Page 122 - HUDCO BEST PRACTICE AWARDS

Urban Design anD regional Planning, inner city revitalization anD conservation

accrual BaSed douBle entry accountinG SySteM in 168 ulBs of

chattisgarh by State urban development agency, chhattisgarh

Migration to Accrual Based Double Entry System of Accounting from Single Entry Cash Based System at all 168 ULBs of Chhattisgarh has been done in two phases to achieve self-sustainability
in financial statements. Identification and valuation of assets and liabilities by chartered firms for placing them in balance sheet, updating records and registers, surveys, cross checking with
source document and, third party certificate and physical verification of assets were carried out. Capacity building of staff of ULBs has been done through detailed handholding and prolonged
training by organizing workshops and training of accounting staff of ULBs on periodic basis. Fixed Asset Register has been initiated and balance sheets were prepared. Income and Expenditure
accounts helped in assessing profitability of the ULB concerned. Many unidentified transactions were cleared, non-operative accounts for long time were identified, and identification of assets
has opened new ways for revenue mobilization.
Introduction • Prevention of misappropriation and mismanagement of resources is the main focus
he Urban Local Bodies (ULBs) in Chhattisgarh were maintaining their accounts under of this initiative.
th
Tsingle entry cash based system, which was an incomplete accounting system, causing • Compliance with the recommendation of the 13 Finance commission and fulfillment
many maladies that plagued the ULBs. Hence a shift from manual, Single Entry System of conditions of various schemes of Government of India.
of maintaining accounts to Accrual Based Double Entry System of Accounting in a • Exploring new ideas of revenue mobilization and to support this preparation of
computerized environment has become important to ULBs to achieve self-sustainability Opening Balance Sheet.
in financial statements to determine the financial position and ascertain Profit & Loss of • Standardization of forms, formats and procedure.
ULBs. With this aim, Accrual Based Double Entry System of Accounting in computerized
environment has been formulated in all the 168 ULBs of Chhattisgarh State which Establishment of priorities
includes 13 Municipal Corporations, 44 Nagar Palika Parishads, 111 Nagar Panchayats, he first target of the initiative was to formulate a comprehensive document, which would
with substantiated financial statement up to 31 March 2018 by State Urban Development Tprovide guidelines and procedures for migration to Accrual Based Double Entry System
Agency, Chhattisgarh. of Accounting. It was successfully achieved when Chhattisgarh Municipal Accounting
Background Manual (CGMAM) was developed and implemented in 2011. CGMAM standardized the
fter the 74th amendment to the Constitution of India, the ULBs of Chhattisgarh were formats and procedures for maintaining accounts on Accrual Based Double Entry System
Anot able to develop infrastructure on account of lack of funds. With launch of schemes of Accounting. The next target was conversion of the accounts in Accrual Based Double
Entry System of Accounting. As on 2019, 131 ULBs were covered in the first phase and 37
like Jawaharlal Nehru National Urban Renewal Mission (JnNURM), Urban Infrastructure urban local bodies in second phase of the migration to Accrual Based Double Entry System
Development Scheme for Small and Medium Towns (UIDSSMT), the ULBs had at their of Accounting. 139 towns covered under second phase have their accounts converted to
disposal, the financial resources to be able to effectively discharge their functions. The Accrual Based Double Entry System of Accounting till 2014-15. Work is in progress in 29
role of ULBs thus became important and with this, the need for better financial practices towns.
emerged, with budget allocation based on the feedback received from general public. This
could be implemented only with a strong financial accounting and reporting system. The last but not the least, the target was for training the existing staff of ULBs, so that the
Accounts of Urban Local Bodies under single entry cash based system was an incomplete migration could be sustained. A new set of 121 accountants have been planned in the ULBs
with core accounting background, out of which 40 accountants have already been placed
accounting system wherein the ULBs were not aware of what they own and what they after undergoing rigorous practical and theoretical trainings for nine days.
owe, and also there was no financial report generated by the accounting system for fund
management, resource mobilization and budgetary control. It also caused many maladies For exploring new ideas of revenue mobilization, preparation of Opening Balance Sheet
that plagued the ULBs like deficient financial reporting, un-reconciled banking accounts, (OBS) was essential. Only after preparation of OBS, the actual picture became clear about
inefficient budgeting, poor financial planning, and too many inoperative accounts, non the land assets owned by the ULBs. It helped in exploring options for revenue mobilization.
accounting of interest received from banks, loss of time in recovering or extracting relevant
data. There was no record of ownership of the assets. Some assets were owned by other
departments of government but were in possession of ULBs for long time and vice versa
and the assets were also never valued, bank balances were not reconciled. Huge number of
bank accounts were maintained, among which many accounts were not operative. Records
maintained by ULBs did not give sufficient base for assessing the solvency and profitability.
All these have created a situation for introduction of Accrual Based Double Entry
System of Accounting in computerized environment. It has been accelerated with the
recommendations of the 13th Finance Commission. Without Accrual Based Double Entry
Accounting System the ULBs would not have been eligible for Performance Based Grants.
Further, mandatory reform under JnNURM and UIDSSMT Projects for implementation
of Double Entry Accrual Based accounting system in the Urban Local Bodies has also
accelerated proposal of the project.
Key dates
Dates Significance/Achievement
Preparation of financial statement under Accrual Based
30 June 2018
th
Double Entry System of Accounting for F.Y.2011-17 Vision
Preparation of financial statement under Accrual Based Mobilization of resources
30 November 2018
th
Double Entry System of Accounting for F.Y.2017-18 he initiative has been executed based on three groups of people. First group was the
Main focus Tconsultants engaged in execution of the migration work- both at field level and at
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