Uniformity in Accounts of Government Organizations in India
-Dr. Lalit Kumar Setia
The concern of bringing efficiency in functions of Government Organizations always remains at the top in the eyes of administrators. Most of the time, the parliamentary committees observed and pointed out to standardize the accounts of organizations utilizing the amount from Consolidated Fund of India / State / UT. The Government with a focus on ‘Minimum Government – Maximum Governance’, is making the administrators and policymakers accountable to the public for the best utilization of the public resources.
Need of Unified Accounting Standards
The Public Sector Financial Reporting is specifically to support the decisions of Administrators and the research function of think-tanks of the nation. The information based upon the unified accounting standards is used to decide where to supply the public resources or invest the amount for making the public services accessible to the citizens.
The cost of processing information to each stakeholder can easily be reduced by framing unified Accounting Standards and it will also improve the functioning of ministries of the central government, state governments, and all government organizations of India. The reports of the Auditor General always gave emphasis upon improving public financial management and that is possible only through Government Process Re-engineering (GPR) by removing the processes which have no relevance today but are still in the system and adding the new processes to streamline the functions with the use of latest technological tools.
The quality of Government Financial Reporting depends upon the unified Accounting Standards and fixing of responsibilities and accountabilities is also possible only after improving the quality of financial reporting. There is a need for research by collecting structured questionnaires on ‘how decisions are being taken in Central and State Government on various Financial Issues and how the decisions can be taken with the help of implementing software, artificial intelligence, and big data analytical tools in Government?’. The data should be analyzed using descriptive and inferential statistical methods to find out the facts and thereafter recommend how the performance of Governments be improved with taking new initiatives and how to fix the financial accountability of decision-makers and those who are implementing the decisions so that the right decision is implemented in the right way without any delay.
Management of Public Assets
The public sector delivery system basically supports the public in getting the public services at the right time, in the right quantum, and without making any grievance. The Central and State Governments are making the processes modified but still, there is a need to manage the public assets more sincerely. From Budgeting to Auditing, the Government Accounting setup is to manage the public assets.
In India, it is found in various research reports that due to lack of standard reporting systems, where the money is appropriated in budget and where it is actually spent or lost or misappropriated, cannot be traced easily. Today the Government is taking steps to privatize the Government Organizations’ work, decentralized the functions to the extent possible, incorporate the quality and output-oriented systems with the help of NITI Ayog, a well-known think-tank of India but the accounting standards are still not with the unified structure of accounts in Government organizations.
What will happen if a Unified Structure of Accounts is adopted?
Whether the Government wants to experience lesser revenue shortfalls in tax collection or not? Whether the Government wants to use Audit recommendations to improve the Financial Functions of Government Organizations or not? Whether the Government wants to automate Accounting to trace irregularities or not? Whether the Government requires to take steps to reduce the misappropriation of public money or not? Obviously, each Government wants these things to realize, but how? Each of these things requires a Unified Structure of Accounts in Government Organizations.
The Usability of Accounting Reports for Decisions in Government
Financial Accounting is concerned with measuring the financial consequences of transactions and events, and it improves the comprehensiveness and transparency in financial functions of the organizations.
It is very easy to say that the unified structure of Government Accounts may sort out the problems of misusing public assets. But it is must understand that the use of Accounting Reports in making decisions in Government so that rational decisions based on scientific facts be taken, it is must incorporate the Standard Operating Procedures (SoPs) for each financial decision based on Government Accounting. The countries of the United States, Finland, Russia, etc; have incorporated the SoPs for decisions. In the United States, the GAAP (Generally Accepted Accounting Principles) are used in organizations particularly to ensure uniformity in the accounts of organizations. Multi-national companies (MNCs) with a presence in multiple countries, follow the IFRS (International Financial Reporting Standards) to disclose the aspects of finances such as assets, liabilities, revenues, expenses, etc.
Why not be in India? Yes, it should be.
The rational and scientific decisions are possible based on the following facts, which will come from the unified structure of Government organizations such as ‘Valuation of Inventories in each Government Organization’, ‘Cash Flow Statements of the Government Organizations’, ‘Factors behind income or loss of each Government Organizations’, ‘Revenue and Capital Receipts of each Government Organization’, and ‘Fixed Assets, Borrowing Costs as per Cost Accounting Records’, etc.
*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 12th August, 2021 and last updated on 4th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com
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