Automation and Using Information Technology

 Automation and Using Information Technology

By Dr. Lalit Kumar Setia

Information Technology is taking its place in every field of life and Financial Management to improve Governance at workspace requires to be reformed with the help of using Gadgets, Software, and the latest technological tools.

I planned and designed a module on “Information Technology in Effective Financial Management and Accounting” on the demand of various government departments and HAFED. It is worth mentioning here that the Drawing and Disbursing Officers in Government Government are supposed to follow Punjab Financial Rules strictly to avoid audit objections. In today’s age, it is a must to use information technology in communicating with e-mail, exploring sites or content online, social networking, writing articles and reports, using MS-Excel software, and designing app & web pages for building personal repo around the world. The Government officers are supposed to use information technology in routine official functions. The students of even matriculation are nowadays well versed with the use of information technology and to upgrade the skills of officers, it is a must to learn using IT tools in office and personal life. Financial management comprises budgeting for estimating revenues and expenditures and accounting for keeping records of financial transactions. It is a must to firstly understand the difference between expenses and expenditures. It is also must to know about Economic Order Quantity (EOQ), funding patterns including the use of Public-Private Partnership (PPP) and private partners as outsourcing. It is also explained in the class, the difference between outsourcing and PPP.

How it helps in improving Governance

With the change in the governance during the last decade, the head offices of government are framing Result-oriented Framework Document (RFD) to fix the accountability with maximum use of Standardized Operating Procedures (SoPs). The Human Resource Management System (HRMS) is being connected with salary to fix the account directly and Human Resource Accounting (HRA) will be the next step to provide performance-linked pay and ensure full exploitation of resources including human resources. The practical examples of using spreadsheets in estimating revenues, expenditures, and computing economic order quantities made the sessions more interesting. The first day of the course remained totally full of practical examples and exercises. The types of accounting including cash basis, accrual basis, single-entry book-keeping, and double-entry bookkeeping methods with the procedures to switching from manual to computerized accounting have also been discussed. The sessions on this topic improves the capacity of government officers to prepare the budget estimates using excel spreadsheets and a discussion on types of accounting and book-keeping made them competent to understand financial functions more effectively. I usually am invited to various esteemed organizations for delivering sessions on these issues.

Software for improving Management 

Today in the era of technology, automation is everywhere. The time-consuming complex processes are being replaced with automated software-based processes. The chances of manual errors were reduced significantly. It will not be surprising if the procurement through GeM becomes automated in near future on the basis of the level of inventory set as a minimum reserve in the storeroom of a Government office. How to design software to support the management, in Haryana, the modules are prepared and implemented in an amazing way to enhance the efficiencies. A course is designed to inculcate the same skills in Officers/officials so that the time and efforts can be saved and the resources are fully utilized. The departments which are not using software and modules; are suffering from inefficiencies. 

During the Covid-19 times, most of the organizations decided to work from home, and innovative ways were incorporated to perform the organizational activities. The software not only streamlines the organizational processes but also makes the employees realize more job satisfaction from their efforts. The employees also learn to manage time more effectively and the use of virtual meetings, virtual training, and software-based outcomes can easily measure their real-time performance. 

It's time to be well managed and utilize the resources more effectively. How to do it, require skills which I inculcate usually in my classes. A new course designed for the Officers / Officials of the Government of Haryana:

Course on Digitalization of Service Records (HRMS) and Records Management

Haryana State Training Policy, 2020 is committed to equipping all functionaries of Government with adequate knowledge and skills, bringing about positive attitudinal changes, and building capacities to enhance performance. 

The main objective of the above course is to build and enhance the capacities of officers to digitalize the service records as per the latest guidelines of the Haryana Government on implementing Human Resource Management System (HRMS) and also to maintain the records properly with weeding out old records as per rules of Government.

What needs to be computerized in Office?

The Accounting, Invoicing and tax compliance-related procedures are already computerized in most of the offices relating to Boards and Corporations of Government. The public sector undertakings (PSUs) are facing competition from the private sector players, need to automate the functions for improving efficiency to a great extent. I have designed courses especially to sharpen the skills in the following areas:

a. Use of Technology to automate compliance of financial rules in managing expenses: 

It is possible to use Google forms for ensuring a proper system of approvals in each office and for automate purchase orders, prepare invoices, make reimbursement of expenses easily, and also for posting entries or booking expenditures. 

b. Reconciliation of accounts to trace embezzlements

Tracking expenses is easy but when the number of expenses every day increases to a significant level, it becomes difficult to trace and track any file or case relating to an expense. The cloud-based solutions can easily be used for automatic reconciliation of accounts and giving the red signals to the exceptions for consideration of the executives. 

c. Business Applications in Government Offices

The Government has adopted a Double Entry System in most of the departments working under the direct control of the Government. The double entry system is also used in business organizations of the private sector. Whatever business applications with automation are used in the private sector, the same business applications can be adopted in Government offices. For example, the private organizations use Customer Relationship Management (CRM), the government organization may design and use Citizen Relationship Management (CRM) with rating each citizen of the state or country. 

How to design software for Government organizations:

The National Informatics Centre is the primary organization for designing specific software in Government offices. Four things should be taken care of while giving directions to the NIC for designing a specific software i.e. Estimated Expenditure or Budget Availability, No leakage of privacy or security of confidential information, the feature of the software to scale it up for large level applications, and information is stored either on systems of NIC or on clouds. 

It is fact that the use of automation software increases the efficiency in functions but everything cannot be computer-based. 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was firstly published on 8th July 2017, and last updated on 14th October 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

Read more content:

https://drlalitsetia.blogspot.com/2021/10/about-crypto-currencies-bitcoin.html (About the Cryptocurrencies)  

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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 

Responsibilities of Head of Accounting Organizations

Responsibilities of Head of Accounting Organizations

-Dr. Lalit Kumar

In Government Organizations, the hardest responsibility is ‘ensuring economy, efficiency, and effectiveness – the 3 Es’ in payments and the second hardest responsibility is to improve the tax collection system to the extent possible. The Chief Controller of Accounts (CCAs) or Controller of Accounts (CAs) is with the independent charge being Head of Organizations. They are expected for critical analysis of Government functions based on above stated 3 Es – Economy, Efficiency, and Effectiveness.

Rules, Regulations, and Instructions:

The Finance Ministry with the help of the Finance Department frames rules and regulations, also issue instructions as per the need of changing business environment. To improve transparency with online procurement of goods and services, the Government e-Marketplace (GeM) incorporated by the Government and now in every state, there is more emphasis upon adoption of GeM. However, the heads of accounting organizations are responsible to certify the reasonability of the rates on which products and services are being procured in their offices.

Emphasis upon Outcome Budgeting:

The time is changing fast, now Government is focusing upon Outcome instead of Outlay and Output. There are ceilings in the budget for effective monitoring of the utilization of financial resources and managing the debt due to excess demand of financial resources in the offices. The budget is formed based on the Output-Outcome Monitoring Framework (OOMF) as per the latest guidelines of the Ministry of Finance / Finance Department.

In Finance Department, the Budget branch is entrusted to furnish accurate budget estimates and monitoring of utilization of funds as per the amount proposed by the departments.

Financial Reporting:

The heads of accounting organizations are responsible to prepare the reports based on financial records to enable better decision-making by the Administrative Officers (IAS / IPS / IFS etc.).

The reports and periodical reviews, analytical diagrams for managerial decisions, are now part of the financial reporting.

Internal and External Audit

It is well known that the Audit function is completed by the Chartered Accountants (CAs) in Private and Public Sector Organizations as per the Companies Act. But at the same time, in Government Organizations, the primary audit function is directly in the hands of heads of Accounting Organizations i.e. Accounts Officers, Senior Accounts Officers, Chief Accounts Officers, etc.

a. Enforcing Internal Controls and Checks –

The challenge is to supervise and ensure timely payments to the right beneficiaries and claimants as per the rules framed by the Finance Department and latest instructions. The Government also deals with the Contractors and Vendors for the supply of goods, services, works including manpower solutions.

b. Preparing Monthly Accounts as per Rules –

It is not so easy as it seems. Accurate figures of accounts along with compiling the financial records, reconciliation of the accounting information is a hard responsibility. Most of the time, the RTI Activists demand such information and put their queries with quoting the inaccurate information sometimes due to clerical mistakes (if any). The accounting tasks are time-bound and related to taxation, budgets, and compliance of Companies Act or Partnership Act for preparing Financial Statements and the disclosure of the same in the public domain.

After preparing the accurate financial accounts, these are submitted to the Accounting Organization i.e. CGA in Central Government and AG (Accounts) in State Governments.

c. Advisory Services for reforming taxation –

The Government Organizations realize revenues most of the times from taxation and it is the basic focus area to reform by the Government. The heads of accounting organizations are responsible to advise the Government for reforming the taxation function and make it more transparent and error-proof.

The rising debt on Government can easily be reduced with effective collection of taxes with least cost.

Leveraging Information Technology:

Without Information Technology, every function is incomplete. The Internet of Things and Artificial Intelligence have changed the scenario of Accounting. The use of Software, Apps, Web portals, and tools of Artificial Intelligence not only detects the irregularities but also supports administrators to think out of the box and make the organizations more profitable. The technological environment cannot be easily understood by Accounting people because, in most Government Organizations, the heads of accounting organizations lack skills in Information Technology such as the Internet of Things and Artificial Intelligence tools.

The implementation of Financial Rules with the help of Financial Management Systems convince the officers both Accounting and Administrative officers to use the portals for carrying out their financial functions. The preparation of Sanctions, processing of Bills, Making Payments in digital forms, processing of Receipts and Management, incorporating the Direct Benefit Transfer using Payments directly into the Accounts of Payees / Beneficiaries, analyzing the flow of Cash and Funds including inflows and outflows in various types of activities, and finally reporting of financial records with the use of templates, graphs, and diagrams; every function is being transformed with the impact of Information Technology.

Course on Decision Making for Effective Financial Administration by Dr. Lalit Kumar Setia:

This course first time organized from 6th September to 10th September, 2021 particularly to support the Officers/Official ensuring effective financial administration in their offices.
The Haryana State Training Policy, 2020 notified by Honorable Chief Secretary to Government, clearly state to focus upon equipping all functionaries of Government with adequate knowledge and skills, bring about positive attitudinal changes, and build capacities to enhance performance.
The main objective of the above course is to build and enhance the capacities and sharpen the skills for making decisions relating to ensure proper utilization of financial resources, procurement of goods and services using online and offline modes, workout medical reimbursement in Cashless and packages, and deduction of Tax Deduction at Source (TDS) as per Income tax and GST Act as per the directions of Government for effective financial administration.
By the end of this course, participants will be able to:
•              Describe the bases of making Financial Decisions in ensuring proper utilization of Financial Resources, Budgetary Control by using Online Budgeting portal as per guidelines of Government
•              Describe the process of making decisions in Procuring Goods and Services, taking sanctions, use of approved source and open market, Tendering and Online Procurement using Government e-Marketplace (GeM).
•              Describe the rules, latest instructions, and directions of Government for Effective Financial Administration in Income Tax, Goods and Services Tax, Medical Reimbursement, Recovery of over payments, submission of e-TDS returns in Income Tax and GST etc. 

The Government Departments can apply for the desired training on lalits.hipa@nic.in and after confirmation/acceptance of the nominations, the participants are added to Google meet classes. For more information, the contact number of Dr. Lalit Kumar Setia is +91-9416382720.

*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 9th August, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

Next Article - Computerised Systems

https://drlalitsetia.blogspot.com/2020/08/computerized-accounting-systems.html 

- How a Person Caught for Tax Evasion

https://drlalitsetia.blogspot.com/2021/07/how-person-caught-for-tax-evasion.html

Basic concepts of Financial Accounting

Basic concepts of Financial Accounting

-Dr. Lalit Kumar Setia*

Accounting — often called the language of business — is the process of recording, classifying, reporting and analyzing financial data. And while the accounting requirements of every business vary, all organizations need a way to keep track of their money. Unfortunately, there's very little that's intuitive about accounting. Many small businesses hire accountants to set up and keep their books. Other companies use accounting software like QuickBooks, CheckMark Multi-Ledger and M.Y.O.B. Accounting and keep their accounting functions in house.

It's All about Balance

Using a system of debits and credits, called double-entry accounting, accountants use a general ledger to track money as it flows in and out of a business. They record each financial transaction on a balance sheet, which provides a snapshot of a business's financial condition. Accountants record every financial transaction in a way that keeps the following equation balanced:

Assets = Liabilities + Owner's Equity (Capital)

The Accounting Cycle

Accounting is based on the periodic reporting of financial data. The basic accounting cycle includes:

Ø    Recording business transactions. Businesses keep a daily record of transactions in sales journals, cash-receipt journals or cash-disbursement journals.

Ø    Making adjustments to the general ledger. General-ledger adjustments let businesses account for items that don't get recorded in daily journals, such as bad debts, and accrued interest or taxes. By adjusting entries, businesses can match revenues with expenses within each accounting period.

Ø    Closing the books. After all revenues and expenses are accounted for, any net profit gets posted in the owners' equity account. Revenue and expense accounts are always brought to a zero balance before a new accounting cycle begins.

Ø    Preparing financial statements. At the end of a period, businesses prepare financial reports — income statements, statements of capital, balance sheets, cash-flow statements and other reports — that summarize all of the financial activity for that period.

The Importance of Financial Statements

At the end of a period — either annually or more frequently, depending on the length of a business's accounting cycle — accountants create financial statements that show the financial health (or decline) of a business. Many people inside and outside a company use the information found in financial statements. Business owners and managers use the data in financial statements to chart the course of their companies, project revenues and expenses, monitor cash flow, keep tabs on costs and plan for the future. Present and prospective employees also want to see their employers' financial performance. Stockholders and investors closely examine financial statements to check a company's performance. They want to compare a business's financial statements with those of other companies to guide their investment choices. Bankers look at a company's most recent financial statements when they make lending decisions. Financial statements also make it easier to for accountants to prepare tax returns and report financial information to the Internal Revenue Service. In fact, so many business partners, investors, and other interested parties rely on your these documents that it's important to get a handle on all the common financial reports your business will be expected to produce.

Continued...

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.