Uniformity in Accounts of Haryana Government
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 31st 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:
References/End Notes:
[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 1st September, 2021 and last updated on 4th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com
