Government Accounting - Notes

GOVERNMENT ACCOUNTING

• Government accounting is a process of collecting, recording, classifying, summarizing, interpreting, and reporting to the concerned authority
• Reflects all the transactions which involve receipt, transfer, and disposition of governments fund or property
• Principles and procedures of government accounting are governed by govt financial rules regulations and acts that may provide relevant financial information.

Characteristics of Government Accounting:

• Based on the double-entry system
• Government regulations – prepared as per govt regulations
• No motive for P&L except in governmental co
• Based on the Budget and its control mechanism
• Banking transactions
• Auditing
• Information – receipts, transfer, and disposition
• cash accounting principle
• budget head

Objectives of Government Accounting:

• maintain systematic records of financial transaction of govt
• excess expenditure beyond the limit of budget
• Provide financial stat
• Safeguard assets and other materials
• Facilitate auditing
• Communicate annual report

New Accounting system of GON:

• The old system proved unsuitable, impracticable, and lacked uniformity for the fulling needs of the country.
• Bhuktani siesta pranali also became unsuitable to record all revenue and expenditure of the country account committee was formed in 20th Magh, 2017 BS
• After a detailed study of 288 days committee presented a draft as suggestions and recommendations for a systematic, decentralized, scientific, and efficient accounting system
• Draft approved on 20th Magh 2018 BS by then auditor general
• Got a nod of King on Chaitra 2, 2018
• Implemented in Kathmandu Valley from FY 2019/20
• Implemented all over Nepal from Shrawan 2025

Features of New Accounting System:

• Based on double entry
• Cash basis accounting
• Emphasis on banking transaction
• Based on a budget head
• Secrecy
• Flexibility
• Use of brackets
• Use of different forms
• Uniformity and simplicity
• History of financial transaction
• Budgetary control

Advantages of new accounting system:

• Financial administration
• Formulation of plan & policies
• Reflect financial transaction
• Usefulness for audit
• Limitations of New Accounting System:
• Lack of mechanism
• Less emphasis on assets
• Cash basis of accounting
• Lack of proper information
• Advance payment treated as an expenditure
• Provision controlling inventories

Limitations of New Accounting System:

• Lack of mechanism
• Less emphasis on assets
• Cash basis of accounting
• Lack of proper information
• Advance payment treated as an expenditure
• Provision controlling inventories

Difference between Government and Commercial accounting: