CAG to change the format of govt accounting
The Comptroller and Auditor General of India (CAG) is considering to change the format of recording government finances from cash to accruals – the transaction are recorded as they occur not like cash where transactions are recorded when the cash is received or forwarded – within five years of time span. This move of government would lead to more transparency in financial accounting system.
In this regard, a national round table conference on accrual basis accounting was held in CAG office Tuesday where the issue of transforming from cash to accrual accounting as well as the process of migration was discussed. The Conference was convened by the Government Accounting Standards Advisory Board (GASAB) of CAG of India.
The CAG officials believe that the accrual based statements may provide more appropriate presentation of financial performance and position of the government.
‘The Union and States would have a common format of financial statements that would include a Balance Sheet, a Statement of financial performance and a Cash flow statement,’ said CAG in a statement.
The framework for the accrual accounting would be according to Indian Government Financial Reporting Standards (IGFRS) that will be issued by GASAB, added CAG.
The World Bank (WB) is already funding some pilot projects for study in this regard, being conducted by Department of Posts in Government of India and some selected offices in Andhra Pradesh, Madhya Pradesh, Haryana and West Bengal.
‘These pilot studies would be precursor to a national rollout which is aimed for within a five-year time frame. The studies would be conducted by teams from the State Accountant General offices with international and national consultants with the support of state governments,’ CAG said.
The experts believe that one of the benefits of accrual based accounting is that all incomes earned during a particular period will also be matched with the expenses incurred for earning those incomes. It will also provide a better measurement of net income, as it matches the expenses incurred with income earned for a given period.
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