Government Accounts Classification PDF

Structure of Government Accounts  Constitutional Provisions on Accounts  Article-148 of the Constitution provides that the Comptroller and Auditor General of India shall be appointed by the President.  Article-149-C&A.G’s DPC act 1971 in relation to accounts...

Structure of Government Accounts  Constitutional Provisions on Accounts  Article-148 of the Constitution provides that the Comptroller and Auditor General of India shall be appointed by the President.  Article-149-C&A.G’s DPC act 1971 in relation to accounts and audits.  Section 10- Compilation of accounts of union and states  Section 11-Preaparation and submission of annual accounts  Section 13, 16, 17 -For Audit  Article 150-Regarding form of accounts  Article 151(2)- Submission of annual accounts to the governor by the C & A.G  Article 202 – Annual financial statement or budget to be placed before the Legislature. AFS should show expenditure charged on the consolidated fund and the sums provided for voting of the legislature separately and also revenue and other than revenue separately.  Article 266(1)- Consolidated fund of the union and state government.  Article 266(2)- Public accounts of the union and state government.  Article 266(3)- No money can be expended from the consolidate fund of the state without necessary approval of the legislature.  Article 267(1)- Contingency fund of the union government.  Article 267(2)- Contingency fund of state government. What is Accounts: - Broadly speaking Accounts are the systematic booking of transactions. In other words Accounts are a systematic record of various activities and functions expressed in financial terms and maintained by activity centers. Accounting period: - Government Accounts presents the transactions for the period from 1st April to 31st March. They are necessarily to comply with the budgetary structure of the country. Since budgets in India are on an annual basis, government transactions are also finalized in the accounts on an annual basis. However, the Govt. Accounts of each financial year are kept open for a certain period in the following year for adjusting transactions which took place in the previous financial year. This is considered necessary in order to allow certain inter government adjustments, correction of mis- Basis of Accounts: - With the exception of some book adjustments, the Accounts represents the actual cash receipts and disbursements during the Accounting period. All cash appropriations lapse at the close of the financial year. Although the govt. accounts are maintained on cash basis , a need has been felt for maintaining the relevant accounts on commercial basis in the case of those govt. departments/organisations where functions are purely or largely of a commercial nature. For this purpose proforma accounts are kept on commercial accounting principles for those commercial units.This enables the public to see the complete picture inter alia about cost of services rendered and the return from the investments. Currency in which Accounts are kept Form of Accounts : - Under Article 150 of the Constitution, the accounts of the Union and of the States are kept in such form as the President may on the advice of the Comptroller and Auditor General of India, prescribes. The word “Form” used in Article 150 has a comprehensive meaning so as to include the prescription not only of the broad form in which the accounts are to be kept but also the basis for selecting appropriate heads under which the transactions are to be classified. Structure of Government Accounts : - Position before Government of India Act 1935 Before the Government of India Act 1935 came into force, the Governor General was the custodian of the Public Account, which was a single account for the whole of India. All the financial transactions of the erstwhile provincial Governments were effected through the Central Balance. The account of each provincial Government was only a subsidiary account and the balance of each provincial Government was only an account balance. POSITION AFTER GOVT. OF INDIA ACT 1935 : -  Consequent upon the coming into force of the Government of India Act 1935, the balances of provincial Governments were physically separated w.e.f 1st April 1937 from the Central Government.  Separate Public Account was set up for each Government, into which all moneys received by a Government, whether on revenue account or other account were paid and credited and from which all disbursements on behalf of that Government were made. POSITION ON ADOPTION OF THE CONSTITUTION OF INDIA The Single Public Account was divided into separate parts in which the transactions of the Union Government and each of the State Government are recorded. Viz. (i) Consolidated Fund (ii) Contingency Fund and (iii) Public Account. CONSOLIDATED FUND : - All revenues received by the Union Government, all loans raised by issue of Treasury Bills, internal and external loans and all moneys received by Government in repayment of loans shall form one Consolidated Fund styled as “The Consolidated Fund of India’ established under Article 266 (1) of the Constitution of India. Similarly all revenues received by the State Government, all loans raised by the State Government, ways and means advances and all moneys received by the State Government in repayment of loans form one Consolidated Fund styled as Consolidated Fund of the CONTINGENCY FUND : - Contingency Fund of India established under Article 267 (1) of the Constitution of India is in the nature of an imprest placed at the disposal of the President to enable him to make advances to meet urgent unforeseen expenditure, pending authorization by the Parliament. Approval of the Parliament for such expenditure and for withdrawal of an equivalent amount from the consolidated fund is subsequently obtained, where upon the advances from the contingency fund are recouped to the Fund. Similar is in the case of States Article 267 (2). PUBLIC ACCOUNT: - Besides the normal receipts and expenditure of Government which relate to the Consolidated Fund, certain other transactions enter Government Accounts in respect of which Government acts more as a banker. Transactions relating to Provident Funds, Small Savings, Other deposits, etc. are a few examples. The Public money thus received are kept in the Public Account set up under Article 266 (2) of the Constitution. The connected disbursements are also made there from. Generally speaking Public Account Funds do not belong to Government and have to be paid back some time or the other to the persons or authorities, who deposited the money. Parliamentary/Legislative authorization for payments from Public Account is therefore not required. The excess of receipts in the Public Account over disbursements during each financial year is utilized by Government as a resource. The accumulated balances in the Public Account, is therefore a liability of the Government.  Classification of transactions in Government Accounts on a function-cum-programme basis was introduced from 01.04.1974.  This functional classification was evolved with the twin objectives of reflecting Govt. transactions in terms of functions, programs and schemes and securing co-relation between accounting classification and plan heads of development.  To bring about a closure co-relation between Plan schemes and Account Heads, Govt. constituted a committee consisting of representatives of Controller General of Accounts, the Budget Division in the Ministry of Finance, the Planning Commission and Comptroller and Auditor General of India to review the existing accounting classification and rationalize the Heads of Accounts wherever required.  The recommendation of the Committee was Consolidated Fund Capital, Revenue Public Debt, Loans etc. Expendit Receipts ure General Services, Expendit Social Services Receipts ure Economic Services, Tax General Services, Public Debt, Loans and Revenu Social Services, Advances Inter-State e Economic Settlement, Non-Tax Services, Grants Appropriation to Rvenue in Aid Contingency Fund Grants-in- Aid  Part-I Consolidated Fund Section-I Section-II a) Receipt Heads a) Receipt Heads (Revenue Account) 0020 to Section-III (Capital Account) 4000 1999 Public Debt., Loans and b) Expenditure Heads b) Expenditure Heads Advances etc. (Capital Account) 4046 to (Revenue Account) 2011 to 5999 3999 Expenditur Receipt e 6001 to 6001 to 7999 7999 Part-II – Contingency Fund – 8000 Part-III – Public Account – 8001 to 8999 With effect from 1st April, 1987 a new coding pattern was introduced for classification of Government Accounts. A Four Digit Code was allotted to the Major Head (corresponds to Functions) – the first digit indicating whether the Major Head is a receipt head or a revenue expenditure head, or a capital expenditure head or aIfloan head, the first digit is 0 or 1asRevenue detailed below: - Receipt Head If the first digit is 2 or 3 Revenue Expenditure Head If the first digit is 4 or 5 Capital Expenditure Head If the first digit is 6 or 7 Loan Head If the first digit is 8 Contingency Fund and Public Account Adding 2 to the first digit of the revenue receipt head will give the number allotted to the corresponding revenue expenditure head. Adding another 2 will give the capital expenditure head and another 2 will give the loan head of account. For example, 0401 – Receipt Head for Crop Husbandry 2401 – Revenue Expenditure Head for Crop Husbandry A two digit code was allotted to Sub-Major Head (corresponds to Sub-Functions) starting from ‘01’ under each Major Head. Where there is no sub-major head, the code ‘00’ was allotted. Minor Heads (corresponds to Programmes) have been allotted a three digit code starting from ‘001’ under each Major/Sub-Major Head. There are Sub-Heads (corresponding to Schemes), Detailed Heads (corresponding to Sub-Schemes) and Object Heads (corresponding to an object of expenditure). Receipt Heads (Revenue Account) A – Tax Revenue ( 0020 to 0044) Sector (Sub – Sector) a) Taxes on Income and Expenditure (0020 to 0028) b) Taxes on Property, Capital and Other transactions (0029 to 0035) c) Taxes on Commodity and Services (0037 to B0044) – Non-Tax Revenue ( 0046 to 1475) Sector (Sub – Sector) a) Fiscal Services (0046 to 0047) b) Interest Receipts, Dividend and Profit (0049 to 0050) c) Other Non-Tax Revenue (0051 to 1475) C – Grants-in-aid and Contributions (1601 to 1606) Sector Expenditure Heads (Revenue Account) A – General Services ( 2011 to 2079) Sector (Sub – Sector) a) Organ of State (2011 to 2016) b) Fiscal services (2020 to 2047) c) Interest payment and Servicing of Debt (2048 to 2049) d) Administrative Services (2051 to 2070) e) Pension and Miscellaneous General Services (2071 to 2075) f) Defence Services (2076 to 2079) B –Social Services ( 2202 to 2251) Sector (Sub – Sector) a) Education, Sports, Art and Culture (2202 to 2205) b) Health and Family Welfare (2210 to 2211) c) Water supply, Sanitation, Housing and Urban Development (2215 to 2217) d) Information and Broadcasting (2220 to 2221) e) Welfare S.C, S.T and O.B.C (2225) f) Labour and Labour Welfare (2230) g) Social Welfare and Nutrition (2235 to 2245) h) Others (2250 to 2251) C – Economic Services (2401 to 3475)Sector (Sub – Sector) a) Agriculture and Allied Activities (2401 to 2435) b) Rural Development (2501 to 2515) c) Special Areas Programmes (2551 to 2575) d) Irrigation and Flood Control (2700 to 2711) e) Energy (2801 to 2810) f) Industries and Minerals (2851 to 2885) g) Transport (3051 to 3056) h) Communications (3201 to 3275) i) Science Technology and Environment (3425 to 3435) j) General Economic Services (3451 to 3475) D – Grants-in-Aid and Contributions (3601 to 3606) Sector Receipt Head (Capital Account) (4000) Expenditure Head (Capital Account) Sector A – Capital Account of General Services (4046 to 4076) (Sub – Sector) a) Capital Account of Education, Sports, Art and Culture (4202) b) Capital Account of Health and Family Welfare (4210 to 4211) c) Capital Account of Water Supply, Sanitation, Housing and Urban Development (4215 to 4217) d) Capital Account of Information and Broadcasting (4220 to 4221) e) Capital Account of Welfare S.C, S.T and O.B.C (4225) f) Capital Account of Social Welfare and Nutrition (4235 to 4236) g) Capital Account of Other Social Services (4250)  Sector C – Capital Account of Economic Services (4401 to 5475) (Sub – Sector) a) Capital Account of Agriculture and Allied Activities (4401 to 4435) b) Capital Account of Rural Development (4515) c) Capital Account of Special Areas Programmes (4551 to 4575) d) Capital Account of Irrigation and Flood Control (4700 to 4711) e) Capital Account of Energy (4801 to 4810) f) Capital Account of Industries and Minerals (4851 to 4885) g) Capital Account of Transport (5002 to 5075) h) Capital Account of Communications (5201 to 5275) i) Capital Account of Science Technology and Environment (5401 to 5425) Ej)–Capital PublicAccount Debt. (6001 to 6005) of General Economic Services (5451 Sector to 5475) F – Loans and Advances (6075 to 7615) Sector G – Inter State Settlement (7810) Sector H – Transfer to Contingency Fund (7999) Sector I – Small Savings, Provident Fund etc. (8001 to 8013) Sector (Sub – Sector) a) National Small Saving Fund (8001 to 8008) b) State Provident Fund (8009) c) Other Accounts (8010 to 8013) J – Reserve Funds (8115 to 8235) Sector (Sub – Sector) a) Reserve Funds bearing Interest (8115 to 8121) b) Reserve Funds not bearing Interest (8222 to 8235) K – Deposits and Advances (8336 to 8554) Sector (Sub – Sector) a) Deposit bearing Interest (8336 to 8342) b) Deposit not bearing Interest (8443 to 8451) c) Advances (8550 to 8554) L – Suspense and Miscellaneous (8656 to 8680) Sector (Sub – Sector) a) Coinage Accounts (8656) b) Suspense (8658 to 8663) c) Other Accounts (8670 to 8677) d) Accounts with Governments of Foreign Countries (8679) e) Miscellaneous (8680) M – Remittances (8781 to 8797) Sector (Sub – Sector) a) Money Orders and Other Remittances (8781 to 8785) b) Inter Government Adjustment Accounts (8786 to 8795) c) Exchange Accounts (8797) N – Cash Balance (8999) Sector FUNCTIONAL CLASSIFICATION The sector is sub-divided into four digit Major Heads of Account, in some cases the sectors are “in addition” sub-divided into sub-sector before their division into Major Heads of Account. Each sector in a section is distinguished by a capital letter of the alphabet. The Major Head of Account falling within the Consolidated Fund generally correspond to “Function of the Government” such as: Crop Husbandry, Public Works, Elections, etc. The Major Heads are further divided into 3 digit Minor heads. The minor heads subordinate to the Major Heads identify the programme undertaken to achieve the objectives of the functions. Before their sub-division into minor heads, the major head may have 2 digit sub-major heads (sub-functions). A programme i.e. a minor head may consist of a number of schemes or activities and these shall generally correspond to sub-heads below the minor head. A detail head is termed as an object of classification SIX TIER ARRANGEMENTS :- The Major head, sub-major head, minor head, sub-head, detail head and sub-detail head constitute a six-tier classification basing on which State Budget is prepared. Sector / Sub-sector (Broad Group of Classification) Major Head (1st Tier) 4 digits Sub Major Head ( 2nd Tier) 2 digits Minor Head (3rd Tier) 3 digits Sub-Head (Schemes) (4th Tier) 4 digits Detailed Head (sub-schemes) (5th Tier) 5 digits Object Head (unit of appropriation (6th FORMS, POLICIES AND PROCEDURES : - Govt. Accounts are prepared on the basis of forms, policies and procedure prescribed by the Central Govt. on the advice of the C & A.G of India (Art 150 of the Constitution read with DPC Act 1971 Section 22). The Govt. accounting policies and procedures have bee prescribed, inter-alia, by way of following publications. Government Accounting Rule 1990 Account code for Accountants General List of Major and Minor Heads of Account General Financial Rules Receipt and Payment Rules Central Public Works Department Codes Manual of Standing Orders (A&E), Vol. I & II 