Uniformity in Accounts of Haryana Government

 Uniformity in Accounts of Haryana Government

-By Dr. Lalit Kumar

Statement of Purpose:

The uniformity in accounts is generally ensured by enforcing the Accounting Standards and the purpose is improving financial reporting. In India, the Comptroller and Auditor General of India (C&AG) constituted Government Accounting Standards Advisory Board (GASAB) on dated 12th August 2002 and the GASAB is working as a nodal advisory body to formulate and improve standards of government accounting, financial reporting, and enhance accountability mechanisms. As per a document compiled by GASAB entitled, “Primer on Accrual Accounting”, there should be a transition to an accrual-based system for improving financial reporting. Government Accounting is primarily concerned with the recognition, measurement, and reporting of transactions undertaken by governmental entities and it is quite different in many aspects from business and commercial accounting. Government financial information is used by a wide range of stakeholders, all of whom have an interest in the financial health and management of public resources.  For improving the quality of the information on which basis the decisions are usually taken by the Authorities of Public Sector Organizations, it is desirable to adopt uniform and comparable accounting practices. The Robust and Uniform Set of Accounting Standards can bring greater stability in the economic system; enhance the accountability and efficiency to govern. It can become a basis for evaluating the financial positions of the organizations easily and support the effective decision making.

Accounting is an effective tool for improving the finance function in Government and there is need for both uniformity and transparency by following standards, rules, regulations etc. It is well-known fact that the functions of Government Organizations by nature are diverse and there are numerous legal and fiscal constraints under which the financial operations must be conducted. Due to this limitation, the financial reporting also becomes different and the particulars of receipts, payments, accounting principles, and financial statements also differ from one organization to another as per the nature of the functions.

With the help of uniform accounting, the Administrative Officers, Finance Officers including Accounts officers not only summarize the financial accounts in terms of income statement and balance sheet but also make decisions with a comparison of the figures with greater transparency. Arthur Stone Dewing rightly said, “All decisions are financial decisions.” Critical analysis and evaluation is used as a base to take effective decisions in organizations and financial management is a yardstick used to judge most of the operations and projects of an enterprise.

Aims and Objectives:

The main objective of this research is to examine and evaluate the benefits and drawbacks of uniformity in Government Accounts and how it affects the financial management, decisions of the Officers relating to the financial health of the organizations.

Review of Literature:

Amyas Morse (2013) in his report examined how far finance is at the heart of decision-making in government. He emphasized the importance of effective financial management in supporting sound decision making, facilitating accountability, improving and refining planning, and enabling an organization to devise its strategy and manage risks. He explained how the government has made some significant financial management processes more coherent and simplified reporting at three stages i.e. plans, estimates, and expenditures outturns. In the research, various strategic challenges for financial management have been identified including cost reduction, strategic planning, prioritizing in the allocation of resources, difficulties in rendering local public services, and lack of skills associated with effective financial management. It is concluded that the government has succeeded in a number of areas in controlling spending however it still faces a significant challenge in redesigning and transforming public services.

Government of Haryana (2016) describes the accounts of government companies audited by the Comptroller and Auditor General of India under the provisions of Section 619 of the Companies Act. The report detailed the performance audits on the functioning of DCR Thermal Power Plant, Yamunanagar, and RG Thermal Power Plant at Hisar and pointed out an amount of nearly five thousand crores related to avoidable expenditure, non-compliance of rules, directives, and procedures. There are 30 Public Sector Undertakings (PSUs) in Haryana including 25 working PSUs and 5 non-working PSUs. The government exercises control over the affairs of the PSUs through its administrative departments. The State Legislature monitors the accounting and utilization of invested amounts in the PSUs. The total investment in the form of Capital and Long-term Loans was Rs. 40,984.19 crores as of 31^st March 2015. In the report, it is found that the DCR Thermal Power Plant and RG Thermal Power Plant incurred avoidable expenditure towards penalty imposed by ECL and kept excess inventories than the normative limit set by HERC. There was an unfruitful expenditure of Rs 6.4 crores in December 2009 on the Computerized Maintenance and Inventory Management System (CMIMS) which had not been made operational till June 2015.

Vishal Gupta, Swanand Kulkarni, Naresh Khatri (2018) explored the key managerial challenges faced by the leaders and managers of public sector organizations. They used an open-ended questionnaire to gathered data from 42 senior managers of PSUs from various industries representing 12 Indian states in different regions of India. On the basis of in-depth qualitative analyses, they tried to find the ground realities of Indian Public Sector Undertakings and what they found that there are three key managerial challenges i.e. political interference and lack of autonomy, rigid rules, and HR practices, and lack of employee motivation. Finally, it is concluded that there is a dominant role of Indian cultural and political contexts in influencing the experiences of leaders working in public sector organizations.

The review of literature reveals that the decisions of the Government are affected by the level of uniformity in the accounting of organizations. There are few research studies in the areas of uniformity of accounting and it needs to relook this area of research with consistent changes in the accounting systems and new approaches in Accounting and Finance. The present research will bring useful results for improving the financial decisions of the Government because the quality of financial reporting is a factor for fixing the responsibilities of the concerned Officers/Officials. It will determine the effect of uniformity in enhancing public finance accountability management.  

Research Methodology:

The research is descriptive and data will be collected firstly from secondary sources, thereafter if required, from the primary sources using a survey with a pre-determined structured questionnaire. The primary data will be gathered through the questionnaire method and also with the help of discussions and interviews covering both personal and telephonic interactions. The targeted population will be Finance Officers including Chief Accounts Officers, Senior Accounts Officers, Accounts Officers, Section Offices and Accounting Staff working the Haryana Government Organizations. Adequate Sample units keeping in view the constraints of time and cost will be selected using the Simple Random Sampling method. The data collected from Secondary and Primary sources will be analyzed using descriptive and inferential statistical methods. The research is descriptive and data will be collected firstly from secondary sources, thereafter if required, from the primary sources using a survey with a pre-determined structured questionnaire. The primary data will be gathered through the questionnaire method and also with the help of discussions and interviews covering both personal and telephonic interactions. The targeted population will be Finance Officers including Chief Accounts Officers, Senior Accounts Officers, Accounts Officers, Section Offices and Accounting Staff working the Haryana Government Organizations. Adequate Sample units keeping in view the constraints of time and cost will be selected using the Simple Random Sampling method. The data collected from Secondary and Primary sources will be analyzed using descriptive and inferential statistical methods.

References/End Notes:

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[i] The information of GASAB is retrieved on http://gasab.gov.in/gasab/about.aspx.

[ii] A document is retrieved from the portal of GASAB i.e. http://gasab.gov.in/gasab/pdf/Primer.pdf

[iii] ICAI (2017), Government Accounting System in Developed and Developing Countries – A Comparative Analysis retrieved from https://cpfga.icai.org/wp-content/uploads/2017/11/Government-Accounting-System-in-Developed-and-Developing-Countries.pdf

[iv] This information is retrieved from the lesson, “Government Financial Operations: Accounting and Reporting”, retrieved from https://study.com/academy/lesson/government-financial-operations-accounting-reporting.html

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. The article was published on 1^st September, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com