include the amount receivable in respect of tax as well as the expenditure
incurred in respect of the recovery from the taxpayer.
6.39 The entries for adjustment of collection against year-wise receivable and
recognition of specific liabilities for collection of State Government dues shall be
recorded on the basis of the Summary Statement of Year-wise Head-wise Collection
of Property & Other Taxes which have been discussed above.
6.40 To record the receipt of cost of recovery, the Accounts Department shall pass
the following entry:
Code of
Account
Accounting Entry
431-80-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
20,000
Journal Book,
Ledger
Cr.
20,000
Receivables Control
Accounts- Property Taxes
220-51-(a)
To Legal Expenses- Cost
of Recovery of Tax
Revenues
(a) Insert Detailed Head Codes of Account as applicable
PROPERTY TRANSFER CHARGES
6.41 The ULB may charge fees for transfer of property. The revenue for the
Property Transfer Charges levied shall be recognised on collection.
6.42 Recording of collection. On the basis of the Summary of Daily Collection
(Form GEN-12) received from the various Collection Offices and Collection Centres,
the Accounts Department shall pass the following entry:
6.18
National Municipal Accounts Manual
Code of
Account
Accounting Entry
450-21-(a)
431-80-(a)
Property & Other Taxes
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
300
Cash Book,
Cr.
300 Ledger
Bank Account*
To Receivables Control
Accounts- Property Taxes
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
6.43 Recording of specific income in respect of Property Transfer Charges: Based
on the Summary Statement of Year-wise Head-wise Collection of Property & Other
Taxes (Form P&OT-3) received from the Tax Department, the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Dr./ Amount (Rs.)
Books to be
(Rs.)
Cr.
Illustrative
entered into
Illustrative
figures
figures
Dr.
300
Journal
Book,
Cr.
300 Ledger
431-80-(a) Receivables Control
Accounts- Property Taxes
140-40-(a) To Other Fees Property
Transfer Charges
(a) Insert Detailed Head Codes of Account as applicable
INTERNAL CONTROLS
6.44 The following internal controls shall be observed by the ULB in respect of
Property and Other Taxes related transactions:
a. The Tax Department shall ensure those Bills / Demands are raised on a
quarterly/half yearly basis for Property and Other Taxes.
b. The Head of the Accounts Department shall ensure that taxes are
accrued in the month in which it is due and journalisation of all the
demands/bills raised for property & other taxes before accounting for
the collection.
c. The Head of the Accounts Department and the Head of the Tax
Department shall reconcile the balance at the beginning of the
accounting year in respect of the year-wise Property and Other Tax
Receivables (as appearing in the Balance Sheet of the previous year)
with the year-wise total of the arrears recorded in the Demand Register.
6.19
National Municipal Accounts Manual
Property & Other Taxes
d. A quarterly reconciliation shall be carried out by the Head of the
Accounts Department and the Head of the Tax Department in respect
of the amount collected and the year-wise amount outstanding between
the balances in the Ledger Accounts maintained at the Accounts
Department and the Demand Register maintained at the Tax
Department.
e. The officers designated by the ULB for operating the Designated
Property Tax Bank Account(s) shall co-ordinate with the banks on a
daily basis and ascertain the status of the cheques/drafts deposited by
them.
f. The Tax Department shall ensure that the Receipt / Summary of daily
collection prepared, provides reference to the Tax Collection Register.
g. Write-off of Property Tax receivables should be based on specific
procedures and authorisation levels. The State Government/ ULB to lay
down the level of seniority of officers and the amounts, which they
would be competent to write-off.
h. The Chief Executive Officer/Head of the ULB shall specify such
appropriate calendar of returns /reports for monitoring.
6.45 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN THE FINANCIAL STATEMENTS
6.46 The various heads of account used for the accounting of Property and Other
Taxes related transactions shall be reflected in the Financial Statements or in the
Schedules attached to the Financial Statements of the ULB. All these Financial
Statements and schedules should be affixed with signature and seal of designated
authorities.
6.47 The provision against the outstanding property tax receivable is to be disclosed
under the major head Accumulated Provisions as a separate line item in the Balance
Sheet below the Sundry Debtors .
6.48 The Schedule of the Income and Expenditure Statement in respect of Property
and Other Taxes is presented below.
6.20
National Municipal Accounts Manual
Property & Other Taxes
Schedule I-1: Schedule of Tax Revenue
Code No
Particulars
1
110-01-(a)
110-01-(a)
110-01-(a)
110-02-(a)
2
Tax on Residential Properties
Tax on Commercial Properties
Service Charges in lieu of Property taxes
Water Taxes
*
Sub-total
Less
110-90-(a) Tax Remission and Refunds
Sub-total
Total Income of Property Taxes to be shown as a part of Tax
revenue Schedule
* Insert all taxes raised along with Property Taxes
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-1 (a): Refund/Remission of revenues
Code No
Particulars
1
110-90-(a)
2
Property Taxes
Total Income of Property Taxes to be shown as a part of
Refund and Remissions of Taxes Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I – 4: Schedule of Fees and User Charges
Code No
Particulars
1
2
140-20-(a) Penalties and Fines
140-40-(a) Mutation Fees
140-40-(a) Property Transfer Charges
140-40-(a) Notice Fees
140-40-(a) Warrant Fees
. .
. .
Total Income of Property Taxes to be shown as a part of
Fees and User Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I – 8: Schedule of Interest Earned
Code No
1
171-80-(a)
Particulars
2
Other Interests- Interest on Receivables
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Income of Property Taxes to be shown as a part of
Interest Earned Schedule
(a) Insert Detailed Head Codes of Account as applicable
6.21
National Municipal Accounts Manual
Schedule I
Code No
Property & Other Taxes
9: Schedule of Other Incomes
Particulars
1
180-60-(a)
2
Excess provision written-back
Property Taxes
Total Income of Property Taxes to be shown as
a part of Other Income Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-11: Administrative Expenses
Code No.
Particulars
1
220-51-(a)
2
Legal Expenses - Cost of recoveries of tax
revenues (net of amount received from State
government/assessee for the cost of recovery)
Total Expense of Property Taxes to be shown as a part of
Administrative Expenses Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-13: Interest and Finance Charges Head-wise
Code No.
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
1
2
3
4
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
240-80-(a)
Other Finance Expenses
Discount on
Early/Prompt Payment
Total Expense of Property Taxes to be shown as a part of
Interest and Finance Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I
Code No
16: Schedule of Provisions and Write off
Particulars
1
2
270-10-(a)
Provision for Doubtful receivables Property Taxes
Total Expense of Property Taxes to be shown as a part of
Provision and Write off Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-18: Prior Period Items
Code No.
1
Particulars
2
Income (a)
280-10-(a)
Taxes
280-30-(a)
Recovery of Revenues written off
Expense (b)
280-50-(a)
Refund of Taxes
Total [a-b] of Property Taxes to be shown as a part of
Prior Period Items Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
6.22
National Municipal Accounts Manual
Property & Other Taxes
6.49 The Balance Sheet Abstracts in respect of Property and Other Taxes are
presented below:
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No
1
350-30-(a)
350-40-(a)
350-41-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Government Dues Payable
Refunds Payable
Advance Collection of Revenues
Total
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
Particulars
1
431-10-(a)
Current Year Amount (Rs.)
Provision for
Gross
Net
Out standing
Amount
Amount
Receivables
3
4
5=3 4
2
Receivables of Property Taxes
Less than 5 years *
More than 5 years*
Sub total
Less:
State
Government
431-91-(a)
Cesses/Levies in Taxes
Control Accounts
Net Receivables of Property Taxes
* Break up for provision for outstanding revenues are given in Column 4
(a) Insert Detailed Head Codes of Account as applicable
Previous
Year
Amount
(Rs.)
6
Schedule B-17: Schedule of Cash and Bank Balances
Code No.
1
450-10-(a)
450-21-(a)
Particulars
2
Cash
Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
6.23
1
General Tax
Water Tax
Water Benefit Tax
Conservancy/Sewerage Tax
Sewerage Benefit Tax
Education Cess
Street Tax
State Education Cess
Employment Guarantee Cess
Library Cess
Fire Brigade Tax
Dog Tax
Tree Cess
Amount Due in lieu of General
Tax
Particulars
National Municipal Accounts Manual
10
6.24
Outstanding
Amount
(Rs.)
(9-10)
Sr. No. ________________
______________ Ward
Current Current Total Advance
Year
Adjusted
Demand
Year ( 5) Year ( 4) Year (-3) Year (-2) Year (-1) year’s
(Rs.)
(Others)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
First Bill
(Rs.)
(Rs.)
2
3
4
5
6
7
8
9
Arrears
FOR THE PERIOD _____________________
in respect of Property & Other Taxes
SUMMARY STATEMENT OF BILLS RAISED
________________ (NAME OF THE ULB)
Form P&OT-1
Property Tax
Current Current Total Advance
Year
Adjusted
Demand
Year ( 5) Year ( 4) Year (-3) Year (-2) Year (-1) year’s
(Rs.)
(Others)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
First Bill
(Rs.)
(Rs.)
2
3
4
5
6
7
8
9
Arrears
Note: 1. This statement should be prepared separately for each Ward and then consolidated.
* Specify the other taxes that are levied by the ULB.
^ Specify the other cess that are levied ad collected on behalf of state government
** Record the name, designation and signature of the person.
Prepared By :** ______________
Checked By :** _______________________
Dated:
Examined and entered
Accountant/Authorised Officer
Dated:
6.25
Outstanding
Amount
(Rs.)
(9-10)
Property Tax
1
10
Other Taxes*
Notice Fee
Warrant Fee
Other Fees
Total bill raised for income of
the ULB
Demand raised for taxes
collected on behalf of State
Government
Library Cess
State Education Cess
Employment Guarantee Cess
Any other Cess^
Total
Amount in Words : Rupees _____________________________________________________________________________________________
Particulars
National Municipal Accounts Manual
1
General Tax
Water Tax
Water Benefit Tax
Conservancy/Sewerage
Tax
Sewerage Benefit Tax
Education Cess
Street Tax
State Education Cess
Employment Guarantee
Cess
Library Cess
Fire Brigade Tax
Dog Tax
Tree Cess
Amount Due in lieu of
Education Cess
Particulars
Year
Year
(Others) ( 5)
(Rs.)
(Rs.)
2
Year
( 4)
(Rs.)
3
Year
(-3)
(Rs.)
4
Year
(-2)
(Rs.)
5
6
7
8
Year
Year
Year
Current
(Others) ( 5)
(-1)
year' s
(Rs.)
(Rs.)
(Rs.)
9
Year
( 4)
(Rs.)
10
Year
(-3)
(Rs.)
11
Year
(-2)
(Rs.)
Proposed Demand
12
13
14
15
Year
Year
Year
Current
(Others) ( 5)
(-1)
year' s
(Rs.)
(Rs.)
(Rs.)
in respect of Property & Other Taxes
FOR THE PERIOD _____________________
________________ (NAME OF THE ULB)
SUMMARY STATEMENT OF DEMAND ADJUSTMENTS RAISED
Existing Demand
National Municipal Accounts Manual
16
Year
( 4)
(Rs.)
17
Year
(-3)
(Rs.)
18
Year
(-2)
(Rs.)
Change in Demand
19
6.26
20
Year
Current
(-1)
year' s
(Rs.)
Sr. No. ________________
______________ Ward
Form P&OT-2
Property Tax
21
Impact
+ / (-)
Year
Year
(Others) ( 5)
(Rs.)
(Rs.)
2
Year
( 4)
(Rs.)
3
Year
(-3)
(Rs.)
4
Year
(-2)
(Rs.)
5
6
7
8
Year
Year
Year
Current
(Others) ( 5)
(-1)
year' s
(Rs.)
(Rs.)
(Rs.)
9
Year
( 4)
(Rs.)
10
Year
(-3)
(Rs.)
11
Year
(-2)
(Rs.)
Proposed Demand
12
13
Note:
1. This statement should be prepared separately for each Ward and then consolidated.
* Specify the other taxes that are levied by the ULB.
^ Specify the other cess that are levied and collected on behalf of state government
** Record the name, designation and signature of the person
Prepared By :** ______________
Checked By :** _______________________
Dated:
Examined and entered
Accountant/Authorised Officer
Dated:
14
15
Year
Year
Year
Current
(Others) ( 5)
(-1)
year' s
(Rs.)
(Rs.)
(Rs.)
Library Cess
State Education Cess
Employment Guarantee
Cess
Any other Cess^
Amount in Words : Rupees _____________________________________________________________________________________________
1
Other Taxes*
Notice Fee
Warrant Fee
Other Fees
Total bill raised for
income of the ULB
Demand raised for taxes
collected on behalf of
State Government
Particulars
Existing Demand
National Municipal Accounts Manual
16
Year
( 4)
(Rs.)
17
Year
(-3)
(Rs.)
18
Year
(-2)
(Rs.)
Change in Demand
19
6.27
20
Year
Current
(-1)
year' s
(Rs.)
Property Tax
21
Impact
+ / (-)
________________ (NAME OF THE ULB)
1
Collection in respect of incomes for which demand is
raised
General Tax
Water Tax
Water Benefit Tax
Conservancy/Sewerage Tax
Sewerage Benefit Tax
Education Cess
Street Tax
Fire Brigade Tax
Dog Tax
Tree Cess
Amount Due in lieu of General Tax
Amount Due in lieu of Education Cess
Other Taxes*
Notice Fee
Particulars
_________________ Collection Centre
Year
(Others)
(Rs.)
2
3
4
5
6
Form P&OT-3
Property Tax
7
Current
Year' s
Demand
(Rs.)
8
9
6.28
Total (Rs.)
Sr. No. ___________________
Deposited with _____________________
Year (-5) Year (-4) Year (-3) Year (-2) Year (-1)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
Arrears
FOR THE PERIOD _____________________
SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF PROPERTY & OTHER TAXES
National Municipal Accounts Manual
1
Warrant Fee
Other Fees
Penalties
Others, Specify ________________
Sub-Total
Collections of taxes on behalf of State Government
Library Cess
State Education Cess
Employment Guarantee Cess
Any other cess ^
Sub-Total
Collection in respect of incomes accounted on actual
receipt basis
Property Transfer Charges
Others, Specify _______________
Sub-Total
Collection in respect of incomes written off
Property Tax
Government Cess
Sub-total
Receipt of Cost of Recovery
Tax collected in Advance
Others, Specify _______________
Total Collections
Particulars
National Municipal Accounts Manual
Year
(Others)
(Rs.)
2
3
4
5
6
7
Year (-5) Year (-4) Year (-3) Year (-2) Year (-1)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
Arrears
Current
Year' s
Demand
(Rs.)
8
9
6.29
Total (Rs.)
Property Tax
Property Tax
Examined and entered
Accountant/Authorised Officer
Dated:
* Specify the other taxes that are levied by the ULB
^ Specify the other cess that are levied ad collected on behalf of state government
** Record the name, designation and signature of the person
Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.
Prepared By :** ______________
Checked By :** _______________________
Dated:
6.30
Arrears
Current
Year' s
Year
Total (Rs.)
Particulars
Year (-5) Year (-4) Year (-3) Year (-2) Year (-1)
Demand
(Others)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
1
2
3
4
5
6
7
8
9
Amount in Words : Rupees _____________________________________________________________________________________________
National Municipal Accounts Manual
Advances #
Rs.
Sr. No _______
Refunds/Remissions*
Receivables #
Refunds Payable #
Rs.
Rs.
in respect of Property & Other Taxes
FOR THE PERIOD ____________________
SUMMARY STATEMENT OF REFUNDS /REMISSIONS
________________ NAME OF THE ULB
Dated:
Dated:
Total
Rs.
Form P&OT-4
Property Tax
6.31
* Include total amount of all income heads of account in respect of Property and Other Taxes.
** Record the name, designation, and signature of the person.
# The details of whether refunds/remissions are treated as refund payable or adjustment of receivables or Revenues received in advance shall be entered in this form in
order to account for the refunds/remissions Accordingly.
Examined and entered
Accountant/Authorised Officer
Prepared By :** ______________
Checked By :** ______________
1
Arrears
Year (Others)
Year (-5)
Year (-4)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
Amount in Words : Rupees______________________________________________________
Particulars
National Municipal Accounts Manual
Taxes*
* Include total amount of all income heads of account in respect of Property and Other Taxes.
** Record the name, designation, and signature of the person.
Dated:
Prepared By :** ______________
Checked By :** _______________________
Dated:
Examined and entered
Accountant/Authorised Officer
5
Property Tax
6.32
Form P&OT-5
Total
Sr. No. __________
Write-offs (Rs.)*
State Education
Employment Guarantee
Cess
Cess
3
4
in respect of Property & Other Taxes
FOR THE PERIOD ____________________
SUMMARY STATEMENT OF WRITE OFF
________________ NAME OF THE ULB
1
2
Arrears
Year (Others)
Year (-5)
Year (-4)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
Amount in Words : Rupees______________________________________________________
Particulars
National Municipal Accounts Manual
National Municipal Accounts Manual
Octroi
CHAPTER 7
2&752,
INTRODUCTION
7.1
This chapter contains the recommended accounting system for Octroi related
transactions.
7.2
For determining the liability for Octroi, a valuation/assessment of the goods is carried
out at the point of entry. Octroi may be collected in one of the following ways:
a. On valuation/assessment of the goods at the point of entry into the city and spot
collection of the entire amount payable. This could include nakas located at the
roads leading to entry into the city or at major transportation hubs like railway
stations, airport, port, etc. or a post office.
b. On provisional valuation/assessment of the goods at the point of entry into the city
and spot collection of a substantial amount payable, subject to confirmation and
final valuation/assessment at the Octroi Head Office, at which time, a further
amount may be payable or a refund granted to the importer. In such cases, it is
possible that a deposit may be collected towards the octroi payable on final
assessment.
c. On valuation/assessment of the goods at the point of entry into the city, but
collected periodically. This facility is extended to regular importers whose goods
are allowed to pass without spot payment of Octroi. Such importers are allowed
Account Current facilities.
7.1
National Municipal Accounts Manual
7.3
Octroi
In addition to octroi, following may be collected by the Octroi Department:
a. Transit Fees from vehicles plying across the municipal area and not intending to
bring any goods for consumption, use or sale within the city. (A Transit Deposit
may be collected from such importers on entry and refunded on exit).
b. Penalties in the event of octroi under recovery or evasion
c. Octroi on Consumption of Electricity
d. Miscellaneous receipts, e.g., escort fees, toll, etc.
7.4
Most of the transactions of the Octroi Department relate to tax revenues and fees &
user charges. The Octroi Department incurs the usual administrative expenses such as
establishment expenses, rent, printing & stationery, office expenses, etc. In addition , it may
incur the following expenses:
a. Performance Bonus payable to octroi staff;
b. Compilation fees paid to the railway and postal authorities for compiling
information with respect to the goods imported via railways and post, respectively;
c. Security charges to the Police Department or Security Agencies payable for
service rendered in connection with provision of security at the octroi nakas.
ACCOUNTING PRINCIPLES
7.5
The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to octroi and other income:
a. Revenue in respect of octroi payable on spot assessment for non-current account
importers shall be recognised on actual receipt.
b. Revenue in respect of penalties, transit fees, etc., shall be recognised on actual
receipt.
c. In case of account current facility holders, revenue in respect of octroi shall be
recognised on a valuation/assessment being done at the time of the entry of the
goods within the municipal limits.
d. In cases where a provisional assessment is made, revenue shall be recognised in
respect of the entire amount received provisionally or by way of deposit. At the
time of final assessment, the additional amount recovered, if any, shall be
recognised as revenue when recovered.
e. Refunds shall be recognised as expenditure as and when the amounts are
determined.
f. Transit Deposits and/or any other deposits collected, including Security Deposit
7.2
National Municipal Accounts Manual
Octroi
collected from account current importers, shall be recognised as a liability when
received and such liability shall be settled on its refund.
g. Transit Deposit and/or any other deposit received shall be forfeited and recognised
as income when the right for claiming refund of deposit has expired.
h. Octroi on Consumption of electricity shall be recognised as income on actual
receipt during the year. However, at year-end alone, it shall be accrued if sanction
order (or proceedings) is passed and the amount is ascertained
ACCOUNTING RECORDS AND PROCEDURES
7.6
This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Octroi. For the purposes of
accounting of Octroi there are certain forms, registers, etc., which are specific to Octroi, e.g.,
Summary Statement of Collection/Refund of Octroi (Form OC-1). These (Form OC-1 to OC4) are annexed to this chapter
Octroi
7.7
The procedure, in brief, followed for levy and collection of octroi is described in
subsequent paras under two broad heads:
a. Final assessment cases at Octroi Nakas, and
b. Provisional assessment cases at Octroi Nakas.
Final Assessment cases at Octroi Nakas
7.8
In cases where a final assessment of octroi is made at the octroi naka, the steps in
accounting shall be as follows:
a. Goods imported to the ULB limits for consumption, use or sale shall be assessed
for octroi at the various octroi nakas. The amount assessed shall be collected on
the spot and a receipt shall be issued.
b. The procedure to be followed for remittance and/or deposit of octroi collections
made at the nakas and at the octroi office shall be the same as provided in the
Chapter 5 on General Accounting Procedures.
c. Recording of Octroi received. On receipt of Summary of daily collection, the
Accounts Department shall pass the following entry:
7.3
National Municipal Accounts Manual
Code of
Account
Octroi
Accounting Entry
Dr./
Cr.
450-21-(a)
110-51-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger
Bank Account*
Dr.
To Octroi & Toll
Cr.
– Octroi
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable.
Provisional Assessment cases at the Octroi nakas
a. In cases where a provisional assessment of octroi is made on receipt of details of
collection received in Form OC – 2, the Accounts Departments shall pass the
following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
450-21-(a)
110-51-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger
Bank Account*
Dr.
To Octroi & Toll Cr.
Provisional Octroi
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
b. On assessment of Octroi, deficit in octroi is recovered and the excess deposit /
provisional octroi collected is refunded to the importer
c. For settlement of provisional octroi cases, the following entries are passed:
i. For recovery of additional octroi in case the provisional octroi collected is less
than the final octroi assessed:
Code of
Account
450-21-(a)
110-51-(a)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger
Bank Account*
Dr.
To Octroi & Toll –
Cr.
Provisional Octroi
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
ii. For refund of provisional octroi in case the amount collected on provisional
assessment is more than the final octroi assessed:
7.4
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Octroi
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
800
Cash Book,
Ledger
800
Dr.
Octroi & Toll - Provisional
Octroi
To Bank Account*
Cr.
450-21-(a)
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
110-51-(a)
iii. For transfer of Provisional Octroi to Octroi Income on final assessment:
The amount adjusted against collection on provisional assessment, the
following entry will be made:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
110-51-(a) Octroi & Toll – Provisional Octroi Dr.
10,200
Journal Book,
To Octroi & Toll
Ledger
110-51-(a)
– Octroi
Cr.
10,200
(a) Insert Detailed Head Codes of Account as applicable.
Note: The net octroi collected finally should be Rs. 10,200 calculated as Rs.10,000 (provisionally
collected) plus 1,000 (additional octroi assessed) minus Rs.800 (excess provisional octroi
refunded)
Account Current facility
7.9
As per the rules of the relevant State Act, Account Current facility may be provided to
importers. The brief procedure in respect of Account Current facility shall be as under:
a. Recording of receipt of Security Deposit from Account Current importer. The
Octroi Department may collect a Security Deposit for extending the Account
Current facility. The details of the Security Deposit shall be recorded in a
‘summary statement of collection/refund’ in Form OC – 1. The Accounts
Department shall pass the following entry:
Code of
Account
450-21-(a)
340-20-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Cash Book, Ledger
Cr.
1,00,000 and Deposit register
Bank Account*
To Deposit Revenues –
Octroi Account Current
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
b. Recording of octroi due from the Account Current importers. The assessment
details of goods under current facility shall be forwarded to the Accounts
Department in Form no OC -3 and the following entry shall be passed:
7.5
National Municipal Accounts Manual
Code of
Account
Octroi
Accounting Entry
431-19-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Ledger
Receivables for Other Taxes Octroi from Account Current
Importers
To Octroi & Toll Account Cr.
110-51-(a)
Current Importers
(a) Insert Detailed Head Codes of Account as applicable
10,000
c. Recording of Octroi received. The details of the consolidated recoveries from
Account Current importers shall be entered in Form OC 3 which shall be sent to
the Accounts Department, on the basis of which following entry shall be passed:
Code of
Account
Accounting Entry
450-21-(a)
431-19-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
9,000
Cash Book,
Cr.
9,000 Ledger
Bank Account*
To Receivables for Other
Taxes Octroi from Account
Current Importers
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
d. Recording of adjustment of Security Deposit against Octroi due. In case of nonreceipt of the whole or part of the amount outstanding within a specified period,
the Security Deposit received from the importer may be adjusted against the
amount outstanding. The details of the amount forfeited shall be sent to the
Accounts Department in Form OC 3, based on which the Accounts Department
shall pass the following entry:
Code of
Account
340-20-(a)
431-19-(a)
Accounting Entry
Deposit Revenues Octroi
Account Current
To Receivables for Other
Taxes Octroi from Account
Current Importers
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Journal Book,
Ledger and
Cr.
1,000 Deposit
register
(a) Insert Detailed Head Codes of Account as applicable
e. Recording of refund of Octroi Security Deposit. On payment of the security
deposit, the Accounts Department shall pass the following entry:
7.6
National Municipal Accounts Manual
Code of
Account
Octroi
Accounting Entry
340-20-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
9,000
Cash Book,
Ledger
Cr.
9,000
Deposit Revenues Octroi
Account Current
To Bank Account*
450-21-(a)
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
Transit Fee and Transit Deposit
7.10 ULBs may collect transit fee and refundable transit deposit for goods imported in the
City for immediate exportation out of the City.
Transit Fee
7.11 The accounting for transit fee shall be carried out based on Statement of collection in
Form OC-1 and is as follows:
Code of
Account
450-21-(a)
140-12-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
500
Octroi Cash
Cr.
500 Book, Ledger
Bank Account*
To Fees for Grant of Permit
Transit Fee
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
Transit Deposit
7.12
The accounting for transit deposit shall be carried out as follows:
a. The details of the transit deposit collected by the octroi nakas shall be recorded in
the Deposit Register maintained.
b. At the time of exit, the exit octroi naka shall refund the transit deposit (as per the
Rules prescribed by the ULB) on presentation of the Transit Pass and obtain a
confirmation of receipt from the party.
c. The exit naka shall enter the details of transit deposit refunded
d. A Consolidated statement for Transit Collection and Refunds in Form no OC 4
be forwarded to the Accounts Department, and the accounting entry passed is as
follows.
7.7
National Municipal Accounts Manual
Octroi
i. To record transit deposit collected:
Code of
Account
Accounting Entry
450-21-(a)
340-20-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Cash Book,
Cr.
1,000 Ledger
Bank Account*
To Deposit Revenues
Transit Deposit
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
ii. To record transit deposit refunded:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
340-20-(a)
Deposit Revenues Transit Dr.
1,000
Cash Book,
Deposit
Ledger
450-10-(a)
To Cash
Cr.
1,000
(a) Insert Detailed Head Codes of Account as applicable.
7.13 Recording of Transit Deposit lapsed. The right to claim refund of transit deposit shall
lapse if not claimed within the period stipulated, subject to any Rules framed by the ULB.
The lapsed transit deposit shall be recognised as an income of the ULB. The accounting entry
to be passed is as follows.
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
340-20-(a)
Deposit Revenues - Transit Dr.
100
Journal Book,
Deposit
Ledger
180-11-(a)
To Lapsed Deposit
Cr.
100
(a) Insert Detailed Head Codes of Account as applicable.
Penalties
7.14 The Octroi Department may levy penalties in cases of under recovery or evasion of
octroi assessed and paid by the importer.
7.15 Recording of receipt of octroi penalty. Based on Statement of Collection (Form OC
1) received, the Accounts Department shall pass the following entry:
7.8
National Municipal Accounts Manual
Code of
Account
Octroi
Accounting Entry
450-21-(a)
140-20-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrativ
figures
e figures
Dr.
200
Octroi Cash
Cr.
200 Book, Ledger
Bank Account*
To Penalties & Fines
Octroi
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
7.16 Recording of miscellaneous income. For miscellaneous income other than those
specified above, e.g., in respect of toll, escort fees, fees for temporary import of goods for job
work, labour charges, processing charges, etc., the Accounts Department shall pass the
following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450-21-(a)
Bank Account*
Dr.
1,500
Octroi Cash
140-40-(a)
To Other Fees
Cr.
1,500 Book, Ledger
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
Other Security Deposits received for various facilities offered
7.17 Recording of Other Security Deposit. The ULB may accept Security Deposit for
various facilities offered to the importers such as for cheque facility, temporary import of
goods, etc. The Accounts Department shall pass the following entry:
Code of
Account
450-21-(a)
340-20-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Octroi Cash Book,
Cr.
10,000 Ledger, Deposit
Register
Bank Account*
To Deposit Revenues
Octroi Security
Deposit
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
7.18 Refund of Security Deposit. The Security Deposit shall be refunded on an application
being made by the party as per the rules and on payment, the Accounts Department shall pass
the following entry:
7.9
National Municipal Accounts Manual
Octroi
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
10,000
Octroi Cash Book,
340-20-(a)
Deposit Revenues -Octroi Dr.
Ledger, Deposit
Security Deposit
To Bank Account*
Cr.
10,000 Register
450-21-(a)
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
ACCOUNTING FOR REFUND/REMISSION OF OCTROI
7.19 Recording of refund/remission of Octroi. Octroi collected as per the requirements of
the Rules may be refunded/remission under certain circumstances. The accounting entry for
the refund/remission shall be as follows:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
1,000
Octroi Cash Book,
110-90-(a)
Tax Remission & Refunds Dr.
Ledger
Octroi
Cr.
1,000
350-40-(a)
To Refunds PayableOctroi**
(a) Insert Detailed Head Codes of Account as applicable
**Refunds/Remissions arising on account of applicable rules shall be either passed for
‘Payment’ (under the account code 350-40-(a)) or credited to the account ‘Advance Collection of
Revenues - Octroi’ (under the account code 350-41-(a)) in accordance with the principles of the
ULB.
Recording of payment of refunds/remissions granted.
7.20 The Accounts Department shall prepare a Payment Order (Form GEN-14) in respect
of the refunds/remissions and communicate the details of refunds/remissions payments to the
Octroi Department for updating the Register of Demand and other registers. To record
refunds/remissions payment, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-40-(a) Refunds Payable - Octroi
Dr.
1,000
Cash Book, Ledger,
450-21-(a)
To Bank Account*
Cr.
1,000
Register of Demand
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
ACCOUNTING FOR OCTROI ON CONSUMPTION OF ELECTRICITY
7.21 The ULB may receive share of Octroi levied by the State on consumption of
electricity.
7.10
National Municipal Accounts Manual
Octroi
7.22 Recording of receipt: Octroi on Consumption of Electricity is an income of uncertain
nature and the amount cannot be ascertained with reasonable accuracy as it depends on
consumption of electricity. Thus, it should be accounted on receipt of proceeds from the State
Government. A receipt is issued in Form GEN-8 for amount received. Based on receipt the
Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Octroi Cash
450-21-(a) Bank Account*
10,000 Book, Ledger
120-20-(a)
To Compensation in lieu of Cr.
Taxes /Duties - Octroi in
lieu of Electricity
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
ACCOUNTING FOR OCTROI RELATING TO PRIOR PERIOD
7.23 There may be instances wherein the assessment/ascertainment of the Octroi amount
relating of the prior years/periods is completed in the current year. The accounting entry to be
followed for this transaction is as follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Journal Book,
Ledger
15,000
Dr.
431-19-(a) Receivables for Other Taxes
Octroi
Cr.
280-10-(a)
To Prior period Income
Taxes (Octroi & Toll)
(a) Insert Detailed Head Codes of Account as applicable.
YEAR END ACCRUAL AND REVERSAL
7.24 Year end accrual of income: During the year the income on octroi on consumption of
electricity is accounted on collection. However, at year-end alone, it shall be accrued if
sanction order (or proceedings) is passed and the amount is ascertained.
7.25 Recording of Accrued Income. For recording the Accrued Income, the Accounts
Department shall pass the following entry:
7.11
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Octroi
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Ledger
Cr.
10,000
431-50-(a) Receivables from
Government Octroi
120-20-(a) To Compensation in
lieu of Taxes/ Duties
Octroi in lieu of
Electricity
(a) Insert Detailed Head Codes of Account as applicable.
7.26 Receipt of Accrued Income: In the next accounting period, upon receipt of accrued
income, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
Ledger
10,000
431-50-(a) Receivables from
Dr.
Government Octroi
450-21-(a)
To Bank Account*
Cr.
* Specify Name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
ACCOUNTING FOR EXPENDITURE
7.27 The procedure to be followed with respect to the payment of expenditures peculiar to
the Octroi Department shall be as follows:
a. Recording of Performance Bonus paid. Performance Bonus payable shall be
arrived at on the basis of Rules, if any, prescribed in this behalf. On payment, the
Accounts Department shall pass the following entry:
Credit
Debit
Amount
Code of
Dr./ Amount (Rs.)
Accounting Entry
(Rs.)
Account
Cr. Illustrative
Illustrative
figures
figures
210-10-(a) Octroi Performance Bonus
Dr.
500
450-21-(a)
To Bank Account *
Cr.
500
* Specify Name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
Books to be
entered into
Cash Book,
Ledger
b. Compilation Fees may be paid to the Railway and Postal departments. The bills
received for services rendered shall be recorded on Payment, for which the
Accounts Department shall pass the following entry:
7.12
National Municipal Accounts Manual
Credit
Debit
Amount
Code of
Dr./ Amount (Rs.)
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
Illustrative
figures
figures
220-80(a) Other Operating Expenses
Dr.
400
450-21-(a)
To Bank Account*
Cr.
400
* Specify name of the Bank and account number
(a) Insert detailed Head Codes of Account as applicable
Octroi
Books to be
entered into
Cash Book,
Ledger
c. The ULB may pay security Charges to the Police Department or Security Agency.
On receipt of Payment Order, the Accounts Department shall pass the following
entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
220-11-(a) Office Maintenance
Dr.
400
Cash Book,
Security Expenses
Ledger
450-21-(a)
To Bank Account*
Cr.
400
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
INTERNAL CONTROLS
The following internal controls shall be observed by the ULBs:
7.28
The Head of the Accounts Department shall exercise the following internal controls:
a. The amount remitted by the Octroi Department shall be daily reconciled with the
statement of collections and the Summary of daily collection furnished by it;
b. The balance in the Octroi Deposit ledger account shall be reconciled quarterly
with the Register of Deposits maintained at the Octroi Department;
c. For Octroi outstanding in respect of account current holders, accounts shall be
reconciled with the amount of octroi remaining unrealised as per the records
maintained by the Octroi Department on a monthly basis;
d. The balance in the account current of the importer who has been extended the
account current facility shall be reconciled on a monthly basis with the Statement
of Accounts received from the importers;
e. At the time of refund of octroi or any deposit, it shall be ensured no amount is due
from the concerned applicant;
f. The Octroi Department shall reconcile on a weekly basis the transit deposit
collected and refunded by the octroi nakas;
g. Chief Executive officer/Head of the departments of all ULBs may specify
appropriate reports to be put up for monitoring.
7.13
National Municipal Accounts Manual
Octroi
7.29 All Reconciliation Statements shall be certified by the Head of the Accounts
Department
PRESENTATION IN THE FINANCIAL STATEMENTS
7.30 The various heads of accounts used for the accounting of Octroi related transactions
shall be reflected in the Financial Statements or the Schedules attached to the Financial
Statements of the ULB. All such Financial Statements and schedules should be affixed with
signature and seal of designated authorities.
7.31 The Schedule of the Income and Expenditure Statement in respect of Octroi Income is
presented below.
Schedule I-1: Schedule of Tax Revenues
Code No.
1
110-51-(a)
110-51-(a)
110-51-(a)
110-90-(a)
Particulars
2
Octroi & Toll – Octroi Income
Octroi & Toll – Provisional Octroi
Octroi & Toll – Account Current Importers
…….. ……. ……..
Less
Tax Remission and Refunds
Sub-total
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Income of Octroi & Toll to be shown as a part of Tax
revenue Schedule
* Insert the other Heads of Account and the corresponding Codes of Account for other charges levied by the
ULB.
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-1 (a): Schedule of Remission and Refund
Code No.
Particulars
1
110-90-(a)
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Octroi & toll
Total Income of Octroi to be shown as a part of Refund and
Remissions of Taxes Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-2: Schedule of Income from Assigned Revenues & Compensations
Code No.
1
120-20-(a)
Particulars
2
Compensation in lieu of Taxes/Duties – Octroi in
Lieu of Electricity
Total Income of Octroi to be shown as a part of Assigned
Revenues & Compensation Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
7.14
National Municipal Accounts Manual
Octroi
Schedule I-4: Schedule of Income from Fees & User Charges
Code No.
Particulars
1
2
140-12-(a)
Fees for Grant of Permit Transit Fees
140-12-(a)
Fees for Grant of Permit Escort Fees
140-20-(a)
Other Fees
140-20-(a)
Penalties and Fines
Total Income of Octroi to be shown as a part of Fees & User
Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I – 9: Schedule of Other Incomes
Code No.
1
180-11-(a)
Particulars
2
Lapsed Deposit
Total Income of Octroi to be shown as a part of Other Income
Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-18: Schedule of Prior Period Items
Code No.
Particulars
1
2
Income (A)
280-10-(a)
Taxes
Expense (B)
280-50-(a)
Refund of Taxes
Total [A-B] of Octroi to be shown as a part of Prior Period
Items Schedule
(a) Insert Detailed Head Codes of Account as applicable
7.32
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
The Balance Sheet Abstracts in respect of the Octroi Income are presented below.
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
1
431-10-(a)
Particulars
2
Receivables of Other Taxes
Octroi & Toll
Less than 3 years *
More than 3 years*
Sub total
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year Amount (Rs.)
Provision
Gross
for Out
Net
Amount
standing
Amount
Receivables
5=3–4
3
4
Previous
Year
Amount
(Rs.)
6
7.15
National Municipal Accounts Manual
Octroi
Schedule B-7: Schedule of Deposits Received
Amount in Rs.
Code No.
Nature of Deposit
Opening
balance as the
beginning of
the year
1
340-20-(a)
2
From Revenues - Octroi Security
Deposit (Account Current)
340-20-(a) From Revenues - Transit Deposit
340-20-(a) From Revenues - Octroi Security
Deposit (Others)
Total
(a) Insert Detailed Head Codes of Account as applicable
3
Additions
during the
current
year
Refunded
during
the year
4
5
Balance
outstanding
at the end of
the current
year
6
Schedule B-17: Cash and Bank Balances
Code No.
1
450-10-(a)
450-21-(a)
Particulars
2
Cash
Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
7.16
National Municipal Accounts Manual
Octroi
FORM OC - 1
__________________ (NAME OF THE ULB)
SUMMARY STATEMENT OF COLLECTION / REFUNDS OF OCTROI
FOR THE PERIOD _____________________
Date
Sr.
No.
Description of the remittance
Amount Collected
(Rs.)
(1)
Amount Refunded
(Rs.)
(2)
1
2
3
Octroi Duty collected
Octroi Duty Penalty collected
Miscellaneous Income collected
Octroi Deposit
1 Octroi Deposit collected
2 Octroi Deposit adjusted for octroi duty
3 Additional Octroi duty collected where
initially octroi deposit was collected
4 Refund of excess Octroi Deposit
Deposits other than those specified above
1 Other Deposits
2 Octroi Duty refunded
3 Collections, net of refund/ adjustment,
remitted to the head octroi office /
Municipal's Office/ Designated bank
account
Amount in Words : Rupees ________________________________________________________
Prepared By* : ____________________
Examined and entered
Checked By* : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Record the name, designation and signature of the person.
Note : This statement should be prepared separately for each Collection Office/Collection Centre and
then consolidated.
7.17
National Municipal Accounts Manual
Octroi
FORM OC – 2
__________________ (NAME OF THE ULB)
SUMMARY STATEMENT OF FINAL ASSESSMENT OF PROVSIONAL
ASSESSMENT FOR THE PERIOD _____________________
Sr.
No.
Description of the remittance
Amount
Collected
(Rs.)
(1)
Date
Amount
Refunded
(Rs.)
(2)
Amount
Adjusted
(Rs.)
(3)
Provisional Assessment
Provisional Octroi Duty collected
Octroi Duty assessed on final assessment *
Refund of excess octroi duty collected on
provisional assessment at the time of final
assessment
4 Additional Octroi Duty collected
Prepared By** : ____________________
Examined and entered
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
1
2
3
*
**
Collection adjusted against amount collected will have to be shown against the column
Adjustments and the balance Amount collected / refunded will be shown under column 1 0r 2
respectively
Record the name, designation and signature of the person.
Note : This statement should be prepared separately for each assessment Centre and then consolidated.
7.18
National Municipal Accounts Manual
Octroi
FORM OC - 3
__________________ (NAME OF THE ULB)
SUMMARY STATEMENT OF ASSESSMENT OF ACCOUNT CURRENT
HOLDERS FOR THE PERIOD _____________________
Date
Sr.
No.
1
2
3
4
Description of the remittance
Amount
Assessed
(Rs.)
(1)
Amount
Collected
(Rs.)
(2)
Amount
Adjusted
(Rs.)
(3)
Current Account Transaction
Octroi Duty Due from current account holders
Octroi Duty collected from current account
holders *
Deposits other than those specified above
Deposit received from Current Account Holder
Deposit adjusted from Current Account Holder
Prepared By** : ____________________
Examined and entered
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
*
**
Collection adjusted against amount collected will have to be shown against the column
Adjustments and the balance Amount collected / refunded will be shown under column 2
Record the name, designation and signature of the person.
Note : This statement should be prepared separately for each assessment Centre and then consolidated.
7.19
National Municipal Accounts Manual
Octroi
FORM OC - 4
__________________ (NAME OF THE ULB)
SUMMARY STATEMENT OF TRANSIT FEES COLLECTIONS AND
REFUNDS FOR THE PERIOD _____________________
Date
Sr.
No.
1
2
3
4
5
Amount
Collected
(Rs.)
(2)
Description of the remittance
Amount
Paid (Rs.)
(2)
Amount
Adjusted
(Rs.)
(3)
Transit Fee Collected
Transit Deposit Collected
Transit Deposit Refunded
Net Amount remitted/deposited with Bank
(1+2-3)
Transit Deposit Lapsed *
Total remittance in words:
Prepared By** : ____________________
Examined and entered
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Transit Deposit lapsed shall be shown under the column Adjustments
** Record the name, designation and signature of the person.
Note : This statement should be prepared separately for each assessment Centre and then consolidated.
7.20
National Municipal Accounts Manual
Cess
CHAPTER 8
CESS
INTRODUCTION
8.1
This chapter contains the recommended accounting system for Cess related
transactions.
8.2
Cess is the tax levied along with any other tax or in lieu of tax and is considered
income of the ULB.
8.3
It may be noted that the provisions covered in this chapter are not applicable to cesses
collected on behalf of the State Government. For e.g. Library Cess. Accounting treatment in
respect of these cess are detailed in Chapter 6 on Property and Other taxes
8.4
Cess is normally collected by self-declaration made in the returns filed under the
relevant provisions.
8.5
The normal procedure in respect of levy and collection of Cess is briefly discussed
below:
a. Every person (individual/entity) who is liable to pay Cess gets registered with the
Cess Department.
b. The registered individual/entity voluntarily assesses their Cess liability and pays
the same to the ULB at specified periodic intervals.
c. The Cess Department undertakes an assessment of the returns filed to determine
the actual Cess liability.
8.1
National Municipal Accounts Manual
Cess
d. Additional demand is raised for Cess, interest and penalties if the Cess paid
voluntarily is less than the assessed Cess liability. In case the Cess paid is more
than the assessed Cess liability, the excess Cess collected is refunded.
8.6
In addition to Cess, following may be collected by the Cess Department:
a. Cess Registration Fee at the prescribed rates from the dealers applying for
registration.
b. Penalties and/or interest in the event of evasion and for delays and defaults made
by the dealers.
ACCOUNTING PRINCIPLES
8.7
The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Cess:
a.
Revenue in respect of collection of Cess Income with Returns (on filing of returns
by the dealers) shall be recognised on actual receipt.
b.
Revenue in respect of Cess Income on Assessment shall be recognised in the
period in which they become due, i.e., when the demand is raised.
c.
Revenue in respect of Cess Registration Fee, Interest and Penalties levied on
assessment shall be recognised on actual receipt.
d.
In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of ULB, based on the following provisioning
norms:
¾ Outstanding for more than 2 years but not exceeding 3 years: 50%
¾ Outstanding for more than 3 years: 100% (additional 50%)
e.
Any additional provision for demand outstanding (net on overall basis) required
to be made during the year shall be recognised as expenditure and any excess
provision written back during the year shall be recognised as income of the
ULB.
f.
Refunds, remissions of Cess for the current year shall be adjusted against the
income and if pertain to previous years then it shall be treated as prior period
item.
g.
Write-offs of taxes shall be adjusted against the provisions made and to that
extent recoverable gets reduced
8.2
Cess
National Municipal Accounts Manual
h.
In the case of subsequent collection or recovery of ‘Receivables of Cess
Income’ which were already written off shall be recognised as a ‘Prior Period
Income’.
i.
Demands raised with retrospective effect will be treated as prior period income
to the extent it pertains to earlier years
ACCOUNTING RECORDS AND PROCEDURES
This section describes the records, registers, documents, forms, accounting entries,
8.8
etc., in respect of accounting for transactions related to Cess. For the purposes of accounting
of Cess there are certain forms, registers, etc., which are specific to Cess, e.g., Summary
Statement of Year-wise & Head-wise Collection of Cess (Form CE-2). These (Form CE-1 to
CE-4) are annexed to this chapter
CESS COLLECTION ON REGISTRATION AND FILING OF RETURNS
8.9
The following shall be the procedure for accounting of the collections made in respect
of Cess:
a. Recording of collections relating to Cess. Based on Summary of Daily Collection
(Form GEN-12) received from the various Collecting Offices / Centers, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
9,00,000
450-21-(a)
Bank Account*
Dr.
110-52-(a)
To Cess –Gross Income Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Credit
Amount
Books to be
(Rs.)
entered into
Illustrative
figures
Cash Book,
9,00,000 Ledger
The summary of daily collections does not provide the details in respect of the
year-wise head-wise collections made in respect of Cess. Hence, the total amount
collected should be credited to “Gross Cess Income” Account. The Cess
department updates the Head wise & year wise collection register maintained (in
Form CE – 2) for collection based on the collection statement received from
collection centers along with bills if any.
b. Recording of break-up of collections. A Summary Statement of Year-wise/ Headwise Collection of Cess in Form CE -2 shall be prepared on a monthly basis and
sent to the Accounts Department to record the details of collection. To record the
head-wise break-up of the collections made and to record cess received in
advance, the Accounts Department shall pass the following entry:
8.3
Cess
National Municipal Accounts Manual
Code of
Account
Accounting Entry
110-52-(a)
140-10-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrativ Illustrative
e figures
figures
Dr.
9,00,000
Journal
Cr.
45,000 Book, Ledger
Cess - Gross Income
To Empanelment
Registration Charges
Cess
To Cess - Net Income
Cr.
8,50,000
110-52-(a)
To Advance Collection
Cr.
5,000
350-41-(a)
of Revenues- Cess*
* Adjustment of Cess received in advance is discussed separately under section
‘Adjustment of Cess Received in Advance’ below.
(a) Insert Detailed Head Codes of Account as applicable
RAISING OF DEMAND FOR ADDITIONAL CESS, INTEREST AND PENALTIES
ON ASSESSMENT
8.10 Recording of demand raised. On completion of assessment of the dealers, the Cess
Department shall prepare a Summary Statement of Demand Raised on Assessment in Form
CE-1 on a monthly basis and send it to the Accounts Department within 7 days from the
beginning of the month. The demand raised could be on account of additional cess, interest,
penalties and/or fines charged as per the applicable provisions. Income in respect of demand
raised for interest, penalties and/or fines charged shall be recognised as income on actual
collection. To record the demand raised in respect of additional cess, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
431-20-(a) Receivables for Cess (Year…) Dr.
50,000
Journal
110-52-(a)
To Cess – Net Income
Cr.
44,000 Book, Ledger
280-10-(a)
To Prior Period Income
Cr.
6,000
Taxes – Cess
(a) Insert detailed Head Codes of Account as applicable
8.11 Recording of collections in respect of demand raised. On the basis of the Summary of
Daily Collection (Form GEN – 12) received from the various Collection Offices and
Collection Centres, the Accounts Department shall pass the following entry to record
collections in respect of demand raised:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Cash Book,
Cr.
1,00,000 Ledger
450-21-(a) Bank Account*
431-80-(a)
To Receivables Control
Account - Cess
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
8.4
Cess
National Municipal Accounts Manual
8.12 Recording of break-up of collections. On the basis of monthly Summary Statement of
Year-wise Head-wise Collection of Cess (Form CE-2) received from the Cess Department,
the Accounts Department shall pass the following entry to record the break-up of the
collections made:
Code of
Account
Accounting Entry
Dr./
Cr.
431-80-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,25,000
Journal
Book, Ledger
70,000
Receivables Control Account –
Dr.
Cess
431-20-(a)
To Receivables for Cess
Cr.
(Year…)
431-20-(a)
To Receivables for Cess
Cr.
(Year…)
171-80-(a)
To Other Interest –
Cr.
Interest Receivable for Cess
140-20-(a)
To Penalties and Fines Cr.
Cess
(a) Insert Detailed Head Codes of Account as applicable.
30,000
15,000
10,000
REFUNDS/REMISSIONS
8.13 The Cess Department shall duly grant refunds/remissions on account of change in
rules applicable for Cess of any other reasons as applicable. The details of the same shall be
communicated to the Accounts Department.
8.14 Recording of refunds/Remissions payable. A Summary Statement of Refunds and
Remissions in Form CE-3 shall be prepared on a monthly basis and sent to the Accounts
Department, based on which the Accounts Department shall pass the following entry:
Code of
Account
280-50-(a)
350-40-(a)
Accounting Entry
Dr./
Cr.
Prior Period Expenses Refund of Dr.
Taxes- Cess
To Refunds Payable –
Cr.
Cess*
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal
Book,
1,000 Ledger
* Refunds/Remissions arising on account of change in the applicable rules shall be either
passed for ‘Payment’ (refund payable) or credited to the account ‘Advance Collection of
Revenues’ (under the account code 350-41-(a)) in accordance with the accounting principles
of the ULB.
(a) Insert Detailed Head Codes of Account as applicable.
8.15 Recording of payment for refunds. The Accounts Department shall prepare a Payment
Order (in Form GEN- 14) in respect of the refunds and communicate the details of refunds
made to the Cess Department for updating their records. To record refunds made, the
Accounts Department shall pass the following entry:
8.5
National Municipal Accounts Manual
Cess
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-40-(a) Refund Payable-Cess
Dr.
500
Cash Book,
450-21-(a)
To Bank Account *
Cr.
500 Ledger
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
PROVISION FOR UNREALISED CESS RECEIVABLES
8.16 Recording of provision for unrealised Cess Income. The demand outstanding beyond
two (2) years shall be provided for as per provisioning norms given below:
8.17
a.
Outstanding for more than 2 years but not exceeding 3 years: 50%
b.
Outstanding for more than 3 years: 100% (additional 50%).
For example, provision for the Period ended March 31, 2004 is as under:
a.
50% of outstanding Receivables of Cess Income for the year ended March 31,
2002
b.
100% of outstanding Receivables of Cess Income for the year ended March 31,
2001 and before.
8.18 The amount required being provided as per provisioning norms stated above, shall be
compared with the balance lying in the Provision for outstanding Cess. If the amount to be
provided is more than the balance, then additional provision shall be made for the difference
amount. If the amount to be provided is less than the balance, it reflects the amounts provided
for has been collected, and the provision made towards that can be written back. This process
has to be carried over at every period/yearend.
8.19 Additional provision or reversal of excess provision for the current period shall be
calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 on Property &
Other Taxes.
8.20 For making the provision, the following entry shall be passed by the Accounts
Department:
8.6
Cess
National Municipal Accounts Manual
Code of
Account
270-10-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,500
Journal Book,
Ledger
Cr.
1,500
Provision for Doubtful
Receivables Cess
432-20-(a)
To Provision for
Outstanding Cess
(a) Insert Detailed Head Codes of Account as applicable
8.21
The effect of the above entry will be as follows:
a. Provision for Doubtful Receivables- Cess shall be shown as an expense under
the schedule Provision & write offs.
b. Provision for Outstanding Cess will be shown as a deduction from Receivables
for Cess in the Balance Sheet.
8.22 To record the write back of the provision made earlier, the following entry shall be
passed:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
500
Journal Book,
432-20-(a) Provision for Outstanding Cess Dr.
Cr.
500 Ledger
180-60-(a)
To Excess Provision
written back Cess
(a) Insert Detailed Head Codes of Account as applicable
WRITE-OFFS
8.23 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off any
Cess Income dues, the details of the write off has to be entered in the Statement of Write off
by the respective departments in Form CE 4. This form has to be prepared on a monthly
basis and forwarded to the Accounts Department and based on which , the write off shall be
adjusted against the provision made and the following entry will be passed:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
432-20-(a) Provision for Outstanding Cess Dr.
500
Journal Book,
To Receivables for Cess
Ledger
431-20-(a)
(Year )
Cr.
500
(a) Insert Detailed Head Codes of Account as applicable
8.7
Cess
National Municipal Accounts Manual
8.24
Recording of subsequent collection/ recovery of ‘Receivables of Cess Income’ written
off: In case of a ‘Receivables of Cess Income’ written off already were recovered/collected
during the year, the accounts department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
Ledger
1,000
Dr.
431-80-(a) Receivables Control Account Cess
Cr.
280-30-(a)
To Prior period Income
Recovery of Revenues
Written off - Cess
(a) Insert Detailed Head Codes of Account as applicable
TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS FROM
SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT
8.25 The arrears of Cess shall be carried forward year-wise, i.e., in “Receivables of Cess
Income (Year…)” Account up to three years. On completion of the third year, the amount
outstanding in the specific year-wise receivable account shall be transferred to a general
arrears account, i.e., “Receivables of Cess Income (Others)” Account. For example, the cess
receivable in respect of the demand raised during the accounting year 2000-01 shall be carried
forward in “Receivables of Cess Income (2001)” Account up to the year ending March 31,
2004. On March 31, 2004, the balance outstanding in this account shall be transferred to
“Receivables of Cess Income (Others)” Account.
8.26 Recording of transfer of arrears to general account. To record this transfer, the
Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
431-20-(a) Receivables for Cess (Others)
Dr.
2,000
Journal
To Receivables for Cess
Book, Ledger
431-20-(a)
(Year…)
Cr.
2,000
(a) Insert Detailed Head Codes of Account as applicable
ADJUSTMENT OF CESS RECEIVED IN ADVANCE
8.27 The Cess Department shall intimate the Accounts Department of the advance adjusted
against the subsequent demand raised by the Cess Department through the Summary
Statement of Demand Raised on Assessment CE-2.
a. Recording of subsequent demand raised. To record the demand raised for cess on
assessment, the Accounts Department shall pass the following entry:
8.8
National Municipal Accounts Manual
Cess
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
431-20-(a)
Receivables for Cess (Year )
Dr.
50,000
Journal Book,
110-52-(a)
To Cess Income
Cr.
50,000 Ledger
(a) Insert Detailed Head Codes of Account as applicable
b. Recording of adjustment of advance. To record the adjustment of Cess received in
advance, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
5,000
Journal
350-41-(a) Advance Collection of Revenues Dr.
Book, Ledger
Cess
Cr.
5,000
431-20-(a)
To Receivables of Cess
(Year )
(a) Insert Detailed Head Codes of Account as applicable
RECOVERY OF CESS THROUGH LEGAL PROCEEDINGS
8.28 The transactions in respect of recovery of Property and Other Taxes have been
described in Chapter 6 Property & Other Taxes (paras. 6.34 to 6.40) reference to which is
invited. The transactions relating to recovery of Cess shall be accounted in similar manner.
INTERNAL CONTROLS
8.29 The following internal controls shall be exercised by the ULB in respect of Cess
related transactions:
a. The Head of the Accounts Department and the Head of the Cess Department shall
reconcile the balance at the beginning of the accounting year in respect of the yearwise Cess Receivable (as appearing in the Balance Sheet of the previous year)
with the year-wise total of the arrears recorded by the Cess Department.
b. A quarterly reconciliation shall be carried out by the Head of the Accounts
Department and the Head of the Cess Department in respect of the amount
collected and the year-wise amount outstanding between the balances standing in
the relevant Ledger Accounts maintained at the Accounts Department and the
records/registers maintained at the Cess Department.
c. The officers designated by the ULB for operating the Designated Cess Bank
Account shall co-ordinate with the banks on a daily basis and ascertain the status
of the cheques/drafts deposited by them.
8.9
Cess
National Municipal Accounts Manual
d. The Head of the Cess Department shall annually co-ordinate with the department
handling the Shop and Establishment registrations and ascertain that the dealers
who have been granted new registrations and are liable to Cess have registered
with the Cess Department.
e. The Cess Department shall ensure that the Receipt / Summary of Daily Collection
prepared, provides reference to the Cess Collection Register.
f. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
8.30 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN THE FINANCIAL STATEMENTS
8.31 The various heads of account used for the accounting of Cess related transactions shall
be reflected in the Financial Statements or in the Schedules attached to the Financial
Statements of the ULB. All such Financial Statements and schedules should be affixed with
signature and seal of designated authorities.
8.32 The provision against the outstanding Cess Income receivable is to be disclosed under
the major head Accumulated Provisions as a separate line item in the Balance Sheet below
Sundry Debtors .
8.33 The Schedule of the Income and Expenditure Statement in respect of Cess is presented
below.
Schedule I-1: Schedule of Tax Revenues
Code of
Account
1
110-52-(a)
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Cess - Net Income
Sub-total
Less
110-90-(a) Tax Remission and Refunds Cess
Sub-total
Total Income of Cess to be shown as a part of Tax revenue Schedule
(a) Insert Detailed Head Codes of Account as applicable
8.10
Cess
National Municipal Accounts Manual
Schedule I-1 (a): Schedule of Refund and Remission
Code No
1
110-90-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Cess Income
Total Income of Cess to be shown as a part of Refund and
Remissions of Taxes Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-4: Schedule of Income from Fees & User Charges
Code No
Current Year
Amount (Rs.)
3
Particulars
1
140-10-(a)
Empanelment & Registration Charges
140-20-(a)
Penalties & Fines
Previous Year
Amount (Rs.)
4
Cess
Cess
Total
(a) Specify the Detailed Head Code of Accounts depending on the Department to which the revenue relates
Schedule I – 9: Schedule of Other Incomes
Code No
180-60-(a)
Current Year
Amount (Rs.)
Particulars
Excess provision written-back
Previous Year
Amount (Rs.)
Cess
Total Income of Cess to be shown as a part of Other Income
Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-11: Administrative Expenses
Code No.
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
220-51-(a)
Legal Expenses - Cost of recoveries of Cess (net
of amount received from State government for
the cost of recovery)
Total Expense of Cess to be shown as a part of Administrative
Expense Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I – _16: Schedule of Provisions and Write off
Code No
Particulars
270-10-(a)
Provision for Doubtful Receivables Cess
Total Expense of Cess to be shown as a part of Provision and
Write off Schedule
(a) Insert Detailed Head Codes of Account as applicable
8.11
Cess
National Municipal Accounts Manual
Schedule I-18: Prior Period Items
Code No
Particulars
1
2
Income (a)
280-10-(a) Taxes
280-30-(a) Recovery of Revenues written off
Expense (b)
280-50-(a) Refund of Taxes
Total [a-b] of Cess to be shown as a part of Prior
Period Items Schedule
(a) Insert Detailed Head Codes of Account as applicable
8.34
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
The Balance Sheet Abstract in respect of Cess is presented below.
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No
1
350-40-(a)
350-41-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Refunds Payable Taxes Cess
Advance Collection of Revenues
Total
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
Particulars
1
431-20-(a)
Current Year Amount (Rs.)
Provision for
Gross
Net
Outstanding
Amount
Amount
Receivables
3
4
5=3 4
2
Receivables for Cess
Less than 3 years *
More than 3 years*
Total Receivables of Cess
* Break up for provision for outstanding revenues are given in Column 4
(a) Insert Detailed Head Codes of Account as applicable
Previous
Year
Amount
(Rs.)
6
Schedule B-17: Schedule of Cash and Bank Balances
Code of
Account
1
450-10-(a)
450-21-(a)
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Cash
Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
8.12
________________ Name of the ULB
Year (-2)
3
* Provide year-wise details in respect of advance adjusted against demands raised.
**Record the name, designation, and signature of the person.
Cess
Others, Specify _______________
Total
Amount in Words : Rupees __________________
Advance Adjusted:
Against Voluntary Returns filed by the dealers
Against demand raised on Assessment *
Prepared By** : ____________________
Examined and entered
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
Year (Others)
2
Year (-1)
4
Cess
8.13
Form CE-1
Current Year
5
Sr. No. ___________
SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT
FOR THE PERIOD ____________________
in respect of Cess
Particulars
1
National Municipal Accounts Manual
__________________________________________Name of the ULB
Form CE-2
Year Others
(Rs.)
2
Year (-2)
(Rs.)
3
Year (-1) Current Year
(Rs.)
(Rs.)
4
5
Advance
Received (Rs.)
Prepared By** : ____________________
Examined and entered
Checked By** : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Record the name, designation and signature of the person.
Note :. This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.
1
Collection in respect of incomes accounted on accrual
basis
Cess demand raised on Assessment
Others, Specify ___________
Sub-Total
Collection in respect of incomes accounted on actual
receipt basis
Cess received along with Voluntary Returns
Cess Registration Fees
Interest
Penalties
Fines
Others, Specify ___________
Sub-Total
Receipt of Cost of Recovery
Cess received in Advance
Others, Specify ___________
Total Collection
Amount in Words : Rupees ______________________________________________________________________
Particulars
6
Total (Rs.)
SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF CESS
FOR THE PERIOD _____________________
Sr. No. __________
_________________ Collection Center
Deposited with _____________
National Municipal Accounts Manual
8.14
Cess
Advances #
Rs.
Refunds/Remissions
Receivables # Refunds Payable #
Rs.
Rs.
In respect of Cess Income
FOR THE PERIOD ____________________
SUMMARY STATEMENT OF REFUNDS /REMISSIONS
________________ NAME OF THE ULB
Dated:
Examined and entered
Accountant/Authorised Officer
Total
Rs.
Sr. No._________
Form CE-3
Cess
8.15
# The details of whether refunds/remissions are treated as refund payable or adjustment of receivables or Revenues received in
advance shall be entered in this form in order to account for the refunds/remissions Accordingly.
* Include total amount of all income heads of account in respect of Property and Other Taxes.
** Record the name, designation, and signature of the person.
Dated:
Prepared By :** ______________
Checked By :** _______________________
Amount in Words : Rupees______________________________________________________
Arrears
Year (Others)
Year (-5)
Year (-4)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
1
Particulars
National Municipal Accounts Manual
Cess
National Municipal Accounts Manual
Form CE-4
________________ NAME OF THE ULB
SUMMARY STATEMENT OF WRITE OFF
FOR THE PERIOD ____________________
In respect of Cess
Sr. No. __________
Particulars
Amount (Rs.)
1
2
Arrears
Year (Others)
Year (-5)
Year (-4)
Year (-3)
Year (-2)
Year (-1)
Current Year (20XX)
Total
Amount in Words : Rupees______________________________________________________
Prepared By :** ______________
Checked By :** _______________________
Dated:
Examined and entered
Accountant/Authorised Officer
Dated:
* Include total amount of all income heads of account in respect of Property and Other Taxes.
** Record the name, designation, and signature of the person.
8.16
National Municipal Accounts Manual
Water Supply
CHAPTER 9
WATER SUPPLY
INTRODUCTION
9.1
This chapter contains the recommended accounting system for Water Supply
related transactions.
9.2
ULBs have an obligation to make reasonable and adequate provision for the
management and maintenance of all municipal water works and the construction or
acquisition of new works necessary for a sufficient supply of water for public and private
purposes.
9.3
ULBs are entitled to charge the users for the provision of these services. The
charges for the water supply are either recovered as a Tax along with the Property Tax,
based on the Assessment Value of the property or as a charge based on measurement or
at a fixed amount or both.
9.4
The following are the revenue sources in relation to water supply:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Water Tax
Sewerage Tax
Water supply Charges
Sewerage Charges
Meter Rent for Water Supply;
Connection Charges for Water Supply and
Water Tanker Charges.
Road Damage Recovery Charges.
9.1
National Municipal Accounts Manual
Water Supply
ACCOUNTING PRINCIPLES
9.5
The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Water Supply and Sewerage:
a. Revenue in respect of Water Tax, Water Benefit Tax, Water Supply Charges,
Water Meter Rent, Sewerage Charges, shall be recognised in the period in
which they become due. It is to be noted that the water tax and the related
taxes may also be included in the bill raised for property tax.
b. Revenue in respect of Notice Fee, Warrant Fee, and Other Fees shall be
recognised when the bills for the same are raised.
c. Revenue in respect of Connection Charges for Water Supply shall be
recognised on actual receipt.
d. Revenue in respect of Water Tanker Charges and Road Damage Recovery
Charges, Penalties shall be recognised on actual receipt.
e. In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of the ULB as follows
¾ If water tax is collected as a component in Property Tax, provisioning shall
be made in the same way as unrealised Property Tax, which is as follows:
•
Outstanding for more than 2 year but not exceeding 3 years: 25%
•
Outstanding for more than 3 years but not exceeding 4 years: 50%
(additional 25%)
•
Outstanding for more than 4 years but not exceeding 5 years: 75%
(additional 25%)
•
Outstanding for more than 5 years: 100% (additional 25%)
¾ If water tax demand is raised separately, the taxes and charges shall be
provided as follows:
•
Outstanding for more than 2 year but not exceeding 3 years: 50%
•
Outstanding for more than 3 years: 100% (additional 50%)
9.2
National Municipal Accounts Manual
Water Supply
f. Any additional provision for demand outstanding (net on overall basis)
required to be made during the year shall be recognised as expenditure and any
excess provision written back during the year shall be recognised as income of
the ULB.
g. Refunds, remissions of taxes for the current year shall be adjusted against the
income and if pertain to previous years then it shall be treated as prior period
item.
h. Write-offs in respect of water supply income shall be adjusted against the
provisions made and to that extent recoverable gets reduced.
i. Any subsequent collection or recovery of ‘Receivables of Water Supply
Income’ which were already written off it shall be recognised as a ‘Prior
Period Income’.
ACCOUNTING RECORDS AND PROCEDURES
This section describes the records, registers, documents, forms, accounting
9.6
entries, etc., in respect of accounting for transactions related to Water Supply. The
specific forms (Form WS–1 to WS -4) which are applicable to Water Supply are annexed
with this chapter.
9.7
The accounting records and procedures for accounting of Water Tax and Water
Benefit Tax (which are usually collected along with Property Tax) have been described in
Chapter 6 – Property and Other Taxes, reference to which is invited.
RAISING OF DEMAND
9.8
A Summary Statement of Bills Raised shall be prepared ward-wise and income head-wise, in Form WS-1 on a monthly basis within 7 days from the end of the previous
month. These forms the base for accounting and the following entry shall be passed.
9.3
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Water Supply
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
13,000
Ledger
Dr.
431-30-(a) Receivables for Fees & User
Charge - Water Supply
(Year…)
To User Charges -Water Cr.
140-50-(a)
Supply
Cr.
To User Charges –
140-50-(a)
Sewerage
Cr.
To User Charges -Meter
140-50-(a)
Charges
Cr.
To Others*
140-(b)
* Specify the heads of each income for which bill is raised.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor Head Codes of Account as applicable
8,000
1,000
1,500
500
9.9
It is a normal practice for the ULB to enter the arrears of the Water Supply Income
due while issuing the fresh demand. Entries in respect of the arrears would have already
been recorded earlier. The above entry shall therefore be passed only in respect of the
current demand.
COLLECTION OF WATER SUPPLY INCOME
9.10
The procedure for accounting of collections is described below :
a. Recording of Water Supply collections. Based on the Summary of Daily
Collection (Form GEN 12) received from various Collecting Offices/Centers,
the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,500
Cash Book,
1,500
Ledger
Dr.
450-21-(a) Bank Account *
Cr.
431-80-(a)
To Receivables Control
Account – Water
Supply
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
b. The Summary of Daily collection (Form GEN-12) does not provide the details
in respect of the year-wise head-wise collections made in respect of Water
Supply. Hence, the total amount collected should be credited to “Consolidated
9.4
National Municipal Accounts Manual
Water Supply
Receivables of Water Supply Income” Account. The collection made shall be
segregated into year wise, head wise collection on a monthly basis and
maintained as ‘Summary statement of year-wise head-wise collection of water
and related taxes’in Form WS-2.
c. Recording of break-up of collections. A Summary statement of yearwise/head-wise collection of water and related taxes in Form W-2 as
explained above shall be prepared on a monthly basis and sent to the Accounts
Department to record the details of collections. To record the break-up of
collections into year-wise recovery and to record income received in advance
the Accounts Department shall pass the following entry:
Code of
Account
431-80-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Journal
Book,
Cr.
700 Ledger
Receivables Control AccountWater Supply
431-30-(a)
To Receivables for Fees &
User Charges – Water
Supply (Year…)
250
Cr.
To Receivables of Fees &
431-30-(a)
User Charges – Water
Supply (Year…)
To Advance Collection of
Cr.
50
350-41-(a)
Revenues - Water Supply *
* Adjustment of water supply income collected in advance is discussed separately under section
‘Adjustment of Water Supply Income Received in Advance’below.
(a) Insert Detailed Head Codes of Account as applicable
NOTICE FEE, WARRANT FEE AND OTHER FEES
9.11 Notices of demand and warrants shall be issued and other fees may be charged as
per the relevant provisions.
9.12 Recording of demand raised. A Summary Statement of Notice Fee, Warrant Fee
and Other Fees in Form WS – 1 shall be prepared on a monthly basis and sent to the
Accounts Department. The following entry shall be passed to record the demand raised:
9.5
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Water Supply
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
500
Dr.
Ledger
300
Cr.
200
Cr.
Receivables for Fees & User
Charges Water Supply (Year )
To Other Fees Notice Fee
140-40-(a)
To Other Fees Warrant
140-40-(a)
Fee
(a) Insert Detailed Head Codes of Account as applicable
431-30-(a)
REFUNDS AND REMISSIONS
9.13 All refunds and remissions granted shall be duly recorded in the Demand
Registers maintained in form GEN
20 and the details of the same shall also be
communicated to the Accounts Department.
9.14 Recording of refunds/remissions payable. A Summary Statement of Refunds and
Remissions in Form WS-3 shall be prepared on a monthly basis. Refunds/Remissions
pertaining to prior period should be identified separately from the current period based on
which the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
25
Dr.
Ledger
25
Dr.
Fees Remission & Refund Water
Supply
280-60-(a) Prior Period Expenses Refund of
Other Revenues Water Supply
50
Cr.
To Refund Payable Water
350-40-(a)
Supply
*Refunds/Remissions arising on account of change in the applicable rules shall be either passed
for ‘Payment’ (refund payable account) or credited to the ‘Advance Collection of Revenues’
(under the account code 350-41-(a)) in accordance with the accounting principles of the ULB.
a) Insert Detailed Head Codes of Account as applicable
140-90-(a)
9.15 Recording of payment of refunds/remissions granted. The Accounts Department
shall prepare a Payment Order (Form GEN-14) in respect of the refunds and communicate
the details of refunds/remissions made to the Water Supply Department for updating the
Register of Demand and other registers. To record refunds/remissions payment, the
Accounts Department shall pass the following entry:
9.6
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Water Supply
Dr./
Cr.
350-40-(a) Refunds Payable- Water Supply
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
50
Cash Book,
50 Ledger
PROVISION FOR UNREALISED REVENUE RECEIVABLES
9.16 Recording of provision for unrealised Water Tax Income. As explained in Para
9.5 (e) the provisioning policy for unrealised Water supply income will be dependent on
the basis of its charge. For example, the demand for water tax which were raised
separately and outstanding beyond two (2) years shall be provided for as per provisioning
norms given below:
¾ Outstanding for more than 2 year but not exceeding 3 years: 50%
¾ Outstanding for more than 3 years: 100% (additional 50%)
9.17
For example, provision for the year ended March 31, 2004 is as under:
a.
50% of outstanding Receivables of Water Supply Income for the year ended
March 31, 2002
b.
100% of outstanding Receivables of Water Supply Income for the year ended
March 31, 2001 and before.
9.18 This process has to be carried over at every Period-end. The amount required to be
provided as per provisioning norms stated above, shall be compared with the balance
lying in the Provision for Outstanding Fees & User Charges -Water Supply Account. If
the amount to be provided is more than the balance, then additional provision shall be
made for the difference amount. If the amount to be provided is less than the balance, it
reflects the amounts provided for, has been collected and the provision made towards that
can be written back.
9.19 Additional provision or reversal of excess provision for the current period shall be
calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 for
Property & Other Taxes.
9.7
National Municipal Accounts Manual
Water Supply
9.20 For making the provision, the following entry shall be passed by the Accounts
Department:
Code of
Account
270-10-(a)
432-30-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrativ Illustrative
e figures
figures
1,500
Journal Book,
Provision
for
Doubtful Dr.
Ledger
Receivables
Fees & User
Charges
To Provision for
Cr.
1,500
Outstanding Fees & User
Charges Water Supply
(a) Insert Detailed Head Codes of Account as applicable
9.21
The effect of the above entry will be as follows:
a. Provision for Doubtful Receivables Fees & User Charges -Water Supply will
be shown as an expense under the schedule Provisions & Write-offs.
b. Provision for Outstanding Fees & User Charges -Water Supply will be shown
as a deduction from Receivables for Fees & User Charges -Water Supply (Others)
in the Balance Sheet.
9.22
To write back the provision made earlier, the following entry shall be passed:
Code of
Account
432-30-(a)
180-60-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrativ Illustrative
e figures
figures
500
Journal Book,
Provision for Outstanding Fees & Dr.
Ledger
User Charges Water Supply
Cr.
500
To Excess Provision Written
Back Water Supply
(a) Insert Detailed Head Codes of Account as applicable
9.23 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off
any Water Supply Income dues, which were earlier treated as an income, the details of the
write off has to be entered in the Statement of Write off by the respective departments
in Form WS 4. This form has to be prepared on a monthly basis and forwarded to the
Accounts Department and based on which, the write off shall be adjusted against the
provision made and the following entry will be passed:
9.8
National Municipal Accounts Manual
Code of
Account
432-30-(a)
431-30-(a)
Accounting Entry
Provision for Outstanding
Fees & User Charges –
Water Supply
To Receivables for Fees &
User Charges – Water
Supply (Year…)
Water Supply
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
25
Journal Book,
Ledger
Cr.
25
(a) Insert Detailed Head Codes of Account as applicable
9.24 Recording of subsequent collection/ recovery of ‘Receivables of Water Supply
Income’written off: In case of a ‘Receivable of Water Supply Income’ written off already
were recovered/collected during the year, the accounts department shall pass the
following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Journal Book,
431-80-(a) Receivables Control Account
Ledger
– Water Supply
1,000
280-30-(a)
To Recoveries of Revenues Cr.
Written off – Water Supply
(a) Insert detailed head codes of account as applicable
TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS FROM
SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT
9.25 The arrears of water supply income shall be carried forward year-wise, i.e., in
“Receivables of Water Supply Income (Year…)” account up to three years. On completion
of the third year, the amount outstanding in the specific year-wise receivable account
shall be transferred to a general arrears account, i.e., “Receivables of Water Supply Income
(Others)” Account. For example, the water supply income receivable in respect of the
demand raised during the accounting year 2000-01 shall be carried forward in
“Receivables of Water Supply Income (2001)” Account up to the year ending March 31,
2004. On March 31, 2004, the balance outstanding in this account shall be transferred to
“Receivables of Water Supply Income (Others)” Account.
9.26 Recording of transfer of arrears to general account. To record this transfer, the
Accounts Department shall pass the following entry:
9.9
National Municipal Accounts Manual
Code of
Account
Water Supply
Accounting Entry
Dr./
Cr.
Dr.
Receivables for Fees & User
Charges Water Supply (Others)
To Receivables for Fees &
User Charges - Water
Cr.
431-30-(a)
Supply (Year )
(a) Insert detailed head codes of account as applicable
431-30-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,000
Journal Book,
Ledger
2,000
ADJUSTMENT OF WATER SUPPLY INCOME RECEIVED IN ADVANCE
9.27 The Water Supply Department shall intimate the Accounts Department of the
advance adjusted against the subsequent demand raised by the Water Supply Department
through the Summary Statement of Bills Raised (Form GEN 22).
c. Recording of subsequent demand raised. To record the demand raised for
water supply, the Accounts Department shall pass the same entry as in the case
of original demand. The entry to be passed is explained in Para 9.8.
d. Recording of adjustment of advance. To record the adjustment of water supply
income received in advance, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
350-41-(a)
Credit
Debit
Amount
Dr./ Amount (Rs.)
Books to be
(Rs.)
Cr. Illustrative
entered into
Illustrative
figures
figures
Dr.
50
Journal Book,
Ledger
Cr.
50
Advance Collection of
Revenues Water Supply
431-30-(a)
To Receivables for Fees
& User Charges - Water
Supply (Year )
(a) Insert detailed head codes of account as applicable
RECOVERY OF
PROCEEDINGS
WATER
SUPPLY
INCOME
THROUGH
LEGAL
9.28 The transactions in respect of Recovery of Property and Other Taxes have been
described in Chapter 6 Property & Other Taxes (Paras 6.34 to 6.40), reference to which
is invited. The transactions relating to Recovery of Water Supply Income shall be
accounted in similar manner.
9.10
National Municipal Accounts Manual
Water Supply
INCOME TO BE ACCOUNTED ON ACTUAL RECEIPT BASIS
9.29 The following incomes in respect of Water Supply shall be accounted on actual
receipt basis:
a. Connection Charges for Water Supply;
b. Water Tanker Charges;
c. Road Damage Recovery Charges; and
d. Penalties levied in respect of Water Supply related matters.
9.30 The Collection Offices and Collection Centres authorised to collect the above
incomes shall prepare a Summary of Daily Collection (Form GEN-12) and send it to the
Water Supply Department and the Accounts Department.
9.31 Recording of collection. On the basis of the Summary of Daily Collection (Form
GEN-12) received from the various Collection Offices and Collection Centres, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Cash Book,
100
50 Ledger
Dr.
Bank Account*
Cr.
To Other Fees
Connection Charges
Cr.
To User Charges - Water
140-50-(a)
Tanker
Cr.
To Service/
140-70-(a)
Administrative Charges
Road Damage Recovery
Cr.
To Penalties & Fines
140-20-(a)
* Specify name of the Bank and account number
(a) Insert the Detailed Head Codes of account as applicable
450-21-(a)
140-40-(a)
30
10
10
WATER DEPOSITS
9.32 The Water Supply Department may receive deposits towards Water Connection,
Water Meter, Water Tankers, etc. The Collection Offices and Collection Centres
authorised to collect Water Deposits shall prepare a Summary of Daily collection (Form
GEN-12) and send it to the Water Supply Department and the Accounts Department.
9.11
National Municipal Accounts Manual
Water Supply
9.33 Recording of collection. The Accounts Department shall pass the following entry
on the basis of the Summary of Daily Collection (Form GEN- 12) received from the
various Collection Offices and Collection Centres:
Code of
Account
Accounting Entry
Dr./ Cr.
450-21-(a)
340-20-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
100
Cash Book,
100 Ledger
Bank Account
Dr.
To Deposit RevenuesCr.
Water Supply
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
9.34 Recording of adjustment of deposits. The Water Supply Department shall send
details of deposits adjusted in the Summary Statement of Deposits Adjusted (Form GEN19) to the Accounts Department on a monthly basis. To record the adjustment of Water
Deposit, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Books to be
Accounting Entry
Dr./ Cr.
(Rs.)
(Rs.)
Account
entered into
Illustrative Illustrative
figures
figures
Dr.
25
Journal Book,
340-20-(a)
Deposit Revenues Water
Ledger
Supply
Cr.
25
431-30-(a)
To Receivables for Fees
& User Charges - Water
Supply (Year )
(a) Insert Detailed Head Codes of Account as applicable
9.35 Recording of refund of deposit. The deposits shall be refunded as per the rules
prescribed in this regard. A Payment Order (Form GEN- 14) shall be prepared by the
Water Supply Department for the deposits to be refunded. On refund of Water Deposit,
the Accounts Department shall pass the following entry:
Code of
Account
340-20-(a)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
50
Cash Book,
Ledger
50
Deposit Revenues Water
Dr.
Supply
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
9.12
National Municipal Accounts Manual
Water Supply
9.36 Recording of income in respect of lapsed deposit. Deposits not claimed within the
period as laid down by the ULB, from the date they are due for payment, shall be lapsed
and shall not be repayable to the party. At the end of the accounting year, the Water
Supply Department shall prepare a list of such lapsed deposits. To recognise the income,
on obtaining the approval of the Authorised Officer, the Accounts Department shall pass
the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
340-20-(a)
Deposit Revenues - Water Dr.
10
Journal Book,
Supply
Ledger
180-11-(a)
To Lapsed Deposit
Cr.
10
(a) Insert Detailed Head Codes of Account as applicable
EXPENDITURE ON WATER WORKS
9.37 The accounting for expenditures pertaining to Water Supply Department shall be
similar to that described in Chapter 12 - Public Works (for expenditure incurred through
awarding of contracts to outside parties for carrying out certain activities such as laying of
new pipelines, construction of pump houses, repairs related to water supply, etc.), Chapter
13- Stores (for expenditure incurred on purchase of stores such as TCL Powder, Chlorine
Gas, etc.) and Chapter 16 - Other Revenue Expenditures (in respect of all other
expenditures pertaining to water supply related activities such as electricity charges, bulk
water purchase charges, etc.) and Chapter 21 - Fixed Assets (in respect of the fixed assets
purchased), references to which are invited.
INTERNAL CONTROLS
9.38 The following internal controls shall be observed by the ULB in respect of Water
Supply related transaction:
a. The Head of the Accounts Department and the Head of the Water Supply
Department shall reconcile the balance at the beginning of the accounting year
in respect of the year-wise Water Supply Income receivable (as appearing in
the Balance Sheet of the previous year) with the year-wise total of the arrears
recorded in the Demand Register.
b. A quarterly reconciliation shall be carried out by the Head of the Accounts
Department and the Head of the Water Supply Department in respect of the
amount collected and the year-wise amount outstanding between the balances
9.13
National Municipal Accounts Manual
Water Supply
in the Ledger Accounts maintained at the Accounts Department and the
Demand Register maintained at the Water Supply Department.
c. A quarterly reconciliation shall be carried out by the Head of the Accounts
Department and the Head of the Water Supply Department in respect of the
deposits outstanding, between the balances in the Ledger Accounts maintained
at the Accounts Department and the Deposit Register maintained at the Water
Supply Department.
d. The officers designated by the ULB for operating the Designated Water
Supply Bank Account shall co-ordinate with the banks on a daily basis and
ascertain the status of the cheques/drafts deposited by them.
e. The Water Supply Department shall ensure that the Receipt / Summary of
Daily Collection prepared, provides reference to the Water Supply Income
Collection Register.
f. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
9.39 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN THE FINANCIAL STATEMENTS
9.40 The various heads of account used for the accounting of Water Supply related
transactions shall be reflected in the Financial Statements or in the Schedules attached to
the Financial Statements of the ULB. All such Financial Statements and schedules should
be affixed with signature and seal of designated authorities.
9.41 The provision against the outstanding water taxes receivable is to be disclosed
under the major head Accumulated Provisions as a separate line item in the Balance Sheet
below the Sundry Debtors .
9.42 The Schedule of the Income and Expenditure Statement in respect of Water
Supply Income is presented below.
9.14
National Municipal Accounts Manual
Water Supply
Schedule I-4: Schedule of Income from Fees & User Charges
Code No.
Particulars
1
140-20-(a)
140-40-(a)
140-40-(a)
140-40-(a)
140-40-(a)
140-50-(a)
140-50-(a)
140-50-(a)
140-50-(a)
140-70-(a)
2
Penalties & Fines
Other Fees Connection Charges
Other Fees Disconnection Charges
Other Fees Notice Fees
Other Fees Warrant Fees
User Charges Water Supply
User Charges Sewerage
User Charges Water Tanker
User Charges Water Meter
Service/Administrative Charges Road
Damage Recovery
Sub-total
Less
140-90-(a)
Fee Remission and Refund
Sub-total
Total Income of Water Supply to be shown as a part of
Fees & User Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I – 9: Schedule of Other Income
Code No.
Particulars
1
180-11-(a)
180-60-(a)
2
Lapsed Deposit Water Supply
Excess Provision Written Back Water
Supply
Total Income of Water Supply to be shown as a part of
Other Income Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-11: Administrative Expenses
Code No.
1
220-51-(a)
Particulars
2
Legal Expenses - Cost of recoveries of Water Supply
Income (net of amount received from State
government for the cost of recovery)
Total Expense of Water Supply to be shown as a part of
Administrative Expenses Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
9.15
National Municipal Accounts Manual
Water Supply
Schedule I – 16: Schedule of Provisions and Write off
Code No.
Current Year
Amount (Rs.)
3
Particulars
1
270-10-(a)
2
Provision
for
Doubtful
Receivables – Water Supply
Total Expense of Water Supply to be shown as a
part of Provision and Write off Schedule
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-18: Schedule of Prior Period Items
Code No.
Current Year
Amount (Rs.)
3
Particulars
1
2
Income (A)
280-20-(a) Other Revenues – Fees & User Charges
280-30-(a) Recovery of Revenues written off
Expense (B)
280-50-(a) Refund of Fees & User Charges
Total [A-B] of Water Supply to be shown as a part of
Prior Period Items Schedule
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
8.49 The Balance Sheet Abstracts in respect of the Water Supply Income are presented
below:
Schedule B-7: Schedule of Deposits Received
Code No.
Nature of Deposit
1
340-20-(a)
2
Deposits Revenues
– Water Supply
Total
Opening
balance at
the
beginning of
the year
3
Additions
during the
current year
Refunded
during
the year
Balance
outstanding at the
end of the current
year
4
5
6
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-9: Schedule of Other Liabilities
Code No.
Particulars
1
350-40-(a)
2
Refunds Payable of Fees & User Charges –
Court Attachment
Advance Collection of Revenues
Total
350-41-(a)
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
9.16
National Municipal Accounts Manual
Water Supply
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
Particulars
1
431-30-(a)
Current Year Amount (Rs.)
Provision for
Gross
Net
Outstanding
Amount
Amount
Receivables
3
4
5=3–4
2
Receivables for Fees & User Charges
Less than 3 years *
More than 3 years*
Total Receivables of Water Supply
Income
* Break up for provision for outstanding revenues are given in Column 4
(a) Insert Detailed Head Codes of Account as applicable
Previous
Year
Amount
(Rs.)
6
Schedule B-17: Schedule of Cash and Bank Balances
Code No.
1
450-10-(a)
450-21-(a)
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Cash
Bank Account
TOTAL
(a) Insert Detailed Head Codes of Account as applicable
9.17
_____________Name of ULB
2
1
3
Year (-2)
4
Year (-1)
Form WS-1
Water Supply
Current Year (Rs.)
5
Total (Rs.)
9.18
Sr. No. : _____________________
Examined and entered
Accountant/Authorised Officer
Dated:
* Provide year-wise details in respect of advance adjusted against demands raised.
** Record the name, designation and signature of the person.
Advance Adjusted:
Against
demand
raised
on
Assessment*
Prepared By** : ____________________
Checked By** : ____________________
Dated:
Water Tax
Water Supply Charges
Water Meter Rent
Notice Fee
Warrant Fee
Penalties
Others, Specify _______________
Total
Amount in Words : Rupees ________________________________________________
Year (Others)
Particulars
in respect of Water Supply Income
SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT
FOR THE PERIOD ____________________
National Municipal Accounts Manual
Water Supply
1
Collection in respect of incomes accounted
on accrual basis
Water Tax
Water Supply Charges
Water Meter Rent
Notice Fee
Warrant Fee
Other Fees
Penalties
Others, Specify ________________
Sub-Total
Collection in respect of incomes accounted
on actual receipt basis
Water connection charges
Road damage recovery charges
Water Reconnection Charges
Water Tanker Charges
Water Charges for Specific Needs
Others, Specify _______________
Sub-Total
Particulars
2
Year Others
(Rs.)
3
Year (-2)
(Rs.)
4
Year (-1)
(Rs.)
5
Current
Year (Rs.)
Advance
Received
(Rs.)
6
7
9.19
Total (Rs.)
Form WS-2
_____________Name of ULB
SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF WATER TAXES
FOR THE PERIOD _____________________
Sr. No. ___________________
_________________ Collection Centre
Deposited with _____________
National Municipal Accounts Manual
2
Year Others
(Rs.)
3
Year (-2)
(Rs.)
4
Year (-1)
(Rs.)
5
Current
Year (Rs.)
* Record the name, designation and signature of the person.
Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.
1
Receipt of Cost of Recovery
Water Supply Income collected in Advance
Others, Specify ___________
Total Collection
Particulars
National Municipal Accounts Manual
Advance
Received
(Rs.)
6
7
9.20
Total (Rs.)
Water Supply
Year (others)
Rs.
2
Year (-2)
Rs.
3
Year (-1)
Rs.
4
Current Year
Rs.
SUMMARY STATEMENT OF REFUNDS/REMISSIONS
FOR THE PERIOD ____________________
in respect of Water Supply Income
_____________Name of ULB
Total
Rs.
Remarks #
Sr. No: ___________
Form WS-3
Water Supply
9.21
* Record the name, designation, and signature of the person.
# The details of whether refunds/remissions are treated as ‘refund payable’ or ‘adjustment of receivables’ or ‘Revenues received in advance’ shall be entered in
this form for each of the entry in order to account for the refunds/remissions accordingly.
Water Tax
Water Supply Charges
Water Meter Rent
Notice Fee
Warrant Fee
Water supply incomes received in Advance
Penalties
Others, Specify ________________
Total
Amount in Words : Rupees ___________________________________________________________________
Prepared By* : ____________________
Examined and entered
Checked By* : ____________________
Accountant/Authorised Officer
Dated:
Dated:
1
Particulars
National Municipal Accounts Manual
_____________Name of ULB
Year (Others)
Rs.
2
Year (-2)
Rs.
3
Year (-1)
Rs.
4
Current Year (Rs)
Rs.
5
* Record the name, designation and signature of the person.
Water Tax
Water Supply Charges
Water Meter Rent
Notice Fee
Warrant Fee
Penalties
Others, Specify ________________
Total
Amount in Words : Rupees ___________________________________________________________________
Prepared By* : ____________________
Examined and entered
Checked By* : ____________________
Accountant/Authorised Officer
Dated:
Dated:
1
Particulars
Total
Rs.
6
9.22
Form WS-4
Water Supply
Sr. No. ______________
SUMMARY STATEMENT OF WRITE OFFS FOR THE PERIOD ____________________
in respect of Water Supply Income
National Municipal Accounts Manual
National MunicipalAccounts Manual
Assigned Revenues
CHAPTER 10
$66,*1(' 5(9(18(6
INTRODUCTION
10.1 This chapter contains the recommended accounting system for transactions relating to
assigned revenues.
10.2 Assigned revenues are usually in the nature of a share in the revenues of the state
government, to compensate for certain losses in revenue and arrangement of resources of the
ULBs. The ratio of the share in revenues is determined on the basis of the revenues collected
by ULBs and the recommendations of the State Finance Commissions and devolution of
funds to ULBs.
ACCOUNTING PRINCIPLES
10.3 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Grants:
a. Assigned revenues like Entertainment Tax, Duty / Surcharge on transfer of
Immovable properties, shall be accounted during the year only upon actual
collection. However, at year-end alone, these shall be accrued if sanction order (or
proceedings) is passed and the amount is ascertained.
b. Based on the review of recoverable position of the ‘Receivables of Assigned
Revenues’, the amount of outstanding assigned revenues to be provided or written
off shall be ascertained and accounted accordingly on obtaining the relevant
approval.
ACCOUNTING RECORDS & PROCEDURES
10.4 This section describes the records, register, documents, accounting entries, etc., in
respect of accounting for transactions related to Assigned Revenues.
10.1
National MunicipalAccounts Manual
Assigned Revenues
10.5 Recording of receipt of Assigned Revenue. Details of Assigned revenues received
shall be entered in the Receipt Register (Form GEN-9) maintained at the Accounts
Department and deposited into the Main Bank Account and also a Receipt (Form GEN-8)
shall be issued to the State Government. To record the receipt of assigned revenues, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Cash Book,
40,000 Ledger
Dr.
Bank Account *
To Taxes and Duties Collected Cr.
by Others - Duty on Transfer
of Properties
Cr.
To Taxes and Duties Collected
120-10-(a)
by Others - Entertainment
Taxes
To Others __**
Cr.
120-(b)
* Specify name of the Bank and Account number
** Specify the heads of each income of the assigned revenue
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor and Detailed Head Codes of Accounts as applicable
450-21-(a)
120-10-(a)
30,000
30000
Note: The postings in the Ledger (Form GEN-3) of “Main Bank” Account and “Assigned
Revenue” Account shall be carried out as indicated in Chapter 5 – General Accounting
Procedures. The postings in the Ledger shall be similarly carried out in respect of all other
accounting entries described subsequently in this chapter. Whenever, the cash or the bank account
is involved, there will be no entry in the Journal Book (Form GEN-2)
10.6 Recording of accruing of assigned revenues: At the end of the accounting period, the
Accounts Department shall verify whether any proceedings or sanction order is passed and for
which money is not received as at the end of the accounting period. The amount of such
receivable as quantified in the proceedings or sanction order shall be accrued as income of the
ULB. The Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
80,000
Journal Book,
Dr.
Ledger, Grant
20,000 Register
Cr.
431-50-(a) Receivables from Government Assigned Revenues
120-10-(a)
To Taxes and Duties Collected
by Others –Duty on Transfer
of Properties
Cr.
To Taxes and Duties Collected
120-10-(a)
by Others -Entertainment
Taxes
To Others ____*
Cr.
120-(b)
* Specify the heads of each income of the assigned revenue
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor and Detailed Head Codes of Accounts as applicable
25,000
35,000
10.2
National MunicipalAccounts Manual
Assigned Revenues
10.7 Recording of reversal for Accrued Assigned Revenues. At the end of the period end,
the Accounts Department shall verify whether any accrued revenue has been collected during
the period and credited to income account. If so, the accrued income shall be reversed and the
following entry shall be passed:
Code of
Account
Accounting Entry
120-10-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
6,000
Journal Book,
Ledger and
Grant register
Dr.
2,000
Taxes and Duties Collected by
Others -Duty on Transfer of
Properties
120-10-(a) Taxes and Duties Collected by
Others -Entertainment Taxes
Dr.
3,000
Others*
120-(b)
Cr.
To Receivables from
431-50-(a)
Government - Assigned
Revenues
* Specify the heads of each income of the assigned revenue.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor and Detailed Head Codes of Accounts as applicable
9,000
10.8 Recording of write off of outstanding assigned revenues: The Accounts department as
at the end of each year, review the outstanding assigned revenue receivable. The ULB based
on its review of the recoverability may consider either making a provision or writing off. The
accounting entries in respect of the above are as follows:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
500
Journal Book,
Ledger,
Cr.
500
270-30-(a) Revenues Written Off Assigned revenues
431-50-(a)
To Receivables from
Government –
Assigned Revenues
(a) Insert Detailed Head Codes of Account as applicable
PERIOD END PROCEDURES
10.9 At the period end, it shall be ensured that all the Receivables of Assigned revenues be
reviewed and write off if considered necessary be made. Further, the accounts department
shall also ensure that the necessary reversal entries are made for assigned revenues received in
the current accounting period, which were accrued in the previous period.
10.10 The Chief Executive Officer/Head of the ULB shall specify such appropriate calendar
of returns /reports for monitoring.
10.3
National MunicipalAccounts Manual
Assigned Revenues
PRESENTATION IN FINANCIAL STATEMENTS
10.11 The various heads of account used for the accounting of Assigned revenues related
transactions should be reflected in the Financial Statements or in the Schedules attached to
the Financial Statements of the ULB. All such Financial Statements and schedules should be
affixed with signature and seal of designated authorities.
10.12 The Schedule of the Income and Expenditure Statement in respect of Assigned
Revenue is provided below.
Schedule I-2: Assigned Revenues & Compensation
Code No
Particulars
1
120-10-(a)
2
Taxes and Duties collected by others – Duty on
Transfer of Properties
120-10-(a)
Taxes and Duties collected by others –
Entertainment Taxes
120-20-(a)
Compensation in lieu of Taxes / duties
120-30-(a)
Compensations in lieu of Concessions
Total assigned revenues & compensation
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs)
3
Previous Year
Amount (Rs)
4
Schedule I-16 : Schedule of Provisions & Write off
Code No
Particulars
1
2
270-30-(a) Revenues written off – Assigned revenues
Total Expense of Assigned Revenues to be shown as a part of
Provision and Write off Schedule
(a) Insert Detailed Head Codes of Account as applicable
10.13 The Balance Sheet Abstract in respect of Assigned Revenue is provided below.
Schedules B-15: Schedule of Sundry Debtors (Receivables)
Code No
Particulars
Gross
Amount
(Rs.)
Provision for
doubtful
receivables
Amount (Rs.)
Current
Year
Amount(Rs)
Previous
Year
Amount
(Rs.)
4
5 (3-4)
6
1
431-50-(a)
2
3
Receivables from Government
– Assigned Revenues
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-17: Schedule of Cash & Bank Balances
Code No
1
450-10-(a)
450-21-(a)
Particulars
2
Cash Account
Bank account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
10.4
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
CHAPTER 11
RENTALS, FEES &
OTHER INCOMES
INTRODUCTION
11.1 ULBs derive substantial portions of their revenue from Property & other taxes, Water
Tax/Water Charges and Grants. In addition, they also have certain additional sources of
revenue like Rentals from Municipal Properties, Advertisement Taxes, License Fees, etc.
This chapter contains the recommended accounting procedures for transactions related to
such Incomes.
11.2
Some of the Incomes under these categories that may arise to ULBs are listed below:
¾ Crematorium
Charges;
¾ Burial
Ground Charges;
¾ Cattle
Pounding Fees;
¾ Parking
¾ Fees
Fees;
for Pay & Use Toilets;
¾ Slaughtering
¾ Library
¾ Fire
Fees;
Fees;
Extinguishing Service Charges;
11.1
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Sale & Hire Charges, for example,
•
Sale of Scrap;
Sale of Forms & Documents;
•
Sale of Tender Forms;
•
Hire Charges of Road Rollers;
•
Hire Charges of Tools & Equipment;
•
Sale of garbage/Manure;
•
Sale of Trees,
•
Sale of Fruits;
•
Sale of Grass;
•
Sale of Nursery Plants;
•
Sale of Flowers; etc.
11.3 The aspects relating to Incomes to be accounted on actual receipt basis include:
Collections
Refunds.
INCOMES TO BE ACCOUNTED ON ACCRUAL BASIS
11.4 Incomes for which demand is raised shall be accounted on accrual basis. These
include the following (indicative):
i.
Rental Income from Municipal Properties, for example
Rent from Markets/Shopping Complexes;
Rent from Office Buildings;
Rent from Guest Houses;
Rent from Auditorium, Art Galleries;
Rent/Lease from Parking Zones; etc.
ii.
Rent/Lease from Parking Zones; etc.
Trade License Fees
iii. Advertisement Charges/Rights
iv. Profession Tax.
11.2
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
11.5 The various aspects relating to Incomes to be accounted on accrual basis include:
Entry in the Demand Register
Raising of Bills
Collection of dues
Refunds, Remissions and write-offs.
ACCOUNTING PRINCIPLES
11.6 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Other Incomes:
Revenue in respect of Advertisement rights shall be accrued either based on
Demand or based on the contract.
Revenue in respect of Trade License Fees shall be accrued in the year to which it
pertains and where the Demand is raised based on applicable Acts of the state.
Revenues in respect of Profession Tax on Organisations / entities shall be accrued
in the year to which it pertains where the demand is raised based on applicable
Acts of the state.
Revenues in respect of rents from properties shall be accrued based on terms of
agreement.
The Other Income, in respect of which demand is ascertainable and can be raised
in regular course of operations of the ULB, shall be recognised in the period in
which they become due, i.e., when the bills are raised.
The Other Incomes, which are of an uncertain nature or for which the amount is
not ascertainable or where demand is not raised in regular course of operations of
the ULB, shall be recognised on actual receipt.
Revenue in respect Notice Fee, Warrant Fee, Other Fees shall be recognised when
the bills for the same are raised.
Interest element and Penalties, if any, in demand shall be reckoned only on
collection.
In respect of the demand outstanding beyond two (2) years, provision shall be
made to the extent of income of ULB, based on the following provisioning norms:
•
Outstanding for more than 2 year but not exceeding 3 years: 50%
•
Outstanding for more than 3 years: 100% (additional 50%)
Any additional provision for demand outstanding required to be made during the
year shall be recognised as expenditure and any excess provision written back
during the year shall be recognised as income of the ULB.
11.3
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Refunds, remissions of Rents, Fees & Other Incomes for the current year shall be
adjusted against the income if pertain to previous years then it shall be treated as
prior period item.
Write-offs of Other Incomes shall be adjusted against the provisions made and to
that extent recoverable gets reduced.
Any subsequent collection or recovery of ‘Receivables of Rental, Fees and Other
Incomes’ which were already written off shall be recognised as a ‘Prior Period
Income’.
ACCOUNTING RECORDS AND PROCEDURES
11.7 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Rental, Fees and Other Incomes. For
the purposes of accounting of Other incomes there are certain forms, registers, etc., which are
specific to certain type of other incomes, e.g., Summary Statement of Year-wise Head-wise
Collection of Rents or similar incomes (Form OTH-1). These Forms OTH –1 to OTH –4 are
annexed to this chapter.
Accounting for incomes to be accounted on Actual receipt basis
Collection
11.8 The following shall be the procedure for accounting of the collections made in respect
of these Incomes:
Recording of income. To record the income in respect of these Incomes
accounted on actual receipt basis, based on the Summary of Daily Collection
(Form GEN- 12) received from the various Collection Offices and Collection
Centers, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
7,000 Ledger
Dr.
Bank Account*
Cr.
To ________ (Fees &
User) Charges
Cr.
150-(b)
To ________ (Sale &
Hire) Charges
* Specify name of the Bank and account number
(a) Insert detailed Head codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable.
450-21-(a)
140-(b)
3,000
Note: The postings in the Ledger (Form GEN-3) of “Bank” Account and “_____User Charges”
Account shall be carried out as indicated in Chapter 5 – General Accounting Procedures. The postings
in the Ledger shall be similarly carried out in respect of all other accounting entries described
subsequently in this chapter. Whenever, the cash or the bank account is involved, there will be no entry
in the Journal Book (Form GEN-2)
11.4
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Receipt of Incomes in Advance
11.9 In cases where the Incomes that are accounted on actual receipt basis are received in
advance, i.e., before providing the services/goods, they shall be recorded as income on
collection. In case the amount collected is to be refunded, the refund shall be recorded as
expenditure.
11.10 For example, if a sum of Rs. 1,000/- has been received in advance for Service
Charges. On receipt, the amount shall be recorded as Fees & User Charges. To record the
income, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative
Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger
450-21-(a) Bank Account*
Dr.
140-(b)
To _______ (Fees &
Cr.
User) Charges**
* Specify name of the Bank and account number
(a) Insert detailed Head codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable.
11.11 In case the service is not provided and the customer demands a refund of the amount
paid by him in advance. To record the refund, the Accounts Department shall pass the
following entry on payment of the refund:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
Ledger
1,000
Dr.
Refund - _______ (Fees &
User) Charges *
To Bank Account*
Cr.
450-21-(a)
* Specify name of the Bank
(a) Insert detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable.
140-(b)
Deposits
11.12 In respect of certain Incomes (including incomes accounted for on accrual basis), a
deposit is taken at the time of receiving the application for providing the services/goods, e.g.,
Rent Deposit, etc. The accounting for the different transactions in respect of deposits received
in respect of Incomes, have been discussed below, using the example of Rent Deposit.
11.13 Recording of receipt of deposits. On receipt of deposit, the same shall be treated as a
liability. To record the receipt of Rent Deposit, say of Rs. 10,000/-, the Accounts Department
shall pass the following entry:
11.5
National Municipal Accounts Manual
Code of
Account
Rentals, Fees & Other Incomes
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger
Dr./
Cr.
Accounting Entry
Dr.
Bank Account*
Cr.
To Deposits Revenues
Rent
* Specify Name of the Bank and account number
(a) Insert detailed Head codes of account as applicable
450-21-(a)
340-20-(a)
11.14 Recording of adjustment of deposits. The ULB may adjust the deposits received
against the cost of the services rendered by it to the customer. On adjustment of deposits, the
respective departments shall send the details of deposits adjusted in the Summary Statement
of Deposits Adjusted (GEN- 19) to the Accounts Department on monthly basis. If Rent
Deposit of Rs. 5,000/- has been adjusted against Rent Income, to record the adjustment of
deposits, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Journal Book,
5,000 Ledger
340-20-(a) Deposit Revenues Rent
Dr.
130-(b)
To Rental Income from
Cr.
Municipal Properties
(a) Insert detailed Head codes of account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable.
11.15 Recording of refund of deposits. The deposits shall be refunded when an application
is made for it as per the rules prescribed for the same. A Payment Order (GEN 14) shall be
prepared by the respective departments for the refund of the deposits. On refund of the
balance Rent Deposit of Rs. 5,000, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Cash Book,
5,000 Ledger
340-20-(a) Deposit Revenues Rent
Dr.
450-21-(a)
To Bank Account *
Cr.
* Specify name of the Bank and account number
(a) Insert detailed Head Codes of Account as applicable
11.16 Recording of income in respect of lapsed deposit. Deposits not claimed within the
period as laid down by the ULB, from the date it is due for payment, shall be considered as
lapsed and shall not be repaid to the party. At the end of each accounting year, the respective
departments shall prepare a list of such lapsed deposits. To recognise the income, on
obtaining the approval of the Authorised Officer, the Accounts Department shall pass the
following entry (assuming Rent Deposit of Rs. 1,000 has lapsed):
11.6
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
340-20-(a) Deposit Revenues – Rent
Dr.
1,000
Journal Book,
180-11-(a)
To Lapsed Deposit-Rent
Cr.
1,000 Ledger, Deposit
Register
(a) Insert detailed Head Codes of Account as applicable
11.17 Similar entries as above shall be passed for recording the various transactions in
receipt of other deposits for example deposits relating to License Fees and Advertisement
Taxes.
ACCOUNTING FOR INCOMES TO BE ACCOUNTED ON ACCRUAL BASIS
11.18 The accounting of the various aspects relating to Incomes accounted on accrual basis
have been discussed below in respect of Rent, License Fees, and Advertisement Taxes are
explained below:
A. Rental income
Demand Raised
11.19 In respect of the demand raised, the Accounts Department shall do the following:
Recording of demand raised. The demand raised for Incomes shall be recognised
as an income for the ULB and correspondingly as a current asset. Accordingly,
based on the Summary Statement of Bills Raised (Form OTH –1) received from
the respective departments, the Accounts Department shall pass the following
entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
20,000
Journal Book,
Ledger
20,000
Dr.
431-40-(a) Receivables from Other
Sources -Rent (Year…)**
Cr.
130-(b)
To Rental Income from
Municipal Properties
(a) Insert detailed Head Codes of Account as applicable
(b) Insert Minor & detailed Head Codes of Account as applicable
11.20 It is a normal practice for the ULB to enter the arrears of the dues while issuing the
fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The
above entry shall be passed only in respect of the current demand of Other Incomes. The
rental incomes earned out of shopping complexes, markets, office buildings, etc shall be
entered in the relevant fixed assets register for E.g. Register of Immovable properties in form
GEN 30 or in Register of Movable Properties in form GEN 31. The registers shall be updated
periodically as per the provisions and rules of the Act governing the ULBs.
11.7
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Collection of accrued incomes
11.21 The following shall be the procedure for accounting of the collections made in respect
of accrued Incomes:
11.22 Recording of Income collections. To record the income based on the Summary of
Daily Collections (Form GEN-12) received from the various Collection Offices and
Collection Centers, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Dr.
Bank Account*
To Receivables Control Cr.
Account – Rent
* Specify Name of the Bank and account number
450-21-(a)
431-80-(a)
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Cash Book,
15,000 Ledger
(a) Insert detailed Head Codes of Account as applicable
11.23 For Other Incomes to be accounted on accrual basis, the Summary of Daily Collection
(Form GEN- 12) does not provide the break-up of the collections into arrears collected,
collections received in advance and collection made in respect of the current year' s demand.
Hence, the total amount collected is credited to “Consolidated Receivables of Rent” Account
which shall be segregated on a monthly basis.
11.24 Recording of break-up of collections. A Summary Statement of Year-wise/ Head-wise
Collection of various other incomes in Form OTH-2 shall be prepared on a monthly basis by
the respective departments and sent to the Accounts Department to record the details of
collection. . To record the break-up of the collections made in respect of Incomes accounted
for on accrual basis, into current and arrears recovery and to record any income collected in
advance, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
18,000
Journal Book,
Ledger
15,000
Dr.
Receivables Control
Account -Rent
Cr.
To Receivables from
431-40-(a)
Other Sources –
Rent (Year…)
Cr.
2,000
To Receivables from
431-40-(a)
Other Sources –
Rent (Year…)
To Advance Collection
Cr.
1,000
350-41-(a)
of Revenues – Rent *
* Adjustment of income collected in advance is discussed separately under section ‘Adjustment of
Other Incomes received in Advance’
(a) Insert detailed Head Codes of Account as applicable
431-80-(a)
11.8
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Notice Fee, Warrant Fee and Other Fees
11.25 Notices of demand and warrants shall be issued and other fees may be charged as per
the relevant provisions.
11.26 Recording of demand raised. A Summary Statement of Notice Fee, Warrant Fee and
Other Fees Charged in Form GEN 24 shall be prepared on a monthly basis and sent to the
Accounts Department.
11.27 For recording the demand raised in respect of Notice Fee, Warrant Fee and Other Fees
charged for rent not received, on the basis of the Summary Statement of Notice Fee, Warrant
Fee and Other Fees Charged received from the respective departments, the Accounts
Department shall pass the same entry as explained in Para 6.15 of Chapter 6 on Property &
Other Taxes.
Refunds and Remissions
11.28 All refunds and remissions arising on account of certain changes or amendments of
the provisions or acts governing the revenues shall be duly recorded in the Demand Registers
maintained and the details of the same shall also be communicated to the Accounts
Department.
11.29 Recording of refunds/remissions payable. A Summary Statement of Refunds and
Remissions in Form OTH 3 shall be prepared on a monthly basis. Refunds / Remissions
pertaining to prior period shall be identified separately from the current period based on
which the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
500
Ledger
100
Dr.
Rents Remission & Refund
Dr.
Prior Period Expenses
Refund of Other Revenues
Rent
600
To Refund Payable Rent* Cr.
350-40-(a)
* Refunds/Remissions arising on account of change in the applicable rules shall be either passed
for ‘Payment’ or credited to the account ‘Advance Collection of Revenues- Rent’ (with account
code 350-41-(a)) in accordance with the accounting principles of the ULB.
(a) Insert detailed Head Codes of Account as applicable
130-90-(a)
280-60-(a)
11.30 Recording of payment of refunds/remissions granted: The Accounts Department shall
prepare a Payment Order (Form GEN-14) in respect of the refunds and communicate the
details of refunds/remissions payments to the concerned departments for updating the
Register of Demand and other registers. To record refunds made, the Accounts Department
shall pass the following entry:
11.9
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Rentals, Fees & Other Incomes
Dr./
Cr.
Credit
Debit
Amount
Amount
(Rs.)
(Rs.)
Illustrative Illustrative
figures
figures
500
500
350-40-(a) Refund Payable Rent
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and account number
(a) Insert detailed Head Codes of Account as applicable
Books to be
entered into
Cash Book,
Ledger
Adjustment of Incomes received in advance
11.31 The respective departments shall intimate the Accounts Department of the advance
adjusted against the subsequent bills raised through the Summary Statement of Bills Raised
(Form OTH 1).
(a) Recording of subsequent demand raised in the normal course. To record the
demand raised for rent, the Accounts Department shall pass same entry as in the
case of original demand as explained in Para 11.19.
(b) Recording of adjustment of advance. To record the adjustment of Other Incomes
received in advance, the Accounts Department shall pass the following entry:
Code of
Account
350-41-(a)
431-40-(a)
Accounting Entry
Advance Collection of
Revenues Rent
To Receivables from
Other Sources Rent
(Year )
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
Ledger
1,000
(a) Insert detailed Head Codes of Account as applicable
Deposits
11.32 The accounting in respect of receipt, adjustment, refund of deposits and recognising
income in respect of lapsed deposits for Incomes accounted on accrual basis shall be similar
to that for Incomes accounted for on actual receipt basis. The entry for adjustment of deposit
for income to be accounted on accrual basis has been given below.
11.33 Recording of adjustment of deposits. The ULB may adjust the deposits received
against the cost of the services rendered by it to the customer. The respective departments
shall send the details of deposits adjusted in the Summary Statement of Deposits Adjusted
(Form GEN-19) to the Accounts Department on monthly basis.
11.34 If Rent Deposit of Rs. 5,000/- has been adjusted against recovery of dues towards
Rent Income, to record the adjustment of deposits, the Accounts Department shall pass the
following entry:
11.10
National Municipal Accounts Manual
Code of
Account
340-20-(a)
431-40-(a)
Accounting Entry
Deposit Revenues Rent
To Receivables from
Other Sources - Rent
(Year )
Rentals, Fees & Other Incomes
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Journal Book,
5,000 Ledger
(a) Insert detailed Head Codes of Account as applicable
Provision for Unrealised Revenue Receivables
11.35 Recording of provision for unrealised Income. The demand outstanding beyond two
(2) years shall be provided for as per provisioning norms given below:
Outstanding for more than 2 year but not exceeding 3 years: 50%
Outstanding for more than 3 years: 100% (additional 50%)
For example, provision for the year ended March 31, 2004 is as under:
a.
50% of outstanding Receivables of Rent for the year ended March 31, 2002
b.
100% of outstanding Receivables of Rent for the year ended March 31, 2001 and
before.
11.36 Additional provision or reversal of excess provision for the current period shall be
calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 for Property &
Other Taxes.
11.37 For making the provision, the following entry shall be passed by the Accounts
Department:
Code of
Account
270-10-(a)
432-40-(a)
Accounting Entry
Dr./
Cr.
Provision
for
Doubtful Dr.
Receivables- Rent
To Provision for
Cr.
Outstanding Other
Receivables Rent
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,500
Journal Book,
Ledger
1,500
(a) Insert detailed Head Codes of Account as applicable
11.38 The effect of the above entry will be as follows:
a.
Provision for Doubtful Receivables - Rent will be shown as a separate item under
the Major expense head Provisions and Write off;
b.
Provision for Outstanding Other Receivables will be shown as a deduction from
Receivables from Other Sources- Rent in the Balance Sheet.
11.11
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
11.39 To write back the provision made earlier, the following entry shall be passed:
Code of
Account
432-40-(a)
180-60-(a)
Accounting Entry
Provision for Outstanding
Other Receivables Rent
To Excess Provision
Written Back Rent
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
500
Journal Book,
Ledger
500
(a) Insert detailed Head Codes of Account as applicable
Write-offs
11.40 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off any
Other Income dues, the details of the write off has to be entered in the Statement of Write
off by the respective departments in Form OTH 4. This form has to be prepared on a
monthly basis and forwarded to the Accounts Department and based on which , the write off
shall be adjusted against the provision made and the following entry will be passed:
Code of
Account*
432-40-(a)
431-40-(a)
Accounting Entry
Provision for Outstanding
Other Receivables Rent
To Receivables from
Other Sources Rent
(Year )
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
500
Journal Book,
Ledger
500
(a) Insert detailed Head Codes of Account as applicable
11.41 Recording of subsequent collection/ recovery of Receivables of Rents/License
Fees/Advertisement Taxes written off : In case of a Receivables of Rents/License
Fees/Advertisement Taxes written off already were recovered/collected during the year, the
accounts department shall pass the following entry:
Code of
Account*
431-80-(a)
280-30-(a)
Accounting Entry
Receivables Control
Account - - Rent
To Prior period
Income Recovery of
Revenues written offRent
Dr./
Cr.
Dr.
Debit
Amount
(Rs.)
Illustrative
figures
1,000
Cr.
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Journal Book,
Ledger
1,000
(a) Insert detailed Head Codes of Account as applicable
11.12
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Transfer of amount outstanding in respect of arrears from specific year-wise account to
general account
11.42 The arrears of Other Income shall be carried forward year-wise, e.g., in “Receivables
of Other Income (Year…)” account up to three years. On completion of the third year, the
amount outstanding in the specific year-wise receivable account shall be transferred to a
general arrears account, i.e., “Receivables of Other Income (Others)” Account. For example,
the rent receivable in respect of the demand raised during the accounting year 2000-01 shall
be carried forward in “Receivables of Rent (2001)” Account up to the year ending March 31,
2004. On March 31, 2004, the balance outstanding in this account shall be transferred to
“Receivables of Rent (Others)” Account.
11.43 Recording of transfer of arrears to general account. To record this transfer, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
431-40-(a) Receivables from Other
Sources –Rent (Others)
431-40-(a)
To Receivables from
Other Sources –Rent
(Year…)
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Journal Book,
Ledger
5,000
(a) Insert detailed Head Codes of Account as applicable
Recovery of other incomes through legal proceedings
11.44 The transactions in respect of Recovery of Property and Other Taxes have been
described in Chapter 6 – Property & Other Taxes (paras. 6.34 to 6.40), reference to which is
invited. The transactions relating to Recovery of Other Incomes shall be accounted in similar
manner.
B. License Fees
11.45 The license fees charged for granting license to any trade, shops, markets etc. Similar
to accruing of rental income, license fees shall also be accrued based on raising a demand in
form OTH – 1. Accounting entries in respect of Demand and Collection are detailed below.
However in respect of notice fees, refunds, adjustment of advances & deposits, provisions,
write off and transfer outstanding from specific year to general account, reference is invited
to entries explained above under Section A – Rental Income.
Demand Raised
11.46 Recording of demand raised. The demand raised for Income shall be recognised as an
income for the ULB and correspondingly as a receivable. Accordingly, based on the
Summary Statement of Bills Raised (Form OTH –1) received from the respective
departments, the Accounts Department shall pass the following entry:
11.13
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
,
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
20,000
Journal Book,
Ledger
Dr.
431-30-(a) Receivables for Fees & User
Charges - License Fees
(Year )
To Licensing Fees - Trade Cr.
140-11-(a)
(a) Insert detailed Head Codes of Account as applicable
20,000
11.47 It is a normal practice for the ULB to enter the arrears of the dues while issuing the
fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The
above entry shall be passed only in respect of the current demand of Other Incomes.
Collection of accrued incomes
11.48 The following shall be the procedure for accounting of the collections made in respect
of accrued Incomes:
a.
Recording of Income collections. To record the income based on the Summary of
Daily Collections (Form GEN-12) received from the various Collection Offices
and Collection Centres, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Cash Book,
15,000 Ledger
Dr.
Bank Account*
Cr.
To Receivables Control
accounts - License
Fees
* Specify name of the Bank and account number
(a) Insert detailed Head Codes of Account as applicable
450-21-(a)
431-30-(a)
b.
For Other Incomes to be accounted on accrual basis, the Summary of Daily
Collection (Form GEN- 12) does not provide the break-up of the collections into
arrears collected, collections received in advance and collection made in respect
of the current year' s demand. Hence, the total amount collected is credited to
Consolidated Receivables of License Fees Account which shall be segregated
on a monthly basis.
c.
Recording of break-up of collections. A Summary Statement of Year-wise/ Headwise Collection of various other incomes in Form OTH-2 shall be prepared on a
monthly basis by the respective departments and sent to the Accounts
Department to record the details of collection. . To record the break-up of the
collections made in respect of Incomes accounted for on accrual basis, into
current and arrears recovery and to record any income collected in advance, the
Accounts Department shall pass the following entry:
11.14
National Municipal Accounts Manual
Code of
Account
Rentals, Fees & Other Incomes
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
18,000
Journal Book,
Ledger
15,000
Receivables Control Account Dr.
License Fees
To Receivables for Fees Cr.
431-30-(a)
& User Charges License Fees (Year )
2,000
To Receivables for Fees Cr.
431-30-(a)
& User Charges
License Fees (Year )
To Advance Collection
Cr.
1,000
350-41-(a)
of Revenues License
Fees *
* Adjustment of income collected in advance is discussed separately under section ‘Adjustment
of Other Incomes received in Advance’
(a) Insert detailed Head Codes of Account as applicable
431-80-(a)
C. Advertisement Fees
11.49 The advertisement fees charged towards advertisement rights. Similar to accruing of
rental income and license fees, advertisement fees shall also be accrued based on raising a
demand in form OTH 1.
Demand Raised
11.50 Recording of demand raised. The demand raised for Advertisement fees incomes shall
be recognised as an income for the ULB and correspondingly as a current asset. Accordingly,
based on the Summary Statement of Bills Raised (Form OTH 1) received from the
respective departments, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
20,000
Journal Book,
Ledger
Dr.
Receivables for Fees &
User Charges
Advertisement Fees
(Year )
Cr.
To Other Fees
140-40-(a)
Advertisement
(a) Insert Detailed Head Codes of Account as applicable
431-30-(a)
20,000
11.51 It is a normal practice for the ULB to enter the arrears of the dues while issuing the
fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The
above entry shall be passed only in respect of the current demand of Other Incomes.
Collection of accrued incomes
11.52 The following shall be the procedure for accounting of the collections made in respect
of accrued Incomes:
11.15
National Municipal Accounts Manual
a.
Rentals, Fees & Other Incomes
Recording of Income collections. To record the income based on the Summary of
Daily Collections (Form GEN-12) received from the various Collection Offices
and Collection Centres, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Dr.
Bank Account*
Cr.
To Receivables Control
accounts advertisement
Fees
* Specify name of the Bank and account number
(a) Insert detailed Codes of Account as applicable
450-21-(a)
431-80-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Cash Book,
15,000
Ledger
b.
For Other Incomes to be accounted on accrual basis, the Summary of Daily
Collection (Form GEN- 12) does not provide the break-up of the collections into
arrears collected, collections received in advance and collection made in respect
of the current year' s demand. Hence, the total amount collected is credited to
Consolidated Receivables of Advertisement Taxes Account which shall be
segregated on a monthly basis.
c.
Recording of break-up of collections. A Summary Statement of Year-wise/ Headwise Collection of various other incomes in Form OTH-2 shall be prepared on a
monthly basis by the respective departments and sent to the Accounts
Department to record the details of collection. To record the break-up of the
collections made in respect of Incomes accounted for on accrual basis, into
current and arrears recovery and to record any income collected in advance, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
18,000
Journal Book,
Ledger
Dr.
Receivables Control
Account Advertisement
Fees
Cr.
15,000
431-30-(a)
To Receivables for Fees
& User Charges
Advertisement Fees
(Year )
2,000
To Receivables for Fees & Cr.
431-30-(a)
User Charges
Advertisement Fees
(Year )
To Advance Collection of Cr.
1,000
350-41-(a)
Revenues
Advertisement Fees*
* Adjustment of income collected in advance is discussed separately under section ‘Adjustment
of Other Incomes received in Advance’
(a) Insert detailed Codes of Account as applicable
431-80-(a)
11.16
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Internal controls
11.53 The following internal controls shall be observed by the ULB in respect of transaction
related to Other Incomes:
The Head of the Accounts Department and the head of the respective departments
shall reconcile the balance at the beginning of the accounting year in respect of the
Sundry Income Receivables Arrears (as appearing in the Balance Sheet of the
previous year) with the year-wise total of the arrears recorded in the Demand
Registers.
A quarterly reconciliation shall be carried out by the Head of the Accounts
Department and the head of the respective departments in respect of the amount
collected and the arrears outstanding between the balances standing in the Ledger
maintained at the Accounts Department and the Demand Registers maintained at
the respective departments.
A monthly reconciliation shall be carried out by the Head of the Accounts
Department and the head of the respective departments in respect of the various
deposits collected, between the balances standing in the Ledger maintained at the
Accounts Department and the Deposits Registers maintained at the respective
departments.
The head of the respective departments shall ensure that the Receipt / Chalan for
Remittance of Money prepared, provides reference to the Consolidated Collection
Register.
The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
Levy of stallages, rents and fees in Municipal Markets, Slaughter-houses and
Stock-yards;
Registration of Births and Deaths Fees;
Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,
Clerk of Works, and Plumbers;
Professional Tax;
Advertisement Charges/Rights;
Development Charges; etc.
Registration of Births and Deaths Fees;
Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,
Clerk of Works, and Plumbers;
Professional Tax;
Advertisement Charges/Rights;
Development Charges; etc.
Registration of Births and Deaths Fees;
Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,
Clerk of Works, and Plumbers;
11.17
National Municipal Accounts Manual
Rentals, Fees & Other Incomes
Professional Tax;
Advertisement Charges/Rights;
Development Charges; etc.
Levy of stallages, rents and fees in Municipal Markets, Slaughter-houses and
Stock-yards; A. F. Ferguson & Co.
11.54 All Reconciliation Statements shall be certified by the Head of the Accounts
Department:
Presentation in financial statements
11.55 The various heads of account used for the accounting of Other Incomes related
transactions should be reflected in the Financial Statements or in the Schedules attached to
the Financial Statements of the ULB. All such Financial Statements and schedules should be
affixed with signature and seal of designated authorities.
11.56 The provision against the Outstanding Rental and Other Incomes receivable is to be
disclosed under the major head Accumulated Provisions as a separate line item in the Balance
Sheet below the Sundry Debtors .
11.57 The Schedule of Income and Expenditure Statement in respect of Other Incomes are
presented below.
Schedule I-3: Rental income from Municipal Properties
Minor Head
Code
1
130-10-(a)
130-20-(a)
130-30-(a)
130-40-(a)
130-80-(a)
Particulars
2
Rent from Civic Amenities
Rent from Office Buildings
Rent from Guest Houses
Rent from lease of lands
Other rents
Sub-Total
Less:
130-90-(a)
Rent Remission and Refunds
Sub-total
Total Rental Income from Municipal Properties
(a) Insert detailed Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-4: Schedule of Income from Fees & User Charges
Detailed
Head Code
1
140-11-(a)
140-20-(a)
140-40-(a)
140-50-(a)
140-60-(a)
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Licensing Fees
Penalties and Fines
Other Fees Advertisement Fees
User Charges
Entry Fees
11.18
National Municipal Accounts Manual
Detailed
Head Code
1
140-80-(a)
140-90-(a)
Rentals, Fees & Other Incomes
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Other Charges
Sub-Total
Less:
Rent Remission and Refunds
Sub-total
Total Income of Other income to be shown as part of Fees & User
Charges – Income head-wise Schedule
(a) Insert detailed Codes of Account as applicable
Schedule I-5: Income from Sale & Hire Charges
Detailed
Head Code
1
150-11-(a)
150-12-(a)
150-30-(a)
150-40-(a)
150-41-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Sale of Forms & Publications
Sale of stores & scrap
Sale of Others
Hire Charges for Vehicles
Hire Charges for Equipment
Previous Year
Amount (Rs.)
4
Total Other income to be shown as part of Sale & Hire Charges –
Income head-wise Schedule
(a) Insert detailed Codes of Account as applicable
Schedule I-9: Schedule of Other Income
Code No.
Particulars
1
2
180-10-(a)
Deposits Forfeited
180-11-(a)
Lapsed Deposits Rent
180-20-(a)
Insurance Claim Recovery
180-60-(a)
Excess Provisions written back Rental Income
180-80-(a)
Miscellaneous Income
Total Rental, Fees and Other Income to be shown as part of
Other Income Schedule
(a) Insert detailed Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-16: Schedule of Provisions & Write off
Code No.
Particulars
1
270-10-(a)
270-30-(a)
2
Provisions for Doubtful receivables Rent
Revenues written off Rent
Total expense of Rental, Fees & Other Incomes to
shown as part of Provision and Write off Schedule
(a) Insert detailed Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-18: Schedule of Prior Period Items
Code No.
1
280-20-(a)
280-30-(a)
280-40-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Income
Other Revenues
Recovery of revenues written off
Other income
Sub – Total Income (A)
Previous Year
Amount (Rs.)
4
Rent
11.19
National Municipal Accounts Manual
Code No.
Rentals, Fees & Other Incomes
Current Year
Amount (Rs.)
3
Particulars
1
2
Expenses
280-60-(a)
Refund of Other Revenues- Rent
280-80-(a)
Other Expenses
Sub Total Income (B)
Total expense of Rental, Fees & Other Income to be shown as
part of Prior Period (net) Schedule (A-B) (a) Insert detailed Codes of Account as applicable
Previous Year
Amount (Rs.)
4
11.58 The Balance Sheet Abstract in respect of the other Incomes are presented below.
Schedule B-7: Schedule of Deposits Received
Code No.
Current Year
Amount (Rs.)
3
Particulars
1
340-20-(a)
2
Deposit Revenues Rent
Total
(a) Insert detailed Codes of Account as applicable
Previous Year
Amount (Rs.)
4
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code of
Account
1
350-40-(a)
350-41-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Refunds Payable
Advance Collection of Revenues
Total
(a) Insert detailed Codes of Account as applicable
Previous Year
Amount (Rs.)
4
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
Particulars
1
431-30-(a)
2
Receivables for Fees and User Charges
Less than 3 years*
More than 3 years*
Sub total
Receivables from Other Sources- Rent
Total of Receivables of Rentals, Fees
& Other Incomes
431-40-(a)
Current Year Amount (Rs.)
Provision for
Gross
Net
Outstanding
Amount
Amount
Revenues
3
4
5=3 4
Previous
Year
Amount
(Rs.)
6
*Break up for provision for outstanding revenues are given in Column 4
(a) Insert detailed Codes of Account as applicable
Schedule B-17: Schedule of Cash and Bank Balances
Code of
Account
450-10-(a)
450-21-(a)
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Cash
Bank Account
Total
(a) Insert detailed Codes of Account as applicable
11.20
Particulars
Year (Others)
2
Year (-2)
3
Year (-1)
4
Sr. No. _____________
SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT
FOR THE PERIOD ____________________
in respect of Other Incomes
________________ Name of the ULB
Dated:
Dated:
* Record the name, designation and signature of the person.
Accountant/Authorised Officer
Checked By* : ____________________
1
Property Rental
Trade License Fees
Advertisement Taxes
Others, Specify _______________
Total
Amount in Words : Rupees ________________________________________________
Advance Adjusted:
Against demand raised on Assessment *
Prepared By*: ____________________
Examined and entered
National Municipal Accounts Manual
Current Year
5
11.21
Form OTH-1
Rentals, Fees & Other Incomes
Arrears
Recovery
2
Year (-2)
(Rs.)
3
Year (-1)
(Rs.)
4
Current Year
(Rs.)
5
Advance
received (Rs)
6
1
Collection in respect of incomes accounted on accrual basis
Property Rental
Trade License fees
Advertisement Taxes
Others, Specify ___________
Sub-Total
Collection in respect of incomes accounted on actual receipt
basis
Sale of Fixed assets/scrap
Water Tanker Charges
Penalties
Fines
Others, Specify ___________
Sub-Total
Receipt of Cost of Recovery, if any
Others, Specify ___________
Total Collection
Amount in Words : Rupees ______________________________________________________
Prepared By* : ____________________
Examined and entered
Checked By* : ____________________
Accountant/Authorised Officer
Dated:
Dated:
* Record the name, designation and signature of the person.
Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.
Particulars
7
Total (Rs.)
11.22
Form OTH-2
Rentals, Fees & Other Incomes
Sr. No. ___________
Deposited with _____________
SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION
OF OTHER INCOMES FOR THE PERIOD _____
______________________Name of the ULB
_________________ Collection Centre
National Municipal Accounts Manual
Year (Others)
Year (-2)
Current Year
(Rs.)
5
* Record the name, designation, and signature of the person.
Prepared By* : ____________________
Checked By* : ____________________
Dated:
Examined and entered
Accountant/Authorised Officer
Dated:
6
Total (Rs.)
11.23
Form OTH -3
Rentals, Fees & Other Incomes
Sr. No. _____________
Year (-1)
SUMMARY STATEMENT OF REFUNDS
FOR THE PERIOD ____________________
In respect of Other Incomes
___________Name of the ULB
1
2
3
4
Property Rental
Trade License fees
Advertisement Taxes
Sale of Fixed assets/scrap
Water Tanker Charges
Advance received in respect of Other
incomes
Others, Specify ___________
Total
Amount in Words : Rupees ___________________________________________________________________
Particulars
National Municipal Accounts Manual
2
1
3
Year (-2)
4
Year (-1)
* Record the name, designation and signature of the person.
Prepared By* : ____________________
Checked By* : ____________________
Dated:
Current Year
(Rs.)
Examined and entered
Accountant/Authorised Officer
Dated:
Property Rental
Trade License fees
Advertisement Taxes
Others, Specify ___________
Total
Amount in Words : Rupees _____________________________________________________________
Year (Others)
5
Total (Rs.)
11.24
Form OTH –4
Rentals, Fees & Other Incomes
Sr. No. __________________
SUMMARY STATEMENT OF WRITE OFFS
FOR THE PERIOD ____________________
in respect of Other Incomes
___________Name of the ULB
Particulars
National Municipal Accounts Manual
National Municipal Accounts Manual
Public Works
CHAPTER 12
38%/,& :25.6
12.1 This chapter contains the recommended accounting system for Public Works
transactions undertaken by the Urban Local Body (ULB). These would generally include
construction/expansion/major modification of buildings, development of land, construction of
roads, construction of water works, construction of drainage systems or other public utilities.
Repairs and maintenance of these would also constitute Public Works. Apart from these, any
non-civil contracts (e.g., for furniture) undertaken by the ULB through the Public Works
Department would also be covered here. This chapter also covers the accounting treatment
for ‘Deposit works’ executed by the ULB on behalf of the Government or Government
Departments and recognition on revenue from these Deposit works.
12.2 ‘Original Works’ includes all new constructions or additions and alterations to
existing works. Repairs to newly purchased or previously abandoned buildings, which are
required for bringing them into use, should be classified as Original Works. Where a portion
of an existing structure is dismantled and replaced and if the cost of such replacement
represents a genuine increase in the permanent value of the property as an asset, the work
should be classified as ‘Original Works’.
12.3 ‘Repairs and Maintenance’ includes works, other than those specified under Original
Works, required to maintain buildings, roads, water work assets, drainage system and other
works in proper condition for ordinary use.
12.4 ‘Fees & User Charges’: Where the Public Works Department issues any permission
for road digging or any other activity for private purpose, it recovers the charges incurred for
repair of the damaged road or any other structure from the person seeking permission.
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National Municipal Accounts Manual
Public Works
12.5 The Public Works may be carried out in a municipal area either from Municipal
Funds or from Grants or Special Funds. The accounting procedure for dealing with the
various transactions of Public Works would be similar irrespective of the source of funds.
The accounting entries in respect of works executed from Grants have been described in
Chapter 17 on Grants. Similarly, accounting entries in respect of works executed from
Special Funds have been described in Chapter 19 on Special Funds. This chapter describes
the accounting entries for works executed out of Municipal Funds of the ULB.
12.6
Deposit works: The Governmental departments or the State Governments may use
the services of ULB, for execution of certain works/schemes/approved infrastructure
schemes. Money received from the Governments for the above shall be treated as Deposit
works and are accounted as a liability of an ULB. ULBs are provided certain percentage of
the value of the works/scheme/project/plans completed as their service charges.
ACCOUNTING PRINCIPLES
12.7 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to public works:
a. The cost of fixed assets shall include cost incurred/money spent in acquiring or
installing or constructing fixed assets, interest on borrowings attributable to
acquisition or construction of qualifying fixed assets up to the date of
commissioning of the assets and other incidental expenses incurred up to that date.
b. Any addition to or improvement to the fixed asset that results in increasing the
utility or capacity or useful life of the asset shall be capitalised and included in the
cost of asset. Revenue expenditure in the nature of repairs and maintenance
incurred to maintain the asset and sustain its functioning or the benefit of which is
less than for a year, shall be charged off
c. Assets under erection/installation on existing projects and capital expenditures on
new projects (including advances for capital works and project stores) shall be
shown as "Capital Work-in-Progress".
d. The Earnest Money Deposit and Security Deposit received if forfeited shall be
recognised as income when the right for claiming refund of deposit has expired.
e. Deposit received under Deposit works shall be treated as a liability till such time
the projects for which money is received is completed. Upon completion of the
projects, the cost incurred against it shall be reduced from the liability.
f. Revenues (percentage charges) in respect of Deposit works shall be accrued along
with expenditure of Deposit works.
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National Municipal Accounts Manual
Public Works
ACCOUNTING RECORDS AND PROCEDURES
12.8 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Public Works. For the purposes of
accounting of Public Works there are certain forms, registers, etc., which are specific to
Public Works, e.g., Statement of status of Capital Work-in-Progress PW – 1, etc. These
Forms (Forms PW - 1 and PW - 2) are annexed to this chapter and are prefixed “PW”.
12.9
The procedure for accounting of works expenditure is briefly described below:
a. Earnest Money Deposit (EMD) may be received from the bidders bidding for the
tender as per the principle and the procedures prescribed by the ULB. On tender
being awarded, EMD shall be refunded to the unsuccessful bidders.
b. An agreement may be entered into with the successful bidder as per the terms of
the Tender and agreement, Security Deposit may be taken in advance.
c. Advance may be provided to the contractor as per the terms and procedures of the
ULB and agreement entered into with the contractor.
d. Payment shall be made against bill raised after deducting Security Deposit,
income tax, works contract tax and other deductions/ recovery including advance
provided, if any.
e.
Security Deposit shall be refunded after successful completion of the work as per
terms of agreement
f. In case of Original Works, the expenditure incurred shall be capitalised and
disclosed as an asset in the Balance Sheet.
ACCOUNTING FOR RECEIPT OF EARNEST MONEY DEPOSIT
12.10 The following procedure shall be followed for accounting of receipt of EMD received
in respect of works executed.
a. The procedure to be followed for collection of EMD and its remittance and/or
deposit to the Accounts Department or in the Bank shall be the same as provided
in the Chapter 5 on General Accounting Procedures. The following entry for the
amount received is passed:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger
Dr.
450-21-(a) Bank Account *
Cr.
340-10-(a)
To From Contractors/
Suppliers– EMD
* Specify name of Bank and account number
(a) Insert detailed Head Codes of Account as applicable
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National Municipal Accounts Manual
Public Works
Note: The postings in the Ledger Account of "Earnest Money Deposit - Public Works
Department" Account shall be carried out as indicated in Chapter 5 – General Accounting
Procedures. The postings in the Ledger Accounts shall be similarly carried out in respect of
all other accounting entries described subsequently in this chapter. Whenever, the cash or the
bank account is involved, there will be no entry in the Journal Book.
ACCOUNTING FOR REFUND OF EARNEST MONEY DEPOSIT
12.11 The procedure followed for accounting of refund shall be the same as any payment
provided in Chapter 5 on General Accounting Procedures.
12.12 Recording of refund of Earnest Money Deposit. After the receipt of approval for
payment and upon payment, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
9,000
Cash Book,
Ledger
Cr.
9,000
340-10-(a) From Contractors/Suppliers–
EMD
450-21-To Bank Account*
(a)
*Specify name of Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Accounting for conversion of Earnest Money Deposit into Security Deposit
12.13 Recording of conversion of Earnest Money Deposit into Security Deposit. On receipt
of intimation for conversion of EMD of the successful bidder into Security Deposit payable
the following entry shall be passed:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
1,000
Journal
340-10-(a)
From Contractors/Suppliers– Dr.
Book, Ledger
EMD
Cr.
1,000
340-10-(a)
To From Contractors/
Suppliers-Security
Deposits
(a) Insert Detailed Head Codes of Account as applicable
RECEIPT OF SECURITY DEPOSIT
12.14 Recording of Security Deposit received: The procedure followed for accounting of
Security Deposit is similar to that of Earnest Money Deposit. The Accounts Department shall
pass the following entry:
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National Municipal Accounts Manual
Code of
Account
Public Works
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger
Dr.
Bank Account*
Cr.
To From Contractors/
Suppliers– Security
Deposits
* Specify name of Bank and account number
(a) Insert detailed Head Codes of Account as applicable
450-21-(a)
340-10-(a)
12.15 As per the terms of agreement entered into with the contractor, Security Deposit may
be deducted from the contractor’s bill. For accounting treatment for Security Deposit
deducted from the contractor’s bill, refer section “Expenditure” in this chapter.
Advances
12.16 Recording of payment of advance for work carried out from Municipal Fund, Grant
and Special Fund. As per the terms of agreement, advance may be paid to the contractor.
Advance may be provided either in cash or in kind, i.e., by way of supply of materials. On
receipt of approval for payment, and on payment, entries will be made for money advanced in
Cheque Issue Register in Form GEN –15 and in Register of Advance in Form GEN – 16 for
the cheques issued to the contractor. The accounting entries to be passed are :
a. For recording advance sanctioned for payment
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrativ
e figures
figures
1,000
Journal Book,
Ledger
950
Dr.
Advance to Suppliers
&Contractors
Cr.
350-10-(a)
To Creditors –
Contractors
Advance Control
Cr.
350-20-(a)
Account
To Recoveries Payable –
TDS from Contractors
(a) Insert detailed Head Codes of Account as applicable
460-40-(a)
50
b. For recording disbursement of advance,
i. In cash/cheque:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
950
Cash Book,
350-10-(a) Creditors –Contractors Advance Dr.
Ledger
Control Account
To Bank Account *
Cr.
950
450-21-(a)
*Specify name of Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
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National Municipal Accounts Manual
Public Works
ii. Materials supplied to the Contractor:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
950
Cash Book,
Ledger
460-40-(a) Advances to ContractorsDr.
Material Issued to contractors
To Stock in Hand
430-(b)
Cr.
Purchase of Materials
950
(a) Insert Detailed Head Codes of Account as applicable.
(b) Insert Minor & Detailed Head Codes of Account as applicable.
Note: This entry will be passed along with other items of consumption based on valuation
statement as explained in Paras 13.24 to 13.27 of Chapter 13 on Stores Accounting.
EXPENDITURE
12.17 Preparation of Bill for payment. On the basis of work completed as per governing
rules, a bill shall be prepared and sent for payment. The amount of security deposit, income
tax deducted at source, works contract tax and any other recovery or deduction, including
recovery for supply of material by the Stores and money advanced to the contractor, should
be specified in the Bill. Running bills are submitted during the progress of work and final bill
is normally submitted on completion of work. The Contract Completion Certificate shall be
annexed to the final bill.
12.18 Recording of Contractor s bill in respect of Original Work , On receipt of the
processed bill, the particulars be entered in a Register of Bills for Payment in Form GEN
13. To record the liability in respect of contractor s bill for Original Works undertaken, the
following entry shall be passed:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
50,000
Journal
Cr.
44,000 Book, Ledger
412-(a)
Capital Work-in-Progress
350-10-(b)
To Creditors Contractors
Account
Cr.
340-10-(b)
To From Contractors /
Suppliers Security Deposits
Cr.
460-40-(b)
To Advance to Suppliers &
Contractors
To Recoveries Payable from Cr.
350-20-(b)
TDS Contractors
To Recoveries Payable
Cr.
350-20-(b)
Works Contract Tax
To Advance to Contractors - Cr.
460-40-(b)
Material Issued to
Contractors *
* At agreement rates for material issue with the Contractor
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
2,500
500
1,000
1,500
500
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National Municipal Accounts Manual
Public Works
12.19 The Capital Work-in-Progress Account shall be a control account wherein details of
expenditure incurred on capital projects shall be recorded. Separate Capital Work-in-Progress
Control Accounts shall be opened for Civil, Electrical, Water Works and Other projects.
12.20 At period-end, the departments incurring expenditure on capital projects shall submit
a Summary Statement of Status on Capital Work-in-Progress in Form PW 1 detailing total
expenditure incurred till date on each of the capital projects. The details of total expenditure
incurred on each of the capital projects can be collated from the Work Sheet (Form PW 2).
12.21 The Contractors Control Account shall be a control account in which the liability for
amount payable to various contractors for work executed shall be credited and the amount
paid to the various contractors shall be debited.
12.22 Recording of payment made to Contractors. The procedure to be followed for
approval of a contractor s bill for payment and making payment shall be the same as
provided in Chapter 5 on General Accounting Procedures to which reference is invited. The
Accounts Department shall, on receipt of Payment Order in Form GEN 14 together with the
Work Sheet and Contract Completion Certificate, where applicable, after making the
payment, enter the details of the payment in the Work Sheet (Form PW 2) and pass the
following entry:
Code of
Account
350-10-(a)
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
44,000
Cash Book,
Ledger
44,000
Creditors Contractors
Dr.
Account
450-21-(a)
To Bank Account *
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
12.23 Recording of payment of TDS Payable and Works Contract Tax Payable. The income
tax and works contract tax deducted from the bills of the contractors shall be paid by the
Accounts Department to the concerned authorities as and when due as per the relevant laws
in force. On payment of Income Tax and Works Contract Tax deducted, the Accounts
Department shall pass the following entry:
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National Municipal Accounts Manual
Code of
Account
Public Works
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,050
Cash Book,
Ledger
1,500
350-20-(a) Recoveries Payable -TDS
Dr.
from Contractors
350-20-(a) Recoveries Payable -Works
Dr.
Contract Tax
450-21-(a)
To Bank Account*
Cr.
*Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
2,550
12.24 Recording of difference between the Stores Issue Rate and the Recovery Rate for
material issued to Contractors. The Accounts Department shall determine the difference
between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To
record the difference, the Accounts Department shall pass either entry (a) or entry (b) given
below:
a. In case of favorable Rate Variance, where Stores Issue Rate is less than Recovery
Rate with the Contractor for materials issue:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
460-40-(a) Advance to Contractors Dr.
50
Journal Book,
Material issued to Contractors
Ledger
To Capital Work-in412-(a)
Cr.
50
Progress
(a) Insert Minor & Detailed Head Codes of Account as applicable
b. In case of Adverse Rate Variance, where Stores Issue Rate is greater than
Recovery rate from the Contractor for materials issue:
Code of
Account
412-(a)
460-40-(a)
Accounting Entry
Capital Work-in-Progress
To Advance to Contractors
Material issued to
Contractors
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
20
Journal
20 Book, Ledger
(a) Insert Minor & Detailed Head Codes of Account as applicable
Works executed by Public Works Department
12.25 The accounting procedure and the accounting entries to be recorded for materials
purchased for works shall be the same as provided in Chapter 13 on Stores.
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National Municipal Accounts Manual
Public Works
12.26 Recording of materials consumed in Original Works. Based on the bill received from
the Public Works Department for works executed, the Accounts Department shall pass the
following entry:
Code of
Account
412-(a)
430-(a)
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
5,000
Journal Book,
Cr.
5,000
Ledger
Capital Work-in-Progress
To Stock in Hand –
Purchase of Materials
(a) Insert Minor & Detailed Head Codes of Account as applicable.
Note: This entry will be passed along with other items of consumption based on valuation
statement as explained in Paras 13.24 to 13.27 of Chapter 13 on Stores Accounting
CAPITALISATION OF CAPITAL WORK-IN PROGRESS
12.27 On completion of construction of the asset, the asset becomes ready for use. Thus, it
becomes necessary to transfer the cost incurred for construction (which is temporarily
accounted in capital work-in-progress account) to the relevant asset account. This process is
called capitalisation.
12.28 Recording of capitalisation of Capital Work-in-progress. On receipt of Contract
Completion Certificate, the Accounts Department shall capitalise the amount lying in the
Capital Work-in-Progress Account and convert the amount pertaining to the Capital Work-inProgress and lying in the Capital Work-in-Progress Account into a Fixed Asset. The
Accounts Department shall pass the following entry:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
410-(a)
Fixed Asset (Name of the Fixed Dr.
1,00,000
Journal Book,
Asset) (1)
Ledger
412-(a)
To Capital Work-inCr.
1,00,000 Register of
Progress (please specify)
Movable/
Immovable
Assets
(a) Insert Minor & Detailed Head Codes of Account as applicable
(1) Fixed Assets of a particular class shall be accounted for under one broad fixed asset
account head. For instance, ULB may have more than one hospital building, then all the
hospital buildings shall be recorded under one broad head of Buildings (Code of Account
410-20-(a)). Any new hospital building constructed, though shall be recorded separately
in the Register of Buildings, shall be recorded under the account head ‘Hospital
Buildings’.
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National Municipal Accounts Manual
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12.29 Recording of deductions from contractor’s bill . For deductions made from contractor' s
bills, which is in the nature of penalty or liquidated damages levied on the contractor for
delay in completion of construction or sub-standard construction or for any other reason, the
Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
350-10-(a)
Creditors –Contractors Account Dr.
5,000
Journal
180-80-(a)
To Other Income –
Cr.
5,000 Book,
Miscellaneous Income
Ledger
(a) Insert Detailed Head Codes of Account as applicable
12.30 Where any loan has been borrowed for the construction of any qualifying fixed asset,
i.e., Original Works, the cost of construction of qualifying fixed asset shall also include the
interest paid on that loan till the date of capitalisation of the asset. The accounting procedure
to be followed and accounting entries to be recorded for receipt of loan, payment of interest
on funds borrowed and repayment of loan has been provided in Chapter 18 on Borrowings.
12.31 The amount of interest to be charged to the Original Works under consideration shall
bear the same proportion to the total interest payable on loan as the project cost of the
concerned work bears to the total project cost for which funds have been borrowed. However,
in case where the loan has been specifically borrowed for the execution of a particular work,
the entire amount of interest payable on that loan shall be capitalised. The accounting entry
for capitalisation of interest shall be passed for the interest accrued, whether paid or not, till
the date of capitalisation of the work.
12.32 Recording of capitalisation of interest paid on loans borrowed for original works. At
the period-end, for capitalising interest accrued, the Accounts Department shall pass the
following entry:
Code of
Account
412-(a)
240-(a)
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Journal Book,
10,000 Ledger
Capital Work-in-Progress
Dr.
To Interest & Finance
Cr.
Charges
(a) Insert Minor and Detailed Head Codes of Account as applicable
12.33 The amount to be capitalised at the completion of the construction of the original
work shall be inclusive of the amount of interest charged to the work.
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National Municipal Accounts Manual
Public Works
12.34 The Register of Immovable Property maintained in Form GEN – 30 shall be updated
at the time of capitalisation of the Original Work.
REFUND OF SECURITY DEPOSIT
12.35 Security Deposit shall be refunded after the expiry of the liability period, including
defects liability period, as specified in the agreement entered into with the contractor.
a. Recording of refund of Security Deposit after adjusting for recoveries. In case
where any dues are recoverable from the contractor, after the receipt of approval,
draw the cheque for net amount after deducting the recoveries to be made from the
contractor. The accounting entry to be passed is as follows:
i. For recording adjustment of recoveries against Security Deposit
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
340-10-(a) From Contractors / Suppliers– Dr.
5,000
Journal
Security Deposits
Book, Ledger
180-80-(a)
To Other Income –
Cr.
5,000
Miscellaneous Income
(a) Insert Detailed Head Codes of Account as applicable
ii.
For recording payment of net Security Deposit
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
20,000
Cash Book,
340-10-(a) From Contractors /Suppliers– Dr.
Ledger
Security Deposits
To Bank Account*
450-21-(a)
Cr.
20,000
* Specify Name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
ACCOUNTING FOR LAPSED DEPOSITS
12.36 The Earnest Money Deposit and Security Deposit received, if forfeited, shall be
recognised as income in the year in which the right for claiming refund of these deposits has
expired. The following entries shall be passed:
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National Municipal Accounts Manual
Public Works
a. For Earnest Money Deposit lapsed. To record Earnest Money Deposit lapsed.
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
2,000
Journal Book,
340-10-(a) From
Contractors
/ Dr.
Ledger
Suppliers– EMD
To Other Income Lapsed
Cr.
2,000
180-11-(a)
Deposit –Contractors/
Suppliers
(a) Insert Detailed Head Codes of Account as applicable
b. For Security Deposit lapsed. To record Security Deposit lapsed.
Debit
Credit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
5,000
Journal
340-10-(a) From
Contractors
/ Dr.
Book, Ledger
Suppliers– Security Deposit
To Other Income Lapsed
Cr.
5,000
180-11-(a)
Deposit – Contractors/
Suppliers
(a) Insert Detailed Head Codes of Account as applicable
ACCOUNTING FOR REPAIRS AND MAINTENANCE WORKS
12.37 As per the principles framed by the ULB, tenders may be floated for award of repairs
and maintenance work. . The accounting procedure to be followed, the accounting entries to
be recorded and accounting records to be updated in respect of receipt of Earnest Money
Deposit, refund of Earnest Money Deposit to the unsuccessful bidders and conversion of
Earnest Money Deposit of successful bidders into Security Deposit shall be the same as
provided in the section on “Accounting for Original Works” earlier in this chapter.
12.38 Where the terms of agreement entered into with the contractor provide for collection
of a certain percentage of Security Deposit in advance, a receipt (Form GEN – 8) shall be
issued for the amount collected to the successful bidder. The accounting procedure to be
followed, accounting entries to be recorded and the accounting records to be updated in
respect of receipt of Security Deposit and deduction of Security Deposit from the contractor’s
bills shall be the same as provided in the section on “Accounting for Original Works” earlier
in this chapter.
12.39 As per the terms of agreement, advance may be paid to the contractor. The accounting
procedure to be followed, accounting entries to be recorded and the accounting records to be
updated shall be the same as provided in the section on “Accounting for Original Works”
earlier in this chapter.
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National Municipal Accounts Manual
Public Works
12.40 The accounting procedure to be followed and the accounting records to be updated on
receipt of bill shall be the same as provided in the section on Accounting for Original
Works earlier in this chapter.
12.41 Recording of Contractor’s bill in respect of Repairs and Maintenance Work . On
receipt of processed bill, for recording the liability in respect of the repairs and maintenance
work, the following entry shall be passed:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Cr.
7,900 Ledger
230-(a)
Repairs & Maintenance- #
350-10-(b)
To Creditors – Contractors
Control Account
340-10-(b)
Cr.
To Deposits Received from
Contractors /Suppliers–
Security Deposits
To Advance to Suppliers &
460-40-(b)
Cr.
Contractors
350-20-(b)
To Recoveries Payable from
Cr.
TDS Contractors
To Recoveries Payable –
350-20-(b)
Cr.
Works Contract Tax
To Advance to Contractors –
460-40-(a)
Cr.
Material Issued to
Contractors *
# Specify the nature of asset for which the repairs are made.
* At agreement rates for material issue with the Contractor
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
500
100
200
300
1,000
12.42 Repairs and Maintenance Ledger Accounts shall be opened in respect of repairs &
maintenance expenditure incurred for each class of assets. All the repairs and maintenance
expenditure pertaining to a class of asset shall be debited to the Repairs and Maintenance
Ledger Account maintained for that class of asset.
12.43 The Accounts Department shall maintain a Function-wise Expense Subsidiary Ledger
in Form GEN – 34 for each function, in which, asset-wise, total operations and maintenance
expenditure incurred by the department shall be recorded. On recording of repairs and
maintenance expenditure, the Accounts Department shall simultaneously update the
Subsidiary Ledger mentioned above. The procedure for updating Subsidiary Ledger has been
provided in Chapter 5 – General Accounting Procedures, reference to which is invited.
12.44 Recording of payment to Contractor. On making of payment to the contractor, the
Accounts Department shall pass the following entry:
12.13
National Municipal Accounts Manual
Public Works
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
Dr.
7,900
Cash Book,
350-10-(a) Creditors - Contractors
Ledger
Control Account
To Bank Account*
Cr.
7,900
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
12.45 Recording of difference between the Stores Issue Rate and the Recovery Rate for
material issued to Contractors. The Accounts Department shall determine the difference
between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To
record the difference, the Accounts Department shall pass either entry (a) or entry (b) given
below:
a. In case of Favorable Rate Variance, where Stores Issue Rate is less than Recovery
Rate with the Contractor for materials issue:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
Dr.
50
Journal Book,
460-40-(a) Advance to Contractors Ledger
Material issued to Contractors
To Repairs & Maintenance * Cr.
50
230-(b)
* Specify the type of asset for which repairs are made
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
b. In case of Adverse Rate Variance, where Stores Issue Rate is greater than
Recovery Rate with the Contractor for materials issue:
Code of
Account
230-(a)
460-40-(b)
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
20
Journal
20 Book,
Ledger
Repairs & Maintenance *
Dr.
To Advance to
Cr.
Contractors -Material
issued to Contractors
* Specify the type of asset for which repairs are made
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
12.46 Recording of materials consumed in Repairs and Maintenance Works. At times, the
Public Works Department may execute repairs and maintenance work from its own resources
without awarding the contract through tender or otherwise. In such case, on the basis of bill
received from the Public Works Department in respect of materials consumed, the Accounts
Department shall pass the following entry:
12.14
National Municipal Accounts Manual
Code of
Account
Public Works
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
2,000
Journal Book,
Cr.
2,000 Ledger
230-30-(a) Consumption of Stores
430-10-(a)
To Stock in Hand –
Purchase of Materials
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
12.47 The Function wise Expense Subsidiary Ledger (Form GEN – 34) shall be updated in
respect of stores released for repairs and maintenance work.
12.48 The income tax and the works contract tax deducted from the contractor’s bill shall be
paid by the Accounts Department to the concerned authorities as and when due as per the
relevant law in force. The accounting entries to be recorded and the accounting records to be
updated in respect of payment of TDS Payable and Works Contract Tax Payable shall be the
same as provided in the section on Accounting for Original Works earlier in this chapter
DEPOSIT WORKS
12.49 The procedure involved in such works is briefly described below:
¾ Receipt of money from Governmental Departments as Deposits towards their
works.
¾ Execution of works as in case of any other Public works
¾ Settlement of Accounts on completion of works
12.50 ULBs are normally paid at some percentage of works as service charges. These
service charges are accrued along with the bills for expenditure. The accounting procedures
for these transactions are detailed in the subsequent paras.
12.51 The Accounts Department shall maintain a Deposit Works Register in Form PW-3
with separate registers for each kind of the Deposit works. (For example, Civil, Electrical,
etc). Separate pages for each ‘deposit work’ for recording details of receipt of grant and
expenditures incurred from it.
Receipt of Money
12.52 Receipt of money from Governments/Departments for ‘Deposit works: The procedure
to be followed for collection of ‘Deposit works money’ and its remittance and/or deposit to
the Acc1ounts Department or in the Bank shall be the same as provided in the Chapter 5 on
General Accounting Procedures. The details of the Deposit works contract (including names
of the departments who have entrusted the deposit works) shall be recorded in the Deposit
Works Register (in form PW – 3). The Accounts department shall pass the following entry
for receipt of money:
12.15
National Municipal Accounts Manual
Code of
Account
Public Works
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Cash Book,
10,00,000
Dr.
5,00,000 Ledger
Cr.
Bank Account *
To Deposit Works-Civil
Works
Cr.
To Deposit Works –
341-20-(a)
Electrical
To Deposit Works – Others Cr.
341-30-(a)
*Specify name of Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
450-21-(a)
341-10-(a)
4,00,000
1,00,000
12.53 Receipt and refund of earnest money deposits: Accounting entries for receipt and
refund of earnest money deposits shall be same as explained in Para 12.10 & 12.11.
12.54 Receipt and conversion / receipt of Security deposits: Accounting entries for
conversion of earnest money deposits into Security Deposits and receipt of Security Deposit
shall be same as explained in Paras 12.13 &12.14.
Advances
12.55 Advance to the Contractors: Accounting for advances made to the Contractors allotted
for Deposit works shall be same as explained in Para 12.16.
Payment
12.56 Preparation of Bill for payment. On the basis of work completed as per governing
rules, a bill shall be prepared and sent for payment. The amount of security deposit, income
tax deducted at source, works contract tax and any other recovery or deduction, including
recovery for supply of material by the Stores and money advanced to the contractor, should
be specified in the Bill. Running bills are submitted during the progress of work and final bill
is normally submitted on completion of work. The Contract Completion Certificate shall be
annexed to the final bill.
12.57 Recording of Contractor’s bill in respect of Deposit Works: On receipt of the
processed bill, the particulars be entered in a Register of Bills for Payment in Form GEN –
13. To record the liability in respect of contractor’s bill for Deposit Works undertaken and
also a percentage (as agreed with the Government/Department) of works completed as an
income for the ULB, the following entry shall be passed:
12.16
National Municipal Accounts Manual
Code of
Account
Public Works
Accounting Entry
Debit
Credit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
510,000
Journal
Cr.
440,000 Book, Ledger
470-10-(a) Deposit Works – Expenditure
350-10-(a)
To Creditors – Contractors
Account
Cr.
25,000
340-10-(a)
To from Contractors /
Suppliers– Security Deposits
Cr.
5,000
460-40-(a)
To Advance to Suppliers
& Contractors
Cr.
To Recoveries Payable
10,000
350-20-(a)
From TDS Contractors
To Recoveries Payable –
Cr.
15,000
350-20-(a)
Works Contract Tax
To Advance to contractors –
Cr.
5,000
460-40-(a)
Material Issued to Contractors
*
To Service/Administrative
Cr.
10,000
140-70-(a)
Charges – Percentage on
Deposit Works
* At agreement rates for material issue with the Contractor
(a) Insert Detailed Head Codes of Account as applicable
Notes:
(i) The Deposit Works -Expenditure Account shall be a control account wherein details of
expenditure incurred on Deposit Works shall be recorded. Separate Deposit Works Control
Accounts shall be opened for Civil, Electrical, and other work projects.
(ii) The Contractors Control Account shall be a control account in which the liability for
amount payable to various contractors for Deposit works executed shall be credited and the
amount paid to the various contractors shall be debited.
12.58 Recording of payment to Contractors: Accounting for payment made to the
Contractors allotted for Deposit works shall be same as explained in Para 12.22.
12.59 Recording of payment of TDS Payable and Works Contract Tax Payable. Accounting
entries for payment of TDS and Works contract Tax shall be same as explained in Para.12.23.
Materials Consumed
12.60 Recording of difference between the Stores Issue Rate and the Recovery Rate for
material issued to Contractors. The Accounts Department shall determine the difference
between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To
record the difference, the Accounts Department shall pass either entry (a) or entry (b) given
below:
a. In case of favorable Rate Variance, where Stores Issue Rate is less than Recovery
Rate with the Contractor for materials issue:
12.17
National Municipal Accounts Manual
Public Works
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
50
Journal Book,
460-40-(a) Advance to contractors - Dr.
Ledger
Material issued to Contractors
To Deposit Works –
Cr.
50
470-10-(a)
Expenditure
(a) Insert Detailed Head Codes of Account as applicable
b. In case of adverse Rate Variance, where Stores Issue Rate is greater than
Recovery Rate with the Contractor for materials issue:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
470-10-(a) Deposit Works-Expenditure
Dr.
20
Journal Book,
460-40-(a)
To Advance to contractors Cr.
20 Ledger
- Material issued to
Contractors
(a) Insert Detailed Head Codes of Account as applicable
Final Payment to Contractors & Refund of security deposit
12.61 Recording of deductions from contractor’s bill . For deductions made from contractor' s
bills, which is in the nature of penalty or liquidated damages levied on the contractor for
delay in completion of construction or sub-standard construction or for any other reason, the
Accounts Department shall pass the following entry:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
350-10-(a) Creditors-Contractors Account Dr.
3,000
Journal Book,
341-(b)
To Deposit Works
Cr.
3,000 Ledger
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
12.62 Recording of refund of Security Deposit after adjusting for recoveries. Security
Deposit shall be refunded after the expiry of the liability period, including defects liability
period, as specified in the agreement entered into with the contractor. In case where any dues
are recoverable from the contractor, after the receipt of approval, draw the cheque for net
amount after deducting the recoveries to be made from the contractor. The accounting entry
to be passed is as follows:
12.18
National Municipal Accounts Manual
Public Works
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
2,000
Journal Book,
340-10-(a) From Contractors / Suppliers Dr.
Ledger
– Security Deposits
To Deposit works
Cr.
2,000
341-(b)
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
12.63 For recording payment of net Security Deposit
Debit
Credit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
340-10-(a) From Contractors /Suppliers– Dr.
20,000
Cash Book,
Security Deposits
Ledger
450-21-(a)
To Bank Account*
Cr.
20,000
* Specify Name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Accounting for lapsed deposits of Deposit works
12.64 Accounting for lapsed deposits in respect of deposit works shall be same as explained
in Para 12.36.
Closure of deposit works-expenditure account
12.65 On completion of Deposit works, the assets under Deposit works becomes ready for
use and will be handed over to the concerned government department and the balance if any
shall be refunded. Thus, it becomes necessary to adjust the cost incurred for Deposit works
against the money received. The Account Department shall pass the following for transfer of
Deposit expenses to Deposit Works account:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
4,50,000
Ledger
3,85,000
Dr.
341-10-(a) Deposit works – Civil Works
341-20-(a) Deposit works – Electrical Dr.
works
65,000
Dr.
341-30-(a) Deposit works – Others
Cr.
To Deposit Works –
470-10-(a)
Expenditure
(a) Insert Detailed Head Codes of Account as applicable
900,000
12.19
National Municipal Accounts Manual
Public Works
Refund of balance ‘Deposit Works Money’
12.66 The balance amount after utilisation of the amounts for the Deposit works shall be
refunded to the Governments/Government Departments by transferring the balance in
‘Deposit Works’ account to a liability account. The Accounts Department shall pass the
following entry for creation of liability account:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
55,000
Journal
15,000
Book, Ledger
35,000
1,05,000
Dr.
Deposit Works –Civil
Deposit Works – Electrical Dr.
Dr.
Deposit Works – Others
Cr.
To Refund Payable –
Deposit Works
(a) Insert Detailed Head Codes of Account as applicable
341-10-(a)
341-20-(a)
341-30-(a)
350-40-(a)
12.67 Accounting entry for recording of payment of ‘Deposit Works Refund payable after
the above entry is as follows:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
350-40-(a) Refund Payable - Deposit Dr.
105,000
Journal Book,
Works
Ledger
450-21-(a)
To Bank Account*
Cr.
105,000
* Specify Name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
PERIOD END PROCEDURE
12.68 At the period-end, the Public Works Department shall ensure that all the bills received
in respect of work executed before the last date of the accounting period, are processed and
forwarded to the Accounts Department for accounting and payment within one month where
the accounting period is a financial year and in other cases in 15 days from the end of the
accounting period. The accounting entry to be recorded shall be the same as provided in para.
12.18 above in case of Original Works and para. 12.41 for Repairs and Maintenance Works.
12.69 At period-end, the departments incurring expenditure on Deposit Works shall submit
a Summary Statement of Status on Deposit Works Expenditure maintained category wise as
Civil, Electrical and Others in Form PW – 1 (similar to Capital work in progress) detailing
total amount of works incurred till date on each of the Deposit Works. The details of total
expenditure incurred on each of the Deposit Works can be collated from the Work Sheet
(similar to Capital work in progress) in Form PW – 2.
12.20
National Municipal Accounts Manual
Public Works
INCOME
12.70 Tender Form Fees. For tender forms sold to the intended bidders, a receipt shall be
issued for the amount received in Form GEN – 8.
12.71 The Public Works Department shall recover in advance, the charges estimated for
repairing of roads or any other structure damaged, from the person to whom permission is
issued for laying of telephone or electrical cables or for any other purpose, which results in
damage of road, or any other public structure.
12.72 The procedure to be followed with reference to these incomes for remittance and/or
deposit of collections made to the Accounts Department or in the Bank shall be the same as
provided in the Chapter 5 on General Accounting Procedures, reference to which is invited.
12.73 Recording of Tender Form Fees. On the basis of the Summary of Daily Collection
(Form GEN – 12) received from the Public Works Department, for accounting collections
received, the Accounts Department shall pass the following accounting entries:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
450-21-(a) Bank Account *
Dr.
1,000
Cash Book,
150-11-(a)
To Tender Form Fees** Cr.
1,000 Ledger
* Specify Name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
12.74 Similar accounting entries shall be passed in respect of other incomes earned by the
Public Works Department.
INTERNAL CONTROLS
12.75 The following internal controls shall be observed by the ULB:
12.76 The Public Works Department and the Chief of Accounts or any other responsible
officer as defined by the applicable Acts, shall ensure the availability of adequate budget
allocation after considering all commitments made against that budget allocation before
undertaking any new work, whether being an Original Work or Repairs and Maintenance
Work.
12.77 The Head of the Accounts Department shall exercise the following internal controls:
a. A distinction should be maintained between the works of capital nature and
revenue nature.
12.21
National Municipal Accounts Manual
Public Works
b. A quarterly reconciliation of the balance as per the Deposit Register maintained at
the Public Works Department shall be carried out with the Deposit Ledger
accounts.
12.78 On the completion of an Original Work, reconciliation should be carried out in respect
of the amount expended as shown in the records maintained by the Public Works Department
and the capital work-in-progress control ledger account maintained by the Accounts
Department.
12.79 On receipt of Summary Statement of Status on Capital Work-in-Progress (Form PW –
1), the Accounts Department shall ensure that total expenditure incurred as stated in the
Statement tallies with the cumulative total of several Capital Work-in-Progress Ledger
Accounts.
12.80 The Accounts Department shall ensure that the tax deducted at source and works
contract tax deducted from the contractor’s bill, etc., is deposited with the Government in
accordance with the provisions of the relevant Acts.
12.81 At the end of each month, the Accounts Department shall reconcile the total
expenditure as per the Functional Expense (Repairs and Maintenance) Subsidiary Ledger (in
form GEN –34) with the total expenditure recorded in the several Repairs and Maintenance
Ledger Accounts.
12.82 The Public Works Department, Accounts Department and the Audit Department shall
exercise the following internal controls:
a. Ensure budget availability at the time of approval of the bill.
b. Ensure that all the dues, including liquidated damages/penalties, are recovered
from the contractor before making the final payment in respect of any contract.
c. Ensure that no amount is due from suppliers/contractors, which may be otherwise
adjusted before payment.
d. Ensure that all the bills/invoices of contractors were journalised before release of
the payments.
12.83 At period-end, the Head of the Accounts shall review the Work Sheets maintained for
ascertaining whether any of the capital work in progress qualifies for capitalisation.
12.22
National Municipal Accounts Manual
Public Works
12.84 The Chief Executive Officer/Head of the ULB shall specify such appropriate calendar
of returns /reports for monitoring.
12.85 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN THE FINANCIAL STATEMENTS
12.86 The various heads of accounts used for the accounting of Public Works shall be
reflected in the Financial Statements or the Schedules attached to the Financial Statements of
the ULB. All such Financial Statements and schedules should be affixed with signature and
seal of designated authorities.
12.87 The Schedules of the Income and Expenditure Statement in respect of Public Works
are presented below.
Schedule I-4: Schedule of Fees & User Charges
Code No.
Particulars
1
140-70-(a)
2
Service/Administrative Charges - Percentage Charges
on Deposit Works
Total Income from Public Works shown as part of Fees & User
Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-5: Schedule of Income from Sale & Hire Charges
Code No.
Particulars
1
2
150-11-(a) Sale of Forms & Publications- Tender Fees
150-30-(a) Sale of Others
Total income from public works shown as part of Sale and Hire
Charges Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Schedule I-9: Schedule of Other Income
Code No.
Particulars
180-11-(a) Lapsed deposit income
180-80-(a) Miscelleneous Income
Total income form Public Works shown as part of Other Income
Schedule
(a) Insert Detailed Head Codes of Account as applicable
12.23
National Municipal Accounts Manual
Public Works
Schedule I-12: Schedule of Operations and Maintenance
Code No.
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
1
2
3
4
230-30-(a)
Consumption of Stores
230-50-(a)
Repairs & maintenance -Infrastructure Assets
230-51-(a)
Repairs & maintenance - Civic Amenities
230-52-(a)
Repairs & maintenance – Buildings
230-53-(a)
Repairs & maintenance – Vehicles
230-59-(a)
Repairs & maintenance – Others
230-80-(a)
Other operating & maintenance expenses
Total Expense of Public Works to be shown as part of Operations &
Maintenance – Expense head wise Schedule
(a) Insert Detailed Head Codes of Account as applicable
12.88 The cost incurred on the Original Works should be categorised as Capital Work-inProgress and disclosed on the Asset side of the Balance Sheet of the ULBs. After completion
of the construction, the Capital Work-in-progress should be capitalised and recorded as Fixed
Asset in the Balance Sheet.
12.89 The Balance Sheet Abstracts in respect of Public Works are presented below.
Schedule B-7: Schedule of Deposits Received
Code No.
Particulars
1
340-10-(a)
340-10-(a)
340-80-(a)
2
From Contractors and Suppliers – EMD
From Contractors and Suppliers – Security Deposits
From Others
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule B -8: Schedule of Deposits Works
Code No.
1
341-10-(a)
341-20-(a)
341-30-(a)
Nature of Deposit
Opening balance
at the beginning
of the year
Amount (R.s)
Additions
during the
current year
Amount (Rs.)
Utilisation /
expenditure
Amount (Rs.)
Balance
outstanding at
the end of the
current year
Amount (Rs.)
6
2
3
4
5
Civil Works
Electrical works
Others
Total
(a) Insert Detailed Head Codes of Account as applicable
Note:
1. The amount received from the department on whose behalf the deposit works have been undertaken would
appear in col. 4
2. Expenditure incurred including percentage (departments) charges would appear in Col 5
3. Balance as in Col. 6 would appear in the balance sheet as a liability
12.24
National Municipal Accounts Manual
Public Works
Schedule B–_9: Schedule of Other Liabilities (Creditors)
Code No.
Current Year
Amount (Rs.)
Particulars
Previous Year
Amount (Rs.)
350-10-(a)
350-40-(a)
350-20-(a)
350-20-(a)
Creditors – Contractors Account
Refunds Payable – Deposit Works
Recoveries Payable –TDS from Contractors
Recoveries Payable - Works Contract Tax
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-17: Schedule of Cash and Bank Balances
Code No.
Current Year
Amount (Rs.)
Particulars
Previous Year
Amount (Rs.)
450-10-(a)
450-21-(a)
Cash
Main Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedules B-18: Schedule of Loans, Advances & Deposits
Code No.
1
460-40-(a)
Particulars
Opening
Balance at the
beginning of
the year (Rs.)
3
2
Advance to Suppliers &
Contractors – Public Works
460-40-(a) Advance to Suppliers &
Contractors – Public Works
Total
(a) Insert Detailed Head Codes of Account as applicable
Paid during
the current
year (Rs.)
Recovered
during the
year (Rs.)
4
5
Balance
outstanding
at the end of
the year (Rs.)
6
12.25
_____________ Name of the ULB
2
1
Amount of
Contract
remaining
unexecuted
Rs.
7 = (3-6)
Checked by* : _____________
Expenditure
Expenditure
Value of Work
Total expenditure
incurred at the
incurred (bills
/ Contract
incurred at the
beginning of admitted) during the
Amount
end of the quarter
the quarter
quarter
Rs.
Rs.
Rs.
Rs.
3
4
5
6 = (4+5)
For the Quarter : ________
* Record the Name, Designation and Signature of the person making the entry in the Summary Statement and the person checking the entry
Prepared by* : _____________
Name of Project
Work
Order
No.
Name of the Department: _____________
SUMMARY STATEMENT OF STATUS OF CAPITAL WORK-IN-PROGRESS/DEPOSIT WORKS
National Municipal Accounts Manual
8
12.26
Whether
project
completed
(Yes/No)
Form PW – 1
Public Works
WORK SHEET
Note:
1.
2.
3.
Initials
Contract of the
amount Author
ised
unutilised (Rs.) Officer
- PWD
6
7
3
4
Initials of Authorised
Officer
8
9
10
11
12
13
14
15
16
{6-(7+8+9+ 10+11+12+ 13)}
Initials of the
Recovery Recovery
Security
Authorised
Net
for
Other
for
Works
Deposit TDS
Remarks
Officer –
Contract material advance Deductions Amount
deduct- (Rs.)
Accounts
provided
paid (Rs.)
(Rs.)
Tax (Rs.) issued
ed (Rs.)
Department
(Rs.)
(Rs.)
2
1
Amount (Rs.)
Form PW - 2
Public Works
12.27
For each entry made; record the Name, Designation and Signature of the person making the entry in the work sheet and the person checking the entry
A separate Work sheet shall be prepared for each of the multiple transaction contract which shall be sent alongwith each contractor' s bill
At the completion of contract and at the time of final payment being made to the Contractor, it shall be ensured that the sum total of Column 3 of ' Details of Advance
Provided' equals to sum total of Column 12
Amount CumuAmount
approved lative
claimed
Bill Date payable as per
approby the
Authorised ved bill
No. of Bill
the
contractor' s Officer amount
(Rs.)
(Rs.)
bill (Rs.)
1
2
3
4
5
Date
Details of Advance Provided
Voucher No.
_______________ Name of the ULB
Serial No. of estimate
Work Order No.
Name of Work
Nature of Work
Contract Amount (Rs.)
Number and date of order sanctioning the estimate (Administrative Approval)
Order sanctioning the contract (No. and Date of Resolution)
Name of the Contractor
National Municipal Accounts Manual
2
1
Order/Designation of the
Authority sanctioning the
Deposit Works
3
10
9
11
Nature of
Payments***
12
Amount
(Rs.)
4
13
6
Total Amount
(Rs.)
7
Date
8
Amount (Rs.)
Money Received #
Form PW-3
Public Works
*** Nature of payments shall also include the % of Charges recognised as revenue of the ULB for the execution of the Works.
# Money received shall also include any other sum received in respect of the Deposit works in the form of penalties/charges for delay or defect
from Sub-contractors
Note:
1. Open Separate folios for each of the Deposit works within the register
2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
12.28
Deposit Works Money Refund of unutilised Deposit Works Money
unutilised on
completion of the works
Date
Amount (Rs.)
(Rs.)
14
15
16
5
Period for execution
of Works
Date of
Payment
Nature of the
Deposit Works*
* Maintain separate registers for each kind of Deposit works.
** State whether Deposit works received from Central Govt Department, State Govt. or Other Govt. departments
Voucher Number
Date
Name of the ULB
DEPOSIT WORKS REGISTER*
Expenditure Incurred on Deposit Works
Name of the
Deposit Works
Sr. No.
National Municipal Accounts Manual
National Municipal Accounts Manual
Stores
CHAPTER 13
$% # $
INTRODUCTION
13.1 This chapter contains the recommended accounting system for stores related
transactions.
13.2 The functions of the Stores, involving procurement, storage, issue, disposal and
accounting of materials, may be performed either centrally by Central Stores (referred to as
Municipal Stores) or by the Department Stores empowered by the ULB to perform the
aforesaid functions for specific departments of the ULB. Generally, the ULB empowers the
Public Works, Health - Sanitation, Health - Medical, Water Works, Workshop for Vehicles
and Machinery repairs and Public Lighting Departments to maintain their own stores.
13.3
The financial transactions carried out by Stores will arise on account of:
a. Receipt of Earnest Money Deposit (EMD) from the bidders to a contract
b. Refund of EMD to the unsuccessful bidders
c. Payment of advance to the contractor
d. Delivery of material and its documentation
e. Consumption of materials
f. Payments to Suppliers
g. Adjustments of Security Deposits
h. Write-off / disposal of obsolete, scrap and unusable materials.
13.1
National Municipal Accounts Manual
Stores
ACCOUNTING PRINCIPLES
13.4 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to stores:
a. Expenditure in respect of material, equipment, etc., procured shall be recognised
on accrual basis, i.e., on admission of bill by the Local Body in relation to
materials, equipment, etc., delivered.
b. Accounting of ‘goods received & accepted but no bills received’ as at the cut off
date shall be accounted based on purchase orders.
c. The stock lying at the period-end shall be valued at cost in accordance with the
First in – First out method.
d. Revenue in respect of disposal of material shall be recognised on actual receipt.
e. Finished goods and work-in-progress (WIP) related to goods produced for sale
will be valued at cost or market value whichever is lower. Cost of finished and
work-in-progress includes all direct costs and applicable production overheads to
bring the goods to the present location and condition.
ACCOUNTING RECORDS AND PROCEDURES
13.5 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Stores. For the purposes of
accounting of Stores there are certain forms, registers, etc., which are specific to Stores, e.g.,
Stores Ledger – Form ST-3. These Forms (Form ST - 1 to ST- 3) are annexed to this chapter
and are prefixed “ST’.
13.6 In case tenders are floated for procuring materials, Earnest Money Deposit (EMD)
may be collected from the bidders on such basis as prescribed by the ULB at the time of
submitting their tenders. A receipt shall be issued for the amount collected in Form GEN – 8.
13.7
The following procedure shall be followed for accounting of receipt of EMD:
a. The procedure to be followed for remittance and/or deposit of EMD to the
Accounts Department or in the Bank shall be the same as provided for in the
Chapter 5 on General Accounting Procedures.
b. The Stores shall prepare a Summary of Daily Collection in Form GEN – 12, which
shall be forwarded to the Accounts Department.
c. Recording of Earnest Money Deposit received. On receipt of Summary of Daily
collections, the Accounts Department shall pass the following entry:
13.2
National Municipal Accounts Manual
Code of
Account
450-21-(a)
340-10-(a)
Stores
Accounting Entry
Bank Account *
To From Contractors/
Suppliers – EMD
Stores
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
500
Cash Book,
Cr.
500 Ledger
*Specify name of the Bank and account number
(a) Insert detailed Head Codes of Account as applicable
Note: The postings in the Ledger Account of “Earnest Money Deposit” Account shall be
carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in the
Ledger Accounts shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever, the cash or the bank account is involved,
there will be no entry in the Journal Book.
13.8 The EMD shall be refunded as per the terms of tender issued to the unsuccessful
bidders. The procedure followed for accounting of refund of EMD shall be as under:
a. The Stores shall prepare a Payment Order (PO) in Form GEN – 14 for refund of
deposits, make an entry in the Deposit Register (Form GEN – 18) against the
relevant entries made therein and then forward the PO to the Accounts Department
for payment.
b. Recording of refund of Earnest Money Deposit. After the receipt of approval for
payment and upon payment, the Accounts Department shall pass the following
entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
340-10-(a) From Contractors/Suppliers –
Dr.
400
Cash Book,
EMD Stores
Ledger
450-21-(a)
To Bank Account *
Cr.
400
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
13.9 Recording of conversion of Earnest Money Deposit into Security Deposit. On receipt
of intimation from the Stores for conversion of Earnest Money Deposit of successful bidder
into Security Deposit payable by him, the Accounts Department shall pass the following
entry:
13.3
National Municipal Accounts Manual
Code of
Account
Stores
Accounting Entry
340-10-(a) From Contractors/Suppliers –
Earnest Money Deposit
340-10-(a) To From Contractors/
Suppliers -Security
Deposit Stores
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
100
Journal Book,
Ledger
Cr.
100
(a) Insert Detailed Head Codes of Account as applicable
13.10 Recording of additional Security Deposit received. Where the terms of agreement
entered into provide for collection of a certain percentage of Security Deposit in advance, a
receipt (Form GEN – 8) shall be issued to the successful bidder for the amount collected. The
procedure followed for accounting of Security Deposit is the same as described for Earnest
Money Deposit. On receipt of additional Security Deposit, the Accounts Department shall
pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Cash Book,
Cr.
1,000 Ledger
450-21-(a) Bank Account *
340-10-(a)
To From Contractors/
Suppliers – Security
Deposit Stores
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
13.11 Recording of advance paid to suppliers. As per the terms of agreement, advance may
be provided to the supplier. On receipt of an application for grant of advance, the Stores shall
prepare a Payment Order and forward it to the Accounts Department. The procedure to be
followed for payment of advance shall be the same as provided in the Chapter 5 on General
Accounting Procedures. On payment, the Accounts Department shall pass the following
entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
460-40-(a) Advance to Suppliers &
Dr.
2,000
Cash Book,
Contractors – Stores
Ledger
450-21-(a)
To Bank Account*
Cr.
2,000
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
13.4
National Municipal Accounts Manual
Stores
RECEIPT OF MATERIALS
13.12 As per the terms of the agreement with the Supplier, the materials shall be delivered to
the ULB. The Stores shall prepare a Material Receipt Note in Form ST-1.
13.13 From the Material Receipt Note, the Stores shall record the receipt of materials in the
Stores Ledger maintained in Form ST-2.
13.14 On receipt of bill from the supplier, the Stores shall verify the bill received with the
Material Receipt Note and record it in the Register of Bills for Payment maintained in Form
GEN – 13.
13.15 Recording of liability due in respect of materials purchased. On acceptance and
approval of the material supplied and on receipt of the processed bill from the Stores
Department, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
4,000
Journal Book,
Ledger
3,800
Stock in Hand -Purchase of Dr.
Materials Stores
Cr.
To Creditors –
350-10-(a)
Suppliers/
Contractors Stores
460-40-(a)
Cr.
To Advance to
Suppliers &
Contractors Stores
(a) Insert Detailed Head Codes of Account as applicable.
430-10-(a)
200
13.16 Recording of payment made to supplier. The procedure to be followed for approval of
a supplier’s bill for payment and making payment shall be the same as provided in the
Chapter 5 on General Accounting Procedures. On receipt of Payment Order (Form GEN – 14)
together with the supporting documents and on making payment, the Accounts Department
shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-10-(a)
Creditors – Suppliers/
Dr.
3,800
Cash Book,
Contractors Stores
Ledger
450-21-(a)
To Bank Account*
Cr.
3,800
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
13.17 The Accounts Department shall intimate the Stores of the payment made.
13.5
National Municipal Accounts Manual
Stores
RETURN OF MATERIALS
13.18 If the materials supplied are found to be defective or not in accordance with the terms
specified in the agreement, the Stores shall return it back to the supplier concerned and make
an entry for return of material in the Issue Column of the relevant folio in the Stores Ledger
(Form ST – 2). The details of the materials returned shall be communicated to the Accounts
Department.
13.19 Recording of adjustment for material returned to Supplier, if payment is not made. In
case the payment for materials received has not been made to the supplier, for reducing the
amount of liability in respect of material returned, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
350-10-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Journal Book,
Ledger
Cr.
1,000
Creditors –Suppliers/
Contractors Stores
430- 10-(a)
To Stock in Hand –
Purchase of Materials
Stores
(a) Insert Detailed Head Codes of Account as applicable.
13.20 Recording of transactions for materials returned to Supplier, if payment has been
already made. On receipt of communication from the Stores relating to return of materials, the
Accounts Department shall pass the following entries:
a. On raising of the claim
Code of
Account
Accounting Entry
350-10-(a)
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
1,000
Creditors –Suppliers
/Contractors Stores
430-10-(a)
To Stock in Hand–Purchase Cr.
of Materials Stores
(a) Insert Detailed Head Codes of Account as applicable.
Books to be
entered into
Journal Book,
Ledger
1,000
b. On receipt of money from the Supplier for materials returned
Code of
Account
450-21-(a)
350-10-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Cash Book,
Cr.
1,000 Ledger
Bank Account*
To Creditors –Suppliers/
Contractors Stores
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
13.6
National Municipal Accounts Manual
Stores
VALUATION OF CLOSING STOCK AT PERIOD-END
13.21 At the end of every accounting period, the Stores shall send a Statement of Closing
Stock in Form ST – 3. Such a statement shall consist of two parts; Part A shall show the items
in respect of which the invoices/bills received from the suppliers have already been sent by
the Stores to the Accounts Department after processing by the Stores. Part B shall consist of
the items for which the materials have been received and accepted by the Stores but for which
the invoices/bills have not been processed as yet by the Stores. This Statement shall be drawn
from the entries made in the Stores Ledger.
13.22 At the end of the financial year, a reconciliation shall be carried out by the Stores-incharge to match the physical stock with the book stock and discrepancies identified shall be
incorporated in the Statement of Closing Stock.
13.23 The balances in various accounts of the item-wise Stores Ledger shall be extracted
and valued as per First In First Out (FIFO) Method. The FIFO Method is explained as
follows:
a. Under this method, the consignment of material, which shall be received first,
shall be issued first.
b. The example below illustrates the FIFO method:
Opening Stock of TCL Powder as on 1st March was 200 nos. acquired at the rate
of Rs.2 per unit. Subsequent purchase and issue transactions during the month of
March were as follows:
Date
Transaction
Units
Rate
Mar 2
Mar 4
Mar 6
Mar 10
Mar 18
Mar 20
Mar 23
Mar 31
Mar 31
Purchase from ABC
Purchase from B
Issued to Dept. X
Purchase from B
Issued to Dept. Y
Purchase from C
Issued to Dept. Z
Issued to Dept. Q
Purchase from ASD
200 nos.
600 nos.
500 nos.
700 nos.
800 nos.
300 nos.
100 nos.
500 nos.
200 nos.
Rs.3/- per unit
Rs.4/- per unit
Rs.4/- per unit
Rs.5/- per unit
Rs.6/- per unit
13.24 Entries in Stores Ledger for the aforesaid transactions shall be made as depicted in
Table 13.1 below.
13.7
National Municipal Accounts Manual
Stores
Table 13.1
Entries in Stores Ledger for the financial year 20XX - 20XX
Item Description: TCL Powder
Date
Mar 1
Mar 2
Mar 4
Receipts
MRN Qty. Rate
No.
(Rs.)
Opening 200
2
Stock
200
3
600
4
Item Code: XXXXXXXX
Issues
Value MRIN Qty. Rate
(Rs.)
No.
(Rs.)
400
600
2400
Mar 6
Mar 10
200
200
100
500
700
4
500
300
800
300
5
2
3
4
400
600
400
1400
2800
Mar 18
Mar 20
Value
(Rs.)
4
4
2000
1200
3200
1500
Mar 23
100
4
400
Mar 31
300
200
500
4
5
1200
1000
2200
Mar 31
200
6
1200
Balance
Qty. Rate Value Remarks
(Rs.) (Rs.)
200
200
400
200
200
600
1000
500
500
700
1200
400
400
300
700
300
300
600
100
100
200
300
2
3
2
3
4
4
4
4
4
4
5
4
5
5
5
6
400
600
1000
400
600
2400
3400
2000
2000
2800
4800
1600
1600
1500
3100
1200
1500
2700
500
500
1200
1700
MRN - Material Receipt Note
MRIN - Material Requisition-cum-Issue Note
Note: Details & break up of materials issued
Materials issued on 6th March is towards consumption for usage in production process
Materials issued on 18th March is towards repair works of the ULB
Materials issued on 23rd March is to the Contractors for the works undertaken by them
Materials issued on 31st March is to the capital works of the ULB
13.8
National Municipal Accounts Manual
Stores
13.25 Accordingly, the closing stock of 300 units of TCL Powder shall be valued at Rs. 5 for
100 units and at Rs. 6 for the remaining 200 units. This is because the TCL Powder received
earlier is still there in Stock on the valuation date, which has to be valued at the rates
applicable for that consignment.
13.26 On the basis of Statement of Closing Stock, the Accounts Department shall compute
the Stores consumed in the following manner:
Compute the total purchases made by the Stores during the accounting period. The
value of the purchases made in the above illustration is Rs. 8500;
Add the Opening Stock at the Stores valued at Rs. 400 to the total purchases made
to determine the total stores available for consumption. Thus total stores available
for consumption as per above illustration, is Rs. 8900 computed as Rs. 8500
(purchases) + Rs. 400 (opening stock) ;
Deduct the Closing Stock valued at Rs. 1700, on the basis of Statement of Closing
Stock, from the total stores available for consumption;
The balance value represents the stores that have been consumed during the
accounting period i.e. Rs. 8900 (total stores available for consumption) – Rs. 1700
(closing stock) = Rs. 7200 (consumption).
13.27 Recording of Closing Stock. On the basis of Statement of Closing Stock (Form ST –
3) received from Stores, for recording closing stock, the Accounts Department shall pass the
following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
1,400
Dr.
230-30-(a) Consumption of Stores(1)
Ledger
3,200
Dr.
Repairs and Maintenance (2)
230-(b)
2,200
Dr.
Capital work in progress(3)
412-(b)
400
460-40-(a) Advance to Contractors- Material Dr.
Issued to Contractors/Stores (4)
Stock in Hand –Stores Closing
1,700
Dr.
430-10-(a) Stock
To Stock in Hand –Purchase
8,500
Cr.
of Materials Stores
430-10-(a)
To Stock in Hand - Stores
400
Cr.
Opening Stock
430-10-(a)
(a) Insert Detailed Head Codes of Account as applicable.
(b) Insert Minor & Detailed Head Codes of Account as applicable
(1) Consumption of Stores is debited for value of materials consumed in relation to production
of any goods for sale.
(2) Repairs and Maintenance account is debited for value of materials used for any of the
repairs and maintenance of ULBs assets.
(3) Capital work in progress account is debited for value of materials issued to the Capital
works of the ULBs.
(4) Material Issued to Contractors account is debited for value of materials issued to the
contractors.
13.9
National Municipal Accounts Manual
Stores
13.28 Similar entries shall also be passed in respect of consumption/CWIP and closing stock
at each of the other stores.
13.29 The closing stock at the end of an accounting period shall be the opening stock of the
subsequent accounting period for which the Accounts Department shall pass the following
entry on the first day of the subsequent accounting period:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,700
Journal Book,
Ledger
Cr.
1,700
430-10-(a) Stock in Hand - Stores
Opening Stock
430-10-(a)
To Stock in Hand -Stores
Closing Stock
(a) Insert Detailed Head Codes of Account as applicable.
13.30 Similar entries shall be passed for recognising closing stock of each of the other stores
as opening stock of the subsequent accounting period.
FINISHED GOODS & WIP RELATED TO GOODS PRODUCED FOR SALE
13.31 At the end of every accounting period, the finished goods and work-in-progress
related to goods produced for sale shall be valued at cost.
13.32 The cost of finished goods and WIP shall include all direct costs and applicable
production overheads to bring the goods to the present location and condition. It shall include
the following:
a. Costs of purchase including duties and taxes, freight inwards and other
expenditure directly attributable to the purchase. Trade discounts, rebates, duty
drawbacks and other similar items should be deducted from the costs of purchase;
b. Costs of direct labour for converting the materials into finished goods;
c. Variable production overheads i.e. those direct costs of production that vary
directly with the volume of production, such as, Power and other consumables.
The variable production overheads are allocated to per unit of production;
d. Fixed production overheads i.e. those indirect costs of production that remain
constant irrespective of the volume of production, such as depreciation and
maintenance costs of production facilities. The fixed production overheads are
period costs, which are apportioned over the total units of production over that
period.
13.10
National Municipal Accounts Manual
Stores
13.33 The cost of finished goods and WIP shall, however, not include the following:
a. Abnormal amount of wasted material, labour or other production costs;
b. Storage costs, unless these are necessary in the production process prior to a
further production stage;
c. Administrative overheads that do not contribute to bringing the goods to their
present location and condition;
d. Selling and distribution costs;
e. Interest and other borrowing costs.
13.34 Based on these guidelines each local body can develop detailed guideline for each of
the manufactured product meant for sale. The Cost sheet would serve as a base for arriving at
the value.
MATERIALS PURCHASED FROM ANY GRANT OR SPECIAL FUNDS
13.35 The accounting procedure to be followed for purchase of material, the cost of which is
met from any Grant or from funds set aside under any Special Fund, and its issue shall be the
same as provided earlier in this chapter. However, the accounting entries in respect of these
have been described in Chapter 17 on Grants and Chapter 19 on Special Funds respectively.
13.36 The materials purchased in terms of any grant or special fund shall be recorded in
separate folios in the Stores Ledger or in the Stock Account of Books and Forms and the
procedure to be followed for valuation of closing stock shall be the same as provided earlier
in this chapter.
PERIOD END PROCEDURE
13.37 At the period-end, the Stores Department shall ensure that all the bills in respect of
stores received and accepted before the last date of the accounting period, are processed and
forwarded to the Accounts Department for accounting and payment within one month where
the accounting period is a financial year and in other cases in 15 days from the end of the
accounting period. The accounting entry to be recorded shall be the same as provided above
in para 13.15 in the section on “Receipt of Materials”. In addition, in respect of ‘goods
received & accepted but no bills received’ as at the cut off date shall be accounted based on
purchase orders.
DISPOSAL OF MATERIAL
13.38 The unutilised/unusable material in the Stores of the ULB may be disposed of as per
the principles framed by the ULB.
13.11
National Municipal Accounts Manual
Stores
13.39 For such disposal of material by Stores, the accounting procedure to be followed and
accounting entries to be passed for receipt and refund of EMD and conversion of EMD into
Security Deposit shall be the same as provided earlier in this chapter. The accounting
procedures to be followed on realisation of sale value shall be the same as provided in
Chapter 5 on General Accounting Procedures.
13.40 Recording of disposal of material. An entry for the material disposed shall be made in
the records maintained at the Stores. The accounting entries passed in respect of disposal of
stores are as follows:
a.
Recording of receipt of sale proceeds: The Stores shall prepare a Summary of
Daily Collection (Form GEN –12) for sale proceeds and forward it along with
the collection to the Accounts Department. (For example an amount of Rs 600
realised against the sale of stores with a recorded value of Rs 500). On receipt
of Summary of Daily Collections, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
450-21-(a)
350-90-(a)
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
600
Cash Book,
600 Ledger
Bank Account *
Dr.
To Sale Proceeds from Cr.
Stores
* Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable.
b.
Recording of profit or loss on disposal: In the example explained above, there
is a profit amounting to Rs 100 the Accounts Department shall pass the
following entry in respect of the same:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
600
Dr.
350-90-(a) Sale Proceeds from Stores
500 Ledger
To Stock in Hand-Purchase Cr.
430-10-(a)
of Materials Stores
100
Cr.
To Sale & Hire Charges –
150-12-(a)
Sale of Stores
Note: If the amount realised for sale is Rs 400, the difference of Rs 100 shall be debited to ‘Loss
to disposal of Stores’.
(a) Insert Detailed Head Codes of Account as applicable.
WRITE-OFF OF MATERIAL
13.41 The pilfered/damaged material in the Stores of the ULB may be written-off as per the
principle framed by the ULB.
13.12
National Municipal Accounts Manual
Stores
13.42 Recording of write-off of material. An entry for the material written-off shall be made
in the records maintained at the Stores. On the basis of intimation received from the Stores,
the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
270-40-(a) Assets Written off -Stores
Dr.
50
Journal Book,
430-10-(a)
To Stock in Hand –Stores Cr.
50 Ledger &
Opening Stock
Stores Register
(a) Insert Detailed Head Codes of Account as applicable.
INTERNAL CONTROLS
13.43 The following internal controls shall be observed by the ULB in respect of Stores
related transactions:
a. The Head of the Accounts Department shall ensure budget availability with
respect to the expenditure incurred at the time of accruing of the expenditure i.e
Budget monitoring shall be on accrual basis rather than payment basis.
b. The Head of the Accounts Department shall ensure that all the purchase
bills/invoices were journalised before release of the payments.
c. At the end of the financial year, the Stores-in-charge, the Head of the Accounts
Department and the Municipal Chief Auditor shall physically verify the stock
lying in stores and compare it with the stock as per the book records and in case of
any difference, appropriate remedial steps as prescribed by the ULB shall be taken.
d. The Stores-in-charge shall ensure availability of adequate budget allocation before
procuring any material, after considering all commitments made against the
budget allocation.
f. At the time of issue of any material to the Departments, the Stores-in-charge shall
ensure that there is an adequate budget provision in respect of that department.
g. The Head of the Accounts Department shall ensure that all the dues recoverable
including advance provided to supplier has been recovered before making the final
payment to the supplier. Further, it should be ensured that only net amount has
been paid to the supplier, as may be applicable to the materials actually received or
accepted.
h. Before releasing payment to the supplier, the Head of the Accounts Department
shall ensure that the material received is recorded in the Stores Ledger. Further, it
13.13
National Municipal Accounts Manual
Stores
shall be ensured that the Payment Order provides reference to the Stores Ledger
where the entry for receipt of material is recorded. In addition, at the time of
payment to Suppliers/contractors and any other creditors it shall be ensured that no
amount is due from them, which may be adjusted before payment.
i. The Stores-in-charge shall ensure that materials in respect of which bills have
been received but have not been forwarded to the Accounts Department are stated
separately in the Statement of Closing Stock (Form ST – 3).
j. The Head of the Accounts Department shall ensure that the ‘Purchase of
Materials’ account has been reconciled at the period and the balance has become
nil on accounting of stock entries for the closing stock(on the basis of Statement of
Closing Stock in Form ST –3) and consumption of stores.
k. Also the Head of Accounts Department shall ensure that the balance in the
‘Opening Stock’ account has become nil at the period end on accounting of stock
entries and consumption based on the closing stocks.
l. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
13.44 All Reconciliation Statements shall be certified by the Head of the Accounts
Department and verified by the Municipal Chief Auditor.
PRESENTATION IN THE FINANCIAL STATEMENTS
13.45 The various heads of accounts used for the accounting of Stores shall be reflected in
the Financial Statements or the Schedules attached to the Financial Statements of the ULB.
All such Financial Statements and schedules should be affixed with signature and seal of
designated authorities.
13.46 The Schedules of the Income and Expenditure Statement in respect of Stores are
presented below.
Schedule I-5: Income from Sale & Hire Charges
Code No.
Particulars
1
2
150-12-(a)
Sale of stores & scrap
150-30-(a)
Sale of Others
Total Income from Stores to be shown as part of Sale & Hire
charges Schedule
(a) Insert Detailed Head Codes of Account as applicable.
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
13.14
National Municipal Accounts Manual
Stores
Schedule I-12: Schedule of Operations and Maintenance
Code No.
Expenditure
1
230-30-(4a)
230-51-(a)
2
Consumption of Stores
Repairs & Maintenance –
Infrastructure Assets
230-52-(a)
Repairs & Maintenance – Civic
amenities
230-53-(a)
Repairs & Maintenance –
Buildings
230-54-(a)
Repairs & Maintenance – Vehicles
230-59-(a)
Repairs & Maintenance – Others
Total of Expense of Stores to be shown as part of
Operations & Maintenance Expense Schedule
(a) Insert Detailed Head Codes of Account as applicable.
Amount
(Rs.)
3
Current Year
Amount (Rs.)
4
Previous Year
Amount (Rs.)
5
13.47 The Balance Sheet abstracts in respect of Stores are presented below.
Schedule B-7: Deposits Received
Amount in Rs.
Code No.
Particulars
1
340-10-(a)
340-10-(a)
2
From Contractors/Suppliers – EMD
From Contractors/Suppliers – Security
Deposits
340-80-(a)
From Others
Total
(a) Insert Detailed Head Codes of Account as applicable.
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No.
Particulars
1
350-10-(a)
2
Creditors - Suppliers /Contractors Payable
Stores Account
Total
(a) Insert Detailed Head Codes of Account as applicable.
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule B-14: Stock in Hand (Inventories)
Code No.
1
430-10-(a)
430-20-(a)
430-30-(a)
Particulars
2
Stores
Loose Tools
Others
Total Stock in hand
(a) Insert Detailed Head Codes of Account as applicable.
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
13.15
National Municipal Accounts Manual
Stores
Schedule B-17: Schedule of Cash and Bank
Code No.
Particulars
1
450-10-(a)
450-21-(a)
Current Year Amount
(Rs.)
3
2
Cash Account
Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable.
Previous Year Amount
(Rs.)
4
Schedules B-18: Schedule of Loans, Advances & Deposits
Code No.
1
460-40-(a)
Particulars
Opening
Balance at
the beginning
of the year
(Rs.)
3
2
Advance to Suppliers &
Contractors – Stores
460-40-(a) Advance to Suppliers &
Contractors – Material Issued
to Contractors /Stores
Total
(a) Insert Detailed Head Codes of Account as applicable.
Paid during
the current
year
(Rs.)
Recovered
during the
year
(Rs.)
4
5
Balance
outstanding
at the end of
the year
(Rs.)
6
13.16
National Municipal Accounts Manual
Stores
ST-1
___________________ Name of the ULB
MATERIAL RECEIPT NOTE
________________________ Stores
Book No._________________
Receipt No._____________
Date __________________
Received following material from ___________________________ (name of the supplier)
vide their delivery challan number __________ bill number __________ dated _________
against Purchase Order No. ______________
Sr. No.
1
Particulars (Product details and
specifications)
2
Material received by
____________
Stores Clerk
Quantity
Accepted
3
Inspected by Remarks
4
5
Entered in Store Records
Entry No.: _______________
_____________
Stores-in-charge
13.17
11
Date of Issue
10
12
Department to
which issued
Weight
14
Quantity
Number
13
Issues
15
16
17
Rate per
Initials of
Value
unit
Authorised
(Rs.)
(Rs.)
Officer
Balance
8
Weight
19
(6-14)
Quantity
Number
18
(5-13)
7
Rate per unit
Value (Rs.)
(Rs.)
20
Rate
per
unit
(Rs.)
21
Value
(Rs.)
9
Initials of
Authorised
Officer
ST-2
Stores
13.18
Note: For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the
entry
Material
Requisition
cum Issue
Note No.
1
Date of Receipt
STORES LEDGER
___________________ Name of the ULB
Receipt
Reference of Cash Department
Material
Book / Journal Book for which
Quantity
Receipt No. / Ledger where entry purchase
is recorded
made
Number
Weight
2
3
4
5
6
Item Description__________________________
National Municipal Accounts Manual
National Municipal Accounts Manual
Stores
ST-3
___________________ Name of the ULB
STATEMENT OF CLOSING STOCK AS ON ___
________________ Stores
Sr. No. _________
Unit rate for
valuation
(Rs.)
4
Reference No. of
Stores Ledger
Item Description
Quantity
1
2
3
Reference No. of
Stores Ledger
Item
Description
Quantity
2
3
4
Amount
(Rs.)
Remarks *
5
6
Total
Details of Material issues
Purpose
1
For Consumption
For
Repairs
Maintenance
Unit rate for
valuation Amount (Rs.)
(Rs.)
5
6
&
For Capital Work In
Progress
For Sale
Written off
Contractors**
Total
Verified by
(Audit Department)
Stores-in-charge / Authorised Officer
* In case of obsolete, unservicable, defective inventory, please indicate so in the Remarks column
** Contractor wise details of the Materials issued shall be given as per annexure attached with this form.
13.19
National Municipal Accounts Manual
Stores
Annexure to Form ST 3
Details of Material issued to Contractors
Name of the
Contractor
Reference number
to whom the Item Description
of Stores Ledger
materials
issued
1
2
3
Total *
Verified by
(Audit Department)
Quantity
Unit Rate
for
Valuation
(Rs)
Value of
the
Materials
(Rs)
4
5
6
Stores-in-charge / Authorised Officer
* The total of this table shall agree to the value of ‘materials issued to Contractors’.
13.20
National Municipal Accounts Manual
Employee Related transactions
CHAPTER 14
EMPLOYEE RELATED
TRANSACTIONS
INTRODUCTION
14.1 This chapter contains the recommended accounting system on matters (i.e., salaries,
allowances, deductions, Provident Fund, Pension Fund, loans, advances, etc.) pertaining to
the employees of the Urban Local Body (ULB). The Accounting principles and procedures
explained below for maintaining the employee related transactions on the following
assumptions
¾ The
employee related funds (for e.g. PF fund account) are maintained within
the ULB.
¾ Processing of payroll and related approvals are decentralised.
ACCOUNTING PRINCIPLES
14.2 The following Accounting Principles shall govern the recording, accounting and
treatment of employee related transactions:
a. Expenses on Salaries and other allowances shall be recognised as and when
they are due for payment (i.e. at the month end).
b. Statutory deductions from salaries including those for income tax, profession
tax, provident fund contribution, etc., shall be recognised as liability in the
same period in which the corresponding salary is recognised as expense.
14.1
National Municipal Accounts Manual
Employee Related transactions
c. Formation of Trusts shall be considered for management of Provident Funds.
However it will be the responsibility of the ULB to form the trusts and meet the
shortfall of the fund, if any.
d. Provident Fund money shall be invested as per the guidelines applicable to any
Employee Provident Fund.
e. Separate Funds may also be formed for meeting the pension and other
retirement benefits including Gratuity and Leave Encashment. The State
Governments can decide on this and can define the modus operandi also. The
State may form Trusts either at the state level or at the municipal level.
f. Contribution due towards Pension and other retirement benefit funds shall be
recognised as an expense and a liability. State Government to define the rate of
contribution. One basis for such rate could be at the rate generally prescribed
for state government employees on deputation. Actuarial valuation has not been
considered due to practical limitations of the ULBs. If an ULB wants to make
an actuarial valuation, their applicable state laws can guide this.
g. Interest receivable on loans given to employees shall be recognised as revenue
at the end of the period in which these have accrued.
h. In respect of loans to employees, penal interest leviable on default in repayment
of principal or payment towards interest shall be recognised on accrual basis.
i. Bonus, ex-gratia, overtime allowance, other allowances and reimbursements to
the employees shall be recognised as an expense as and when they are due for
payment.
ACCOUNTING RECORDS & PROCEDURES
14.3 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for employee related transactions. For the purposes of
accounting of employee related transactions there are certain forms, registers, etc., which
are specific to employee related transactions, e.g., Pay bill – Form ES -1. These (Forms ES –
1 to ES – 6) are annexed to this chapter and are prefixed “ES”.
PAY BILL & DEDUCTIONS
14.4 A Pay Bill shall be prepared for each department on the basis of employee muster and
service book maintained. The Pay Bill shall provide computation of gross salaries payable to
the employees as per the conditions of service. From the gross salary, adjustments shall be
14.2
National Municipal Accounts Manual
Employee Related transactions
made for deductions in respect of statutory payments such as income tax, profession tax,
provident fund, etc., voluntary deductions such as group insurance premium, investment by
employees, contribution to various societies, loan recovery for external agencies, etc., as well
as recoveries in respect of loans, advances, etc., to arrive at the net salary payable to the
employees.
14.5 Pay bills are normally drawn by Drawing and Disbursing Officer (DDO) in every
department. There may be more than one DDO in a Department. The pay bills drawn by all
DDOs in a Department may be consolidated and sent to Accounts Department for payment.
14.6 The Accounts Department shall prepare a Consolidated Pay Bill summary in Form
ES- 1 from the Departmental Pay Bills. Preparation of Consolidated Pay Bill summary would
involve consolidation and summation of the individual Departmental Pay Bills.
14.7 On the basis of the Consolidated Pay Bill, the Accounts Department shall pass the
following entries every month for recognising the expense and the corresponding liability:
a. Recording of salary, allowances and corresponding liability. For recognising the
expense under various heads and the liability to the employees in respect of gross
salaries, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Journal
Cr.
1,00,000 Book, Ledger
210-(a)
Establishment Expenses –
350-11-(b)
To Employee Liabilities –
Gross Salaries Payable
(a) Insert Major and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Accounts of “Establishment Expenses” Account and “Gross
Salaries Payable” Account shall be carried out as indicated in Chapter 5 – General
Accounting Procedures. The postings in the Ledger Accounts shall be similarly carried out in
respect of all other accounting entries described subsequently in this chapter. Whenever, the
cash or the bank account is involved, there will be no entry in the Journal Book.
b. The department-wise details of establishment expenses will be available in the
Consolidated Pay Bill prepared by the Accounts Department, reference to which
may be made at the time of preparation of Financial Statements.
c. The Accounts Department shall maintain a separate Functional Expense
Subsidiary Ledger in Form GEN – 34 for recording Function-wise establishment
expenses. On recording of establishment expenditure in the Journal Book, the
Accounts Department shall immediately update the Subsidiary Ledger mentioned
above. The procedure for updating Subsidiary Ledger has been provided in
Chapter 5 – General Accounting Procedures, reference to which is invited
14.3
National Municipal Accounts Manual
Employee Related transactions
d. Recording of statutory and other deductions and recoveries from salaries. For
accounting liabilities towards amounts payable to different authorities in respect of
statutory deductions, and, dues towards settlement of obligations on behalf of
employees (e.g. housing loan, contribution to various societies, loan recovery for
external agencies, group insurance premium, investment by employees, etc.),
recovery of instalments of loans or interest levied on loan and/or advances from
employees, etc., the Accounts Department shall pass the following entry:
Code of
Account
350-11-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Journal Book,
Ledger,
Cr.
1,000 Register of
Employee
Cr.
1,000 Advances,
Register of
Cr.
9,000 Loans to
Employees,
Cr.
1,000 Register of
Interest on
Loans to
Cr.
1,500 Employees
Cr.
200
Employee Liabilities - Gross
Salaries Payable
350-20-(a)
To Recoveries PayableTDS from Employees
To Recoveries Payable350-20-(a)
Profession Tax
To- Provident Fund (for
311-(b)
own employees)
To Recoveries payable –
350-20-(a)
Provident Fund for
Employees on Deputation
To Loans to Employees
460-10-(a)
To Receivable from Other
431-40-(a)
Sources-Interest due from
Employees Loans
To Recoveries Payable Cr.
7,500
350-20-(a)
Others*
To Advance to Employees
Cr.
1,500
460-10-(a)
To Employee Provident
Cr.
300
460-20-(a)
Fund Loans
To Employee Liabilities –
Cr.
77,000
350-11-(a)
Net Salaries Payable
* This may include voluntary deductions with respect to Insurance Premium deduction, deduction
for Investment by Employees, deduction for Contribution to various Societies, Loan recovery for
External Agencies, etc.
(a) Insert Detailed Head Codes of Account as applicable
e. Accounts Department shall update the Register of Employee Advances
maintained in Form ES-2 for recovery of Loans / advances and Register of
Interest on Loans to Employees maintained in Form ES-3 for recovery of loans
and interest respectively.
f. Salaries may be paid to the employees either (i) by Cheque or (ii) by directly
crediting the amount to employees’ bank account; or (iii) in cash. (efforts may
be made to move towards direct credit of salaries to bank accounts)
g. Recording of payment of salaries by cash: For accounting of payment of salary
by cash, the Accounts Department shall pass the following entries:
14.4
National Municipal Accounts Manual
Code of
Account
Employee Related transactions
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
On Withdrawal of cash
450-10-(a) Cash Account
Dr.
7,000
Cash Book
450-21-(a)
To Bank Account *
Cr.
7,000
For payment of salary by cash (if paid fully)
350-11-(a) Employee Liabilities -Net
Dr.
7,000
Cash Book,
Salaries Payable
Ledger
450-10-(a)
To Cash Account
Cr.
7,000
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Note: If the salary is not fully paid, the accounting treatment is described subsequently.
h. Recording of payment of salaries through bank: For accounting of payment of
salary by cheque or direct credit of the salary to employee bank account, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
70,000
Cash Book,
Ledger
70,000
350-11-(a) Employee Liabilities – Net
Dr.
Salaries Payable
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Note: If the salary is not fully paid, the accounting treatment is described subsequently.
i. Recording of payment of statutory deductions made from salaries. For
discharging liabilities towards statutory deductions (e.g., income tax, profession
tax, etc.), on payment, the Accounts Department shall pass the following
entries:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Cash Book,
1,000
Ledger
50
950
Cash Book,
1,000
Ledger
100
900
Dr.
350-20-(a) Recoveries Payable – TDS
from Employees
Cr.
To Cash Account
450-10-(a)
Cr.
To Bank Account*
450-21-(a)
Dr.
350-20-(a) Recoveries Payable –
Profession Tax
Cr.
To Cash Account
450-10-(a)
Cr.
To Bank Account*
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
14.5
National Municipal Accounts Manual
Employee Related transactions
j. Recording of payment of other deductions made from salaries. For discharging
liabilities towards voluntary deductions (e.g., group insurance premium,
investment made by employees, contribution to various societies, repayment of
loan to various external agencies, etc.) made on behalf of employees, on
payment, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
7,500
Cash Book,
500 Ledger
7,000
350-20-(a) Recoveries Payable- Others Dr.
450-10-(a)
To Cash Account
Cr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Note: Recoveries Payable – Others may include voluntary deductions with respect to Insurance
Premium deduction, deduction for Investment by Employees, deduction for Contribution to
various Societies, Loan recovery for External Agencies, etc.
Unpaid Salaries
14.8 If the salary remains unpaid to the employees, it shall be recorded in the Unpaid
Salary Register maintained in Form ES-4. The register shall have the details for unclaimed
salary as well as subsequent payment of salary. Cheques remaining unpaid and cash
withdrawn for payment of salary remaining unpaid for a period of three (3) months shall be
re-deposited in the Bank Account and the details recorded in the Unpaid Salary Register.
14.9 Recording of unpaid salaries (bank). In case cheques issued to the employees have not
been encashed for three months or such other period as may be prescribed by the State /
applicable acts, such cheques shall be cancelled. On cancellation of cheques, the Accounts
Department shall pass the following entry:
Code of
Account
450-21-(a)
350-11-(a)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger, Unpaid
Salary Register
Bank Account*
Dr.
To Employee Liabilities Cr.
– Unpaid Salaries
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
14.10 Recording of unpaid salaries if cash is withdrawn but not collected by the employee.
In case of salary payments by cash, if the amount has not been collected, the Accounts
Department shall pass the following entries:
14.6
National Municipal Accounts Manual
Employee Related transactions
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Assuming that Rs. 500 is unpaid out of Rs. 7000 drawn and only Rs. 6500 has been paid,
the entry for the payment would be:
350-11-(a) Employee Liabilities - Net
Dr.
6,500
Cash Book,
Salaries Payable
Ledger, Unpaid
450-10-(a)
To Cash
Cr.
6,500 Salary Register
For depositing the cash lying in hand in respect of unpaid salary, the entry would be:
450-21-(a) Bank Account*
Dr.
500
450-10-(a)
To Cash
Cr.
For recording the unpaid salary, the following entry shall be passed:
Dr.
500
350-11-(a) Employee Liabilities - Net
Salaries Payable
Cr.
350-11-(a)
To Employee Liabilities –
Unpaid Salaries
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Cash Book
500
Journal Book,
Ledger, Unpaid
500 Salary Register
14.11 Recording of payment of unpaid salaries. On payment of unpaid salaries, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Cash Book,
700
Ledger, Unpaid
100 Salary Register
600
Employee Liabilities – Unpaid Dr.
Salaries
Cr.
To Cash
450-10-(a)
Cr.
To Bank Account*
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
The illustrative amount indicates that of Rs. 700 outstanding in Salaries Unpaid Account, Rs. 100
is paid in Cash and Rs. 600 is paid by cheque.
350-11-(a)
LOANS AND ADVANCES TO EMPLOYEES
Loans and Advances given
14.12 Recording of advances and loans to employees. ULB may grant loans (interest bearing
or interest free) and advances (temporary, standing, etc.) to the employees. On payment of
loans and advances by the ULB, the Register of Employee Loans / Advances (Form ES-2)
shall be updated by the Accounts Department. These registers shall be maintained
department-wise. For recording the payment of loans and advances to employees, the
Accounts Department shall pass the following entries:
14.7
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Employee Related transactions
Dr./
Cr.
Debit
Credit
Amount
Amount
(Rs.)
(Rs.)
Illustrative Illustrative
figures
figures
Books to be
entered into
For Advances given to employees
460-10-(a) Advance to Employees
450-21-(a)
To Bank Account*
Dr.
Cr.
10,000
Cash Book,
10,000 Ledger, Register
of Employee
Advances
For Loans granted to employees
460-10-(a) Loans to Employees
450-21-(a)
To Bank Account*
Dr.
Cr.
10,000
Cash Book,
10,000 Ledger, Register
of Loans to
Employees
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
14.13 The Accounts Department shall intimate the concerned department to update the
respective Service Books for recording the loans and advances taken by the employees of that
department.
Accrual of Interest on Loans provided to employees
14.14 Recognising interest on loans and advances granted to the employees at the periodend. As per the terms and conditions of the loan agreement, interest is levied on the monthly
outstanding balance of loans. The amount of interest accrued shall be communicated by the
concerned department to the Accounts Department at the period-ends for which an entry shall
be made in the Register of Interest on Loans to Employees (Form ES-3). On the basis of
intimation received, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
431-40-(a) Receivable from Other Sources Dr.
Ledger, Register
- Interest due on Employee
of Interest on
Loans
To Interest on Loans and
Cr.
1,000 Loans to
171-20-(a)
Employees
advances to Employees
(a) Insert Detailed Head Codes of Account as applicable
14.15 Recording of Penal Interest for non-payment of principal or interest installment. In
case of default in either repayment of principal or payment of interest, penal interest shall be
levied at the rates and in the manner prescribed. To record penal interest levied, the Accounts
Department shall pass the entry passed in para 14.14 above.
Recovery of Loans and Advances
14.16 Normally as per the terms and conditions of service and loan agreement, recovery of
the principal amount of loan assumes precedence over recovery of interest. Interest accrued
14.8
National Municipal Accounts Manual
Employee Related transactions
for the intervening period, i.e., the period between the date of disbursement of loan and full
repayment of loan shall be recognised as an asset, recoverable after the repayment of principal
in full.
14.17 The Accounts Department shall update the Register of Employee Loans / Advances
(Form ES-2) for the amount of advances and loans recovered. The entries for recovery of
loans and advances every month from the Pay Bill, have already been described above in para
14.7 (d).
Recovery of Interest accrued on Loans provided to employees
14.18 Recovery of interest installment. As per the terms and conditions of loan agreement,
interest accrued and recognised, as an asset receivable shall be recovered in instalments. The
accounting entry for interest recovery from the monthly pay-bill has already been described in
para 14.7 (d) above.
PAYMENTS OTHERWISE THAN FROM PAY BILL
14.19 For various types of employee related payments such as leave travel concession,
bonus & ex-gratia, overtime, medical reimbursement, hospitalisation claim, suspension
allowance, gratuity, leave salary, house rent reimbursement, etc., the concerned department
shall send the approved Payment Order along with the supporting documents to the Accounts
Department.
14.20 Recording of payments otherwise than from Pay Bill. On payment being made, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
4,000 Ledger
6,000
210-(a)
Establishment ExpensesDr.
450-10-(a)
To Cash
Cr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Major & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Note: Separate entry shall be passed for each of the Payment Order.
14.21 Upon payment, the Accounts Department shall immediately update the Function wise
Expense Subsidiary Ledger maintained in Form GEN-34.
14.9
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Employee Related transactions
PROVIDENT FUND
Employees’ Provident Fund Contribution
14.22 A deduction shall be made for employees’ provident fund contribution from the
salaries of the employees from the Pay Bill. The entry for this has already been described
above in para 14.7 (d).
14.23 Recording of transfer of money to Provident Fund Bank Account. The Accounts
Department shall transfer the amount deducted as contribution from Main Bank Account to
Provident Fund Bank Account and pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
9,000
Cash Book
9,000
450-41-(a)
Designated Bank Account*
Dr.
450-21-(b)
To Bank Account*
Cr.
* Specify name of the Banks and Account number
(a) Insert Detailed Head Codes of Account as applicable
Payment of Provident Fund Contribution in respect of employees on deputation
14.24 Recording of payment of Provident Fund Contribution in respect of employees on
deputation. Provident Fund Contribution deducted on behalf of State Government or other
organisations/authorities from the salary of employees on deputation to the ULB shall be
deposited with the relevant authority every month. On payment, the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
350-20-(a)
Credit
Debit Amount
Amount
Dr./
(Rs.)
Books to be
(Rs.)
Cr.
Illustrative
entered into
Illustrative
figures
figures
Dr.
1,000
Cash Book,
Ledger
Recoveries payable Provident Fund Contribution
for Employees on Deputation
To Bank Account*
Cr.
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
1,000
Loans to Employees against Provident Fund
14.25 Recording of the loans granted against Provident Fund Contribution. As per the
prescribed rules, the ULB may grant loans to the employees against balance standing to the
credit of their Provident Fund account. On receipt of approved payment order, the Accounts
Department shall pass the following entry:
14.10
National Municipal Accounts Manual
Employee Related transactions
Credit
Debit Amount
Amount
Code of
Dr./
(Rs.)
Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
entered into
Illustrative
figures
figures
Dr.
1,000
Journal Book
460-20-(a)
Employee Provident Fund
Ledger
Loans
To Bank Account*
Cr.
1,000
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Recovery of Provident Fund Loan
14.26 A deduction shall be made for recovery of loan given from the provident fund, from
the salaries of the employees from the Pay Bill. The entry for this has already been described
above in para 14.7 (d).
14.27 Recording of transfer of money to Provident Fund Bank Account. The Accounts
Department shall transfer the amount deducted towards recovery of provident fund loans from
Main Bank Account to Provident Fund Bank Account and pass the following entry:
Credit
Debit Amount
Amount
Code of
Dr./
(Rs.)
Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
entered into
Illustrative
figures
figures
450-41-(a)
Designated Bank Account*
Dr.
300
Cash Book
450-21-(a)
To Bank Account*
Cr.
300
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Investments of Employees’ Provident Fund Contribution
14.28 The Provident Fund money shall be invested as per the guidelines applicable to any
Employee Provident Fund.
14.29 Investments made in respect of Provident Fund Contribution shall be entered in a
Provident Fund Investment Register to be maintained in Form IN-1 (provided in Chapter 20
on Investments). The accounting procedures to be followed and the accounting entries to be
passed in respect of investments of such moneys are similar to those followed in respect of
other investments. They relate to investments, maturity of investment, recording of interest,
profit/loss on sale/maturity of investments, etc. These have been described in Chapter 20 on
Investments.
Interest on Provident Fund
14.30 For recording interest shortfall. Interest, which is earned on Investments made out of
the Provident Fund Reserve, will be credited to the Provident Fund Reserve as well as
individual employees. In situations wherein the interest earned is lower than the stipulated
14.11
National Municipal Accounts Manual
Employee Related transactions
rate payable to the employees, the shortfall in payment of interest shall be made good by the
ULB for which the Accounts Department shall pass the following entries:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
100
Journal Book,
Ledger
Other Terminal & Retirement Dr.
Benefits– Provident Fund
shortfall
To Provident Fund
Cr.
100
311-(b)
For transfer of money from Main Bank Account to the Provident Fund Bank Account
450-41-(a)
Designated Bank Account*
Dr.
100
Cash Book
450-21-(a)
To Bank Account*
Cr.
100
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
210-40-(a)
Withdrawal from Provident Fund
14.31 The balance standing to the credit of the employee' s provident fund account may be
withdrawn either at the time of employee' s retirement or otherwise in accordance with the
prescribed rules in this behalf.
14.32 The employee may, in accordance with the prescribed rules, withdraw the balance
standing to the credit of his/her provident fund account during the continuation of his/her
employment. On receipt of approved payment order (Form GEN - 14), the Accounts
Department shall pass the following entries:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
For recognising the provident fund contribution and interest due to an employee
311-(a)
Provident Fund
Dr.
150
Journal Book,
350-11-(b)
To Employee Liabilities – Cr.
150 Ledger
Provident Fund Payable
On payment
Dr.
150
Ledger
350-11-(b)
Employee Liabilities –
Provident Fund Payable
Cr.
150
450-41-(b)
To Designated Bank
Account*
* Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(a) Insert Detailed Head Codes of Account as applicable
14.33 When any employee ceases to be an employee of the ULB, the Provident Fund
account of the employee shall be closed and he shall be paid the amount to the credit of his
Provident Fund account (contribution, interest, etc.) from the Provident Fund Bank Account.
The Accounts Department shall pass the entries referred in para 14.24 above for recognition
14.12
National Municipal Accounts Manual
Employee Related transactions
of liability, for payment of provident fund dues and for payment of the amount determined
from the Provident Fund Bank Account.
RETIREMENT BENEFITS
14.34 Retirement benefits for employees of ULB usually consist of:
a. Pension;
b. Gratuity; and
. Leave Encashment.
Pension
14.35 The pension would be payable at the time of their retirement either on superannuation
or otherwise in accordance with the prescribed rules. Details of pension liability for each
pensioner shall be maintained separately in Pension Register in Form ES-6. The ULB may
pay pension directly or through a Fund established for this purpose
14.36 Payment of pension shall be made on the basis of the approved Pension Payment
Order (PPO). The details of PPO shall be recorded in Pension Payment Order Register in
Form ES-5.
Accounting for Pension
Direct Payment
14.37 If the pension amounts were directly paid without creation of a separate fund, the
Accounts department shall pass the following entries for accrual of pension expenses and
payment of the same.
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
On creation of liability for pension
Dr.
210-30-(a)
Pension-Pension /Family
Pension Expenses
Cr.
350-11-(a)
To Employee Liabilities
–Pension Payable
On payment of commuted pension
350-11-(a)
Employee Liabilities –
Dr.
Pension Payable
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Books to be
entered into
1,000
Journal Book,
Ledger,
1,000 Pension
Register
1,000
Ledger,
Pension
1,000 Register
14.13
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Employee Related transactions
Through Fund
14.38 The ULB shall, on a monthly basis, contribute a sum as determined by the State
Government towards the Pension Fund. The contribution shall be recorded as an expense and
charged to the Statement of Income and Expenditure and shall also be recognised as a
liability.
Creation of Fund
14.39 For creation of Pension Fund. Every month, contribution to the Pension Fund shall be
made for the employees on the payroll. For recognising the liability in respect of Pension
Fund contribution, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
210-30-(a)
Pension-Pension/Family
Dr.
1,000
Journal Book,
Pension Expense
Ledger
311-(b)
To Pension Fund
Cr.
1,000
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
14.40 For transfer of money to Pension Fund Bank Account. An amount equivalent to the
contribution to Pension Fund shall be transferred from Main Bank Account to Pension Fund
Bank Account. On transfer, the Accounts Department shall pass the following entry:
Code of
Account
450-(a)
450-21-(b)
Accounting Entry
Bank Account*
To Bank Account*
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Pension Fund
Cash Book
* Specify name of the Bank and Account number
(a) Insert Major & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Payment of Pension to Employees
14.41 On retirement, as per the prescribed rules, the employee may have a choice of taking
his full pension either through monthly payments or by commuting a portion thereof payable
at the time of retirement and the balance through monthly payments after retirement.
14.14
National Municipal Accounts Manual
Employee Related transactions
Commuted Pension
14.42 On commutation of pension. On the basis of approved Pension Payment Order (Form
ES-5), on payment of Commuted Pension, the Accounts Department shall pass the following
entries:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
On creation of liability for commutation of pension
311-(a)
Pension Fund
Dr.
100
Journal Book,
350-11-(b)
To Employee Liabilities
Cr.
100 Ledger,
-Pension
Pension
Register
On payment of commuted pension
100
Ledger,
350-11-(b)
Employee Liabilities –Pension Dr.
Pension
Payable
Cr.
100 Register
450-41-(b)
To Designated Bank
Account*
* Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Uncommuted Pension
14.43 Recording of payment of uncommuted pension. A Pension Pay Bill shall be prepared
for making monthly pension payment to the individual pensioners. On receipt of approved
Pension Pay Bill, the Accounts Department shall pass the following entry:
Code of
Account
311-(a)
450-41-(a)
Accounting Entry
Pension Fund
To Designated Bank
Account*
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
500
Pension Fund
500 Cash Book,
Ledger,
Pension
Register
* Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Pension Fund deficit
14.44 An amount equivalent to the deficit in the Pension Fund, i.e., the amount by which the
Pension Fund is inadequate to pay pension to the pensioners, shall be transferred from the
Main Bank Account to the Pension Fund Bank Account. On transfer of funds, the Accounts
Department shall pass the following entry:
14.15
National Municipal Accounts Manual
Code of
Account
450-41-(a)
450-21-(a)
Employee Related transactions
Accounting Entry
Dr./
Cr.
Designated Bank Account*
To Main Bank Account*
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
200
Cash Book,
200 Pension Fund
Cash Book
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
14.45 The shortfall in the Pension Fund Bank Account, which is met by way of transfer from
the Main Bank Account, shall be treated as an expense of the accounting period in which such
transfer is made. For this, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
200
Cash Book,
Pension Fund
200 Cash Book
Pension-Pension Fund Deficit Dr.
Contribution
To Pension Fund
Cr.
311-(b)
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
210-30-(a)
Employees on Deputation
14.46 On payment of pension contribution in respect of employees on deputation at ULB. In
respect of State Government employees or employees of other organisations/authorities, who
have been deputed to the ULB, if pension contribution is payable by the ULB, to the
concerned authorities, the Accounts Department shall pass the following entry on payment:
Code of
Account
Accounting Entry
210-30-(a)
Dr./
Cr.
Pension–Pension Contribution Dr.
Employees on Deputation
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
200
Cash Book,
Ledger
200
GRATUITY AND LEAVE ENCASHMANT
14.47 The ULB may form separate funds for Gratuity and Leave Encashment as per the rules
prescribed by the State Government in this behalf. The ULB shall make contribution to the
Fund at the rates prescribed by the State Government in this behalf.
14.16
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Employee Related transactions
14.48 For recognising the liability in respect of contribution to the fund, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
(Rs.)
(Rs.)
Illustrative Illustrative
figures
figures
1,000
Dr.
Other Terminal Expenses –
Leave Encashment
500
Dr.
210-40-(a) Other Terminal ExpensesGratuity Expense
Cr.
To ______Fund
311-(b)
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
210-40-(a)
Books to be
entered into
Journal Book,
Ledger
1,500
14.49 The procedure and the accounting entries in respect of transfer of money to the fund
bank account, payments from the fund, etc. shall be similar to as discussed above in respect of
Pension Fund.
Direct Payment
14.50 If the gratuity and leave encashment amounts were directly paid without creation of a
separate fund, the Accounts department shall pass the following entries for accrual of pension
expenses and payment of the same.
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
On creation of liability for gratuity and leave encashment
Journal Book,
1,000
210-40-(a) Other Terminal Benefits -Leave Dr.
Ledger,
Encashment
500
Dr.
210-40-(a) Other Terminal Benefits
Gratuity Expenses
1,000
Cr.
To Employee Liabilities
350-11-(a)
- Gratuity
500
Cr.
To Employee Liabilities
350-11-(a)
- Leave Salary
On payment of liability for gratuity and leave salary payable
Journal Book,
1,000
Dr.
350-11-(a) Employee Liabilities –
Ledger,
500
Dr.
Leave Salary
1,000
Cr.
350-11-(a) Employee Liabilities Gratuity
500
Cr.
To Bank Account
450-41-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
14.17
National Municipal Accounts Manual
Employee Related transactions
Employees on Deputation
14.51 On payment of Leave Encashment contribution in respect of Employees on deputation
at ULB. In respect of State Government employees or employees of other
organisations/authorities, who have been deputed to the ULB and if leave encashment
contribution is payable by the ULB to the concerned authorities, on payment, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
210-40-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Cash Book,
Ledger
Other Terminal Benefits –Leave
Salary Contribution for
Employees on Deputation
To Bank Account*
Cr.
450-21-(a)
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
200
INVESTMENT OF RETIREMENT BENEFITS FUNDS
Investment of Pension Fund
14.52 Investments made in respect of Pension Fund shall be entered in a Pension Fund
Investment Register to be maintained in Form IN-1 (provided in Chapter 20 on Investments).
The accounting procedures to be followed and the accounting entries to be passed in respect
of investments of such moneys are similar to those followed in respect of other investments.
They relate to investments, maturity of investment, recording of interest, profit/loss on
sale/maturity of investments, etc. These have been described in Chapter 20 on Investments.
Investment of Other Retirement Benefits Fund
14.53 Investments made in respect of other retirement benefits funds including gratuity and
leave encashment shall be entered in a separate Investment Register to be maintained in Form
IN-1 (provided in Chapter 20 on Investments). The accounting procedures to be followed and
the accounting entries to be passed in respect of investments of such moneys are similar to
those followed in respect of other investments, as described in Chapter 20 on Investments.
ACCOUNTING IN RESPECT OF TRUSTS FORMED BY THE ULB
14.54 The ULB may form Trusts for management of provident fund, pension fund, gratuity
fund, leave encashment fund and other retirement benefits funds as per the guidelines of the
State Government in this behalf.
14.18
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Employee Related transactions
14.55 In case Trusts are formed, the ULB shall transfer its contribution to the Trusts as per
the prescribed dates. For recording the transfer of its contribution to the Trusts, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
9,000
Ledger
1,000
Dr.
Provident Fund*
Dr.
Pension- Pension/Family
Pension
1,000
210-40-(b) Other Terminal & Retirement Dr.
Benefits -Leave Encashment
500
210-40-(b) Other Terminal & Retirement Dr.
Benefits – Gratuity Expense
11,500
Cr.
To Bank Account**
450-21-(b)
* Provident Fund contribution deducted from the monthly salaries of the employees, as shown
under Para 14.7 (d), should be transferred to the Trust as per the prescribed dates.
** Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
311-(a)
210-30-(b)
14.56 The Trusts shall manage the funds transferred to it by the ULB. It shall invest the
funds as per the rules prescribed by the State Government in this behalf.
14.57 The Trust shall maintain books of accounts to record transactions in respect of funds
received by it from the ULB, the funds invested by it, the payments made to the employees,
the interest received on the investments made, etc. The accounting entries to be passed by the
Trusts would be similar to as discussed above under the section ‘Provident Fund’ and
‘Retirement Benefits’. It may be noted here that the ULB shall only record the entry as
discussed in Para 14.53 and all subsequent accounting entries would be passed by the Trust in
its books of accounts.
14.58 At the end of the accounting period, the Trusts shall prepare financial statements in
respect of the funds managed by it. A copy of the financial statements shall be provided to the
ULB by the prescribed dates. The ULB shall attach these to the financial statements of the
ULB.
INTERNAL CONTROLS
14.59 The following internal controls shall be observed by the ULB:
a. Separate Pay Bills shall be prepared by each DDO.
b. Consolidation of Pay Bills of DDO shall be made Department wise and
Department bills are consolidated for ascertainment of ULB level information.
14.19
National Municipal Accounts Manual
Employee Related transactions
c. Consolidated paybill summary shall be checked with previous month for ensuring
all DDO and departments bills are included.
d. A monthly reconciliation shall be carried out by the Head of the Accounts
Department and the Head of Establishment Department in respect of loans and
advances outstanding between the balances in the Ledger Accounts maintained at
the Accounts Department and the Register of Employee Advances and Register of
Loans to Employees. Further, at the period-end, the Head of the Accounts
Department shall ensure that accounting entry for recording income in respect of
interest accrued on loans provided to employees has been passed.
e. Every month, the Head of the Accounts Department shall ensure timely remittance
of the various deductions made from the employees' salaries in the Pay Bill to the
concerned authorities.
f. The Head of the Accounts Department shall ensure that the total establishment
expenditure incurred and recorded in the Functional Expense Subsidiary Ledger
reconciles with the balance as per the respective Establishment Expense Ledger
Account. The Subsidiary Ledger shall record total establishment expenses
incurred, including that paid through Pay Bill.
g. Every month, the Head of the Accounts Department or other officers of the ULB
designated by him shall verify that Provident Fund and Pension Fund contribution
deducted for the employees on deputation have been deposited with the concerned
authorities.
h. At every year-end, the Head of the Accounts Department or other officers of the
ULB designated by him shall verify whether interest received or receivable on the
provident fund investment is less than the statutory liability for interest payment to
employees on their balance in the provident fund reserve account, and if so, ensure
that the difference of interest payable is provided for and to that extent amount has
been transferred from Main Bank Account to Provident Fund Bank Account.
i. The Head of the Accounts Department or other officers of the ULB designated by
him shall ensure that payment of pension and other retirement benefits to the
employees at retirement should be made from the Pension Fund and other
retirement benefits funds created by the ULB.
j. All the pension payments shall be made only from the Pension Fund Bank
Account. To the extent of difference/deficit in the Pension Fund, an amount
equivalent to the deficit shall be transferred from the Main Bank Account to the
Pension Fund Bank Account. The transfer shall be made before making payment
to the pensioners from the Pension Fund Bank Account.
14.20
National Municipal Accounts Manual
Employee Related transactions
k. The Head of the Accounts Department shall ensure that whenever the entries in
para 14.7 (d) is passed, the equivalent amount of money in respect of deduction of
provident fund contribution and provident fund loan is simultaneously transferred
from the Main Bank Account to the Provident Fund Bank Account.
l. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
14.60 All Reconciliation Statements shall be certified by Head of the Accounts Department.
PRESENTATION IN FINANCIAL STATEMENTS
14.61 The various heads of account used for the accounting of Employee Related
Transactions shall be reflected in the Financial Statements or the Schedules attached to the
Financial Statements of the ULB. All such Financial Statements and schedules should be
affixed with signature and seal of designated authorities.
14.62 The Schedules of Income and Expenditure Statement in respect of Employee Related
Transactions are presented below.
Schedule I-8: Schedule of Interest Earned
Code No.
171-20-(a)
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Interest on Loans and advances to Employees
Total Income earned from Employees to be shown Interest Earned
Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-9: Schedule of Other Income
Code No.
180-40-(a)
Heads of Account
Recovery from Employees
Total Income earned from Employees to be shown Other Income
Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-10: Establishment Expenses -Expense head wise
Code No.
1
210-10-(a)
210-20-(a)
210-30-(a)
210-40-(a)
Head of Account
2
Salaries, Wages and Bonus
Benefits and Allowances
Pension
Other Terminal & Retirement Benefits
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Expense of Employees to be shown as part of establishment
expenses– expense head wise Schedule
(a) Insert Detailed Head Codes of Account as applicable
14.21
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Employee Related transactions
Note: Details of any other establishment expenses incurred, which has not been specifically disclosed above,
shall be collated and disclosed as Other Administrative expenses, provided the expense incurred does not exceed
the disclosure limits prescribed in this Accounts Manual.
14.63 The Balance Sheet Abstracts in respect of the Employee Related Transactions are
presented below.
Schedule B-2: Schedule of Earmarked Funds
Schedule B – 2: Special Funds
Particulars
Amount in Rs.
General
Pension
Provident
Fund
fund
(a) Opening Balance
(b) Additions to the Special Fund
(i) Transfer from Municipal Fund
(ii) Interest/Dividend earned on Special Fund Investments
(iii) Profit on disposal of Special Fund Investments
(iv) Appreciation in Value of Special Fund Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets*
Others
Sub –total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Sub –total
(iii) Other:
Loss on disposal of Special Fund Investments
Diminution in Value of Special Fund Investments
Transferred to Municipal Fund
Sub –total
Total of (i+ii+iii) (c)
Net balance at the year end – (a+b)-(c)
Grant Total of Special Funds
Note: All funds are to be shown as separate fund either in the schedule or in a separate schedule with the
corresponding indication in the balance sheet under “Funds” on liability.
Additions during the year:
a. Addition to Pension Fund would be out of the "Transfer to Funds" from Income and Expenditure Account as
per the accounting principles.
b. Addition to General Provident and Contributory Provident Fund are the deductions from salary.
c. Interest from investments of Funds would be added to respective Funds.
Deductions during the year:
a. Deductions from Pension Fund means payments made on account of Pension/Family pension
b. Deduction from Gross Provident Fund/Contributory Provident Fund - Advances/Withdrawals.
14.22
National Municipal Accounts Manual
Employee Related transactions
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No.
Particulars
1
350-11-(a)
350-11-(a)
350-11-(a)
350-11-(a)
350-11-(a)
350-11-(a)
2
Employee Liabilities –Gross Salaries payable
Employee Liabilities –Salaries Unpaid
Employee Liabilities –Net Salaries Payable
Employee Liabilities –Pension payable
Employee Liabilities –Provident Fund Payable
Recoveries payable -Provident Fund Contribution for Employees on
Deputation Payable
350-11-(a) Recoveries payable -Investment by Employees Payable
350-11-(a) Recoveries payable –Contribution to Societies Payable
350-11-(a) Recoveries payable -Loan Recovery for External Agencies Payable
350-20-(a) Recoveries Payable -TDS from Employees
350-20-(a) Recoveries Payable Profession Tax Payable
350-20-(a) Recoveries Payable Insurance Premium Payable
Total
(a) Insert Detailed Head Codes of Account as applicable
Current
Year
Amount
(Rs.)
3
Previous
Year
Amount
(Rs.)
4
Schedule B-17: Schedule of Cash and Bank Balances
Code No.
Particulars
1
450-10-(a)
450-21-(a)
450-41-(a)
2
Cash
Bank Account
Designated Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule B-18: Schedule of Loans, advances and deposits
Code No.
1
460-10-(a)
460-20-(a)
Particulars
Opening
Balance at
the beginning
of the year
(Rs.)
3
2
Loans and advances to employees
Employee Provident Fund Loans
Total
461-(b)
Less: Accumulated Provisions
against Loans, Advances and
Deposits
Net total of Receivables from
Employees
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Paid
during the
current
year
(Rs.)
4
Recovere
d during
the year
(Rs.)
5
Balance
outstanding at
the end of the
year
(Rs.)
6
14.23
______________ Name of the ULB
Form ES-1
Section of
establishment
2
Serial No.
1
Substantive pay (Personal pay or
special pay, if any, should also be
shown in this column as a separate
entry below substantive pay)
Rs.
3
Officiating
pay
Rs.
5
Leave
Salary
Rs.
4
Rs.
6
Compensatory
or other
allowances
Rs.
7
Total
14.24
Employee Related Transactions
CONSOLIDATED PAY BILL SUMMARY ROLL OF THE PERMANENT/TEMPORARY ESTABLISHMENT
FOR THE MONTH OF ______
National Municipal Accounts Manual
Rs.
9
Rs.
8
Rs.
10
Provident Fund
Subscription
Deductions
Total
(in words ………..)
*Please specify the nature of Deduction
Income
Tax
Pay, officiating
pay or leave
salary held over
for future
payment
National Municipal Accounts Manual
Rs.
11
Other
deductions *
Rs.
12
Rs.
13
14
15
Miscellaneous
recoveries
Net amount
Date of receipt
(Fines and
Remarks
payable
of bill
advances, house
rent, etc.)
14.25
Employee Related Transactions
1
2
Month and date
Particulars
and name of the
of advance
employee
National Municipal Accounts Manual
3
Rs.
4
Rs.
5
Voucher or
Monthly
Amount
receipt number
Total
Rs.
6
April
Rs.
7
May
Rs.
8
June
Rs.
9
July
Rs.
10
August
Repayments or adjustments
REGISTER OF EMPLOYEE LOANS/ ADVANCES
FOR THE YEAR 20 ____to 20____
______________ Name of the ULB
Rs.
11
14.26
September
Form ES-2
Employee Related Transactions
**
#
Checked By :# _________________
21
Remarks
Total repayment in Column 18 shall be the sum total of Columns 6 to 17
For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
Entered By :# ___________________
Rs.
12
October
14.27
Employee Related Transactions
Balance
Total
Date and
remaining
Repayment voucher number
unadjusted at
November December January February March for the year of repayment/
the end of the
**
adjustment
year
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
13
14
15
16
17
18
19
20
Repayments or adjustments
National Municipal Accounts Manual
Particulars of
Loans
2
Name of
Employee
1
National Municipal Accounts Manual
14.28
Total
Interest Accrued during the
Repayments or
Total
Opening
Interest
Quarters
Adjustments *
Cumulative
Accrued
Cumulative
Accrued
Accrued Interest Quarter Quarter Quarter Quarter during the
Interest
April May June
year
I
II
III
IV
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
3
4
5
6
7
8
9
10
11
12
(4+5+6+7)
(3+8)
REGISTER OF INTEREST ON LOANS TO EMPLOYEES
FOR THE YEAR 20 __to 20__
______________ Name of the ULB
Form ES-3
Employee Related Transactions
Rs.
14
Rs.
15
Rs.
16
**
***
#
Rs.
18
Rs.
19
Rs.
21
Checked By :#___________________
Rs.
20
March
Balance
Total Interest
remaining
Recovered
unadjusted at
during the year
the end of the
**
year***
Rs.
Rs.
22
23
(9-22)
24
14.29
Remarks
Employee Related Transactions
Column 22 shall be sum total of columns 10 to 21
Balance in Column 23 at the end of the accounting year shall be the opening balance of Column 3 in the next year
For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
Rs.
17
August September October November December January February
Repayments or Adjustments *
Entered By :#___________________
Rs.
13
July
National Municipal Accounts Manual
Serial No. of
payment
8
7
3
Name of person
Payments
4
12
Checked By :*______________
11
13
Initials of
Authorised Officer
6
Initials of
Authorised Officer
Form ES-4
14.30
Employee Related Transactions
*For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
9
Acquittance of
payee
5
On what account Amount (Rs.)
Payments
Name of person
Amount(Rs.)
2
1
Date
Serial No. of credit
Entered By :*______________
______________ Name of the ULB
UNPAID SALARY REGISTER FOR THE YEAR 20___to 20__
Date
National Municipal Accounts Manual
Monthly amount
(Rs.)
3
4
Remarks
Form ES-5
14.31
Employee Related Transactions
* For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
Checked By :*______________
2
1
Entered By :* ______________
Name of Pensioner
REGISTER OF PENSION PAYMENT ORDER
______________ Name of the ULB
Number of Pension Payment Order
National Municipal Accounts Manual
Checked By :* ______________
* For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
1
April
..
May
..
June
..
July
..
August
..
September ..
October
..
November ..
December
..
January
..
February
..
March
..
Entered By :* ______________
Month
PENSION REGISTER
______________ Name of the ULB
Form ES-6
Employee Related Transactions
14.32
20__ to 20 __
20__ to 20 __
20__ to 20 __
20__ to 20 __
Initials of
Initials of
Initials of
Initials of
Remarks
Date of Voucher
Date of Voucher
Date of Voucher
Date of Voucher
Authorised
Authorised
Authorised
Authorised
payment No.
payment
No.
payment
No.
payment
No.
Officer
Officer
Officer
Officer
2
3
4
5
6
7
8
9
10
11
12
13
14
Name of Pensioner_____________
Orders sanctioning the pension_________________
National Municipal Accounts Manual
National Municipal Accounts Manual
Health & Sanitation
CHAPTER 15
+($/7+ 6$1,7$7,21
INTRODUCTION
15.1
This chapter contains the recommended accounting system for transactions
relating to health and sanitation activities in the Urban Local Body (ULB).
15.2
The Health Department is primarily involved in operating the hospitals,
dispensaries & maternity homes and in monitoring sanitation and other public health
related activities, within the limits of the ULB.
15.3
The main sources of incomes earned by the Health Department are as follows:
a. Fees and User Charges (accounted under Code of Account -)
Fees from Medical Institutions
Registration Fees for Patients
Recovery of Cost of Medicines
Examination Charges [X -Rays, Tests, Ultra-Sound, etc.]
Ambulance Charges
Funeral/Hearse Van Services
License fees from Butchers and Traders of Meat
Meat and Poultry Trade Licensing Fees, etc.
Disposal Charges (Solid Waste)
15.1
National Municipal Accounts Manual
Health & Sanitation
b. Sale & Hire Charges (accounted under Code of Account -)
Sale of Garbage/Manure
15.4
Besides incurring the usual administrative expenses such as establishment
expenses, printing, stationery, office expenses, etc., the Health Department incurs
expenses related to its Health and Sanitation functions. Following is an illustrative list
of the expenses incurred in respect of the Health Department:
a. Sanitation related expenses
Solid Waste Management related expenses
S
City cleaning and sweeping
S
Garbage clearance
S
Dumping ground maintenance
Repairs and Maintenance – Solid Waste Management related expenses
S
Dustbin repairs and maintenance
S
Cattle-shed maintenance
S
Crematoria operation and maintenance
Own Programmes
Consumption of Health Stores – Solid Waste Management, etc.
S
Purchase of cleaning material
S
Insecticides and pesticides
S
Insecticides and pesticide spraying
b. Hospitals and Dispensaries related
Medical related expenses,
Testing & inspection fees,
Repairs and Maintenance – Medical/Health related assets,
Consumption of Medical Stores, etc.
c. Public Health progamme/scheme related
Health Program related expenses,
S
Family welfare expenses
S
Pulse polio vaccination expenses
S
School children health program related expenses
S
Aids awareness expenses, etc.
15.2
National Municipal Accounts Manual
Health & Sanitation
ACCOUNTING PRINCIPLES
15.5
The following Accounting Principles shall govern the recording, accounting
and treatment of transactions relating to health and sanitation:
a. Revenue in respect of the following shall be recognised on actual receipt.
i. Hospital fees, maternity homes fees, diagnostic centre fees and
dispensaries fees
ii. Hospital training fees
iii. Rent and/or hire charges in respect of ambulance, hearse, suction unit,
meat van and road roller
iv. Sale of fertilisers and waste, sale of animals and sale of scrap.
b. Revenue in respect of Trade License Fees shall be accrued in the year to
which it pertains and where the demand is raised based on applicable Acts
of the state.
c. Revenue in respect of rent of equipment provided to the contractors,
deducted from their bills, shall be recognised as and when the deductions
are made.
d. All revenue expenditures incurred shall be recognised on admission of the
bills for payment by the ULB.
e. Provision shall be made at the year-end for all bills received up to a cut off
date (30th April of the next financial year). However, the State
Governments, depending on practicality and materiality involved can
decide on this.
ACCOUNTING RECORDS & PROCEDURES
15.6
This section describes the records, registers, documents, forms, accounting
entries, etc., in respect of accounting for transactions related to Health & Sanitation.
For the purposes of accounting of Health & Sanitation all the forms applicable, are
generally applicable in respect of the transactions of the ULB including in respect of
Health & Sanitation.
15.3
National Municipal Accounts Manual
Health & Sanitation
ACCOUNTING FOR INCOME AND OTHER RECEIPTS
Medical Fees
15.7
The procedure to be followed for the collection and accounting of medical fees
shall be as follows:
a. The collection in respect of the medical fees shall be made at the respective
units (i.e. Hospitals, Dispensaries, Maternity Homes, etc.). A Receipt
(Form GEN-8) or pre-denominated tokens shall be issued to the person
making the payment at the respective units.
b. The amount collected by the units shall be deposited in a Designated Bank
Account or forwarded to the Ward Office or to the Accounts Department.
c. The procedures for cash/cheque collection, remittance and/or deposit have
been described in Chapter 5 - General Accounting Procedures, reference to
which is invited. These procedures should be followed for Health and
Sanitation related transactions.
d. Recording of collection of medical fees. On the basis of the Summary of
Daily Collection (Form GEN-12) received from the various entities, i.e.,
Units, Ward Offices, Health Department, etc., the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Cash Book,
Cr.
10,000 Ledger
450-21-(a)
Bank Account*
140- (b)
To ________ Charges**
* Specify name of the Bank and account number
(a) Specify the Detailed head codes of account as applicable
(b) Insert Minor & Detailed Head Codes of account as applicable.
Note: The postings in the Ledger Account of “________ Charges” Account shall be carried
out as indicated in Chapter 5 – General Accounting Procedures. The postings in the Ledger
Accounts shall be similarly carried out in respect of all other accounting entries described
subsequently in this chapter. Whenever, the cash or the bank account is involved, there will be
no entry in the Journal Book.
15.4
National Municipal Accounts Manual
Health & Sanitation
Hospital Training Fees
15.8 Recording of collection of hospital training fees. Hospital training fees are
charges from medical colleges for granting internship facilities to their students in the
hospitals owned by the ULB. The procedure followed for collection of hospital
training fees shall be the same as described above for the collection of medical fees.
To record the collection of hospital training fees, the Accounts Department shall pass
the entry referred to in para. 15.7 (d).
Trade License Fees
15.9 The income in respect of trade license fees shall be recognised on accrual
basis. It shall be accrued in the year to which it pertains and where the demand is
raised based on applicable Acts of the State.
15.10 The procedure and accounting entries in respect of demand raised for trade
license fees, collections made, provisioning for unrealised fees, etc. shall be similar to
as described under section ‘Accounting for Incomes to be accounted on Accrual
Basis’ in Chapter 11 – Rentals, Fees, and Other Incomes.
Other Incomes
15.11 The other incomes pertaining to the health and sanitation related activities
such as ambulance rent, suction unit rent, dumping ground charges, etc., shall be
accounted for in the manner as has been described under section ‘Accounting for
Other Incomes to be accounted on Actual Receipt Basis’ in Chapter 11 - Rentals,
Fees, and Other Incomes.
EXPENDITURES PERTAINING TO HEALTH AND SANITATION
15.12 The accounting for expenditures pertaining to hospitals, dispensaries,
sanitation, scavenging, etc., shall be similar to that described in Chapter 12 - Public
Works (for expenditure incurred through awarding of contracts to outside parties for
carrying out certain activities), Chapter 13 - Stores (for expenditure incurred on
purchase of stores such as medicines, insecticides, pesticides, etc.) and Chapter 16 Other Revenue Expenditures in respect of all other expenditures pertaining to health
and sanitation related activities.
15.13 At the period-end, the Health Department shall ensure that all the bills
received in respect of expenses incurred before the last date of the accounting period,
are processed and forwarded to the Accounts Department for accounting by 30th April
of the next financial year if the accounting period is a financial year and in other cases
in 15 days from the end of the accounting period.
15.5
National Municipal Accounts Manual
Health & Sanitation
INTERNAL CONTROLS
15.14 The following internal controls shall be observed by the ULB in respect of
health and sanitation related transactions :
a. A quarterly reconciliation shall be carried out by the Head of the Accounts
Department and the Head of the Health Function in respect of the amount
collected under the various heads based on the balances standing in the
Functional Income Subsidiary Ledger (Form GEN-33) in respect of Fees &
User Charges and Sale & Hire Charges relating to Health Function
maintained at the Accounts Department and the Collection Register (Form
GEN–11) maintained at the Health Department.
b. The officers designated by the ULB for operating the Designated Hospital
Bank Account shall co-ordinate with the banks on a daily basis and
ascertain the status of the cheques deposited by them.
c. The Head of the Accounts Department shall ensure budget availability
with respect to the expenditure incurred at the time of accruing of the
expenditure.
d. The Head of the Accounts Department shall ensure that all the
bills/invoices were journalised before release of the payments.
e. The Chief Executive Officer/Head of the ULB shall specify such
appropriate calendar of returns /reports for monitoring.
15.15 All Reconciliation Statements shall be certified by the Head of the Accounts
Department and verified by the Municipal Chief Auditor.
PRESENTATION IN THE FINANCIAL STATEMENTS
15.16 The various heads of accounts used for the accounting of Health and
Sanitation related transactions shall be reflected in the Financial Statements or the
Schedules attached to the Financial Statements of the ULB. All such Financial
Statements and schedules should be affixed with signature and seal of designated
authorities.
15.17 The Schedules of Income and Expenditure Statement in respect of Health and
Sanitation related income and expenses are presented below.
15.6
National Municipal Accounts Manual
Health & Sanitation
Schedule I-4: Schedule of Income from Fees & User Charges – Income head-wise
Code No.
Particulars
1
2
140-10-(a)
Empanelment & Registration Charges- Patients
140-40-(a)
Other Fees- Health Fees
140-50-(a)
User Charges-Medicines
140-50-(a)
User Charges-Examination Charges
140-50-(a)
User Charges-Ambulance
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total income of Health & Sanitation to be shown as part of
Fees & User Charges – Income head-wise Schedule
(a) Specify the Detailed head codes of account as applicable
Schedule I-5: Schedule of Income from Sale & Hire Charges – Income head-wise
Code No.
Particulars
1
2
150-11-(a)
Sale of Forms
150-41-(a)
Hire Charges of Equipment – Medical Equipment
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total income of Health & Sanitation to be shown as part of
Sale & Hire Charges – Income head-wise Schedule
(a) Specify the Detailed head codes of account as applicable
Schedule I-12: Schedule of Operations & Maintenance – Expenditure head-wise
Code No.
Particulars
1
2
230-51-(a)
Repairs & maintenance - Civic Amenities
230-52-(a)
Repairs & maintenance – Hospital Buildings
230-53-(a)
Repairs & maintenance – Health Vehicles
230-59-(a)
Repairs & maintenance – Others
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total expense of Health & Sanitation to be shown as part of
Operations & Maintenance Expenses Schedule
(a) Specify the Detailed head codes of account as applicable
Schedule I-14: Schedule of Programme Expenses
Code No.
Particulars
1
2
250-20-(a)
Own Programmes
250-30-(a)
Share in Programmes of others
Total expense of Health & Sanitation to be shown as part of
Program Expenses Schedule
(a) Insert the Detailed head codes of account as applicable
15.7
National Municipal Accounts Manual
Health & Sanitation
15.18 The Balance Sheet Abstract in respect of Health & Sanitation Expense is
presented below:
Schedule B-17: Schedule of Cash and Bank Balances
Code of
Account
1
Particulars
2
450-10-(a)
Cash
450-21-(a)
Bank Account
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total
(a) Insert Detailed Head Codes of Account as applicable
15.8
National Municipal Accounts Manual
Other Revenues Expenditures
CHAPTER 16
27+(5 5(9(18( (;3(1',785(6
INTRODUCTION
16.1 This chapter contains the recommended accounting system for transactions
relating to revenue expenditures other than the employees related expenses, the Public
Works and the Stores. The expenditures discussed in this chapter are those in respect of
which the benefits expire in a short period of time, i.e., less than one year.
16.2
The revenue expenditures discussed in this chapter could illustratively include:
a. Administrative Expenses
¾ Books and Periodicals, Newspapers
¾ Legal expenses
¾ Fuel
¾ Printing
¾ Stationery
¾ Advertisement and publicity
¾ Service Postage / Stamps
¾ Electricity and power
¾ Telephone and communication expenses
¾ Rent, Rates and Taxes
¾ Suit Compromises
16.1
National Municipal Accounts Manual
Other Revenues Expenditures
¾ Professional and other Fees/charges
¾ Insurance charges
¾ Hospitality expenses
¾ Training expenses
¾ Computer related expenses (Revenue Expenses)
¾ Any other expenses, etc.
b. Programme Expenses
¾ Election Expenses
¾ Own Programmes
¾ Share in Programmes of others
¾ Census Expenses; etc
c. Miscellaneous Expenses
¾ Miscellaneous contingent expenses
¾ Women and Child Welfare Expenditure
¾ Backward Class Expenditure; etc.
16.3 Payment in respect of all the expenses incurred or borne by the ULB shall be
made centrally by the Accounts Department. However, payment for certain categories of
expenses, may be made from the Permanent Advance granted to a Head of the
Department as resolved by the ULB or from the advance provided to the employees of the
ULB.
16.4 Permanent Advance refers to those advances, which are granted to the Heads of
the Departments for incurring certain specific expenditure, usually of a minor nature
involving payments of small amounts, subject to bye-laws framed by the ULB in this
behalf.
16.5 The ULB may also grant Miscellaneous Advance for incurring expenditure to the
employees of the ULB. Such advances are expected to be settled immediately after the
purpose for which they were sanctioned has been fulfilled.
16.2
National Municipal Accounts Manual
Other Revenues Expenditures
ACCOUNTING PRINCIPLES
16.6 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Other Revenue Expenditures:
a. Other Revenue Expenditures shall be treated as expenditures in the period in
which they are incurred.
b. Provision shall be made at year-end for all bills received upto a cut off date
(30thApril of next financial year). However, state governments, depending on
practicality and materiality involved can decide on this.
c. Any expenditure for which the payment has been made in the current period
but the benefit and/or service is likely to arise in a future period shall be
treated as an expenditure for the period in which its benefit arises and/or
services are received.
d. The expenditure for the current period shall include the proportionate value of
the benefits and/or services arising in the current period even if the payment
therefor has been made in the previous period.
ACCOUNTING RECORDS & PROCEDURES
16.7 This section describes the records, registers, documents, forms, accounting
entries, etc., in respect of accounting for transactions related to Other Revenue
Expenditures. For the purposes of accounting of Other Revenue Expenditures all the
forms applicable, are the ones generally applicable in respect of the transactions of the
ULB.
16.8 The concerned department, on receipt of bill or invoice for goods purchased or
services received, shall prepare a Payment Order in Form GEN-14 and forward it to the
Accounts Department for payment.
16.9 On receipt of the Payment Order, the Accounts Department shall enter the
particulars thereof in a Register of Bills for Payment (Form GEN-13).
16.10 The procedure to be followed for approval and accounting of payment of
expenditure is the same as provided in Chapter 5 on General Accounting Procedures.
16.3
National Municipal Accounts Manual
Other Revenues Expenditures
16.11 Recording payment of expenditure. With regard to the payment made towards an
expenditure, the benefit of which is likely to expire within a financial year in which it is
incurred, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Cash Book,
25,000
Ledger
15,000
10,000
50,000
Dr.
_________ Expenses**
220-(a)
Dr.
_________ Expense**
230-(a)
Dr.
_________ Expense**
271-(a)
Cr.
To Bank Account*
450-21-(b)
* Specify name of the Bank and Account number
** Specify the appropriate expense head.
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Account of “__________ Expenses” Account shall be
carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in the
Ledger Accounts shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever the cash or the bank account is involved,
there will be no entry in the Journal Book.
16.12 The Accounts Department shall maintain a Functional Expense Subsidiary Ledger
in Form GEN–34 for each function in which various administrative expenditure incurred
by a function shall be recorded on a daily basis. On payment of administrative
expenditure, the Accounts Department shall immediately update the Functional Expense
Subsidiary Ledger. The procedure for updating Subsidiary Ledger has been provided in
Chapter 5 – General Accounting Procedures, reference to which is invited.
TREATMENT OF EXPENSES INVOLVING AN ELEMENT OF PREPAYMENT
16.13 In case of expenses for which payment is made in one accounting period and the
benefit is likely to be received in the period within which the payment is made as well as
the next period, the accounting entries shall be as explained below. This is illustrated with
reference to rent payment.
16.14 Suppose the rent is payable in advance for a calendar year, e.g., January 2004 to
December 2004. The bill for this is received in the month of November 2003. The portion
in respect of January 2004 to March 2004 will pertain to the financial year 2003-2004.
The portion in respect of April 2004 to December 2004 will pertain to the financial year
2004-2005.
16.4
National Municipal Accounts Manual
Other Revenues Expenditures
16.15 Recordings of payment say in November 2003. The Accounts Department shall
pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
48,000
Cash Book,
48,000 Ledger**
220-10-(a)
Rent, Rates & Taxes
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
16.16 Recording of adjustment of prepaid rent. Immediately on expenditure being
incurred, the amount of rent paid in advance shall be determined for recording the prepaid
rent. For adjusting the rent paid for April 2004 to December 2004, i.e., for the next
financial year, the Accounts Department shall pass the following entry:
Code of
Account
440-20-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
36,000
Journal Book,
Ledger
Cr.
36,000
Prepaid Expenses –
Administration
220-10-(a)
To Rent, Rates &
Taxes
(a) Insert Detailed Head Codes of Account as applicable
Note: This entry shall be passed only if the prepaid amount is ascertainable at the time of
recording expenditure. If such amount is not ascertainable at the time of recording of
expenditure, the same shall be ascertained at the period-end and recorded then.
16.17 Recording of rent expense in next year. In the financial year 2004-2005, in April
2004, the following entry shall be passed:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
220-10-(a) Rent, Rates & Taxes
Dr.
36,000
Journal Book,
440-20-(a)
To Prepaid Expenses –
Ledger
Administration
Cr.
36,000
(a) Insert Detailed Head Codes of Account as applicable
16.18 By passing the entries in the above manner, the following shall happen:
a. Rent expense for the year 2003-2004 shall be shown as at Rs. 12,000 (Rs.
48,000 less Rs. 36,000).
16.5
National Municipal Accounts Manual
Other Revenues Expenditures
b. Prepaid rent of Rs. 36,000 shall be carried forward in the Balance Sheet as at
31st March 2004 and shown as an asset.
c. Rent expense for the year 2004-2005 shall be shown at Rs. 36,000 as far as it
relates to the payment made in November 2003.
d. For the payment made during financial year 2004-2005, similar entries as
above would need to be passed. It is likely that a further Rs. 12,000 shall be
treated as an expense in the financial year 2004-2005 and therefore, the total
rent for the financial year 2004-2005 shall be Rs. 48,000 (Rs. 36,000 paid in
previous year plus Rs.12, 000 paid in the year 2004-2005).
16.19 All other expenses shall be treated in a similar manner.
16.20 Most expenses which are payable on a time basis shall be treated in the above
manner. In case of expenses of a sporadic nature, if the entire service has not been
received in the year of payment, an estimate would need to be made at the end of the
financial year to carry forward the unexpired portion of the benefit or service to the next
financial year.
ACCRUED EXPENDITURE
16.21 There may be instances of expenditures, which pertain to a particular accounting
period in respect of which the bills have been received but may not have been admitted
for payment by the ULB. These shall be provided at the end of an accounting period to
fully reflect the revenue expenditures incurred in that period.
16.22 For this, at the end of the accounting period, each of the departments shall collate
the details of the accrued expenditure from the bills received during or after the
accounting period but pertaining to the accounting period and remaining unpaid at the end
of the accounting period. The said information shall be collated in Form GEN-28 by 30th
April of the next financial year where the accounting period is a financial year and in
other cases in 15 days from the end of the accounting period.
16.23 The portion of a bill representing accrued liability in respect of an accounting
period shall be accounted for in that period’s books, irrespective of the fact that it has
been received in the next accounting period.
16.6
National Municipal Accounts Manual
Other Revenues Expenditures
16.24 Recording of Accrued Expenditure. For recording the accrued expenditure, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
220-(a)
360-10-(b)
Debit
Credit
Amount
Amount
Dr./
(Rs.)
(Rs.)
Cr.
Illustrative Illustrative
figures
figures
Dr.
2,00,000
Cr.
2,00,000
__________ Expenses*
To Provision for
Expenses
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Books to be
entered into
Journal Book,
Ledger
16.25 Payment of Accrued Expenditure. In the next accounting period, upon payment of
accrued expenditure, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
(Rs.)
(Rs.)
Illustrative Illustrative
figures
figures
2,00,000
2,00,000
360-10-(a) Provision for Expenses
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Books to be
entered into
Cash Book,
Ledger
16.26 Suppose the bill in respect of legal fees of Rs. 10,000/- payable for the months of
March 2004 and April 2004 is received at the end of April 2004 with the expenditure for
the month of April being separately quantified at Rs. 5,000/-.
a. Recording the liability. For the accrued expenditure, the Accounts Department
shall pass the following entry for legal fees in the books of accounts of
financial year 2003 – 2004:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
220-51-(a) Legal Expenses – Legal Fees Dr.
5,000
Journal Book,
350-10-(a)
To Creditors -Expenses
Cr.
Ledger**
5,000
(a) Insert Detailed Head Codes of Account as applicable
b. Recording of payment of Legal Fees. When the payment is made in the month
of April 2004, the following entry shall be passed in the books of accounts of
financial year 2004-2005:
16.7
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Other Revenues Expenditures
Debit
Credit
Amount
Amount
(Rs.)
(Rs.)
Illustrative Illustrative
figures
figures
5,000
Dr./
Cr.
Legal Expenses – Legal Dr.
Fees
5,000
Dr.
350-10-(a) Creditors – Expenses
Cr.
To Bank Account*
450-21-(a)
* Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
220-51-(a)
Books to be
entered into
Cash Book,
Ledger
10,000
16.27 The effect of the above entries shall be as follows:
a. Legal Expenses shall be reflected for March 2004 in the accounts for the
period 2003-2004 and an outstanding liability created.
b. When the actual payment is made, the legal expenses ledger account shall be
debited for that portion of legal fees which pertains to April 2004 and
Creditors for Other Expenditures shall be debited for that portion of legal fees
which pertains to March 2004 for which a liability was created in the financial
year 2003-2004.
PAYMENT AGAINST PERMANENT ADVANCE
16.28 Recording of grant of Permanent Advance. Permanent Advance may be provided
to the heads of the departments for incurring specific expenditure, as per the bylaws of the
ULB or as approved by the ULB. The Accounts Department shall record the grant of
Permanent Advance in Register of Permanent Advance in Form GEN-17 and pass the
following entry:
Code of
Account
460-50-(a)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,500
Cash Book,
Ledger, Register
2,500 of Advances
Advance to others –
Dr.
Permanent Advance
450-21-(a)
To Bank Account*
Cr.
* Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
16.29 Recording of other revenue expenditure incurred. Expenditure in respect of which
Permanent Advance has been provided shall be initially incurred against it. At intervals of
not more than one month, the concerned department shall prepare a Payment Order (Form
16.8
National Municipal Accounts Manual
Other Revenues Expenditures
GEN-14) and forward it to the Accounts Department. On receipt of Payment Order, the
Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
220-(a)
__________ Expenses*
Dr.
1,000
Journal Book,
460-50-(b)
To Advance to others
Cr.
1,000 Ledger, Register
Permanent Advance
of Advances
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
16.30 The Accounts Department after recording the aforesaid entry shall replenish the
permanent advance to the extent of the amount expended and in respect of which entry as
referred to in para. 16.28 shall be passed.
16.31 For recovery of Permanent Advance. The permanent advance granted to the
Departments shall be recovered at the end of the financial year. On receipt of money, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,500
Cash Book,
1,500 Ledger, Register
of Advances
450-21-(a) Bank Account*
Dr.
460-50-(a)
To Advance to others – Cr.
Permanent Advance
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
PAYMENT AGAINST MISCELLANEOUS ADVANCE
16.32 Recording of grant of Miscellaneous Advances. Miscellaneous Advances may be
given to the employees of the ULB for incurring specific expenditure for the ULB. The
Accounts Department at the time of granting of miscellaneous advance shall make an
entry in the Register of Advance (Form GEN-16) and pass the following entry:
16.9
National Municipal Accounts Manual
Other Revenues Expenditures
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
460-10-(a) Advances to EmployeesDr.
1,500
Cash Book,
Miscellaneous Advance
Ledger, Register
450-21-(a)
To Bank Account*
Cr.
1,500 of Advances
* Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Expenses incurred are less than the advance given
16.33 Recording of Expense incurred. The concerned employee shall prepare a Payment
Order (Form GEN-14) for the expenditure incurred against the miscellaneous advance
provided (for e.g. - expenses incurred are Rs. 1,000 against advance provided Rs. 1,500)
and forward it to the Accounts Department. The excess cash shall be re-deposited with
the Accounts Department. The Accounts Department shall update the Register of
Advances (Form GEN-16) for the Payment Order received and pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
Ledger, Register
1,000 of Advances
Administrative Expenses – Dr.
Others
To Advances to
Cr.
460-10-(b)
Employees –
Miscellaneous Advance
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
220-(a)
16.34 Re-deposit of excess cash. For excess cash tendered along with the Payment
Orders, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
500
Cash Book,
500 Ledger, Register
of Advances
Dr.
450-21-(a) Bank Account*
Cr.
460-10-(a)
To Advances to
Employees –
Miscellaneous
Advance
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
16.10
National Municipal Accounts Manual
Other Revenues Expenditures
Expenses incurred are more than the advance given
16.35 Recording of Expense incurred. The concerned employee shall prepare a Payment
Order (Form GEN-14) for the expenditure incurred against the miscellaneous advance
provided (for e.g. - expenses incurred are Rs. 2,500 against advance provided Rs. 1,500)
and forward it to the Accounts Department. The Accounts Department shall update the
Register of Advances (Form GEN-16) for the Payment Order received and pass the
following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,500
Journal Book,
1,500 Ledger, Register
of Advances
Dr.
220-(a)
___________ Expenses*
Cr.
460-50-(b)
To Advances to
Employees –
Miscellaneous Advance
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
16.36 Recording extra expense incurred. In case, expenditure incurred is more than the
advance provided to the employee, for recording the extra expenditure incurred and
payment for it, either to the employee or to the supplier, the Accounts Department shall
pass the following entry:
Code of
Account
Accounting Entry
220-(a)
__________ Expenses**
450-21-(b)
To Bank Account*
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger, Register
of Advances
* Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
ACCOUNTING OF EXPENDITURE INCURRED IN TERMS OF ANY GRANT
OR SPECIAL FUND
16.37 The procedure to be followed for accounting of expenditure incurred in pursuance
of the terms and conditions of any Grants or Special Funds, shall be the same as what is
described above in respect of expenditure incurred by the ULB during the normal course
of its operations. The expenditure so incurred shall be paid from the respective designated
bank accounts. The accounting entry to be passed for expenditure incurred and paid shall
16.11
National Municipal Accounts Manual
Other Revenues Expenditures
be the same as what has been described in Chapter 17 on Grants in respect of expenditure
incurred under any Grant and Chapter 19 on Special Funds in respect of expenditure
incurred from any Special Fund.
INTERNAL CONTROLS
16.38 The following internal controls shall be observed by the ULB:
a. The Head of the Accounts Department shall ensure budget availability with
respect to the expenditure incurred at the time of accruing of the expenditure.
b. The Head of the Accounts Department shall ensure that all the bills/invoices
were journalised before release of the payments.
c. The Head of the Accounts Department shall ensure proper authorisation of
Payment Order as per the authorities delegated by the ULB.
d. The Head of the Accounts Department shall ensure that the relevant
supporting documents are annexed to the Payment Order submitted by the
Department.
e. The Head of the Accounts Department shall ensure appropriate classification
both in terms of expenditure head and the period in which the expenditure has
been accounted with reference to the nature of the bill and the date of the bill,
respectively.
f. On a quarterly basis, and, also in between, on a random basis, the Head of the
Accounts Department shall conduct physical verification of cash in hand held
at the various departments and tally it with the departmental records
maintained there and thereafter with the Register of Advances (Form GEN-16)
maintained at the Accounts Department.
g. At the time of making payment, the Accounts Department shall ensure that
reference to the departmental Register of Bills for Payment where the payment
bill has been recorded by the department concerned, is provided in the
Payment Order. In case of non-referencing, the Accounts Department shall
return the Payment Order to the concerned Department for rectification and
resubmission. In addition, at the time of payment to Suppliers/contractors and
any other creditors it shall be ensured that no amount is due from them, which
may be adjusted before payment.
16.12
National Municipal Accounts Manual
Other Revenues Expenditures
h. The Head of the Accounts Department shall ensure that a monthly
reconciliation of total expenditure incurred and recorded in the Departmental
Expense (Administrative Expenses) Subsidiary Ledger is carried out with the
total expenditure recorded in several Administrative Expense Ledger
Accounts.
i. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
16.39 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN FINANCIAL STATEMENTS
16.40 The prepaid expenses and accrued liability shall be identified for proper disclosure
in the Balance Sheet of the ULB.
16.41 The various heads of accounts used for the accounting of Other Revenue
Expenditures shall be reflected in the Financial Statements or the Schedules attached to
the Financial Statements of the ULB. All such Financial Statements and schedules should
be affixed with signature and seal of designated authorities.
16.42 The Schedules of Income and Expenditure Statement in respect of Other Revenue
Expenditures are presented below.
Schedule I-11: Schedule of Administrative Expenses – Expenditure head-wise
Code No.
1
220-10-(a)
Particulars
2
220-51-(a)
Rent, Rates and Taxes
Legal Expenses
220-80-(a)
Other Administrative Expenses
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total expense of Other Revenue Expenditure to be shown as part
of Administrative expenses – expense head wise Schedule
(a) Insert Detailed Head Codes of Account as applicable
16.43 The abstracts of Balance Sheet in respect of Other Revenue Expenditures are
presented below:
16.13
National Municipal Accounts Manual
Other Revenues Expenditures
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No.
Particulars
1
350-10-(a)
2
Creditors – Payable against Expenses
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current year
Amount (Rs.)
3
Previous year
Amount (Rs)
Current year
Amount (Rs.)
3
Previous year
Amount (Rs.)
4
Schedule B-10: Schedule of Provision for Expenses
Code No.
Particulars
1
360-10-(a)
2
Provision for Expenses
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-16: Schedule of Prepaid Expenses
Code No.
Particulars
1
440-20-(a)
2
Administration
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-17: Schedule of Cash and Bank Balances
Code No.
Particulars
1
450-10-(a)
450-21-(a)
450-41/61-(a)
2
Cash Account
Bank Account
Designated Bank Account
Total Cash and Bank balances
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-18: Schedule of Loans, advances and deposits
Code No.
1
460-50-(a)
Particulars
Opening
Balance at
the
beginning of
the year
(Rs.)
3
2
Advance to Others
Net total of Loans,
advances, and deposits
(a) Insert Detailed Head Codes of Account as applicable
Paid during
the current
year
(Rs.)
Recovered
during the
year
(Rs.)
Balance
outstanding
at the end of
the year
(Rs.)
4
5
6
16.14
Grants
National Municipal Accounts Manual
CHAPTER 17
*5$176
INTRODUCTION
17.1 This chapter contains the recommended accounting system for transactions relating to
Grants received by the Urban Local Body (ULB).
17.2 The ULB receives grants from the State and/or Central Government(s). The grants
received by the ULB could be either for general purposes or for carrying out specific
projects/schemes or in form of reimbursements for specific expenditures.
NATURE OF GRANTS
17.3 Grants received by the ULB may be of a capital or revenue nature. A Capital Grant is
usually utilised for capital expenditure i.e. creation of a fixed asset (like purchase of land,
building, equipment, facilities, etc.). The benefits of such expenditure are of an enduring
nature and spread over an extended period of time. A Revenue Grant, on the other hand, is
generally utilised for meeting recurring expenditure, the benefits of which usually expire
within the accounting year in which it is incurred. Revenue Grants are usually in the nature of
a subsidy. Grants may be for a non-specific purpose, i.e., General Grants or for a specific
purpose, i.e., Specific Grants. These are further described below.
17.1
National Municipal Accounts Manual
Grants
GENERAL GRANTS
17.4 Grants received for general (unspecified) purposes are usually in the form of a
lumpsum payment from the State Government to facilitate meeting certain expenditure
(usually revenue in nature) relating to the ULB’s activities.
17.5 Following is an illustrative list of the General Grants that may be received by the ULB
from the State Government:
¾
Motor Vehicles Tax grant
¾
Stamp Duty grant
¾
District Court grant
SPECIFIC GRANTS
17.6 The ULB usually also receive grants for carrying out specific projects/schemes or for
meeting specific expenditures. These can be Revenue or Capital in nature based on the
purpose for which they are received Certain Specific Grants can have both, capital and
revenue components, e.g., grant for construction of new roads and subsequent repairs and
maintenance of roads. Specific Grants may either be received in advance or as a
reimbursement of the expenditure incurred by the ULB.
17.7 The following is an illustrative list of Specific Grants that may be received by the
ULB:
Revenue Grants for meeting expenditure incurred during the ordinary course of
activites of the ULB:
•
Dearness Allowance Expenditure Reimbursement Grant,
•
Grant for Chemicals used for Water Supply Works, etc.
Revenue Grants for operating specific projects/schemes:
•
Census Grant,
•
Pulse Polio Grant,
•
Family Welfare Grant,
•
Tuberculosis Control Grant,
•
Malaria Control Grant,
•
Aids Awareness Grant,
•
School Children Health Program Grant, etc.
17.2
National Municipal Accounts Manual
Grants
Capital Grants for meeting capital expenditures under specific projects/schemes:
•
Backward Classes Development Grant,
•
Integrated Urban Areas Development/Integrated Development of Small and
Medium Towns Grant,
•
Public Toilets Construction grant, etc.
17.8 When a Specific Grant is received in advance, the ULB is required to submit an
“Utilisation Certificate” in the manner, prescribed in the Grant Sanction Order.
17.9 The claim for grant receivable as a reimbursement of expenditure incurred is made by
submitting “Statement of Expenditure” to the sponsoring agency at such intervals as
prescribed in the Grant Sanction Order.
17.10 Some Specific Grants require opening of a Designated Bank Account from which all
expenditures in respect of the grant are paid and/or maintenance of separate Books of
Accounts.
ACCOUNTING PRINCIPLES
17.11 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Grants:
a. General Grants, which is of a revenue nature, shall be recognised as income on
actual receipt.
b. Grants towards revenue expenditure, received prior to the incurrence of the
expenditure, shall be treated as a liability till such time that the expenditure is
incurred.
c. Grants received or receivable in respect of specific revenue expenditure shall be
recognised as income in the accounting period in which the corresponding revenue
expenditure is charged to the Income and Expenditure Account.
d. Grants received towards capital expenditure shall be treated as a liability till such
time that the fixed asset is constructed or acquired. On construction/acquisition of
a fixed asset out of the grants so received, the extent of liability corresponding to
the value of the asset so constructed/acquired shall stand reduced and the amount
shall be treated as a capital receipt and shall be transferred from the respective
Specific Grant Account to the Capital Contribution.
17.3
National Municipal Accounts Manual
Grants
e. Grants received as a nodal agency or as implementing agency for an intended
purpose, which does not, result in the creation of assets with ownership rights for
the ULB shall be treated as a liability till such time it is used for the intended
purpose. Upon utilisation for the intended purpose, the extent of liability shall
stand reduced by the value of such utilisation and no further treatment shall be
required.
f. Grants in the form of non-monetary assets (such as fixed assets given at a
concessional rate) shall be accounted for on the basis of the acquisition cost. In
case a non-monetary asset is received free of cost, it shall be recorded at a nominal
value (e.g. Rupee One).
g. Income on investments made from ‘Specific Grants received in advance’ shall be
recognised and credited to the Specific Grant, whenever accrued. Profit/loss, if
any, arising on disposal of investments made from the ‘Specific Grant received in
advance’ shall also be recognised and credited/debited to the Specific Grant.
ACCOUNTING RECORDS & PROCEDURES
17.12 This section describes the records, register, documents, accounting entries, etc., in
respect of accounting for transactions related to Grants. For the purposes of accounting, the
form Grant Register (Form G-1) is specific to Grants. This is annexed to this chapter.
17.13 The Accounts Department shall maintain a Grant Register in Form G-1 with separate
registers for capital and revenue grants and separate pages for each grant for recording details
of receipt of grant and expenditures incurred from it.
GENERAL GRANTS
17.14 The amount of grant sanctioned by the State Government may be after deduction of
certain charges/dues payable to the State Government by the ULB. For example loan
liabilities/interest on the loans from the State Government/electricity charges payable etc
Therefore recording of a grant received from the State Government of Rs.85,000 after
deduction of ‘Electricity charges payable’ amounting to Rs 10,000 and Interest on Short-term
loan from the State Government’ amounting to 5,000 is explained as detailed below:
a. Recording of receipt of General Grant. Details of General grants received shall be
entered in the Receipt Register (Form GEN-9) maintained at the Accounts
Department and deposited into the Main Bank Account. A Receipt shall be issued
in Form GEN-8 to the sponsoring agency. To record the receipt of grant, the
Accounts Department shall pass the following entry:
17.4
Grants
National Municipal Accounts Manual
Code of
Account
450--(a)
160-10-(b)
Accounting Entry
Bank Account *
To Revenue Grant
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
85,000
Cash Book,
85,000 Ledger, Grant
Register
* Specify name of bank and Account number
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
b. Recording of deductions made by the State Government at the time of payment:
At the time of release, state government may deduct from the grants the payments
to be made by ULB like Electricity Charges, Interest on Loans, Loan repayment
etc. ULBs shall account for the gross amount of the grant as Income and book the
relevant heads for the deductions made. As per the details of the deductions in the
government order sanctioning the grant, the Accounts Department shall pass the
following entry in its books:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
5,000
Journal Book,
Interest on Loans from State
240-20-(a)
Ledger, Loans
Government
Dr.
10,000
Register and
Office Maintenance 220-11-(a)
Grants Register
Electricity Charges
To Revenue Grant
Cr.
15,000
160-10-(a)
(a) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger (Form GEN-3) of “Main Bank” Account and “____Grant
Income” Ac count shall be carried out as indicated in Chapter 5 – General Accounting Procedures.
The postings in the Ledger shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever, the cash or the bank account is involved, there
will be no entry in the Journal Book (Form GEN-2)
SPECIFIC GRANTS
17.15 Specific Grants could either be received in advance or as a reimbursement of the
expenditure already incurred. These could be Revenue or Capital in nature, or a combination
of both. The accounting entries for Specific Grant will, depend on the nature of the receipt (in
advance or as reimbursement) and the nature of the expenditure, which are expected to be
incurred out of such grants (capital or revenue).
Specific Grants Received in Advance
17.16 Grants received in advance shall be deposited in their respective Designated Grant
Bank Accounts and they shall be accounted for in the following manner.
17.5
Grants
National Municipal Accounts Manual
Specific Grant in respect of Revenue Expenditure
17.17 The Specific Grants received in advance towards revenue expenditure shall be
accounted as follows:
a. Recording of grant received in advance. The details of the Grant Sanction Order
shall be recorded in the Grant Register (Form G-1). On receipt of the grant, the
Accounts Department shall pass the following entry:
Code of
Account
450- 61-(a)
320-(b)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Grant Cash Book,
1,00,000 Ledger, Grant
Register
Designated Bank Account*
Dr.
To Grants for Specific
Cr.
Purposes
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
b. Separate Cash Book (Form GEN-1) shall be maintained in respect of all grants.
c. The details of the receipt of the grant shall be updated in the Grant Register (Form
G-1).
d. The accounting procedure to be followed in respect of revenue expenditure
incurred against Specific Grants received in advance shall be the same as what is
described in Chapter 12 – Public Works for repairs and maintenance expenses,
Chapter 13 – Stores for stores purchased, and Chapter 16 - Other Revenue
Expenditures for other revenue expenditures.
e. Payment of advance to contractor/supplier in respect of a Specific Grant received
in advance. Any advance made to a supplier/contractor in respect of a
project/scheme to be carried out against a Specific Grant received in advance,
shall be payable from the Designated Grant Bank Account only and not from the
Main Bank Account. The entry for this shall be the same as described in the
section “Advance paid to contractors/suppliers”.
f. Recording of liability on receipt of contractor/supplier bill. On receipt of
processed bill in respect of material supplied or services rendered or works
executed which is of a revenue nature, the Accounts Department shall pass the
following entry:
17.6
Grants
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
20,000
Journal Book,
Cr.
12,000 Ledger, Grant
Register
Cr.
2,000
2-(b)
_______Expenditure
350-10-(a)
To Creditors-Payables
against Specific Grants
340-10-(a)
To From Contractors/
Suppliers -Security
Deposit Specific Grant
1,000
Cr.
To Recoveries Payable
350-20-(a)
TDS from Specific Grant
2,000
Cr.
To Recoveries Payable
350-20-(a)
Works Contract Tax from
Specific Grant
Cr.
3,000
To Advance to Suppliers/
460-40-(a)
Contractors Specific
Grants
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Major, Minor and Detailed Head Codes of Account as applicable
g. The details of the expenditure shall be recorded in the Grant Register (Form G-1)
under the respective Specific Grant.
h. Recording of payment to the contractor/supplier. The payment to the
contractor/supplier shall be made only from the respective Designated Grant Bank
Account. On payment, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
12,000
Grant Cash Book,
Ledger, Grant
Cr.
12,000 Register
350-10-(a) Creditors Payables against
Specific Grants
450- 61-(a)
To Designated Bank
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
i. Recording of payment for deductions made. The deductions made on behalf of the
Government in point "h" above shall also be paid from the respective Designated
Grant Bank Account. On payment of deductions made, the Accounts Department
shall pass the following entry:
17.7
Grants
National Municipal Accounts Manual
Code of
Account
350-20-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Grant Cash Book,
Dr.
1,000
Ledger, Grant
Dr.
2,000
Register
Recoveries Payable - TDS
Specific Grant
350-20-(a)
Recoveries Payable -Works
Contract Tax from Specific
Grant
To Designated Bank
Cr.
450-61-(a)
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
3,000
j. Recording of transfer of money from Designated Grant Bank Account to Main
Bank Account on utilisation of common stores. The amount equivalent to the cost
of common stores utilised for the purpose of the Specific Grant shall be
transferred from the respective Designated Grant Bank Account to Main Bank
Account. Accounts Department shall update the Grant Register (Form G-1) for the
same and pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450-21-(a)
Bank Account*
Dr.
1,000
Grant Cash Book,
450-61-(a)
To Designated Bank
Cr.
1,000 Cash Book, Grant
Account*
Register
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
k. Recognising grant income in respect of revenue expenditure incurred under
Specific Grants. At the end of each quarter, the Accounts Department shall
identify the revenue expenditure incurred under the Specific Grants received in
advance (from the Grant Register). To record income against it, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
320-(a)
Grants for Specific Purposes Dr.
21,000
Journal Book,
160-10-(b)
To Revenue Grant
Cr.
21,000 Ledger, Grant
Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
17.8
Grants
National Municipal Accounts Manual
Advance paid to contractors/suppliers
17.18 On payment of advance to contractors for work executed under a Specific Grant, the
Accounts Department shall pass the following entries:
a. To record the advance sanctioned. Suppose an advance of Rs. 20,000 is sanctioned
to a contractor from which Rs. 1,000 is deducted on account of income tax. On
deduction, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
20,000
Dr.
460-40-(a) Advance to Suppliers &
Ledger, Grant
Contractors Specific Grant
1,000 Register
To Recoveries Payable TDS Cr.
350-20-(a)
From Specific Grant
19,000
To Creditors Contractors Cr.
350-10-(a)
Advance Control Account
Specific Grants
(a) Insert Detailed Head Codes of Account as applicable
b. For recording payment of advance. On payment of balance advance, i.e., Rs.
19,000 from the respective Designated Grant Bank Account, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
19,000
Grant Cash
Book, Ledger,
Grant Register
19,000
Dr.
Creditors Contractors
Advance Control Account
Specific Grants
To Designated Bank
Cr.
450-61-(a)
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
350-10-(a)
Earnest Money Deposit
17.19 Any amount received or paid on account of Earnest Money Deposit in respect of any
contract executed under Specific Grant received in advance shall be deposited in or refunded
from the respective Designated Grant Bank Account. The accounting procedure to be
followed for this shall be the same as described in Chapter 12 - Public Works, reference to
which is invited.
17.20 Recording of receipt of Earnest Money Deposit. On receipt of Earnest Money Deposit,
the Accounts Department shall pass the following entry:
17.9
Grants
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
1,000
Dr.
450-61-(a) Designated Bank Account*
Cr.
340-10-(a)
To From Suppliers/
Contractors EMD
Specific Grants
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
1,000
Grant Cash Book,
Ledger, Grant
Register
17.21 Recording of refund of Earnest Money Deposit. On refund of Earnest Money Deposit
to the unsuccessful bidder, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
900
Grant Cash Book,
Ledger, Grant
900 Register
340-10-(a) From Suppliers/ Contractors Dr.
EMD Specific Grants
Cr.
450-61-(a)
To Designated Bank
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
17.22 Conversion of Earnest Money Deposit to Security Deposit. On receipt of intimation
from the concerned department for conversion of Earnest Money Deposit of the successful
bidder into Security Deposit payable by him, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
100
Journal Book,
Ledger, Grant
100 Register
340-10-(a) From Suppliers/ Contractors Dr.
EMD Specific Grants
Cr.
340-10-(a)
To From Suppliers/
Contractors Security
Deposit Specific Grants
(a) Insert Detailed Head Codes of Account as applicable
Security Deposit
17.23 Any amount received or paid on account of Security Deposit in respect of any contract
executed under any Specific Grant shall be deposited in or refunded from the respective
Designated Grant Bank Account. The accounting procedure to be followed in this respect
shall be the same as described in Chapter 12 - Public Works, reference to which is invited.
17.10
Grants
National Municipal Accounts Manual
17.24 Recording receipt of Security Deposit. On receipt of Security Deposit, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Grant Cash Book,
Cr.
10,000
Ledger, Grant
Register
450-61-(a) Designated Bank Account*
340-10-(a)
To From Suppliers/
Contractors Security
Deposit Specific Grants
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
17.25 Treatment of Security Deposit deducted from the contractor’s/supplier’s invoice has
already been described in para. 17.16 (f) above.
17.26 Recording refund of Security Deposit. The refund of the Security Deposit
collected/deducted in respect of any Specific Grant received in advance shall be made from
the respective Designated Grant Bank Account. and the Accounts Department shall pass the
following entry:
Credit
Debit
Amount
Code of
Dr./ Amount (Rs.)
Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
entered into
Illustrative
figures
figures
12,000
Grant Cash Book,
340-10-(a) From Suppliers/ Contractors Dr.
Ledger, Grant
Security Deposit Specific
Register
Grants
To Designated Bank
Cr.
12,000
450-61-(a)
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Specific Grant in respect of Capital Expenditure
17.27 Recording of grant received in advance. The details of the Grant Sanction Order shall
be recorded in the Grant Register (Form G-1). On receipt of the grant, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
3,00,000
Grant Cash Book,
3,00,000 Ledger, Grant
Register
450-61-(a) Designated Bank Account*
Dr.
320-(b)
To Grants for Specific
Cr.
Purposes
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
17.11
Grants
National Municipal Accounts Manual
17.28 The accounting procedure to be followed and accounting entries to be recorded in
respect of:
a. Advance provided to the contractor/supplier,
b. Recovery of advance provided to contractor/supplier,
c. Receipt of Earnest Money Deposit (EMD) from the bidders and its refund to
unsuccessful bidders;
d. Conversion of EMD of successful bidder into Security Deposit;
e. Security Deposit received from contractor/supplier,
f. Security Deposit deducted from the contractor’s/supplier’s bill,
g. Refund of Security Deposit,
h. Deduction of tax from the contractor’s/supplier’s bill,
i. Payment of amounts deducted to the relevant authorities, etc.
shall be the same as what is described in the section "Specific Grant in respect of Revenue
Expenditure" above.
17.29 Recording of receipt of bill for capital work-in-progress. On receipt of a progress bill
in respect of capital works being executed under Specific Grants, the Accounts Department
shall pass the following entry:
Code of
Account
412-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
2,00,000
Journal Book,
Ledger, Grant
Cr.
2,00,000 Register
Capital Work-in-Progress
______Specific Grants
350-10-(a)
To Creditors Payables
against Specific Grants
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
17.30 Recording of receipt of bill for acquisition of fixed assets. On receipt of a bill in
respect of acquisition/purchase of fixed assets under Specific Grants, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
1,00,000
Journal Book,
410-(a)
Fixed Assets (Specify the name Dr.
Ledger, Grant
of the Asset)
To Creditors - Payables
Cr.
1,00,000 Register
350-10-(a)
against Specific Grants
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
17.12
Grants
National Municipal Accounts Manual
17.31 Recording payment to contractors/suppliers. Payment in respect of any expenditure
incurred for purchase, acquisition or construction of any fixed asset under any Specific Grant
shall be made from the respective Designated Grant Bank Account. On payment, the
Accounts Department shall pass the following:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
3,00,000
Grant Cash Book,
Ledger, Grant
3,00,000 Register
Dr.
350-10-(a) Creditors - Payables against
Specific Grants
Cr.
450-61-(a)
To Designated Bank
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
17.32 Recording capitalisation of capital work-in-progress. On completion of construction
of capital project, the capital work-in-progress shall be capitalised for which the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,00,000
Journal Book,
Ledger, Grant
2,00,000 Register
Fixed Assets (Specify name of Dr.
the Asset)
Cr.
412-(a)
To Capital Work-inProgress
_____ Specific Grants
(a) Insert Minor Head Codes of Account under 3-07 & 3-08 as applicable
410-(a)
17.33 Recording of transfer of Specific Grant to ‘Capital Contribution’ on capitalisation . On
capitalisation of capital work-in-progress or on acquisition of any fixed assets under a
Specific Grant, an amount equivalent to the amount of capital expenditure incurred and
capitalised shall be transferred from the Specific Grant to the Capital Contribution. To record
this transfer, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered nto
Illustrative Illustrative
figures
figures
320-(a)
Grants for Specific Purposes
Dr.
3,00,000
Journal Book,
312-10-(b)
To Capital Contribution
Cr.
3,00,000 Ledger, Grant
Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
17.13
Grants
National Municipal Accounts Manual
17.34 The above entry shall be passed simultaneously along with the entry for
purchase/acquisition or capitalisation of the fixed assets.
Investment of Funds from Specific Grant received in advance
17.35 Investments made from Specific Grants received in advance shall be entered in a
Grant Investment Register to be maintained in Form IN-1 (provided in Chapter 20 Investments). The accounting entries /procedures to be followed for investments of such
moneys are similar to those followed in respect of other investments. They relate to
investments, maturity of investment, recording of interest, profit/loss on sale/maturity of
investments, etc. These have been described in Chapter 20 - Investments.
17.36 Interest earned on investments, profit/loss on disposal of Investments, if any, shall be
updated in the Grant Register (Form G-1) by the Accounts Department.
GRANTS RECEIVED AS NODAL/ IMPLEMENTATION AGENCY
17.37 ULBs may receive grants as a nodal agency under certain schemes, wherein the
expenditure of the schemes are for a set of beneficiaries. In some cases, the scheme
expenditure is met by the ULB directly. In some other cases they are paid to the beneficiaries
group who upon spending will produce the relevant expenditure / utilisation statement.
17.38 Recording of grant received: The details of the Grant Sanction Order shall be recorded
in the Grant Register (Form G-1). On receipt of the Grant in advance, the Accounts
department shall pass the following entry:
Code of
Account
450-61-(a)
320-(b)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
3,00,000
Grant Cash
3,00,000 Book, Ledger,
Grant Register
Designated Bank Account*
Dr.
To Grants for Specific
Cr.
Purposes
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
17.39 Payment of advance to executing agency or beneficiary group: The ULBs may pay
advance to the executing agency / beneficiary group towards the works to be undertaken by
them. For recording the payment of advances, the accounts department will pass the
following accounting entry:
17.14
Grants
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,00,000
Grant Cash Book,
Ledger, Grant
2,00,000 Register
Dr.
Advances for Project
Specific grants
Cr.
450-61-(a)
To Designated Bank
account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
460-50-(a)
17.40 Recording of liability for ‘Scheme expenses’ on receipt of bill : ULBs may receive the
bills for payment either directly from the contractors or from the implementing agency. The
expenses incurred against Scheme to which the grant is received by the ULB shall be taken to
a separate control to accumulate the expenditure incurred. For recording of the amounts
payable to the contractors or nodal agencies the following entry shall be passed:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book and
1,00,000
Ledger
80,000
Dr.
Other Current Assets
Scheme expenses
Cr.
To Creditors
350-10-(a)
Payables against
Scheme expenses
350-20-(a)
To Recoveries Payable Cr.
TDS from Scheme
expenses
To Advances for
Cr.
460-50-(a)
Project Specific
grants
(a) Insert Detailed Head Codes of Account as applicable
460-80-(a)
10,000
10,000
17.41 Recording of payments made to contractor / implementing agency.
a. The payment for the bills shall be made only from the respective designated grant
bank account. . The accounts department shall pass the following entry on
payment :
Code of
Account
350-10-(a)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
80,000
Grant Cash Book,
Ledger, Grant
80,000 Register
Creditors -Payable against Dr.
Scheme expense
450-61-(a)
To Designated Bank Cr.
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
17.15
National Municipal Accounts Manual
Grants
17.42 Recording of payment for deductions made The deductions made on behalf of the
Government in above shall also be paid from the respective Designated Grant Bank Account.
On payment of deductions made, the Accounts Department shall pass the same entry as
explained in Para 17.16.
17.43 Recording of transfer of money from Designated Grant Bank Account to Main Bank
Account on utilisation of common stores. The amount equivalent to the cost of common
stores utilised for the purpose of the Specific Grant shall be transferred from the respective
Designated Grant Bank Account to Main Bank Account before issue of any common stores.
Accounts Department shall update the Grant Register (Form G-1) for the same and the
accounting entry is same as explained in Para 17.16 (j).
17.44 Recording of Transfer of Scheme expenses on completion of the scheme or at period
end: On completion of the scheme or at the period ends, the total amount of grant received for
specific purpose as a nodal agency shall be adjusted to the extent of amounts utilised under
the project. The accounting entry for such adjustment is as follows:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered nto
Illustrative Illustrative
figures
figures
320-(a)
Grants for Specific Purposes
Dr.
3,00,000
Journal Book,
460-80-(b)
To Other Current Assets
Cr.
3,00,000 Ledger, Grant
Scheme Expenses
Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Period End Procedures
17.45 At the period-end it shall be ensured that the bills received in respect of revenue
expenditure incurred as well as works executed or acquisition / purchase of fixed assets
before the last date of the accounting period, are processed and forwarded to the Accounts
Department for accounting and payment within 15 days from the end of the accounting
period.
17.46 The accounting entry to be recorded in respect of revenue expenditure shall be same
as provided in para 17.16 (f) above and the accounting entry to be recorded to recognise the
grant income in respect of revenue expenditure incurred shall be same as provided in para
17.16 (k) above.
17.47 The accounting entry to be recorded for progress bill in respect of capital works being
executed under Specific Grants shall be the same as provided in para 17.28 above and for
bills in respect of acquisition / purchase of fixed assets under Specific Grants shall be the
same as provided in para 17.29 above.
17.16
Grants
National Municipal Accounts Manual
17.48 For grants received as a nodal agency, it shall be ensured that the transfer entry is
made for expenses incurred against it and the balance in the ‘Scheme Expenses Nodal
Agency’account has become nil.
Repayment of unutilised Specific Grant received in advance
17.49 Recognition of liability for repayment of grant. Specific grants are normally to be used
within a period specified in the Grant Sanction order. Generally the Specific grants shall be
refunded in the following circumstances:
¾ On expiry of the period for utilisation of the grant as per grant sanction order.
¾ The total amount utilised out of the grant is lesser than the amount of the grant
received.
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
320-(a)
Grants for Specific Purposes
Dr.
10,000
Journal Book,
350-40-(b)
To Refunds Payable
Cr.
10,000 Ledger, Grant
Grants
Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
17.50 Payment of unutilised Specific Grant. The unutilised Specific Grant received in
advance shall be repaid from the respective Designated Grant Bank Account. On payment, the
Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Grant Cash
10,000 Book, Ledger,
Grant Register
350-40-(a) Refund Payable Grants
Dr.
450-61-(a)
To Designated Bank
Cr.
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Specific Grants Received as Reimbursement of Expenditure incurred by the ULB
17.51 Specific Grants received as reimbursement of expenditures could be received towards
revenue expenditures incurred during the ordinary course of activities of the ULB or for
implementing a specific project/scheme or towards capital expenditure incurred under a
specific project/scheme. These expenditures would be incurred from the Main Bank Account
before claiming reimbursement. The grants receivable as reimbursement shall be accounted in
the following manner:
17.17
Grants
National Municipal Accounts Manual
Specific Grant for revenue expenditure incurred during the ordinary course of activities of
the ULB
17.52 The grants receivable as reimbursement of revenue expenditures incurred during the
ordinary course of activities of the ULB, shall be accounted in the following manner:
a. Recognition of grant income on sanction of the grant. The details on receiving the
Grant Sanction Order in respect of the specific grant where application/details of
expenditure submitted earlier shall be recorded in the Grant Register (Form G-1).
To recognise the income, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
431-50-(a) Receivable from
Government -Grants
160-20-(a)
To Re-imbursement of
Expenses
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
50,000
Journal Book,
Ledger, Grant
50,000 Register
(a) Insert Detailed Head Codes of Account as applicable
b. Recording of receipt of grant. On receipt of the grant, the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
450-21-(a) Bank Account
431-50-(a)
To Receivable from
Government -Grants
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
45,000
Cash Book,
45,000 Ledger, Grant
Register
(a) Insert Detailed Head Codes of Account as applicable
Specific Grant for expenditure incurred under a specific project/scheme
17.53 The grants receivable as reimbursement of expenditure incurred under a specific
project/scheme shall be accounted as follows:
a. The project/scheme is usually sponsored/sanctioned by a sponsoring agency. The
details of the Grant Sanction Order shall be recorded in the Grant Register (Form
G-1).
b. The accounting entries/procedure to be followed for receipt of deposits, incurrence
of expenditure, payment of contractor bills, payment of deductions made from the
contractor bills, utilisation of common stores, completion of the asset and
capitalisation of the asset, period end procedure for making provisions for unpaid
bills, has been described in Chapter 12 - Public Works, Chapter 13 - Stores,
Chapter 16 - Other Revenue Expenditures and Chapter 21 - Fixed Assets.
17.18
Grants
National Municipal Accounts Manual
c. The department incurring the expenditure shall specify the name of the grant in
respect of which the expenditure has been incurred in the Payment Order (Form
GEN-14). As and when any expenditure is recorded in the books of original entry,
i.e., Cash Book (Form GEN-1) or Journal Book (Form GEN-2) as well as
utilisation of common stores, the Grant Register (Form G-1) shall also be updated
correspondingly.
d. Recording of grant income in respect of revenue expenditure incurred under the
grant. The grant becomes receivable on incurrence of expenditure under the grant.
At period-end, the Accounts Department shall identify the revenue expenditure
incurred and paid for during the period from the Grant Register (Form G-1). To
recognise the grant income in respect of the revenue expenditure incurred under
the grants during the period, the Accounts Department shall pass the following
entry:
Code of
Account
431-50-(a)
160-30-(a)
Accounting Entry
Receivable from
Government -Grants
To Contribution towards
scheme
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Ledger, Grant
Cr.
10,000 Register
(a) Insert Detailed Head Codes of Account as applicable
e. Recording of receipt of grant. The concerned department shall submit a
“Statement of Expenditure” at periodic intervals (as specified in the
program/scheme details) to the sponsoring agency for claiming the amount of
grant due. On receipt of the grant, the Accounts Department shall pass the
following entry:
Code of
Account
450-21-(a)
431-50-(a)
Accounting Entry
Bank Account*
To Receivable from
Government -Grants
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
9,500
Cash Book,
Cr.
9,500 Ledger, Grant
Register
(a) Insert Detailed Head Codes of Account as applicable
Period-end Procedure
17.54 At the period-end, it shall be ensured that revenue expenditure incurred under the
grant scheme but remaining outstanding for re-imbursement before the last date of the
accounting period shall be recorded with matching the income corresponding to the
expenditure being recorded. The accounting entry to be recorded shall be the same as
provided in para 17.51 (a) above.
17.19
Grants
National Municipal Accounts Manual
Write-off of Grant Receivable
17.55 Recording of write-off of grant receivable. The Accounts Department shall, at the end
of each year, review the recoverable position of Grants Receivables. The ULB may consider
writing-off the grants that have remained outstanding for a period exceeding three (3) years. If
the ULB decide to write-off any grants receivable, based on the Write-off Order, the Accounts
Department shall pass the following entry:
Code of
Account
270-30-(a)
431-50-(a)
Accounting Entry
Revenues Written off
Grants
To Receivable from
Government Grants
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
500
Journal Book,
Ledger, Grant
500 Register
(a) Insert Detailed Head Codes of Account as applicable
ADJUSTMENT OF GRANT RECEIVABLE FROM THE STATE GOVERNMENT
AGAINST ULB’S DUES TO THE STATE GOVERNMENT
17.56 The State Government may deduct any amount, which is due from ULB to any
Government Corporation, Government Company or any other statutory authority constituted
by it, from the grants payable to the ULB.
17.57 Recording of adjustment of State Government dues against grant receivable. On
receiving the intimation from the State Government regarding such adjustment, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-30-(a) Government Dues Payable*
Dr.
500
Journal Book,
431-50-(a)
To Receivables from
Cr.
500 Ledger, Grant
Government Grants
Register
* Specify the head of account of the government due, against which the grant is adjusted, e.g.,
State Education Cess Payable, Electricity Charges payable, Employment Guarantee Cess
Payable, etc.
(a) Insert Detailed Head Codes of Account as applicable
INTERNAL CONTROLS
17.58 The following internal controls shall be observed by the ULB in respect of Grant
related transactions:
a. The Head of the Accounts Department shall ensure that the grant received for a
specific purpose shall not be utilised for any other purpose.
17.20
National Municipal Accounts Manual
Grants
b. The Head of the Accounts Department and the Head of the Department
implementing the project/scheme sponsored by the grant shall quarterly reconcile
the expenditure incurred during the period in respect of each of the grant from the
Ledger (Form GEN-3) and the Grant Register (Form G-1) maintained at the
Accounts Department and the relevant records maintained at the respective
departments.
c. The Head of the Accounts Department shall quarterly reconcile the amount of
grant received and receivable in the Ledger (Form GEN-3) and the Grant Register
(Form G-1) maintained at the Accounts Department.
d. The Head of the Accounts Department shall, after entry in CashBook in respect of
grants received, ensure that the grant received is recorded in the Grant Register.
Further, it shall be ensured that the Receipt in from GEN-8 Summary of Daily
collections prepared, provides reference of Grant Register.
e. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
17.59 All Reconciliation Statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN FINANCIAL STATEMENTS
17.60 The various heads of account used for the accounting of Grant related transactions
should be reflected in the Financial Statements or in the Schedules attached to the Financial
Statements of the ULB. All such Financial Statements and schedules should be affixed with
signature and seal of designated authorities.
17.61 The Schedule of the Income and Expenditure Statement in respect of Grants is
provided below.
17.21
Grants
National Municipal Accounts Manual
Schedule I-6: Schedule of Revenue Grants, Contribution and Subsidies
Code No
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Current Year
Previous
Year
160-10-(a)
Revenue Grant
160-20-(a)
Re-imbursement of expenses
160-30-(a)
Contribution towards schemes
Total Income of Grants to be shown as part of Revenue Grants,
Contributions and Subsidies Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-16 : Schedule of Provisions & Write off
Code No
270-30-(a)
Particulars
Revenues Written Off Revenue Grants
Total Expense of Grants to be shown as part of Provision & Write
Off Schedule
(a) Insert Detailed Head Codes of Account as applicable
17.62 The Balance Sheet Abstract in respect of Grants is provided below.
Schedule B-3: Schedule of Reserves
Code No.
1
312-10-(a)
312-30-(a)
Particulars
2
Capital Contribution
Special Funds
(Utilised)
Opening
balance
(Rs.)
3
Additions
during the
year
(Rs.)
4
Total
(Rs.)
5 (3+4)
Deductions
during the
year
(Rs.)
6
Balance at the
end of the
current year
(Rs.)
7 (5-6)
Total Reserve funds
(a) Insert Detailed Head Codes of Account as applicable
17.22
(a+b)-(c)
Grants from
Central
Government
Grants from
State
Government
Grants from
Other
Government
Agencies
Grants from
Financial
Institutions
Grants from
Welfare
Bodies
Grants from
International
Organisations
17.23
Others
Amount in Rs.
Grants
Total Grants & Contribution for Specific Purposes
Note: Plan funds received from Central/ State Government are to be shown as grant funds and not be mixed up with earmarked funds
* For transferring completed capital assets, expenditure incurred will be capitalised and assets will be taken to Fixed Assets schedule (B-11) and Capital contribution will be increased by the same amount.
Net balance at the year end
Total (c) [i+ii+iii]
Sub –total
(i) Capital expenditure on
Fixed Assets*
Others
Sub –total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Sub –total
(iii) Other:
Loss on disposal of Grant Investments
Diminution in Value of Grant Investments
Grants Refunded
(c) Payments out of funds
Total (a+b)
Total (b)
(v) Other addition (Specify nature)
(iv) Appreciation in Value of Grant Investments
(iii) Profit on disposal of Grant Investments
Code No.
(a) Opening Balance
(b) Additions to the Grants *
(i) Grant received during the year
(ii) Interest/Dividend earned on Grant Investments
Particulars
Schedule B-4: Schedule of Grants & Contribution for Specific Purposes
National Municipal Accounts Manual
Grants
National Municipal Accounts Manual
Schedule B-7: Schedule of Deposits Received
Code No.
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
1
340-10-(a)
2
From Contractors and Suppliers EMD Specific
Grants
340-10-(a)
From Contractors and Suppliers
Security
Deposits Specific Grants
340-80-(a)
From Others Specific Grants
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedules B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No
Particulars
1
350-10-(a)
350-10-(a)
350-20-(a)
350-20-(a)
2
Creditors Payable against Specific Grant
Creditors Payable against Scheme Expense
Recoveries Payable TDS Specific Grants
Recoveries Payable- Works Contract Tax
Specific Grants
350-40-(a)
Refunds Payable - Grants
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-13: Schedule of Investments
Code No
Nature of investment
1
421-(a)
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
from
Other Funds
With whom
invested
3
2
Investment Other Funds
Grant Investment
Total
(a) Insert Detailed Head Codes of Account as applicable
Face value
Cost
Remarks.
4
5
6
Schedules B-15: Schedule of Sundry Debtors (Receivables)
Code No
Particulars
Gross
Amount
(Rs.)
Provision for
doubtful receivables
Amount (Rs.)
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Current Assets
Receivable
from
Government -Grants
Total
(a) Insert Detailed Head Codes of Account as applicable
431-50-(a)
17.24
Grants
National Municipal Accounts Manual
Schedules B-17: Schedule of Cash & Bank Balances
Code No
Current Year
Amount (Rs.)
Particulars
Previous Year
Amount (Rs.)
Cash Account
Bank Account
Designated Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
450-10-(a)
450-21-(a)
450-61-(a)
Schedule B-18: Loans, advances and deposits
Code No.
1
460-40-(a)
Particulars
Opening
Balance at the
beginning of
the year
(Rs.)
3
2
Advance to Suppliers and
Contractors Specific Grants
460-50-(a) Advance to Others
Specific
Grants
460-80-(a) Other Current Assets- Scheme
Expenses
Total
461--(b)
Less: Accumulated Provisions
against Loans, Advances and
Deposits [Schedule B 18 (a)]
Net total of Loans, advances,
and deposits
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Paid during
the current
year
(Rs.)
Recovered
during the
year
(Rs.)
4
5
Balance
outstanding
at the end of
the year
(Rs.)
6
17.25
Grants
National Municipal Accounts Manual
Form G-1
___________________Name of the ULB
GRANT REGISTER*
Order/Designa
tion of the Nature Period Sanctioned
Sr. Name of the
Authority
of the of the
Amount
No.
Grant
sanctioning the Grant* Grant
(Rs.)
grant
1
2
3
4
5
6
Grant Received in
Advance
Date
Amount (Rs.)
7
8
Refund of unutilised
Grant
Grant
unutilised on
expiry of
Nature of Amount Date of
Amount
grant period Date
Expenditure
(Rs.)
Payment
(Rs.)
(Rs.)
11
12
13
14
15
16
Expenditure Incurred on Specific Grants
Date
Voucher
Number
9
10
* Maintain separate registers for Capital and Revenue Grants.
* State whether Grants received from Central Govt., State Govt. or Other Govt. agencies
Note: For each entry made; record the Name, Designation and Signature of the person making the entry in the
register and the person checking the entry.
17.26
National Municipal Accounts Manual
Borrowings (Loans Received)
CHAPTER 18
BORROWINGS (LOANS RECEIVED)
INTRODUCTION
18.1 This chapter contains the recommended accounting system for transactions relating to
loans received by the Urban Local Body (ULB).
18.2
On sanction by the State Government, the ULB may borrow funds, either by issuing
debentures, or other wise, for the purposes specified in the approval. These borrowings are
generally secured by movable and immovable properties vested in the ULB. Unless
specifically approved by the State Government, the loans cannot be used for any purpose
other than that specified in the approval.
18.3 Where the terms of sanction provide for the establishment of a sinking fund for the
repayment of loan, the ULB shall establish it and credit to it, funds from the Municipal Fund.
Similarly, if the terms provide for a creation of an escrow account for repayment of loans, the
ULB shall create it and credit to it, the income earmarked for this. The purpose of
establishment of a sinking fund or an escrow account is to accumulate money, including
interest, adequate to repay the loan as per the repayment schedule.
ACCOUNTING PRINCIPLES
18.4 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Borrowings (Loans Received):
18.1
National Municipal Accounts Manual
Borrowings (Loans Received)
a. Interest expenditure on loan shall be recognised on accrual basis.
b. Interest on borrowings directly attributable to acquisition or construction of
qualifying fixed assets up to the date of commissioning of the assets shall be
capitalised.
c. A provision shall be made for the interest accrued between the date of last
payment of interest and the date of financial statements and shall be charged to the
current period’s Income and Expenditure Statement.
d. The expenses incurred while issuing of debentures or bonds (Issue Expenses) shall
be deferred and amortised in equal installments over a period of 5 years or the
tenure of the loan whichever is earlier. In case, the debentures & bonds are
prematurely redeemed, the amount of issue expenses outstanding during the year
shall be written-off and charged to the Income and Expenditure Statement as
expense of the year when such an event happens. However, all other expenses in
respect of raising loans other than those considered, as issue expenses shall be
expensed off in the year in which they are incurred.
ACCOUNTING RECORDS AND PROCEDURES
18.5 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Loans. For the purposes of
accounting of Loans, there are certain forms, registers, etc., which are specific to Loans, e.g.,
Register of Loans – (Form BR-1). These (Forms BR-1 to BR-3) are annexed to this chapter
and are prefixed “Loan”.
ACCOUNTING FOR RECEIPT OF LOAN
18.6 The amount borrowed as per the terms of sanction shall be entered in the Register of
Loans in Form BR–1 maintained by the Accounts Department of the ULB. A separate folio
shall be allotted for each loan taken. In case, sanction has been obtained for issuing
debentures, the particulars of the debenture holder shall be recorded in the Register of
Debentures in Form BR-2. Amount received as loan shall be deposited in the Designated
Loan Bank Account.
18.7 Raising / Borrowing of Funds. On receipt of loan, the Accounts Department shall pass
the following entries:
18.2
National Municipal Accounts Manual
Borrowings (Loans Received)
a. In cases where debentures have been issued for raising funds.
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,00,000
Cash Book,
450- (b)
Designated Loan Bank
Ledger, Register
Account *
To Bonds & debentures** Cr.
10,00,000 of Debenture
331-70-(a)
* Specify the name of the Bank and Account number
**Specify the percent or any other distinguishing feature of the debenture issued for easy
identification.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Detailed & Minor head codes of account as applicable
Note 1: The Major account head to be credited shall be 330 in the case of Un- Secured Loans
and this applies to all the entries relating to loans explained in this Chapter.
Note 2: The postings in the Ledger Accounts of “Bonds & debentures" Account shall be
carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in the
Ledger Accounts shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever the cash or the bank account is involved,
there will be no entry in the Journal Book.
b. In cases where funds are borrowed otherwise than by issue of debentures.
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450-(b)
Designated Loan Bank
Dr.
10,00,000
Cash Book,
Account *
Ledger, Register
331-(b)
To Loans ____ **
Cr.
10,00,000 of Loans
*Specify the name of the Bank and Account number
**Specify the institution from which the funds have been borrowed or any other distinguishing
feature of the loan received for easy identification.
(a) Insert minor & detailed Head Codes of account as applicable
ACCOUNTING OF INTEREST PAYABLE ON LOAN / DEBENTURES
18.8 Recording of interest accrued. For interest payment, on receipt of approval for
payment of interest from the authorities designated by the ULB, the Accounts Department
shall pass the following entry:
18.3
National Municipal Accounts Manual
Borrowings (Loans Received)
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
240 – (b) Interest & Finance Charges
Dr.
1,00,000
Journal Book,
350-12-(a)
To Interest Accrued &
Cr.
1,00,000 Ledger, Register
due – Loans
of Loans,
Register of
Debenture
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
18.9 Recording of payment of interest. On payment of interest to the lenders, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-12-(a) Interest Accrued & due –
Dr.
1,00,000
Cash Book,
Loans
Ledger, Register
450-21-(a)
To Bank Account *
Cr.
1,00,000 of Loans,
Register of
Debenture
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
18.10 The amount of interest remaining unclaimed or unpaid shall be treated as Current
Liability.
18.11 Recording of interest accrued but not due. For the period between the date of last
payment of interest and the date of the preparation of the financial statements, the amount of
interest accrued for the period aforesaid shall be determined and a provision shall be made for
it. The Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Journal Book,
15,000 Ledger
Dr.
240 –(b)
Interest & Finance Charges
Cr.
360 –20-(a)
To Provision for
Interest- Interest
Accrued & Not Due
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
18.4
National Municipal Accounts Manual
Borrowings (Loans Received)
18.12 Recording of reversal of interest provisioning. At the beginning of the new accounting
period, the provision entry made in the previous accounting period shall be reversed and the
following entry shall be passed:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Journal Book,
Ledger
Dr.
Provision for Interest
Interest Accrued and Not
Due
To Interest & Finance
Cr.
240 (b)
Charges- Loans
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
360 20-(a)
15,000
18.13 Through the reversal entry, the entry for period end expenses passed in the current
period shall be reversed in the next accounting period. Payments made during the next
accounting period in respect of the interest shall be recorded by debits to the interest on loans/
debentures accounts in the same manner as payment for interest accruing and arising in the
next accounting period as described in paras 18.11 and 18.12.
18.14 The credits made in the interest account through the above reversal entry would
automatically take care of the extra debits given in the next accounting period.
ACCOUNTING FOR REPAYMENT OF LOAN/REDEMPTION OF DEBENTURES
Repayment of Loan/Redemption of Debentures in case where Sinking Fund is
established
Establishment of Sinking Fund
18.15 For creation/addition to Sinking fund. Where the terms of sanction for raising loan or
issuing debenture provides for establishment of a Sinking Fund, an amount stipulated in the
terms of sanction shall be transferred to the Sinking Fund from the Municipal Fund at the end
of the year. To record the above, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
290- (a)
Transfer to Sinking Fund
Dr.
1,00,000
Journal Book,
311-50-(b)
To Sinking Fund
Cr.
1,00,000 Ledger, Register
of Sinking Fund
(a) Insert Minor and Detailed Head Codes of account as applicable
(b) Insert Detailed Head Codes of account as applicable
18.5
National Municipal Accounts Manual
Borrowings (Loans Received)
18.16 Recording of transfer of funds from the Main Bank Account to the Sinking Fund Bank
Account. The amount so transferred to the Sinking Fund from the Municipal Fund shall be
deposited in a separate bank account. On deposit, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
450- 41-(a) Designated Bank Account*
450-21-(a)
To Bank Account *
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Cash Book,
1,00,000 Ledger, Register
of Sinking Fund
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Investment of Sinking Fund
18.17 Investments made in respect of Sinking Fund shall be entered in a Sinking Fund
Investment Register (Form IN-1) (provided in Chapter 20 on Investments). The accounting
entries/procedures to be followed for investments of such moneys are similar to those
followed in respect of other investments. They relate to investments, maturity of investment,
recording of interest, profit/loss on sale/maturity of investments, etc. These have been
described in Chapter 20 on Investments.
18.18 Interest earned on Investments, profit/loss on disposal of Investments, if any, shall be
updated in the Register of Sinking Fund (Form BR-3).
Transfer from Municipal Fund to Sinking Fund
18.19 Recording of transfer from Municipal Fund to make good the deficit in Sinking Fund
observed during an examination of sinking fund investment. On examination, if it is observed
that the present value of sinking fund investment is less than the value of the Fund stipulated
in the terms of sanction, the difference shall be made good from the Municipal Fund. The
Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
290-(a)
Transfer to Sinking Fund
Dr.
5,000
Journal Book,
311-50-(a)
To Sinking Fund
Cr.
5,000 Ledger, Register
of Sinking Fund
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed head as applicable
18.6
National Municipal Accounts Manual
Borrowings (Loans Received)
18.20 Recording of transfer of Funds. The additional amount so transferred from Municipal
Fund to Sinking Fund shall be deposited to the Sinking Fund Bank Account and accordingly
following entry shall be passed:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450- 41-(a) Designated Bank Account* Dr.
5,000
Cash Book,
450-21-(a)
To Bank Account *
Cr.
5,000 Ledger, Register
of Sinking Fund
*Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
Repayment of Loan/Redemption of Debentures
18.21 On repayment/redemption of loans/debentures. For repayment of loans and/or
redemption of debentures, the Accounts Department shall pass the following entries:
a. For repayment of loan from the Sinking Fund
Credit
Debit
Amount
Code of
Dr./ Amount (Rs.)
Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
entered into
Illustrative
figures
figures
331 - (a)
Loans
Dr.
10,00,000
Cash Book, Ledger,
450-41-(b)
To Designated
Cr.
10,00,000 Register of Sinking
Bank Account *
Fund, Register of
Loans
*Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
b. For redemption of debentures from the Sinking Fund
Credit
Debit
Amount
Code of
Dr./ Amount (Rs.)
Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative
entered into
Illustrative
figures
figures
331- (a)
Bonds & debentures
Dr.
10,00,000
Cash Book,
450- 41-(a)
To Designated Bank Cr.
10,00,000 Ledger, Register
Account *
of Sinking Fund,
Register of
Debentures
*Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
18.7
National Municipal Accounts Manual
Borrowings (Loans Received)
c. For transfer of funds from the Sinking Fund on repayment/redemption of
loan/debenture
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount (Rs.)
Books to be
(Rs.)
Illustrative
entered into
Illustrative
figures
figures
20,00,000
Journal Book,
Ledger, Register
20,00,000 of Sinking Fund
Dr.
Investments Other
Funds
Cr.
420 - (b)
To Investments
General Funds
(a) Insert Minor & Detailed Head Codes of Account as applicable
421- (b)
Repayment of Loan/Redemption of Debentures in case where Escrow Account is
created:
18.22 Creation of Escrow account: Where the terms of sanction for raising loan or issuing
debentures provide for the establishment of an Escrow account, an amount equivalent to that
stipulated in the sanction shall be transferred to the Escrow account based on collections of
earmarked income. For e.g. if a loan has been taken for building Water Supply Infrastructure,
then out of the water supply income collected, an amount equal to certain percentage of water
tax shall be deposited into the Escrow account. For creation of Escrow Account, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount (Rs.)
Dr.
3,00,000
450-41-(a) Designated Bank
Account *
Dr.
7,00,000
450-21-(a) Bank Account *
To Tax Revenues
Cr.
110-02-(a)
Water Taxes
*Specify the name of the Bank and Account number
Insert Detailed Head Codes of Account as applicable
Credit
Amount
(Rs.)
Books to be
entered into
Cash Book,
Ledger, Register
of Loans,
10,00,000 Register of
Debenture
Investment of amount lying in Escrow Account:
18.23 Investments made in respect of Escrow account shall be entered in an Escrow Account
Investment Register (Form IN-1) (provided in Chapter 20 on Investments). The accounting
entries/procedures to be followed for investments of such moneys are similar to those
followed in respect of other investments. They relate to investments, maturity of investment,
recording of interest, profit/loss on sale/maturity of investments, etc. These have been
described in Chapter 20 on Investments.
18.24 Interest earned on Investments, profit/loss on disposal of Investments, if any, shall be
updated in the Escrow Account Investments Register.
18.8
National Municipal Accounts Manual
Borrowings (Loans Received)
Accounting and payment of Interest on Loans/ Debentures
18.25 Accounting and payment of interest on Loans/ Debenture/ Bonds raised/ issued will be
same as provided in the section “Accounting of interest payable on loan / debentures” above,
reference to which is invited. The only difference being payment will be out of Escrow Bank
Account instead of Main Bank Account. To record the payment the Accounts Department
shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
70,000
Cash Book,
350- 12- (a) Interest Accrued & dueLedger, Register
Loans
Cr.
70,000 of Loans,
450-41-(a)
To Designated Bank
Register of
Account*
Debenture
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Repayment of Loan/Redemption of Debentures
18.26 On repayment/redemption of loans/debentures. For repayment of loans and/or
redemption of debentures, the Accounts Department shall pass the following entries:
a. For repayment of loan from the Escrow Account:
Code of
Account
331- (a)
450-41-(b)
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
300,000
Credit
Amount
(Rs.)
Books to be
entered into
Loans
Dr.
Cash Book,
To Designated Bank
Cr.
300,000 Ledger, Register
Account*
of Loans
*Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
b. For redemption of debentures from the Escrow Account:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
331- (b)
Bonds & debentures
Dr.
10,00,000
Cash Book,
450- 41-(a)
To Designated Bank Cr.
10,00,000 Ledger, Register
Account*
of Debentures
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
18.9
National Municipal Accounts Manual
Borrowings (Loans Received)
Repayment of Loan/Redemption of Debentures in case where Sinking Fund/Escrow
Account is not established
18.27 Recording of repayment of loan or redemption of debenture. Where Sinking Fund is
not established, the loan shall be repaid or debentures redeemed from the Municipal Fund as
per the terms of the agreement entered into and the following entry shall be passed:
Code of
Account
331-(b)
331-(b)
450-21-(a)
Accounting Entry
Loans
Bonds & debentures
To Bank
Account*
Dr./
Cr.
Dr.
Dr.
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
10,00,000
10,00,000
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Cash Book,
Ledger, Register
20,00,000 of Loans,
Register of
Debentures
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Accounting for Expenditure incurred in raising loans or issuing debentures
18.28 Recording of Loan Issue Expenses. The ULB may incur expenses such as credit rating
fees, security creation fees, stamp duty, etc., at the time of raising loan or issuing debentures.
These expenses shall be deferred and be classified as Loan Issue Expenses and on payment
being made, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
50,000
Loan Issue Expenses Dr.
Cr.
Deferred
450-21-(a)
To Bank
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
480-10-(a)
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Cash Book,
50,000 Ledger,
18.29 Recording of amortisation of Loan Issue Expenses. The Loan Issue Expenses shall be
amortised in equal instalments over a period of 5 years or the tenure of the loan whichever is
lower. For instance, issue expenses of Rs. 50,000 incurred for raising loan shall be amortised
over a period of 5 years in equal instalments of Rs. 10,000/- every year. At the end of each
financial year, for amortising the relevant portion of Loan Issue Expenses, the Accounts
Department shall pass the following entry:
18.10
National Municipal Accounts Manual
Code of
Account
Borrowings (Loans Received)
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Journal Book,
Ledger,
10,000
Dr.
Miscellaneous Expenditure
written off
To Loan Issue Expenses
Cr.
480-10-(a)
Deferred
(a) Insert Detailed Head Codes of Account as applicable
270-50-(a)
18.30 Recording of write-off of Loan Issue Expenses. In case the loans are pre-paid or
debentures are redeemed prematurely, the balance outstanding in the Loan Issue Expenses
shall be written-off during the year in which the prepayment or premature redemption has
been made. Continuing the earlier illustration, in case the loans have been prepaid during the
third year, then the balance of Rs. 30,000/- lying outstanding in the Loan Issue Expenses shall
be written-off during the third year. At the end of the financial year, the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
30,000
Journal Book,
Ledger,
30,000
Dr.
Miscellaneous Expenditure
written off
Cr.
480-10-(a)
To Loan Issue Expenses
Deferred
(a) Insert Detailed Head Codes of Account as applicable
270-50-(a)
INTERNAL CONTROLS
18.31 The following internal controls shall be observed by the ULB in respect of Loans
related transactions:
a. The Head of the Accounts Department shall ensure that adequate provision is
made for the interest accrued between the date of last payment of interest and the
date of Financial Statements and is charged to the current period’s Income and
Expenditure Statement.
b. The Head of the Accounts Department shall carry out physical verification of
Sinking Fund Investment documents and compare with the Sinking Fund
Investment Account.
c. The Head of the Accounts Department shall monitor the funds borrowed and
ensure proper utilisation of funds.
18.11
National Municipal Accounts Manual
Borrowings (Loans Received)
d. The Head of the Accounts Department shall ensure that the present value of the
sinking fund investment ties up with the value of the Fund as per the State
Government’s sanction. If any mismatch is observed, the adequate funds shall be
transferred from the Main Bank Account to Sinking Fund Bank Account.
e. The Head of the Accounts Department shall ensure that the transfers to escrow
account out of income collected are as per the conditions of borrowings.
f. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
18.32 All Reconciliation Statements shall be certified by the Head of the Accounts
Department and verified.
PRESENTATION IN FINANCIAL STATEMENTS
18.33 The various heads of accounts used for the accounting of Loans shall be reflected in
the Financial Statements or the Schedules attached to the Financial Statements of the ULB.
All such Financial Statements and schedules should be affixed with signature and seal of
designated authorities.
18.34 The schedule of Income and Expenditure Statement in respect of Loans is provided
below.
Schedule I-13: Interest & Finance Expenses
Code No.
1
240-10-(a)
240-20-(a)
240-30-(a)
240-40-(a)
240-50-(a)
240-60-(a)
240-70-(a)
240-80-(a)
Particulars
2
Interest on Loans from Central Government
Interest on Loans from State Government
Interest on Loans from Government Bodies &
associations
Interest on Loans from International Agencies
Interest on Loans from Banks & Other Financial
Institutions
Other Interest
Bank Charges
Other Finance Expenses
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Interest & Finance expenses
(a) Insert Detailed Head Codes of Account as applicable
18.12
National Municipal Accounts Manual
Borrowings (Loans Received)
Schedule I-16 - Schedule of Provisions & Write off
Code No.
Particulars
1
270-50-(a)
2
Miscellaneous Expenses / Expenditure written off
Total – Provisions & Write off
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Previous Year
3
4
18.35 The Balance Sheet abstract in respect of Loans is provided below.
Schedule of Ear Marked Funds
Schedule B-2 (a): Sinking Fund
Particulars
(a) Opening Balance
(b) Additions to the Sinking Funds
(i) Transfer from Municipal Funds
(ii) Interest/Dividend earned on Sinking Fund Investments
(iii) Profit on disposal of Sinking Fund Investments
(iv) Appreciation in Value of Sinking Fund Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets
Others
Total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative expenses
Total
(iii) Other:
Loss on disposal of Sinking Fund Investments
Diminution in Value of Sinking Fund Investments
Transferred to Municipal Fund
Total
Total (c)
Net balance at the year end (a)+(b)-(c)
Sinking Fund
Schedule B-2 (b): Escrow Account
Particulars
(a) Opening Balance
(b) Additions to the Escrow Account
(i) Transfer from Income from Project
(ii) Interest/Dividend earned on Escrow Account Investments
(iii) Profit on disposal of Escrow Account Investments
(iv) Appreciation in Value of Escrow Account Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
Escrow Account
18.13
National Municipal Accounts Manual
Borrowings (Loans Received)
Particulars
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets
Others
Total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative expenses
Total
(iii) Other:
Loss on disposal of Escrow Account Investments
Diminution in Value of Escrow Account Investments
Transferred to Municipal Fund
Total
Total (c)
Net balance at the year end (a)+(b)-(c)
Escrow Account
Schedule B-5/6: Secured & Unsecured Loans [Code No 330/331]
Amount in Rs.
Code No.
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
1
330/31-10-(a)
330/31-20-(a)
330/31-30-(a)
330/31-40-(a)
330/31-50-(a)
330/31-60-(a)
330/31-70-(a)
330/31-80-(a)
2
3
4
Loans from Central Government
Loans from State government
Loans from Govt. bodies & Associations
Loans from international agencies
Loans from banks & other financial institutions
Other Term Loans
Bonds & debentures
Other Loans
Total Secured/Un Secured Loans
(a) Insert Detailed Head Codes of Account as applicable
Notes
1. Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan under each of
these categories separately;
2. The nature of the Security shall be specified in each of these categories
3. Particulars of any guarantees given shall be disclosed
4. Terms of redemption (if any) of bonds/debentures issued shall be stated, together with the earliest date of
redemption
5. For loans disbursed directly to an Executing Agency, please specify the name of the Project for which such
loan is raised.
Schedule B-9: Schedule of Other Liabilities
Code No.
1
350-12-(a)
Particulars
2
Interest Accrued and Due-Loans
Total Other liabilities
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
18.14
National Municipal Accounts Manual
Borrowings (Loans Received)
Schedule B-10: Schedule of Provisions
Code No.
Current Year
Amount (Rs.)
3
Particulars
1
360-20-(a)
2
Provision for interest- Interest Accrued & not dueLoans
Total Provisions
(a) Insert Detailed Head Codes of Account as applicable
Previous Year
Amount (Rs.)
4
Schedule B-13: Schedule of Investments - Other Funds (Sinking Funds, Escrow
Account)
Code No.
Particulars
With
whom
invested
1
421-10-(a)
421-20-(a)
421-30-(a)
421-40-(a)
421-50-(a)
421-60-(a)
421-80-(a)
Current year
Face
Carrying
value
Cost
(Rs.)
(Rs.)
4
5
Previous year
Face
Carrying
value
Cost
(Rs.)
(Rs.)
6
7
2
3
Central Government Securities
State Government Securities
Debentures and Bonds
Preference Shares
Equity Shares
Units of Mutual Funds
Other Investments
Sub-total
Less:
420-90-(a) Accumulated Provision
Net Total Investments OF
(a) Insert Detailed Head Codes of Account as applicable
Note:
1.Details of Investments shall be provided separately for each of the Special Fund Investment and Grant
Investment.
2.Value in respect of investments, which have matured but not encashed shall be disclosed separately.
Schedules B-17: Schedule of Cash & Bank Balances
Code No
Particulars
1
2
Bank Balances
Designated Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
450-21-(a)
450-41-(a)
Schedules B-20: Schedule of Miscellaneous Expenditure Not Written Off
Code of Account
1
Particulars
2
Loan Issue Expense Deferred
Total
(a) Insert Detailed Head Codes of Account as applicable
Current
Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
480-10-(a)
18.15
2
9
10
11
Date of
Principal
Interest
Repayment Amount
Amount Repaid
12
Total
Balance
13
14
Principal
Interest
Amount
Note :
1. Separate folio shall be allotted to each loan.
2. The format for capital grant register would be similar.
3. Pages of ledger / register would be numbered.
4. In case of more than one loan, summary of all loans shall be drawn suitably in the register.
5. For each entry made, record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
1
Date of Amount
Receipt Received
Amount due for repayment
Initials of
Total
Total
Due Date Amount Amount
the
Amount
Amount
of
of
of
officer
due to
Received Repayment Principal Interest
repayment
3
4
5
6
7
8
Receipt of Loan
15
16
Remarks
18.16
Total
Form BR – 1
Borrowings (Loans Received)
5. Rate of Interest ____________________
6. No. of instalment _________________________
[whether half-yearly or yearly]
7. Amount of each instalment _________________
REGISTER OF LOANS
_________________Name of the ULB
1. Department from which loan received ___________
2. Purpose of Loan ______________
3. No. & date of resolution / orders sanctioning the loan _____________
4. Amount of Loan sanctioned ______________
National Municipal Accounts Manual
REGISTER OF DEBENTURES
_________________Name of the ULB
2
3
4
5
6
7
8
9
10
11
12
13
Notes:
(1) Details of all the holders who have been issued debentures of a particular series shall be listed above.
(2) Separate folios shall be allotted for each series of the debentures being issued.
(3) Three to four lines should be left after each certificate number to record the transfer entries for those certificates.
(4) Date on which a person becomes a debenture holder and the date on which he ceases to be shall be mentioned for all the transfers effected.
(5) For each entry made, record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
1
14
18.17
15
Remarks
Form BR - 2
Borrowings (Loans Received)
Distinctive number Name and
Date of
Date of
of Debentures
Payment of Interest on Debentures
Debenture
Address of
Initials of
Initials of
Sr. Debenture
becoming
a
ceasing
as a
issued
Certificate
the
Authorised
Authorised
No. Folio No.
debenture debenture
Nos.
Debenture
Officer*
Officer*
Date
Amount Date of Amount
holder
holder
From
To
holder
when due due (Rs.) Payment paid (Rs.)
Date of order sanctioning the issue of debenture:
Debenture Face Value (Rs.):
Amount raised by issue of debentures (Rs.):
Rate of interest payable on debentures:
Date of issue of Debentures:
Purpose of issuing debentures:
Details of Guarantee and Security furnished:
Name of the Debenture-trustee, if any:
Interest payment Schedule:
Date of maturity:
Repayment Schedule:
National Municipal Accounts Manual
Note: For each entry made, record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
18.18
Form BR – 3
Borrowings (Loans Received)
Previous
Purchased during
Total
Present Value of Sinking Fund
Balance
the year
Amount of
interest Theoretic
Previous
Market
Difference
Uninvested
received/ al value as
Annual
Remarks
Balance
Value of
Date of Total
(Rs.)
Cash
(Rs.) Instalments Credit (Rs.) accrued on on 31st Actual Face Value Face Date Value Face securities
Balance of Total
at
of
at
value
March
Invest
(Rs.)
Value mentioned
Value
Value
sinking fund (Rs.)
invest Cost
Cost
at cost
(Rs.)
ments
(Rs.) in column
(Rs.)
(Rs.)
as on 31st
ment (Rs.)
(Rs.)
(Rs.)
(Rs.)
13 on 31st
March (Rs.)
March (Rs.)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
(1+2)
(4+5)
(7+9)
(8+10)
(14+15
(16-6)
)
RECEIPTS
INVESTMENTS
REGISTER OF SINKING FUNDS
_________________Name of the ULB
Amount of loan and rate of interest:
Date of raising the loan:
Amount of sinking fund instalment:
Rate of interest provided for in the Agreement at which sinking fund develops:
National Municipal Accounts Manual
National Municipal Accounts Manual
Special Funds
CHAPTER 19
63(&,$/ )81'6
INTRODUCTION
19.1 This chapter contains the recommended accounting system for transactions relating to
Special Funds, which are accounted in the same books of the ULBs.
19.2 ULBs may, as per relevant statutes, constitute special funds for any purpose
mentioned in the statute. The statutes may also prescribe the manner in which such funds
shall be constituted and disposed off.
19.3 Special funds are created for objects for which it is considered essential to allocate
separate funds from the Municipal Funds or by earmarking certain percentage of specific
receipts of the ULB. A separate account may be created and all moneys collected for the
specific purpose shall be transferred to the Special Funds Account. All expenditures incurred
for the specific purpose shall be debited to the respective fund accounts.
19.4 The following is an illustrative list of the Special Funds that may be created by the
ULB:
Development Funds
Fire Brigade Fund
Road Fund
Water Supply Reserve Fund
Tree Authority Fund, etc.
City Development Funds
Solid Waste Management Fund
19.1
National Municipal Accounts Manual
Special Funds
Employee Funds:
Pension Fund
General Provident Fund / Contributory Provident Fund
Welfare Fund, etc.
Gratuity / Leave encashment Fund
Sinking Funds:
Asset Replacment Fund
Sinking Fund etc
19.5 The accounting procedure and entries in respect of employee funds are described in
Chapter 14 on Employee Related Transactions, reference to which is invited.
19.6 The accounting procedure and entries for creation/addition to sinking fund and its
utilisation, investments made from fund and other related aspects are described in Chapter 18
on Borrowings (Loans Received), reference to which is invited.
19.7 This chapter essentially covers the accounting procedures in respect of Development
Funds only.
ACCOUNTING PRINCIPLES
19.8 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Special Funds:
a. Special Funds shall be treated as a liability on their creation.
b. Income on investments made from Special Fund shall be recognised and credited
to Special Fund, whenever accrued. Profit/loss, if any, arising on disposal of
investments made from the Special Fund shall be recognised and credited/debited
to Special Fund Account.
c. Any expenditure of a revenue nature, which is incurred specifically on
scheme/project for which a Special Fund has been created, shall be charged to that
Special Fund.
d. On completion of the construction of a fixed asset and/or on acquisition of a fixed
asset out of a Special Fund, the amount equivalent to the cost of such fixed asset
shall be transferred from the respective Special Fund to the Special Fund
(Utilised).
19.2
National Municipal Accounts Manual
Special Funds
ACCOUNTING RECORDS & PROCEDURES
19.9 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Special Funds. For the purposes of
accounting of transactions related to Special Funds, the register applicable is specific to
Special Funds transactions, e.g., Special Funds Register – Form SF -1.
CREATION OF FUNDS
19.10 Special Funds are created as an appropriation from the Municipal Fund. Each of the
Special Funds shall be represented by a separate Bank Account. On creation of the fund,
money shall be transferred from the Main Bank Account to Special Fund Bank Account. The
Accounts Department shall maintain a Special Fund Register in Form SF-1 where details of
each fund created, expenditure incurred in respect of each fund, etc., is separately recorded.
a.
On creation of Special Funds. The Accounts Department shall enter the details
of the order approving the creation of fund in the Special Fund Register and
pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
310-10-(a) Municipal Fund
Dr.
1,00,000
Journal Book,
311-(b)
To ---------- Special Cr.
1,00,000 Ledger, Special
Fund *
Fund Register
* Specify the name of the special fund
(a) Insert Detailed Head Code of Account as applicable
(b) Insert Minor Head Codes of Account between 10-49 and detailed head of account as
applicable
Note: The postings in the Ledger Accounts of “Municipal Fund” Account and “Special
Fund” Account shall be carried out as indicated in Chapter 5 – General Accounting
Procedures. The postings in the Ledger Accounts shall be similarly carried out in respect
of all other accounting entries described subsequently in this chapter. Whenever, the cash
or the bank account is involved, there will be no entry in the Journal Book.
b. Recording of contribution to Special funds from earmarked collection: The
accounts department as per the decision of the ULB shall transfer the
earmarked collection accounted as revenue to the special funds. Accounting
entry for transfer of these amounts to Special fund is as follows:
Code of
Account
290-(a)
311-(a)
Accounting Entry
Transfer to ---------Fund*
To ----------Special Fund*
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Journal Book,
Ledger, Special
Cr.
1,00,000 Fund Register
* Specify the name of the special fund
(a) Insert Minor Head Codes of Account as applicable
19.3
National Municipal Accounts Manual
Special Funds
c. Recording of transfer of money to Designated Special Fund Bank Account. For
transferring the funds to a separate bank account, Accounts Department shall
transfer the amount from Main Bank Account to Special Fund Bank Account
and pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Cash Book,
Special Fund
Cr.
1,00,000 Cash Book
450-41-(a) Designated Bank
Account*
450-21-(a)
To Main Bank
Account *
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Note: A Separate Cash Book shall be maintained for Special Funds.
d.
On creation of Welfare Fund: As per relevant act, an amount of surplus of the
Transport Undertaking acquired or established by the ULB may be transferred
to the Municipal Fund for credit to the Welfare Fund constituted under the
rules provided in Act. On receipt of contribution from the Transport
Undertaking, the Accounts Department shall pass the following entry
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450-41-(a) Designated Bank
Dr.
25,000
Cash Book,
Account*
Special Fund
311-(b)
To Welfare Fund
Cr.
25,000 Cash Book
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor Head Codes of Account between 70-99 and detailed head of account as
applicable
19.11 Collection of Special Funds may be made along with other collections. For example,
ULB may collect Tree Authority Cess along with Property Tax. The accounting treatment in
such cases is described below.
19.12 At the end of every month, Accounts Department shall also identify the transactions
pertaining to Tree Authority Cess collected along with the property and other taxes,
accounting process in respect of which has been described in Chapter 6 on Property and Other
Taxes. Accounts Department shall transfer the amount of the cess thus collected from
Municipal Fund to Tree Authority Fund. In addition, money will be transferred from Main
Bank Account to Tree Authority Fund Bank Account. Accounts Department shall further pass
the entries mentioned in para 19.10 (b) and (c) above for the same.
19.4
National Municipal Accounts Manual
Special Funds
19.13 In respect of Development Charges, the amount collected shall be transferred to
Development Fund. In addition, money equal to Development Charges so collected shall be
transferred from the Main Bank Account to Development Fund Bank Account. Accounts
Department shall pass the entries mentioned in para 19.10 (b) and (c) above for the same
19.14 Similar procedure shall be followed for identifying transactions and transferring an
equivalent amount to designated bank account pertaining to various other Special Funds
created/ought to be created. Accounting entries referred to in para 19.10 (a) for creation, (b)
for addition and (c) for transfer of money to Special Funds shall be recorded. .
UTILISATION OF FUNDS
19.15 Special Funds shall be utilised for the purpose for which they are created. The
expenditure incurred could be either revenue or capital expenditure. The accounting
procedure to be followed is described below.
Utilisation of Special Fund for Revenue Expenditure
a. The accounting procedure to be followed in respect of revenue expenditure
incurred against Special Fund shall be the same as what is described in Chapter
12 on Public Works for repairs and maintenance expenses, Chapter 13 on
Stores for stores purchased, and Chapter 16 on Other Revenue Expenditures for
other revenue expenditures.
b. Payment of advance to contractor/supplier in respect of a Special Fund. Any
advance made to a supplier/contractor in respect of a project/scheme to be
carried out against a Special Fund, shall be payable from the Designated
Special Fund Bank Account only and not from the Main Bank Account. The
entry for this shall be the same as described in section “Advance paid to
contractors/suppliers”.
c. Recording of liability on receipt of contractor/supplier bill. On receipt of
processed bill in respect of material supplied or services rendered or works
executed which is of a revenue nature, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Cr.
10,000 Ledger, Grant
Register
311-(a)
___ Special Fund*
350-10-(b)
To Payables against
Special Funds
*Specify the name of the special Fund
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
19.5
National Municipal Accounts Manual
Special Funds
d. Recording of deductions from contractor’s/supplier’s bill. If Security or any tax
on behalf of Government or advance provided to contractor/supplier is
deducted or any other deduction is made from the processed bill, the amount
payable shall be reduced for the deduction made and the Accounts Department
shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal
4,000
Book,
1,000 Ledger,
Special Fund
Register
500
1,000
Dr.
350-10-(a) Payables against Special
Funds
Cr.
To Deposit From
340-10-(a)
Contractors - Security
Deposit Special Funds
Cr.
To TDS– Special Funds
350-20-(a)
To Works Contract Tax – Cr.
350-20-(a)
Special Funds
Cr.
To Advance for suppliers
460-40-(a)
and contractors –
Special Funds
(a) Insert Detailed Head Codes of Account as applicable
1,500
e. Recording of payment to the contractor/supplier. Such payments shall be made
only from the bank account maintained for that Special Fund. On payment, the
Accounts Department shall pass the following entry:
Code of
Account
350-10-(a)
450-41-(a)
Accounting Entry
Payables against Special
Funds
To Designated Bank
Account*
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
6,000
Special Fund
Cash Book,
6,000 Special Fund
Register,
Ledger
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
f. Recording of payment for deductions made. Deductions made shall also be paid
from the respective Designated Special Fund Bank Account. On payment of
deductions made, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Special Fund
500
Cash Book,
1,000
Special Fund
1,500 Register,
Ledger
Dr.
TDS - Special Funds
Works contract Tax – Special Dr.
Funds
Cr.
To Designated Bank
450-41-(a)
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
350-20-(a)
350-20-(a)
19.6
National Municipal Accounts Manual
Special Funds
g. Recording of transfer of money from Designated Special Fund Bank Account
to Main Bank Account on utilisation of Common Stores. The amount
equivalent to the common stores utilised for the purpose of the Special Fund
shall be transferred from the Special Fund Bank Account to Main Bank
Account before issue of any common stores. Accounts Department shall update
the Special Fund Register (Form SF-1) and pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
450-21-(a) Main Bank Account*
Dr.
1,000
Cash Book,
450-41-(a)
To Designated Bank
Cr.
1,000 Special Fund
Account*
Cash Book,
Special Fund
Register
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
h. Recording of utilisation of Common Stores for special funds. For common
stores consumed, the Accounts Department shall pass the following entry:
Code of
Account
311-(a)
430-10-(b)
Accounting Entry
Dr./
Cr.
Special Fund *
To Purchase of Stores
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
1,000 Ledger,
Special Fund
Register
*Specify the name of the Special Fund
(a) Insert Minor Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Advance paid to contractors/suppliers
19.16 As mentioned earlier, any advance payable to the contractor/supplier in respect of any
work executed or services or materials received under any Special Fund shall be paid from
the Designated Special Fund Bank Account. On payment, the Accounts Department shall pass
the following entries:
a. For recording tax deducted, if any, from the advance provided. Suppose an
advance of Rs. 10,000 is granted to a contractor from which Rs. 500 is
deducted on account of income tax. On deduction, the Accounts Department
shall pass the following entry:
19.7
National Municipal Accounts Manual
Code of
Account
460-40-(a)
350-20-(a)
350-10-(a)
Special Funds
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
Advance for Suppliers and
Ledger,
contractors Special Funds
To TDS Special Funds Cr.
500 Special Fund
To Contractors Advance Cr.
9,500 Register
Control Account
Special Funds
(a) Insert Detailed Head Codes of Account as applicable
b. For recording payment of advance. On payment of balance advance, i.e., Rs.
9,500 from the Designated Special Fund Bank Account, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
9,500
Special Fund
460-40-(a) Advances for suppliers and
Cash Book,
contractors Special Funds
Cr.
9,500 Ledger,
450-41-(a)
To Designated Bank
Special Fund
Account*
Register
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Earnest Money Deposit
19.17 Any amount received or paid on account of Earnest Money Deposit in respect of any
contract executed under Special Fund shall be deposited in or refunded from the respective
Designated Special Fund Bank Account. The accounting procedure to be followed for the
same is described in Chapter 12 on Public Works, reference to which is invited.
19.18 Recording of receipt of Earnest Money Deposit. On receipt of Earnest Money Deposit,
the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,000
Special Fund
450-41-(a) Designated Bank Account*
Cr.
1,000 Cash Book,
340-10-(a)
To Deposit From
Ledger,
Contractors EMD
Special Fund
Special Funds
Register
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
19.8
National Municipal Accounts Manual
Special Funds
19.19 Recording of refund of Earnest Money Deposit. On refund of Earnest Money Deposit
to the unsuccessful bidder, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
900
Special Fund
340-10-(a) Deposit From Contractors
Cash Book,
EMD Special Funds
Cr.
900 Ledger, Special
450-41-(a)
To Designated Special
Fund Register
Fund Bank Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
19.20 Conversion of Earnest Money Deposit into Security Deposit. On receipt of intimation
from the concerned department for conversion of Earnest Money Deposit of the successful
bidder into Security Deposit payable by him, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
100
Journal Book,
Ledger, Special
Cr.
100 Fund Register
340-10-(a) Deposit From Contractors
EMD Special Funds
340-10-(a)
To Deposit From
Contractors Security
Deposit Special Funds
(a) Insert Detailed Head Codes of Account as applicable
Security Deposit
19.21 Any amount received/paid on account of Security Deposit in respect of any contract
executed under Special Fund shall be deposited in or refunded from the respective Designated
Special Fund Bank Account. The accounting procedure to be followed for the same is
described in Chapter 12 on Public Works, reference to which is invited.
19.22 Recording of receipt of Security Deposit. On receipt of Security Deposit, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
5,000
Special Fund
450-41-(a) Designated Bank Account*
Cr.
5,000 Cash Book,
340-10-(a)
To Deposit from
Ledger, Special
Contractors - Security
Fund Register
Deposit Special Funds
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
19.9
National Municipal Accounts Manual
Special Funds
19.23 Treatment of Security Deposit deducted from the contractor’s/supplier’s invoice has
already been described in para 19.15(d) above.
19.24 Recording of refund of Security Deposit. On refund of Security Deposit, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
6,000
Special Fund Cash
Book, Ledger,
6,000 Special Fund
Register
Dr.
340-10-(a) Deposit From Contractors Security Deposit Special Funds
Cr.
450-41-(a)
To Designated Special
Fund Bank Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Utilisation of Special Fund for Capital Expenditure
19.25 The accounting procedures and entries to be recorded for:
a. Advance provided to the contractor/supplier,
b. Recovery of advance provided to contractor/supplier,
c. Receipt of Earnest Money Deposit (EMD) from the bidders and its refund to
unsuccessful bidders;
d. Conversion of EMD of successful bidder into Security Deposit;
e. Security Deposit received from contractor/supplier,
f. Security Deposit deducted from the contractor’s/supplier’s bill,
g. Refund of Security Deposit,
h. Deduction of tax from the contractor’s/supplier’s bill,
i. Payment of amounts deducted to the relevant authorities, etc.
shall be the same as described in the section “Utilisation of Special Funds for Revenue
Expenditure” above.
19.26 Recording of receipt of bill for capital work-in-progress. On receipt of a progress bill
in respect of capital works being executed under Special Fund, the Accounts Department
shall pass the following entry:
19.10
National Municipal Accounts Manual
Code of
Account
Special Funds
Accounting Entry
412-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Journal Book,
Ledger, Special
Cr.
1,00,000 Fund Register
Capital Work-in-Progress
against ___ Special Funds
350-10-(b)
To Payables against
Special Funds
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert the Detailed head code of account as applicable
19.27 Recording of receipt of bill for fixed asset purchased/acquired. On receipt of bill in
respect of fixed asset purchased/acquired under Special Fund, the Accounts Department shall
pass the following entry:
Code of
Account
411-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
50,000
Journal Book,
Ledger,
Cr.
50,000
Fixed Assets (Specify the
name)
350-10-(a)
To Payables against
Special Funds
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert the Detailed head code of Account as applicable
19.28 Recording of payment made. Payment in respect of any expenditure incurred for
purchase, acquisition or construction of any fixed asset under any Special Fund shall be made
from the Bank Account maintained for that Special Fund. On payment, the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,50,000
Special Fund
350-10-(a) Payables against Special
Cash Book,
Funds
Cr.
1,50,000 Special Fund
450-41-(a)
To Designated Bank
Register,
Account*
Ledger
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
19.29 Recording of capitalisation of capital work-in-progress. On completion of
construction of capital project, the capital work-in-progress shall be capitalised for which the
Accounts Department shall pass the following entry:
19.11
National Municipal Accounts Manual
Code of
Account
Special Funds
Accounting Entry
411-(a)
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrativ
figures
e figures
Dr.
1,00,000
Journal Book,
Ledger
Cr.
1,00,000
Fixed Assets (Name of the
Fixed Asset)
To Capital Work-in413-(a)
Progress against
Specific Grant
(a) Insert Minor and Detailed Head Codes of Account as applicable
19.30 Recording of transfer of funds from Special Fund to Special Fund (Utilised) on
capitalisation. On capitalisation of capital work-in-progress or on purchase/acquisition of
fixed asset, an amount equivalent to the amount of expenditure incurred and capitalised shall
be transferred from Special Fund to Special Fund (Utilised). For this, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,50,000
Journal Book,
Cr.
1,50,000 Ledger, Special
Fund Register
311-(a)
___ Special Fund *
312-30-(b)
To ___ Special Fund
(Utilised)*
* Specify name of the fund
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
INVESTMENT OF SPECIAL FUNDS
19.31 Investments made in respect of Special Fund shall be entered in a Special Fund
Investment Register (Form IN-1) (provided in Chapter 20 on Investments). The accounting
procedures/ entries to be followed/ passed in respect of investments of such moneys are
similar to those followed in respect of other investments. They relate to investments, maturity
of investment, recording of interest, profit/loss on sale/maturity of investments, etc. These
have been described in Chapter 20 on Investments.
19.32 Interest earned on Investments, profit/ loss on disposal of Investments, if any,shall be
updated in the Special Fund Register (Form SF-1) by the Accounts Department.
PERIOD END PROCEDURES
19.33 The following entries shall be passed for provisioning of the unpaid bills.
19.12
National Municipal Accounts Manual
Special Funds
a. Recording of period-end provision for bills remaining unpaid in respect of Special
Fund expenditure. At period-end, a provision shall be made for the revenue
expenditure incurred under Special Fund but for which bills are remaining unpaid
as at the end of the accounting period. For making provision, the Accounts
Department shall pass the following entry:
Code of
Account
Accounting Entry
Debit
Credit Amount
Dr./ Amount (Rs.)
(Rs.)
Books to be
Cr. Illustrative
Illustrative
entered into
figures
figures
Dr.
5,000
Journal Book,
Cr.
5,000 Ledger, Special
Fund Register
311-(a)
___ Special Fund
350-10-(b)
To Payables
against Special
Funds
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
b. Recording of payment. On payment of the expenditures in respect of which
period-end provision entry has been passed, the Accounts Department shall pass
the following entry:
Code of
Account
Accounting Entry
Debit
Credit Amount
Dr./ Amount (Rs.)
(Rs.)
Books to be
Cr. Illustrative
Illustrative
entered into
figures
figures
Dr.
5,000
Special Fund
Cash Book,
Cr.
5,000 Special Fund
Register, Ledger
350-10-(a) Payables against
Special Funds
450-41-(a)
To Designated
Bank
Account*
*Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
19.34 In respect of capital project / schemes, bills received in respect of works executed or
acquisition / purchase of fixed assets before the last date of the accounting period, must be
processed and forwarded to the Accounts Department for accounting and payment by 30th
April of the next financial year if the accounting period is a financial year and in other cases,
within 15 days from the end of the accounting period. The accounting entry to be recorded
shall be the same as provided in para 19.26 above for progress bill in respect of capital works
being executed under Special Funds and 19.27 above for bills in respect of acquisition /
purchase of fixed assets under Special Funds.
ON CLOSURE OF FUNDS
19.35 On closure of Special Funds. Once the purpose for which the Special Fund created is
achieved, the unutilised balance in the fund, if any, shall be transferred from Special Fund to
Municipal Fund by transferring the money from the Special Fund Bank Account to the Main
Bank Account. The approval of the ULB shall be obtained wherever required. The following
entries shall be passed:
19.13
National Municipal Accounts Manual
Special Funds
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal Book,
311-(a)
____ Special Fund
Cr.
10,000 Ledger, Special
310-10- (b)
To Additions to
Fund Register
Municipal Fund
460-21-(b) Main Bank Account
Dr.
10,000
Cash Book,
460-41-(b)
To Designated Special
Cr.
10,000 Special Fund
Fund Bank Account*
Cash Book
*Specify the name of the Bank and Account number
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
INTERNAL CONTROLS
19.36 The following internal controls shall be observed by the ULB:
a. The Head of the Accounts Department shall, before transferring the money
from Main Bank Account to the respective designated special fund bank
account, ensure that the fund created is recorded in the Special Fund Register.
Further, it shall be ensured that the Journal Voucher in Form No. GEN-7
prepared to record the transaction, shall provide reference to the Special Fund
Register.
b. The Head of the Accounts Department and other officer designated in this
behalf shall ensure timely transfer of mandatory contribution to Special Fund
Bank Accounts.
c. The Head of the Accounts Department and the or other officer designated in
this behalf, shall ensure that the amount of Special Fund shall not be utilised
for the purpose other than for which the fund it is created.
d. Bank reconciliation of Special Fund Bank Accounts shall be carried out on a
monthly basis by the department/office responsible for operating the bank
account.
e. The Head of the Accounts Department or other officer designated in this behalf
shall regularly match the expenditure from a Special Fund to the reduction in
the balance of the Special Fund.
f. At the end of every month, the Head of the Accounts Department or other
officer designated in this behalf shall reconcile the ledger balance of the Special
Fund Account with the Special Fund Register and the Special Fund Bank
Account balance.
19.14
National Municipal Accounts Manual
Special Funds
g. The Head of the Accounts Department shall reconcile the expenditure incurred
towards Backward Classes Welfare activities and ensure that the unspent
balance is transferred to the Backward Classes Welfare Fund Bank Account.
h. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
19.37 All Reconciliation Statements shall be certified by the Head of the Accounts
Department and verified.
PRESENTATION IN BALANCE SHEET
19.38 The various heads of accounts used for the accounting of Special Funds shall be
reflected in the Financial Statements or the Schedules attached to the Financial Statements of
the ULB. All these Financial Statements and schedules should be affixed with signature and
seal of designated authorities.
19.39 The Balance Sheet Abstract in respect of Special Funds is provided below.
Schedule B-2 : Special Fund
Code
No.
Particulars
Special
Fund 1
Special
Fund 2
Special
Fund 3
Special
Fund 4
Special
Fund 5
Special
Fund 6
Special
Fund 7
(a) Opening Balance
(b) Additions to the Special
Funds
i. Transfer from Municipal
Funds
ii. Interest/Dividend earned
on Special Fund
Investments
iii. Profit on disposal of
Special Fund
Investments
iv. Appreciation in Value of
Special Fund
Investments
v. Other addition (Specify
nature)
Total (b)
Total (a+b)
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets
Others
Total
(ii) Revenue Expenditure
on
Salary, Wages and
allowances etc.
Rent
Other administrative
charges
Total
19.15
National Municipal Accounts Manual
Code
No.
Special Funds
Special
Fund 1
Particulars
Special
Fund 2
Special
Fund 3
Special
Fund 4
Special
Fund 5
Special
Fund 6
Special
Fund 7
(iii) Other:
Loss on disposal of Special
Fund Investments
Diminution in Value of Special
Fund Investments
Transferred to Municipal Fund
Total
Total (c)
Net balance at the year end
(a)+(b)-(c)
Schedule B-3: Schedule of Reserves
Code No.
Particulars
Opening
Balance at the Additions
beginning of
(Rs.)
the year (Rs.)
Total
(Rs.)
Deductions
(Rs.)
Balance
outstanding at the
end of the current
year (Rs.)
312-30-(a)
Special Fund
(Utilised)
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-7: Schedule of Deposits Received
Code No.
Opening
balance as the
beginning of
the year
Particulars
Additions
during the
current year
Refunded
during the
year
Balance
outstanding at
the end of the
current year
340-10- (a)
Security Deposit
Special
Funds
340-10-(a) Earnest Money Deposit
Special Funds
TOTAL
(a) Insert Detailed Head Codes of Account as applicable
Schedules B-9: Schedule of Other Liabilities (Sundry Creditors)
Code of
Account
Liabilities
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
350-10-(a)
350-20-(a)
350-20-(a)
Payables against Special Funds
TDS Special Funds
Works Contract Tax Special Funds
Total
(a) Insert Detailed Head Codes of Account as applicable
19.16
National Municipal Accounts Manual
Special Funds
Schedule B-13: Schedule of Investments – Other Funds
Code No
Particulars
1.
With whom
invested
3.
2.
Any other investments
321-(a)
Special Fund
Investment
Total
(a) Insert Minor & Detailed Head Codes of Account as applicable
Face value
4.
Cost
5.
Remarks
6.
Schedules B-17: Schedule of Cash & Bank Balances
Code No
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
450-10-(a)
450-21-(a)
450-41-(a)
Cash Account
Main Bank Accounts
Designated Bank Accounts
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedules B-18: Schedule of Other Loans, Advances & Deposits
Code No
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
460-40-(a)
Advance for suppliers and contractors
Special Funds
Total
(a) Insert Detailed Head Codes of Account as applicable
19.17
2
1
4
Amount
(Rs.)
Cumulative
Date of
Amount
Payment
(Rs.)
5
6
12
Remarks
19.18
Interest earned on investments and Profit on disposal of investments made from the Special Funds shall be recorded in the column 1 to 5 to update the balance of Special
Funds
Loss on disposal of investments shall be recorded in the column 6 to 10 to reduce the balance of Special Fund
3
Particulars
Form SF-1
Special Funds
Name of the Fund _______________
On Utilisation of Fund
Balance in
Cumulative
Reference
fund (Rs.)
Amount
Amount
of voucher Particulars
(5-10)
(Rs.)
(Rs.)
No.
7
8
9
10
11
SPECIAL FUNDS REGISTER
Name of the ULB______
For each entry made; record the Name, Designation, and Signature of the person making the entry in the register and the person checking the entry.
2.
1.
Note:
Reference of
voucher No.
Date of
Receipt
On creation/ addition to Fund
National Municipal Accounts Manual
National Municipal Accounts Manual
Investments
CHAPTER 20
,19(670(176
INTRODUCTION
20.1 This chapter contains the recommended accounting system in relation to investment
transactions, i.e., transactions dealing with surplus or other funds.
20.2 The local bodies invest surplus funds available with it as per state laws under which it
was constituted. Investments means assets held not for operational purposes or for rendering
services and comprises financial assets resulting from investments of cash surpluses (e.g.,
securities, shares, debentures, etc.).
20.3 Investments shall be classified based on the maturity profile / nature into short-term
and long-term. According to the Accounting Standard 13 prescribed by the Institute of
Chartered Accountants of India, ‘short term’ investments are those which are readily
realisable, and are intended to be held for not more than twelve months from the date of
investment. Investments falling outside the ambit of current investments are treated as ‘long
term’ investments.
20.4 A separate account code has to be assigned for each type of the investments made by
the ULBs. (The accounting procedures for accounting of various investment transactions are
explained in detail in the accounting principles listed below)
ACCOUNTING PRINCIPLES
20.5 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Investments:
20.1
National Municipal Accounts Manual
Investments
a. Investment shall be recognised at cost of investment. The cost of investment
shall include cost incurred in acquiring investment and other incidental
expenses incurred for its acquisition.
b. All long-term investments shall be carried / stated in the books of accounts at
their cost. However in the event of any permanent diminution in their value as
on the date of balance sheet, these shall be provided for.
c. Short-term investments shall be carried at their cost or market value (if quoted)
whichever is lower.
d. Interest on investments shall be recognised as and when due. At period-ends,
interest shall be accrued proportionately.
e. Dividend on investments shall be recognised on actual receipt.
f. Profit/loss, if any, arising on disposal of investment (net of selling expense
such as commission, brokerage, etc) from the Municipal Fund shall be
recognised in the year when such disposal takes place.
g
Income on investments made from Special Fund and Grants under specific
purpose shall be recognised and credited to Special Fund and Grants for
Specific purpose respectively, whenever accrued. Profit/loss, if any, arising on
disposal of investments (net of selling expense such as commission, brokerage,
etc) made from the Special Fund and Grants under specific purpose shall be
recognised and credited/debited to Special Fund Account and Grant under
specific purpose Account respectively. However, interest or gains from an
investment made from grants received as reimbursements, shall be credited to
Municipal / General fund of the ULB instead of the Grant account.
ACCOUNTING RECORDS AND PROCEDURES
This section describes the records, registers, documents, forms, accounting entries, etc., in
respect of accounting for transactions related to Investments. For the purposes of accounting
of Investments, the register applicable is specific to Investments, e.g., Investment Register Form IN-1. This is annexed to this chapter and is prefixed “IN”. Accounts Department shall
maintain an Investment Register in Form IN-1. Details of investment made from the
Municipal Fund, various Special Funds and Grants for specific purpose shall be recorded
separately in the Investment Register.
Investment of funds from Municipal Fund, Special Funds and Grant for specific purposes
20.6 Recording of investment made from Municipal Fund: For investment made from the
Municipal Fund, the Accounts Department shall pass the following entry:
20.2
National Municipal Accounts Manual
Investments
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
420-(a)
Municipal Fund Investment*
Dr.
10,000
Cash Book,
450-21-(b)
To Bank Account**
Cr.
10,000 Ledger, Investment
Register
* Separate folios shall be maintained in respect of each of the investments made in the Investment
Register.
** Specify name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Account of “Municipal Fund Investment” Account shall be carried
out as indicated in Chapter 5 – General Accounting Procedures. The postings in the Ledger
Accounts shall be similarly carried out in respect of all other accounting entries described
subsequently in this chapter. Whenever, the cash or the bank account is involved, there will be no
entry in the Journal Book.
20.7 Recording of investment made from Special Funds. For investment made from
Special Funds, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
421-(a)
Special Fund Investment*
Dr.
10,000
Cash Book, Ledger,
450-41-(b)
To Designated Bank
Cr.
10,000 Investment
Account **
Register, Special
Fund Register,
* Separate accounts shall be maintained for investments made from different funds such as,
provident fund, pension fund, sinking fund, etc.
**Specify name of the bank
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
20.8 Recording of investment made from Grants for specific purposes. For investment
made from Grants for specific purposes, the Accounts Department shall pass the following
entry:
Debit
Credit
Amount
Amount
Code of the
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
421-(a)
Grant Investment*
Dr.
10,000
Cash Book, Ledger,
450-61-(b)
To Designated Bank
Cr.
10,000 Investment
Account**
Register, Grant
Register,
* Separate accounts shall be maintained for investments made from different grants for specific
purposes, such as, Grants from Central Government, State Government and Others.
**Specify name of the bank
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
20.3
National Municipal Accounts Manual
Investments
20.9 Designated bank accounts of Special Funds and Grants shall be credited for
investment made from respective funds and grants.
Income from Investment
20.10 Recording of receipt of interest/dividend on investments from the Municipal Fund. To
record the receipt of interest/dividend on the Municipal Fund Investments, the Accounts
Department shall pass the following entry:
Code of
the
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Cash Book,
1,000
800 Ledger,
Investment
200 Register
Dr.
450-21-(a) Bank Account *
Cr.
To Income From
170-10-(a)
Investments –Interest
Cr.
To Income From
170-20-(a)
Investments -Dividend
* Specify name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
20.11 Recording of receipt of interest/dividend on investments from the Special Funds and
Grants. Interest/dividend earned on investments made from Special Funds and Grants shall be
deposited in the respective Special Fund or Grant bank account. Interest/dividend received on
investments represents accretion to the Special Fund or Grant and cannot be utilised for any
purpose other than for which the Special Fund has been created or Grant has been received.
To record the receipt of interest/dividend on investments made from Special Funds or Grants,
the Accounts Department shall pass the following entries:
a. Recording of interest/dividend received on Special Fund Investments. To record
the interest/dividend received on Special Fund Investments, the Accounts
Department shall pass the following entry:
Code of
the
Account
Accounting Entry
450-41-(a) Designated Bank Account *
311-10-(a)
To Special Funds**
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger,
Investment
Register,
Special Fund
Register,
Register of
Sinking Fund
* Specify name of Bank and Account number
** Specify name of the Special Fund
(a) Insert Detailed Head Codes of Account as applicable
20.4
National Municipal Accounts Manual
Investments
b. Recording of interest/dividend received on Grant Investments. To record the
interest/dividend received on Grant Investments, the Accounts Department shall
pass the following entry:
Code of
the
Account
Accounting Entry
Dr./
Cr.
450-61-(a) Designated Bank Account *
320-(b)
To Grants for specific
purposes
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Cash Book,
1,000 Ledger,
Investment
Register,
Grant Register
* Specify name of Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
20.12 Interest earned on investments made from Special Funds and Grants shall be updated
in the Investment Register along with Special Funds Register maintained in Form SF-1,
Grants Register maintained in Form G-1.
Re investment of interest amounts
20.13 Investments are re-invested along with Interest on many occasions. To record the reinvestment of interest on the Municipal Fund Investments, the Accounts Department shall
pass the following entry:
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
420-(a)
Municipal Fund Investments
Dr.
1,000
Ledger,
170-10-(b)
To Income From
Cr.
1,000 Investment
Investments -Interest
Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Code of
the
Account
20.14 Similar entries will be passed for other funds.
Period-end Procedures
20.15 At period-end, interest shall be accrued on investments made from the date of last
receipt of interest till the end of the accounting period. The accrual of interest shall include
both interests due for receipt and interests not due for receipt. This can be explained with the
help of an illustration. For instance, assume interest on Municipal Fund Investment of Rs. 1
lakh is payable half yearly on 30th June and 31st December at 10% per annum, which implies
that interest of Rs.5000 is receivable on 31st December 2004 of the current accounting year
and Rs 5000 is receivable on 30th June 2005 of the next accounting year. However, interest
20.5
National Municipal Accounts Manual
Investments
for the period from the date of last receipt, i.e., 30th December 2004 to the end of the
accounting year needs to be accounted in the books of account as interest is computed on the
basis of time elapsed. Thus, Rs. 7500 (10% on Rs. 1 lakh for 3 months), i.e., interest for the
intervening period shall be recorded in the books of accounts. In the case interest due for halfyear ended 31 December of Rs. 5,000 which is not received as of March i.e. year end it shall
be accounted as ‘Interests accrued and due’ and the interest accrued for the three months
period upto 31 March 2005 of Rs 2,500 shall be accounted as ‘Interest accrued but not due’.
The entries that would be passed for accounting of interest accrued is outlined below.
a. Recording of Interest accrued on Municipal Fund Investments. At period-end, to
record the interest accrued on Municipal Fund Investments, the Accounts
Department shall pass the following entry:
Code of
the
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
5,000
Journal
Book,
Ledger,
Dr.
2,500
Investment
Register
431-40-(a) Receivable from other sources
Interest accrued & dues on
Municipal Fund Investment
431-40-(a) Receivable from other sources
Interest accrued & not due on
Municipal Fund Investment
To Investment Income –
Cr.
170-10-(a)
Interest from Municipal
Fund Investment
(a) Insert Detailed Head Codes of Account as applicable
7,500
b. Recording of Interest accrued on Investments made from the Special Funds. In
case the investment in the illustration is made from the Special Fund, ‘interest
accrued and due on Investments’ and ‘interest accrued and not due on
Investments’ shall be added to the respective Special Fund for which the Accounts
Department shall pass the following entry:
Code of
the
Account
Accounting Entry
Debit
Credit
Amount
Amount Books to be
Dr./
(Rs.)
(Rs.)
entered
Cr.
Illustrative Illustrative
into
figures
figures
Dr.
5,000
Journal
Book,
Ledger,
Investment
Register
Dr.
2,500
431-40-(a) Receivable from other sources Interest accrued & dues on
Special Fund Investment
Receivable from other sources 431-40-(a) Interest accrued & not due on
Special Fund Investment
To Special Funds*
Cr.
311-10-(a)
* Specify name of the Special Fund
(a) Insert Detailed Head Codes of Account as applicable
7,500
20.6
National Municipal Accounts Manual
Investments
c. Recording of Interest accrued on Investments made from the Grants. In case the
investment in the illustration is made from funds received in the form of Grant,
‘interest accrued and due on Investments’ and ‘interest accrued and not due on
Investments’ shall be added to the respective Grant for which the Accounts
Department shall pass the following entry:
Code of
the
Account
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
5,000
Journal Book,
Ledger,
Investment
Dr.
2,500
Register
431-40-(a) Receivable from other
sources -Interest accrued &
dues on Grant Investment
431-40-(a) Receivable from other
sources –Interest accrued &
not due on Grant Investment
To Grant for specific
Cr.
320-(b)
purposes
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
7,500
20.16 Reversal of Interest accrued on Municipal Fund Investments and Grants received as
reimbursements. At the beginning of the next accounting period, the entry for accrual of
interest on Municipal Fund Investment shall be reversed by passing the following entry:
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
7,500
Journal Book,
170-10-(a) Investment Income -Interest Dr.
Ledger,
from
Municipal
Fund
Investment
Investment
Cr.
5,000 Register
To Receivable from
431-40-(a)
Other Sources –
Interest Accrued and
due on Municipal
Fund Investment
Cr.
2,500
To Receivable from
431-40-(a)
Other Sources Interest Accrued and
not due on Municipal
Fund Investment
(a) Insert Detailed Head Codes of Account as applicable
Code of
the
Account
20.17 Reversal of Interest accrued on investments made from Special Funds. At the
beginning of the next accounting period, the entry for accrual of interest on Investments made
from the Special Funds shall be reversed by passing the following entry:
20.7
National Municipal Accounts Manual
Code of
the
Account
Investments
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
7,500
Journal Book,
5,000 Ledger,
Investment
Register
Dr.
311-10-(a) Special Funds*
431-40-(a)
To Receivable from Other Cr.
Sources - Interest Accrued
& due on Special Fund
Investment
To Receivable from Other Cr.
431-40-(a)
Sources - Interest Accrued
and not due on Special
Fund Investment
* Specify name of the Special Fund
(a) Insert Detailed Head Codes of Account as applicable
2,500
20.18 Reversal of Interest accrued on investments made from Grants. At the beginning of
the next accounting period, the entry for accrual of interest on Investments made from the
Grants shall be reversed by passing the following entry:
Code of
the
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
7,500
Journal Book,
5,000 Ledger,
Investment
Register
Dr.
320-(b)
Grant for specific purposes
Cr.
431-40-(a)
To Receivable from
Other Sources-Interest
Accrued and due on Grant
Investment
Cr.
To Receivable from
431-40-(a)
Other Sources Interest
Accrued and due on
Grant Investment
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
2,500
20.19 Through the above reversing entries passed in Paras 20.16 to 20.18, the entry for
period end interest income passed in the current accounting period shall be reversed in the
next accounting period. Money received during the next accounting period in respect of the
concerned head of accounts shall be recorded by credits to the concerned head of accounts in
the same manner as receipt of interest income accruing and arising in the next period.
20.20 The debits made in the interest income account through above entries would be for a
temporary period and would automatically be set-off when credits shall be given in the next
accounting period. Through this, interest of Rs. 7,500 is recognised as an income of the
current accounting period and not as an income of the next accounting period when money is
actually received.
20.8
National Municipal Accounts Manual
Investments
Maturity/Disposal of Investment
20.21 Investments may be held to maturity or may be disposed before the maturity date. On
disposal of investment, the ULB may either realise a profit or loss depending on whether the
amount received on disposal of investment is more or less than the cost of investment. In case
of Municipal Fund Investment, the profit earned or loss incurred on disposal of investment
shall be recorded as income or expenditure in the Income and Expenditure Statement
whereas, in case of Special Funds Investments or Grants Investments, the profit realised or
loss incurred shall be adjusted in the Special Fund or Grant.
20.22 This is explained with the following illustration wherein an original investment which
had cost Rs. 9000 is disposed under three different alternative scenarios resulting in no profit
or loss in Scenario I, profit in Scenario II and loss in Scenario III.
a. Investment is disposed of at Rs. 9000 and thus only cost is recovered. In this case
the Accounts Department shall pass the following entries for money realised:
i. In case of Municipal Fund Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
450-21-(a) Bank Account*
Dr.
9,000
Cash Book,
420-(b)
To Municipal Fund
Cr.
9,000 Ledger,
Investment
Investment
Register
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
Account
ii. In case of Special Fund Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
9,000
Cash Book,
450-41-(a) Designated Bank
Cr.
9,000 Ledger,
421-(b)
Account*
Investment
To Special Fund
Register,
Investment**
Special Fund
Register,
Register of
Sinking Fund
* Specify name of the Bank and Account number
**Separate accounts shall be maintained for investments made from different funds such
as provident fund, pension fund, sinking fund, etc.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
Account
20.9
National Municipal Accounts Manual
Investments
,
iii. In case of Grant Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
450-61-(a) Designated Bank Account Dr.
9,000
Cash Book,
To Grant
Ledger,
421-(b)
Investment*
Cr.
9,000 Investment
Register,
Grant
Register,
* Separate accounts shall be maintained for investments made from different grants for
specific purposes, such as Grants from Central Government, State Government and
Others.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
Account
b. Suppose investment instead of being disposed of at Rs. 9000 is disposed of at Rs.
9,500 (after deducting cost of disposal of investment such as brokerage,
commission, etc.), thus resulting in a profit of Rs. 500. The Accounts Department
shall pass the following entry for money received and profit realised on disposal of
investment.
i. For money realised on disposal of investment. Entries referred to in (a) above
shall be passed for money realised on disposal of investment, i.e., Rs. 9,500.
ii. For recording profit realised on disposal of investment.
In case of Municipal Fund Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
500
Journal Book,
420-(a)
Municipal Fund
Ledger,
Investment
Cr.
500 Investment
170-40-(b)
To Profit on Sale of
Register
Investments
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Code of
the
Account
20.10
National Municipal Accounts Manual
Investments
In case of Special Fund Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
421-(a)
Special Fund Investment* Dr.
500
Journal Book,
311-10-(b)
To Special Fund*
Cr.
500 Ledger,
Investment
Register,
Special Fund
Register,
Register of
Sinking Fund
* Separate accounts shall be maintained for investments made from different funds such
as provident fund, pension fund, sinking fund, etc.
** Specify name of the Special Fund
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Code of
the
Account
In case of Grant Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
421-(a)
Grant Investment*
Dr.
500
Journal Book,
320-(a)
To Grants for specific Cr.
500 Ledger,
purposes
Investment
Register, Grant
Register,
* Separate accounts shall be maintained for investments made from different grants for
specific purposes, such as Grants from Central Government, State Government and
Others.
(a) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
account
c. Suppose the investment is disposed at Rs. 8500 (after deducting cost of disposal of
investment such as brokerage, commission, etc.), thus resulting in a loss of Rs.
500. The Accounts Department shall pass the following entries for money received
and loss incurred on disposal of investment.
i. For money realised on disposal of investment. Entries referred to in (a) above
shall be passed for money realised on disposal of investment, i.e., Rs. 8,500.
ii. For recording loss incurred on disposal of investment.
In case of Municipal Fund Investments
20.11
National Municipal Accounts Manual
Investments
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
271-20-(a) Loss on Sale of Investments Dr.
500
Cash Book,
420-(b)
To Municipal Fund
Cr.
500 Ledger,
Investment*
Investment
Register
* Separate folios shall be maintained in respect of each of the investments made in the
Investment Register.
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
In case of Special Fund Investments
Code of
the
Account
Accounting Entry
311-10-(a) Special Fund*
421-(b)
To Special Fund
Investment**
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
500
Journal Book,
Cr.
500 Ledger,
Investment
Register,
Special Fund
Register,
Register of
Sinking Fund
* Specify name of the Special Fund
** Separate accounts shall be maintained for investments made from different funds such
as, provident fund, pension fund, etc.
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
In case of Grant Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
320-(a)
Grants for specific purposes Dr.
500
Journal Book,
421-(a)
To Grant Investment*
Cr.
500 Ledger,
Investment
Register, Grant
Register,
*Separate accounts shall be maintained for investments made from different grants for
specific purposes, such as Grants from Central Government, State Government and Others.
(a) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
Account
20.23 Profit or Loss arising on disposal of Special Funds Investments and Grants
Investments shall be updated in the Special Funds Register maintained in Form SF-1, Grants
Register maintained in Form G-1.
20.12
National Municipal Accounts Manual
Investments
Valuation of Investments
20.24 All long-term investments shall be carried / stated in the books of accounts at their
cost. In the case of the market values being less than the carrying value of the investments at
the period, the diminution in the value of investments will be accounted as charge to the
Income and expenditure account in the case of General Fund Investment or to respective
funds account as the case may be.
20.25 Short-term investments shall be carried at their cost or market value (if quoted)
whichever is lower.
20.26 At the end of the financial year, the accounts department has to ascertain whether any
amount to be provided towards diminution or decline in value of the investments. The
provision required in accordance with the accounting principle shall be calculated investment
wise. The total amount of provision so calculated would then have to be compared with the
balances in the Accumulated Provision for Decline in Value of Investments accounts.
Wherever balances fall short of the amount of provision calculated, an additional provision
for such shortfall is created and where the balance in accumulated provision for investments
account exceeds the provision calculated, such excess in the books would have to be written
back. For the purpose of calculation for provision, calculation sheet as provided in Form IN2 shall be used. To record the diminution in value of long-term investments and fall in the
value of short-term investments, the Accounts Department shall pass the following entries:
i. In case of Municipal Fund Investments
Debit
Credit
Amount
Amount
Code of the
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Journal Book,
270-20-(a) Provision for other
Ledger,
Assets-Investments
Cr.
200 Investment
420-(b)
To Municipal Fund
Register
Investments*
* In the case of long-term investment the account to be credited is ‘Provision for decline in
the value of investments’ (under the account head 420-90-(a) and the Investment value will
be shown net of the balance in this account).
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
20.13
National Municipal Accounts Manual
Investments
ii. In case of Special Funds Investments
Code of
the
Account
Accounting Entry
311-10-(a) Special Fund *
421-(b)
To Special Fund
Investment
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Journal Book,
Cr.
200 Ledger,
Investment
Register, Special
Fund Register,
Register of
Sinking Fund
* Specify the name of the Special Fund
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
iii. In case of Grant Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
320-(a)
Grants for specific purposes Dr.
200
Journal Book,
421-(a)
To Grant Investment*
Cr.
200 Ledger,
Investment
Register, Grant
Register,
* Separate accounts shall be maintained for investments made from different grants for
specific purposes, such as, Grants from Central Government, State Government and Others.
(a) Insert Minor & Detailed Head Codes of Account as applicable
Code of
the
Account
20.27 Investments, after provision for diminution shall be carried in Financial Statements at
the reduced value.
20.28 Any appreciation in market value of both short-term and long-term investments over
the cost of investments shall be ignored. If the appreciation is in respect of investments for
which provision for diminution in value or fall in value was made in earlier years, the value
of the said investments shall be appreciated by an amount not greater than the provision for
diminution / fall in value made in earlier years. To record the appreciation in value of
investment, the Accounts Department shall pass the following entries:
20.14
National Municipal Accounts Manual
Investments
i. In case of Municipal Fund Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Journal Book,
420-(a)
Municipal Fund Investment
200 Ledger,
170-80-(a)
To Appreciation in Value Cr.
Investment
of Investment
Register
Note 1 : It is presumed that the market value of current investments increases as follows:
• Investments in respect of which diminution in value had been provided in earlier
years Rs. 250
• Investments in respect of which no diminution was provided Rs. 50.
Code of
the
Account
Note 2: The appreciation in value of investments for which diminution provision was provided
in earlier years would be restricted to provision for diminution provided. Thus, the
appreciation in value of such investments is restricted to Rs. 200/- (equivalent to diminution
provided) despite increase in market value by Rs. 250. In respect of investments for which no
diminution was provided in earlier years, the increase in market value of Rs. 50 shall be
ignored.
ii. In case of Special Funds Investments
Code of
the
Account
Accounting Entry
421-(a)
Special Fund Investment
311-10-(b)
To Special Fund*
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Journal Book,
Cr.
200 Ledger,
Investment
Register,
Special Fund
Register,
Register of
Sinking Fund
* Specify the name of the Special Fund
(a) Insert Minor & Detailed Head Codes of account as applicable
(b) Insert Detailed Head Codes of Account as applicable
Note: Restricted to increase in value of Special Fund investments for which diminution
provision was provided in earlier years.
iii. In case of Grant Investments
Debit
Credit
Amount
Amount
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
421-(a)
Grant Investment*
Dr.
200
Journal Book,
320-(a)
To Grants for specific
Cr.
200 Ledger,
purposes
Investment
Register, Grant
Register,
(a) Insert Minor & Detailed Head Codes of Account as applicable
Note: Restricted to increase in value of Grant investments for which diminution provision
was provided in earlier years.
Code of
the
Account
20.15
National Municipal Accounts Manual
Investments
20.29 Investments, whose value has appreciated on account of reversal in diminution in
value, shall be disclosed in the Financial Statements at their increased value.
INTERNAL CONTROLS
20.30 The following internal controls shall be observed by the ULBs:
a. The Head of the Accounts Department shall ensure that investments are made as
per the laws applicable.
b. At the end of every month, the Head of the Accounts Department or other officer
designated in this behalf shall reconcile the ledger balance of various Investment
Accounts with the Investment Register.
c. At the end of the financial year, the Head of the Accounts Department shall
conduct physical verification of investments and reconcile the balance as denoted
in the investments with the balance in ledger accounts. Each of the investment
certificate/instrument/document shall be tallied with the Investment Register.
d. The Head of the Accounts Department or other officer designated in this behalf
shall review the Investment Register on a weekly basis to identify and list
investments maturing within the next two weeks for information of the
Commissioner.
e. The Head of the Accounts Department shall ensure that interest/dividend on
investments is actually received as per the terms of the investments.
f. The Head of the Accounts Department shall ensure that the Investments at the end
of the financial year are valued at cost or market price, whichever is less. Further,
they shall ensure that Investments are not stated over the original cost of
acquisition.
g. The Chief Executive Officer or the Head of ULB may prescribe appropriate MIS
reports of their level for monitoring.
20.31 The Head of the Accounts Department shall certify all Reconciliation Statements.
PRESENTATION IN FINANCIAL STATEMENTS
20.32 The various heads of accounts used for the accounting of Investments related
transactions shall be reflected in the Financial Statements or the Schedules attached to the
Financial Statements of the ULBs. These Financial Statements and schedules should be
affixed with signature/seal of authorised staff.
20.33 The schedules of Income and Expenditure Statement in respect of the income earned
from Municipal Fund Investments are provided below.
20.16
National Municipal Accounts Manual
Investments
Schedule I-7: Income from Investments – General Fund
Code No
1
170-10-(a)
170-20-(a)
170-30-(a)
170-40-(a)
170-80-(a)
Particulars
2
Interest
Dividend
Income from projects taken up on commercial basis
Profit on Sale of Investments
Others
Total Income from Investments
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-8: Interest Earned
Code No.
1
171-10-(a)
Particulars
2
Interest from Bank Accounts
Total. – Interest earned
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-17: Miscellaneous Expenses
Code No.
Particulars
1
271-20-(a)
2
Loss on disposal of Investments
Total Expenses of Investments to be shown as part
of Miscellaneous expenses Schedule
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
20.34 The Balance Sheet Abstract in respect of Investments is provided below.
Schedule B-12: Investments - General Fund
Code No.
1
420-10-(a)
420-20-(a)
420-30-(a)
420-40-(a)
420-50-(a)
420-60-(a)
420-80-(a)
Particulars
With
whom
invested
3
Current year
Face
Carrying
value
Cost
4
5
Previous year
Face
Carryin
value
g Cost
6
7
2
Central Government Securities
State Government Securities
Debentures and Bonds
Preference Shares
Equity Shares
Units of Mutual Funds
Other Investments
Sub-total
Less:
420-90-(a) Accumulated Provision
Net Total Investments GF
(a) Insert Detailed Head Codes of Account as applicable
Note:
1. Provide detailed break-up of other investments as applicable
2. Value in respect of investments, which have matured but not encashed shall be disclosed separately.
3. Aggregate amount of quoted investments and also market value thereof shall be disclosed. Aggregate
amount of unquoted investments shall also be disclosed.
20.17
National Municipal Accounts Manual
Investments
Schedule B-13: Investments - Other Funds (Special Funds, Grants)
Code No.
Particulars
With
whom
invested
1
421-10-(a)
421-20-(a)
421-30-(a)
421-40-(a)
421-50-(a)
421-60-(a)
421-80-(a)
Current year
Face
Carrying
value
Cost
(Rs.)
(Rs.)
4
5
Previous year
Face
Carrying
value
Cost
(Rs.)
(Rs.)
6
7
2
3
Central Government Securities
State Government Securities
Debentures and Bonds
Preference Shares
Equity Shares
Units of Mutual Funds
Other Investments
Sub-total
Less:
420-90-(a) Accumulated Provision
Net Total Investments OF
(a) Insert Detailed Head Codes of Account as applicable
Notes:
1. Provide break-up of investments as provided for General Provident Fund Investment.
2. Details of Investments shall be provided separately for each of the Special Fund Investment and Grant
Investment.
3. Value in respect of investments, which have matured but not encashed shall be disclosed separately.
4. Aggregate amount of quoted investments and also market value thereof shall be disclosed. Aggregate
amount of unquoted investments shall also be disclosed.
Schedule B-15: Sundry Debtors (Receivables)
Code No.
Particulars
Gross
Amount
(Rs.)
2
3
Provision for
Outstanding
revenues
(Rs.)
4
432
Net amount
(Rs.)
5=3
4
Previous
year
Net amount
(Rs.)
6
431-40-(a)
Receivables from Other Sources
Interest accrued & due
431-40-(a) Receivables from Other Sources
Interest accrued & not due
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedules B-17: Schedule of Cash & Bank Balances
Code of
Account
450-10-(a)
450-21-(a)
450-41-(a)
Particulars
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
Cash Account
Main Bank Accounts
Designated Bank Accounts
(a) Insert Detailed Head Codes of Account as applicable
20.18
INVESTMENT LEDGER / REGISTER
______________ Name of the ULB
14
15
16
20.19
17
Date on Date /
Initials
which month of
of
proceeds adjustme Authoris Remarks
were
nt in
ed
realised accounts Officer
Form IN – 1
Investments
Seal/Signature of authorised officer
Note:
1. Separate folio would be allotted to each type of investment.
2. Separate ledger / register for each type of fund investment should preferably be maintained. For example, separate ledger may be maintained for General Fund Investment,
GPF investment, Pension Fund Investment, etc.
Amount
Particulars of
Date /
No. and
Initials
realised
investment
Due date Amount
Amount Date on month in
Date of
date of
Purchase Face
of
either on
Sr.
quoting no. and
of
of receipt
of interest which
which
resolution investPrice Value
Authoris
sale or
No.
date of Govt.
of
interest
recovered interest adjusted
authorising ment
(Rs.)
(Rs.)
ed
maturity of
Paper or FDR
interest due on
(Rs.) recovered
in
investment
investment
Officer
no. of the Bank
accounts
(Rs.)
1
2
3
4
5
6
7
8
9
10
11
12
13
National Municipal Accounts Manual
Total
Col 2
Name of the
investment
Col 3
No of
units
Cost of the
investment
(Rs.)
Col 5 (Col 3 x 4)
Cost per
unit
(Rs.)
Col 4
(Rs.)
Col 6
Book value as of
the previous
closing period
(Rs.)
Col 7
(Rs.)
Col 8( Col 3x7)
(Rs.)
Col 9
(Rs.)
Col 10
(Rs.)
Col 11 (10-9)
Accumulated
Accumulated
Additional
Market
Provision to be
Market value as
Provision
as
of
provision
to be
rate/NAV on the reporting
made as of
the previous
made or
(refer notes)
date
current
period
reversed
reporting date
Form IN – 2
Investments
20.20
Notes
1. Market rate is applicable for only the quoted shares (normally classified as ' short term' investments)
2. NAV (net assets value) is applicable to unquoted investments which are generally intended to be held for more than twelve months and these are classified as ' long-term
investments'
d)
c)
b)
Col 1
a)
S No
______________ NAME OF THE ULB
CALCULATION SHEET FOR PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS
FOR THE PERIOD ENDING ___________
National Municipal Accounts Manual
National Municipal Accounts Manual
Fixed Assets
CHAPTER 21
),;(' $66(76
INTRODUCTION
21.1 This chapter contains the recommended accounting system for transactions relating to
fixed assets for Urban Local Bodies (ULBs).
21.2 Fixed Assets represent those assets of the ULBs, which are meant for use over an
extended period. These are the assets held for providing services and are not held for resale in
the normal course of operations of the ULBs.
21.3 Fixed Assets may be constructed or acquired by or may be gifted or donated to the
ULBs either for its own use or for public benefit. The accounting treatment in respect of
Fixed Assets constructed by the ULBs has been described in Chapter 12 on “Public Works”,
reference to which is invited.
21.4 This chapter covers the accounting procedures in respect of purchase/acquisition and
disposal of Fixed Assets, including acquisition by way of gift or donation. This chapter also
covers the accounting for revaluation of the assets and Depreciation on all the Fixed Assets of
the ULBs including those covered by Chapter 12 on “Public Works” and Chapter 24 on
“Special Transactions”. The accounting principles and procedures given in this chapter is
based on specific references taken from Indian Accounting Standards (AS) 10 on ‘Accounting
for Fixed Assets’ issued by the Institute of Chartered Accountants of India. In case of any
other guidance/ clarifications, the same shall be obtained by referring to AS 10.
21.5 The Fixed Assets described in this chapter could be broadly classified as Infrastructure
assets and Other assets and the list of these assets illustratively include:
21.1
National Municipal Accounts Manual
A.
Fixed Assets
Infrastructure Assets
¾ Roads and Bridges;
•
Bridges,
•
Causeways, etc.
¾ Water Works;
•
Bore Wells,
•
Laboratory Equipment, etc.
¾ Sewerage and drainage;
•
Open Drains,
•
Underground Drains, etc.
¾ Public Lighting;
B.
•
Lamp Posts,
•
Luminary & Electrical Fittings, etc.
Other Assets
¾ Land;
•
Land,
•
Grounds, etc.
¾ Buildings;
•
Art gallery Buildings,
•
Auditorium Buildings, etc.
¾ Furniture, fixtures, fittings and Electrical appliances;
•
Cabinets and cupboards,
•
Chairs, etc.
¾ Office & other equipments;
•
Air Conditioners,
•
Computer - Hardware, etc.
¾ Vehicles;
•
Ambulances,
•
Buses, etc.
¾ Health related assets; and
•
Cold Storage Equipment,
•
Medical Equipment, etc.
¾ The codes of Account for above and all other transactions are given in Part
IV-chart of Accounts of this Manual.
21.2
National Municipal Accounts Manual
Fixed Assets
21.6 A record shall be maintained for the immovable fixed assets in the relevant Register
of Immovable Property in Form GEN-30 and for the moveable fixed assets in the Register of
Moveable Property in Form GEN-31.
ACCOUNTING PRINCIPLES
21.7 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Fixed Assets:
a. All Fixed Assets shall be carried at cost less accumulated depreciation. The cost of
fixed assets shall include cost incurred/money spent in acquiring or installing or
constructing fixed asset, interest on borrowings directly attributable to acquisition
or construction of qualifying fixed assets up to the month of commissioning of the
assets and other incidental and indirect expenses incurred up to that month.
b. Any addition to or improvement to the fixed asset that results in increasing the
utility or useful life of the asset shall be capitalised and included in the cost of
fixed asset.
c. Any Fixed Asset, which has been acquired free of cost or in respect of which no
payment has been made, shall be recorded at nominal value of Re. 1/-.
d. All assets costing less than Rs.5, 000 (Rupees five thousands) shall be expensed /
charged to Income & Expenditure Account in the year of purchase.
e. An increase in net book value arising on revaluation shall be credited to a reserve
account under the Municipal fund as ‘Revaluation Reserve Account’. A decrease
in net book value arising on revaluation of fixed assets is charged to Income and
Expenditure accounts.
f. Revaluation of a class of assets shall not result in the net book value of that class
being greater than the recoverable amount of the assets of that class.
g. Revaluation reserve shall be reduced by transfer of equivalent amount of
depreciation charged on the revalued portion of the cost of the fixed assets.
h. Depreciation shall be provided at the rates prescribed by the State. Depreciation on
all fixed assets is to be provided consistently on either Written Down Value or
Straight Line Method (A task Force is being set up to prescribe life and rates of
Depreciation for different type of assets of ULBs).
i. Depreciation shall be provided at full rates for assets, which are
purchased/constructed before October 1 of an Accounting Year. Depreciation shall
be provided at half the rates for assets, which are purchased/constructed on or after
October 1 of an Accounting Year.
21.3
National Municipal Accounts Manual
Fixed Assets
j. Depreciation shall be provided at full rates for assets, which are disposed on or
after October 1 of an Accounting Year. Depreciation shall be provided at half the
rates for assets, which are disposed before October 1 of an Accounting Year.
k. Assets recorded in the register but not physically available shall be written off
after a specified period as defined by the State/Municipal act or rules governing
the ULBs. The authority levels for the same shall be as defined under the
respective Act or rules. However the specified period shall not exceed five years.
ACCOUNTING RECORDS AND PROCEDURES
21.8 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Fixed Assets. For the purposes of
accounting of Fixed Assets all the forms applicable, are generally applicable in respect of the
transactions of the ULBs including in respect of Fixed Assets.
21.9
The procedure for accounting of fixed assets is briefly described below:
a. Earnest Money Deposit (EMD) may be received from the bidders bidding for the
tender as per the principles and procedures prescribed by the ULBs. On award of
contract, EMD shall be refunded to the unsuccessful bidders.
b. Contract for supply of requisite fixed asset shall be awarded to the successful
supplier and a Purchase Order shall be issued to the supplier for supply of fixed
assets specified therein.
c. Advance may be provided to the contractor as per the terms and procedures of the
ULBs and purchase agreement entered into with the contractor.
d. On receipt of bill, the concerned department shall prepare a Payment Order in
Form GEN-14 for the purchase/acquisition of the Fixed Asset and forward it to the
Accounts Department to make the payment after deducting the Security Deposit
and any other deduction specified in the purchase agreement.
e. As explained above in the accounting principles (Para 21.7) that all assets costing
less than Rs 5,000 shall be charged to Income and Expenditure account in the
period in which they were purchased.
Accounting for Earnest Money Deposit (EMD)
21.10 Earnest Money Deposit may be collected from the bidders on such basis as
determined by the ULBs at the time of submitting their tenders. A Receipt in Form GEN-8
shall be issued for the amount collected. The accounting for collection of EMD from the
bidders, refund of EMD to the unsuccessful bidders and conversion of EMD of successful
bidder into Security Deposit and its refund shall be the same as provided in the Chapter 12 on
Public Works .
21.4
National Municipal Accounts Manual
Fixed Assets
Accounting for Security Deposit
21.11 Where the terms of Agreement entered into with the supplier provide for collection of
a certain percentage of Security Deposit in advance, a Receipt (Form GEN-8) shall be issued
for the amount collected to the successful bidder. The procedure for accounting of Security
Deposit received and refunded on successful execution of the order shall be the same as
provided in Chapter 12 on “Public Works”.
Accounting for Advance
21.12 As per the terms of purchase agreement, advance may be paid to the supplier. The
procedure to be followed for payment and accounting in respect of advance shall be the same
as provided in the Chapter 12 on “Public Works”.
Accounting for Acquisition/Purchase of Fixed Assets
21.13 Recording of purchase of Fixed Assets. The department which purchases/acquires the
Fixed Asset shall prepare a Payment Order in Form GEN-14 for the purchase/acquisition of
the Fixed Asset and forward it to the Accounts Department. To record the purchase of the
Fixed Asset, the Accounts Department shall pass the following entry:
Code of
Account
410- (b)
350-10-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
1,00,000
Journal Book,
Cr.
90,000 Ledger
Fixed Assets
To Creditors -Suppliers
Account
Cr.
340- 10- (a)
To From Contractors /
Suppliers –Security
Deposit
To Advance to Suppliers
Cr.
460- 40- (a)
and contractors
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable.
5,000
5,000
Note 1: All the fixed assets belonging to a class of assets shall be accounted under that asset
class. For instance, the acquisition of a building for any purpose shall be accounted under the
asset head of Buildings.
Note 2: The Cost of the fixed assets shall also include installation, duties, taxes and other
incidental expenses for eg, transport charges, port dues, etc incurred towards acquisition of an
asset.
Note 3: The postings in the Ledger Accounts of “Fixed Asset” Account, ”Suppliers”
Account, “Security Deposit” Account and “Advance to Supplier” Account shall be
carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in
the Ledger Accounts shall be similarly carried out in respect of all other accounting
entries described subsequently in this chapter. Whenever, the cash or the bank account
is involved, there will be no entry in the Journal Book.
21.5
National Municipal Accounts Manual
Fixed Assets
21.14 Recording of payment made. After obtaining approval of the concerned authority, the
Accounts Department shall prepare a Bank Payment Voucher in Form GEN-5 and draw a
cheque in accordance with the procedure provided in the Chapter 5 on General Accounting
Procedures. On payment, the Accounts Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
350-10-(a) Creditors Suppliers Account Dr.
90,000
Cash Book,
450-21- (a)
To Main Bank Account*
Cr.
90,000 Ledger
* Specify name of the Bank and account number
(a) Insert detailed head codes of account as applicable
21.15 Any addition or improvement to the Fixed Asset that results in increasing the utility or
useful life of the asset shall be capitalised and included in the cost of Fixed Asset. The
procedure to be followed for accounting of any addition or improvement to Fixed Asset shall
be the same as provided earlier in this chapter.
Depreciation on Fixed Assets
21.16 At the end of the accounting year, depreciation shall be provided on each class of
Fixed Asset at the prescribed rates. The amount of depreciation to be provided each year shall
be computed by applying the depreciation rate to the cost or written down value of Fixed
Asset as per the accounting principles of the ULB. An example of computation of
depreciation is provided in Table 21.1 below. .
21.17 For Depreciation on Fixed Asset. For providing depreciation (refer e.g. in Table 21.1
below), the Accounts Department shall pass the following entry:
Code of
Account
272- (a)
411- (a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
2,100
Journal Book,
Cr.
2,100 Ledger
Depreciation on ____
To Accumulated
Depreciation
(a) Insert Minor & Detailed Head Codes of account as applicable
Note: Separate depreciation entry shall be passed for each class of fixed assets, such as
Buildings, Vehicles, etc.
21.6
National Municipal Accounts Manual
Fixed Assets
Table 21.1
Computation of Depreciation at Year-end on an asset class
Sr. No
Amount (Rs.)
Particulars
a.
Original Cost of Fixed Asset at the beginning of the year
10,000
b.
Less: Original Cost of fixed asset sold during the accounting year*
2,000
c.
Original Cost of the fixed asset held at year-end
8,000
d.
Annual Depreciation provision (@ 20%) for the financial year
1,600
Depreciation on fixed assets purchased during the year**
e.
Depreciation on the fixed asset purchased before October 1 of an
accounting year (at full rate of 20% on Rs. 2,000/-)
400
f.
Depreciation on the fixed asset purchased after October 1 of an
accounting year (at half the rate of 20% i.e. 10% on Rs. 1,000/-)
100
g.
Total Depreciation charge for the year (d+e+f)
2,100
* Refer sale of fixed asset worth Rs 2000 in para 21.24 under section ‘Sale/Disposal of Fixed Assets’ below.
** It is assumed that fixed assets worth Rs. 2,000 purchased before October 1 of an accounting year and
fixed assets worth Rs. 1,000 purchased after October 1 of an accounting year.
21.18 Register of Immovable Property maintained in Form GEN-30, Register of Moveable
Property maintained in Form GEN-31, and Register of Public Lighting System in Form GEN36 shall be updated in respect of the depreciation provision made during an accounting year
annually.
Maintenance of Sinking Fund
21.19 ULBs may maintain sinking funds to invest the replacement of assets. In such cases
the following procedures shall be adopted.
21.20 Recording of transfer of funds from Main Bank Account to Asset Replacement Bank
Account. Immediately after the approval of Financial Statements by the ULBs, an amount
equivalent to depreciation provision for the year shall be transferred from the Main Bank
Account to Asset Replacement Bank Account for which the Accounts Department shall pass
the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,100
Cash Book,
2,100 Ledger
450-41-(a) Designated Bank Account*
Dr.
450- 21- (a)
To Bank Account*
Cr.
* Specify name of the Bank and account number
(a) Insert detailed head codes of account as applicable
21.21 The amount so set aside shall be utilised only for the purpose of purchase or
acquisition of the fixed assets pertaining to the asset class in respect of which the above
depreciation has been provided.
21.7
National Municipal Accounts Manual
Fixed Assets
21.22 Asset Replacement Register in Form GEN-35 shall be maintained asset class-wise to
record the money set aside and shall be updated for deposits made to Asset Replacement
Bank Account in respect of annual depreciation provision made during the accounting year
and for utilisation of proceeds from the Asset Replacement Bank Account for the purpose of
replacement by way of purchase / acquisition / construction of fixed asset.
21.23 Recording of transfer of funds from Asset Replacement Bank Account to Main Bank
Account. In case, where the payment in respect of any such fixed assets is made through the
Main Bank Account, the Accounts Department shall transfer an amount equivalent to the cost
of acquisition from the Asset Replacement Bank Account to the Main Bank Account and pass
the following entry:
Code of
Account
Accounting Entry
450-21-(a)
450- 41- (a)
Main Bank Account *
To Asset Replacement
Bank Account*
(a) Insert detailed head code of accounts
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
200
Cash Book,
Cr.
200 Ledger
Sale/Disposal of Fixed Asset
21.24 The Fixed Assets may be transferred by way of sale either through auction or
otherwise. The procedure for accounting of receipt of EMD from the bidders, refund of EMD
to the unsuccessful bidders, conversion of EMD of successful bidder into Security Deposit
and its adjustment shall be the same as provided in Chapter 12 on Public Works.
21.25 Recording of Depreciation on disposal of Fixed Asset. Depreciation shall be provided
at the prescribed rates on the asset class (in respect of fixed asset sold). The amount of
depreciation to be provided shall be computed by applying the depreciation rate to the cost of
fixed asset upto the month of sale. For providing depreciation, the Accounts Department shall
pass the following entry:
Code of
Account
272- (b)
411- (b)
Accounting Entry
Depreciation on _____
(please specify)
To Accumulated
Depreciation
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
100
Journal Book,
Ledger
Cr.
100
(a) Insert Minor & detailed Head Codes of Account as applicable
21.8
National Municipal Accounts Manual
Fixed Assets
21.26 Recording of disposal of Fixed Asset. In respect of the Fixed Asset to be sold, the
Accounts Department shall compute the Written Down Value for that Fixed Asset. Written
Down Value of an asset is calculated as Cost of the Fixed Asset Accumulated Depreciation
provided till the previous year - Provision for Depreciation made during the year till the
month of disposal (computed in Table 21.2 below). The Accounts Department shall pass the
following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
1,500
Dr.
Fixed Assets -Assets under
410- 90- (a)
Ledger
Disposal #
500
Dr.
Accumulated Depreciation
411- (b)
2,000
Cr.
To Fixed Assets
410- (b)
# This would be the same figure as the Written-Down Value of the Fixed Asset computed
in Table 21.2 below as an example.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
21.27 Recording of receipt of money on disposal of Fixed Asset. On receipt of money, the
Accounts Department shall pass the following entry:
Code of
Account
450- 21- (a)
350-90-(a)
Accounting Entry
Debit
Credit
Amount
Amount
Dr./
Books to be
(Rs.)
(Rs.)
Cr.
entered into
Illustrative Illustrative
figures
figures
Dr.
2,000
Cash Book,
Cr.
2,000 Ledger
Bank Account *
To Sale Proceeds from
Assets
* Specify name of Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
Note: This entry would be passed for the consideration amount at which the Fixed Asset is
disposed.
21.28 Recording of refund of Security Deposit. After the completion of the disposal of the
fixed asset, Security Deposit (if any) received shall be refunded for which the Accounts
Department shall pass the following entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
340- 10- (a)
From Suppliers/ Contractors Dr.
500
Cash Book,
Security Deposit
Ledger
450- 21- (a)
To Bank Account *
Cr.
500
* Specify name of Bank and account number
(a) Insert detailed head code of accounts as applicable
21.9
National Municipal Accounts Manual
Fixed Assets
21.29 The concerned Fixed Asset may be transferred at a loss or profit in comparison to its
written down value, as provided in Table 21.2 which shall be calculated by applying the rate
of depreciation (prescribed for the asset class) to the cost of fixed asset sold. The cost of
Fixed Asset sold shall be obtained from Register of Immovable Property (GEN-30).
Table 21.2
Computation of Profit or Loss on Disposal of Fixed Asset
Sr.
No.
a.
Particulars
Original Cost of Fixed Asset
Profit scenario
Amount (Rs.)
2000
Loss scenario
Amount (Rs.)
2000
0
0
2000
2000
b.
Add: Cost of improvement/addition
c.
Total cost of Fixed Asset (a+b)
d.
Less: Depreciation provided from the year of acquisition till
the previous financial year
400
400
e.
Less: Depreciation provided for the current financial year till
the month of disposal
100
100
f.
Total Depreciation provided on the Fixed Asset Disposed
(d+e)
500
500
g.
Written down Value of the Fixed Asset at the time of
transfer (c– f)
1500
1500
h.
Less: Disposal value realised
2000
500
i.
Profit or (loss) on transfer of Fixed Asset (h-g)
500
(1000)
21.30 Recording profit on disposal of Fixed Asset. In case of profit on disposal of Fixed
Asset (as per the example given above), the Accounts Department shall pass the following
entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
Journal Book,
2,000
1,500 Ledger
Dr.
350-90-(a) Sale Proceeds from Assets
Cr.
410- 90- (a) To Fixed Assets -Assets
under Disposal
Cr.
180- 30- (a) To Profit on disposal of
Fixed Assets
(a) Insert detailed head code of accounts as applicable
500
21.31 Recording loss on disposal of Fixed Asset. In case the asset is disposed at Rs. 500,
i.e., a loss of Rs. 1,000 is incurred on disposal of fixed asset, the Accounts Department shall
pass the entry referred to in para. 21.29 for Rs. 500 for recording, the money realised on
disposal of fixed asset. For loss incurred on disposal of fixed asset, the Accounts Department
shall pass the following entry:
21.10
National Municipal Accounts Manual
Code of
Account
Fixed Assets
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrativ
figures
e figures
Journal Book,
500
Ledger
1,000
Dr.
350-90-(a) Sale Proceeds from Assets
Dr.
271-10- (a) Loss on disposal of fixed
asset
To Fixed Assets -Assets Cr.
410-10- (a)
under Disposal
Note: In practice, only one of the above two situations could happen.
(a) Insert detailed head code of accounts as applicable
1,500
REVALUATION OF FIXED ASSETS
21.32 Fixed assets may be revalued under the following circumstances such as:
a) Commercial development of the fixed assets are taken up after the land use and
architectural control have been approved by the competent authority;
b) At the time of lease; or
c) At the time of issue of municipal bonds.
21.33 The procedure for accounting of revaluation of fixed assets are briefly described
below:
¾ Recording for increase or decrease of the values of the Fixed Assets;
¾ Recording of amortisation of revaluation reserve;
¾ Recording of disposal of revalued assets.
a)
Recording of increase in the value of assets: Increase in values arising on
account of revaluation of the fixed asses shall be credited to a reserve account
under General fund. The accounting entry for recording the increase shall be as
follows:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
410 (b)
Fixed Assets
Dr.
10,000
Journal Book,
312- 60- (a) To Reserves
Cr.
10,000 Ledger and
Revaluation Reserve
Fixed Assets
Register
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
21.11
National Municipal Accounts Manual
b)
Fixed Assets
Recording of decrease in the value of assets: Decrease in the value of fixed
assets because revaluation shall be charged off in the Income and Expenditure
Account. The accounting entry for recording the decrease shall be as follows:
Debit
Credit
Amount
Code of
Dr./
Amount (Rs.) Books to be
Accounting Entry
(Rs.)
Account
Cr.
Illustrative entered into
Illustrative
figures
figures
Dr.
10,000
Journal Book,
270-40-(a) Assets Written Off/
Ledger and
Decline in value of Assets
Fixed Assets
on Revaluation
To Fixed Assets
Cr.
10,000 Register
410- (b)
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
c)
Recording of adjustment of depreciation against revaluation reserve:
Revaluation reserve shall be adjusted /reduced by an amount equivalent to the
depreciation charge on the revalued portion of the fixed assets. The accounting
entry for recording the adjustment is as follows:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
312- 60- (a) Revaluation Reserve
Dr.
3,000
Journal book,
272- (b)
To Depreciation on
Cr.
3,000 Ledger and
Fixed Assets
Fixed Assets
Register
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
d)
Recording of disposal of assets revalued: In case the assets revalued have been
disposed off or written off, the revaluation reserve if any relating to those
assets shall also be reversed.
21.34 The concerned Fixed Asset may be transferred at a loss or profit in comparison to its
written down value, as provided in Table 21.3 which shall be calculated by applying the rate
of depreciation (prescribed for the asset class) to the cost of fixed asset sold. The cost of
Fixed Asset sold shall be obtained from Register of Immovable Property (GEN-30).
21.12
National Municipal Accounts Manual
Fixed Assets
Table 21.3
Computation of Profit or Loss on Disposal of Fixed Asset
Sr.
No.
a.
Particulars
Original Cost of Fixed Asset
Profit scenario
Amount (Rs.)
5,000
b.
Add: Increased on account of revaluation
2,500
c.
Total vlalue of the Fixed Asset (a+b)
7,500
d.
Less: Depreciation provided from the year of acquisition till the
previous financial year
3,500
e.
Less: Depreciation provided for the current financial year till the
month of disposal
200
f.
Total Depreciation provided on the Fixed Asset Disposed
(d+e)
3,700
g.
Written down Value of the Fixed Asset at the time of transfer
(a– f)
1,300
h.
Less: Disposal value realised
6,000
i.
Profit or (loss) on transfer of Fixed Asset (h-g)
4,700
* The accumulated depreciation at the beginning of the period and depreciation for the current
period includes the depreciation provision on the portion of increase in the value of assets on
revaluation. (i.e. Rs 2000)
i. Recording of transfer of assets and reversal of revaluation on disposal: In respect
of the Fixed Asset to be sold, the Accounts Department shall pass the following
entry:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book,
1,300
Dr.
410- 90- (a) Fixed Assets -Assets under
Ledger
Disposal #
2,500
Dr.
312- 60- (a) Revaluation Reserve
3,700
Dr.
Accumulated Depreciation
411- (b)
7,500
Cr.
To Fixed Assets
410- (b)
# This would be the same figure as the Written-Down Value of the Fixed Asset computed in
Table 21.3 above as an example.
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
ii. Recording of profit or loss on disposal of revalued assets: The scheme of
entries shall be same as explained in paras 21.30 & 21.31 for profit or loss
respectively.
21.13
National Municipal Accounts Manual
Fixed Assets
INVESTMENT FROM ASSET REPLACEMENT BANK ACCOUNT
21.35 Investments made from Asset Replacement Bank Account shall be entered in the
Investment Register (Form IN-1) (provided in Chapter 20 on Investments). The accounting
procedures to be followed, the accounting entries to be recorded and accounting records to be
updated in respect of investments of such funds are similar to those followed in respect of
investments. They relate to investments, maturity of investment, recording of interest,
profit/loss on sale/maturity of investments, etc. These have been described in Chapter 20 on
Investments.
TREATMENT OF CERTAIN TYPE OF ASSETS
Assets under dispute/litigation
21.36 All the fixed assets accounted in the books of ULBs which are under dispute or
litigation shall be disclosed in the financial statements along with notes/remarks that these are
under dispute and also the status of the legal case as at the reporting date of the financial
statements.
Assets in Register not yet physically identified
21.37 The details of assets, which are in the register but not yet physically identified/traced,
shall be disclosed in the financial statements in the form of a note. However, the assets were
which are not traced within a specific period of time, shall be written off. The State Acts/rules
governing the ULBs shall define the period and authorisation for writes off. However it is
recommended that the maximum period shall not exceed beyond five years. Accounts
Department shall pass the following entry for recording of write off.
Code of
Account
Accounting Entry
270- 40- (a) Assets written off Fixed
Assets
Accumulated Depreciation
411- (b)
To Fixed Assets
410- (b)
Debit
Amount
Dr./
(Rs.)
Cr.
Illustrative
figures
2,000
Dr.
Dr.
Cr.
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Journal Book,
Ledger
3,000
5,000
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
PERIOD END PROCEDURES
21.38 Recording of liability for fixed assets purchased for which payment has not been
made. At period end, the concerned departments shall ensure that for bills in respect of all the
fixed assets received before the last date of the accounting period are processed and sent to
the Accounts Department for accounting and payment within 15 days from the end of the
accounting period. Based on the bills received, the Accounts Department shall pass the same
entry as what is described in para. 21.13 above.
21.14
National Municipal Accounts Manual
Fixed Assets
21.39 Provision for Depreciation: Provision for depreciation on fixed assets shall be
calculated for the full year and accounted on pro-rata basis at the period ends. For example if
the total depreciation for full year is Rs. 1,000, the depreciation provision for the current year
for the 3 months ended 30th June shall be Rs.250. However, the depreciation calculation sheet
shall be updated for all additions and deletions during the period under reporting and
accordingly the additional provisions for subsequent periods are accounted.
21.40 For Fixed Assets purchased in terms of any financial assistance or grant received or
the cost of which is met from funds set aside in a Special Fund, period-end entries as
described in Chapter 17 on Grants and Chapter 19 on Special Funds respectively, shall be
recorded.
INTERNAL CONTROLS
21.41 The following internal controls shall be observed by the ULBs:
a. At the time of award of new contract, the concerned department shall ensure the
availability of adequate budget allocation after considering all commitments made
against that budget allocation before purchasing any new fixed asset.
b. The Head of the Accounts Department shall carry out quarterly reconciliation of
the balance as per the Deposit Register maintained at the concerned department
with the Deposit Ledger accounts.
c. The Head of the Accounts Department shall have a system of conducting physical
verification of fixed assets throughout the year so that each fixed asset is verified
at least once during the year. Any discrepancies with the Fixed Assets Register
should be reconciled.
d. The Head of the Accounts Department shall ensure that the amount set aside in the
Asset Replacement Bank Account consequent to depreciation provision made, is
utilised only for the purpose of purchase or acquisition of fixed asset for which
depreciation has been provided.
e. Before releasing payment to the supplier, the Head of the Accounts Department
shall ensure that the fixed assets acquired are recorded in the Register of
Immovable Properties. Further, it shall be ensured that the Payment Order
provides reference to the Register of Immovable Properties where the entry for
receipt of fixed assets is recorded.
f. At the time of computing depreciation provision for the period, the Head of the
Accounts Department shall ensure that the accumulated depreciation (including
current period' s depreciation provision) provided on any fixed asset does not
exceed its cost of acquisition.
21.15
National Municipal Accounts Manual
Fixed Assets
g. Chief Financial Officer / Head of the Departments of ULBs may specify
appropriate MIS reports for monitoring.
21.42 All Reconciliation Statements shall be certified by the Head of the Accounts
Department
PRESENTATION IN FINANCIAL STATEMENTS
21.43 The various heads of account used for the accounting of Fixed Assets shall be
reflected in the Financial Statements or the Schedules attached to the Financial Statements of
the ULBs. All such Financial statements and schedules shall be affixed with signature/seal of
authorised officer.
21.44 The schedules of Income and Expenditure Statement in respect of Fixed Assets are
provided below.
Schedule I-9: Schedule of Other Income
Code No.
1
180-30-(a)
Particulars
2
Profit on Disposal of Fixed asses
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total of Income of Fixed Assets to be shown as part of Other
Income Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-17: Miscellaneous Expenses
Code No.
Particulars
1
271-10-(a)
2
Loss on disposal of Assets
271-30-(a)
Decline in the Value of Fixed Assets on
Revaluation
Total of Expense of Fixed Assets to be shown as part of
Miscellaneous expenses Schedule
(a) Insert Detailed Head Codes of Account as applicable
21.16
National Municipal Accounts Manual
Fixed Assets
21.45 The Balance Sheet abstract in respect of Fixed Assets is provided below.
Schedule B-3: Reserves
Code No.
1
312-60-(a)
Particulars
2
Revaluation Reserve
Total
Opening
balance
(Rs.)
Additions
during the
year
(Rs.)
Total
(Rs.)
Deductions
during the
year
(Rs.)
3
4
5 (3+4)
6
Balance
at the end
of the
current
year
(Rs.)
7 (5-6)
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-7: Deposits Received
Amount in Rs.
Code No.
Particulars
1
340-10-(a)
340-10-(a)
2
From Contractors & Suppliers- EMD
From Contractors & Suppliers- Security Deposits
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule B-9: Other Liabilities (Sundry Creditors)
Amount in Rs.
Code No.
1
350-10-(a)
350-90-(a)
Particulars
2
Suppliers Account- Fixed Assets
Sale Proceeds of Fixed Assets
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
21.17
Particulars
Opening
Balance
Gross Block (410)
Accumulated Depreciation (411)
Net Block
Additions Deductions Cost at the
Additions Deductions Total at the At the end At the end of
Opening
during the during the end of the
during the during the end of the of current the previous
Balance
period $
period
year
period
period
year
year
year
4
5
6
7
8
9
10
11
12
Amount in Rs.
Fixed Assets
.
21.18
2
3
Land
Buildings
Infrastructure Assets
410-30 Roads and Bridges
410-31 Sewerage and drainage
410-32 Water ways
410-33 Public Lighting
Other assets
410-40 Plants & Machinery
410-50 Vehicles
410-60 Office & other equipment
410-70 Furniture, fixtures, fittings and
electrical appliances
410-80 Other fixed assets
Total
$ - Additions include fixed assets created out of Earmarked Funds and Grants transferred to Urban Local Body' s fixed block as referred to in Schedule B-2 and B-4 in Chapter
31.
1
410-10
410-20
Code No
Schedule B-11: Fixed Assets
National Municipal Accounts Manual
National Municipal Accounts Manual
Fixed Assets
Additional disclosures to the Schedule
(1)
(2)
(3)
Note:
i.
ii.
iii.
iv.
v.
vi.
vii.
.
Value of fixed assets under dispute or litigation shall be provided. The status of the legal case as at the
reporting date of the financial statements shall also be mentioned.
The details & value of assets, which are not yet physically identified/traced, shall be disclosed
separately.
Details and value of assets under leases and hire purchase needs to be disclosed as a note
Gross Block means cost of acquisition of fixed asset. Opening Balance in Gross Block as on the first
day of the year represents the closing balance of the previous year. For instance, the opening balance as
on 1st April 2004 shall be equal to the closing asset balance as on 31st March 2004.
Land includes areas used as and for the purpose of public places such as parks, squares, gardens, lakes,
museums, libraries, godowns etc.
Buildings include office and works buildings, commercial buildings, residential buildings, school and
college buildings, hospital building, public buildings temporary structures and sheds, etc.
Roads and bridges include roads and streets, pavements, pathways, bridges, culverts and subways.
Sewerage and drainage include sewerage lines, storm water drainage lines and other similar drainage
system.
Waterworks include water storage tank, water wells, bore wells, Water pumping station, Water
transmission & distribution system, etc.
No depreciation is to be charged on "Land"(01)
21.19
National Municipal Accounts Manual
Fixed Assets
Schedules B-17: Schedule of Cash & Bank Balances
Code No.
Current
Year
Amount
(Rs.)
3
Particulars
1
450-10-(a)
450-21-(a)
2
Previous Year
Amount (Rs.)
4
Cash Account
Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Schedule B-18: Schedule Loans, advances and deposits
Code No.
1
460-40-(a)
Particulars
Opening
Balance at
the
beginning
of the year
(Rs.)
3
2
Advance to Suppliers and
Contractors
Sub –Total
461-(b)
Less: Accumulated Provisions
against Loans, Advances and
Deposits
Net Total Loans, advances,
and deposits
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
.
Paid
during
the
current
year
(Rs.)
4
Recovered
during the
year
(Rs.)
Balance
outstanding
at the end of
the year
(Rs.)
5
6
21.20
National Municipal Accounts Manual
Lease & Hire Purchase
CHAPTER 22
/($6(
+,5( 385&+$6(
INTRODUCTION
22.1 This chapter contains the recommended accounting system for transactions
relating to fixed assets purchased or sold under hire purchase and leases by Urban
Local Bodies (ULBs). The accounting principles and procedures given in this chapter
is based on specific references taken from Indian Accounting Standard (AS) 19 on
‘Accounting for Leases’ issued by the Institute of Chartered Accountants of India. In
case of any other guidance/ clarifications the same shall be obtained by referring to
AS 19.
22.2 A lease is an agreement whereby the lessor conveys to the lessee in return for
a payment or series of payments the right to use an asset for an agreed period of time.
22.3 A lease is classified as a finance lease if it transfers substantially all risks and
rewards incident to ownership. All other leases are classified as operating leases.
Classification is made at the inception of the lease. Whether a lease is finance lease or
an operating lease depends on the substance of the transaction rather than the form.
Contextually under finance lease agreement the ownership passes on to the lessee on
completion of the lease and in the case of an operating lease the ownership always
remains with the Lessor.
22.1
National Municipal Accounts Manual
Lease & Hire Purchase
22.4 Hire purchase agreement is a contract, more fully called contract of hire with
an option of purchase, in which a person hires goods for a specified period and at a
fixed rent, with the added condition that if he retains the goods for the full period and
pay all the installments of rent as they become due the contract shall determine and
the title vest absolutely in him.
22.5 Accounting of leases and hire purchase transactions shall be divided into the
following situations:
Finance lease in the books of lessee.
Operating lease in the books of lessor.
Finance lease in the books of lessor
Operating lease in the books of Lessee
Hire Purchase in the books of buyer.
Hire Purchase in the books of seller.
22.6 Considering the general position ULB as lessee in the case of Finance leases
and lessor in the case of Operating lease are provided in this manual. While both
situations are covered in respect of Hire Purchase.
ACCOUNTING RECORDS AND PROCEDURES
22.7 This section describes the records, registers, documents, forms, accounting
entries, etc., in respect of accounting for transactions related to Fixed Assets under
lease and hire purchase. For the purposes of accounting of Fixed Assets under a lease
or hire purchase all the forms applicable, are generally applicable in respect of the
transactions of the ULBs including in respect of Fixed Assets.
ACCOUNTING PRINCIPLES:
22.8 The following Accounting Principles shall govern the recording, accounting
and treatment of transactions relating to Fixed Assets acquired/given under Lease and
Hire Purchase:
a. Finance lease in the books of lessee
•
At the commencement of the lease term, finance leases shall be
recorded as an asset and a liability. Such recognition shall be at an
amount equal to the cost. .
•
Finance lease payments shall be apportioned between the finance
charge and the reduction of the outstanding liability. The finance
22.2
National Municipal Accounts Manual
Lease & Hire Purchase
charge shall be allocated as to produce a constant periodic rate of
interest on the remaining balance of the liability for each of the period.
•
Depreciation on such assets shall be provided at the same rates as in
case of owned assets.
b. Operating lease in the books of Lessor
Assets given under operating lease shall be accounted as its assets in
the same manner similar to any other fixed assets owned and used by
the ULB.
Lease income from operating leases shall be recognised as income on a
straight-line basis over the lease term. Lease income shall be accrued
on the respective due dates.
Any amount incurred that results in improvement or increase of the
useful life of the assets under operating lease shall be capitalised as
like any other asset used by the ULB for its own operations;
Depreciation on such assets shall be provided at the same rates as in
case of owned assets.
c. Hire purchase in the books of buyer
The purchase price shall be capitalised as the cost of fixed assets
Hire Purchase (HP) installments shall be apportioned between the
finance charge and the reduction of the principal outstanding. The
finance charge shall be allocated so as to produce a constant periodic
rate of interest on the remaining balance of the liability;
The total amount of interest portion out of the ‘HP Payable’ shall be
accounted by debiting to a control account under current assets. This
amount will be adjusted on accounting of finance charges
The depreciation principle for assets purchased under HP should be
consistent with that for owned assets.
d. Hire purchase in the books of seller
The sale price (including the interest portion) shall be accounted as
receivable from HP agreement;
HP installments shall be apportioned between the interest income and
the reduction of the principal amount receivable (the finance income to
be allocated so as to produce a constant periodic rate of interest on the
remaining balance of the receivable);
22.3
National Municipal Accounts Manual
Lease & Hire Purchase
The total amount of interest portion out of the ‘HP Receivable’ shall be
accounted by crediting to a control account under current assets. This
amount will be adjusted while accounting for finance charges
ACCOUNTING FOR FINANCE LEASE IN THE BOOKS OF LESSEE
Accounting for Acquisition/Purchase of Fixed Assets
22.9 Recording of purchase of Fixed Assets: Delivery / installation of fixed assets
purchased under a ‘Finance Lease’ shall be as per the agreement. To record the
purchase of the fixed assets under a finance lease (for example at a cost
Rs.25,00,000), the Accounts Department shall pass the following entry:
Code of
Account
410-+(a)
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
2,500,000
Journal Book,
Ledger,
Dr.
250,000
Register of
Movable/Immo
Cr.
27,50,000 vable Assets
Fixed Assets (please specify
the type) *
470-30-(b) Interest control payable –
Leases
To Lease Charges payable
350-80-(b)
(a) Insert Minor Head Codes as applicable
(b) Insert detailed head codes as applicable.
* All the fixed assets belonging to a class of assets shall be accounted under that asset class.
For instance, the acquisition of a building for any purpose shall be accounted under the asset
head of Buildings.
Note: The postings in the Ledger Accounts of “Fixed Asset” Account, “ Lease Charges
Payable”, “Interest Control Payable” Account shall be carried out as indicated in Chapter 5
– General Accounting Procedures. The postings in the Ledger Accounts shall be similarly
carried out in respect of all other accounting entries described subsequently in this chapter.
Whenever, the cash or the bank account is involved, there will be no entry in the Journal
Book.
22.10 ‘Interest control payable – Leases account’ is in the nature of a control
account, which represents an equivalent amount of unpaid interest portion included in
the ‘Lease Charges Payable’. The balance in this account gets reduced at the period
ends by accounting for the finance charges portion of the lease payments dues for the
period.
Lease payments
22.11 The periodical lease payments shall be accounted as per the lease agreement,
the accounting entry for periodical lease payment (for example if the annual lease
payment inclusive of interest is Rs 2,75,000) is as follows:
22.4
National Municipal Accounts Manual
Code of
Account
Accounting Entry
350-80-(a) Lease Charges Payable
450-21-(a)
To Bank Account*
Lease & Hire Purchase
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
2,75,000
Cash Book,
2,75,000 Ledger
* Specify names of the Bank and Account number
(a) Include Detailed Head Codes of Account as applicable
Finance Charges
22.12 The portion of finance charges out of the lease payments due for the current
period shall be identified at the period ends and accounted as finance charges for the
period. The accounting entry for recording the finance charges is as follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
25,000
Journal Book,
25,000 Ledger
Dr.
240-60-(a) Interest on Leases
Cr.
470-30-(a)
To Interest control
payable Leases
(a) Include Detailed Head Codes of Account as applicable
Depreciation Charge
22.13 At the end of the accounting year, depreciation shall be provided on each class
of fixed assets under finance lease at the prescribed rates. The amount of depreciation
to be provided each year shall be computed by applying the depreciation rate to the
cost of acquisition or written down values as the case may be. The calculation and
accounting of depreciation shall be same as explained in para 21.16 of Chapter 21 on
Fixed Assets.
ACCOUNTING FOR OPERATING LEASES IN THE BOOKS OF LESSOR
Lease rental income
22.14 Recording of accrual of lease rental: The lease rentals due for the period shall
be accrued in accordance with the lease agreement. For example, if there is an
agreement for rental of Furniture under an operating lease for a monthly rental of
Rs.5,000 it shall be accounted on a monthly basis. The accounting entry for this is as
follows:
22.5
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Lease & Hire Purchase
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative
Illustrative
figures
figures
5,000
Cash Book,
Ledger
5,000
431-40-(a) Receivables from other Dr.
sources Lease rental
To Other rent Cr.
130-80-(a)
Lease Rental
(a) Include Detailed Head Codes of Account as applicable
22.15 Recordings of receipt of lease rentals: The lease rentals shall be received in
accordance with the lease agreement. The accounting entry for this is as follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative
Illustrative
figures
figures
5,000
Cash Book,
5,000 Ledger
450-21-(a) Bank Account *
Dr.
431-40-(a)
To Receivables
Cr.
from Other Sources
Lease rental
* Specify name of the Bank and Account number
(a) Insert Detailed Minor Head Codes of account as applicable
22.16 Accounting of Fixed assets and depreciation: Accounting treatments for the
Fixed assets given under an operating lease and depreciation on those assets shall
follow the same principles and procedures as laid down in Chapter 21 on Fixed
Assets.
Period end procedures:
22.17 Accrual of lease rentals: The Accounts Department shall identify the total
lease rentals due for the period under reporting and compare the same with the lease
rental income recognised till date in the books and account for differences if any.
ACCOUNTING OF HIRE PURCHASE (HP) IN THE BOOKS OF BUYER
Down payment against purchase of Asset under Hire purchase agreement
22.18 The HP agreement may have clauses for down payments either before or after
delivery or receipt of the asset depending on the terms of the HP agreement.
22.19 To record the down payment made, the following entry shall be passed:
22.6
National Municipal Accounts Manual
Lease & Hire Purchase
Debit
Credit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
460-40-(a) Advance for HP Assets
25,000
Cash Book,
450-21-(a) To Bank Account*
25,000 Register of
Advances, Ledger
Accounts
* Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes as applicable.
Accounting for Acquisition/Purchase of Fixed Assets
22.20 Recording of purchase of Fixed Assets: To record the purchase of the Fixed
Asset under a hire purchase agreement, the Accounts Department shall pass the
following entry:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Journal Book,
2,50,000
Dr.
Ledger,
Register of
50,000
Dr.
Movable/Immova
2,75,000 ble Assets and
Cr.
Register of
25,000 Advances
Cr.
Fixed Assets (please
specify the type)
470-30-(a) Interest control payable HP
To Other Term
330-60-(a)
Loans- HP
To Advance for HP
460-40-(a)
Assets
(a) Insert Minor Head Codes of Account as applicable
(b) Insert Detailed Head Codes of account as applicable.
410-(a)
HP Installments
22.21 Assuming that in the example given in the previous para carries an annual
installment repayment of Rs.27, 500. The accounting entry for the payment of
installment is as follows:
Code of
Account
Accounting Entry
330-60-(a) Other Term Loans- HP
450-21-(a)
To Bank Account*
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
27,500
Cash Book,
Cr.
27,500 Ledger
* Specify names of the Bank and Account number
(a) Include detailed Head Codes of Account as applicable
22.7
National Municipal Accounts Manual
Lease & Hire Purchase
Finance Charges
22.22 The portion of interest out of the HP payable due for the period under
reporting shall be identified at the period ends and accounted as finance charges for
that period. Assuming that in the annual repayment of Rs.27,500 includes interest
charge of Rs 5,000, the accounting entry for recording the interest charges are as
follows:
Code of
Account
Accounting Entry
240-60-(a)
470-30-(a)
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative
Illustrative
figures
figures
5,000
Journal Book,
5,000 Ledger
Other Interest - HP
Dr.
To Interest control Cr.
payable - HP
(a) Include Detailed Head Codes of Account as applicable
Depreciation Charge
22.23 At the end of the accounting year, depreciation shall be provided on each class
of Fixed Asset purchased under HP at the prescribed rates. The amount of
depreciation to be provided each year shall be computed by applying the depreciation
rate to the cost or written down values of the Fixed Assets as the case may be. The
calculation and accounting entries for Depreciation on Fixed Assets purchased under
HP shall be same as explained in para 21.16 of Chapter 21 on Fixed Assets.
Period end procedures:
22.24 Recording of interest portion of the installments due appropriately: The
Accounts Department shall identify the interest portion of the installments payable for
the period under reporting and accordingly account for the Interest Charges for the
period.
ACCOUNTING OF HIRE PURCHASE (HP) IN THE BOOKS OF SELLER
Down payment received under Hire purchase agreement
22.25 The HP agreement may have clauses for down payments to be received from
the buyer up-front either before or after delivery of the asset depending on the terms
of the HP agreement.
22.26 For example, the accounting entry for 10% down payment received on the sale
of assets costing Rs 250,000 is as follows:
22.8
National Municipal Accounts Manual
Lease & Hire Purchase
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
450-21-(a) Bank Account*
Dr.
25,000
Cash Book,
350-80-(a) To Other LiabilitiesCr.
25,000 Register of
HP Advance received
Advances, Ledger
Accounts
* Specify Name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Sale of Assets under HP
22.27 To record the sale of the assets under an HP agreement and adjust the down
payment received, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
25,000
Journal Book,
Ledger,
Register of
2,75,000
Movable/Immova
ble Assets
275,000
Dr.
350- 80-(a) Other Liabilities - HP
Advance received
Dr.
460-80-(a) Other Current assets
HP Installments
receivable
Cr.
To Fixed Assets
410-(b)
(please specify the
type)
Cr.
25,000
350-80-(a) To Other LiabilitiesInterest control
receivables HP
(a) Insert Detailed Head code of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Installment receipts
22.28 The periodical hire purchase installments due shall be received as per the HP
agreement. Assuming that in the example given in the previous para carries an annual
installment repayment of Rs.27, 500. The accounting entry for receipt of the
installment is as follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
27,500
Cash Book,
27,500 Ledger
450-21-(a) Bank Account*
Dr.
460-80-(a)
To Other Current
Cr.
assets - HP
Installments
Receivable
* Specify names of the Bank and Account number
(a) Include Detailed Head Codes of Account as applicable
22.9
National Municipal Accounts Manual
Lease & Hire Purchase
Interest Income
22.29 The portion of interest income out of the ‘Receivables - HP’ due for the period
under reporting shall be identified at the period ends and accounted as ‘Interest
Income for that period. Assuming that in the annual repayment of Rs.27,500 includes
interest charge of Rs 5,000, the accounting entry for recording the interest is as
follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Journal Book,
Ledger
5,000
Dr.
350-80-(a) Interest control
receivables – HP
To Other Interest
Cr.
171-80-(a)
Income - HP
(a) Include Detailed Head Codes of Account as applicable
Period end procedures:
22.30 Recording of interest portion of the installments due appropriately: The
Accounts Department shall identify the interest portion of the installment receivable
for the period under reporting and accordingly account for the Interest Charges for the
period.
INTERNAL CONTROLS
22.31 The following internal controls shall be observed by the ULB:
a. For Finance lease /Hire purchase in the books of lessee /buyer:
¾ The Head of the Accounts Department shall ensure that the ‘purchase
of fixed assets’ under a finance lease or HP and the terms (lease/HP
rentals, lease/HP periods and interest rate) of the lease/HP agreement is
approved before recording the capitalisation.
¾ The Head of the Accounts Department shall ensure that the interest
charges included in the Lease Charges/HP Payable for the period under
reporting are accounted appropriately.
¾ The Head of the Accounts Department shall ensure that penalties or
additional interests on account of delay in installment dues are
provided as per the Lease /HP agreement
22.10
National Municipal Accounts Manual
Lease & Hire Purchase
b. For Operating Leases in the books of Lessor
¾ The Head of the Accounts Department shall ensure that lending the
‘fixed assets’ under a operating lease and the terms (lease rentals, lease
periods) of the lease agreement are approved before recording of any
lease rental income.
¾ The Head of the Accounts Department shall ensure that penalties or
additional interests on account of delay in installment dues are raised
timely and accounted as per the Lease agreement.
¾ The Head of the Accounts Department shall have a system of
conducting physical verification of fixed assets throughout the year so
that each fixed asset is verified at least once during the year.
Alternatively, a periodical confirmation of the assets held under
operating lease from the lessee shall also be obtained. Any
discrepancies with the Fixed Assets Register and the physical
verification sheets or confirmation shall be reconciled.
¾ The Head of the Accounts Department shall ensure that the fixed assets
given under operating leases are updated in the Register of Immovable
Properties with the name of the lessee and location.
c. For Hire Purchase in the books of Seller
¾ The Head of the Accounts Department shall ensure that ‘sale of fixed
assets’ under a hire purchase agreement and the terms (HP
installments, periods and interests) of the agreement are approved
before recording the sale of assets.
¾ The Head of the Accounts Department shall ensure that the interest
income included in the HP Installments due for the period under
reporting are accounted appropriately.
¾ The Head of the Accounts Department shall ensure that penalties or
additional interests on account of delay in installment dues are levied
and accounted as per the HP agreement.
Presentation in financial statements
22.32 The various heads of account used for the accounting of Fixed Assets shall be
reflected in the Financial Statements or the Schedules attached to the Financial
Statements of the ULBs. All such Financial statements and schedules shall be affixed
with signature/seal of authorised officer.
22.11
National Municipal Accounts Manual
Lease & Hire Purchase
22.33 The schedule of Income and Expenditure Statement in respect of Fixed Assets
under a finance lease is provided below.
Schedule I-3: Schedule of Rental income from Municipal Properties
Code No.
Particulars
1
2
130-80- (a) Other rents – Lease Rental
Total Income from HP, Lease to be shown as part of
Rental Income Schedule
(a) Include Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-8: Schedule of Interest Earned
Code No.
Particulars
1
2
171-80
Other Interest Income - HP
Total Income from HP, Lease to be shown as part of
Interest Earned Schedule
(a) Include Detailed Head Codes of Account as applicable
Schedule I-13: Schedule of Interest & Finance Expenses
Code No.
Current Year
Amount (Rs.)
3
Particulars
1
2
240-60-(a)
Other Interest - Leases
240-60-(a)
Other Interest - HP
Total Expense of HP, Lease to be shown as part of
Interest Earned Schedule
(a) Include Detailed Head Codes of Account as applicable
Previous Year
Amount (Rs.)
4
22.34 The Balance Sheet abstract in respect of Fixed Assets provided below.
Schedule B-5: Schedule of Secured Loans
Amount in Rs.
Code No.
Particulars
1
330-60-(a)
2
Other Loans – HP
Original
amount of
loan
Rate of
interest
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
5
6
Total
(a) Include Detailed Head Codes of Account as applicable
Notes
1. The nature of the Security shall be specified;
2. Particulars of any guarantees given shall be disclosed
3. Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan
separately;
22.12
National Municipal Accounts Manual
Lease & Hire Purchase
Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)
Code No.
Particulars
Current
Year
Amount
(Rs.)
Previous
Year
Amount
(Rs.)
2
3
4
1
Current Liabilities
350-80--(a)
350-80-(a)
350-80-(a)
Others- Lease Charges payable
Others- HP Advance
Interest control Receivables – HP
Total
(a) Include Detailed Head Codes of Account as applicable
Schedule B-15: Sundry Debtors (Receivables)
Code No.
Particulars
Gross
Amount
(Rs.)
2
3
Provision for
Outstanding
revenues
(Rs.)
4
432
Net
amount
(Rs.)
5=3–4
Previou
s year
Net
amount
(Rs.)
6
431-40-(a)
Receivables from Other
sources- HP
Less than 2 years *
More than 2 years*
Sub-total
431-40-(a)
Receivables from Other
sources – Lease Charges
Less than 2 years *
More than 2 years*
Sub-total
Total
(a) Include Detailed Head Codes of Account as applicable
Schedules B-18: Schedule of Loans, advances & Deposits
Code No.
1
460-40-(a)
Particulars
2
Advance to Suppliers - HP Assets
Total
(a) Include Detailed Head Codes of Account as applicable
Current
Year
Amount
(Rs.)
3
Previous Year
Amount (Rs.)
4
22.13
National Municipal Accounts Manual
Lease & Hire Purchase
Schedules B-17: Schedule of Cash & Bank
Code No.
1
Particulars
2
Current Assets
450-10-(a)
Cash Account
450-21-(a)
Bank Account
Total
(a) Include Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
22.14
Particulars
3
Opening
Balance
22.15
Gross Block (410)
Accumulated Depreciation (411)
Net Block
Additions Deductions Total at the At the end At the end of
Additions Deductions Cost at the
Opening
during the during the end of the of current the previous
during the during the end of the
Balance
year
year
year
period
year
period
period
period $
4
5
6
7
8
9
10
11
12
Amount (Rs.)
Lease & Hire Purchase
Additional disclosures to the Schedule
(1) Value of fixed assets under dispute or litigation shall be provided. The status of the legal case as at the reporting date of the financial statements shall also be mentioned.
(2) The details & value of assets, which are not yet physically identified/traced, shall be disclosed separately.
(3) Details and value of assets under leases and hire purchase needs to be disclosed as a note
Notes:
1.
Gross Block means cost of acquisition of fixed asset. Opening Balance in Gross Block as on the first day of the year represents the closing balance of the previous year. For instance, the
opening balance as on 1st April 2002 shall be equal to the closing asset balance as on 31st March 2002.
2.
Land includes areas used as and for the purpose of public places such as parks, squares, gardens, lakes, museums, libraries, godowns etc. Buildings include office and works buildings,
commercial buildings, residential buildings, school and college buildings, hospital building, public buildings temporary structures and sheds, etc.
3.
Roads and bridges include roads and streets, pavements, pathways, bridges, culverts and subways.
4.
Sewerage and drainage include sewerage lines, storm water drainage lines and other similar drainage system.
5.
Waterworks include water storage tank, water wells, bore wells, Water pumping station, Water transmission & distribution system, etc.
6.
No depreciation is to be charged on "Land"(01)
7.
All the assets under leases and hire purchase needs to be quantified by referencing in a note
2
Land
Buildings
Roads and Bridges
Bridges & Fly –overs
Sewerage and drainage
Water works
Plants & Machinery
Vehicles
Office & other equipment
Furniture, fixtures, fittings and
electrical appliances
410-80-(a) Public Lighting
410-90-(a) Other fixed assets
Total
1
410-10-(a)
410-20-(a)
410-30-(a)
410-31-(a)
410-32-(a)
410-33-(a)
410-40-(a)
410-50-(a)
410-60-(a)
410-70-(a)
Code No
Schedule B-10: Fixed Assets
National Municipal Accounts Manual
National Municipal Accounts Manual
Loans & Advances
CHAPTER 23
/2$16
$'9$1&(6
INTRODUCTION
23.1 This chapter contains the recommended accounting system for transactions relating to
loans given to others including any boards/undertakings set up by the ULB. Loans and
advances provided to employees and contractors /suppliers are covered in chapter 14 and 12
respectively.
23.2 ULBs may lend loans out of general funds as per the rules and provisions of the act
governing the ULBs. ULBs may also advance out of specific funds / grants received for a
long-term projects if the terms and conditions of the fund/grant provide for the same. In such
cases, interests earned on the loans and advances lent out of the specific project fund/grant
shall be credited to these funds/grants account.
ACCOUNTING PRINCIPLES
23.3 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to loans provided by ULBs
a. Interest on loans shall be recognised as and when due. At period-ends, interest
shall be accrued up to the date of the period-end.
b. Interest earned on loans given out of specific fund/grant shall be directly credited
to the specific fund/grant account.
23.1
National Municipal Accounts Manual
Loans & Advances
c. Penal interests if any either on loans given out of Municipal fund or out of specific
fund/grant shall be accounted on actual receipt.
d. Provision against bad and doubtful loans shall be made according to the
provisioning principle of the ULB based on norms or guidelines issued by the state
government in this regard.
e. Any additional provision for loans outstanding (net on overall basis) required to be
made during the year shall be recognised as expenditure and any excess provision
written back during the year shall be recognised as income of the ULB.
f. Write-offs of bad and doubtful loans shall be adjusted against the provisions made
and to that extent, loan outstanding get reduced. In case of inadequate provisions,
the write off shall be recognised as expenditure.
ACCOUNTING FOR LOANS TO OTHERS
23.4 The amount of loans granted to external organisations and undertakings shall be
entered in the Register of ‘loans to others’ in Form LA–1 maintained by the Accounts
Department of the ULB.
a. Recording of disbursement of loans. On disbursement of loan, the Accounts
Department shall pass the following entries:
,
Code of
Account
Accounting Entry
460-30-(a) Loans to Others
450-21-(a) To Bank Account*
Dr./
Cr.
Dr.
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
100,000
Credit
Amount
(Rs.)
Illustrative
figures
Books to be
entered into
Cash Book,
100,000 Ledger, Register
of loans to
Others, Register
of Specific
funds/grants
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Accounts of “Loans to Others" Account shall be carried
out as indicated in Chapter 5 – General Accounting Procedures. The postings in the
Ledger Accounts shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever the cash or the bank account is
involved, there will be no entry in the Journal Book.
23.2
National Municipal Accounts Manual
Loans & Advances
b. Recording of recovery of loan installments:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrativ
figures
e figures
450-21-(a) Bank Account*
Dr.
20,000
Cash Book, Ledger,
460-30-(a)
To Loans to Others
Cr.
20,000 Register of loans to
Others, Register of
Specific funds/
grants
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
c. Recording of interest due on loans to external organisations/ undertakings
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrativ
figures
e figures
Dr.
2,000
Journal Book,
431-40-(a) Receivables from other
Ledger, Register of
sources – Interest Accrued
2,000 loans to Others,
171-30-(a)
To Interest on Loans Cr.
Register of Specific
to Others
funds/grants
(a) Insert Detailed Head Codes of Account as applicable
d. Recording of receipt of interest on loans:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrativ
figures
e figures
Dr.
2,000
Cash Book, Ledger,
450-21-(a) Bank Account*
2,000 Register of loans to
431-40-(a)
To Receivables from Cr.
Others, Register of
other sources –
Specific
Interest Accrued
funds/grants
* Specify name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
LOANS TO TRANSPORT UNDERTAKINGS / SCHOOL BOARDS
23.5 ULBs may provide loans to other undertaking/boards depending on the governing acts
and Rules applicable to the ULB. The accounting entries and procedures relating to loans
given to other Undertakings setup by the ULBs are same as explained in Para 23.4 above.
23.3
National Municipal Accounts Manual
Loans & Advances
PROVISIONING AGAINST BAD AND DOUBTFUL ‘LOANS TO OTHERS’
23.6 The Accounts department shall review recoverability status of all Loans to Others on
periodical basis and based on the review and in accordance with the provisioning principle
laid down by the state, appropriate amount of provisioning or write off needs to determined
and accounted after obtaining the requisite approvals. The accounting entries for provisioning
or write off of Loans and Advances are detailed below:
a. Recording of provision against doubtful loans to Others as at the period end:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
6,000
Journal Book,
Ledger,
6,000
Dr.
Provision for Other
Assets
Cr.
461-10-(a)
To Provision for
Outstanding
Loans to Others
(a) Insert Detailed Head Codes of Account as applicable
270-20-(a)
b.
Recording of write off doubtful and bad loans for which provisioning was made
in the previous years:
Code of
Account
270-20-(a)
460-30-(a)
Accounting Entry
Provision for Other
Assets
To Loans to
Others
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
4,000
Journal Book,
Ledger,
4,000
(a) Insert Detailed Head Codes of Account as applicable
c.
Recording of write off of doubtful or bad loans for which no provisioning was
made in the previous years:
Code of
Account
270-40-(a)
460-30-(a)
Accounting Entry
Assets Written off –
Loans & Advances
To Loans to
Others
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
4,000
Journal Book,
Ledger, Register
4,000 of loans to
Others
(a) Insert Detailed Head Codes of Account as applicable
23.4
National Municipal Accounts Manual
d.
Loans & Advances
Recording of write back of provision against doubtful loans to the extent of the
amount recovered:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
Ledger
1,000
Accumulated Provision Dr.
for Loans to Others
180-60-(a)
To Other income – Cr.
Excess Provisions
Written back
(a) Insert Detailed Head Codes of Account as applicable
461-10-(a)
INTERNAL CONTROLS
23.7 The ULBs in respect of Loans lent to others shall observe the following internal
controls:
a. The loans to Others shall be entered in the ‘Loans to Others register’ in Form LA –
1 and on a monthly basis, the amount as per the register shall be reconciled with
the amounts as per the ledger accounts.
b. Also the interest accrued at the period ends shall be entered in the registers
referred above and the interest on loans as per the registers shall be reconciled
with the amount as per Interest ledger.
c. At the end of the year, an abstract of ‘Loans to Others’ has to be made showing the
loans outstanding at the beginning of the year, loans lent during the year, total
interests accrued during the year and total amount of recoveries/ adjustments
during the year.
d. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
23.8 All the reconciliation statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN FINANCIAL STATEMENTS
23.9 The various heads of accounts used for the accounting of Loans to Others shall be
reflected in the Financial Statements or the Schedules attached to the Financial Statements of
the ULB. All such statements and schedules should be affixed with signature and seal of
designated authorities.
23.5
National Municipal Accounts Manual
Loans & Advances
23.10 The schedule of Income and Expenditure Statement in respect of Loans is provided
below:
Schedule I-8: Schedule of Interest Earned
Code No.
1
171-30-(a)
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Interest on loans to others
Total Income of Loans & advances to be shown as part of Interest
Earned Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-9: Schedule of Other Income
Code No.
1
180-10-(a)
180-60-(a)
Current Year
Amount (Rs.)
Particulars
2
Deposits Forfeited
Excess Provisions written back
3
Previous
Year Amount
(Rs.)
4
Total Income of Loans & advances to be shown as part of Other
Income Schedule
(a) Insert Detailed Head Codes of Account as applicable
Schedule I-16: Schedule of Provisions & Write off
Code No.
1
270-20-(a)
270-40-(a)
Particulars
Current Year
Amount (Rs.)
2
3
Previous
Year Amount
(Rs.)
4
Provision for other Assets
Assets written off
Total Expense of Loans & advances to be shown as part of
Provisions & Write off Schedule
(a) Insert Detailed Head Codes of Account as applicable
23.11 The Balance Sheet abstract in respect of Loans and advances is provided below:
Schedule B-15: Schedule of Sundry Debtors (Receivables)
Code No.
Particulars
Gross
Amount
(Rs.)
1
2
3
Provision for
Outstanding
revenues
(Rs.)
4
432
Net amount
(Rs.)
5=3–4
Previous
year
Net
amount
(Rs.)
6
Receivables from Other
Sources
Total of Sundry Debtors
(Receivables)
* Break up for provision for outstanding revenues are given in Column 4
(a) Insert Detailed Head Codes of Account as applicable
431-40-(a)
23.6
National Municipal Accounts Manual
Loans & Advances
Schedule B-18: Schedule of Loans, advances and deposits
Code No.
Opening
Balance at
the
beginning
of the year
(Rs.)
3
Particulars
1
460-30-(a)
461-(b)
Paid during the
current year
(Rs.)
2
Loans to Others
Less: Provision for
Outstanding
Net total of Loans,
advances, and deposits
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Recovered
during the
year
(Rs.)
Balance
outstanding
at the end of
the year
(Rs.)
5
6
4
Schedule B-18 (a): Accumulated Provisions against Loans, Advances, and Deposits
Code No.
1
461-10-(a)
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Loans to Others
Total Accumulated Provision
(a) Insert Detailed Head Codes of Account as applicable
23.7
Form LA – 1
Loans & Advances
Note:
1.
1.
2.
3.
23.8
Separate folio shall be allotted to each loan.
Pages of ledger / register would be numbered.
In case of more than one loan, summary of all loans shall be drawn suitably in the register.
For each entry made, record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry
5. Rate of Interest ____________________
6. No. of installment _________________________
[whether monthly, quarterly, half-yearly or yearly]
7. Amount of each installment _________________
8. Name of the Specific fund/grant used for lending____________________
Disbursement of Loan
Amount due for repayment
Amount Repaid
Balance
Initials
Total
Due Date Amount
Princi
Princip
Amount
Date of Amount
Total
Remarks
of the
Amount
Date of
of
of
pal
Interest Total
al
Interest Total
of
Disbur Disburse Amount
officer Repayment
due to
Repayme Princip
Amount
Amount
Interest
sement
d
Disbursed
repayment
nt
al
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
REGISTER OF LOANS TO OTHERS
________________ Name of the ULB
1.Name of the borrower ___________
2.Purpose of Loan ______________
3.No. & date of resolution / orders sanctioning the loan _____________
4.Amount of Loan sanctioned ______________
National Municipal Accounts Manual
Special Transactions
National Municipal Accounts Manual
CHAPTER 24
63(&,$/ 75$16$&7,216
INTRODUCTION
24.1 Often ULBs have transactions which are not of usual nature. These are referred to as
Special Transactions. These could include:
i. Fixed assets created on behalf of ULBs by an executing agency, from the
funds directly disbursed to them by the Government, or;
ii. Grants given by ULBs to the School Boards or other undertakings established
under an ULB.
iii. Contributions made by ULBs in creation of assets not owned by it;
iv. Joint Venture Investments
24.2 This chapter contains recommended accounting system for each of the above
transactions.
ACCOUNTING PRINCIPLES
24.3 The Accounting Principles governing the recording, accounting and treatment of
transactions coming under Special Transactions are similar to those prescribed in similar
situations in the other chapters of this Accounts Manual. For instance:
❏ Accounting Principles relating to construction of fixed assets and their repairs and
maintenance shall be the same as what is described in Chapter 12 on Public
Works;
❏ Accounting Principles in respect of procurement and consumption of Stores shall
be the same as what is described in Chapter 13 on Stores;
24.1
National Municipal Accounts Manual
Special Transactions
❏ Accounting Principles in respect of grants received shall be the same as what is
described in Chapter 17 on Grants;
❏ Accounting Principles in respect of Borrowings (Loans Received) shall be the
same as what is described in Chapter 18 Borrowings (Loans Received);
❏ Accounting Principles in respect of Investments and accrual of interest shall be the
same as what is described in Chapter 20 on Investments;
❏ Accounting Principles in respect of fixed assets and depreciation provisioning
shall be the same as what is described in Chapter 21 on Fixed Assets;
❏ Accounting Principles in respect of loans and advances shall be the same as what
is described in Chapter 23 on Loans and advances;
ACCOUNTING RECORDS AND PROCEDURES
24.4 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Special Transactions. For the
purpose of accounting the Form SPL-1 is specific to Grants provided to the School Boards or
other undertakings established by the ULBs. This is annexed to this chapter
24.5 The Accounts Department shall maintain a Register in Form SPL-1 for Grants
provided to Schools/other undertakings. The details of the grants sanctioned shall be recorded
in the Grants to Schools/other undertakings register. This Register shall be updated for each
payment of the grant.
Creation of Fixed Assets by an Executing Agency
24.6 Under certain schemes sanctioned by the State Government, the ULBs may have
assets created by an executing agency, on their behalf. These projects may be funded by one
or more of the following sources:
a. Loans;
b. Grants from State Government; or
c. Own contribution, i.e., contribution by the ULBs. In accordance with a scheme
sanctioned, the ULBs may raise a loan for the purpose of execution of an
approved project. The loan may either be disbursed to the ULBs, which will then
utilise it for execution of the scheme (accounting procedure and accounting entries
in respect of which has been described in Chapter 18 on Borrowings (Loans
Received), or may be disbursed directly to an executing agency. Likewise, Grants
may be either disbursed to the ULBs (accounting procedure and accounting
entries in respect of which has been described in Chapter 17 on Grants) or may be
disbursed directly to an executing agency.
24.2
Special Transactions
National Municipal Accounts Manual
24.7 This section describes the accounting procedures and entries in situations in which
loans and grants are disbursed directly to an executing agency on behalf of an ULB. There
could be situations in which a large project is executed by an executing agency for the
common benefit of more than one ULB. In this Chapter the accounting entries in respect of a
particular ULB’s share in such situation is also explained.
24.8 This is explained with the help of an illustration. Suppose a Water Works Scheme for
Rs. 1.5 crores is sanctioned of which Rs. 1 crore would be receivable as loan and Rs. 40 lakhs
as grant from State Government and the balance would be contributed by the ULB. The said
scheme would be executed by an independent organisation i.e. the executing agency, on
behalf of the ULB. The amount of loan and grant would be directly disbursed to the
executing agency and the ULB would also remit its own contribution to the executive agency.
The scheme of entries outlined below shall be passed for all projects executed by an
executing agency in respect of which funds are directly disbursed to the executing agency.
24.9 Recording of direct disbursement of Loan. On receipt of intimation of disbursement
of loan to an executing agency, the Accounts Department shall pass the following entry:
Code of
Account
460-50-(a)
331-(b)
Accounting Entry
Advance against Project*
To Loans **
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr. 1,00,00,000
Journal Book,
Cr.
1,00,00,000 Ledger,
* Specify name of the Project under execution and the Executing Agency executing it.
** Specify the institution from which the funds have been borrowed or any other distinguishing
feature of the loan raised for easy identification. In the case of Secured loans the code to be used
is 330 instead of 331.
(a) Insert Minor Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
Note: The postings in the Ledger Accounts of "Advance against Project Account and "
Loan " Account shall be carried out as indicated in Chapter 5 – General Accounting
Procedures. The postings in the Ledger Accounts shall be similarly carried out in
respect of all other accounting entries described subsequently in this chapter.
Whenever, the cash or the bank account is involved, there will be no entry in the
Journal Book.
24.10 Recording of direct disbursement of Grant. For grants disbursed directly to the
executing agency, on receipt of intimation from the government or executing agency, the
Accounts Department shall pass the following entry:
24.3
Special Transactions
National Municipal Accounts Manual
Code of
Account
Accounting Entry
460-50- (a) Advance against Project*
320-20-(a)
To Grants for Specific
Purposes
Dr./
Cr.
Dr.
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
40,00,000
Journal Book,
40,00,000 Ledger,
* Specify name of the Project under execution and the Executing Agency executing it.
(a) Insert Detailed Head Codes of Account as applicable
24.11 Recording of remittance of ULBs own contribution. In accordance with the terms of a
sanctioned scheme, funds may be remitted by the ULBs as their contribution to executing
agency. On transfer of funds, the Accounts Department shall pass the following entry:
Code of
Account
460-50-(a)
450-21-(a)
Accounting Entry
Advance against Project*
To Bank Account**
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Cash Book,
10,00,000 Ledger,
* Specify name of the Project under execution and the Executing Agency executing it.
** Specify name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
24.12 Recording of accrual and payment of interest. Interest on funds borrowed shall be
accrued and paid as per the terms of the agreement. In such cases, the interest amount is paid
to the executing agency, which in turn would pay to the lender. For accounting of interest
accrued and its subsequent payment, the Accounts Department shall pass the following
entries:
a. On accrual of interest:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Journal Book,
10,00,000 Ledger,
Dr.
Advance against Project*
To Interest Liability on Cr.
Projects
* Specify name of the Project under execution and the Executing Agency executing it.
(a) Specify the Detailed Head Code of Account as applicable
460-50-(a)
350-12-(a)
24.4
Special Transactions
National Municipal Accounts Manual
b. On payment of interest:
Code of
Account
Accounting Entry
Dr./
Cr.
350-12-(a)
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Cash Book,
Ledger,
10,00,000
Interest Liability on
Dr.
Projects
450-21-(a)
To Main BankAccount* Cr.
* Specify name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
24.13 Recording of repayment of loan. In such cases, loan instalments may be paid to the
executing agency for further payment to the lender. On payment of loan instalment, the
Accounts Department shall pass the following entries:
Code of
Account
Accounting Entry
Dr./
Cr.
331-(a)
450-21-(b)
Loans*
To Bank Account**
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Cash Book,
10,00,000 Ledger
* Specify the institution from which the funds have been borrowed or any other distinguishing
\feature of the loan raised for easy identification.
* *Specify name of the bank and Account number
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
24.14 Recording of capitalisation of asset under construction. On completion of construction
and on receipt of Work Completion Certificate from the executing agency, for capitalisation
of the work executed, the Accounts Department shall pass the following entry:
Code of
Account
410-(a)
460-50-(b)
Accounting Entry
Fixed Assets
To Advance against
Project*
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,60,00,000
Journal Book,
1,60,00,000 Ledger,
* Specify name of the Project under execution and the Executing Agency executing it.
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
24.15 Recording of completion of construction and capitalisation: On completion of
construction and on capitalisation of the fixed asset, the amount received as Grant shall be
transferred to the Grant Fund. For this the Accounts Department shall pass the following
entry:
24.5
Special Transactions
National Municipal Accounts Manual
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
Dr.
40,00,000
Journal Book,
320-20-(a) Grants for Specific
Ledger, Grant to
Purposes
To Capital Contribution Cr.
40,00,000 Schools/other
312-10-(a)
undertakings
register
(a) Insert Detailed Head Codes of Account as applicable
Revolving Fund
24.16 ULBs maybe required to open a separate designated bank account for depositing
funds (usually both loans, grants), received from State Government, both loans and grants,
aimed towards development of ULBs through creation of fixed assets. Further, the ULBs may
be required to contribute certain percentage of the project cost towards the scheme
sanctioned, which shall be deposited in the designated bank account.
24.17 The amount deposited in the designated bank account shall be utilised only for the
purposes specified in the scheme sanctioned. Interest on loan and repayment of loan
instalment shall be made from the Designated Revolving Fund Bank Account. The deficit in
the designated bank account, if any, shall be met from the ULBs Main Bank Account.
24.18 This is explained with the help of an illustration. Suppose a Scheme has been
formulated under a special programme approved by the Government for construction of a
public facility. The cost of the project is Rs. 1 crore of which Rs. 25 lakhs would be received
as loan and Rs. 15 lakhs as grant from State Government. The ULBs shall contribute the
balance. The amount received as loan and grant together with ULBs own contribution shall
be deposited in a separate designated bank account. The scheme of entries outlined below
shall be passed for any other project executed under any other Revolving Fund.
24.19 Recording of receipt of Loan. The accounting procedures in relation to loan received
from the State Government, payment of interest accrued on loan and repayment of loan has
been described in Chapter 18 on Borrowings (Loans Raised). On receipt of loan, the
Accounts Department shall pass the following entry:
Code of
Account
450-41-(a)
331-(b)
Accounting Entry
Bank Account *
To Loans**
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
25,00,000
Cash Book,
25,00,000 Ledger, Special
Fund Register,
Register of Loans
*Specify name of the bank and Account number
**Specify the institution from which the funds have been borrowed or any other distinguishing
feature of the loan raised for easy identification. Also specify the name of the project.
(a) Insert Detailed Head Codes of Account under as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
24.6
Special Transactions
National Municipal Accounts Manual
24.20 Recording of receipt of Grant. On receipt of grant from the Government, the Accounts
Department shall pass the following entry:
Code of
Account
450-41-(a)
311-(b)
Accounting Entry
Dr./
Cr.
Dr.
Designated Revolving
Fund Bank Account*
To Revolving Fund** Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,00,000
Cash Book,
Ledger, Special
15,00,000 Fund Register
*Specify name of the bank and Account number
** Specify the name of the Fund
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert the Minor and detailed Head as applicable
24.21 Recording of remittance of ULB' s own contribution
. Contribution of the ULBs shall
be transferred from the Main Bank Account to the Designated Revolving Fund Bank
Account. On transfer of funds, the Accounts Department shall pass the following entries:
a. For transfer of funds from Municipal Fund to Revolving Fund:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
310-(a)
Municipal Fund
Dr.
60,00,000
Cash Book,
311-(a)
To Revolving Fund
Cr.
60,00,000 Ledger, Special
Fund Register
(a) Insert Minor & Detailed Head Codes of Account as applicable
b. For recording transfer of money:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
60,00,000
Cash Book,
Ledger, Special
60,00,000 Fund Register
Dr.
Designated Revolving
Fund Bank Account*
To Bank Account *
Cr.
450-21-(a)
*Specify name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
450-41-(a)
24.22 ULBs may execute/operate the scheme by employing its own resources or
outsourcing through tender. The accounting procedures and accounting entries in relation to
following have been described in Chapter 19 on Special Funds read with Chapter 12 on
Public Works:
a. Receipt of Earnest Money Deposit (EMD) from the bidders and its refund to
unsuccessful bidders;
24.7
Special Transactions
National Municipal Accounts Manual
b. Conversion of EMD of successful bidder into Security Deposit and receipt of
Security Deposit in advance;
c. Provision of Advance to the contractor;
d. Bills raised by the contractor for work executed and recording of capital work-inprogress;
e. Payment of bills raised by the contractor after deducting Security Deposit; and
f. Refund of Security Deposit received/deducted from the running account bills.
24.23 Any money received, including Security Deposits received from the tenants, from the
properties constructed under the scheme shall be deposited in the Designated Revolving Fund
Bank Account. If any revenue earned is credited to the Main Bank Account, the Accounts
Department shall, at the end of every month, identify the transactions pertaining to the
Revolving Fund and transfer the equivalent amount from the Main Bank Account to the
Designated Revolving Fund Bank Account. Correspondingly, an equivalent amount shall be
transferred from Municipal Fund to Revolving Fund. The accounting procedure and
accounting entry with reference to these has been described in Chapter 19 on Special Funds.
24.24 Recording of payment of interest and repayment of loan. Interest up to the date of
completion of construction of the qualifying fixed asset shall be capitalised and added to the
cost of fixed asset. Both the payment of interest and repayment of loan shall be made from
the Designated Revolving Fund Bank Account. In case of deficit in the designated bank
account, payment shall be made from the Main Bank Account. The Accounts Department
shall pass the following entries:
a. Payment of Interest
i. For recording interest accrued:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,50,000
Cash Book,
1,50,000 Ledger, Special
Fund Register
Dr.
Capital Work in
Cr.
Progress
To Interest payable
on Revolving Fund
Loan
(a) Insert the Minor & detailed Head as applicable
(b) Insert Detailed Head Codes of Account as applicable
412-(a)
350-12-(b)
24.8
Special Transactions
National Municipal Accounts Manual
ii. For recording payment of interest:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,50,000
Cash Book,
Ledger, Special
1,50,000 Fund Register
Dr.
Interest payable on
Revolving fund Loan
To Designated
Cr.
450-41--(a)
Revolving Fund Bank
Account
*Specify name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
350-12-(a)
b. Repayment of Loan
i. Recording repayment of loan made from Designated Revolving Fund Bank
Account:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
331-(a)
Loans
Dr.
5,00,000
Cash Book,
450-41-(b)
To Designated
Cr.
5,00,000 Ledger, Special
Revolving Fund Bank
Fund Register,
Account*
Register of Loans
*Specify name of the bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
ii. Recording of repayment of loan made from Main Bank Account in case of
deficit in Designated Revolving Fund Bank Account:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
311-(a)
Loans
Dr.
1,00,000
Cash Book,
450-21-(b)
To Bank Account*
Cr.
1,00,000 Ledger, Register
of Loans
*Specify name of the bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
24.25 Recording of capitalisation of capital work-in-progress. On completion of
construction and on capitalisation of capital work-in-progress account, the Accounts
Department shall pass the following entry:
24.9
Special Transactions
National Municipal Accounts Manual
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,01,50,000
Journal Book,
Ledger,
1,01,50,000
Fixed Assets (Name of Dr.
the Fixed Asset)
To Capital Work in
Cr.
412-(a)
Progress
(a) Insert Minor & Detailed Head Codes of Account as applicable
410-(a)
Notes:
Fixed Assets of a particular class shall be accounted under; one broad fixed asset account
head. For instance, ULBs may have more than one hospital building, then all the hospital
buildings shall be recorded under one broad head of Buildings – Hospitals (Code of
Account 4-10-(a)). Any new hospital building constructed, while it shall be recorded in a
separate folio in the Register of Buildings, it shall be incorporated under the account head
"Buildings – Hospitals".
24.26 Recording of transfer to Special Fund (Utilised) and Grant Fund. On completion of
construction and on capitalisation of capital work-in-progress account, the Accounts
Department shall transfer an amount equivalent to the amount of ULB' s contribution and
loans repaid from the Designated Revolving Fund Bank Account from Revolving Fund to
Special Fund (Utilised) and grant to Grant Fund for which the Accounts Department shall
pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
75,00,000
Journal Book,
15,00,000 Ledger, Register
of Loans
60,00,000
Dr.
Revolving Fund
Cr.
To Capital
Contribution
To Special Fund
Cr.
312-30-(b)
(Utilised)
(a) Insert Minor and Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
311-(a)
312-10-(b)
Note: ULBs own contribution of Rs. 60 lakhs shall be transferred to Municipal Fund and
Grant received Rs. 15 lakhs to Grant Fund.
Investment of revolving funds
24.27 Investments made from Revolving Fund shall be entered in Special Funds Register
maintained in SF-1 (provided in Chapter 19 on Special Funds) and in a Special Fund
Investment Register to be maintained in Form IN-1 (provided in Chapter 20 on Investments).
The accounting procedures to be followed and the accounting entries to be passed in respect
of investments of such funds are similar to those followed in respect of other investments.
They relate to investments, maturity of investment, recording of interest, profit/loss on
sale/maturity of investments, etc. These have been discussed in Chapter 19 on Investments.
24.28 Where the ULBs are required to furnish any Statement of Utilisation to the concerned
authorities, the requisite details shall be collated from the books of accounts maintained by
the Accounts Department.
24.10
National Municipal Accounts Manual
Special Transactions
GRANTS GIVEN TO SCHOOL BOARDS OR OTHER UNDERTAKINGS:
24.29 ULBs may provide grants to The Municipal School Board or any other undertaking.
ULB may provide the following recurring and non-recurring grants
a.
Revenue grant in the form of reimbursement of monthly expenses of the
School Board or other undertakings;
b.
Revenue grant for any other revenue expenditure of the Board or other
undertakings, etc.
c.
Capital grant for purchase/construction/modifications of any assets of the
schools or undertakings;
24.30 The accounting entries in the books of the ULBs relating to the grants given are as
follows:
i. Recording of revenue grants either as reimbursement of the monthly expenses or
towards any other revenue expenses:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
260-10-(a) Grant to School Board Dr.
45,000
Cash book,
or other undertaking *
Ledger, Register of
450-21-(a)
To Bank account**
Cr.
45,000 Grants to
Schools/other
undertakings
* Specify the name of the School Board or other undertaking
** Specify name of the Bank and Account Number
(a) Insert Minor Head Codes of Account as applicable
24.31 The accounting entries for recording of capital grants given for the
purchase/construction/modification of the School Boards or other undertakings shall be the
same as explained above.
CONTRIBUTIONS MADE ULBs IN CREATION OF ASSETS NOT OWNED BY
THE ULBs
24.32 ULBs may contribute as its share in some projects, which are created by external
agencies. For e.g. contribution in any infrastructure projects like multi-modal transport. In
such cases ULB does not have any ownership rights on the assets.
24.33 Recording of remittance of ULB' s own contribution
. In accordance with the terms of
understanding, funds may be remitted by the ULBs as their contribution to the executing
agency.
24.11
Special Transactions
National Municipal Accounts Manual
24.34 With regard to the payment made the Accounts Department shall pass the following
entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Amount
(Rs.)
Illustrative
figures
25,000
260-20-(a) Contributions to Projects
Dr.
450-21-(a)
To Bank Account*
Cr.
* Specify the name of Account Number of the Bank
(a) Insert Detailed Head Codes of Account as applicable
Credit
Amount
(Rs.)
Illustrative
figures
25,000
Books to be
entered into
Cash Book,
Ledger
JOINT VENTURE
24.35 ULBs may also be involved in Joint venture projects. The investment in a joint
venture shall be treated as an investment of the ULB. If investments are in kind like
contribution land for development, the accounting treatment to be adopted will depend on
agreement between parties. Public private partnerships are one form of joint ventures.
24.36 The Accounting procedures and principles for joint venture investments shall be same
as explained in Chapter 20 on Investments.
24.37 Public Private Partnership (PPP) is an effective means of establishing cooperation
between public and private actors and to bundle financial resources, know-how and expertise
to address these urban environmental needs. PPPs offer alternatives to full privatisation,
combining the advantages of both the public and the private sector. Public Private Partnership
is evolved for development of various projects.
24.38 Some of the areas in which PPPs are evolved are listed below:
•
•
•
•
•
•
•
•
•
Solid Waste Management
Water supply
Street Lighting
Maintenance of Roads & Bridges
Sewerage
Parks
Commercial complexes
Markets
Bus Shelters
24.12
National Municipal Accounts Manual
Special Transactions
24.39 A brief of a notable PPP initiative of ULBs is provided below:
Alandur Municipality
Alandur Municipality is situated on the southern boundary of the City of Chennai. Alandur
has been the first municipality in the country where initiative has been taken to finance,
develop and implement the sewerage project on commercially viable basis by using Public
Private Partnership (PPP) as an option.
The major components of the project are:
•
Sewerage network consisting of a main sewer line, branch sewer lines and manholes
•
Sewerage pumping station and
•
Sewerage treatment plant
The work of the proposed project was carried out in two phases.
First Phase: A sewage treatment plant was commissioned
Second Phase: A sewage collection system was introduced and operated through a Contractor
for a defined period as per the contract entered into. The sewerage treatment plant was on
build, operate and transfer (BOT) basis. The BOT operator is expected to make capital
investment for the treatment plant and recover it over a period of 15-20 years. The collection
of tariff and provision of new connections during O&M phase would be undertaken by the
municipality directly.
PERIOD END PROCEDURES
24.40 The period end procedure for work executed but in respect of which bills have not
been paid shall be the same as described in Chapter 12 on Public Works.
24.41 The period end procedure for materials received but in respect of which bills have not
been paid and valuation of closing stock shall be the same as described in Chapter 13 on
Stores.
24.42 At the end of the accounting period, for work executed relating to Grants, the
Accounts Department shall pass the entries referred to in Chapter 17 on Grants.
24.43 At the end of the accounting period, the Accounts Department shall, for the interest
accrued on loans raised, pass the accounting entries referred to in Chapter 18 on Borrowings
(Loans Raised).
24.44 At the end of the accounting period, for the value of work executed pertaining to
special fund/revolving fund, the accounts department shall pass the accounting entries
referred to in chapter 19 on special funds.
24.13
National Municipal Accounts Manual
Special Transactions
INTERNAL CONTROLS
24.45 The following internal controls shall be observed by the ULBs:
a. At the end of the financial year, the Head of the Accounts Department shall send a
balance confirmation statement to the executing agency stating therein the amount
paid by the ULBs towards repayment of loan and payment of interest. Further, the
Statement shall state the balance amount of loan repayable as per the ULB’s
records. On the basis of reply received, the Accounts Department shall reconcile
the difference, if any, as reported by the executing agency.
b. The Head of the Accounts Department shall ensure that the balance in the
Designated Revolving Fund Bank Account is utilised for the purpose specified in
the scheme. He shall also ensure that any revenue derived from the properties
constructed under the scheme is deposited in the Designated Revolving Fund
Bank Account.
c. At the end of every month, the Head of the Accounts Department or other officer
designated in this behalf shall reconcile the ledger balance of the Revolving Fund
Account with the records maintained in Special Fund Register and the Revolving
Fund Bank Account balance.
d. The Head of the Accounts Department shall, at all times, ensure that the balances
in the Designated Revolving Fund Bank Account is adequate to discharge the
Security Deposit liability when due for payment.
e. In case of deficit in the Designated Revolving Fund Bank Account, ULBs shall
ensure that the same is made good from the Main Bank Account at the earliest.
f. The Head of the Accounts Department shall ensure deposit of any revenue
received from the properties constructed under the terms of Revolving Fund in the
Designated Revolving Fund Bank Account. In case any such sum is erroneously
deposited in any other bank account, the same shall, immediately on knowledge of
such error, be transferred to the designated bank account from that bank account.
g. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
24.46 All the reconciliation statements shall be certified by the Head of the Accounts
Department.
PRESENTATION IN FINANCIAL STATEMENTS
24.47 The various heads of accounts used for the accounting of Special Transactions shall
be reflected in the Financial Statements or the Schedules attached to the Financial Statements
of the ULBs. All such Financial Statements and schedules should be affixed with signature
and seal of designated authorities.
24.14
Special Transactions
National Municipal Accounts Manual
24.48 The schedule of Income and Expenditure Statement in respect of Special Transactions
is provided below.
Schedule I-13: Schedule of Interest & Finance Charges
Code No.
1
240-10-(a)
240-20-(a)
240-30-(a)
240-40-(a)
240-50-(a)
240-60-(a)
240-70-(a)
240-80-(a)
Particulars
2
Interest on Loans from Central Government
Interest on Loans from State Government
Interest on Loans from Government Bodies &
associations
Interest on Loans from International Agencies
Interest on Loans from Banks & Other Financial
Institutions
Other Interest
Bank Charges
Other Finance Expenses
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Interest & Finance expenses
(a) Insert Detailed Head Codes of Account as applicable
* Details of any other interest and financial charges incurred, which has not been disclosed specifically, shall be
collated and disclosed under Other Charges, provided the amount does not exceed the disclosure limits
prescribed in the Accounts Manual.
Schedule I – 15 Schedule of Revenue Grants, Contributions and Subsidies –Expenses
Code No.
1
260-10-(a)
260-20-(a)
260-30-(a)
Particulars
2
Grants (give details)
Contributions (give details)
Subsidies (give details)
Total.
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
24.49 The Balance Sheet abstract in respect of Special Transactions is provided below.
24.15
Particulars
Code No.
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets*
Others
Total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Total
(iii) Other:
Loss on disposal of Revolving Fund Investments
Diminution in Value of Revolving Fund Investments
Transferred to Municipal Fund
Total
Total (c)
Net balance at the year end – (a)+(b)-(c)
(a) Opening Balance
(b) Additions to the Revolving Funds
(i) Transfer from Municipal Funds
(ii) Interest/Dividend earned on Revolving Fund
Investments
(iii) Profit on disposal of Revolving Fund
Investments
(iv) Appreciation in Value of Revolving Fund
Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
Schedule B-2: Revolving Fund
National Municipal Accounts Manual
Revolving Fund 1
Revolving Fund 2
24.16
Revolving Fund 3
Special Transactions
Grants from
Central
Government
Grants from
State
Government
Grants from
Other
Government
Agencies
Grants
from
Financial
Institutions
Grants
from
Welfare
Bodies
Grants from
International
Organisation
Others
Special Transactions
24.17
Note: Grants received in respect of Fixed assets created on behalf of the ULBs by an executing agency, from the funds directly disbursed to them by the Government shall be
presented separately in above schedule.
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets*
Others
Total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Total
(iii) Other:
Loss on disposal of Grant Investments
Diminution in Value of Grant Investments
Grants Refunded
Total
Total (c)
Net balance at the year end – (a)+(b)-(c)
Code No.
(a) Opening Balance
(b) Additions to the Grants
(i) Grant received during the year
(ii) Interest/Dividend earned on Grant Investments
(iii) Profit on disposal of Grant Investments
(iv) Appreciation in Value of Grant Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
Particulars
Schedule B-4: Grants & Contributions for Specific Purposes
National Municipal Accounts Manual
Special Transactions
National Municipal Accounts Manual
Schedule B-3: Reserves
Code No.
Particulars
Opening
Balance at the Additions
(Rs.)
beginning of
the year (Rs.)
1
312-10-(a)
312-30-(a)
2
3
Capital Contribution
Special Fund
(Utilised)
Total
(a) Insert Detailed Head Codes of Account as applicable
4
Balance
outstanding at
Deductions
the end of the
(Rs.)
current year
(Rs.)
6
7
Total
(Rs.)
5
Schedule B-5: Secured & Unsecured Loans [Code No 330/331]
Code No.
1
330/31-10
330/31-20
330/31-30
330/31-40
330/31-50
330/31-60
330/31-70
330/31-80
Particulars
2
Loans from Central Government
Loans from State government
Loans from Govt. bodies & Associations
Loans from international agencies
Loans from banks & other financial institutions
Other Term Loans
Bonds & debentures
Other Loans
Total Secured/Un Secured Loans
Current Year
Amount (Rs.)
3
Amount in Rs.
Previous
Year
Amount
(Rs.)
4
Note:
1. The nature of the Security shall be specified in each of these categories
2. Particulars of any guarantees given shall be disclosed
3. Terms of redemption (if any) of bonds/debentures issued shall be stated, together with the earliest date of
redemption
4. Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan under each of
these categories separately;
5. For loans disbursed directly to an Executing Agency, please specify the name of the Project for which such
loan is raised.
Schedules B-17: Schedule of Cash & Bank Balances
Code No.
1
450-10-(a)
450-21-(a)
450-41-(a)
Particulars
2
Cash Account
Bank Account
Designated Bank Account
Total
(a) Insert Detailed Head Codes of Account as applicable
Current Year
Amount (Rs.)
Previous
Year
Amount
(Rs.)
3
4
XX
24.18
Special Transactions
National Municipal Accounts Manual
Schedules B-18: Schedule of Other Loans, Advances & Deposits
Code No.
Particulars
Current Year
Amount (Rs.)
1
2
3
Previous
Year
Amount
(Rs.)
4
460-30-(a)
460-50-(a)
Loans to Others
Advance for Projects
Total
(a) Insert Detailed Head Codes of Account as applicable
24.19
2
1
3
Name and nature
of the Grant given
Name of the School
Sanctioned
Board/Other
Period of
Amount
Undertaking
the Grant
(Rs.)
receiving the grant
4
5
6
7
Sanctioned
by
Form SPL-1
Name of the ULB
Special Transactions
24.20
Key
Date of release
Conditions
Remarks
of the grant attached to the
Grant
8
9
10
For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.
Note:
Date
Sr.
No.
REGISTER OF GRANTS TO SCHOOLS/OTHER UNDERTAKINGS
National Municipal Accounts Manual
National Municipal Accounts Manual
Addition/ Merger of Local Bodies
CHAPTER 25
$'',7,210(5*(52)/2&$/
%2',(6
INTRODUCTION
25.1 This chapter explains accounting principles and procedures to be followed by the
ULBs for the merger of ULBs/Undertakings.
25.2
Additions or merger in ULBs can happen under the following circumstances.
i. Merger between two or more local bodies for up-gradation or for some
administrative reasons
ii. Merger of any undertaking / Boards (para-statal agencies) which performs some
of the functions assigned to the Local Bodies.
25.3 The ULB/Undertaking into which other ULBs/Undertakings are to be merged shall be
called as ‘Ultimate ULB/Undertaking’.
ACCOUNTING PRINCIPLES
25.4 The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Addition / Merger of Local Bodies/undertakings:
a) The financial statements of the merging local bodies/undertakings shall be
consolidated at the cut-off dates under the pooling of interest method. The assets,
liabilities, reserves and fund balances of the merging local bodies are recorded at
their existing carrying amounts. However it must be ensured that accounting
principles adopted for preparation of financial statements of merging local bodies
should be same.
b) The financial statements prepared on consolidation shall disclose
25.1
National Municipal Accounts Manual
¾
¾
¾
¾
Addition/ Merger of Local Bodies
Names of the local bodies merged
Authority under which the merger has taken place
Effective date of merger
Principles adopted for consolidation
ACCOUNTING RECORDS AND PROCEDURES
25.5 This section describes the records, registers, documents, forms, accounting entries,
etc., in respect of accounting for transactions related to Merger. There is no specific form
applicable to this chapter.
INCORPORATION OF BALANCES OF THE MERGED UNITS IN THE BOOKS OF
ULTIMATE ULB/UNDERTAKING
25.6 The financial statements of the individual ULBs / undertakings under the merger shall
be prepared at the cut off dates and finalised.
25.7 Once the financial statements are finalised, the closing balances as at the cut off date
shall be carried over to the ultimate ULB accounts to which the operations are merged.
25.8 The following accounting entries shall be passed in the books of the ultimate
ULB/Undertaking for incorporating the assets and liabilities of individual
ULBs/Undertakings to be merged in the books of the Ultimate ULB/Undertaking selected for
consolidation:
Code of
Account
Accounting Entry
Dr./
Cr.
410-(a)
412-(a)
431- (a)
450-21-(b)
Fixed assets
Capital work in progress
Sundry Debtors
Municipal Fund Bank
Dr.
Dr.
Dr.
Dr.
311-10-(b)
To Special fund Cyclone
Cr.
330- (a)
340 -(a)
350- (a)
360-10- (b)
411 – (a)
To Secured Loans
To Deposits received
To Other liabilities
To Provision for expenses
To Accumulated
Depreciation
To Accumulated
Provision for Receivables
To Municipal fund
Cr.
Cr.
Cr.
Cr.
Cr.
432 – (a)
310 – (a)
Cr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
120,000
Journal Book,
53,000
Ledger
210,000
The following
25,000
Registers will be
updated:
60,000 i. Fixed Assets
ii. Capital Work
80,000 in
progress
40,000
97,000 iii. Special
16,000 Funds
45,000 iv. Loans
v. Deposits
20,000 received
vi. Provision for
50,000
expenses
(a) Insert Minor & Detailed Head Codes of accounts as applicable
(b) Insert Detailed Head Codes of accounts as applicable
Note: Since the incorporation of account balances is made under the line by line method, the
account balances are incorporated without netting off. For e.g., Sundry Debtors and Provision
for doubtful receivables.
25.2
National Municipal Accounts Manual
Addition/ Merger of Local Bodies
25.9 The financial statements of the Ultimate ULB/Undertaking after the merger shall be
treated as the opening balance sheet for the subsequent year.
Negative Municipal Fund Account balances
25.10 In case of Municipal fund account balances of one or more ULBs under the merger is
negative, these negative balances will get adjusted on incorporation of the account balances
of the individual ULBs into the Municipal fund account balance of the Ultimate ULB.
25.11 Further, the ‘General/Municipal’ fund account schedule shall be disclosed under
liabilities and as a separate line item in the financial statements of the ULBs irrespective of
the nature of balance it carries.
ADJUSTMENT OF INTER ULB/UNDERTAKING TRANSACTIONS
25.12 Inter-ULB/Undertaking transactions shall be those transactions where in the services
/goods of one ULB are availed by other ULBs/Undertakings. Examples of inter
ULB/Undertaking transactions are as follows:
a. Supply of water by ‘Town Municipality’ to ‘School boards and primary education
societies’
b. Loans and advances between the local bodies/undertakings;
c. Interest on loans and advances between the local bodies/undertakings;
25.13 Adjustment entries in respect of inter ULB/Undertaking transactions: Inter ULB /
Undertaking balances, if any, will have to be first matched. If there are any differences, it has
to be reconciled. Once the balances are matched, the accounting entries that are to be passed
in the books of Ultimate ULB/Undertaking for the adjustments are explained with the
following example.
¾ Adjustment of Loans’ received amounting to Rs 100,000 from the Ultimate
ULB/Undertaking by other ULBs/Undertakings under merger;
¾ Adjustment of an amount totaling to Rs.23,000 receivable by the Ultimate
ULB/Undertaking from other ULBs/Undertakings;
¾ Adjustment of interest on loans by Ultimate ULB/Undertaking to other
ULBs/Undertakings amounting to Rs.10, 000.
25.14 For elimination of the inter ULB/Undertaking transactions:
25.3
National Municipal Accounts Manual
Code of
Account
Addition/ Merger of Local Bodies
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
100,000
Journal Book,
23,000
Ledger
10,000
Register of Loans,
100,000 Register of
Provisions
23,000
10,000
Dr.
Loans
330 – (a)
Dr.
Other Liabilities
350 – (a)
Dr.
360 – 20 -(b) Provision for Interest
Cr.
To Loans and
460 – (a)
Advances
Cr.
To Sundry Debtors
431 – (a)
Cr.
To Interest
460 – 80 –(b)
receivable – Loans
and advances
(a) Insert Minor & Detailed Head Codes of accounts as applicable
(b) Insert Detailed Head Codes of accounts as applicable
DIFFERING ACCOUNTING PRINCIPLES
25.15 In case, the accounting principles adopted by ULBs/Undertakings differ, a uniform set
of accounting principles are to be adopted following the merger. The effect of the changes to
the accounting principle shall be reported as ‘Prior period and extraordinary items and
changes in accounting principles’ in the first year of merged accounts.
INTERNAL CONTROLS
25.16 The following internal controls shall be observed by the ULB in respect of Merger of
two or more ULB and its related transactions:
a. The account balances of the financial statements of the individual
ULBs/Undertakings under merger should be verified by the Head of Accounts
Department before incorporation of their balances in the books of the Ultimate
ULB/Undertaking.
b. The Head of the accounts department of the Ultimate ULB/Undertaking should
compare the inter-unit/ULBs/Undertaking balances and differences if any
identified has to be reconciled and rectified before incorporating the balances in
the books of Ultimate ULB/Undertaking.
c. All the inter-ULB/undertakings transactions shall be identified and ensured that
these are appropriately adjusted in the books of ultimate ULB/undertaking.
d. The Chief Executive Officer/Head of the ULB shall specify such appropriate
calendar of returns /reports for monitoring.
25.4
Inter Unit Transactions
National Municipal Accounts Manual
CHAPTER 26
,17(5 81,7 75$16$&7,216
INTRODUCTION
26.1
This chapter contains the recommended accounting systems for transactions
between various accounting units within the ULB.
26.2
Some ULBs may have decentralised accounting set up. This may result in more
than one accounting unit (AU) within the ULB and each of these accounting units
maintains separate books of account and prepares their Trial balance. The accounting
unit, as defined by the ULB (e.g. Zone, Circle, etc.), shall maintain all the primary
records and shall prepare Trial Balance in respect of the transactions relating to the AU.
26.3
These accounting units may also enter into accounting transactions with each
other. A transaction occurring between any two accounting units shall be called 'Inter
Unit Transaction' (IUT). IUTs are defined as transactions/ transfers between any two
accounting units (AUs) of the ULB. Given below is an illustrative list of IUTs that may
occur between accounting units in an ULB:
26.1
National Municipal Accounts Manual
Inter Unit Transactions
❏ Transfer of funds between the AUs
❏ Transfer of payments/ receipts from one AU to another for payments/
collections made on behalf of another AU
❏ Transfer of assets/ liabilities from one AU to another AU.
26.4
The AUs involved in any transactions are classified as Originating unit and
Responding by virtue of origin of transactions.
❏ ‘Originating AU’ - unit, in which the transaction occurs and which raises the
document for IUTs, called ‘Advice of Transfer’.
❏ ‘Responding AU’ - means the accounting unit, on which the Originating Unit
raises the ‘Advice of Transfer’.
26.5
Advice of Transfer is called Advice Transfer Debit (ATD) when the originating
unit debits the other Accounting unit. Advice of transfer is called Advice Transfer Credit
(ATC) when the originating unit credits the other Accounting Unit.
26.6
Final Accounts may be prepared at every AU and then consolidated at H.O. or
prepared directly at HO based on Trail Balance sent from every AU. This chapter covers
recording of the primary transactions between the Accounting Units. Procedure relating
to Final Accounts preparation and consolidation is described in Chapter 31 on Financial
Statements.
ACCOUNTING PRINCIPLES
26.7
The following Accounting Principles shall govern the recording, accounting and
treatment of transactions relating to Inter Unit Transactions (IUTs):
a. All IUTs shall be recorded on cost basis and no mark up shall be included in
IUTs.
b. At the year-end, the inter-unit accounts are knocked off / adjusted in the
consolidated accounts of the ULB.
26.2
Inter Unit Transactions
National Municipal Accounts Manual
ACCOUNTING RECORDS & PROCEDURES
26.8
This section describes the records, registers, documents, forms, accounting
entries, etc in respect of accounting for transactions related to IUTs between AUs of the
ULB. For the purpose of accounting, there are certain forms, registers, etc., e.g. Advice
of Transfer (IUT-01), specific to IUTs which hare annexed to this chapter and are
prefixed “IUT”.
INTER UNIT TRANSACTIONS
26.9
All the AUs shall first record the transactions related to Inter Units (IUTs) in its
books of accounts. This shall then be intimated to the concerned unit through an Advice.
Transfer Advice Debit/ Credit in Form IUT-01 shall be used for raising all debits or
credits to another AU. The ‘Responding AU’shall accept the advice and make entry in its
books of accounts based on the advice and intimate the same to the ‘Originating AU’.
26.10 Register of Inter unit Advice shall be maintained to record the raising, acceptance
and modifications of all advices at the originating and responding AU. This Register shall
be maintained in the format specified in Form IUT-02.
ACCOUNTING FOR TRANSFER OF FUNDS BETWEEN AUs
26.11 Funds may be transferred from one AU to another AU. The AU, which transfers
the fund originates the transaction and hence is called as ‘Originating AU’. The AU,
which receives the funds, is called ‘Responding AU’. The accounting entries to be passed
by the AUs are given below:
a.
Recording of transfer of funds in the books of ‘Originating AU’:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
5,000
Cash book ,
Ledger,
5,000 Register of
Transfer Advice
Dr.
470-20-(a) Inter Unit Account –
450-21-(a) AU*
To Bank
Cr.
Account**
*Specify name of the accounting unit
** Specify name of the Bank and account number
(a) Insert Detailed Head Code of Account as applicable
26.3
National Municipal Accounts Manual
Inter Unit Transactions
Note: The postings in the Ledger Accounts of "Inter Unit account " shall be carried
out as indicated in Chapter 5 – General Accounting Procedures. The postings in the
Ledger Accounts shall be similarly carried out in respect of all other accounting
entries described subsequently in this chapter. Whenever, the cash or the bank account
is involved, there will be no entry in the Journal Book.
b.
Recording of receipt of funds in the books of ‘Responding AU’:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
450-21-(a) Bank Account*
Dr.
5,000
Cash book,
470-20-(a)
To Inter Unit
Cr.
5,000 Ledger,
Account–AU **
Register of
Transfer Advice
* Specify name of the Bank and account number
** Specify name of the AU
(a) Insert Detailed Head Codes of Account as applicable
ACCOUNTING FOR TRANSFER OF RECEIPTS AND PAYMENTS OF AUs
26.12 As per the provisions and rules governing the ULB, one AU can accept
collections relating to another AU and make payments on behalf of another AU. In order
to account for these transactions, the ‘Originating AU’ shall raise an Advice of Transfer
(IUT-01) on the ‘Responding AU’.
a. Recording of Receipt of collections of another AU: This type of collection
generally happens only in case of Accrued Income e.g. Property Taxes,
License Fees etc. At the time of recording the collection, the collection is first
entered in the consolidated Debtors account and later transferred to the
respective account based on the statement of head-wise collection as stated in
Chapter 6 on Property and Other taxes. The accounting entries to be passed by
the AUs are given below:
i) In the books of the ‘Originating AU’: Based on the details of break-up of
collection, the amount collected by the originating AU in respect of
another AU is recorded as follows:
26.4
Inter Unit Transactions
National Municipal Accounts Manual
Debit
Credit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal
431-80-(a) Receivable Control
Register,
Accounts ------*
Cr.
10,000 Ledger,
470-20-(a) To Inter Unit Account
Register of
–AU**
Transfer Advice
* Specify the head of receivable e.g. Property Tax, License Fees etc
** Specify name of the AU
(a) Insert Detailed Head Codes of Account as applicable
ii) In the books of ‘Responding AU’
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Journal, Ledger,
Register of
10,000 Transfer Advice
470-20-(a) Inter Unit Account –
Dr.
431-(b)
AU *
To Receivables for Cr.
------ **
* Specify name of the AU.
** Specify name of the receivable e.g. Property Tax Year ----
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
b. Recording of payments made for another AU: This type of payments normally
happens at HO on behalf of another AU. Such payments are made only after
receipt of duly authorised pass orders.
i. In the books of the ‘Originating AU’: At the time of making the payment, the
accounting entry to be passed is as follows:
Code of
Account
Accounting Entry
470-20-(a) Inter Unit Account –
AU *
450-21-(a)
To Bank Account
**
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
Ledger,
10,000 Register of
Transfer Advice
* Specify the name of the AU
** Specify name of the Bank and account number
(a) Insert Detailed Head Codes of Account as applicable
26.5
Inter Unit Transactions
National Municipal Accounts Manual
ii).
In the books of the ‘Responding AU’: On receipt of the Transfer Advice
the relevant liability account will be debited if the expenditure is already
accrued in the books of AU. Else it will be debited to the relevant expense
account. The accounting entry to be passed is as follows:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Dr.
10,000
Journal, Ledger,
Register of
Transfer Advice
Cr.
10,000
350-10-(a) Other Liabilities Creditors - *
Or ------ Expense **
2-(b)
To Inter Unit
470-20-(a)
Account – AU ***
* Type of payable if the liability is accrued
** Name of expense head if the expense is not accrued
*** Specify name of the AU
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Major, Minor & Detailed Head Codes of Account as applicable
ACCOUNTING FOR TRANSFER OF ASSETS/LIABILITIES BETWEEN AUs
26.13 Similar to collections and payments in Para 26.12 above, the ULBs may also be
allowed to transfer assets and liabilities from one AU to another AU for various purposes.
In order to account for these transactions, the ‘Originating AU’ shall raise an Advice of
Transfer (IUT-01) on the ‘Responding AU’.
a. Recording of Transfer of Assets: The ‘Originating AU’ shall raise the Advice
for Transfer – Debit (ATD) when there is a transfer of fixed assets/
stocks/other assets. The accounting entry for the ATD raised is as follows:
26.6
Inter Unit Transactions
National Municipal Accounts Manual
i. In the books of the ‘Originating AU’is as follows :
Code of
Account
470-20-(a)
470-20-(a)
410-(b)
430-(b)
Credit
Debit
Amount
Amount
Books to be
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Inter Unit Account -AU Dr.
100,000
Journal, Ledger,
*
Register of
Dr.
Inter Unit Account 20,000
Transfer
AU *
Advice,
To Fixed assets -- Cr.
100,000 Register of
--**
fixed assets and
To Stock in Hand - Cr.
20,000 Register of
----Stocks
* Specify name of the AU as a detailed head code
** Specify name of the assets
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor Head Codes of account as applicable
ii. In the books of the ‘Responding AU’is as follows :
Code of
Account
Accounting Entry
410 – (b) Fixed Assets --------*
430 – (b) Stock in Hand
To Inter Unit
470-20-(a)
Account - AU **
To Inter Unit
470-20-(a)
Account - AU **
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Journal, Ledger,
1,00,000
Dr.
Register of
20,000
Dr.
Transfer
100,000 Advice,
Cr.
Register of
20,000 fixed assets and
Cr.
Register of
Closing Stocks
* Specify name of the assets
** Specify name of the AU as detailed head code
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
b. Recording of Transfer of Liability: The ‘Originating AU’ shall raise the
Advice for Transfer – Credit (ATC) when there is a transfer of liabilities. The
accounting entry for the ATD raised is as follows:
26.7
Inter Unit Transactions
National Municipal Accounts Manual
i. In the books of the ‘Originating AU’is as follows :
Code of
Account
3 – (b)
470-20-(a)
Accounting
Entry
_____ Liability
Account**
To Inter Unit
Account AU*
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Journal, Ledger,
Register of
1,00,000 Transfer Advice
* Specify name of the assets
** Specify name of the AU as detailed head code
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
ii. In the books of the ‘Responding AU’is as follows :
Code of
Account
Accounting
Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
100,000
Journal, Ledger,
Register of
100,000 Transfer Advice
Dr.
Inter Unit
Account - AU *
To _____
Cr.
3 – (b)
Liability
Account**
* Specify name of the AU as detailed head code
** Specify name of the liability
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Major, Minor & Detailed Head codes of account as applicable
470-20-(a)
ACCOUNTING FOR NON – ACCEPTANCE OF ATD/ ATC RAISED
26.14 If the ‘Responding AU’ finds the ATD/ATC is not acceptable, it shall return the
ATD/ATC to the ‘Originating AU’ giving reasons and supporting documents for nonacceptance of the ATD/ATC. The examples of reasons for non-acceptance may be that
the ATD/ ATC has been raised on the wrong AU or for an incorrect value. The
‘Originating AU’ may, after analysing the reasons given for non-acceptance, either
cancel the ATD/ATC or modify the same.
26.15 Recording of Cancellation of ATD/ ATC: If the reasons claimed in the ATD/
ATC are justifiable, then the AU’s accounts department shall cancel the ATD/ATC. On
cancellation, Accounts department of the ‘original AU’ shall reverse the entry passed by
it on raising the ATDs/ ATCs in its books.
26.8
National Municipal Accounts Manual
Inter Unit Transactions
26.16 The ‘Originating AU’ shall update the Register of IUT Advice for the reversal
entry made above with the reasons for cancellation.
PART ACCEPTANCE OF THE ATD/ATCS
26.17 There are chances that the ‘Responding AU’ might accept part amounts of ATDs/
ATCs instead of non-acceptance of the whole document. In such circumstances, the
‘Responding AU’ may account for debits and credits to the extent it has accepted and
intimates the ‘Originating AU’accordingly.
26.18 The ‘Originating AU’, in such circumstances, shall follow the following
accounting procedure if the reasons for rejection claimed by the ‘Responding AU’ found
justified in order to rectify the accounting records of its books:
a. Step 1: Cancel the original ATD/ ATC: For cancellation of the ATD or ATC,
which is being modified, the accounts department of the ‘Originating AU’
shall follow the procedure described in Para 26.15.
b. Step 2: Raising of revised ATD/ ATC: For raising a revised ATD/ ATC, the
‘Originating AUs’ accounts department shall follow the procedure described
in Paras 26.11/26.12/26.13.
26.19 The ‘Originating AU’s’ accounts department shall update the Register of IUT
Advice for the same along with the reasons for modification.
INTERNAL CONTROLS
26.20 The following internal controls shall be observed by the ULB in respect of IUT
within the ULB:
a. All the AUs shall generate monthly statement of accounts of other AUs
accounts for circulation. Competent authority before forwarding to other AUs
shall verify these statements. Each AU shall then reconcile their records based
on the statement of accounts received from other AU for the differences if
any.
b. Originals of all the cancelled ATDs/ATCs shall be filed in the ‘office file’
with approval and reasons with justification for cancellation.
26.9
National Municipal Accounts Manual
Inter Unit Transactions
c. On a half yearly basis, the reconciliation statements of individual AUs shall be
submitted at the Head Office of the ULB and the Head of the Accounts
Department shall ensure that the combined balance under all IUT account
heads are tallied with the balance appearing in the ATDC.
d. In case of any disputed IUTs identified during the reconciliation process, the
ULB’s Accounts department shall take appropriate action in resolving the
disputed IUTs.
e. At the period end, based on the review of reconciliation of AU account
balances referred above, the Head of the ULB’s Accounts Department shall
ensure that the balance of all IUT Account heads is nullified in the
consolidated accounting statement of the ULB.
PRESENTATION IN FINANCIAL STATEMENTS
26.21 The various heads of accounts used for the accounting of IUT shall not be
reflected in the Consolidated Financial Statements of the ULB as they should have a nil
balance after adjustments. However if Financial Statement is prepared at the AU level,
then IUT balances will appear in the financial statements. All such Financial Statements
and schedules should be affixed with signature and seal of designated authorities.
26.10
PART -I
Advice of Inter Unit Transfer - Debit/ Credit (ATD/ ATC)
(Tick the appropriate)
Name of the Accounting Unit (AU)
Name of the ULB
Date:………………
IUT - 01
Inter Unit Transactions
Particulars
Prepared by
List of documents attached:
1
2
3
Sl.
No.
Account
head
Debit (Rs.)
Checked by
Account
code
Credit (Rs.)
Closing balance
after this
ATD/ATC (Rs.)
(Dr.)
(Cr.)
Approved by
Remarks
26.11
Please note that your account has been debited/ credited in our books with Rs. ____ (rupees in words) on account of following
transactions. Copies of supporting documents are enclosed. Kindly acknowledge the balance with you also which is appearing in our
books of account. Kindly send the duplicate copy of this ATD/ ATC as your acceptance at the earliest:
To
………………….
…………………………
ATD/ ATC No…………………..
National Municipal Accounts Manual
..
Year
Voucher
No. and
Date
Op. Bal.
Particulars
Debit
Amount
(Rs.)
Credit
Amount
(Rs.)
Closing Balance
Amount (Rs.)
(Dr.)
(Cr.)
(To be used by originating as well as responding AU)
Register Folio No.:
Register of Inter Unit Transfer Advice (RIUTDC)
_________Name of the ULB
* Reasons for cancellation / modification needs to be filled in
ATD/ ATC
No. and
Date
..
AU name
National Municipal Accounts Manual
Accepta
Remarks *
nce date
IUT-02
26.12
Inter Unit Transactions
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
CHAPTER 27
75$16$&7,2165(/$7,1*72
081,&,3$/6&+22/%2$5'
INTRODUCTION
27.1 Education is one of the services of the ULB and is carried out by ULBs directly or
through separate boards set up as per the applicable acts. However in some cases, ULBs may
not have a direct role and separate boards may be set up. This chapter contains the
recommended accounting system for transactions relating to the municipal school board.
School Boards shall maintain independent books of accounts for recording the transactions
relating to the school board.
GENERAL APPROACH TO ACCOUNTING FOR SCHOOL BOARDS
27.2 The transactions relating to School Board and education are similar to those relating to
other functions/departments of an ULB.
27.3
This is particularly so in case of:
a. fees received;
b. expenditure on stores & consumables;
c. expenditure on rent and electricity;
d. expenditure on repairs & maintenance;
e. expenditure on salaries and other employee dues;
f. expenditure on purchase, acquisition and construction of fixed assets; etc.
27.1
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
27.4 In addition, the treatment of grants, loans, investments, etc., in the books of the School
Board would also be similar to those of the ULBs itself.
27.5 Since the accounting entries for all the above have been discussed in the concerned
chapters of this manual, and are applicable in the case of the School Board they are not
repeated here. Reference is invited to concerned chapters as specified hereafter. The
transactions, which are peculiar to the School Board, however, been described in this chapter.
ACCOUNTING PRINCIPLES
27.6 The following accounting principles shall govern the recording, accounting and
treatment of peculiar transactions relating to municipal school board:
a. Fees and fines received from primary schools shall be recognised on actual
receipt.
b. Contribution receivable from Other ULBs /Municipalities shall be recognised
in the period in which they become due.
ACCOUNTING RECORDS AND PROCEDURES
27.7 This section describes the Records, Registers, Documents, Forms, Accounting Entries,
etc., in respect of accounting for transactions related to Municipal School Boards.
ACCOUNTING FOR FEES AND FINES RECEIVED FROM PRIMARY SCHOOLS
27.8 The fees and fines received from primary schools shall be recognised on actual receipt
basis.
27.9 Recording of fees and fines received from primary schools. In respect of fees and fines
received from primary schools, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,000
Cash Book,
10,000 Ledger,
Dr.
Bank Account*
Cr.
To Fees & ChargesOther fees – Tuition
Fees
* Specify the name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
450-21-(a)
140-40-(a)
Note: The postings in the Ledger Account of “Fees and fines from Primary Schools” Account
shall be carried out as indicated in Chapter 5 – General Accounting Procedures. The postings
in the Ledger Accounts shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever the cash or the bank account is involved,
there will be no entry in the Journal Book.
27.2
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
CONTRIBUTIONS FROM OTHER LOCAL BODIES/ MUNICIPALITIES
27.10 Contributions may be received from other local bodies/municipalities and the
contribution receivable from them shall be recognised in the period in which they become
due.
27.11 The contributions are receivable during the financial year in various installments as
per the governing provisions and rules.
27.12 Recording of periodical installment receivable from other local bodies/municipalities.
For example if the contributions are received quarterly, the accounting entry for installments
receivable from the other local bodies/municipalities, are as follows:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
50,000
Journal
Book,
Ledger,
50,000
Dr.
431-40-(a) Receivable from Other
Sources - Contribution from
Other ULBs /Municipalities
To Contribution towards Cr.
160-30-(a)
schemes - from Other
ULBs /Municipalities
(a) Insert Detailed Head Codes of Account as applicable
27.13 Recording of quarterly instalments received from Other ULBs /Municipalities. On
receipt of quarterly instalments from the Other ULBs /Municipalities, the Accounts
Department shall pass the following accounting entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
50,000
Cash Book,
50,000 Ledger,
Dr.
450-21-(a) Bank Account*
Cr.
431-40-(a)
To Receivable from
Other Sources –
Contribution from Other
ULBs /Municipalities
* Specify the name of the bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
27.3
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
ACCOUNTING OF OTHER INCOMES
27.14 School Boards may earn income from tuition fees, special training course charges,
renting of School playgrounds, sale of scrap, etc. All these income shall be accounted on the
actual receipt basis. The accounting principles, procedure for accounting of these incomes and
the accounting entries shall be the same as described in Chapter 11 – Rental, Fees and Other
Incomes.
ACCOUNTING FOR STORES
27.15 The Municipal School Board may purchase uniforms, books, slates, etc., for students
of primary schools. It may also purchase forms and stationery for administrative use.
27.16 The accounting principles, procedure for accounting of stores and the accounting
entries shall be the same as what has been described in Chapter 13 on Stores, to which
reference is invited.
ACCOUNTING FOR EMPLOYEE RELATED TRANSACTIONS
27.17 The Municipal School Board may pay salaries and allowances, gratuity, leave
encashment, etc., to primary school teachers and administrative staff of the Board. It may also
handle their pension and provident fund related issues.
27.18 The accounting principles, procedure for accounting of employee related transactions
and the accounting entries shall be the same as what has been described in Chapter 14 on
Employee Related Transactions, to which reference is invited.
ACCOUNTING FOR OTHER REVENUE EXPENDITURE
27.19 The Municipal School Board may incur the following other revenue expenditure:
a. Meeting allowance, travelling allowance and other allowances to Board members;
b. Grants to municipal schools towards general school expenditure;
c. Grant-in-aid to approved private schools;
d. Payment in respect of books, slates and uniforms to students;
e. Expenditure on sports and cultural programs in schools;
f. Payment in respect of postage & stationery, photocopying charges, telephone
charges, electricity charges, water charges, vehicle fuel, vehicle repairs &
maintenance, etc.
27.4
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
27.20 The accounting principles, procedure for accounting of other revenue expenditures
and the accounting entries shall be the same as what has been described in Chapter 16 on
Other Revenue Expenditures, to which reference is invited.
ACCOUNTING FOR GRANTS
27.21 The Municipal School Board may receive the following recurring and non-recurring
grants from the State Government or other ULBs:
a. Revenue grant for municipal schools;
b. Revenue grant for private aided schools;
c. Capital grant for purchase/construction/modifications of primary schools;
d. Revenue grants for administrative expenses of the Board, etc.
27.22 The accounting principles, procedure for accounting of grants and the accounting
entries in the books of a School Board shall be the same as what has been described in
Chapter 17 on Grants to which reference is invited.
27.23 The accounting principles, procedures for accounting of the grants in the books of the
ULB sanctioning the grant to the school board is described in Chapter 24 on Special
transactions to which reference is invited.
ACCOUNTING FOR LOANS RAISED
27.24 The Municipal School Board may receive building loans from the Government.
27.25 The accounting principles, procedure for accounting of loans and the accounting
entries shall be the same as what has been described in Chapter 18 on Borrowings, to which
reference is invited.
ACCOUNTING FOR FIXED ASSETS
27.26 The Municipal School Board may incur the following capital expenditure:
a. Purchase of plots for school premises;
b. Construction/modification to school property;
c. Purchase of furniture & fixtures for schools like benches, chairs, blackboards,
cupboards, etc.
27.27 The accounting principles, procedure for accounting of construction of fixed assets
and their repairs & maintenance and the accounting entries shall be the same as what has been
described in Chapter 12 on Public Works, to which reference is invited.
27.5
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
27.28 The accounting principles, procedure for accounting of purchase of fixed assets and
the accounting entries shall be the same as what has been described in Chapter 21 on Fixed
Assets, to which reference is invited.
ACCOUNTING FOR INVESTMENTS
27.29 The Municipal School Board may invest its surplus funds in specified securities.
27.30 The accounting principles, procedure for accounting of investments and the
accounting entries shall be the same as what has been described in Chapter 20 on
Investments, to which reference is invited.
PERIOD END PROCEDURES
27.31 All the period end procedures followed by an ULB also followed as period-end
procedure by the School Boards.
FINANCIAL STATEMENTS OF A MUNICIPAL SCHOOL BOARD
27.32 At the end of every accounting period, the Municipal School Board shall prepare
Financial Statements including:
a. Income and Expenditure Statement (illustrated in Table 27.1); and
b. Balance Sheet (illustrated in Table 27.2).
c. Receipts and Payments Statement (illustrated in Table 27.3)
d. Cash flow Statement (illustrated in Table 27.4)
27.33 The manner in which the Financial Statements of a Municipal School Board are drawn
shall be the same as what has been described in Chapter 31 on Financial Statements, to which
reference is invited.
27.6
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
Table 27.1
Income and Expenditure Statement for the period from_________ to__________
Code
No.
1
1-10
1-20
1-30
1-40
1-50
1-60
1-70
1-71
1-80
A
2-10
2-20
2-30
2-40
2-50
2-60
2-70
2-71
2-72
B
A-B
2-80
2-90
Item/ Head of Account
2
INCOME
Tax Revenue
Assigned Revenues & Compensation
Rental Income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions & Subsidies
Income from Investments
Interest Earned
Other Income
Total – INCOME
EXPENDITURE
Establishment Expenses
Administrative Expenses
Operations & Maintenance
Interest & Finance Charges
Programme Expenses
Revenue Grants, Contributions & subsidies
Provisions & Write off
Miscellaneous Expenses
Depreciation
Total – EXPENDITURE
Gross surplus/ (deficit) of income over
expenditure before Prior Period Items
Add: Prior period Items (Net)
Gross surplus/ (deficit) of income over
expenditure after Prior Period Items
Less: Transfer to Reserve Funds
Net balance being surplus/ deficit carried over
to Municipal Fund
Schedule No
3
Current
Year
Amount
(Rs.)
4
Previous
Year
Amount
(Rs.)
5
I-1
I-2
I-3
I-4
I-5
I-6
I-7
I-8
I-9
5.1
I-10
I-11
I-12
I-13
I-14
I-15
I-16
I-17
1-18
27.7
National Municipal Accounts Manual
Balance Sheet of
Code of
Account
Transactions Relating to Municipal School Board
Table 27.2
ULB as on __________
Description of items
Schedule
No.
Current
Year
Amount
(Rs.)
Previous
Year
Amount
(Rs.)
LIABILITIES
3-10
3-11
3-12
3-20
3-30
3-31
3-40
3-41
3-50
3-60
Reserve & Surplus
Municipal (General) Fund
Earmarked Funds
Reserves
Total Reserves & Surplus
Grants, Contributions for specific purposes
Loans
Secured Loans
Unsecured Loans
Total Loans
Current Liabilities and Provisions
Deposits Received
Deposit works
Other Liabilities
Provisions
Total Current Liabilities and Provisions
TOTAL LIABILITIES
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
B-9
B-10
ASSETS
4-10
4-11
4-12
4-20
4-21
4-30
4-31
4-32
4-40
4-50
4-60
4- 61
4-70
4-80
Fixed Assets
Gross Block
Less: Accumulated Depreciation
Net Block
Capital Work-in-Progress
Total Fixed Assets
Investments
Investment – General Fund
Investments – Other Funds
Total Investments
Current Assets, Loans and Advances
Stock in Hand (Inventories)
Sundry Debtors (Receivables)
Gross amount outstanding
Less: Accumulated provision against bad and
doubtful Sundry Debtors
Net amount outstanding
Prepaid Expenses
Cash and Bank Balances
Loans, advances and deposits
Less: Accumulated Provision against Loans
Net Amount outstanding
Total Current Assets, Loans & Advances
Other Assets
Miscellaneous Expenditure (to the extent not
written off)
TOTAL ASSETS
B-11
B-12
B-13
B-14
B-15
B-16
B-17
B-18
B-19
B-20
27.8
Non-Operating Receipts
Loans Received
Deposits Received
Grants and contribution for specific purposes
Sale proceeds from Assets
Realisation of Investment General Fund
Realisation of Investment Other Funds
Deposit works
Revenue Collected in Advance
Loans & Advances to Employees (recovery)
Other Loans & Advances (recovery)
Deposits with External Agencies (recovery)
1-10
1-20
1-30
1-40
1-50
1-60
1-70
1-71
1-80
3-30/31
3-40
3-20
*
*
*
3-41
3-50
*
*
*
Head of Account
Current
Period
Amount
(Rs.)
Corresponding
Previous
Period Amount
(Rs.)
3-50
3-50
**
**
4-10
4-12
3-41
4-20
4-21
4-60
4-40
4-60
2-10
2-20
2-30
2-40
2-50
2-60
2-71
4-30
Cod
e
No.
Non-Operating Payments
Other Payables
Refunds Payable
Repayment of Loans
Refund of Deposits
Acquisition / Purchase of Fixed Assets
Capital Work in Progress
Deposit works
Investments General Fund
Investments Other Funds
Loans & Advances to Employees
Prepaid Expenses
Other Loans & Advances
Operating Payments
Establishment Expenses
Administrative Expenses
Operations and Maintenance
Interest & Finance Charges
Program Expenses
Revenue Grants, Contributions & Subsidies
Miscellaneous Expenses
Purchase of Stores
Other Collections on behalf of State and
Central Government
Head of Account
Current
Period
Amount
(Rs.)
27.9
Corresponding
Previous
Period Amount
(Rs.)
Transactions Relating to Municipal School Board
Table 27.3
Receipts and Payments Account for the period from_________ to__________
Opening Balances
Cash balances including Imprest
Balances with
Banks/Treasury (including
balances in designated bank accounts)
Operating Receipts
Tax Revenue
Assigned Revenues & Compensations
Rental income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions & Subsidies
Income from Investments
Interest Earned
Other Income
Code
No.
National Municipal Accounts Manual
Other Receipts [specify]
Transfer to Municipal Fund from Special
Funds
Head of Account
Current
Period
Amount
(Rs.)
Corresponding
Previous
Period Amount
(Rs.)
4-60
Cod
e
No.
GRAND TOTAL
* Details in respect of these items will be available in the corresponding asset ledger accounts.
** Details in respect of these items will be available in the corresponding liability ledger accounts.
Code
No.
National Municipal Accounts Manual
Other Payments [specify]
Transfer to Special Funds from Municipal
Fund
Closing Balances
Cash balances including Imprest
Balances with Banks/Treasury (including
balances in designated bank accounts)
GRAND TOTAL
Deposits with External Agencies
Head of Account
Current
Period
Amount
(Rs.)
27.10
Corresponding
Previous
Period Amount
(Rs.)
Transactions Relating to Municipal School Board
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
Table 27.4
Statement of Cash Flow
Previous Year
(Rs.)
Current Year
(Rs.)
a. Cash flows from operating activities
Gross surplus/ (deficit) over expenditure
Adjustments for
Add:
Depreciation
Interest & finance expenses
Less:
Profit on disposal of assets
Dividend Income
Investment income
Adjusted income over expenditure before effecting
changes in current assets and current liabilities and
extra ordinary items.
Changes in current assets and current liabilities
(Increase) / decrease in Sundry debtors
(Increase) / decrease in Stock in hand
(Increase) / decrease in prepaid expenses
(Increase) / decrease in other current assets
(Decrease)/ increase in Deposits received
(Decrease)/ increase in Deposits works
(Decrease)/ increase in other current liabilities
(Decrease)/ increase in provisions
Extra ordinary items (Specify)
Net cash generated from/ (used in) operating
activities (a)
b. Cash flows from investing activities
(Purchase) of fixed assets & CWIP
(Increase) / Decrease in Special funds/grants
(Increase) / Decrease in Earmarked funds
(Purchase) of Investments
Add:
Proceeds from disposal of assets
Proceeds from disposal of investments
Investment income received
Interest income received
27.11
National Municipal Accounts Manual
Transactions Relating to Municipal School Board
Previous Year
(Rs.)
Current Year
(Rs.)
Net cash generated from/ (used in) investing
activities (b)
c. Cash flows from financing activities
Add:
Loans from banks/others received
Less:
Loans repaid during the period
Loans & advances to employees
Loans to others
Finance expenses
Net cash generated from (used in) financing
activities (c)
Net increase/ (decrease) in cash and cash
equivalents (a + b + c)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Cash and Cash equivalents at the end of the
year comprises of the following account
balances at the end of the year:
i. Cash Balances
ii. Bank Balances
iii. Scheduled co-operative banks
iv. Balances with Post offices
v. Balances with other banks
Total
Note: items in () brackets denote as that they are to be deducted
27.12
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
CHAPTER 28
75$16$&7,2165(/$7,1*72
75$16325781'(57$.,1*
INTRODUCTION
28.1 Some ULBs provide transportation services. This may be carried on by a department
within the Local Body or by setting up a separate undertaking for this purpose. Separate
Books of Accounts shall be maintained for recording the transactions relating to the
Transport Undertaking if a separate fund is formed for this purpose. This chapter contains the
recommended accounting system for transactions relating to the transport undertakings.
Transport undertakings shall maintain independent books of accounts for recording the
transactions relating to the transport undertaking.
ACCOUNTING PRINCIPLES
28.2 The following Accounting Principles shall govern the recording, accounting and
treatment of peculiar transactions relating to Transport Undertaking:
a. Revenue in respect of ticket charges and monthly passes shall be recognised on actual
receipt.
b. The liability towards dues to the State Government for collections on its behalf, i.e.,
Child Welfare Surcharge, shall be recognised as and when it is collected.
28.1
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
c. Revenue in respect of Rebate from State Government for collection made on their
behalf, i.e., Child Welfare Surcharge, shall be recognised at the rates prescribed by the
State Government at the time of creating the liability to the state government.
d. Payments to be made by the Transport Undertaking to the Municipal Fund shall be
accounted on actual payment.
GENERAL APPROACH TO ACCOUNTING FOR TRANSPORT UNDERTAKING
28.3 The transactions relating to Transport Undertaking are similar to those relating to
other functions/departments of a ULBs.
28.4
This is particularly so in case of:
i. Incomes;
a. from luggage charges;
b. from renting of buses;
c. from advertisement charges for advertisements on buses, sheds, tickets;
d. from tender form fees;
e. from investments, etc.;
ii. Expenditures:
a. on salaries and other employee dues;
b. on stores & consumables;
c. on repairs & maintenance;
d. on general administration, etc.;
iii. Fixed Assets:
a. on purchase and acquisition of buses, general office equipment, specific equipment
for workshops;
b. on purchase of land and construction of depots, sheds and bus stops, etc.
28.5 In addition, the treatment of grants loans, investments, etc., and period end procedures
would also be similar to those in respect of the ULBs itself.
28.6 Since the accounting entries for all the above have been discussed in the concerned
chapters of this manual, and are applicable in the case of the Transport Undertaking also, they
are not repeated here. Reference is invited to concerned chapters as specified hereafter. The
transactions, which are peculiar to the Transport Undertaking, have, however, been described
below.
28.2
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
ACCOUNTING OF COLLECTIONS FROM SALE OF TICKETS
28.7 Recording of collections. For collections made, the Accounts Department shall pass
the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Cash Book,
10,00,000 Ledger
450-21-(a) Bank Account *
Dr.
140-50-(a)
To Ticket Income Cr.
* Specify name of bank
(a) Insert Detailed Head Codes of Account as applicable
Note: The postings in the Ledger (Form GEN-3) of “Ticket Income” Account, shall be
carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in
the Ledger shall be similarly carried out in respect of all other accounting entries
described subsequently in this chapter. Whenever, the cash or the bank account is
involved, there will be no entry in the Journal Book (Form GEN-2).
Rebate on collections made on behalf of State Government
28.8 Recording of amount due from State Government in respect of rebate. The Transport
Undertakings are entitled to a rebate at the prescribed rates for the collections made on behalf
of the State Government. The revenue in respect of rebate shall be recognised on creation of
liability to the Government. To recognise the income, the Accounts Department shall pass the
following entry after effecting the entry referred in Para 28.6 above:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,000
Journal Book,
Ledger
Dr.
350-30-(a) Government Dues
Payable –Child
Welfare Surcharge
140-70-(a)
To Rebate on Child Cr.
Welfare Surcharge
collection from
State Government
(a) Insert Detailed Head Codes of Account as applicable
1,000
28.9 Payment of State Government dues. For recording the payment made to State
Government, the Accounts Department shall pass the following entry:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
45,000
Cash Book,
Ledger
350-30-(a) Government Dues
Dr.
Payable – Child
Welfare Surcharge
450-21-(a)
To Bank Account*
Cr.
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
45,000
28.3
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
ACCOUNTING OF OTHER INCOMES
28.10 Transport Undertaking may earn income from luggage charges; renting of buses;
advertisement charges for advertisement on buses, tickets, bus-stops etc.; fines and penalties
for travel without ticket; fines from employees; sale of scrap; tender form fees; etc. All these
income shall be accounted on actual receipt basis.
28.11 The accounting principles, procedure for accounting of these incomes and the
accounting entries shall be the same as described in Chapter 11 Rentals, Fees and other
incomes.
ACCOUNTING OF STORES
28.12 The Transport Undertaking purchases stores and spares like tyres & tubes, battery,
tools, etc., for recurring maintenance of transport facilities. It purchases diesel, oil and
lubricants for operating the buses. It also purchases stationery and other general
administrative stores.
28.13 The accounting principles, procedure for accounting of stores and the accounting
entries shall be the same as described in Chapter 13 on Stores.
ACCOUNTING OF EMPLOYEE RELATED TRANSACTIONS
28.14 The Transport Undertaking pays salaries and allowances, gratuity, leave encashment,
etc., to the employees of the Transport Undertaking. It handles their pension and provident
fund. It also gives loans and advances to the employees of the Transport Undertaking.
28.15 The accounting principles, procedure for accounting of employee related transactions
and the accounting entries shall be the same as described in Chapter 14 - Employee Related
Transactions.
ACCOUNTING OF OTHER REVENUE EXPENDITURE
28.16 The Transport Undertaking incurs the following other revenue expenditure:
a. Payment of Passenger Tax and Tax under Motor Vehicle Act to the State
Government;
b. Repairs and maintenance of vehicles, electrical equipments, etc.;
c. Vehicle registration and renewal expenses, vehicle insurance, etc.;
d. Ticket printing;
e. Payment for general insurance, accident claims and medical expenses of injured
employees;
f. Legal fees;
28.4
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
g. Payment of meeting allowance, honorarium to Transport Committee members;
h. Payment in respect of postage & stationery, photocopying charges, telephone charges,
electricity charges, water charges and other general administrative expenses; etc.
28.17 The accounting principles, procedure for accounting of other revenue expenditures
and the accounting entries shall be the same as described in Chapter 16 - Other Revenue
Expenditures.
ACCOUNTING OF GRANTS
28.18 The Transport Undertaking may receive grants from the ULBs, State Government
(e.g. Police Department Grant), etc.
28.19 The accounting principles, procedure for accounting of grants and the accounting
entries shall be the same as described in Chapter 17 - Grants.
28.20 The accounting principles, procedure for accounting of grants to the transport
undertakings by the local bodies in their books of accounts shall be the same as described in
Chapter 24 Special transactions.
ACCOUNTING OF FIXED ASSETS
28.21 The Transport Undertaking would generally acquire or construct depots, sheds and
bus stops. It would purchase buses for providing transport services and specific equipment for
its routine repairs and maintenance. It would also purchase furniture & fixtures and other
office equipment for administrative purposes. Transport Undertaking also incurs expenses on
repairs and maintenance of buses, bus stops, bus - depots & sheds, etc.
28.22 The accounting principles, procedure for accounting of construction of fixed assets
and their repairs & maintenance and the accounting entries shall be the same as described in
Chapter 12 - Public Works.
28.23 The accounting principles, procedure for accounting of purchase of fixed assets and
the accounting entries shall be the same as described in Chapter 21 - Fixed Assets.
ACCOUNTING OF INVESTMENTS
28.24 The Transport Undertaking may invest surplus funds in the specified securities as per
the provisions and rules of the act governing the transport undertaking
28.25 The accounting principles, procedure for accounting of investments and the
accounting entries shall be the same as described in Chapter 20 - Investments.
ACCOUNTING OF LOANS
28.26 Transport Undertaking may receive loans from State Government and other agencies.
28.27 The accounting principles, procedure for accounting of loans and the accounting
entries shall be the same as described in Chapter 18 - Borrowings.
28.5
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
28.28 Sometimes loans may also be advanced by Local Body to meet out any deficit in the
Transport undertaking account. The accounting principles, procedure for accounting of loans
to the transport undertakings by the local bodies in their books of accounts shall be the same
as described in Chapter 24 Loans and Advances.
ACCOUNTING OF FIXED ANNUAL PAYMENT TO ULBs
28.29 The provisions and rules of the act governing the transport undertaking normally
requires the Transport Undertaking to make a fixed annual payment to the ULBs, when the
services are carried as a separate undertaking On making such payment to Municipal Fund,
the Accounts Department shall pass the following entry:
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
260-20-(a) Fixed Contribution to
Dr.
2,00,000
Cash Book,
Municipal Fund
Ledger
450-21-(a)
To Bank Account*
Cr.
2,00,000
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
28.30 If there is a deficit in the Revenue Account for making the fixed payment to the
Municipal Fund, it shall be made good from the Revenue Reserve Fund. For making payment
to the Municipal Fund from the Revenue Reserve Fund, the Accounts Department shall pass
the following entries:
a. For payment from Revenue Reserve Fund:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Cash Book,
Ledger
1,00,000
Dr.
Fixed Contribution to
Municipal Fund
Cr.
450-41-(a)
To Designated Bank
Account *
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
260-20-(a)
b. For transfer of equivalent funds from Revenue Reserve Fund to Transport Fund:
Code of
Account
311-(a)
311-(a)
Accounting Entry
Dr./
Cr.
Revenue Reserve Fund
To Transport Fund
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Journal Book,
1,00,000 Ledger,
(a) Insert Minor & Detailed Head Codes of Account as applicable
28.6
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
ACCOUNTING FOR DISPOSAL OF SURPLUS
28.31 Any surplus in the Revenue Account of the Transport under taking, after making the
fixed payment to the ULBs, shall be disposed as provided in the relevant governing Act.
Transfer of surplus may be made to reserve funds, Betterment Fund, Welfare Fund etc. This
is illustrated with an example given below:
28.32
Transfer to of surplus to
Revenue Reserve Fund: 30%
Transport Betterment Fund: 30%
Welfare Fund maintained with Local Body: 25%
Contribution to Municipal Fund: 15%
28.33 For transfers as explained above, Accounts Department shall pass the following
entries:
a. For transfer of funds from Transport Fund
Code of
Account
Accounting Entry
311-(a)
311-(a)
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Journal Book,
30,000 Ledger,
Dr.
Special Funds -Transport Fund
Cr.
To Reserves Revenue
Reserve Fund
311-(a)
To Reserves -Transport
Cr.
Betterment Fund
To Other Payables -Liability Cr.
350-80-(b)
for contribution to Welfare
Fund
To Other Payables -Dues to Cr.
350-80-(b)
ULBs
(a) Insert Minor & Detailed Head Codes of Account as applicable
(b) Insert Detailed Head Codes of Account as applicable
30,000
25,000
15,000
b. For transfer of money from Designated Transport Bank Account to respective
Designated Special Fund Bank Accounts:
Code of
Account
Accounting Entry
Credit
Debit
Amount
Amount
Books to be
Dr./
(Rs.)
(Rs.)
entered into
Cr.
Illustrative Illustrative
figures
figures
Cash Book
30,000
Dr.
Revenue Reserve Fund Bank
Account*
30,000
Transport Betterment Fund Bank Dr.
450-(a)
Account*
Cr.
To Designated Transport
450-(a)
Bank Account*
* Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
450-(a)
60,000
28.7
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
c. On payment of amount equal to 25% of surplus to ULBs for credit to the Welfare
Fund:
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
25,000
Cash Book,
Ledger
Dr.
350-80-(a) Others Liability for
contribution to Welfare
Fund
Cr.
450-(b)
To Designated
Transport Bank
Account*
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
25,000
d. On payment of amount equal to 15% of surplus to Municipal Fund.
Code of
Account
Accounting Entry
Dr./
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
15,000
Cash Book,
Ledger
15,000
Dr.
Other Payables -Dues to
ULBs
To Designated Transport
Cr.
450-(b)
Bank Account*
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
350-80-(a)
28.34 In respect of accounts of the ULBs, the above receipts shall be accounted as follows:
28.35 Recording the receipt of 25% of the surplus received from the Transport Undertaking
for credit to the Welfare Fund the Accounts Department of the ULBs shall record the
following entry:
27.1
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
Accounting Entry
(Rs.)
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
450-(a)
Bank Account*
Dr.
25,000
Cash Book,
311-(a)
To Welfare Fund
Cr.
25,000 Ledger
* Specify the name of the Bank and Account number
(a) Insert Minor & Detailed Head Codes of Account as applicable
28.36 Recording the receipt of 15% of the surplus being a contribution to the Municipal
Fund the Accounts Department of the ULBs shall record the following entry:
28.8
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
Credit
Debit
Amount
Amount
Books to be
Code of
Dr./
(Rs.)
Accounting Entry
(Rs.)
entered into
Account
Cr.
Illustrative Illustrative
figures
figures
450-21-(a) Bank Account*
Dr.
15,000
Cash Book,
310-(b)
To Municipal Fund
Cr.
15,000 Ledger
* Specify the name of the Bank and Account number
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Minor & Detailed Head Codes of Account as applicable
PERIOD END PROCEDURES
28.37 All the period end procedures followed by an Urban Local Body are also to be
followed as period end procedure by the School Boards;
FINACIAL STATEMENTS OF A TRANSPORT UNDERTAKING
28.38 At the end of every accounting period, the Transport Undertaking shall prepare
Financial Statements including:
i. Income and Expenditure Statement (illustrated in Table 28.1); and
ii. Balance Sheet (illustrated in Table 28.2).
iii. Receipts and Payments Statement (illustrated in Table 28.3)
iv. Cash flows Statement (illustrated in Table 28.4)
28.39 The manner in which the Financial Statements of a Transport Undertaking are to be
drawn shall be the same as what has been described in Chapter 31 - Financial Statements,
reference to which is invited.
28.40 The amount that is due to the Municipal Body in respect of the Fixed Annual
Contribution to the Municipal Fund shall be disclosed in the notes to accounts.
28.9
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
Table 28.1
Income and Expenditure Statement for the period from_________ to__________
Code
No.
1
1-10
1-20
1-30
1-40
1-50
1-60
1-70
1-71
1-80
A
2-10
2-20
2-30
2-40
2-50
2-60
2-70
2-71
2-72
B
A-B
2-80
2-90
Item/ Head of Account
2
INCOME
Tax Revenue
Assigned Revenues & Compensation
Rental Income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions & Subsidies
Income from Investments
Interest Earned
Other Income
Total – INCOME
EXPENDITURE
Establishment Expenses
Administrative Expenses
Operations & Maintenance
Interest & Finance Charges
Programme Expenses
Revenue Grants, Contributions & subsidies
Provisions & Write off
Miscellaneous Expenses
Depreciation
Total – EXPENDITURE
Gross surplus/ (deficit) of income over
expenditure before Prior Period Items
Add: Prior period Items (Net)
Gross surplus/ (deficit) of income over
expenditure after Prior Period Items
Less: Transfer to Reserve Funds
Net balance being surplus/ deficit carried over
to Municipal Fund
Schedule
No
3
Current Year
Amount (Rs.)
4
Previous Year
Amount (Rs.)
5
I-1
I-2
I-3
I-4
I-5
I-6
I-7
I-8
I-9
I-10
I-11
I-12
I-13
I-14
I-15
I-16
I-17
1-18
28.10
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
Table 28.2
Balance Sheet of
Code No
Description of items
ULB as on __________
Schedule
No.
Current Year
Amount
(Rs.)
Previous Year
Amount
(Rs.)
LIABILITIES
Reserve & Surplus
3-10
3-11
3-12
Municipal (General) Fund
Earmarked Funds
Reserves
Total Reserves & Surplus
B-1
B-2
B-3
3-20
Grants, Contributions for specific purposes
Loans
Secured Loans
Unsecured Loans
Total Loans
Current Liabilities and Provisions
Deposits Received
Deposit works
Other Liabilities
Provisions
Total Current Liabilities and Provisions
TOTAL LIABILITIES
B-4
3-30
3-31
3-40
3-41
3-50
3-60
4-10
4-11
4-12
4-20
4-21
4-30
4-31
4-32
4-40
4-50
4-60
4- 61
4-70
4-80
ASSETS
Fixed Assets
Gross Block
Less: Accumulated Depreciation
Net Block
Capital Work-in-Progress
Total Fixed Assets
Investments
Investment Municipal Fund
Investments Other Funds
Total Investments
Current Assets, Loans and Advances
Stock in Hand (Inventories)
Sundry Debtors (Receivables)
Gross amount outstanding
Less: Accumulated provision against bad and
doubtful Sundry Debtors
Net amount outstanding
Prepaid Expenses
Cash and Bank Balances
Loans, advances and deposits
Less: Accumulated Provision against Loans
Net Amount outstanding
Total Current Assets, Loans & Advances
Other Assets
Miscellaneous Expenditure (to the extent not
written off)
TOTAL ASSETS
B-5
B-6
B-7
B-8
B-9
B-10
B-11
B-12
B-13
B-14
B-15
B-16
B-17
B-18
B-19
B-20
28.11
1-70
1-71
1-80
1-10
1-20
1-30
1-40
1-50
1-60
Code
No.
Tax Revenue
Assigned Revenues & Compensations
Rental income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions &
Subsidies
Income from Investments
Interest Earned
Other Income
Operating Receipts
Table 28.3
Current
Period
Amount
(Rs.)
Establishment Expenses
Administrative Expenses
Operations and Maintenance
Interest & Finance Charges
Program Expenses
Revenue Grants, Contributions & Subsidies
Operating Payments
Head of Account
2-71 Miscellaneous Expenses
4-30 Purchase of Stores
Other Collections on behalf of State and
Central Government
2-10
2-20
2-30
2-40
2-50
2-60
Corresponding
Previous
Code
No.
Period
Amount (Rs.)
Current
Period
Amount
(Rs.)
28.12
Corresponding
Previous Period
Amount (Rs.)
Transactions relating to Transport Undertaking
Receipts and Payments Account for the period from_________ to__________
Cash balances including Imprest
Balances with Banks/Treasury (including
balances in designated bank accounts)
Opening Balances
Head of Account
National Municipal Accounts Manual
*
*
*
*
*
3-41
3-50
*
330/31
3-40
3-20
Code
No.
Other Receipts [specify]
Transfer to Municipal Fund from Special
Funds
Cash balances including Imprest
Closing Balances
Other Payments [specify]
Transfer to Special Funds from Municipal
Fund
4-60 Other Loans & Advances
4-60 Deposits with External Agencies
Current
Period
Amount
(Rs.)
28.13
Correspondi
ng Previous
Period
Amount (Rs.)
Transactions relating to Transport Undertaking
Refund of Deposits
Acquisition / Purchase of Fixed Assets
Capital Work in Progress
Deposit works
Investments General Fund
Investments Other Funds
4-60 Loans & Advances to Employees
4-40 Prepaid Expenses
**
4-10
4-12
3-41
4-20
4-21
3-50 Refunds Payable
** Repayment of Loans
Head of Account
Deposits Received
Grants and contribution for specific
purposes
Sale proceeds from Assets
Realisation of Investment General Fund
Realisation of Investment Other Funds
Deposit works
Revenue Collected in Advance
Loans & Advances to Employees
(recovery)
Other Loans & Advances (recovery)
Deposits
with
External
Agencies
(recovery)
Corresponding
Code
Previous
Period
No.
Amount (Rs.)
Non-Operating Payments
3-50 Other Payables
Current
Period
Amount
(Rs.)
Non-Operating Receipts
Loans Received
Head of Account
National Municipal Accounts Manual
GRAND TOTAL
Head of Account
Current
Period
Amount
(Rs.)
Corresponding
Code
Previous
Period
No.
Amount (Rs.)
Head of Account
Current
Period
Amount
(Rs.)
28.14
Corresponding
Previous
Period
Amount (Rs.)
Transactions relating to Transport Undertaking
Balances with Banks/Treasury (including
balances in designated bank accounts)
GRAND TOTAL
* Details in respect of these items will be available in the corresponding asset ledger accounts.
** Details in respect of these items will be available in the corresponding liability ledger accounts.
Code
No.
National Municipal Accounts Manual
National Municipal Accounts Manual
Transactions relating to Transport Undertaking
Table 28.4
Statement of Cash Flow
Particulars
Previous Year
(Rs.)
Current Year
(Rs.)
a. Cash flows from operating activities
Gross surplus/ (deficit) over expenditure
Adjustments for
Add:
Depreciation
Interest & finance expenses
Less:
Profit on disposal of assets
Dividend Income
Investment income
Adjusted income over expenditure before effecting
changes in current assets and current liabilities and extra
ordinary items.
Changes in current assets and current liabilities
(Increase) / decrease in Sundry debtors
(Increase) / decrease in Stock in hand
(Increase) / decrease in prepaid expenses
(Increase) / decrease in other current assets
(Decrease)/ increase in Deposits received
(Decrease)/ increase in Deposits works
(Decrease)/ increase in other current liabilities
(Decrease)/ increase in provisions
Extra ordinary items (Specify)
Net cash generated from/ (used in) operating activities (a)
b. Cash flows from investing activities
(Purchase) of fixed assets & CWIP
(Increase) / Decrease in Special funds/grants
(Increase) / Decrease in Earmarked funds
(Purchase) of Investments
Add:
Proceeds from disposal of assets
Proceeds from disposal of investments
Investment income received
Interest income received
Net cash generated from/ (used in) investing activities (b)
c. Cash flows from financing activities
Add:
Loans from banks/others received
Less:
Loans repaid during the period
Loans & advances to employees
Loans to others
Finance expenses
Net cash generated from (used in) financing activities (c)
28.15
National Municipal Accounts Manual
Particulars
Transactions relating to Transport Undertaking
Previous Year
(Rs.)
Current Year
(Rs.)
Net increase/ (decrease) in cash and cash equivalents (a
+ b + c)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Cash and Cash equivalents at the end of the year
comprises of the following account balances at the end
of the year:
i. Cash Balances
ii. Bank Balances
iii. Scheduled co-operative banks
iv. Balances with Post offices
v. Balances with other banks
Total
Note: items in () brackets denote as that they are to be deducted
28.16
Period-End Procedures
National Municipal Accounts Manual
CHAPTER 29
3(5,2'(1' 352&('85(6
INTRODUCTION
29.1 This chapter describes the procedures to be followed by an ULB to facilitate
preparation of periodical accounts. Each ULB would prepare periodical accounts at quarterly
or such other shorter period as may be defined by the State and this shall be in addition to the
annual accounts.
29.2 It is recommended that certain reconciliations and other accounting procedures be
carried out on a daily and monthly basis so that the recording of transactions is up to date.
These would be in addition to quarterly and annual procedures.
29.3 The specific period-end procedures in relation to various categories of transactions
have been described in the relevant chapters. The procedures to be followed on a daily,
monthly, quarterly and annual basis are covered under the following heads:
i. Daily Procedures
a. Closing of Cash Book
b. Physical verification of cash balance
c. Deposit of collections (both cash and cheque) in the bank
d. Checking ledger accounts with the books of original entries, i.e., Cash Book
and Journal Book
e. Verification of number of receipts issued as reported by the collection office
with the Collection Register
f. Updation of Subsidiary Ledgers
29.1
National Municipal Accounts Manual
Period-End Procedures
ii. Monthly Procedures
a. Bank Reconciliation
b. Recording of expenditures incurred against permanent advance
c. Payment of provident fund dues and pension contribution in respect of
employees on deputation
d. Reconciliation of Function wise Income/Expense Subsidiary Ledgers with
respective TB totals.
e. Compilation of details of closing stock for recording the consumption of stores
at the end of the months.
f. Closing of ledger accounts
iii. Quarterly Procedures
a. Reconciliation of deposits, advances, receivables and incomes
b. Provision for period-end expenses
c. Transfer of revenue grant received in advance for specific purpose to grant
income
d. Recognition of grant income for revenue expenditure incurred in respect of
grant receivable as reimbursement
e. Accrual of interest on borrowings
f. Recording of provision for bills remaining unpaid in respect of Special Fund
expenditure
g. Accrual of interest on investments
h. Accrual of interest on loans to employees
i. Reconciliation of Capital Work in Progress
j. Reconciliation of Inter Unit Balances
k. Passing of adjustment entries
l. Closing of ledger accounts
iv. Annual Procedures
a. Physical verification of stores
b. Physical verification of fixed assets
c. Transfer of funds from special funds to Special Funds (Utilised)
29.2
National Municipal Accounts Manual
Period-End Procedures
d. Confirmation of all categories of advances
e. Provision for unrealised revenue
f. Accounting of prepaid expenses
g. Contribution of difference in interest to the provident fund
h. Expenditure for the benefit of Backward classes or similar other welfare
schemes
i. Confirmation from Government/Quasi-government and Government owned
agencies
j. Closing of ledger accounts
29.4
Each of the above procedures has been described in detail as follows:
Daily Procedures
29.5 Balancing of Cash Book: The Cash Book shall be totalled and balanced daily. The
posting of the day’s transactions shall be made in the respective Ledger Accounts by the end
of the day. The closing cash and bank balance of the day shall be carried forward to the next
day as opening balance for that day.
29.6 Physical verification of cash balance: Cash available with the Accounts Department
shall be physically verified by the Cashier. The values and denominations of the cash
physically verified shall be noted in the Cash Book itself. This shall be certified by the
Cashier and the Head of the Accounts Department. The cash balance as physically verified
should match with the closing cash balance as per the Cash Book.
29.7 Deposit of collections (both cash and cheque) in the Bank: The cash and cheque
collection shall be remitted to the Accounts Department or deposited with the Bank (Main
Bank or Designated Banks) in the manner and in accordance with the procedure provided for
in Chapter 5 - General Accounting Procedures. Care has to be taken that the money is
remitted or deposited either on the same day or by the next working day. Further, it shall be
ensured that the funds are transferred from the Designated Bank Accounts to the Main Bank
Account at such periodicity as may be prescribed by the states.
29.8 Checking of ledger accounts with the books of original entries, i.e., Cash Book and
Journal Book: The daily postings of the entries in the Ledger Accounts from the Cash Book
and the Journal Book shall be checked and certified by the Head of the Accounts Department
or other designated officer. The employee making the concerned posting shall also certify the
posting of each transaction recorded in the books of original entries. Necessary rectification
entries shall be passed immediately in respect of differences or errors in posting.
29.3
National Municipal Accounts Manual
Period-End Procedures
29.9 Verification of number of receipts issued as reported by the collection office with the
Collection Register: On receipt of Chalan for Remittance of Money from the Collection
Office, the Head of the Department supervising the functioning of the Collection Office shall
verify the duplicate copies of the receipts issued with the entries made in the Collection
Register and in the Chalan for Remittance of Money. The number of receipts cancelled shall
be reported in the Chalan for Remittance of Money.
29.10 Updation of Subsidiary Ledger: The Accounts Department shall update the following
Subsidiary Registers at the end of each day:
a.
Functions wise Income Subsidiary Ledger in respect of all major heads of
Income during the day;
b.
Functions wise Expense Subsidiary Ledger in respect of all major heads of
Expenses during the day;
Monthly Procedures
29.11 Bank Reconciliation: Bank Reconciliation shall be carried out for each of the Banks
either on a monthly basis or for such shorter time interval as the ULB may decide. The
procedure for bank reconciliation has been provided in Chapter 30 - Reconciliation
Procedures.
29.12 Recording of expenditure incurred against permanent advance: At the end of each
month, the Head of the Department, to whom permanent advance has been disbursed, shall
prepare and submit a payment order for expenses incurred against the permanent advance.
The Register of Permanent Advance maintained at the Departments shall be updated on a
daily basis for the expenses incurred and updated for payment order prepared and sent to the
Accounts Department.
29.13 Payment of provident fund dues and pension contribution in respect of employees on
deputation. The Accounts Department shall ensure that the provident fund deducted from the
salaries of the employees on deputation and the pension contribution payable for their benefit
have been paid on time to the Government.
29.14 Reconciliation of Function wise Income/Expense Subsidiary Ledgers with respective
ledger accounts: Subsidiary ledgers of all Function wise Income and Expense shall be
reconciled. The following is an illustrative list of Subsidiary Ledgers for which the Accounts
Department shall prepare reconciliation statements on a monthly basis:
a. Functions wise Income Subsidiary Ledger in respect of all major heads of
Income during the day;
b. Functions wise Expense Subsidiary Ledger in respect of all major heads of
Expenses during the day.
29.4
National Municipal Accounts Manual
Period-End Procedures
29.15 Compilation of details of closing stock for preparation of financial statements at the
end of the month: At the end of each month, the Stores-in-charge shall prepare a Statement of
Closing Stock in Form ST – 3 for the stocks held in the Stores and issues made for various
purposes from the entries made in the Stores Ledger. The procedure for preparation of such
statement and valuation of the closing stock has been outlined in Chapter 13 - Stores.
29.16 Closing of ledger accounts: The ledger accounts shall be totalled and balanced at the
end of each month or such shorter period as the ULB may decide. The closing balances for
each of ledger accounts shall be determined and posted in the Trial Balance prepared for that
period. The procedures for preparation of Trial Balance have been outlined in Chapter 31Financial Statements.
Quarterly Procedures
29.17 Reconciliation of deposits, advances, receivables and income: The deposits received
from contractor/supplier or any other deposit; advances provided to contractor/supplier or to
the departments or employees of the ULB; receivables in respect of various sources of income
and money received from various sources of income shall be reconciled at the end of each
quarter. The procedure for reconciliation has been described in Chapter 30 - Reconciliation
Procedures.
29.18 Provision for period-end expenses: At the end of an accounting period (quarter), all
the departments of the ULB shall prepare a Statement of Outstanding Liability for Expenses
in Form GEN – 28. The procedures for making period-end provision entries has been outlined
in the relevant chapters and are briefly described below:
a. Provision for expenses incurred on original work/ operations or maintenance
work being executed by the Public Works Department for which either no
payment has been made, or part payment has been made against the bills
received, shall be made in accordance with the procedures outlined in Chapter
12 - Public Works.
b. Provision for materials purchased for which either no payment has been made,
or part payment has been made against the bills received, by the Stores, shall
be made in accordance with the procedures outlined in Chapter 13 - Stores.
Provision shall also be made for materials received for which bills are not
received at the values indicated in the Purchase Order.
c. Provision for revenue expenditures other than those described above for which
either no payment has been made, or part payment has been made against the
bills received, shall be made in accordance with the procedures outlined in
Chapter 16 - Other Revenue Expenditures.
29.5
National Municipal Accounts Manual
Period-End Procedures
d. Provision for interest accrued but not due on the money borrowed through
loans or debentures shall be made in accordance with the procedures outlined
in Chapter 18 Borrowings (Loans Received).
e. Provision for fixed assets purchased, for which either no payment has been
made, or part payment has been made against the bills received, shall be made
in accordance with the procedures outlined in Chapter 21 - Fixed Assets.
f. Provision for Depreciation on Fixed assets shall be calculated in accordance
with the procedures outlined in the Chapter 21 Fixed Assets.
29.19 Transfer of revenue grant received in advance for specific purpose to grant income.
The balance in the Revenue Grant Account received in advance, to the extent utilised during
the period shall be transferred to the respective Grant Income Account. Where such transfer
has not been made, the Accounts Department shall pass the relevant entries in accordance
with the procedures outlined in Chapter 17 - Grants.
29.20 Recognition of grant income for revenue expenditure incurred in respect of grant
receivable as reimbursement. The revenue expenditure incurred during the period towards
specific projects/schemes under a grant receivable, as a reimbursement shall be recognised as
income at the end of each quarter. Where such income has not been recognised, the Accounts
Department shall pass the relevant entries in accordance with the procedures outlined in
Chapter 17 - Grants.
29.21 Accrual of interest on borrowings: Interest charges on loans received, which is not due
shall be accrued, in accordance with the procedures outlined in Chapter 18 Borrowings
(Loans received).
29.22 Recording of provision for bills remaining unpaid in respect of Special Fund
expenditure: Provision shall be made for the revenue expenditure incurred under Special
Fund during the period in accordance with the procedures outlined in Chapter 19 Special
Funds.
29.23 Accrual of interest on investments. Interest accrued but not due on investments made
shall be accrued in accordance with the procedures outlined in Chapter 20 - Investments.
29.24 Accrual of interest on loans advanced to employees. The amount of interest accrued in
respect of loans provided to employees shall be determined and accrued in accordance with
the procedures outlined in Chapter 14 - Employee Related Transactions.
29.25 Reconciliation of Capital Work in Progress: Expenditure incurred on cumulative total
of several Capital Work-in-Progress Ledger Accounts should be reconciled at the end of each
quarter with the Summary Statement of Status on Capital Work-in-Progress received from the
department. The Accounts Department shall ensure that total expenditure incurred as stated in
the Statement tallies with the cumulative total of several Capital Work-in-Progress Ledger
Accounts.
29.6
National Municipal Accounts Manual
Period-End Procedures
29.26 Reconciliation of Inter unit Account balances: At the end of each period reconciliation
of inter unit transactions is intended to identify the disputed / unaccepted inter unit
transactions between an ‘originating AU’ and the ‘responding AU’ and take appropriate
action for rectification. Further, reconciliation of inter unit account is necessary in the process
of consolidation of ULB at the head office level as the balances of inter unit account balances
shall be nullified.
29.27 Passing of adjustment entries: At the period-end, the Accounts Department shall
verify whether proper distinction has been maintained between revenue and capital
transactions and between the transactions having effect in two accounting periods. In case,
any income or expenditure for the previous periods or the subsequent periods has been
accounted for as income or expenditure of the current period, the rectification entries as
outlined in Chapter 5 - General Accounting Procedures shall be made by the Accounts
Department.
29.28 Closing of ledger accounts: The ledger accounts shall be totalled and balanced at the
end of each quarter or such shorter period as the ULB may decide for preparation of Financial
Statements. The closing balances for each of ledger accounts shall be determined and posted
in the Trial Balance prepared for that period. The procedures for preparation of Trial Balance,
and, from it, the Financial Statements, have been outlined in Chapter 31- Financial
Statements. The closing balance in the assets and liabilities ledger accounts of the period shall
be carried forward as opening balance of the next period.
Annual Procedures
29.29 All the period-end procedures, including the passing of adjustment entries performed
at the end of each quarter, as explained above, shall also be performed at the end of each
accounting year. In addition to that, further period-end procedures required to be performed at
the year-end have been described below.
29.30 Physical verification of stores: The physical verification of stores and consumables
shall be carried out at least once in a year on the last day of the accounting year and at such
time intervals as the ULB may decide. The verification shall be carried out by the Stores-incharge in presence of the personnel of the Audit Department, who shall certify the stock
sheet. The physically verified stores shall be reconciled with the balances as per the stores
records. The value of physically verified closing stock would be incorporated in the Financial
Statements. The procedure for valuation of closing stock has been outlined in Chapter 13 Stores.
29.31 Physical verification of fixed assets: A Committee consisting of Municipal
Commissioner, Head of the Accounts Department, Head of the Public Works Department and
such other representatives as the ULB’s Statutory Authority resolves, shall be formed. The
Committee shall ensure the existence of a system of conducting physical verification of fixed
assets throughout the year so that each fixed asset is verified at least once during the year.
29.7
National Municipal Accounts Manual
Period-End Procedures
Any discrepancies with the Fixed Assets Register should be reconciled and brought to the
attention of the Statutory Authority. For this, the Committee shall prepare a plan of action for
physical verification of its fixed assets. The Accounts Department together with the Public
Works Department shall carry out physical verification as per the procedures provided in the
verification plan. The details recorded in the verification sheets shall be checked with the
relevant Fixed Assets Registers and suitable remedial steps shall be taken in case of
discrepancies identified.
29.32 Transfer of funds from special funds: The balance in the Special Fund shall be
transferred to the Special Fund (Utilised) on construction or purchase or acquisition of fixed
asset at the time of capitalisation of the relevant expenditures into fixed asset. The procedure
for transfer has been provided in Chapter 19 - Special Funds. A control shall be kept on the
projects executed under any Special Fund for effecting transfer of balance.
29.33 Confirmation of all categories of advances. At the end of the year, the Accounts
Department shall obtain a confirmation from all the persons to whom the advances have been
provided including the Head of the Department for Permanent Advance and employees of the
ULB for miscellaneous advance provided.
29.34 Provision for unrealised revenue: A provision shall be made for the demands raised
during the accounting period but remaining outstanding. The procedure for provisioning, the
amount to be provided and the accounting entries have been outlined in the respective
chapters on incomes. The arrears of Receivable shall be carried forward year-wise up to two
years or five years depending on the provision norm applicable to that Income. On completion
of the last year the amount outstanding in the specific year-wise receivable account shall be
transferred to a general arrears account i.e. Receivable (Others) Account. Further, the
Accounts Department shall make a provision based on the provisioning principle suggested
for various types of Income.
29.35 Accounting of prepaid expenses. At the year-end, all the expenses shall be scrutinised
to identify those expenses whose benefit is likely to accrue in the next year and a prepaid
entry shall be passed in accordance with the procedures outlined in Chapter 16 - Other
Revenue Expenditures.
29.36 Contribution of difference in interest to the provident fund. The difference between
the interest earned on Provident Fund investment and interest payable on Provident Fund
contribution to the employees shall be contributed by the ULB and an amount equivalent to
the difference shall be transferred from the Main Bank Account to the Provident Fund Bank
Account.
29.37 Expenditure for the benefit of Backward Classes Welfare or similar other benefit
schemes of the ULBs. At the year-end, the Accounts Department shall collate the expenditure
incurred for the benefit of Backward Classes Welfare or similar other benefit schemes from
the records maintained there. The difference between the amount spent and the amount
29.8
Period-End Procedures
National Municipal Accounts Manual
required to be spent as per the Government s instruction shall be transferred from the Main
Bank Account to Backward Classes Welfare Fund Bank Account or other similar benefit fund
Bank Account with a corresponding creation of/addition to Backward Classes Welfare Fund.
29.38 Confirmation from Government/Quasi-government and Government owned agencies.
At the end of each accounting year, the Accounts Department shall prepare and forward a
balance confirmation statement to Government and Quasi-government and various
government owned agencies in the format as prescribed in Chapter 30 - Reconciliation
Procedures. Based on replies received, the Accounts Department shall undertake appropriate
remedial action, including passing of necessary rectification entries, for reconciling the
balances.
29.39 Closing of ledger accounts. In addition to closing of ledger accounts at the end of each
quarter, the ledger accounts shall be balanced and totalled at the end of each accounting year,
i.e., on 31st March, for preparation of Financial Statements. The closing balances for each of
the ledger accounts shall be posted in the Trial Balance from which Financial Statements
shall be prepared in accordance with the procedures outlined in Chapter 31- Financial
Statements.
29.40 After the Annual Financial Statements have been prepared, the Accounts Department
shall pass the following entries for transfer of income and expenditure ledger balances to the
Income & Expenditure Account. Let us assume that total income earned (from property and
other taxes, water supply, cess and any other income) by the ULB for the Financial Year
2003-04 is Rs. 23,75,50,000 and total expenditure incurred (on salaries and wages paid to the
employees, on repairs and maintenance of roads, buildings and other structures, on stores
consumed and other such expenditure) for the same Financial Year is Rs. 21,50,00,000.
i. For transfer of income ledger balances to income side of Income and Expenditure
Statement:
Code of
Account
Accounting Entry
Dr./
Cr.
Debit
Credit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,00,000
Journal Book
2,00,00,000
, Ledger
4,00,00,000
20,00,000
15,00,000
.
.
.
.
.
23,75,50,000
Tax Income PTD
Dr.
Cess Income
Dr.
Water Taxes
Dr.
Rebate from State Government Dr.
Property Transfer Charges
Dr.
Dr.
.
.
Dr.
.
Dr.
.
Dr.
.
Dr.
To Income & Expenditure Cr.
Account
Note: Balances of the income ledger accounts shall be posted on the right hand side of the
Income and Expenditure Statement under the column heading "Income".
(a) Insert Minor & Detailed Head Codes of Account
110-(a)
110-(a)
110-(a)
120-(a)
140-(a)
29.9
National Municipal Accounts Manual
Period-End Procedures
ii. For transfer of expenditure ledger balances to expenditure side of Income and
Expenditure Statement:
Debit
Credit
Amount
Amount
Code of
Dr./
Books to be
Accounting Entry
(Rs.)
(Rs.)
Account
Cr.
entered into
Illustrative Illustrative
figures
figures
Journal Book
210-(a) Income & Expenditure Account Dr. 21,50,00,000
, Ledger
To Establishment
7,00,00,000
Cr.
Expenditure
220-(a)
To Rent, Rates & Taxes
50,00,000
Cr.
To Printing
220-(a)
25,00,000
To Repairs & Maintenance Cr.
230-(a)
2,50,00,000
Cr.
Building
230-(a)
To Repairs & Maintenance
1,00,00,000
Cr.
Roads & Bridges
230-(a)
To Central Stores
75,00,000
Cr.
Consumed
230-(a)
To Engineering Stores
50,00,000
Cr.
Consumed
To ………
Cr.
.
To ………
.
Cr.
To ………
.
Cr.
To ………
.
Cr.
To ………
.
Cr.
To ………
.
Cr.
Note: Balances of the expense ledger accounts shall be posted on the left-hand side of the
Income and Expenditure Statement under the column heading "Expenditure".
(a) Insert Minor & Detailed Head Codes of Account
29.41 The closing ledger balance in the assets and liabilities ledger accounts of the
accounting year shall be carried forward as opening balance of the next accounting year.
29.10
Reconciliation Procedures
National Municipal Accounts Manual
CHAPTER 30
5(&21&,/,$7,21
352&('85(6
INTRODUCTION
30.1 This chapter describes the reconciliation procedures to be carried out periodically in
respect of accounts by the Urban Local Body (ULB).
30.2 The objective of the reconciliation procedures is to ensure that if an accounting
information is recorded at more than one place, there are no discrepancies between the
different sets of records. For example, property tax transactions are recorded both at the Tax
Department and at the Accounts Department. The recommended reconciliation procedures
will ensure that the receivables figure is the same at both the locations and in both the sets of
records. In case of differences, necessary adjustments may need to be carried out either by the
Accounts Department or the Tax Department.
30.3 The reconciliation procedures are to be carried out by the Accounts Department, Audit
Department and the concerned departments.
30.4
The procedures will include the following:
a. Bank Reconciliation,
b. Inter-unit reconciliation,
30.1
National Municipal Accounts Manual
Reconciliation Procedures
c. Reconciliation of deposits,
d. Reconciliation of receivables and collections in respect of:
i. Water supply;
ii. Property and other taxes;
iii. Cess;
iv. Other heads of revenues.
e. Reconciliation of advances to:
i. Contractors/suppliers;
ii. Departments of the ULB; and
iii. Employees of the ULB.
f. Reconciliation of loans received (borrowings) ,
g. Reconciliation of payables including contractors’ payables,
h. Reconciliation of balances with Government, quasi-Government agencies,
Government Corporations, and
i. Reconciliation of loans given to others
j. Reconciliation of the accounts for the income and expense heads falling under the
following categories with the Function wise Income / Expense Subsidiary Ledgers
maintained at the Accounts Department in respect of those categories:
i. Fees & User Charges,
ii. Sale & Hire Charges,
iii. Establishment Expenses,
iv. Administrative Expenses, and
v. Repairs & Maintenance Expenses.
BANK RECONCILIATION
30.5 Bank Reconciliation is a procedure which aims at reconciling the bank balance as
shown in the Cash Book (Form GEN - 1) of the ULB with the bank balance as per the pass
book/statement received from the bank. The Bank Reconciliation shall be carried out on a
monthly basis or such other shorter time intervals as the ULB may decide for each of the bank
accounts maintained by the ULB.
30.6 The bank balances as per the Cash Book and the Pass Book may not tally for the
reasons listed in Table 30.1.
30.2
Reconciliation Procedures
National Municipal Accounts Manual
Table 30.1
Factors necessitating Bank Reconciliation
Reconciliation factors
Cheques issued but not presented for
payment
Cheques deposited but not cleared
Cheques received but not deposited
Effect on Cash Book bank
balance
Bank balance reduces by that
amount
Bank balance increases by that
amount
Bank balance increases to the
extent of cheque received but not
deposited
No effect
Effect on bank balance as per
Pass Book
No effect
No effect
No effect
Debit of charges by bank for any
Bank balance reduces to the
services rendered
extent of charges levied
Direct deposit of amount in the bank
No effect
Bank balance increases to the
account
extent of deposit
Interest allowed and credited by the
No effect
Bank balance increases to the
Bank
extent of interest credited
Payment by the bank in respect of
No effect
Bank balance reduces to the
standing instructions given to the bank
extent of the payment made
Fixed Deposit or any other sum directly
No effect
Bank balance increases to the
credited by bank to the account
extent of money credited
Any other reason which may result in difference between bank balance as per Cash Book and Pass Book
30.7 The procedure to be followed for reconciling the bank balance as per the Cash Book
with the balance as per the Pass Book/Bank Statement is as under:
a. The Bank Reconciliation shall be carried out on a monthly basis or at such shorter
time intervals as the ULB may decide. In case the Bank Reconciliation is carried
out monthly, it shall be completed within the first week of the next month.
Receipt entries in the Cash Book
b. The credit entries in the Bank Pass Book shall be compared with the entries in the
Receipt Register (Form GEN-9) and the entries appearing in both shall be ticked
(✔). The date when the cheques have been realised shall also be recorded in the
Cheque Receipt Register.
c. The daily total of cheques realised in the bank shall be derived from the Cheque
Receipt Register and the total shall be tallied with the entry in the Cash Book.
d. The unticked items represent the cheques received and deposited in the bank but
not cleared for payment by the bank. Likewise, they may also represent those cases
wherein cheques have been received but may not have been deposited with the
bank.
e. The unticked items shall appear in the Bank Reconciliation Statement (BRS) of
that period. The entries appearing in the BRS shall be examined for credit in the
subsequent period’s Bank Pass Book and those items, which do not reconcile shall
be carried forward to the next period’s BRS.
30.3
National Municipal Accounts Manual
Reconciliation Procedures
Payment entries in the Cash Book
f. The debit entries in the Bank Pass Book shall be compared with the entries in the
Cheque Issue Register (Form GEN-15) and the Cash Book and the entries
appearing in both shall be ticked (✔).
g. The unticked item represents the cheques issued by the ULB but not presented to
the bank for payment. Likewise, it may also represent those cases wherein cheques
have been drawn and entered in the Cheque Issue Register but have not been
issued to the payee.
h. The unticked items in the Cash Book shall appear in the Bank Reconciliation
Statement of that period. The entries appearing in the statement shall be traced for
payment in subsequent period s Pass Book/Bank Statement and those which are
not reconciled shall be carried forward to the next period s Bank Reconciliation
Statement.
i. All the cheques issued but not presented for payment within six months from their
date of issue (or such shorter period as decided by the ULB) will become stale and
shall be re-debited to the relevant bank account with a corresponding credit entry
in the Stale Cheques Account.
Other Entries in the Bank Pass Book/Bank Statement
j. There may be instances of bank charging service charges/commission or making
payment against the standing instructions issued by the ULB. Likewise, there may
be instances of direct deposit with the bank by the debtor (e.g. property tax) or
credit of interest by the bank. These entries in the first instance are recorded only
in the Pass Book and later incorporated in the Cash Book. Care should be taken
for identifying such items at the time of reconciliation and subsequently recording
them in the Cash Book. Identification of bank charges entries in the Pass book is
more important as these are identified only from the process of Bank
reconciliation. Further, any unduly high bank charges shall also be identified and
corresponded with the Bank for clarifications. It is to be ensured that all the Bank
Charges entry identified in the process of reconciliation, shall be supported with
the Bank s debit advice.
Bank Reconciliation Statement
k. The unticked items both in the Pass Book and the Cash Book shall be extracted for
reconciliation in the following format classified according to their nature:
30.4
Reconciliation Procedures
National Municipal Accounts Manual
Table 30.2
Bank Reconciliation Statement for _____ Bank as on _____
Particulars
Bank Balance as per Cash Book
Add: Cheques issued but not presented into bank (a cheque-wise list
to be appended)
Add: Cheques drawn but not actually issued to parties (a list to be
appended)
Add: Cheque issued and payment stopped by ULB (a list to be
appended)
Add: Credits of investment proceeds in Bank (e.g. Fixed Deposits)
accounted by the bank but not accounted for in Cash Book
Add: Amount (Cash or Cheque) deposited by the depositor(s) into
bank but not accounted for in Cash Book
Add: Credit given by Bank either for interest or for any other account
but not accounted for in Cash Book
Sub-total
Less: Cheques Deposited but not cleared
Less: Payments directly made by the bank but not accounted for in
Cash Book
Less: Cheques deposited but dishonoured
Less: Service Charges / Bank Charges or any other charge levied by
the Bank but not accounted for in Cash Book
Bank Balance as per Pass Book/Bank Statement
Amount (Rs.)
Amount (Rs.)
30.8 Details of the difference shall be given under each of the broad heads depicted above
with a serial listings of all the cheques deposited with the bank or issued for payment, to the
extent possible. Any other factor impacting the bank balance as per the Cash Book and Pass
Book should be appropriately stated. .
RECONCILIATION OF INTER – UNIT TRANSACTIONS
30.9 Reconciliation of inter unit transactions is intended to identify the disputed /
unaccepted inter unit transactions between an ‘originating AU’ and the ‘responding AU’ and
take appropriate action for rectification. Further, reconciliation of inter unit account is
necessary in the process of consolidation of ULB at the head office level as the balances of
inter unit account balances shall be nullified. The process of inter unit account reconciliation
is as follows:
i.
The individual units shall generate the statement of accounts of other AUs for
circulation to the respective AUs on a monthly basis or such other shorter time
intervals as the ULB may decide. On receipt of the statement of accounts, the
individual accounting units shall compare the balances as per their books and
prepares reconciliation statement in the format given below in table 30.3 for
any differences.
30.5
Reconciliation Procedures
National Municipal Accounts Manual
ii.
Further, on a half-yearly basis or such other shorter time intervals as the ULB
may decide, the reconciliation statements prepared by the individual
accounting units shall be submitted to the Head office of the ULB. Based on
review of the reconciliation statements of the individual AUs, the Head of the
accounts department shall ensure that the all the reconciliation items are
actioned and combined balance under all IUT account heads are tallied with
the balance appearing in the Register of Inter Unit Transfer. In case of any
disputed inter unit transactions identified during the reconciliation process, the
ULBs’ accounts department shall take appropriate action in resolving the
disputed IUTs.
Table 30.3
Name of Urban Local Body of
______
Name of Accounting Unit ______
Inter Accounting Unit Reconciliation Statement
for the period…………….
Date ………………
Accounting Unit name (recipient AU):
Particulars
Balance as per our books of account
Add/ Deduct:
ATCs raised by us but not accounted for by
responding AU
Add/ Deduct:
ATDs raised by us but not accounted for by
responding AU
Add/ Deduct:
ATCs raised by other AU but not received by us
Add/ Deduct:
ATDs raised by other AU but not received by us
Add/ Deduct:
ATDs received by us but not accounted for
Add/ Deduct:
ATCs received by us but not accounted for
Balance as per Other AU (credit/ debit)
Amount (Rs.)
Credit
Debit
Add in debit
balance
Deduct from
credit balance
Deduct from
debit balance
Add in credit
balance
Add in debit
balance
Deduct from
debit balance
Deduct from
debit balance
Add in debit
balance
Deduct from
credit balance
Add in credit
balance
Add in credit
balance
Deduct from
credit balance
Remarks
(Accepted/
Unacceptable)
Prepared by : _______________________ Checked by : _______________________ Approved by :
_______________________
Note: Details of the difference shall be given under each of the broad heads depicted above with a serial listings
of Advise Number, Date and Description.
30.6
National Municipal Accounts Manual
Reconciliation Procedures
RECONCILIATION OF DEPOSITS
30.10 Reconciliation of Deposits aims at reconciling the balance of Earnest Money Deposit,
Security Deposit and any other deposits received by the ULB. The reconciliation shall be
carried out between the records maintained at other departments and those maintained at the
Accounts Department.
30.11 The Deposit Reconciliation shall be carried out quarterly or at such shorter time
intervals as the ULB may decide.
30.12 The Department which had received the deposits shall prepare a Reconciliation
Statement of Deposits Outstanding from the Deposit Register (Form GEN-18) in the format
provided in Table 30.4 below for all the deposits received by it and forward it to the Accounts
Department. This statement shall be prepared for each type of deposit. In case there is a
discrepancy between the records of the two, this statement may have to be prepared for each
contractor/supplier.
Table 30.4
Reconciliation Statement of Deposits Outstanding with the ULB
Received by ______________ Department as on ____
Particulars
Deposits outstanding at the beginning of the accounting period
Add: Deposits received during the current accounting period (specify
all the Statement of Collections through which deposit has been
received)
Less: Deposits returned during the current accounting period (specify
all the Payment Orders through which the deposit has been
refunded)
Less : Deposits Adjusted (Give details)
Less : Deposits Lapsed
Deposits outstanding at the end of the accounting period
Amount (Rs.)
30.13 The balances computed above would be reconciled with the balances for Deposits
shown in the Ledger of the Accounts Department and the Deposit Register (Form GEN-18)
maintained by the concerned departments. The reasons for differences, if any, shall be
identified and rectification entries passed wherever required by the department, which has
recorded the entry incorrectly.
RECONCILIATION OF RECEIVABLES AND COLLECTIONS
30.14 The receivables and collections shall be reconciled on a quarterly basis or such other
shorter time intervals as the ULB may decide. The procedure for reconciling the outstanding
balance of receivables and collections shall be the same for all kinds of receivables, viz.:
30.7
Reconciliation Procedures
National Municipal Accounts Manual
a. Water Supply receivables;
b. Property Tax receivables;
c. Cess receivables;
d. Receivables on account of other heads of revenues.
30.15 For instance, for reconciling water supply receivables and collections, the following
shall be done:
a. The Water Supply Department based on their records, especially the Demand
Register (Form WS-1) and the Collection Register (Form WS-2) shall ascertain
the information required in Table 30.5 below and forward the details to Accounts
Department.
Table 30.5
Reconciliation Statement of Receivables and Collection
Details for ____ Department as on ____
Sr. No.
Particulars
A
OPENING
BALANCE
OF
DEMAND
OUTSTANDING
Demand outstanding in respect of the previous
quarters/accounting periods of the current
accounting year
Demand outstanding in respect of previous
accounting years (This detail should be given yearwise, wherever applicable)
Add: Demand raised during the current
Quarter/Period
TOTAL DEMAND OUTSTANDING
COLLECTIONS DURING THE CURRENT
QUARTER/PERIOD
Collection of demand pertaining to current
quarter/accounting period
Collection of demand pertaining to previous
quarters/accounting periods of the current
accounting
year
during
the
current
quarter/accounting period
Collection of demand pertaining to demand for the
previous accounting years collected during the
current quarter/accounting period (This detail
should be given year-wise, wherever applicable)
Collection in advance pertaining to future
accounting periods
I
Ii
B
C
D
i.
ii.
iii.
iv.
Amount
(Rs.)
Amount
(Rs.)
30.8
Reconciliation Procedures
National Municipal Accounts Manual
Sr. No.
Particulars
E
Total collections during the current
quarter/accounting period (i + ii + iii + iv)
CLOSING BALANCE OF DEMAND
OUTSTANDING
Demand outstanding in respect of the current
quarters/accounting periods [B – D(i)]
Demand outstanding in respect of the previous
quarters/accounting periods of the current
accounting year [A(i) – D(ii)]
Demand outstanding in respect of previous
accounting years (This detail should be given yearwise, wherever applicable) [A(ii) – D(iii)]
F
i.
ii.
iii.
Amount
(Rs.)
Amount
(Rs.)
30.16 The Reconciliation Statement received by the Accounts Department shall be
reconciled with the respective ledger accounts maintained by the Accounts Department. The
reasons for differences, if any, shall be identified and rectification entries passed wherever
required by the department, which has recorded the entry incorrectly.
RECONCILIATION OF ADVANCES GIVEN
30.17 This section describes the reconciliation procedure to be followed on a quarterly basis
or such shorter intervals as the ULB may decide for reconciling the advances given to,
namely:
a. Contractors/Suppliers;
b. Departments of the ULB; and
c. Employees of the ULB.
Reconciliation of advance given to Contractors/Suppliers
30.18 The concerned Department shall maintain a record of the advances given to each of
the contractors/suppliers. The Accounts Department shall also maintain a record of the
advances provided in a Register of Advances (Form GEN-16).
30.19 The Department which had initially sanctioned advance to the contractor/supplier
shall prepare a Reconciliation Statement of Advance Outstanding in the format provided in
Table 30.6 below for all the contractors/suppliers and forward it to the Accounts Department.
In case there is a discrepancy between the records of the two departments, this statement may
have to be prepared for each contractor/supplier.
30.9
National Municipal Accounts Manual
Reconciliation Procedures
Table 30.6
Reconciliation Statement of Advance Outstanding provided to Contractor/Supplier
by ______________ Department as on ____
Particulars
Amount (Rs.)
Advance outstanding at the beginning of the accounting period
Add: Further advance given during the current accounting period (specify
all the Payment Orders through which advance have been provided)
Total Advance Provided
Less: Advance recovered during the current accounting period (specify all
the Statement of Collection through which advance had been
recovered)
Less : Advance Adjusted (Give details)
Advance outstanding at the end of the accounting period
30.20 The Reconciliation Statement of Advance Outstanding received by the Accounts
Department shall be reconciled with the respective ledger accounts and the Register of
Advances maintained by the Accounts Department. The reasons for differences, if any, shall
be identified and rectification entries passed wherever required by the department, which has
recorded the entry incorrectly.
Reconciliation of advances given to Departments
30.21 The departments receiving the advances from the Accounts Department shall maintain
a record of the advances received by them in Register of Permanent Advance (Form GEN17). The Accounts Department shall also maintain a record of the advances provided to the
departments in a Register of Advance (Form GEN-16).
30.22 The head of the concerned department shall send to the Accounts Department a
confirmation of the advances provided to his department stating the purpose for which it was
provided in the format provided in Table 30.7 below. The confirmation received shall be
tallied with the Register of Advances by the Accounts Department.
Table 30.7
Reconciliation Statement of Permanent Advance provided to
______________ Department as on ____
Particulars
Advance outstanding at the beginning of the accounting period
Add: Further advance given /replenished during the current
accounting period (specify all the Payment Orders through
which advance have been provided/replenished)
Total Advance Provided
Less: Expenditure incurred against the advance provided
Advance outstanding at the end of the accounting period
Amount (Rs.)
30.10
National Municipal Accounts Manual
Reconciliation Procedures
30.23 The reasons for differences, if any, shall be identified and rectification entries passed
wherever required by the department, which has recorded the entry incorrectly.
Reconciliation of advance given to Employees
30.24 The employees of the ULB may be provided with two kinds of advances namely personal advance or miscellaneous advance.
30.25 The details of the personal advances granted to the employees shall be recorded in a
Register of Advances in Form ES-2. The details of recovery of advances shall also be
recorded in that Register. At the end of the accounting period, a confirmation statement shall
be obtained from each of the employees to whom advance has been provided in the format
provided in Table 30.8 below. The confirmation statement so obtained shall be reconciled
with the record of the employees maintained at the Establishment Department, where a
consolidated Statement of Advance provided to Employees shall be prepared and forwarded
to the Accounts Department. The Accounts Department shall reconcile the total amount of
advance provided with the control ledger accounts.
Table 30.8
Reconciliation Statement of Personal Advance provided to
______________ (name of the employee) as on ____
Particulars
Amount (Rs.)
Advance outstanding at the beginning of the accounting period
Add: Further advance given during the current accounting period (specify
all the Payment Orders through which advance have been
provided/replenished)
Total Advance Provided
Less: Advance recovered including recovery from the salary during the
current accounting period
Advance outstanding at the end of the accounting period
30.26 In case of miscellaneous advance provided to employees for incurring expenses in the
course of performing the duties of office, a confirmation statement shall be obtained from the
employee for the amount advanced stating therein, the expenditure already incurred together
with its details and the balance remaining in hand, in the format provided in Table 30.9
below. The statement obtained shall be confirmed with the records maintained in the Register
of Advances in Form GEN-16.
30.11
National Municipal Accounts Manual
Reconciliation Procedures
Table 30.9
Reconciliation Statement of Miscellaneous Advance provided to
______________ (name of the employee) as on ____
Particulars
Amount (Rs.)
Advance outstanding at the beginning of the accounting period
Add: Further advance given during the current accounting period
(specify all the Payment Orders through which advance have been
provided/replenished)
Total Advance Provided
Less: Expenditure incurred against advance provided
Less: Advance adjusted (Give details)
Advance outstanding at the end of the accounting period
30.27 In the case of any discrepancy, measures shall be taken for rectification of the
discrepancies, by way of either recovery of advance or where there is an error in accounting,
by passing the necessary accounting entries.
RECONCILIATION OF LOANS TAKEN
30.28 The Accounts Department shall maintain a record of all the loans borrowed in
Register of Loan (Form Loan - 1). At the end of each accounting year, the Accounts
Department shall prepare and forward to the lender, a Confirmation Statement for loan
borrowed in the format provided in Table 30.10 stating therein, the amount borrowed or
disbursed directly to Executing Agency, the amount repaid and interest accrued and paid on
the loan.
Table 30.10
Confirmation Statement of Loan borrowed from
______ (name of the lending agency) as on ____
Particulars
Loan outstanding at the beginning of the accounting year
Add: Instalments received during the accounting year
Sub-total loan outstanding
Less: Instalments paid during the accounting year
Net Loan outstanding at the end of the accounting year (A)
Total Interest Payable at the beginning of the accounting
year
Add: Interest accrued during the accounting year
Total Interest Payable
Less: Interest paid during the accounting year
Total Interest Payable at the end of the accounting year (B)
Total amount due (principal plus interest) at the end of the
accounting year (A+B)
Amounts in Rs.
30.12
Reconciliation Procedures
National Municipal Accounts Manual
30.29 Based on the reply received, the ULB shall take steps for reconciliation of the
difference, if any.
RECONCILIATION OF PAYABLES (SUPPLIERS AND CONTRACTORS)
30.30 The concerned departments and the Accounts Department maintain a Register of Bill
for Payment (Form GEN 13) in which all bills submitted for payment are recorded. The
concerned department shall ascertain the information required as per Table 30.11 below and
forward the details to the Accounts Department.
Table 30.11
Reconciliation Statement of Payables
Details for ____ Department as on ____
Sr. No.
Particulars
A
OPENING BALANCE OF UNPAID BILLS
i.
Bill outstanding in respect of the previous
quarters/accounting periods of the current accounting
year
Bill outstanding in respect of previous accounting
years (This detail should be given year-wise,
wherever applicable)
Add: Bills received during the current
quarter/period
GROSS TOTAL LIABILITY OUTSTANDING (A
+ B)
PAYMENTS
DURING
THE
CURRENT
QUARTER/PERIOD
Payment
of
bills
pertaining
to
current
quarter/accounting period of the current accounting
year
Payment of bills pertaining to previous
quarters/accounting periods of the current accounting
year during the current quarter/accounting period
Payment of bills pertaining to previous accounting
years during the current quarter/accounting period
(This detail should be given year-wise, wherever
applicable)
Total payments during the current
quarter/accounting period (i + ii + iii)
CLOSING BALANCE OF UNPAID BILLS
ii.
B
C
D
i.
ii.
iii.
E
F
Amount
(Rs.)
Amount
(Rs.)
30.13
Reconciliation Procedures
National Municipal Accounts Manual
Sr. No.
Particulars
i.
Bill outstanding in respect of the current
quarters/accounting periods of the current accounting
year [B D(i)]
Bill outstanding in respect of the previous
quarters/accounting periods of the current accounting
year [A(i) D(ii)]
Bill outstanding in respect of previous accounting
years (This detail should be given year-wise,
wherever applicable) [A(ii) D(iii)]
ii.
iii.
Amount
(Rs.)
Amount
(Rs.)
30.31 The Reconciliation Statement received by the Accounts Department shall be
reconciled with the respective ledger accounts maintained by the Accounts Department. The
reasons for differences, if any, shall be identified and rectification entries passed wherever
required by the department, which has recorded the entry incorrectly.
RECONCILIATION
OF
BALANCES
WITH
GOVERNMENT,
GOVERNMENT AGENCIES, GOVERNMENT CORPORATIONS, ETC.
QUASI-
30.32 Due to large number of transactions with various government, quasi-government and
government owned agencies, it becomes imperative to reconcile the balances between the
books of account of the ULB and the government/agencies.
30.33 At the end of each accounting year, the Accounts Department shall prepare and
forward to the concerned authority/agency within 15 days from the end of the accounting
year, a Confirmation Statement stating therein
❏ the amount receivable from the authority/agency in Table 30.12, or
❏ the amount payable to the authority/agency in Table 30.13,
depending on whether sum is receivable from or payable to the concerned authority/agency.
Table 30.12
Confirmation Statement of balances receivable from ______as on ____
Sr. No.
Particulars
A
AMOUNT OUTSTANDING AS AT THE
BEGINNING OF THE ACCOUNTING YEAR
Demand outstanding in respect of previous
accounting years (This detail should be given yearwise, wherever applicable)
Add: Bills for Demand raised for Services
rendered or Goods supplied during the current
Accounting Year
B
Amount
(Rs.)
Amount
(Rs.)
30.14
Reconciliation Procedures
National Municipal Accounts Manual
Amount
(Rs.)
Sr. No.
Particulars
C
GROSS TOTAL DEMAND OUTSTANDING (A
+ B)
COLLECTIONS RECEIVED DURING THE
CURRENT ACCOUNTING YEAR
Collections pertaining to current accounting year
Collections pertaining to previous accounting years
during the current accounting year (This detail should
be given year-wise, wherever applicable)
Total collections made during the current
accounting year (i + ii)
CLOSING
BALANCE
OF
DEMAND
OUTSTANDING
Demand outstanding in respect of the current
accounting year [B D(i)]
Demand outstanding in respect of previous
accounting years (This detail should be given yearwise, wherever applicable) [A D(ii)]
D
i.
ii.
E
F
i.
ii.
Amount
(Rs.)
Table 30.13
Confirmation Statement of balances payable to ______as on ____
Sr. No.
Particulars
A
AMOUNT OUTSTANDING AS AT THE BEGINNING OF
THE ACCOUNTING YEAR
Bills outstanding in respect of previous accounting years (This
detail should be given year-wise, wherever applicable)
B
Add: Bills received for payment during the current
Accounting Year
C
GROSS TOTAL LIABILITY OUTSTANDING (A + B)
D
PAYMENTS
MADE DURING THE
ACCOUNTING YEAR
Payments pertaining to current accounting year
i.
Amount (Rs.)
Amount (Rs.)
CURRENT
ii.
Payments pertaining to previous accounting years during the
current accounting year (This detail should be given year-wise,
wherever applicable)
E
Total payments made during the current accounting year
+ ii)
F
i.
CLOSING BALANCE OF OUTSTANDING PAYMENTS
Bills outstanding in respect of the current accounting year
[B
D(i)]
ii.
Bills outstanding in respect of previous accounting years (This
detail should be given year-wise, wherever applicable)
[A
D(ii)]
(i
30.15
National Municipal Accounts Manual
Reconciliation Procedures
30.34 In case, where both the amount is due and payable to any authority/agency, both the
Statements shall be submitted for balance confirmation to the authority/agency concerned.
30.35 Based on the reply received, the ULB shall take steps for reconciliation of the
difference, if any.
RECONCILIATION OF LEDGER BALANCES IN INCOME AND EXPENSE
ACCOUNTS WITH FUNCTIN WISE INCOME/EXPENSE SUBSIDIARY LEDGERS
30.36 As explained in Chapter 5
General Accounting Procedures, Function-wise
Subsidiary Ledgers are to be opened in respect of all major income and expenses. The various
incomes and expense accounts are to be posted directly from the Cash Book and/or Journal to
the Main Ledger in the individual ledger accounts in respect of those income and expense
heads. Simultaneously, entries are to be made in the Function-wise Subsidiary Ledger so that
department-wise information is also readily available.
30.37 Periodically, the two sets of records viz., those in the Main Ledger and those in the
Subsidiary Ledgers should be reconciled to ensure that the totals in the respective places are
matched.
30.16
National Municipal Accounts Manual
Financial Statements
CHAPTER 31
),1$1&,$/ 67$7(0(176
INTRODUCTION
31.1 This chapter contains the recommendations relating to the Annual Accounts
and Report to be prepared by the Urban Local Bodies. It also contains the
recommendations regarding periodical financial statements.
31.2 The provisions and rules of the act governing the ULB stipulate for
preparation of the Annual Administration Report and a Statement of Accounts by the
ULB. The report shall be in such form and shall contain such information as the
Standing Committee may from time to time direct.
31.3 Preparation of Financial Statements comprising of various reports as stated
below are the responsibility of the Head of the Accounts Department. However, other
reports such as Auditor’s report and Municipal Commissioner’s report on the
financial statements shall be prepared by the Municipal Auditor and Municipal
Commissioner respectively.
31.4
The Annual Report of the ULB shall include the following:
a. Financial Statements consisting of:
i.
Balance Sheet;
ii. Income and Expenditure Statement;
iii. Statement of Cash flows (a summary of an enterprise’s cash flow over
a given period of time);
iv. Receipts and Payments Account (detailed as per the account heads);
v.
Notes to Accounts; and
31.1
National Municipal Accounts Manual
Financial Statements
vi. Financial Performance Indicators.
b. Report of the Municipal Chief Auditor (discussed in Chapter 32);
c. Municipal commissioner s Report on the Annual Financial Statements and
the qualifications and comments made in the Report of the Municipal
Chief Auditor; and
d. Standing Committee s Action Taken Report on the qualifications and
comments made in the Report of the Municipal Chief Auditor and the
Report of the Municipal commissioner.
31.5 In determining the accounting treatment and manner of disclosure of an item
in the Income and Expenditure Statement and/or the Balance Sheet, due consideration
shall be given to the materiality of the item.
31.6 The ULB shall also prepare the financial statements like the Balance Sheet,
Income and Expenditure Statement, Statement of Cash flows and Receipts and
Payments Account, apt the end of each quarter. Balance Sheet shall disclose figures as
on a date for the current year and the previous year. Income and Expenditure
Statement, Statement of Cash flows and the Receipts and Payments Account shall
disclose quarterly figures, progressive year-to-date totals and the figures of the
corresponding quarter of the previous year and the quarterly movements in various
accounts. In addition, the Income and Expenditure Statement shall also disclose the
annual budget figures. In respect of the accounting year, the ULB shall prepare all the
statements and reports specified in para. 31.4.
31.7 The Financial Statements for the first 3 (three) quarters shall be placed by the
Municipal commissioner before the Standing Committee within such period as
specified in the applicable Acts.
31.8 The Annual Financial Statements shall be subject to audit by a Municipal
Chief Auditor as prescribed in the provisions and rules governing the ULBs. The
requirements of the Audit Report have been laid down in Chapter 32 on Audit Report.
The Municipal Commissioner shall prepare a report on the qualifications and
comments made by the Municipal Chief Auditor. This report shall be an integral part
of the Annual Report. The Annual Financial Statements shall be approved by the
Municipal commissioner and shall be placed along with the report of the Municipal
Chief Auditor before the Standing Committee on or before such dates as may be
prescribed in the applicable Acts. The Standing Committee shall prepare an Action
Taken Report on the Annual Financial Statements submitted taking into consideration
the qualification and comments made in the report of the Municipal Chief Auditor.
The Standing Committee shall approve the Annual Financial Statements and Report
31.2
National Municipal Accounts Manual
Financial Statements
and place them before the General Body on or such date as may be specified in the
applicable Acts. The General Body shall adopt the Annual Report not later than such
date as may be specified in the applicable acts. The amounts in the annual financial
statements and the schedules forming part of the financial statements shall be stated in
Units of Rupees. It shall be disclosed in Thousands / Lakhs of Rupees if a ULB
decides so with the approval of the state government.
TRIAL BALANCE
31.9 The process of preparation of the Financial Statements shall be preceded by
preparation of a Trial Balance. The Trial Balance is a list of closing balances in all the
accounts in the Ledger and the Cash Books. The purpose of preparing a Trial Balance
is to determine the equality of posted debits and credits, and to generate a basic
summary of accounts for facilitating preparation of the Financial Statements like
Income and Expenditure Statement, Balance Sheet, Statement of Cash flows and
Receipts and Payments account. The Financial Statements are essentially drawn from
the Trial Balance.
31.10 The Trial Balance shall be prepared as shown in Table 31.1.
Table 31.1
Trial Balance for the period from _____
Code No
Particulars
_ to ___________
Debit (Rs.)
Credit (Rs.)
:
:
Total
31.11 The following points should be noted while preparing the Trial Balance:
a. The income accounts shall generally have credit balances and the expense
accounts shall generally have debit balances.
b. The asset accounts shall generally have debit balances and the liability
accounts and the reserve funds shall generally have credit balances.
31.12 The following are the steps involved in the preparation of a Trial Balance:
a. All the ledger accounts shall be closed at period end and the debit or credit
balance shall be calculated.
b. The debit balances shall be posted in the debit column of the Trial Balance
and the credit balances in the credit column of the Trial Balance.
31.3
National Municipal Accounts Manual
Financial Statements
c. The posting of Ledger Accounts in the Trial Balance shall be in the same
order as shown in the Chart of Accounts.
d. The Cash Books shall be closed and the balances shall be posted in the
Trial Balance.
e. Both the Debit Column and the Credit Column of the Trial Balance shall
be totalled.
31.13 Since every debit entry has a corresponding credit entry, the sum-total of the
debit balances in various account heads shall be equal to the sum-total of the credit
balances in the other account heads. While, generally, a tallied Trial Balance will be a
first test of accuracy, it is possible that the Trial Balance may tally even if the
following has happened:
a. Omission of an entry in the original books of entry, viz., Cash Book and
Journal Book, in which case neither debit, nor credit will be recorded;
b. Wrong entry in the original books of entry;
c. Posting of an entry on the wrong sides in such a manner that they
compensate;
d. Posting of an entry in wrong account head but on the correct side;
e. Double posting of an entry in a ledger account;
f. Compensating errors such as salaries paid recorded as Rs.2,000 instead of
actual of Rs.2,500 and Repairs and Maintenance recorded as Rs.1,500
instead of actual of Rs.1,000.
31.14 In case, the Trial Balance does not tally, some of the steps that should be taken
for finding those errors and rectifying them are as follows:
a. Check for totaling errors in the Trial Balance;
b. Ensure that the cash and bank balance is not omitted from inclusion into
the Trial Balance;
c. Check the ledger account totals and their postings in the Trial Balance;
d. Check the journal to see that the total debits and credits for each entry
tally;
e. Verify the postings to the ledger accounts from the books of original
entries, i.e., the Cash Book and Journal to ensure that no error is made
while posting entries in ledgers.
31.4
National Municipal Accounts Manual
Financial Statements
31.15 From the Trial Balance prepared, the ULB shall prepare Balance Sheet and
Income and Expenditure Statement. While preparing the Balance Sheet and the
Income and Expenditure Statement, the following shall be done:
a. The balances in the assets accounts, which generally have a debit balance
and are recorded on the debit side of the Trial Balance, shall be posted on
the Asset side of the Balance Sheet;
b. The balances in the liabilities accounts, which generally have a credit
balance and are recorded on the credit side of the Trial Balance, shall be
posted on the Liability side of the Balance Sheet;
c. The balances in the income accounts, which generally have a credit
balance and are recorded on the credit side of the Trial Balance, shall be
posted on the Income side of the Income and Expenditure Statement;
d. The balances in the expense accounts, which generally have a debit
balance and are recorded on the debit side of the Trial Balance, shall be
posted on the Expenditure side of the Income and Expenditure Statement;
e. The excess of income earned by the ULB over expenses incurred by the
ULB shall be transferred to and added to the Municipal Fund in the
Balance Sheet. Likewise, excess of expenses incurred over income earned
shall be transferred to and reduced from the Municipal Fund in the Balance
Sheet.
f. No items in the trial balance are left out without carrying them either to
Income and Expenditure Account or the Balance sheet.
31.16 Wherever a reference to Schedules has been made in the Financial Statements,
the effects mentioned above shall be given in the Schedules first. From the Schedules,
the balances would be transferred to the Financial Statements.
CONSOLIDATION OF INDIVIDUAL ACCOUNTING UNIT’S TRIAL
BALANCE
31.17 As explained in Chapter 26 each accounting unit shall maintain its books of
account independently. The AUs shall generate trial balance at the period ends.
31.18 The trial balances of each AU as at the period ends shall be forwarded to the
head office of ULB for consolidation purposes. Consolidation of the trial balances of
the AUs shall be done on a line-by-line basis. Format for consolidation of trial
balance is given in Table 31.2 below:
31.5
National Municipal Accounts Manual
Financial Statements
Table 31.2
Trial Balance for the period from _____
Account
Code
Acco
unt
Head
_ to ___________
Amount (Rs)
Unit A
Dr
.
Cr.
Unit B
Dr.
Cr.
Unit C
Dr.
Cr.
Head
office
Dr.
Cr.
Adjustments
Dr.
Cr.
Consolid
ated
balance
Dr. Cr
.
31.19 All the inter-unit transaction account balances shall be nullified on
consolidation of the accounts at the period ends by the Head office. For this purpose
the IUTs shall be reconciled and the balances should match as explained in Chapter
26 on Inter Unit Transactions.
31.20 All Financial statements shall then be prepared based on consolidated Trial
Balance as arrived at for the ULB as a whole.
INCOME AND EXPENDITURE STATEMENT
31.21 The ULB shall also prepare an Income and Expenditure Statement for every
accounting period. The Income and Expenditure Statement discloses the results of the
working of the ULB during the period covered by the statement. It shows incomes
and expenditures of the ULB for an accounting period and the excess of income over
expenditure or vice-versa for that period.
31.22 Since the Financial Statements are prepared under accrual basis, the Income
and Expenditure Statement shall include all the income earned during the year
whether actually received or not and all the expenditure incurred whether actually
paid or not.
31.23 The Income and Expenditure Statement is drawn from the Trial Balance. The
various heads of incomes and expenditures shall be posted from the Trial Balance to
the Income and Expenditure Statement.
31.24 Any income or expenditure under a particular individual head, which is more
than 1% of the total gross income of the ULB or Rs. 1,00,000 whichever is higher,
shall be shown separately in the Schedules annexed to the Income and Expenditure
Statement.
31.25 The Income and Expenditure Statement shall be prepared in the format shown
in Table 31.3.
31.6
National Municipal Accounts Manual
Financial Statements
31.26 If detailed information required to be given under any of the items or sub
items cannot be conveniently shown in the format for the Income and Expenditure
Statement or the Balance Sheet itself, as the case may be, such information can be
furnished in a separate schedule or schedules to be annexed to and forming part of the
Income and Expenditure Statement and the Balance Sheet.
BALANCE SHEET
31.27 The ULB shall prepare a Balance Sheet at the end of each accounting period.
The Balance Sheet is a statement, which reflects the financial position of the ULB as
on a particular date. It presents the assets, liabilities and reserves of the ULB as on a
specified date.
31.28 The Balance Sheet is also drawn from the Trial Balance. Assets, liabilities and
reserve heads shall be posted from the Trial Balance to the Balance Sheet as discussed
above.
31.29 The Balance Sheet shall be prepared in the format shown in Table 31.4.
31.30 The details of various Balance Sheet items would be given in separate
schedules attached to the Balance Sheet. The contents and formats for the various
schedules to the Balance Sheet have been shown subsequent to the schedules of
Income and Expenditure Statement.
FUND ACCOUNTS OF THE ULBS
31.31 ULBs may maintain separate accounts for every fund. States may define what
are the funds for which ULBs shall maintain separate books for Funds. For all those
funds, ULBs shall maintain separate set of books of accounts. The accounting
principles and procedures to be adopted shall be same across all funds. Trial balance
shall be generated for each of the Fund and the financial statements as explained
above shall be prepared for each of the Fund separately and then consolidated to
present the ULB level position.
FINANCIAL STATEMENTS FOR MERGER OF ULBS
31.32 In case the financial statements are prepared on account of merger of two or
more ULBs the accounting principles and disclosures in the merged financial
statements is covered in Chapter 25 - Merger to which reference is invited.
31.7
National Municipal Accounts Manual
Financial Statements
Table 31.3
Income and Expenditure Statement for the period from_________ to__________
Code
No.
1
1-10
1-20
1-30
1-40
1-50
1-60
1-70
1-71
1-80
A
2-10
2-20
2-30
2-40
2-50
2-60
2-70
2-71
2-72
B
A-B
2-80
2-90
Item/ Head of Account
2
INCOME
Tax Revenue
Assigned Revenues & Compensation
Rental Income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions & Subsidies
Income from Investments
Interest Earned
Other Income
Total – INCOME
EXPENDITURE
Establishment Expenses
Administrative Expenses
Operations & Maintenance
Interest & Finance Expenses
Programme Expenses
Revenue Grants, Contributions & subsidies
Provisions & Write off
Miscellaneous Expenses
Depreciation
Total – EXPENDITURE
Gross surplus/ (deficit) of income over
expenditure before Prior Period Items
Add: Prior period Items (Net)
Gross surplus/ (deficit) of income over
expenditure after Prior Period Items
Less: Transfer to Reserve Funds
Net balance being surplus/ deficit carried
over to Municipal Fund
Schedule
No
3
Current
Year
Amount
(Rs.)
4
Previous
Year
Amount
(Rs.)
5
I-1
I-2
I-3
I-4
I-5
I-6
I-7
I-8
I-9
I-10
I-11
I-12
I-13
I-14
I-15
I-16
I-17
1-18
31.8
National Municipal Accounts Manual
Balance Sheet of
Code No
Financial Statements
Table 31.4
ULB as on __________
Description of items
Schedule
No.
Current Year
Amount
(Rs.)
Previous Year
Amount
(Rs.)
LIABILITIES
Reserve & Surplus
3-10
3-11
3-12
3-20
3-30
3-31
3-40
3-41
3-50
3-60
4-10
4-11
4-12
4-20
4-21
4-30
4-31
4-32
4-40
4-50
4-60
4- 61
4-70
4-80
Municipal (General) Fund
Earmarked Funds
Reserves
Total Reserves & Surplus
Grants, Contributions for specific purposes
Loans
Secured Loans
Unsecured Loans
Total Loans
Current Liabilities and Provisions
Deposits Received
Deposit works
Other Liabilities (Sundry Creditors)
Provisions
Total Current Liabilities and Provisions
TOTAL LIABILITIES
ASSETS
Fixed Assets
Gross Block
Less: Accumulated Depreciation
Net Block
Capital Work-in-Progress
Total Fixed Assets
Investments
Investment – General Fund
Investments – Other Funds
Total Investments
Current Assets, Loans and Advances
Stock in Hand (Inventories)
Sundry Debtors (Receivables)
Gross amount outstanding
Less: Accumulated provision against bad and
doubtful Receivables
Net amount outstanding
Prepaid Expenses
Cash and Bank Balances
Loans, advances and deposits
Less: Accumulated provision against Loans
Net Amount outstanding
Total Current Assets, Loans & Advances
Other Assets
Miscellaneous Expenditure (to the extent
not written off)
TOTAL ASSETS
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
B-9
B-10
B-11
B-12
B-13
B-14
B-15
B-16
B-17
B-18
B-19
B-20
31.9
National Municipal Accounts Manual
Financial Statements
31.33 The various schedules to the Income and Expenditure Account have been
indicated below.
Schedule I-1: Tax Revenue [Code No 110]
Minor
Code No
1
110-01
110-02
110-03
110-04
110-05
110-06
110-07
110-08
110-09
110-10
110-11
110-12
110-51
110-52
110-80
110-90
Previous
year
(Rs.)
4
Current year
(Rs.)
Particulars
2
Property tax
Water tax
Sewerage Tax
Conservancy Tax
Lighting Tax
Education tax
Vehicle Tax
Tax on Animals
Electricity Tax
Professional Tax
Advertisement tax
Pilgrimage Tax
Octroi & Toll
Cess
Other taxes
Sub-total
Less
Tax Remissions and Refund [Schedule 1
1 (a)]
Sub-total
Total tax revenue
3
Schedule I-1 (a): Remission and Refund of taxes
Code No. *
Current Year
Amount (Rs.)
3
Particulars
1
2
Property taxes
Octroi and toll
Cess Income
Advertisement tax
Others
Total refund and
revenues
remission
of
Previous Year
Amount (Rs.)
4
tax
* Insert the Detailed Codes of Account as applicable
Note: The totals of this Schedule should be equalling to the amount as per the total in Schedule I
1
Schedule I-2 : Assigned Revenues & Compensation [Code No 120]
Code No.
Particulars
1
2
120-10
Taxes and Duties collected by others
120-20
Compensation in lieu of Taxes / duties
120-30
Compensations in lieu of Concessions
Total assigned revenues & compensation
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
31.10
National Municipal Accounts Manual
Financial Statements
Schedule I-3: Rental income from Municipal Properties [Code No 130]
Code No.
1
130-10
130-20
130-30
130-40
130-80
130-90
Current Year
Amount (Rs.)
3
Particulars
2
Rent from Civic Amenities
Rent from Office Buildings
Rent from Guest Houses
Rent from lease of lands
Other rents
Sub-Total
Less:
Rent Remission and Refunds
Sub-total
Total Rental Income from Municipal
Properties
Previous Year
Amount (Rs.)
4
Schedule I-4 : Fees & User Charges [Code No 140]
Schedule I-4 (a): Fees & User Charges
Code No.
1
Function wise
Current Year
Amount (Rs.)
3
Particulars
2
Municipal Body
Administration
Finance, Accounts, Audit
Election
Record Room
Estate
Stores & Purchase
Workshop
Census
…….
Total income from fees & user charges
wise
Previous Year
Amount (Rs.)
4
Function
Note:
Functions as applicable in the ULBs and on which fees and user charges are raised shall be stated here.
The total income from Fees & User Charges as per Schedule I-4 (a) should tally with the total income
from Fees & User Charges as per Schedule I-4 (b).
Schedule I-4 (b): Fees & User Charges
Particulars
Code No.
1
140-10
140-11
140-12
140-13
140-14
140-15
140-20
140-40
140-50
140-60
140-70
140-80
2
Income head-wise [Code 140]
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Empanelment & Registration Charges
Licensing Fees
Fees for Grant of Permit
Fees for Certificate or Extract
Development Charges
Regularisation Fees
Penalties and Fines
Other Fees
User Charges
Entry Fees
Service / Administrative Charges
Other Charges
Sub-Total
31.11
National Municipal Accounts Manual
Current Year
Amount (Rs.)
3
Particulars
Code No.
1
140-90
Financial Statements
2
Previous Year
Amount (Rs.)
4
Less:
Rent Remission and Refunds
Sub-total
Total income from Fees & User Charges
head-wise
Income
The total income from Fees & User Charges as per Schedule I-4 (b) should tally with the total income
from Fees & User Charges as per Schedule I-4 (a).
Schedule I-5 : Sale & Hire Charges [Code No 150]
Schedule I-5 (a): Sale & Hire Charges
Code No.
1
Function wise
Particulars
2
Municipal Body
Administration
Finance, Accounts, Audit
Election
Record Room
Estate
Stores & Purchase
Workshop
Census
.
Total Income from Sale & Hire charges
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Function wise
The total income from Sale & Hire Charges as per Schedule I-5 (a) should tally with the total income
from Sale & Hire Charges as per Schedule I-5 (b).
Schedule I-5 (b): Sale & Hire Charges
Detailed
Head Code
1
150-10
150-11
150-12
150-30
150-40
150-41
Income head-wise [Code No 150]
Particulars
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
2
Sale of Products
Sale of Forms & Publications
Sale of stores & scrap
Sale of Others
Hire Charges for Vehicles
Hire Charges for Equipment
Total Income from Sale & Hire charges
income head-wise
The total income from Sale & Hire Charges as per Schedule I-5 (b) should tally with the total income
from Sale & Hire Charges as per Schedule I-5 (a).
Schedule I-6: Revenue Grants, Contributions & Subsidies [Code No160]
Code No.
1
160-10
160-20
60-30
Particulars
2
Revenue Grant
Re-imbursement of expenses
Contribution towards schemes
Total Revenue Grants, Contributions &
Subsidies
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
31.12
National Municipal Accounts Manual
Schedule I-7: Income from Investments
Code No
1
170-10
17020
170-30
170-40
170-80
Financial Statements
General Fund [Code No 170]
Particulars
2
Interest on Investments
Dividend
Income from projects taken up on commercial
basis
Profit in Sale of Investments
Others
Total Income from Investments
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-8: Interest Earned [Code No 171]
Code No.
1
171-10
171-20
171-30
171-80
Particulars
2
Interest from Bank Accounts
Interest on Loans and advances to Employees
Interest on loans to others
Other Interest
Total. Interest Earned
Schedule I-9: Other Income [Code No180]
Code No.
1
180-10
180-11
180-20
180-30
180-40
180-50
180-60
180-80
Particulars
2
Deposits Forfeited
Lapsed Deposits
Insurance Claim Recovery
Profit on Disposal of Fixed asses
Recovery from Employees
Unclaimed Refund/ Liabilities
Excess Provisions written back
Miscellaneous Income
Total Other Income
Note:
Details of profit earned on Fixed Assets disposed shall be given for each of the class of fixed assets, to the
extent possible, together with the details of the gross block of the fixed asset sold, depreciation provided on that
and the value realised on disposition below Schedule I-9.
Schedule I-10: Establishment Expenses [code no 210]
Schedule I-10 (a): Establishment Expenses
Code No.
1
Particulars
2
Municipal Body
Administration
Finance, Accounts, Audit
Election
Record Room
Estate
Function wise
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
31.13
National Municipal Accounts Manual
Code No.
Financial Statements
Current Year
Amount (Rs.)
3
Particulars
1
2
Previous Year
Amount (Rs.)
4
Stores & Purchase
Workshop
Census
.
.
Total establishment expenses
Function wise
Note:
The total function wise expenses as per Schedule I-10 (a) should tally with the total Establishment
expenses as per Schedule I-10 (b).
Schedule I-10 (b): Establishment Expenses
Code No.
1
210-10
210-20
210-30
210-40
Expenditure head-wise
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Salaries, Wages and Bonus
Benefits and Allowances
Pension
Other Terminal & Retirement Benefits
Total establishment expenses
expense head wise
Note:
The total function wise expenses as per Schedule I-10 (b) should tally with the total Establishment
expenses as per Schedule I-10 (a).
Schedule I-11: Administrative Expenses [Code No 220]
Schedule I-11 (a): Administrative Expenses
Code No.
1
Function wise
Particulars
2
Municipal Body
Administration
Finance, Accounts, Audit
Election
Record Room
Estate
Stores & Purchase
Workshop
Census
.
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Total Administrative expenses Function wise
Note:
The total function wise expenses as per Schedule I-11 (a) should tally with the total administrative
expenses as per Schedule I-11 (b).
31.14
National Municipal Accounts Manual
Financial Statements
Schedule I-11 (b): Administrative Expenses
Code No.
1
220-10
220-11
220-12
220-20
220-21
220-30
220-40
220-50
220-51
220-52
220-60
220-61
220-80
Expenditure head-wise
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Rent, Rates and Taxes
Office maintenance
Communication Expenses
Books & Periodicals
Printing and Stationery
Travelling & Conveyance
Insurance
Audit Fees
Legal Expenses
Professional and other Fees
Advertisement and Publicity
Membership & subscriptions
Other Administrative Expenses
Total administrative expenses
expense head wise
Note:
The total function wise expenses as per Schedule I-11 (b) should tally with the total administrative
expenses as per Schedule I-11 (a).
Schedule I-12: Operations and Maintenance [Code No 230]
Schedule I-12 (a): Operations &Maintenance Expenses Function wise
Code No.
1
Current Year
Amount (Rs.)
3
Particulars
2
Municipal Body
Administration
Finance, Accounts, Audit
Election
Record Room
Estate
Stores & Purchase
Workshop
Census
.
Previous Year
Amount (Rs.)
4
Total Operations & Maintenance expenses
Function wise
Note:
The total function wise expenses as per Schedule I-12 (a) should tally with the total Operations &
maintenance expenses as per Schedule I-12 (b).
Schedule I-12 (b): Operations & Maintenance
Code No.
1
230-10
230-20
230-30
230-40
230-51
230-52
230-53
Expenditure head-wise
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Power & Fuel
Bulk Purchases
Consumption of Stores
Hire Charges
Repairs & maintenance Infrastructure Assets
Repairs & maintenance - Civic Amenities
Repairs & maintenance Buildings
31.15
National Municipal Accounts Manual
Code No.
1
230-54
230-59
230-80
Financial Statements
Current Year
Amount (Rs.)
3
Particulars
2
Previous Year
Amount (Rs.)
4
Repairs & maintenance Vehicles
Repairs & maintenance Others
Other operating & maintenance expenses
Total operations & maintenance - expense head
wise
Note:
The total function wise expenses as per Schedule I-12 (b) should tally with the total Operations &
maintenance expenses as per Schedule I-12 (a).
Schedule I-13: Interest & Finance Charges [Code No 240]
Code No.
1
240-10
240-20
240-30
240-40
240-50
240-60
240-70
240-80
Particulars
2
Interest on Loans from Central Government
Interest on Loans from State Government
Interest on Loans from Government Bodies &
associations
Interest on Loans from International Agencies
Interest on Loans from Banks & Other Financial
Institutions
Other Interest
Bank Charges
Other Finance Expenses
Total Interest & Finance Charges
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Schedule I-14: Programme Expenses [Code No 250]
Code No.
1
250-10
250-20
250-30
Particulars
2
Election Expenses
Own Programmes
Share in Programmes of others
Total Programme Expenses
\
Schedule I-15: Revenue Grants, Contributions & Subsidies [Code No 260]
Code No.
1
260-10
260-20
260-30
Current Year
Amount (Rs.)
Particulars
2
Grants [give details]
Contributions [give details]
Subsidies [give details]
Total Revenue Grants,
Subsidies
3
Contributions
Previous
Year
Amount
(Rs.)
4
&
31.16
National Municipal Accounts Manual
Financial Statements
Schedule I-16: Provisions & Write off [Code No 270]
Code No.
1
270-10
270-20
270-30
270-40
270-50
Particulars
2
Provisions for Doubtful receivables
Provision for other Assets
Revenues written off
Assets written off
Miscellaneous Expense written off
Total Provisions & Write off
Current Year
Amount (Rs.)
3
Previous
Year
Amount (Rs.)
4
Schedule I-17: Miscellaneous Expenses [Code No 271]
Code No.
1
271-10
271-20
271-80
Particulars
2
Loss on disposal of Assets
Loss on disposal of Investments
Other Miscellaneous Expenses
Total Miscellaneous expenses
Current Year
Amount (Rs.)
3
Previous
Year
Amount
(Rs.)
4
Schedule I-18: Prior Period Items (Net) [Code No 280]
Code No.
1
280-10
280-20
280-30
280-40
280-50
280-60
280-80
Particulars
2
Income
Taxes
Other Revenues
Recovery of revenues written off
Other income
Sub – Total Income (a)
Expenses
Refund of Taxes
Refund of Other Revenues
Other Expenses
Sub – Total Income (b)
Total Prior Period (Net) (a-b) -
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
31.17
Particulars
Opening balance
as per the last account
(Rs.)
3
Additions during
the year *
(Rs.)
4
Total
(Rs.)
Deductions
during the year**
(Rs.)
6
Code No.
(a) Opening Balance
(b) Additions to the Special Fund
(i) Transfer from Municipal Fund
(ii) Interest/Dividend earned on Special Fund
Investments
(iii) Profit on disposal of Special Fund Investments
(iv) Appreciation in Value of Special Fund Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
(c) Payments out of funds
(i) Capital expenditure on
Particulars
Special
Fund 1
Special
Fund 2
Special
Fund 3
Schedule B-2: Earmarked Funds
Schedule B 2: Special Funds/Sinking Fund/Trust or Agency Fund [Code No 311]
Special
Fund 4
Special
Fund 5
Pension
Fund
General
Provident
fund
Amount in Rs.
31.18
Financial Statements
Balance at the end
of the current year
(Rs.)
7 (5-6)
2
5 (3+4)
Municipal Fund
Excess of Income &
Expenditure
Total Municipal fund
(310)
*Addition includes contributions towards the fund, Adjustments to Opening Balance Sheet and also excess of income over expenditure
** Deduction includes contributions from the fund, Adjustments to Opening Balance Sheet and also excess of expenditure over the income
1
310-10
310-90
Code No.
Schedule B-1: Municipal (General) Fund [Code No 310]
The various schedules to the Balance Sheet have been provided below:
National Municipal Accounts Manual
Special
Fund 1
Special
Fund 2
Special
Fund 3
Special
Fund 4
Special
Fund 5
Pension
Fund
General
Provident
fund
Financial Statements
Additions during the year:
a. Addition to Pension Fund would be out of the "Transfer to Funds" from Income and Expenditure Account as per the accounting principles.
b. Addition to General Provident and Contributory Provident Fund are the deductions from salary.
c. Interest from investments of Funds would be added to respective Funds.
Deductions during the year:
a. Deductions from Pension Fund means payments made on account of Pension/Family pension
b. Deduction from Gross Provident Fund/Contributory Provident Fund - Advances/Withdrawals.
1.
2.
31.19
All funds are to be shown as separate fund either in the schedule or in a separate schedule with the corresponding indication in the balance sheet under “Funds” on
liability side.
Code No.
Fixed Assets*
Others
Sub total
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Sub total
(iii) Other:
Loss on disposal of Special Fund Investments
Diminution in Value of Special Fund Investments
Transferred to Municipal Fund
Sub total
Total of (i+ii+iii) (c)
Net balance at the year end – (a+b)-(c)
Grant Total of Special Funds
Note:
Particulars
National Municipal Accounts Manual
Total Reserve funds
2
Capital Contribution
Capital Reserve
Borrowing Redemption Reserve
Special Funds (Utilised)
Statutory Reserve
General Reserve
Revaluation Reserve
Particulars
Opening
balance
(Rs.)
3
Additions
during the year
(Rs.)
4
Code No.
(a) Opening Balance
(b) Additions to the Grants *
(i) Grant received during the year
(ii) Interest/Dividend earned on Grant Investments
(iii) Profit on disposal of Grant Investments
(iv) Appreciation in Value of Grant Investments
(v) Other addition (Specify nature)
Total (b)
Total (a+b)
(c) Payments out of funds
(i) Capital expenditure on
Fixed Assets*
Others
Sub total
Particulars
Grants from
Central
Government
Grants from
State
Government
Grants
from
Welfare
Bodies
Deductions
during the year
(Rs.)
6
Grants
from
Financial
Institutions
5 (3+4)
Total
(Rs.)
Grants from
Other
Government
Agencies
Schedule B-4: Grants & Contribution for Specific Purposes [Code No 320]
1
312-10
312-11
312-20
312-30
312-40
312-50
312-60
Code No.
Schedule B-3: Reserves [Code No 312]
National Municipal Accounts Manual
Grants from
International
Organisations
31.20
Others
Amount in Rs.
Balance at the end of the
current year
(Rs.)
7 (5-6)
Financial Statements
Grants from
Central
Government
Grants from
State
Government
Grants from
Other
Government
Agencies
Grants
from
Financial
Institutions
Grants
from
Welfare
Bodies
Grants from
International
Organisations
Others
Financial Statements
31.21
Code No.
(ii) Revenue Expenditure on
Salary, Wages and allowances etc.
Rent
Other administrative charges
Sub total
(iii) Other:
Loss on disposal of Grant Investments
Diminution in Value of Grant Investments
Grants Refunded
Sub total
Total (c) [i+ii+iii]
Net balance at the year end (a+b)-(c)
Total Grants & Contribution for Specific Purposes
Note:
Plan funds received from Central/ State Government are to be shown as grant funds and not to be mixed up with earmarked funds
* For transferring completed capital assets, expenditure incurred will be capitalised and assets will be taken to Fixed Assets schedule (B-11) and Capital contribution
will be increased by the same amount.
Particulars
National Municipal Accounts Manual
National Municipal Accounts Manual
Financial Statements
Schedule B-5: Secured Loans [Code No 330]
Amount in Rs.
Code No.
1
330-10
330-20
330-30
330-40
330-50
330-60
330-70
330-80
Particulars
2
Loans from Central Government
Loans from State government
Loans from Govt. bodies & Associations
Loans from international agencies
Loans from banks & other financial institutions
Other Term Loans
Bonds & debentures
Other Loans
Total Secured Loans
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
Notes:
1. The nature of the Security shall be specified in each of these categories
2. Particulars of any guarantees given shall be disclosed
3. Terms of redemption (if any) of bonds/debentures issued shall be stated, together with the earliest date of
redemption
4. Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan under each of
these categories separately;
5. For loans disbursed directly to an Executing Agency, please specify the name of the Project for which such
loan is raised.
Schedule B-6: Unsecured Loans [Code No 331]
Code No.
1
331-10
331-20
331-30
331-40
331-50
331-60
331-70
331-80
Particulars
2
Loans from Central Government
Loans from State government
Loans from Govt. bodies & Associations
Loans from international agencies
Loans from banks & other financial institutions
Other Term Loans
Bonds & debentures
Other Loans
Total Un-Secured Loans
Current Year
Amount (Rs.)
Previous Year
Amount (Rs.)
3
4
Note:
Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan under each of
these categories separately.
Schedule B-7: Deposits Received [Code No 340]
Amount in Rs.
Code
No.
1
340-10
340-20
340-30
340-80
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
From Contractors
From Revenues
From staff
From Others
Total deposits received
31.22
Total of deposit works
3
Opening balance as
the beginning of the
year
Amount (Rs
1
350-10
350-11
350-12
350-20
350-30
350-40
350-41
350-80
Code No.
2
Creditors
Employee Liabilities
Interest Accrued and Due
Recoveries Payable
Government Dues Payable
Refunds Payable
Advance Collection of Revenues
Others
Total Other liabilities (Sundry Creditors)
Particulars
Schedule B-9: Other Liabilities (Sundry Creditors) [Code No 350]
3. Balance as in Col. 6 would appear in the balance sheet as a liability
Current Year
Amount (Rs.)
3
4
Additions
during the
current year
Amount (Rs
1. The amount received from the department on whose behalf the deposit works have been undertaken would appear in col. 4
2. Expenditure incurred including percentage (departments) charges would appear in Col 5
Note:
2
1
341-10
341-20
341-80
Civil Works
Electrical works
Others
Particulars
Code No.
Schedule B-8: Deposits Works [Code No 341]
National Municipal Accounts Manual
Amount in Rs.
Balance
outstanding at
the end of the
current year
Amount (Rs
6
4
Previous Year Amount (Rs.)
5
Utilisation /
expenditure
Amount (Rs
Amount in Rs.
31.23
Financial Statements
2
Provision for Expenses
Provision for Interest
Provision for Other Assets
Total Provisions
Particulars
Particulars
Opening
Balance
Previous Year Amount (Rs.)
Amount in Rs.
2
3
Land
Buildings
Infrastructure Assets
410-30 Roads and Bridges
410-31 Sewerage and drainage
410-32 Water ways
410-33 Public Lighting
Other assets
410-40 Plants & Machinery
410-50 Vehicles
410-60 Office & other equipment
410-70 Furniture, fixtures, fittings and
electrical appliances
410-80 Other fixed assets
Total
$ - Additions include fixed assets created out of Earmarked Funds and Grants transferred to Urban Local Body's fixed block as referred to in Schedule B-2 and B-4
1
410-10
410-20
Code No
Current Year
Amount (Rs.)
3
Financial Statements
31.24
Gross Block
Accumulated Depreciation
Net Block
Additions Deductions Cost at the
Additions Deductions Total at the At the end At the end of
Opening
during the during the end of the
during the during the end of the of current the previous
Balance
period $
period
year
period
period
year
year
year
4
5
6
7
8
9
10
11
12
Schedule B-11: Fixed Assets [Code No. 410 & 411]
1
360-10
360-20
360-30
Code No.
Schedule B-10: Provisions [Code No. 360]
National Municipal Accounts Manual
Financial Statements
4.
5.
6.
7.
2.
3.
Note:
1.
31.25
Gross Block means cost of acquisition of fixed asset. Opening Balance in Gross Block as on the first day of the year represents the closing balance of the previous
year. For instance, the opening balance as on 1st April 2004 shall be equal to the closing asset balance as on 31st March 2004.
Land includes areas used as and for the purpose of public places such as parks, squares, gardens, lakes, museums, libraries, godowns etc.
Buildings include office and works buildings, commercial buildings, residential buildings, school and college buildings, hospital building, public buildings temporary
structures and sheds, etc.
Roads and bridges include roads and streets, pavements, pathways, bridges, culverts and subways.
Sewerage and drainage include sewerage lines, storm water drainage lines and other similar drainage system.
Waterworks include water storage tank, water wells, bore wells, Water pumping station, Water transmission & distribution system, etc.
No depreciation is to be charged on "Land
Additional disclosures to the Schedule
i.
Value of fixed assets under dispute or litigation shall be provided. The status of the legal case as at the reporting date of the financial statements shall also be
mentioned.
ii.
The details & value of assets, which are not yet physically identified/traced, shall be disclosed separately.
iii.
Details and value of assets under leases and hire purchase needs to be disclosed as a note
National Municipal Accounts Manual
National Municipal Accounts Manual
Financial Statements
Schedule B-12: Investments - General Fund [Code 420]
Amount Rs.
Code No.
With whom
invested
Particulars
Face value
(Rs.)
1
420-10
420-20
420-30
420-40
420-50
420-60
420-80
Current
year
Carrying
Cost
(Rs.)
5
Previous
year
Carrying
Cost
(Rs)
6
2
3
4
Central Government Securities
State Government Securities
Debentures and Bonds
Preference Shares
Equity Shares
Units of Mutual Funds
Other Investments
Total of Investments General
Fund
1. Insert the other Heads of Account and the corresponding Codes of Account for other investments made by
the ULB
2. Provide break-up of other investments as applicable
3. Aggregate amount of quoted investments and also market value thereof shall be disclosed. Aggregate
amount of unquoted investments shall also be disclosed.
Schedule B-13: Investments - Other Funds [Code 421]
Amount Rs.
Code No.
Particulars
With whom
invested
Face value
(Rs.)
1
2
3
4
Current
year
Carrying
Cost
(Rs.)
5
Previous
year
Carrying
Cost
(Rs)
6
421-10
421-20
421-30
421-40
421-50
421-60
421-80
Central Government Securities
State Government Securities
Debentures and Bonds
Preference Shares
Equity Shares
Units of Mutual Funds
Other Investments
Total of Investments Other
Funds
1. Insert the other Heads of Account and the corresponding Codes of Account for other investments made by
the ULB
2. Provide break-up of other investments as provided for General Fund Investments.
Schedule B-14: Stock in Hand (Inventories) [Code 430]
Amount in Rs.
Code No.
1
430-10
430-20
430-30
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Stores
Loose Tools
Others
Total Stock in hand
31.26
Control
Control
Gross Amount
(Rs.)
3
Provision for Outstanding
revenues (Rs.)
4
(Code No 432)
Net Amount
(Rs.)
5=3 4
31.27
Previous year
Net amount (Rs.)
6
Financial Statements
Note:
The provision made against accrual items would not affect the opening/ closing balances of the Demand and Collection Ledgers for the purpose of recovery of dues
from the concerned parties/ individuals
*Break up for provision for outstanding revenues are given in Column 4
431-50
431-40
431-30
431-20
431-99
431-19
431-91
Receivables for Property Taxes
Less than 5 years *
More than 5 years*
Sub total
Less: State Government Cesses/Levies in Taxes
Accounts
Net Receivables of Property Taxes
Receivable of Other Taxes
Less than 3 years*
More than 3 years*
Sub- total
Less: State Government Cesses/Levies in Taxes
Accounts
Net Receivables of Other Taxes
Receivables of Cess Income
Less than 3 years*
More than 3 years*
Sub- total
Receivables for Fees and User Charges
Less than 3 years*
More than 3 years*
Sub total
Receivables from Other Sources
Less than 3 years*
More than 3 years*
Sub total
Receivables from Government
Total of Sundry Debtors (Receivables)
2
1
431-10
Particulars
Code No.
Schedule B-15: Sundry Debtors (Receivables) [Code No 431]
National Municipal Accounts Manual
National Municipal Accounts Manual
Financial Statements
Schedule B-16: Prepaid Expenses [Code No 440]
Code No.
1
440-10
440-20
440-30
Current year
Amount (Rs.)
3
Particulars
2
Establishment
Administrative
Operations & Maintenance
Total Prepaid expenses
Previous year
Amount (Rs)
Schedule B-17 :Cash and Bank Balances [Code No 450]
Code No.
1
450-10
450-21
450-22
450-23
450-24
450-41
450-42
450-43
450-44
450-61
450-62
450-63
450-64
Current year
Amount (Rs.)
3
Particulars
2
Cash
Balance with Bank Municipal Funds
Nationalised Banks
Other Scheduled Banks
Scheduled Co-operative Banks
Post Office
Sub-total
Balance with Bank ____ Special Funds
Nationalised Banks
Other Scheduled Banks
Scheduled Co-operative Banks
Post Office
Sub-total
Balance with Bank ____ Grant Funds
Nationalised Banks
Other Scheduled Banks
Scheduled Co-operative Banks
Post Office
Sub-total
Total Cash and Bank balances
Previous year
Amount (Rs.)
4
Schedule B-18: Loans, advances and deposits [Code 460]
Code
No.
1
460-10
460-20
460-30
460-40
460-50
460-60
460-80
461-
Particulars
2
Loans and advances to employees
Employee Provident Fund Loans
Loans to Others
Advance
to
Suppliers
and
Contractors
Advance to Others
Deposit with External Agencies
Other Current Assets
Sub Total
Less:
Accumulated
Provisions
against Loans, Advances and
Deposits (Schedule B 18 (a)]
Total Loans, advances, and
deposits
Opening
Balance at
the
beginning of
the year
(Rs.)
3
Paid
during the
current
year
(Rs.)
Recovered
during the
year
(Rs.)
Balance
outstanding
at the end of
the year
(Rs.)
4
5
6
31.28
National Municipal Accounts Manual
Financial Statements
Schedule B-18 (a): Accumulated Provisions against Loans, Advances, and Deposits
(Code No 461)
Code No.
1
461-10
461-20
461-30
Particulars
2
Current Year
Amount (Rs.)
3
Previous Year
Amount (Rs.)
4
Loans to Others
Advances
Deposits
Total Accumulated Provision
Note: The totals of this Schedule should be equalling to the amount as per the total in Schedule B
18
Schedule B-19: Other Assets [Code No 470]
Code No
1
470-10
470-20
Particulars
2
Deposit Works
Other asset control accounts
Total Other Assets
Current year
Amount (Rs.)
3
Previous year
Amount (Rs.)
4
Schedule B-20: Miscellaneous Expenditure (to the extent not written off) [Code No 480]
Code No
1
480-10
480-20
480-30
480-90
Particulars
2
Loan Issue Expenses Deferred
Discount on Issue of Loans
Deferred Revenue Expenses
Others
Total Miscellaneous expenditure
Current year
Amount (Rs.)
3
Previous year
Amount (Rs.)
4
31.29
National Municipal Accounts Manual
Financial Statements
CASH FLOW STATEMENT
31.34 Cash Flow statement is prepared in order to have information about the cash flows of
an enterprise useful in providing users of financial statements with a basis to assess the ability
of the enterprise to generate cash and cash equivalents and the needs of the enterprise to
utilise those cash flows.
31.35 A Cash Flow Statement, when used in conjunction with the other Financial
Statements, provides information that enables users to evaluate the changes in assets and
liabilities of an ULB, its financial status, and the actual performance in terms of cash inflows
and outflows.
31.36 All ULBs shall prepare a Statement of Cash flows apart from Income & Expenditure,
Balance sheet and Receipts and Payments statements.
GUIDELINES FOR PREPARATION OF THE CASHFLOW STATEMENTS
31.37 The cash flow statement shall report cash flows during the period classified by
operating, investing and financing activities. An ULB presents its cash flows from operating,
investing and financing activities in a manner, which is most appropriate to its activities.
Classification by activity provides information that allows users to assess the impact of those
activities on the financial position of the enterprise and the amount of its cash and cash
equivalents. This information may also be used to evaluate the relationships among those
activities. The cash flow statement shall be prepared as shown in Table 31.5.
STEPS IN PREPARATION OF CASH FLOW STATEMENT
31.38 Cash flow statement of an ULB shall be prepared by ascertaining the cash flow from
each of the activity as explained in the previous para. Therefore steps involved in determining
the cash flows from each of the activity is explained in the following paras separately.
Cash flows from operating activities
31.39 Operating activities are the principal activities contributing to or utilising the cash
resources of the ULB and other activities that are not investing or financing activities.
Identification of transactions into operating or other activities primarily depends on whether
the result of the activity is captured in Income and Expenditure statement and is not related to
Investing or Financing activities. .
31.30
National Municipal Accounts Manual
Financial Statements
31.40 The steps involved in calculation of cash flow from Operating Activities are as
follows:
a.
The amount of excess of income over expenditure (or vice versa) as per ‘the
Income and Expenditure Account’ shall be entered in the Cash flow statement
under ‘Operating activities’: (which shall be the gross cash flow from
operating activities)
b.
The amount of excess of income over expenditure (taken in the previous step)
includes certain non-cash and non-operating incomes and expenditures. These
shall be adjusted to the Gross cash flow to determine the net cash flow from
operating activities. Adjustments required for expenditure will be added and
adjustments in respect of income will be deducted from the Gross Cash Flow.
A generalised list of such adjustments under incomes and expenses are given
below:
Expenditure:
- Deprecations
- Write off
- Provisions
- Decline in the value of investment
Income
- Interest on deposits/loan received
- Investment incomes
- Profit or sale arising out of Assets
- Appreciation in the value of Investments
c.
The net cash flows as determined in the previous step shall be adjusted for
changes in working capital: (movement in current assets and current liabilities
excepting those current assets relating to ‘Investing’ or’ Financing’ activity,
for example loans and advances to employees is considered under financing
activity).
Changes during the period in current assets and liabilities are as follows:
Current Assets/Liabilities
Current
year
(Col 1)
Previous
year
(Col 2)
Movements
(Col 1
Col 2)
Inventories
Receivables of Revenues
Prepaid expenses
Employee related payables
Provision for expenses
31.31
National Municipal Accounts Manual
d.
Financial Statements
The cash flows arising from any extra ordinary item shall be disclosed
separately and classified as cash flows from operating activities unless they
can be identified with financing or investing activities and this amount shall be
added to cash flow from operating activities as determined in the previous
step. Few examples of extra ordinary items are as follows:
i. Cyclone relief funds received;
ii. Receipts & payments on account of prior period income and expenses;
e.
The total amount of cash flows from operating activities as determined in the
previous step shall be shown as net cash generated from or (used in)
operating activities.
Cash flows from investing activities
31.41 Investing activities generally involves acquisition and disposal of long-term assets
and investments not included in cash equivalents.
31.42 The steps involved in calculation of cash flow from Operating Activities are as
follows:
a. All the movement of cash flows on account of the following shall be shown as
separate line items under the Investing activities :
¾
¾
¾
¾
Acquisition of fixed assets;
Purchase of investment in shares/equity or any other mode ;
Fixed Deposits with banks and other financial institutions
Amounts expensed/ utilised from Fund accounts
It is to be noted that while calculating the movement of funds/grants account, any
amount included by transfer from General/municipal fund shall be adjusted, as
there is no real cash inflows to the fund/grant accounts.
b. All items of incomes and expenditures in the nature of investing activities ,
which are adjusted while calculating cash flows from operating activities shall be
considered appropriately for inclusion in the calculation of cash flows from
investing activities. Also these items are to be included as separate line items.
Examples of such items are
¾ interest received,
¾ dividend received,
¾ proceeds from disposal of assets/investments
¾ proceeds from disposal of assets/investments
31.32
National Municipal Accounts Manual
Financial Statements
c. The amount of cash flows from investing activities as calculated above shall be
shown as Net cash generated from/ (used in) investing activities .
Cash flows from financing activities
31.43 Financing activities are activities that result in changes in the size and composition
Loans received by the ULBs.
31.44 The steps involved in calculation of cash flow from Financing Activities are as
follows:
a. The movement in loans availed by the ULBs and loans & other advances given to
employees/ others shall be shown on a net basis instead of showing the amount of
loans received / repaid during the year.
Examples of such items are as follows:
¾
¾
¾
¾
Movement in loans from Central Government
Movement in Loans from State Government
Movement in Loans and advances to employees
Interest and finance expenses paid
Movements in loans are calculated as follows:
Amount(Rs)
Loan amounts received during the period
Less: Loan amounts repaid during the year
XXX
XXX
-----------Net movement amount of loans received/(repaid)
XX/(XX)
-----------b. Funds/grants received during the period under reporting shall be shown separately
as amounts received under any fund/grant are in the nature of financing activities.
Examples of such funds/grants are:
¾ Earmarked funds
¾ Special grants
¾ Specific grants
c. All items of incomes and expenditures in the nature of financing activities ,
which are adjusted while calculating cash flows from, operating activities shall be
considered appropriately for inclusion in the calculation of cash flows from
investing activities
31.33
National Municipal Accounts Manual
Financial Statements
Examples of such items are as follows:
¾ Interest and finance charge
¾ Discounts
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
31.45 The total of net cash flows generated from / (used in) each of operating, investing and
financing activities, shall be shown as net increase /(decrease) in cash and cash equivalents
during the period under reporting.
31.46 In order to arrive at the Cash and cash equivalents at the end of the period under
reporting , the amount of cash and cash equivalents at the beginning of the period under
reporting shall be added to net increase/(decrease) in cash and cash equivalents during the
period.
31.47 It should be ensured that the amount of cash and cash equivalents at the end of the
period under reporting shall be tallied with the total cash and bank balances at the end of the
period as disclosed in the balance sheet of the ULB.
Table 31.5
Statement of Cash Flow
Particulars
Previous Year (Rs.) Current Year (Rs.)
a. Cash flows from operating activities
Gross surplus/ (deficit) over expenditure
Adjustments for
Add:
Depreciation
Interest & finance expenses
Less:
Profit on disposal of assets
Dividend Income
Investment income
Adjusted income over expenditure before effecting
changes in current assets and current liabilities and
extra ordinary items.
Changes in current assets and current liabilities
(Increase) / decrease in Sundry debtors
(Increase) / decrease in Stock in hand
(Increase) / decrease in prepaid expenses
(Increase) / decrease in other current assets
(Decrease)/ increase in Deposits received
(Decrease)/ increase in Deposits works
(Decrease)/ increase in other current liabilities
(Decrease)/ increase in provisions
Extra ordinary items (Specify)
Net cash generated from/ (used in) operating activities
(a)
31.34
National Municipal Accounts Manual
Financial Statements
Particulars
Previous Year (Rs.) Current Year (Rs.)
b. Cash flows from investing activities
(Purchase) of fixed assets & CWIP
(Increase) / Decrease in Special funds/grants
(Increase) / Decrease in Earmarked funds
(Purchase) of Investments
Add:
Proceeds from disposal of assets
Proceeds from disposal of investments
Investment income received
Interest income received
Net cash generated from/ (used in) investing activities
(b)
c. Cash flows from financing activities
Add:
Loans from banks/others received
Less:
Loans repaid during the period
Loans & advances to employees
Loans to others
Finance expenses
Net cash generated from (used in) financing activities
(c)
Net increase/ (decrease) in cash and cash
equivalents (a + b + c)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Cash and Cash equivalents at the end of the year
comprises of the following account balances at the
end of the year:
i. Cash Balances
ii. Bank Balances
iii. Scheduled co-operative banks
iv. Balances with Post offices
v. Balances with other banks
Total
Note: items in () brackets denote as that they are to be deducted
31.35
National Municipal Accounts Manual
Financial Statements
RECEIPTS AND PAYMENTS ACCOUNT
31.48 The Receipts and Payments Account shows the sources of funds and the applications
of funds during the accounting reporting periods.
31.49 The Receipts and Payments Account shall be prepared from the Balance Sheet,
Income and Expenditure Statement, Ledgers and Cash Book.
31.50 The following are the steps involved in the preparation of Receipts and Payments
Account:
a. The opening and closing cash and bank balances should be ascertained and
entered:
b. For revenue income accounted for on actual receipt basis, the amounts as
appearing in the Income and Expenditure Statement should be reflected directly in
the Receipts and Payments Account.
c. For revenue income accounted for on accrual basis, the following shall be done:
Receivables at the beginning of the period
Rs.XXX
Add: Bills raised/Income accounted during the period
Rs.XXX
Less: Receivables at the end of the period
Rs.XXX
Cash received during the year
Rs.XXX
This amount shall be reflected in the receipt side of the Receipts and Payments
Account.
d. For revenue payments which are accounted for on accrual basis, the following
shall be done:
Payables at the beginning of the period
Add: Bills received/Expenditure Accounted during the period
Less: Payables at the end of the period
Cash paid during the year
Rs.XXX
Rs.XXX
Rs.XXX
Rs.XXX
This amount shall be reflected in the payment side of the Receipts and Payments
Account.
e. For Non-operating items Ledger accounts shall be scrutinised for each of the
items listing out the total cash inflow and outflow during the period under
consideration. The increase or decrease in the amount outstanding in respect of the
relevant item in the Balance Sheet in comparison to the previous period s figures
should tally with the net cash flow. For instance, while ascertaining the cash flow
in respect of loan, all the loan ledger accounts shall be scrutinised to prepare a list
31.36
National Municipal Accounts Manual
Financial Statements
of cash inflow and outflow in various loan ledger accounts. The difference
between the total cash inflow and outflow of all the loan ledger accounts should
tally with the amount received or paid in respect of loan. This would also be
available from the Balance Sheet itself in terms of increase or decrease of the
amount of loan in relation to the previous period s figures.
31.51 The Receipts and Payments Account shall be prepared as shown in Table 31.6. It
should be noted that the following gives an illustrative list of receipts and payments.
31.52 The following shall be noted in relation to preparation of Receipts and Payments
Account:
a. The receipts considered are on cash basis and does not take into account the
receivables. Similarly, the payments considered are on cash basis and does not
take into account the payables.
b. Non-cash items like Depreciation, Miscellaneous Expenditure w/off (written off),
Profit/Loss on disposal of Fixed Assets, Profit/Loss on disposal of Investments
will not be considered while preparing this statement.
c. If any loan is obtained by the ULB in such a way that the disbursement of
installments is directly made to the appointed Contractor, then the loan, though
not directly received in cash by the ULB, should be shown as ' Receipts' . Similarly,
corresponding payments made to the Contractor, though not made in cash by the
ULB, should be shown as ' Payments' .
31.37
Opening Balances#
Cash balances including Imprest
Balances with Banks/Treasury (including balances
in designated bank accounts)
Operating Receipts
Tax Revenue
Assigned Revenues & Compensations
Rental income from Municipal Properties
Fees & User Charges
Sale & Hire Charges
Revenue Grants, Contributions & Subsidies
Income from Investments
Interest Earned
Other Income
1-10
1-20
1-30
1-40
1-50
1-60
1-70
1-71
1-80
Other Receipts [specify]
Non-Operating Receipts
Loans Received
Deposits Received
Grants and contribution for specific purposes
Sale proceeds from Assets
Realisation of Investment – General Fund
Realisation of Investment – Other Funds
Deposit works
Revenue Collected in Advance
Loans & Advances to Employees (recovery)
Other Loans & Advances (recovery)
Deposits with External Agencies (recovery)
Head of Account
3-30/31
3-40
3-20
*
*
*
3-41
3-50
*
*
*
Table 31.6
Current
Period
Amount
(Rs.)
Corresponding
Previous
Period
Amount (Rs.)
3-50
3-50
**
**
4-10
4-12
3-41
4-20
4-21
4-60
4-40
4-60
4-60
4-30
2-10
2-20
2-30
2-40
2-50
2-60
Code
No.
Purchase of Stores
Other Collections on behalf of State and
Central Government
Non-Operating Payments
Other Payables
Refunds Payable
Repayment of Loans
Refund of Deposits
Acquisition / Purchase of Fixed Assets
Capital Work – in – Progress
Deposit works
Investments – General Fund
Investments – Other Funds
Loans & Advances to Employees
Prepaid Expenses
Other Loans & Advances
Deposits with External Agencies
Other Payments [specify]
Operating Payments
Establishment Expenses
Administrative Expenses
Operations and Maintenance
Interest & Finance Charges
Programme Expenses
Revenue Grants, Contributions & Subsidies
Head of Account
Receipts and Payments Account for the period from_________ to__________
Code No.
National Municipal Accounts Manual
Current
Period
Amount
(Rs.)
31.38
Corresponding
Previous
Period Amount
(Rs.)
Financial Statements
Head of Account
Current
Period
Amount
(Rs.)
Corresponding
Previous
Period
Amount (Rs.)
GRAND TOTAL
# Balances banks operate for Grants and special funds
* Details in respect of these items will be available in the corresponding asset ledger accounts
** Details in respect of these items will be available in the corresponding liability ledger accounts
Code No.
National Municipal Accounts Manual
Code
No.
Closing Balances #
Cash balances including Imprest
Balances with Banks/Treasury (including
balances in designated bank accounts)
GRAND TOTAL
Head of Account
Current
Period
Amount
(Rs.)
31.39
Corresponding
Previous
Period Amount
(Rs.)
Financial Statements
National Municipal Accounts Manual
Financial Statements
NOTES TO ACCOUNTS
31.53 The Notes to Accounts shall comprise of Statement of Significant Accounting
Principles, Statement on Contingent Liabilities, Subsidy Report and Other Disclosures.
Statement of Significant Accounting Principles
31.54 The Statement of Significant Accounting Principles shall state important
accounting principles followed by the ULB in respect of accounting for its transactions and in
the preparation and presentation of the Financial Statements.
31.55 Where any of the accounting principles adopted by the ULB while preparing its
Financial Statements is not in conformity with the principles prescribed in this Accounts
Manual and the effect of deviation from the accounting principles is material, the particulars
of the deviation shall be disclosed together with the reasons therefor and the financial effect
thereof, except where such effect is not ascertainable. The disclosure of such deviation
reasons thereof and financial effect thereof shall be made in the section “Other Disclosures”.
In case the financial effect thereof is not ascertainable, either wholly or in part, the fact that it
is not so ascertainable shall be indicated.
31.56 Likewise, any change in the accounting principles which has no material effect on the
Financial Statements for the current period but which is reasonably expected to have a
material effect in later periods, the fact of such change should be appropriately disclosed in
the period in which the change is adopted.
31.57 The statement of significant accounting principles to be disclosed in the financial
statements is given below.
1.
Basis of Accounting
The financial statements are prepared on a going concern and under historical
cost basis under accrual basis of accounting. The method of accounting is the
double entry system.
2.
Recognition of Revenue
i.
Revenue
a.
Property and Other Taxes are recognised in the period in which
they become due and demands are ascertainable
b.
Revenues in respect of Profession Tax on Organisations /
entities are accrued in the year to which it pertains and when
demands are raised.
31.40
National Municipal Accounts Manual
c.
Financial Statements
Advertisement taxes are accrued based on Demand or the
contract.
d.
Revenue in respect of Trade License Fees is accrued in the year
to which it pertains and when Demands are raised.
e.
Assigned revenues like Entertainment Tax, Duty / Surcharge on
transfer of Immovable properties are accounted during the year
only upon actual receipt.
However, at year-end, they are
accrued if sanction order (or proceedings) is passed and the
amount is ascertained.
f.
Other Incomes, which are of an uncertain nature or for which
the amount is not ascertainable or where demand is not raised
in regular course of operations, is recognised on actual receipt
ii. Provision against receivables
a.
Prudential norms are applied based on type of income and age
of receivable. Based on the principle on provisioning, incomes
that have been accrued and are doubtful of recovery are
provided for.
3.
Recognition of Expenditure
a.
Expenses on Salaries, bonus and other allowances are recognised as
and when they are due for payment
b.
All revenue expenditures are treated as expenditures in the period in
which they are incurred.
c.
In case of works, expenditures are accrued as soon as the work has
been measured and becomes due for payment.
d.
Provision for expenses are made at the year-end for all bills received
upto a cut off date.
4.
Fixed Assets
i.
Recognition
a.
All Fixed Assets are carried at cost less accumulated
depreciation.
The
cost
of
fixed
assets
include
cost
incurred/money spent in acquiring or installing or constructing
31.41
National Municipal Accounts Manual
Financial Statements
the fixed asset, interest on borrowings directly attributable to
acquisition or construction of qualifying fixed assets up to the
date of commissioning of the assets and other incidental and
indirect expenses incurred up to that date.
b.
All assets costing less than Rs.5,000/- would be expensed /
charged to Income & Expenditure Account in the year of
purchase.
c.
Any Fixed Asset, which has been acquired free of cost or in
respect of which no payment has been made, is recorded at
nominal value of Re. 1/-.
ii.
Depreciation
d.
iii.
Depreciation is provided on Written Down Value1
Revaluation of Fixed Assets:
e.
Revaluation of fixed assets is undertaken either at the time of
issue of municipal bonds or when commercial development /
lease of properties is made.
f.
Increase in net book value arising on revaluation is credited to
‘Revaluation Reserve Account’. Decrease in net book value is
charged to Income and Expenditure account.
g.
Revaluation reserve is amortised by equivalent amount of
depreciation charged on the revalued portion of the cost of the
fixed assets.
5.
Borrowing cost
Borrowing cost is recognised as revenue expenditure on accrual basis except
in the case of fixed assets.
6.
Inventories
Inventories are valued as follows:
a. Raw materials are valued at Cost based on first in first out method
b. Finished goods are valued at lower of the cost or market value.
31.42
National Municipal Accounts Manual
7.
Financial Statements
Grants
a.
General Grants, which are of revenue nature, are recognised as income
on actual receipt
b.
Grants, which are re-imbursement of specific revenue expenditure is
recognised as income in the accounting period in which the
corresponding revenue expenditure is charged to the Income and
Expenditure Account.
c.
Grant received towards capital expenditure is treated as a liability till
such
time
the
fixed
asset
is
constructed
or
acquired.
On
construction/acquisition of fixed asset, the grant corresponding to the
value of the asset so constructed/acquired is treated as a capital receipt
and transferred to capital contribution.
8.
Employee benefits
a.
Separate Funds are formed for meeting the pension and other retirement
benefits including Gratuity and Leave encashment.
b.
Contribution towards Pension and other retirement benefit funds are
recognised as and when it is due.
9.
Investments
a. All investments are initially recognised at Cost. The cost of investment
shall include cost incurred in acquiring the investment and other incidental
expenses incurred for its acquisition.
b. Long-term investments are carried at their cost. However in the event of
any permanent diminution in their value as on the date of balance sheet,
these are provided for.
c. Short-term investments are carried at their cost or market value (if quoted)
whichever is lower.
1
Please mention Straight Line Method if straight line is adopted by the ULB.
31.43
National Municipal Accounts Manual
Financial Statements
STATEMENT ON CONTINGENT LIABILITIES
31.58 The Contingent Liabilities represent an obligation, relating to a past transaction or
other event or condition, that may arise in consequence of a future event now deemed
possible but not probable. They represent a claim against the ULB which is contingent on the
happening of a future uncertain event, the financial implications of which may or may not be
ascertainable at the end of an accounting period. The following shall be disclosed by the ULB
in the ‘Statement on Contingent Liabilities’:
a.
Amount of Capital Contracts remaining to be executed and not provided for;
b.
Amount of claim in respect of suits filed against the ULB for which the ULB may
be liable, in case the ULB loses suits;
c.
Claim against the ULB not acknowledged as debts; and
d.
Other money for which the ULB is contingently liable.
SUBSIDY REPORT
31.59 In accordance with the provisions and rules of the act governing the ULB, and
instructions of the Government, the ULB shall prepare a Subsidy Report on the following
services, which shall be annexed to the Annual Financial Statements:
a.
Water supply and disposal of sewage;
b.
Scavenging, transporting and disposal of wastes;
c.
Municipal transport; and
d.
Street lighting.
e.
Hospitals
f.
Schools
31.60 The Subsidy Report may be prepared in the illustrative format provided below in
Table 31.7. However, the ULBs shall adopt those formats as given in the rules and provisions
of the act governing the ULBs and the local needs.
31.44
National Municipal Accounts Manual
Financial Statements
Table 31.7
Subsidy Report for _________ for the period from_________ to__________
Particulars
Current year’s
figures
Amount (Rs.)
Previous year’s
figures
Amount (Rs.)
EXPENDITURE
Establishment expense
Administration expenses
Operation and Maintenance Expenses
Interest on Loans and Financial Charges
Depreciation
Other Expenses
TOTAL EXPENDITURE (A)
INCOME
Charges levied on rendering of Services
Taxes levied
Other Income
TOTAL INCOME (B)
SUBSIDY PROVIDED (A-B)
31.61 The Subsidy, as computed above, indicates the extent of deficit of income as
compared to the expenditure.
OTHER DISCLOSURES
31.62 This section shall give other important financial information about the ULB, which
have not been disclosed in the Financial Statements. These shall include:
a. Details of the expenses incurred under various Government Circulars together
with the details, in broad terms, of the beneficiaries;
b. Details of honorarium paid to Councillors and Mayor;
c. The following shall be disclosed separately in case of each of the incomes of the
ULB:
¾ amount of refunds, remissions and write-offs made during the year, and
¾ arrears collected during the year.
31.63 In addition to disclosures required to be made as specified above, the ULB may also
furnish information in respect of the following;
a. Percentage of properties defaulting on property tax both in terms of number and
value in comparison to total properties and income earned;
b. Number of municipal hospital beds, dispensaries and other medical facilities per
1000 citizens in the municipal area;
31.45
National Municipal Accounts Manual
Financial Statements
c. Details about the various health programs undertaken by the ULB from its own
resources and the section of the population being benefited;
d. Percentage of connections, category-wise, defaulting on payment of water supply
charges both in terms of number and value in comparison with the total number of
connections and demand raised together with the remedial measures taken;
e. Details about the water purification and water distributed and billed in terms of
quantity;
f. Number of lamp-posts erected and the areas in which they are erected (the
expenses incurred in respect of the street lighting shall be given in the Subsidy
Report);
g. Age analysis of receivables;
h. Age analysis of payables; and
i. Such other details as the ULB may decide to give for better disclosure and
governance.
MUNICIPAL COMMISSIONER S REPORT ON THE QUALIFICATIONS AND
COMMENTS MADE IN THE REPORT OF THE MUNICIPAL CHIEF AUDITOR
31.64 The Municipal Commissioner shall in his report include his comments on the report
of the Municipal Chief Auditor, including explanations relating to qualifications mentioned
by the Municipal Chief Auditor, stating clearly the facts of the matter and the steps taken in
respect of those qualifications. The Municipal commissioner shall also comment upon the
performance of the ULB based upon the results of the Financial Performance Indicators. In
respect of any adverse performance, as reflected by the result of any Performance Indicator,
the Municipal Commissioner shall, in his report, explain the reason therefor and shall also
state the steps taken to improve performance in that area.
31.65 Further, the Municipal commissioner’s Report shall state that the books of accounts
are maintained in the manner as required by the Act and the Accounts Manual and that proper
accounting principles have been adopted and applied consistently while accounting for the
transactions and preparing the Annual Financial Statements.
STANDING COMMITTEE S ACTION TAKEN REPORT
31.66 The Standing Committee shall prepare an Action Taken Report on the Annual
Financial Statements submitted to it for approval. The Report shall in addition to such
information as may be prescribed by the Government, provide details of the action taken by
the ULB in respect of the qualifications made in the Report of the Municipal Chief Auditor
and the Municipal Commissioner’s Report.
31.46
National Municipal Accounts Manual
Financial Statements
31.67 The Action Taken Report shall contain a section for Standing Committee’s comments
on the comments and qualifications contained in the Report of the Municipal Chief Auditor
and the Municipal Commissioner’s Report.
FINANCIAL RATIO ANALYSIS
31.68 A ratio is an arithmetical relationship between two figures. Ratios are indicators of
performance of the ULB/Department. Financial Ratio Analysis is a study of ratios between
various items or groups of items in the Financial Statements of the ULB.
31.69 On preparation of Financial Statements, the Accounts Department shall compute and
present the following Financial Ratios as depicted in Table 31.8 below.
Table 31.8
Financial Ratios as on____________
Sr. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Particulars
Current Year Previous Year
Income Ratios
Tax Revenue to Total Income Ratio…(%)
Property & Other Taxes to Total Income Ratio…(%)
Octroi/Cess to Total Income Ratio…(%)
Assigned Revenues & Compensations to Total Income
Ratio…(%)
Rental Income from Municipal Properties to Total Income
Ratio…(%)
Fees & User Charges to Total Income Ratio…(%)
Revenue Grants, Contributions & Subsidies to Total
Income Ratio…(%)
Expense Ratios
Establishment Expenses to Total Income Ratio…(%)
Administrative Expenses to Total Income Ratio…(%)
Operations & Maintenance to Total Income Ratio…(%)
Interest Expense to Total Income Ratio…(%)
Net Income Ratios
Cash Surplus / Deficit to Total Income Ratio…(%)
Efficiency Ratios
Gross Property Tax Receivables Ratio…(No. of Days)
Gross Cess Receivables Ratio…(No. of Days)
Property Tax Receivable to Property Tax Income Ratio…
(%)
Cess Receivable to Cess Income Ratio…(%)
Operations & Maintenance to Gross Fixed Assets Ratio…
(%)
Interest Expense to Loans Ratio…(%)
Leverage Ratios
Loans to Reserves Ratio or Debt-Equity Ratio…(times)
Interest Coverage Ratio…(times)
Debt Service Coverage Ratio…(times)
Investment Ratios
Earmarked Fund Investments to Earmarked Funds
Ratio…(%)
Interest on Investments Ratio…(%)
31.47
National Municipal Accounts Manual
Sr. No.
24
25
26
27
28
29
Particulars
Liquidity Ratio
Current Assets to Current Liabilities Ratio…(times)
Asset Ratios
Fixed Assets to Total Assets Ratio…(%)
Performance Ratios
Income per Employee…(Rs.)
Expenditure per Employee…(Rs.)
Income per Citizen…(Rs.)
Expenditure per Citizen…(Rs.)
Financial Statements
Current Year Previous Year
31.70 The Financial Ratios shall be calculated by the Accounts Department as shown in
Table 31.9 below.
31.48
9
8
7
6
5
4
3
2
1B
1A
1
Sr. No.
Income Ratios
Tax Revenue to Total
Income Ratio…(%)
Property & Other Taxes to
Total Income Ratio…(%)
Octroi/Cess to Total Income
Ratio…(%)
Assigned
Revenues
&
Compensations to Total
Income Ratio…(%)
Rental
Income
from
Municipal Properties to
Total Income Ratio…(%)
Fees & User Charges to
Total Income Ratio…(%)
Revenue
Grants,
Contributions & Subsidies
to Total Income Ratio…
(%)
Expense Ratios
Establishment Expenses to
Total Income Ratio…(%)
Administrative Expenses to
Total Income Ratio…(%)
Operations & Maintenance
to Total Income Ratio…
(%)
Interest Expense to Total
Income Ratio…(%)
Net Income Ratios
Financial Ratio
National Municipal Accounts Manual
Interest Expense X 100
Total Income
Establishment Expenses X 100
Total Income
Administrative Expenses X 100
Total Income
Operations & Maintenance X 100
Total Income
Fees & User Charges X 100
Total Income
Revenue Grants, Contributions & Subsidies X 100
Total Income
Rental Income from Municipal Properties X 100
Total Income
Tax Revenue X 100
Total Income
Property & Other Taxes X 100
Total Income
Octroi/Cess X 100
Total Income
Assigned Revenues & Compensations X 100
Total Income
Method of Computation
I-13
I-12
I-11
I-10
I-6
I-4
I-3
I-2
I-1(b)
I-1(a)
I-1
Schedules to
be referred
Table 31.9
Financial Ratio Analysis
31.49
These Ratios depict the share of each expense in the
total income of the ULB. The ULB should try and keep
these ratios as low as possible so that a higher surplus
can be earned. However, this should not be at the
sacrifice of service to the citizens.
These Ratios depict the share of each income in the
Total Income of the ULB. Higher share of an
individual income in the total income shows a high
dependability on that source and therefore a high risk.
The ULB should try and develop other sources of
income to reduce this risk.
Description of the Ratio
Financial Statements
Gross Cess Receivables
Ratio…(No. of Days)
Property Tax Receivable to
Property
Tax
Income
Ratio…(%)
Cess Receivable to Cess
Income Ratio…(%)
12
13
14
Efficiency Ratios
Gross
Property
Tax
Receivables Ratio…(No. of
Days)
Cash Surplus / Deficit to
Total Income Ratio…(%)
10
11
Financial Ratio
Sr. No.
National Municipal Accounts Manual
Cess
Where Cess Receivable is only in respect of the
financial year under consideration and represents gross
amount receivable at the end of the year (i.e. without
deducting provision for unrealised cess)
Where Property Tax Receivable is only in respect of
the financial year under consideration and represents
gross amount receivable at the end of the year (i.e.
without deducting provision for unrealised property
tax)
Cess Receivable at the end of the year X 100
Demand for cess raised during the year
Property Tax Receivable at the end of the year X 100
Demand for property tax raised during the year
Where Average Gross Cess Receivable =
(Opening Cess Receivable + Closing
Receivable)/2
Where Average Gross Property Tax (P.T.) Receivable
=
(Opening P.T.Receivable + Closing P.T.Receivable)/2
Average Gross Cess Receivable X 365
Demand for cess income raised during the year
Average Gross Property Tax Receivable X 365
Demand for property tax raised during the year
Where Cash Surplus or Deficit is obtained from
Receipts & Payments Account as difference between
Operating Receipts and Operating Expenses.
Cash Surplus or Deficit X 100
Total Income
Method of Computation
This ratio indicates cess outstanding as a percentage of
current year’s demand of cess. Efforts should be made
to keep this ratio as low as possible.
B-13, I-1(b)
31.50
This ratio indicates property tax outstanding as a
percentage of current year’s demand of property tax.
Efforts should be made to keep this ratio as low as
possible.
These ratios indicate the average number of days for
which the receivables are outstanding on an average.
The ULB should try and keep these days very low.
This ratio indicates the cash surplus or deficit
generated as a percentage to the total income of the
ULB.
Description of the Ratio
B-13, I-1(a)
B-13, I-1(b)
B-13, I-1(a)
Schedules to
be referred
Receipts &
Payments
Account
Financial Statements
Operations & Maintenance
to Gross Fixed Assets
Ratio…(%)
Interest Expense to Loans
Ratio…(%)
18
19
22
21
Coverage
Investment Ratios
Debt Service
Ratio…(times)
Leverage Ratios
Loans to Reserves Ratio or
Debt-Equity Ratio…(times)
Interest Coverage Ratio…
(times)
Inventory Ratio… (No. of
Days Consumption)
15
20
Financial Ratio
Sr. No.
National Municipal Accounts Manual
Loans
Reserves & Surplus
Surplus + Depreciation + Interest (incl. interest
capitalised)
Interest (incl. interest capitalised)
Surplus + Depreciation + Interest (incl. interest
capitalised)
Debt instalments to be serviced (paid) during the next
year + Interest (including interest to be capitalised)
Indicate range (highest & lowest) of interest percentage
and nature of loan (for highest & lowest) in respect of
loans outstanding at the end of the year
Operations & Maintenance X 100
Gross Block of Fixed Assets (as at the end of the year)
Where Average Stock = (Opening Stock + Closing
Stock)/2
Average Stock X 365
Store consumed during the year
Method of Computation
Register of
Loans
B-9, I-13
B-1,2,3,4
B-4
I-12, B-9
Schedules to
be referred
31.51
This ratio measures the use of debt finance as a
percentage to own funds of the ULB.
This ratio indicates the comfort level with which the
ULB can meet its interest burden. This ratio is very
important from the lender’s point of view also.
This ratio indicates the comfort level with which the
ULB can service (pay) its debt instalments and meets
its interest burden. This ratio is very important from the
lender’s point of view also.
This ratio indicates the average number of days of
stock lying with the ULB. High number of days would
indicate that the ULB buys a lot of stock in advance,
which if avoided, can result in less blockage of money
into stock. The number of days should be decided
based on the emergency nature of the item and the time
it would take to procure items from the suppliers.
This ratio indicates expenses incurred towards repairs
& maintenance as a percentage of gross block of fixed
assets. Although this is an essential expense to keep the
assets in good working condition, higher ratio could
indicate either bad maintenance or inefficient usage of
the asset or frequent repairs to the same asset, both of
which needs to be investigated.
This ratio indicates the range of interest expenditure on
loans availed by the ULB. The ULB should compare
this with other ULBs and
Government Bodies to ensure that loans are availed at
competitive rates.
This ratio shall be calculated in respect of major stores
of the ULB, for example, engineering stores, water
supply stores, electricity stores, etc.
Description of the Ratio
Financial Statements
Income per Citizen…(Rs.)
Expenditure per Citizen…
(Rs.)
29
30
28
27
26
25
Liquidity Ratio
Current Assets to Current
Liabilities Ratio…(times)
Asset Ratios
Fixed Assets to Total Assets
Ratio…(%)
Performance Ratios
Income per Employee…
(Rs.)
Expenditure
per
Employee…(Rs.)
Earmarked
Fund
Investments to Earmarked
Funds Ratio…(%)
Interest on Investments
Ratio…(%)
23
24
Financial Ratio
Sr. No.
National Municipal Accounts Manual
Total Income as per Income & Expenditure Account
No. of Employees of the ULB
Total Expenditure as per Income & Expenditure
Account
No. of Employees of the ULB
Total Income as per Income & Expenditure Account
No. of Citizens in the Municipal Area
Total Expenditure as per Income & Expenditure
Account
No. of Citizens in the Municipal Area
Fixed Assets X 100
Total Assets
Current Assets
Current Liabilities
Indicate range (highest & lowest) of interest percentage
and nature of investment (for highest & lowest) in
respect of investments outstanding at the end of the
year
Earmarked Fund Investments X 100
Earmarked Funds
Method of Computation
-
-
-
-
B-9
B-5 to 8 &
13-16
B-10
Schedules to
be referred
B-2,11
31.52
These ratios indicate average income earned and
average expenditure incurred per employee and per
citizen of the ULB. These ratios should be compared
with other ULBs and Government Bodies to
benchmark the performance of the ULB with others.
This ratio indicates the share of fixed assets in the total
assets of the ULB.
This ratio indicates the ability of the ULB to meet its
obligations in the short run, usually one year.
This ratio indicates the range of interest earned on
investments made by the ULB.
The ULB should compare this with other ULBs and
Government Bodies to ensure that investments are
made at best rates.
This ratio indicates the percentage of earmarked funds
invested by the ULB.
Description of the Ratio
Financial Statements
National Municipal Accounts Manual
Audit Report
CHAPTER 32
$8',7 5(3257
INTRODUCTION
32.1 This chapter discusses the format and content of the Audit Report to be submitted in
relation to Urban Local Bodies (ULBs).
32.2
This chapter briefly describes the following:
•
•
•
•
Audit report on financial statements
Periodicity of Reports
Supplementary / test audit conducted by CAG
Other audits of ULBs.
32.3 The report of the Auditor as specified in this manual can be construed as certificate
unless the State Government has any specific requirement.
32.1
National Municipal Accounts Manual
Audit Report
AUDIT REPORT ON FINANCIAL STATEMENTS
32.4 The Municipal accounts as contained in the financial statements including the
accounts of special funds, if any, and the balance sheet shall be examined and audited by
Director Local Fund Audit or his equivalent authority or an Auditor appointed by the State
Government.
32.5 The Auditor so appointed shall upon completion of audit of the accounts, issue a
report on the financial statements of the ULB.
32.6 The MCA’s Report on the Balance Sheet, Income and Expenditure Statement,
Receipts and Payments Statement, and Cash Flow Statement shall be addressed to the
Authority (as required by the relevant Act), of the ULB, with a copy being forwarded to the
Municipal Commissioner.
32.7
The Report of the MCA shall state:
a. whether he has obtained all the information and explanations which to the best of
his knowledge and belief were necessary for the purposes of his audit;
b. whether, in his opinion, proper books of account as required by Authority (as
required by the relevant Act), the Accounts Manual, the Rules and any other
stipulations have been kept by the ULB so far as it appears from his examination
of those books;
c. whether the ULB’s Balance Sheet, Income and Expenditure Statement, Receipts
and Payments statement and Cash Flow statement dealt with by the report are in
agreement with the books of accounts;
d. whether appropriate internal controls have been adhered to;
e. whether all the payments have been made in accordance with the law;
f. whether any deficiency or loss appears to have been caused by the gross
negligence or misconduct of any person (if yes, the amount of loss should be
quantified);
g. whether any sum received for and on behalf of the ULB which ought to have been
brought into account of the ULB by any person has been so brought; and
h. whether any material impropriety or irregularity, other than those mentioned
above, has been observed by him during the course of audit of accounts.
32.8 Where any of the matters referred to in para. 32.7 are answered adversely or with a
qualification, the auditor’s report shall state the reason for the same and with further
explanation and inclusion of statistical impact if possible.
32.2
National Municipal Accounts Manual
Audit Report
ANNEXURE TO THE REPORT OF THE MUNICIPAL AUDITOR
32.9 Besides the above Audit Report, the MCA shall comment in respect of the following
matters in the Annexure to the Audit Report:
1.
Whether all the expenditure incurred by the ULB are authorised by appropriate
provision in the sanctioned budget, whether made originally or subsequently?
2.
Whether all sums due to and received by the ULB have been brought to account
within the prescribed time limits?
3.
Whether all transactions (incomes, expenditures, assets and liabilities) are
correctly classified?
4.
Whether in respect of all bills for charges on account of all works and other
expenditure, proper certificates have been furnished in support of them and that
no deviation has been made from the sanctioned plans and the estimates without
the sanction of the competent authority?
5.
Whether the amounts received as specific grants have been utilised for the
purposes as stated in the grant sanction order?
6.
Whether the Special Funds, have been created as per the provision of relevant
statutes and whether the Special Funds have been utilised for the purposes for
which created?
7.
Whether the ULB is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets; whether these fixed
assets have been physically verified by the management at reasonable intervals;
whether any material discrepancies were noticed on such verification and if so,
whether the same have been properly dealt with in the books of account?
8.
Whether physical verification has been conducted by the ULB at reasonable
intervals in respect of stores?
9.
Whether the procedures of physical verification of stores followed by the ULB
are reasonable and adequate? If not, the inadequacies in such procedures should
be reported;
10.
Whether any material discrepancies have been noticed on physical verification
of stores as compared to book records, and if so, whether the same have been
properly dealt with in the books of account?
11.
Whether the valuation of stores is in accordance with the accounting principles
laid down in the Accounts Manual? Whether the basis of valuation of stores is
same as in the preceding year? If there is any deviation in the basis of valuation,
the effect of such deviation, if material, should be reported;
32.3
National Municipal Accounts Manual
Audit Report
12.
Whether the parties to whom the loans, or advances in the nature of loans, have
been given by the ULB are repaying the principal amounts as stipulated and are
also regular in payment of the interest and if not, whether reasonable steps have
been taken by the ULB for recovery of the principal and interest?
13.
Whether there exists an adequate internal control procedure for the purchase of
stores, including components, plant and machinery, equipment and other assets?
14.
Whether proper procedures are in place to identify any unserviceable or
damaged stores and whether provision for the loss in this respect, if any, has
been made in the accounts?
15.
Whether the ULB is regular in depositing Provident Fund dues and Profession
Tax deducted with the appropriate authorities and if not, the extent of arrears;
16.
Whether the ULB is regular in depositing tax deducted at source (income tax
and works contract tax) and other statutory dues, and if not, the nature and cause
of such delay and the amount not deposited;
17.
Whether any personal expenses have been charged to revenue account; if so, the
details thereof.
32.10 The Report of the MCA shall also specifically report on any other matter which the
Government, ULB and/or the Authority (as required by the relevant Act), may have
specifically required to be covered as a part of the Audit.
PERIODICAL AUDIT REPORT/CERTIFICATE
32.11 At the end of each period, the MCA may furnish a certificate on the quarterly
coverage to the Municipal Commissioner. The suggested format of the certificate can be as
follows:
“Certified that the accounts from ------------- to ------------- have been audited by me
and found correct with the exception of the following items:” (The exceptions shall be
explained in detail).
32.12 While furnishing periodical certificate/report, the MCA shall at least verify the
following:
1.
Whether the postings for the entries in the books of original entry have been
correctly made in the respective ledger accounts;
32.4
National Municipal Accounts Manual
Audit Report
2.
Whether all the books of accounts and supplementary registers that are
prescribed in the Accounts Manual / other applicable regulations have been
properly maintained by the ULB;
3.
Whether the Quarterly Financial Statements have been compiled on the basis of
the actual entries in the books of accounts;
4.
Whether the period-end and reconciliation procedures prescribed have been
carried out.
5.
Whether the Bank Reconciliation statements have been prepared and are
appropriate.
6.
Whether all grants from Government have been accounted at gross value with
proper entries to various accounts
SUPPLEMENTARY/TEST AUDIT
32.13 States may empower Comptroller & Auditor General to undertake Test Audit under
its act or under technical guidance and supervision arrangement. The Audit report prepared by
the C & AG shall be also placed before the empowered steering committee.
AUDIT BY EXTERNAL AGENCIES
32.14 Besides, the above audit, the accounts of specific loan funds, grants, etc., would
continue to be audited by auditors of agencies which have given grants, loans, etc., in the
same manner as is currently happening.
ADDITIONAL AUDIT
32.15 In addition to the audit by the MCA, the Government/ULB may additionally get the
accounts of the ULBs audited under the following circumstances:
•
Internal Audit
•
Concurrent Audit
•
Special Audit (investigative or audit in depth)
•
Special Audits ordered by the State Government;
32.16 The state government can also define the guidelines under which these Audits are to
be undertaken. It is recommended that Internal Audit can be undertaken whenever the
revenue collections are greater than Rs.25 crores and concurrent audit can be undertaken
when the revenue collections are grater than Rs.100 crores.
32.5
National Municipal Accounts Manual
Audit Report
32.17 These Special audits may be required to ensure that the accounts and financial
statements of the ULBs have been prepared in accordance with provisions of the Accounts
Manual and other relevant provisions of laws in force or for the objectives under which the
audits have been ordered by the State Governments.
32.6
National Municipal Accounts Manual
Budgeting & MIS Reports
CHAPTER 33
%8'*(7,1* 0,6 5(32576
INTRODUCTION
33.1 This Chapter contains the overview of the Budgeting approach, process,
budgetary controls (budgeting system) and MIS & other performance review /status
reports of an ULB.
33.2 Budget is a financial plan describing proposed expenditure and means of
financing the same. It embodies the estimated receipts and expenditure (both capital and
revenue) for a financial year. It is a proposal of how much money is to be spent on what
and how much of it will be contributed by whom or how it would be raised during a
financial year. It plays an important role in planning and controlling operations of the
ULBs.
33.3 Budget preparation process, calendar, approval and control process indicated in
this chapter is on Cash basis and provides guidelines for States at an overall level.
However states and ULBs should develop detailed manual / guidelines for Budget
preparations.
APPROACH TO BUDGETING
33.4 The objective of the budgeting system of an ULB is to arrive at a scientific basis
for building linkage between the nature of receipt or payment with the functions /
services or other Budget control centres. Budget shall reflect the principles and
programmes of the ULB. Budget must also enable ULB in measuring and promoting
accountability in respect of service delivery. Public expenditure must be spent in the most
productive way. Decentralised planning with citizens’ participation facilitates achieving
this objective.
33.1
National Municipal Accounts Manual
33.5
Budgeting & MIS Reports
Any receipt and payment shall reflect the above said objectives. To facilitate this,
three broad categories of Budgeting Centres are defined. Budgets shall establish a close
linkage between the Accounting subjects (nature of receipt and payment) and
¾ the function
¾ the functionary as identifiable by personnel responsible for any function
¾ the field as identifiable by the geographical boundaries over which the cost is
incurred
BUDGETING PROCESS
33.6
Budgets shall reflect the estimated inflows, outflows, surplus / deficit under the
various Receipts and Payment heads, Opening and Closing balances. The receipts and
payments shall be classified under four broad heads Revenue Receipts, Revenue
Expenditure, Capital Receipts and Capital Expenditure. The receipts and payments shall
be estimated for each of the accounting subjects under every Budgeting centre. Hence a
budget code is defined as a combination of Budget centres and Account code. The
structure for this is detailed in the Chapter 4 on Chart of Accounts.
33.7
Budget shall be prepared for each of the revenue and capital account heads in
form BUD – 1 annexed to this Chapter. This form is to be prepared by individual
budgeting units for each of the Major and Minor Heads of Account along with the details
of the function and functionaries responsible for discharge of the functions and field
towards which it relates. Functions, Functionary, Major Head, Minor Heads are
mandatory. It is advisable to have the budgets prepared at the detailed head also to ensure
budgetary control. However, the States can decide whether budgets would be prepared at
the field level like zones, circles or wards. In the medium term, ULBs are advised to
move towards decentralised budgeting at the field level. In addition, if the State and ULB
maintain separate funds for certain heads like Water or Education etc then the budget has
to be prepared fund wise only. The budget heads hence are integrated with the account
heads. The accounting system can hence provide details of actual against each budget
head.
33.2
National Municipal Accounts Manual
Budgeting & MIS Reports
Bottom up budgeting
33.8
The basis for preparing the budget will be the inputs from various
departments/units. Budgets preparation shall be based on a bottom up approach.
Estimates shall be made from the lowest unit and then consolidated at the Head Office. A
consolidation will be made and can be compiled in the form given as BUD – 2
33.9
The consolidated budgets shall be presented in a summary form (in form BUD –
3-7). Detailed Budget will also form part of the Budget Document of the ULBs.
Budgeting Calendar
33.10 The budget preparatory process follows a budget calendar. The “budget calendar”
provides various details of deadlines and dates by which various officials in the ULB
need to prepare and place the budget before the concerned authorities.
33.11 The time schedule for preparation, placing and revision of the budget and budget
approval by Standing Committee /Council would be governed by the provisions of the
State laws or Acts governing the ULBs.
33.12 The budgeting activity for any financial year shall commence by September or
any other month (as may be specified in the State laws or Acts governing the ULB) of the
financial year preceding it. The various stages of budget preparation and approval should
be within the time limits as stipulated in this regard by the relevant State laws/Acts
governing the ULBs.
33.13 An illustrative timetable for budgeting and review is given below:
Requisition from the Accounts section for Budget activity plan
Receipt of Budgets plans for all Departments
Compilation of Budget for review by Municipal Commissioner
Budget finalisation by Municipal Commissioner for placing
before the Standing Committee
By September
By mid of October
By end of October
At the beginning of
November
Approval of Budget
The Budget is the key document of any governmental set up. The State laws or governing
Acts shall define the approving authority for approval of the budgets of the ULBs. A
33.3
National Municipal Accounts Manual
Budgeting & MIS Reports
budget may not be a valid document unless it is properly approved / authorised by an
approving authority. Generally in the cases of ULBs, the approving authority may be the
Municipal Councils.
Budget Revision
33.14 Once a budget has been prepared subsequent revisions to the amount budgeted
may arise. The State laws or Act governing the ULBs may define the circumstances for
revision of budgets. Some of the forms in which budget allocations are changed are Reappropriation, Additional Budget, reduction in Budget and Budget Cut.
33.15 Budget Utilisation should be reviewed at quarterly and such other periodic rests as
may be determined by State/Act to identify and plan for any budgetary revision well in
advance. Any budgetary revision would be in accordance with the provisions laid out in
this regard by the State/Act in this regard.
BUDGETARY CONTROLS
33.16 In keeping with the objectives, the following control requirements are to be built
into the budgeting system:
¾ No expenditure can be incurred unless backed by a budget;
¾ Any expenditure prior to being incurred must be identified to its budget head
for allocation of money
¾ Any expenditure prior to being incurred should be backed by appropriate
sanctions (administrative / technical sanctions as the case may be) in
accordance with the procedures lay down by the State/Act in this regard.
Budget variance report (BVR)
33.17 An important budgetary control tool used for monitoring and measurement is
Budget variance report (BVR) and shall be prepared at the following levels:
¾ at an overall ULB level;
¾ at each of the Budgeting Centres.
33.4
National Municipal Accounts Manual
Budgeting & MIS Reports
33.18 The BVR forms the basis of control as it can provide information on:
a. Positive variance shall be analysed for reasons. For instance actual tax
collection is more than the projected say in ward or a zone. The reasons for
the same can be analysed and replicated.
b. Negative variance, shall be analysed for reasons and cost control measures
identified. For instance the increase in maintenance expenses or finance
charges could indicate lack of planning or implementation follow-up.
33.19 The BVR should be prepared on a monthly basis or such periods as the State
laws/Acts governing the ULB may define. Review mechanisms for disposing of the
unfavorable variances would add value to the Management of ULB. The format of the
BVR is annexed to this Chapter as Form BUD - 8.
MANAGEMENT INFORMATION SYSTEM (MIS)
33.20 Management Information System reports are necessary in ULBs for measuring its
activities in a more meaningful and transparent manner. MIS not only provides
information on accounting & financial aspects but also covers non-financial aspects /
information in an integrated mode. The object of development of MIS reports is to
provide the performance details/statistical data of the activities of the ULBs in various
forms. MIS reports serve as critical inputs for any decision making on any of the
conducts of the ULBs.
BASES & COVERAGE
33.21 MIS reports are prepared from the accounting and other records maintained for
the conduct of the ULB activities. These basic data are to be maintained properly in order
that the MIS reports prepared based on the records are correct and accurate. Therefore,
establishment and ensuring of maintenance of proper accounting & other records is key
for effective MIS reports.
33.22 As explained earlier, MIS covers non-financial aspects of the activities also. For
example, the data on education: number of schools under ULB, number of teachers,
number of students, and the pass percentage form part of such data. If these data are used
33.5
National Municipal Accounts Manual
Budgeting & MIS Reports
integrally with financial aspect results in preparation of various analytical reports like
cost of service delivery.
33.23 MIS reports prepared in ULBs shall cover the following key areas:
¾ Financial Performance (Balance Sheet, Income and Expenditure, Cash Flow
Statements, etc)
¾ Departmental Performance (Departmental collection summary, etc)
¾ Recovery of Cost / Subsidy Report (Water Supply cost sheet, etc)
¾ Key Performance Indicators (Financial ratio analysis, etc)
¾ Ward Level MIS (Ward level revenue, expenses etc)
33.24 MIS reports covered earlier in Chapter 31 on Financial Statements of this manual
are listed below for easy reference.
¾ Income & Expenditure (Table 31.3)
¾ Balance Sheet (Table 31.4)
¾ Statement of Cash flows (Table 31.5)
¾ Receipts & Payments Account (Table 31.6)
¾ Subsidy Report (Table 31.7)
¾ Financial Ratios (Table 31.8 & 31.9)
33.25 ULBs may also prepare the following reports on a periodical basis and submit
them to various governing committees for review, analysis and decision making
purposes.
¾ Statement of Receivables (Form BUD - 9)
¾ Statement of Payables (Form BUD - 10)
¾ Ward wise Liability Summary Report (Form BUD - 11)
¾ Revenue Trend analysis (Form BUD – 12)
33.26 ULBs may also specify additional MIS reports, which are appropriate and
necessary for their functioning and monitoring. The recommendations made in this
chapter are general and minimal requirements and the ULBs on its own shall add any
other reports or forms, as they consider necessary and suitable.
33.6
Budget estimation Sheets format
_________ name of the ULB
1
Ward 1
Ward 1
REVENUES
Tax Revenues
Property & Other Taxes
Water Taxes
,, ,, ,, ,,
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Tax Revenues)
Fees & User Charges
License Fees
Advertisement Taxes
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Fees & User Charges)
Interest Income
Interest from Bank Deposits
Interest from Post Office Deposits
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Interest Income)
2
Field
Ward 1
Head of Account – Description of
Item*
3
Actual for the
previous year
Rs.
Budget
Estimates for
the current year
Rs.
4
Name of the Functionary: __________ (For e.g. Public Works Department)
Name of the Function: _____________ (For e.g. Road repairs/ Land and Buildings)
Budgeting Year: ____________
National Municipal Accounts Manual
Revised
Estimates for the
current year
Rs.
5
Budget
Estimates for
the next year
Rs.
6
33.7
BUD - 1
Budgeting & MIS Reports
Ward 1
Ward 1
Ward 1
1
Field
Deposit works
Deposit works received
Sub-total (Deposit Works)
Deposits and Advances
Security Deposits
,, ,, ,, ,,
,, ,, ,, ,,
CAPITAL RECEIPTS
Loans
Loans from State Govt
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Loans)
2
TOTAL REVENUE RECEIPTS
EXPENDITURES
Establishment Expenses
Salaries & Wages
Pension expenses
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Establishment Expenses)
Operations & Maintenance
Repairs & Maintenance – Roads
Repairs & Maintenance - Buildings
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Operations & Maintenance)
TOTAL REVENUE EXPENDITURE
Head of Account – Description of
Item*
National Municipal Accounts Manual
3
Actual for the
previous year
Rs.
Budget
Estimates for
the current year
Rs.
4
Revised
Estimates for the
current year
Rs.
5
Budget
Estimates for
the next year
Rs.
6
33.8
Budgeting & MIS Reports
Loans and Advances
Loans to Employees
Loans to Others
Miscellaneous Advances
,, ,, ,, ,,
,, ,, ,, ,,
Sub-total (Loans & Advances)
TOTAL CAPITAL EXPENDITURE
Ward 1
3
Actual for the
previous year
Rs.
Budget
Estimates for
the current year
Rs.
4
Revised
Estimates for the
current year
Rs.
5
Budget
Estimates for
the next year
Rs.
6
33.9
Budgeting & MIS Reports
* Similar to the above, the budget estimation shall be obtained for all the Major, Minor and detailed account heads for each of the wards, functions
and functionaries.
Investments
Investment in Government Securities
Investment in Non- Govt Securities
,, ,, ,, ,,
Sub-total (Investments)
CAPITAL EXPENDITURE
Fixed Assets
Purchase of Fixed Assets
Capital Work in progress
,, ,, ,, ,,
Sub-total (Fixed Assets)
Ward 1
Ward 1
2
1
Sub-total (Deposits)
TOTAL CAPITAL RECEIPTS
Head of Account – Description of
Item*
Field
National Municipal Accounts Manual
2
1
3
Field
4
Head of Account –
Description of Item
5
Actual for
the previous
year
Budget
Estimates
for the
current year
6
_________ name of the ULB
Budget estimate Consolidation format
Consolidation shall be made for every item of detailed heads of account.
Functionary
Function
Budgeting Year: _________________
National Municipal Accounts Manual
Revised
Estimates
for the
current year
7
8
Budget
Estimates for
the next year
BUD - 2
33.10
Budgeting & MIS Reports
* Balances denote cash and bank balance.
Closing Balance *
Add:
Revenue Receipts
Capital Receipts
Less:
Revenue expenditure
Capital Expenditure
1
Opening Balance*
Particulars
National Municipal Accounts Manual
2
Actual for the
previous year
Rs.
3
4
5
Budget Estimates for Revised Estimates
Budget
the current year
for the current year Estimates for the
Rs.
Rs.
next year
Rs.
Sr. No. ____
SUMMARY OF BUDGET FOR THE PERIOD ____________________
_____________name of the ULB
Form BUD - 3
33.11
Budgeting & MIS Reports
S No
Establishment Expenses
Administrative Expenses
Operations and Maintenance
Interest and Finance Charges
Program Expenses
REVENUE EXPENDITURE
Total
_____________Name of theULB
210
220
230
240
250
170
171
180
110
120
130
140
150
160
Code
Actual for the
previous year
Rs.
2
Sr. No. ____
Form BUD – 4
Budgeting & MIS Reports
33.12
Budget Estimates for the Revised Estimates for Budget Estimates
current year
the current year
for the next year
Rs.
Rs.
Rs.
3
4
5
MAJOR ACCOUNT HEAD WISE BUDGET
FOR THE PERIOD ____________________
Tax Revenue
Assigned Revenues and Compensation
Rental Income - Municipal Properties
Fees and User Charges
Sale and Hire Charges
Revenue Grants, Contributions
and
Subsidies
Income from Investments
Interest Earned
Other Income
REVENUE RECEIPTS
1
Major Account Head
National Municipal Accounts Manual
and
Fixed Assets
Capital Work in Progress
Investments – General Fund
Investments – Other Funds
Stock in hand
Prepaid Expenses
Loans, advances and deposits
Other Assets
CAPITAL EXPENDITURE
Total
Grants, Contributions for Specific purposes
Secured Loans
Unsecured Loans
Deposits Received
Deposit Works
Other Liabilities
Total
CAPITAL RECEIPTS
Revenue Grants, Contributions
Subsidies
Miscellaneous Expenses
Prior Period Item
1
Major Account Head
410
412
420
421
430
440
460
470
320
330
331
340
341
350
271
280
260
Code
Actual for the
previous year
Rs.
2
Total
Note: These totals shall be tallied with the totals in Forms BUD 5- 7.
S No
National Municipal Accounts Manual
33.13
Budget Estimates for the Revised Estimates for Budget Estimates
current year
the current year
for the next year
Rs.
Rs.
Rs.
3
4
5
Budgeting & MIS Reports
00
10
20
30
40
50
60
70
General & Administration
Planning & Regulations
Public Works
Health
Sanitation & Solid Waste Management
Civic Amenities
Urban Forestry
Urban Poverty Alleviation & Social
Welfare
Other Services
Revenues
4
Revenue
Receipt
Rs.
*The total of columns 4 to 7 shall be tallied with those in Form BUD - 3.
80
90
3
2
1
Code
Function
Total*
Form BUD - 5
Budgeting & MIS Reports
5
Revenue
Expenses
Rs.
6
Rs.
Capital Receipts
7
Capital
Expenditure
Rs.
33.14
8
Net Inflow/
(Outflow)
Rs.
Sr. No. ____
_____________Name of the ULB
SUMMARY OF FUNCTION WISE BUDGET FOR THE PERIOD ___________
S No
National Municipal Accounts Manual
3
Code
Revenue
Receipt
Rs.
4
Revenue
Expenses
Rs.
5
6
Capital Receipts
Rs.
Capital
Expenditure
Rs.
7
33.15
Net Inflow/
(Outflow)
Rs.
8
Sr. No. ____
Form BUD - 6
Budgeting & MIS Reports
SUMMARY OF FIELD WISE BUDGET FOR THE PERIOD ___________
_____________Name of the ULB
Note: Field could be lowest level at which ULB likes to budget. Ideally this should be done at the ward level.
*The total of columns 4 to 7 shall be tallied with those in Form BUD - 3.
2
1
Field 1
Field 2
Field 3
…..
…….
Ward n
Total *
Function
S No
National Municipal Accounts Manual
93
1
5
6
3
Code
Revenue
Receipt
Rs.
4
Revenue
Expenses
Rs.
5
6
Capital Receipts
Rs.
Capital
Expenditure
Rs.
7
33.16
Net Inflow/
(Outflow)
Rs.
8
(4+6)-(5+7)
Sr. No. ____
Form BUD - 7
Budgeting & MIS Reports
SUMMARY OF FUNCTION WISE BUDGET FOR THE PERIOD ___________
_____________Name of the ULB
*All the functions carried out by the ULBs shall be captured in the format given above.
**The total of columns 4 to 7 shall be tallied with those in Form BUD - 3.
,, ,, ,, ,,
,, ,, ,, ,,
,, ,, ,, ,,
Others*
Total**
Municipal Body
Estate & Central Records
Stores
…..
…….
2
1
1
2
3
4
5
6
7
8
9
10
11
12
13
Function
S No
National Municipal Accounts Manual
210
220
230
240
250
260
271
33.17
Variance
Rs.
8
BUD- 8
Budgeting & MIS Reports
Progressive Total at the end of each quarter Rs.
Qtr. 1
Qtr. 2
Qtr. 3
Total
4
5
6
7
Establishment Expenses
Administrative Expenses
Operations & Maintenance
Interest & Finance charges
Programme Expenses
Revenue Grants, contribution & subsidies
Miscellaneous Expenses
Any other revenue payments [ specify ]
Sub-total
* Similarly, the variances for Capital receipts and expenditures shall also be computed on a periodic basis.
REVENUE EXPENDITURE *
Budget
Estimate (Rs.)
3
_____________ Name of the ULB
Quarterly Budget Variance Report
For the period from ____________ to _______________
Tax revenue
Assigned Revenues & Compensation
Rental income from Municipal Properties
Fees & User charges
Sale & Hire charges
Revenue Grants, contribution & subsidies
Income from Investments – General Fund
Income from Investments – Other Funds
Interest earned
Other income
Any other revenue receipts [ specify ]
Sub-total
REVENUE RECEIPTS *
2
1
110
120
130
140
150
160
170
170
171
180
Head of Account
Code No.
National Municipal Accounts Manual
97
Remark
431-40
431-40-(a)
431-40-(a)
431-40-(a)
431-40-(a)
431-20
431-30
431-30-(a)
431-30-(a)
431-30-(a)
431-19
431-19-(a)
431-19-(a)
431-19-(a)
431-19-(a)
1
431-10
431-10-(a)
431-10-(a)
Code No.
2
Property Taxes
Property Taxes
Others*
Sub-total
Other Taxes
Water Supply
Sewerage Tax
Professional Tax [ wherever on demand ]
Others*
Sub-total
Cess Income
Fees & User Charges
License Fees
Development Charges
Others*
Sub-total
Other Sources
Rental Income
Interest Accrued and due
Interest Accrued and not due
Others*
Receivables at the
start of the month
3
4
Demand raised
Actual receipts
during the month
5
____________Name of the ULB
____________Name of the Department
Statement of Receivables for the month of ___________
(To be forming part of Monthly Accounts)
Head of Account / Item
National Municipal Accounts Manual
33.18
Receivables at the
end of the month
6
BUD- 9
Budgeting & MIS Reports
2
Sub-total
Government
Grants
Assigned Revenues
Others*
Sub-total
Grant Total of Receivables
Head of Account / Item
(a) Insert Detailed Head Codes of Account as applicable
* Specify tax or other revenue accounts as applicable
431-50
431-50-(a)
431-50-(a)
431-50-(a)
1
Code No.
National Municipal Accounts Manual
Receivables at the
start of the month
3
4
Demand raised
Actual receipts
during the month
5
33.19
Receivables at the
end of the month
6
Budgeting & MIS Reports
(a) Insert Detailed Head Codes of Account as applicable
350-41
350-41-(a)
350-41-(a)
350-40
350-40-(a)
350-40-(a)
350-20
350-20-(a)
350-20-(a)
350-20-(a)
350-11
350-11-(a)
350-11-(a)
350-11-(a)
2
1
350-10
350-10-(a)
350-10-(a)
350-10-(a)
350-10-(a)
Creditors
Suppliers
Contractors
Payable against Grants
Others*
Sub-total
Employee Liabilities
Gross Salary
Pension
Others*
Sub-total
Recoveries Payable
TDS
Works Tax
Others*
Sub-total
Refunds Payable
Taxes
Others*
Sub-total
Advance Collection Of Revenues
Taxes
Others*
Sub-total
Grant total of Payables
Head of Account / Item
4
Bills raised
Actual payments
during the month
5
* Specify tax or other payable accounts as applicable
Payables at the
start of the month
3
____________Name of the ULB
____________Name of the Department
Statement of Payables for the month of ___________
(To be forming part of Monthly Accounts)
Code No.
National Municipal Accounts Manual
33.20
Payables at the end
of the month
6
BUD- 10
Budgeting & MIS Reports
Total
1
2
3
4
Ward
No.
No. of
pending
bills
Amount
Opening Balance
National Municipal Accounts Manual
No. of
pending
bills
Amount
Current year
No. of
pending
bills
Amount
Total
Paid during the
current year
No. of
pending
Amount
bills
____________Name of the ULB
Ward wise Works Liability Summary Report
For the year _______________
No. of
pending
bills
Amount
Balance
33.21
Remarks
BUD- 11
Budgeting & MIS Reports
171
180
170
170
140
150
160
130
1
110
120
2
Tax revenue
Assigned
Revenues
&
Compensation
Rental income from Municipal
Properties
Fees & User charges
Sale & Hire Charges
Revenue Grants, contributions
& subsidies
Income from Investments –
General Fund
Income from Investments –
Other Funds
Interest earned
Other income
Total
Revenue
3
Apr
National Municipal Accounts Manual
4
May
5
Jun
6
Jul
7
Aug
8
Sep
9
Oct
10
Nov
11
Dec
12
Jan
_____________Name of the ULB
Revenue Trend Analysis
For the year ending _______________
13
Feb
14
Mar
15
Total of
the
current
year
16
Total of
the
previous
year
%age
increase
or
[decrease
]
18
33.22
Absolute
increase
of
[decrease
]
17 [15-16]
BUD - 12
Budgeting & MIS Reports
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
CHAPTER 34
*8,'(/,1(6 )25 35(3$5$7,21 2)
23(1,1* %$/$1&( 6+((7
INTRODUCTION
34.1 This chapter contains the guidelines and the formats for collating the information for
the assets and liabilities mentioned hereunder. It would facilitate the preparation of the
Opening Balance Sheet of the Urban Local Body (ULB).
DEFINITIONS
34.2
The definition of key terms referred to in this Report are provided below:
a. Fixed Assets comprise assets, which are meant for use by the ULB over an
extended period of time. It includes Immovable Property such as Land, Buildings,
Bridges etc. and Movable Property such as Vehicles, Plant and Machinery,
Furniture & Fixture etc.
b. Immovable Properties consist of properties, which cannot be relocated.
34.1
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
c. Movable Properties consist of properties, which can be relocated.
d. Current Assets are comprised of items of a short-term nature (normally less than
one year). Such items are usually used up in less than one year or converted into
cash (or its equivalent) within a year. For instance, Property Tax Receivables,
Water Charges Receivables, Inventory of medicines, consumables etc.
e. Investments comprise of financial assets resulting from investments of cash
surpluses.
f. Current Liabilities comprise of the claims of external parties on ULB on account
of any dues or other payables.
g. Reserve Fund in the ULB represents amounts set aside and earmarked for meeting
specific obligations and commitments. For instance, Pension Fund represents the
amount set aside for meeting future pension liability.
34.3 The assets and liabilities for which guidelines and formats have been furnished are as
under:
a.
Fixed Assets
•
Immovable Property
Land (Form 1)
Building (Form 2)
Roads, streets, lanes and footpaths (Form 3)
Bridges, culverts, flyovers, subways and causeways (Form 4)
Drains including underground drains (Form 5)
Water Works Distribution (Form 6)
Public Lighting System (Form 7)
Lakes and Ponds (Form 8)
Capital Work-in-Progress (Form 9)
•
Movable Property
Plant and Machinery (including machinery of Water Works and
Drainage) (Form 10)
Vehicles (Form 11)
Furniture and Fixtures (Form 12)
Office Equipments (Form 13)
Other Equipments (Form 14)
34.2
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Live Stock (Form 15)
b.
Investments (Form 16)
c.
Current Assets
Cash Balance (Form 17)
Bank Balance (Form 18)
Details of Advances paid to suppliers / contractors (Form 19)
Details of Loans & Advances to employees (Form 20)
Receivables (including Taxes, Water charges, Rent etc.) (Form 21)
Grants Receivable (Form 22)
Department - wise Inventory (Form 23)
Consolidated Inventory (Form 23A)
Details of Deposits made (Form 24)
d.
Loans Payable (Form 25)
e.
Unutilised Grants (Form 26)
f.
Reserve Funds (Form 27)
g.
Current Liabilities
Details of Deposits received (Form 28)
Bills and other payables details (Form 29)
GENERAL GUIDELINES
34.4 This section contains the general guidelines to be followed while preparing the
formats for the assets and liabilities. Specific guidelines for any asset or liability, if required,
have been mentioned on the formats.
34.5 As far as possible, all details should be collected department-wise and then
consolidated to give an overall picture for the ULB. For instance, Form 12 - Furniture &
Fixture, Form 13 - Office Equipment, Form 14 - Other Equipment, Form 15 - Livestock and
other relevant forms shall be given to each of the dispensaries, hospitals, maternity homes,
animal pound and other locations within the Health Department for collecting information of
the assets there, which shall be then consolidated at the departmental level.
34.6 The ULB should form separate teams who would be responsible for collating
information in the formats provided, within a specific time frame.
34.3
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
34.7 A Steering Committee comprising of City Engineer, Head of the Accounts
Department and Head of the Audit Department shall be responsible for coordinating the task
of collecting information for each of the category of fixed assets. An illustrative list of the
assets for which separate teams should be formed is as under:
Land
Buildings - the team should include a Civil Engineer or preferrably a Structural
Engineer
Roads, Streets and Lanes - the team should include a Civil Engineer
Bridges, Culverts, Flyovers, Subways and Causeways - the team should include a
Civil Engineer or preferrably a Structural Engineer
Furniture & Fixture, etc.
34.8 Separate teams may also be formed for collecting information for other category of
the assets under the overall supervision of the Steering Committee. The information gathered
should be signed by the members of the concerned team and authenticated by the members of
the Steering Committee.
34.9 It is suggested that the Provisional Balance Sheet be prepared as on December 31 of
the financial year, so as to facilitate a quick and efficient preparation of Opening Balance
Sheet as on April 1 of the next financial year.
34.10 The General Guidelines to be followed for Fixed Assets have been arranged as
General Guidelines for Immovable Fixed Assets and General Guidelines for Movable Assets.
GENERAL GUIDELINES FOR IMMOVABLE ASSETS
34.11 The General Guidelines to be followed for Immovable Fixed Assets are as follows:
a. Conduct physical verification of the immovable assets.
b. The information collated during physical verification should be cross verified with
the existing records maintained for the said fixed assets, if any.
c. Only such assets, whose ownership vests with the ULB, shall be considered for
arriving at the list of assets of the ULB.
d. Details of the assets, whether freehold or leasehold should be specified separately
for each of the assets.
e. Cost of acquisition / construction.
The cost of acquisition / construction should also include, in addition to the
cost incurred in acquiring / constructing the said asset, the cost incidental to
the acquisition / construction such as registration charges, stamp duty,
consultancy charges (including legal charges) etc.
34.4
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
In case the cost of acquisition / construction is not ascertainable, an estimate of
cost that would have been incurred for the acquisition / construction should be
provided.
For assets funded out of grants, the cost of acquistion of the assets would be
net of the grant proceeds utilised for the purchase of the asset
In case an asset has been acquired / created free of cost, the asset should be
recorded at a nominal value.
Cost of improvement. Any cost incurred for improvement of assets, which results
in increasing the life or the utility of the asset, should be considered as an
improvement cost. Expenses of a normal and routine nature incurred for the
repairs and maintenance of assets should not be considered as an improvement
cost.
f. Date of Acquisition. The date of acquisition is the date on which the property was
legally vested with the ULB. In case of acquisition of fully constructed civil
property, specify the estimated date when the construction of the structure. Also
specify the date of acquisition of the said structure by the ULB.
g. Mode of Acquisition. Specify whether the fixed assets have been purchased,
constructed, transferred or gifted to the ULB or has been attached under any Act.
h. From whom acquired. Specify the person / institution from whom the assets have
been acquired.
i. Reference of available title documents. It has to be ensured that all the relevant
documents like title deeds, contracts, invoices etc. are available with the ULB. A
reference of the same has to be provided in the formats provided. In case the
original documents are not available, a duplicate set should be made.
j. The following should be specified in the Remarks Column:
Source of finance for the acquisition / construction of the assets.
Any restriction/covenants on the transfer of assets.
Pending litigations in respect of the fixed assets
Any unauthorised use or encroachment on the fixed assets
k. The Accounts Department shall provide appropriate depreciation for assets held
by the ULB to arrive at the book values of the assets. Depreciation shall be
provided at the rates and calculated up to the date of opening balance sheet from
34.5
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
the date of acquisition / installation as the case may be as per the principles laid
down under the chapter 21 on Fixed assets.
34.12 The General Guidelines to be followed for Movable Fixed Assets are as follows:
a. Conduct physical verification of the movable assets. Allot an asset reference
number to all categories of plant and machinery, vehicle, furniture, fixture and
equipment (including office equipment).
b. The information collated during physical verification should be cross-verified
with the existing records maintained for the said fixed assets, if any.
c. Cost of acquisition / construction is the same as discussed in para. 34.11 (e).
d. Cost of improvement. Any cost incurred for improvement of vehicles such as
building of body for buses, hearse vans, ambulances, fire brigades, etc. should be
considered as an improvement cost.
e. Date of Acquisition. The date of acquisition is the date on which the property was
legally vested with the ULB.
f. Mode of Acquisition is the same as discussed in para. 34.11 (g).
g. From whom acquired is the same as discussed in para 34.11 (h).
h. Reference of available title documents. It has to be ensured that all the relevant
documents like title deeds, contracts, invoices etc. are available with the ULB. A
reference of the same has to be provided as per the formats. In case the original
documents are not available, a duplicate set should be made.
i. The following should be specified in the Remarks Column:
Source of finance for the acquisition / construction of the assets.
Any restriction/covenants on the transfer of assets.
Pending litigations in respect of the fixed assets
Any unauthorised use of the fixed assets
GUIDELINES FOR DETERMINATION OF VALUE OF CURRENT ASSETS
34.13 In respect of Investments, Receivables, Other Current Assets, Loans and Advances,
Borrowings/Loans payable, Unutilised Grants, Reserve Funds and Current Liabilities, the
ULBs should compile the information required in the formats from the registers maintained
by them currently. As far as possible, all details should be collected department-wise and then
consolidated to give an overall position for the ULB.
34.6
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
34.14 The ULB shall also provide for income receivable, expenses payable, provisions for
current assets, loans and advance as per the accounting principles prescribed in each of the
chapters described earlier. These provisions shall also appear in the opening balance sheet as
follows.
All income receivable shall be carried forward as current assets
All expenses payable shall be carried forward as current liabilities
Provisions for aged receivables shall be as per the accounting principles and the
respective assets shall be netted off for the same.
MUNICIPAL FUND
34.15 Once, the values of all the assets and liabilities are arrived, the ULB shall record the
net value or the balancing figure under the head ”Municipal Funds”.
TRANSITIONAL ISSUES
34.16 ULBs may encounter few of the transitional issues as illustrated below while
transforming data from manual system of accounting to a computerised data environment:
•
Availability of Historical Data
•
Knowledge and Understanding capacity of Staff.
States and ULBs shall develop a detailed implementation plan to ensure smooth shift
to the new system. Sustainability shall also be addressed in the implementation plan.
ACCOUNTING ENTRY FOR INCORPORATION OF BALANCES IN THE
OPENING BALANCE SHEET
34.17 The entry to be passed for incorporating the opening balances is given below:
34.7
National Municipal Accounts Manual
Code of
Account
Accounting Entry (*)
Guidelines for Preparation of Opening Balance Sheet
Dr./
Cr.
Debit Amount Credit Amount
(Rs.)
Books to be
(Rs.)
Illustrative
entered into
Illustrative
figures
figures
Journal Book,
500,000
Ledgers
410-(b)
Fixed Assets (Specify the
name of the assets for e.g.
Buildings)
Dr.
412- (b)
Capital Work in progress
Dr.
300,000
420/ 42- (b)
Investments (Specify the
name of the relevant fund
also)
Dr.
100,000
460-40-(a)
Advance to Suppliers
Dr.
50,000
460-(b)
Loans and advances
Dr.
30,000
430-(b)
Stock in hand
Dr.
25,000
431- (b)
Sundry Debtors
Dr.
100,000
440- (b)
Prepaid expenses
Dr.
10,000
450-(b)
Cash and Bank Accounts
Dr.
60,000
310-10-(a)
To Municipal fund
(General fund)
Cr.
454,000
311-(b)
To Earmarked funds
Cr.
80,000
312- (b)
To Reserves
Cr.
120,000
330/331 – (b)
To Loans payable
Cr.
150,000
340-(b)
To Deposits (specify the
nature of deposits)
Cr.
25,000
411- (b)
To Accumulated
depreciation – Fixed
assets (Specify the name
of the asset for e.g.
Buildings)
Cr.
300,000
432- (b)
To Provision for Sundry
Debtors
Cr.
15,000
461- (b)
To Provision for Loans &
advances
Cr.
2,000
360-10-(a)
To Provision for expenses
Cr.
8,000
350-(b)
To Other liabilities
Cr.
21,000
(a) Insert Detailed Head Codes of Account as applicable
(b) Insert Major and Detailed Head Codes of Account as applicable
Note: The individual accounts within the major account heads listed above shall be debited/credited in
above. Journal voucher prepared for incorporation of account balances in the Opening balance sheet.
34.8
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
REVISION OF OPENING BALANCE SHEET
34.18 There may exist possibilities that certain assets and liabilities are identified after
preparation of draft Opening Balance Sheet as well as after preparation of the first Balance
Sheet subsequent to Opening Balance Sheet. In such case, the value of assets or liabilities
identified should be directly incorporated in the Opening Balance Sheet (where first Balance
Sheet subsequent to the Opening Balance Sheet is not prepared) or through the account
“Adjustments to Opening Balance Sheet” in the Balance Sheet for the period concerned. The
amount of asset/liability should not be routed through the Income and Expenditure Account.
An illustrative list of accounting entries required to be passed for incorporation of newly
identified assets and liabilities are as under:
a.
Incorporation of Land (e.g. Ground, Open Market, etc.)
Code of
Account
410-10-(a)
310-10-(a)
Accounting Entry
Land
To Adjustments to
Opening balance
sheet
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
1,00,000
Journal Book ,
1,00,000 Ledger
(a) Insert Detailed Head Codes of Account as applicable
b.
Incorporation of Buildings (e.g. Art Gallery Building, Auditorium Building, etc.)
Code of
Account
410-20-(a)
310-10-(a)
Accounting Entry
Buildings
To Adjustments to
Opening balance
sheet
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Journal Book ,
10,00,000 Ledger
(a) Insert Detailed Head Codes of Account as applicable
c.
Incorporation of Contractor Bills Payable in respect of maintenance of road
Code of
Account
310-10-(a)
350-10-(a)
Accounting Entry
Adjustments to Opening
balance sheet
To Contractors
Control
Account
Dr./
Cr.
Dr.
Cr.
Credit
Debit
Amount
Amount
Books to be
(Rs.)
(Rs.)
entered into
Illustrative Illustrative
figures
figures
10,00,000
Journal Book ,
Ledger
10,00,000
(a) Insert Detailed Head code of Account as applicable
34.9
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
34.19 This account “Adjustments to opening balance sheet will shown as an addition to the
Municipal Fund at the time of preparation of the Balance Sheet.
34.20 While incorporating the value of newly identified assets and liabilities in the Balance
Sheet, it should be ensured that details of these assets/liabilities have also been incorporated
in the relevant registers such as Fixed Assets Register, etc.
34.10
2.
3.
4.
1.
Notes:
1
3
4
5
6
7
8
Was the land
subject to
improvement
Cost of
such as
Date of acquiring
filling,
acquisition the land
leveling etc.
(Rs.)
after
acquisition?
(Yes / No)
9
Date
Cost
(Rs.)
10
If yes, specify
the details of
improvement
11
(7+10)
Total
Cost
(Rs.)
LAND DETAILS as on
12
13
14
Specify
how land
From whom Mode of
is being
acquired acquisition
currently
used
Name of the ULB ___________________
15
16
Give
reference Current
of the
market
available
value
title
(Rs.)
documents
17
34.11
Remarks
Form 1
Guidelines for Preparation of Opening Balance Sheet
Details of all the land belonging to the ULB, irrespective of the fact, whether it is vacant or any structure has been constructed on that, should be included here.
Each plot of land should be identified separately.
Specify if land is industrial / agricultural / residential in Column 2.
Draw a sketch / boundary for each plot of land and annex it to the form.
2
Survey
Specify if
Area
Sr.
no. of
leasehold/ Location
(acre /
the
no.
freehold
sq. m.)
land
National Municipal Accounts Manual
1
2
3
4
Survey no. of
Description
the land
Sl.
of the
Location
where
No.
Building
building is
located
National Municipal Accounts Manual
Length
5
Breadth
6
Height
7
Dimension of the Building
8
Number
of Floors
9
Total sq.
feet
(carpet
area)
10
11
12
13
34.12
In case of property
Area of the
acquired, specify the
In case of property
land on
Cost of
estimated date of
which
constructed by the
completion of
acquisition /
building is
ULB, specify the
construction alongwith
construction (Rs.)
located (acre
date of construction
date of acquisition by the
/ sq. m.)
ULB
Name of the ULB ___________________
BUILDING DETAILS as on
Form 2
Guidelines for Preparation of Opening Balance Sheet
15
Date
16
Cost
(Rs.)
If yes, specify
details of
improvement
17
(13+16)
Total
Cost
(Rs.)
18
19
(17-18)
Specify the
Written down
amount of
value of the
depreciation
building after
provided on the
considering
building, if any
provision of
(Rs.)
depreciation (Rs.)
20
From
whom
acquired
21
Mode of
acquisition
22
23
24
Specify how
Give
building is reference of
Current market
being
the available
value (Rs.)
currently
title
used
documents
25
Remarks
34.13
Guidelines for Preparation of Opening Balance Sheet
Note:
Buildings should be categorised into municipal offices, residential quarters, godowns, shopping centres, hospitals, auditoriums, schools, swimming pool, temples,
factory shed for water works and drainage system, library, slaughterhouse, market etc.
14
Was the building
subject to any
improvement such as
renovation, extension
or otherwise after
acquisition?
(Yes / No)
National Municipal Accounts Manual
Name of the road,
street and lane
2
Sr. no.
1
National Municipal Accounts Manual
3
Specify whether the
road, street or lane is
earthen, tar or concrete
4
Survey no. of land on
which the roads, streets
or lanes have been
constructed
5
Length
6
Width
Dimension of the
road, street or lane
7
(5*6)
Area
(Sq. m.)
ROAD, STREET, LANE AND FOOTPATHS DETAILS as on
Name of the ULB ___________________
8
Date of acquisition /
construction
9
34.14
Cost of acquisition /
construction (Rs.)
Form 3
Guidelines for Preparation of Opening Balance Sheet
3.
1.
2.
Note:
11
12
13
(9+12)
Total Cost (Rs.)
14
15
(13-14)
Written down value
Specify the amount of
after considering the
depreciation provided,
depreciation provision
if any (Rs.)
(Rs.)
16
From whom
acquired
17
Mode of
acquisition
18
Give reference of
the available title
documents
19
Remarks
Guidelines for Preparation of Opening Balance Sheet
34.15
Prepare ward-wise, area-wise list of roads, streets, lanes and footpaths.
Improvement would mean conversion of the road from one type of construction to another type of construction, for instance, conversion of a tar road into a concrete
road or extension of the road, etc.
Specify the details of the footpaths annexed to the roads, streets or lanes immediately below the details of the said road, street or lane.
10
Were the roads,
streets or lanes If yes, specify the details
Sr.
of improvement
subject to any
No.
improvement?
(Yes/No)
Date
Cost (Rs.)
National Municipal Accounts Manual
1
2
3
Description of the
Sr. bridge, culvert,
Location
no. flyover, causeway
or subway
National Municipal Accounts Manual
4
5
6
7
8
9
In case of property acquired,
Survey no. of
Area of the land
In case property is
Dimension of the
specify the estimated date of
the land
on which
constructed by the
structure
completion of construction
where
structure is
ULB, specify the
structure is
constructed (acre / along with date of acquisition by
date of construction
the ULB
located
sq. m.)
Length Breadth
BRIDGES, CULVERTS, FLYOVERS, SUBWAYS AND CAUSEWAYS DETAILS as on
Name of the ULB ___________________
10
34.16
Cost of
construction /
acquisition (Rs.)
Form 4
Guidelines for Preparation of Opening Balance Sheet
12
Date
13
Cost (Rs.)
If yes, specify the
details of
improvement
14
(10+13)
Total Cost (Rs.)
15
Specify the amount
of depreciation
provided on the
structure, if any
(Rs.)
16
(14-15)
Written down
value of the
structure after
considering
depreciation
provision (Rs.)
17
18
Mode of
acquisition
19
Give reference
of the
available title
documents
34.17
20
Remarks
Guidelines for Preparation of Opening Balance Sheet
From whom
acquired
Note: The commercial establishment annexed to the structures, if any should be included in the Building Schedule
11
Was the
structure subject
to any
improvement
Sr.
No. such as extension
or otherwise
after acquisition?
(Yes / No)
National Municipal Accounts Manual
1
Sr. no.
DRAINS INCLUDING UNDERGROUND DRAINS DETAILS as on
10
34.18
In case property is
constructed by the ULB,
specify the date of
construction
Name of the ULB ___________________
Form 5
Guidelines for Preparation of Opening Balance Sheet
Description
In case of property
Area of the
of the drain, Name of the
acquired, specify the
Survey no. of
Dimension
of
the
land where the
road/street
specifying
estimated date of
the land where
structure
drains are
whether it is where the
completion of construction
drains are
constructed
drains are
open or
along with date of
located
(acre / sq. m.)
located
underground
acquisition by the ULB
Length
Breadth
Height
drain
2
3
4
5
6
7
8
9
National Municipal Accounts Manual
13
Date
Cost
(Rs.)
14
If yes, specify
the details of
improvement
15
(11+14)
Total
Cost
(Rs.)
16
Specify the
amount of
depreciation
provided on the
structure, if
any (Rs.)
17
(15-16)
Written down
value of the
structure after
considering
depreciation
provision (Rs.)
18
19
20
Give
reference of
From
Mode of
the
whom
acquisition available
acquired
title
documents
21
Remarks
Guidelines for Preparation of Opening Balance Sheet
34.19
Notes:
1. The details of the drains should be collated ward-wise.
2. In column 2, in addition to specifying whether the drains are open or underground, also specify whether they are storm water drains or sewerage drains or
for other purpose.
Sr. No.
Was the structure
subject to any
improvement such
Cost of
as extension or
construction /
acquisition (Rs.) otherwise after
acquisition?
(Yes/No)
11
12
National Municipal Accounts Manual
Description of
the water
distribution
system assets
2
Sr. no.
1
3
Name of the
road/street
where the
distribution
assets are
located
National Municipal Accounts Manual
34.20
In case of property
Area of the land acquired, specify
In case property is
Survey no. of
the estimated date
where the
Dimension of the
constructed by the
the land where
Cost of construction
of completion of
distribution
structure
ULB, specify the
distribution
/ acquisition (Rs.)
system assets are construction along
date of
assets are
with date of
located (acre /
construction
located
acquisition by the
sq. m.)
Length Diameter
ULB
4
5
6
7
8
9
10
WATER WORKS DISTRIBUTION DETAILS as on
Name of the ULB ___________________
Form 6
Guidelines for Preparation of Opening Balance Sheet
11
12
Date
13
Cost
(Rs.)
If yes, specify
the details of
improvement
14
(10+13)
Total
Cost
(Rs.)
15
16
(14-15)
Written down
Specify the amount
value of the
of depreciation
structure after
provided on the
considering
structure, if any
depreciation
(Rs.)
provision (Rs.)
Notes:
1. In column 2, list down the water distribution asset details ward-wise.
2. Details of pipes, water storage tanks and transmission pipes should be provided here.
Sr. No.
Was the structure
subject to any
improvement
after acquisition?
(Yes/No)
National Municipal Accounts Manual
17
From whom
acquired
18
19
Give reference
Mode of
of the available
acquisition
title documents
20
34.21
Remarks
Guidelines for Preparation of Opening Balance Sheet
Note: Specify the details ward-wise
4
5
6
7
8
(5+7)
3
1
2
Total
Cost
(Rs.)
Form 7
Guidelines for Preparation of Opening Balance Sheet
34.22
Written
Give
down value
Specify
reference
Year of Acquired Mode of
after
amount of
Remark
of the
from acquisiti
depreciation considering acquisition/
s
available
on
provided, if depreciation installation whom
title
provision
any (Rs.)
documents
(Rs.)
10
9
11
12
13
14
15
(8-9)
PUBLIC LIGHTING SYSTEM DETAILS as on
Name of the ULB _____________
Survey
Cost of
Cost of
Name
number
Number acquisition Meters acquisition
of the
Sr.
of road
of lamp and erection of cables and laying
road/
No.
where the
of cables
posts of lamp posts used
Locatio
system is
(Rs.)
(Rs.)
n
installed
National Municipal Accounts Manual
LAKES AND PONDS DETAILS as on
Name of the ULB ___________________
2
3
4
5
6
7
8
9
10
From whom
acquired
12
Total
Cost
(Rs.)
11
(7+10)
13
14
34.23
15
Give
reference of
Remark
Mode of
the
s
acquisition available
title
documents
Form 8
Guidelines for Preparation of Opening Balance Sheet
Note:
In column 2, in addition to specifying the name and other relevant details of the lakes and ponds, also specify whether the lake or pond is used for portable purpose or for
commercial activity.
1
Was the lake
Survey
Descript
If yes, specify the
/ pond
Area of
Cost of
no. of the
ion of
Date of
details of
the lake /
acquisition / improved
Sr.
construction
the lake Location land
improvement
No.
after
pond (acre
construction
where it
/ acquisition
and
acquisition?
/ sq. m.)
(Rs.)
is located
pond
(Yes / No)
Date Cost (Rs.)
National Municipal Accounts Manual
1
2
3
Work Order
Name
Sr.
number and
of the
no.
Year in which
project
sanctioned
National Municipal Accounts Manual
4
Location of
the Project
5
Estimated cost of
the project (Rs.)
6
7
8
Cost already
Specify the source of Estimated date of
incurred on
finance from which
completion of the
the project
project is being funded
project
(Rs.)
CAPITAL WORK IN PROGRESS DETAILS as on
Name of the ULB ___________________
9
34.24
Remarks
Form 9
Guidelines for Preparation of Opening Balance Sheet
PLANT AND MACHINERY DETAILS as on
Name of the ULB ___________________
Form 10
Guidelines for Preparation of Opening Balance Sheet
Note:
1.
The details of the plant and machinery should be given department-wise and location-wise.
2.
In addition to the plant and machinery of a general nature, also specify the plant and machinery of the Water Works and Drainage Department.
3.
Also specify the sub-station and transformers deployed for public lighting system within the ULB
4.
Details of any improvements to the plant and machinery, which has resulted into increasing the capacity of the plant and machinery, should be mentioned separately.
5.
In Remarks column, indicate whether the ULB has the ownership right to the property or have only operating rights.
34.25
Written down
Give
Descriptio
Specify the
value after
reference of Current
n of the
Cost of
amount of
Date of
From
Number
market Rem
considering
Mode of
the
Date of acquisition /
Sr. plant and
commencemen whom
Capacity Location of shifts in
depreciation
acquisition available
acquisition construction
no machinery
value arks
depreciation
t of operation acquired
use
provided, if
(Rs.)
provision
title
(Rs.)
specifying
any (Rs.)
(Rs.)
documents
the 'make'
9
1
2
3
4
5
6
7
8
10
11
12
13
14
15
(7-8)
National Municipal Accounts Manual
1
2
2.
Notes:
1.
4
5
6
7
8
(4+7)
9
Specify
the
amount of
Total
depreciati
Cost
on
(Rs.)
provided,
if any
(Rs.)
10
(8-9)
11
12
13
14
15
16
17
18
34.26
19
Written
down value
Give
of the
reference Current
From
vehicle
market
Year of
Registration Engine Chassis
Mode of
of the
whom
after
Remarks
manufacture
details
No.
No.
acquisition available
value
considering
acquired
title
(Rs.)
depreciatio
documents
n provision
(Rs.)
VEHICLES DETAILS as on
Name of the ULB ___________________
Form 11
Guidelines for Preparation of Opening Balance Sheet
In column 2, in addition to the normal description of the vehicle, also specify whether any structure has been added to the same, for instance, building of body for
buses, ambulances, fire brigade, hearse van, etc.
In column 2, also specify the vehicle number.
3
Was the
Description
vehicle
of the vehicle
subject to
specifying
Cost of
If yes, specify
any
Sr. whether it is
Date of
acquisition improvement the details of
no. LCV, HCV acquisition
(Rs.)
such as body improvement
or cars, jeeps
extension or
etc. and its
otherwise?
make
(Yes/No)
Cost
Date
(Rs.)
National Municipal Accounts Manual
1
2.
1.
Notes:
2
4
Asset
reference
number
5
Date of
acquisition
6
Cost of
acquisition /
construction
(Rs.)
7
8
(6-7)
Written down
value after
Specify the amount of
considering the
depreciation
depreciation
provided, if any (Rs.)
provision (Rs.)
FURNITURE AND FIXTURES DETAILS as on
Name of the ULB ___________________
9
From whom
acquired
10
Mode of
acquisition
11
12
Remarks
34.27
Give reference
of the
available title
documents
Form 12
Guidelines for Preparation of Opening Balance Sheet
Prepare a separate list for each of the class of furniture and fixture, for instance, a separate list should be prepared for tables, chairs, cupboards,
partitions, safe vaults, etc.
Asset reference number denotes any numbering / marking given to each piece of asset.
3
Description of the
asset specifying
Sr. whether it is table, Location /
no. chair, cupboard, Department
partition, safes
vaults, cabinets, etc.
National Municipal Accounts Manual
1
Sr.
no.
3
4
5
6
7
8
(6-7)
9
10
11
34.28
12
Written down
value after
Give reference
considering
From whom Mode of
of the
the
Remarks
acquired
acquisition available title
depreciation
documents
provision
(Rs.)
Form 13
Guidelines for Preparation of Opening Balance Sheet
Notes:
1.
Prepare a separate list for each of the class of office equipment, for instance, a separate list should be prepared for computer, photocopier machine,
fax machine, telephone instruments, typewriter, air conditioner, water cooler, etc.
2.
Asset reference number denotes any numbering / marking given to each piece of asset.
2
Cost of
acquisition /
construction
(Rs.)
Specify the
amount of
depreciation
provided, if
any (Rs.)
OFFICE EQUIPMENT DETAILS as on
Name of the ULB ___________________
Description of the
asset specifying
whether it is
Asset
photocopier
Location /
Date of
machine,
reference
Department
acquisition
typewriter, air
number
conditioner, water
cooler, computer
etc.
National Municipal Accounts Manual
2
3
4
5
6
7
Specify the
Cost of
amount of
Date of
acquisition /
depreciation
acquisition construction
provided, if
(Rs.)
any (Rs.)
Form 14
8
(6-7)
9
10
11
12
Written down
Give
value after
reference of
From
Mode of
considering
the available Remarks
whom
acquisition
the
title
acquired
depreciation
documents
provision (Rs.)
OTHER EQUIPMENT DETAILS as on
Name of the ULB ___________________
Guidelines for Preparation of Opening Balance Sheet
34.29
Notes:
1. Specify here the details of the equipments other than plant and machinery such as hospital/maternity home/dispensary related equipments, playground equipment,
club house/gymnasium equipment etc.
2. Details of the equipment should be collated department-wise and location-wise.
3. Asset reference number denotes any numbering / marking given to each piece of asset.
1
Description of the
Asset
equipment details,
Location /
Sr.
reference
specifying the
Department
No.
number
make-n-model of
the same
National Municipal Accounts Manual
1
Form 15
8
9
10
34.30
Guidelines for Preparation of Opening Balance Sheet
Give reference
of the
Mode of
Remarks
acquisition available title
documents
Notes:
1.
Details of the animals should be collated location wise.
2.
Each class of animal such as cows, buffaloes etc. should be identified separately.
Sr.
No.
LIVESTOCK DETAILS as on
Name of the ULB ___________________
Specify
Specify
Specify
amount paid
From
Description
Date of
location of
number of
whom
for
of the animal
acquisition
the animal
animals
acquisition
acquired
(Rs.)
2
3
4
5
6
7
National Municipal Accounts Manual
1
2
3
Specify the instrument
(government securities/ bank
deposit) where Investment made
4
5
Amount
Amount of interest receivable
invested from the last receipt till the cut-off
(Rs.)
date (Rs.)
INVESTMENT DETAILS AS ON ___________
Name of the ULB_______________
6
Remarks
34.31
Form 16
Guidelines for Preparation of Opening Balance Sheet
For Column 5 - Please compute the interest between the period of last receipt of interest till the
cut-off date, even if the interest has not become due, or the instrument has not matured.
Sr. Specify the funds from which
no.
investment made
National Municipal Accounts Manual
Specify the name of the
department where cash is
lying
2
Sr.
no.
1
National Municipal Accounts Manual
3
Cash balance as per
General Cash Book (Rs.)
4
Cash in hand
physically verified as
on cut-off date
CASH BALANCE AS ON ___________
Name of the ULB _____________
5
Difference (3-4)
6
Remarks
34.32
Form 17
Guidelines for Preparation of Opening Balance Sheet
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 18
Name of the ULB ___________
BANK BALANCES AS ON ___________
Specify the
Balance as
Bank
purpose for
Name of the Bank
per General
Sr.No.
Account which the bank
and Branch
Cash Book
number
account is
(Rs.)
maintained
1
2
3
4
5
Remarks
6
34.33
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 19
Name of the ULB _______________
DETAILS OF ADVANCES PAID TO SUPPLIERS / CONTRACTORS AS ON
________
Specify name of
Name of the Supplier
the department
Date when the
Amount
Sr.
/ Contractor to
in respect of
advance is
outstanding
no.
whom advance has
which advance is
paid
(Rs.)
been paid
paid
1
2
3
4
5
Remarks
6
Note: This list should be prepared department-wise.
34.34
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 20
Name of the ULB _____________
DETAILS OF LOANS & ADVANCES TO EMPLOYEES AS ON ___________
Specify name of
Name of the
Amount of
the department
Date when
Sr.
Employee to Nature of
advance
in respect of
the advance
no.
whom advance advance
outstanding
which advance is
is paid
has been paid
(Rs.)
given
1
2
3
4
5
6
Remarks
7
Note: This list should be prepared department-wise.
34.35
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 21
Name of the ULB ______________
RECEIVABLES DETAILS (Including Taxes, Water Charges, Rent etc.) AS ON
____________
Specify name of the
Specify the
Sr. Department and/or
description of the
no. Ward from where
Receivables
the demand is raised
1
2
3
Year-wise amount of
Receivables
Year
Amount (Rs.)
4
5
Remarks
6
Note: This format should be prepared department-wise.
34.36
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 22
Name of the ULB________________
GRANTS RECEIVABLE DETAILS AS ON ______________
Sr.
no.
Name of the
Grant
1
2
Government
Specify the
sanction order
Specify the amount
year for
no. specifying
of Grant due as per
which Grant
the amount of
order of State
to be
Grant
Government (Rs.)
received
receivable
3
4
5
Remarks
6
34.37
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 23
Name of the ULB ___________
INVENTORY DETAILS AS ON ___________
NAME OF DEPARTMENT - _________________
Sr. no.
1
Name of
Article
2
Quantity in
Rate at
Value of the
Stock
which valued inventory
3
4
5
Remarks
6
Examples of inventory
Health - Pesticides & Chemicals (Phenol, Powder) etc., Medicine, Test-tube, Injections etc.
Electric Goods- Bulbs, Tubelight, Lampshade, Holder, Starter, Choke, Condenser etc.
Water - Meter, Pipes, Spare-parts etc.
Fire Brigade - Fireman pipe, Nozal, Spare-parts etc.
Vehicle - Tyres, Tubes, Horsepipe, Spare-parts, Bulb, Bearings etc.
Office Stationery - Forms, Register etc.
34.38
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 23 A
Name of the ULB ____________
INVENTORY DETAILS AS ON ___________
CONSOLIDATED STATEMENT OF INVENTORY
Sr. No. Name of the department
1
2
Value of the
inventory
3
Remarks
4
Note: This statement will be compiled departments/ stores- wise from the Form 22 filled separately
by each of the departments/ stores.
34.39
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 24
Name of the ULB ___________
DETAILS OF DEPOSITS MADE BY THE CORPORATION/ COUNCIL
AS ON ___________
Sr.
no.
Description of
the Deposits
made by the
Corporation/
Council
1
2
Amount of
Deposit (Rs.)
specify whether
interest is
receivable on
deposit made,
(yes/no)
If yes, specify
the amount of
interest earned
from the date of
last receipt to
cut off date
Remarks
3
4
5
6
34.40
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 25
Name of the ULB ____________
LOANS PAYABLE DETAILS AS ON ___________
Specify
the name
of the
Sr. Institution
No.
from
whom the
loan is
received
1
2
Specify
the
purpose
for which
the loan is
received
3
Specify the
Specify if any
amount of
penal interest
Specify the
interest
levied by the
outstanding payable from
lending institution Remarks
amount of loan the date of
on undischarged
(Rs.)
last payment
amount of loan
till cut-off
repayable
date
4
5
6
7
34.41
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 26
Name of the ULB __________
UNUTILISED GRANTS DETAILS AS ON _________
Government
sanction
Total
Balance
Name of order no. amount of
Sr.
amount of
the
specifying
Grant
No.
Grant to be
Grant the amount received
spent (Rs.)
of Grant
(Rs.)
received
1
2
3
4
5
Specify if the
time for the
utilisation of
the Grant has
lapsed (Rs.)
Remarks
6
7
Note: Purpose for which the grant is received should be captured alongwith the name of the grant in column
number 2.
34.42
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 27
Name of the ULB ______________
RESERVE FUND DETAILS AS ON _________
Sr.
No.
Name of the
reserve fund
1
2
Balance to the
credit of reserve
fund as on cut-off
date (Rs.)
3
Remarks
4
34.43
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 28
Name of the ULB ____________
DETAILS OF DEPOSITS RECEIVED AS ON ____________
Sr.No.
1
Note:
(1)
(2)
Department
in which Description of the Name of the
deposit is
Deposit received
depositor
received
2
3
4
Amount of
Deposit (Rs.)
Remarks
5
6
The format should be prepared department-wise.
Details of the same nature of deposits received should be recorded together. (e.g.- In case of PWD - all
the Earnest Money Deposit received should be recorded together; all the Security Deposit received/
deducted from the supplier/contractor bill should be recorded together.
34.44
National Municipal Accounts Manual
Guidelines for Preparation of Opening Balance Sheet
Form 29
Name of the ULB _________________
BILLS & OTHER PAYABLES DETAILS AS ON _________
Sr.
No.
Name of the
supplier /
contractor
Specify
nature of
payables*
Amount
payable (Rs.)
1
2
3
4
Specify name of the
department
procuring the
material or
incurring the
expenditure
5
Remarks
6
* If more than one contract is given to the same supplier/ contractor than specify nature of each bills/expense
payable in separate line for that party.
34.45
National Municipal Accounts Manual
Annexure I
List of Forms and Registers
Sl.
No.
Name
Number
General
1.
2.
3.
4.
5.
Cash Book
Journal Book
Ledger
Cash/Bank Receipt Voucher
Cash/Bank Payment Voucher
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
Contra Voucher
Journal Voucher
Receipt
Receipt Register
Statement on Status of Cheques Received
Collection Register
Summary of Daily Collection
Register of Bills for Payment
Payment Order
Cheque Issue Register
Register of Advance
Register of Permanent Advance
Deposit Register
Summary Statement of Deposits Adjusted
Demand Register
Bill of ______Income
Summary Statement of Bills Raised
Register of Notice Fee, Warrant Fee, Other Fees
Summary Statement of Notice Fee, Warrant Fee, Other Fees
Register of Refunds, Remissions and Write-offs
Summary Statement of Refunds and Remissions
Summary Statement of Write offs
Statement of Outstanding Liability for Expenses
Documents Control Register/Stock Account of Receipt/Cheque Book
Register of Immovable Property
Register of Movable Property
Register of Land
Function-wise Income Subsidiary Ledger
Function-wise Expenditure Subsidiary Ledger
Asset Replacement Register
Register of Public Lighting System
GEN-1
GEN-2
GEN-3
GEN-4
GEN-5
GEN-6
GEN-7
GEN-8
GEN-9
GEN-10
GEN-11
GEN-12
GEN-13
GEN-14
GEN-15
GEN-16
GEN-17
GEN-18
GEN-19
GEN-20
GEN-21
GEN-22
GEN-23
GEN-24
GEN-25
GEN-26
GEN-27
GEN-28
GEN-29
GEN-30
GEN-31
GEN-32
GEN-33
GEN-34
GEN-35
GEN-36
1
National Municipal Accounts Manual
Sl.
No.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
Name
Property Tax
Summary Statement of Bills Raised
Summary Statement of Demand Adjustments Raised
Summary Statement of Year-wise, Head-wise collection of Property &
Other Taxes
Summary Statement of Refunds and Remissions
Octroi
Summary Statement of Collection / Refunds of Octroi
Summary Statement of Final Assessment of Provisional Assessment
Summary Statement of Assessment of Account Current Holders
Summary Statement of Transit Fees Collections and Refunds
Cess
Summary Statement of Demand Raised on Assessment
Summary Statement of Year-wise, Head-wise Collection of Cess
Summary Statement of Refunds/Remissions
Summary Statement of Write-offs
Water Supply
Summary Statement of Demand Raised on Assessment
Summary Statement of Year-wise, Head-wise Collection of Water
Taxes
Summary Statement of Refunds/Remissions
Summary Statement of Write-offs
Rentals, Fees & Other Income
Summary Statement of Demand Raised on Assessment
Summary Statement of Year-wise, Head-wise Collection of Other
Incomes
Summary Statement of Refunds
Summary Statement of Write-offs
Public Works
Summary Statement of Status of Capital Work-in-Progress
Work Sheet
Deposit Works Register
Stores
Material Receipt Note
Stores Ledger
Statement of Closing Stock
Employee Related Transactions
Consolidated pay bill and acquittance roll of the permanent/temporary
establishment
Register of Employee Loans / Advances
Register of Interest on Loans to Employees
Unpaid Salary Register
Number
P&OT-1
P&OT-2
P&OT-3
P&OT-4
OC-1
OC-2
OC-3
OC-4
CE-1
CE-2
CE-3
CE-4
WS-1
WS-2
WS-3
WS-4
OTH-1
OTH-2
OTH-3
OTH-4
PW-1
PW-2
PW-3
ST-1
ST-2
ST-3
ES-1
ES-2
ES-3
ES-4
2
National Municipal Accounts Manual
Sl.
No.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
Name
Register of Pension Payment Order
Pension Register
Grants
Grant Register
Borrowings
Register of Loans
Register of Debentures
Register of Sinking Fund
Special Funds
Special Funds Register
Investments
Investments Ledger / Register
Calculation Sheet for provision for Diminution in value of investments
Loans
Register of Loans to Others
Special Transactions
Register of Grants to Schools & Other Undertakings
Inter Unit Transactions
Advice of Inter Unit Transfer – Debit / Credit (ATD / ATC)
Register of Inter Unit Transfer Advice (RIUTDC)
Opening Balance Sheet
Land Details
Building Details
Road, Street, Land and Footpaths Details
Bridges, Culverts, Subways, Flyovers Details
Drains including Underground Drain Details
Water Works Distribution Details
Public Lighting System Details
Lakes and Ponds Details
Capital Work in Progress Details
Plant & Machinery Details
Vehicles Details
Furniture and Fixtures Details
Office Equipment Details
Other Equipment Details
Livestock Details
Investment Details
Cash Balance
Bank Balance
Details of Advances paid to Suppliers / Contractors
Details of Loans & Advances to Employees
Receivables Details (Including Taxes, Water Charges, Rent etc.)
Grants Receivable Details
Number
ES-5
ES-6
G-1
BR-1
BR-2
BR-3
SF-1
IN-1
IN-2
LA-1
SPL-1
IUT-1
IUT-2
Form 1
Form 2
Form 3
Form 4
Form 5
Form 6
Form 7
Form 8
Form 9
Form 10
Form 11
Form 12
Form 13
Form 14
Form 15
Form 16
Form 17
Form 18
Form 19
Form 20
Form 21
Form 22
3
National Municipal Accounts Manual
Sl.
No.
103.
104.
105.
106.
107.
108.
109.
110.
Name
Inventory Details
Consolidated Statement of Inventory
Details of Deposits Made by the Corporation Council
Loans payable Details
Unutilised Grants Details
Reserve Fund Details
Details of Deposits Received
Bills & Other Payable details
Number
Form 23
Form 23A
Form 24
Form 25
Form 26
Form 27
Form 28
Form 29
4
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