Inroads made for Chartered Accountants in Public Financial Management
“Government plays an important role in a country’s progress and economy. Its proper accounting & financial reporting is essential for enhancing transparency and accountability in financial operations of the Government and quality decision making.”
“As a partner in nation building, the Institute of Chartered Accountants in India (ICAI) through its one of the Non-standing Committee namely Committee on Public and Government Financial Management (CP&GFM) is contributing to support the Government of India (GoI) to improve their accounting, financial reporting and public financial management system in India.”
Continuous Dialogue with stakeholders
ICAI is in continuous dialogue with the Ministry of Housing & Urban Affairs, Ministry of Panchayati Raj, Ministry of Rural Development, O/o Controller General of Accounts (CGA), O/o Comptroller & Auditor General (C&AG) of India, relevant State Government Departments and other stakeholders to offer them organisational support to strengthen accounting, financial reporting and management in Government in India.
Accounting Standard setting
i. For Central and State Government(s)
President, ICAI is a Member of the Government Accounting Standards Advisory Board (GASAB), constituted by the C&AG of India, that formulates Accounting Standards for Central & State Governments and Union Territories.
ICAI actively participates in their meetings and submits technical inputs on draft Standards and various other documents of GASAB from time to time. Currently, the focus of GASAB is to adapt cash based International Public Sector Accounting Standards (IPSASs) to Government Accounts for which ICAI is providing technical support.
ii. For Local-self Government / Local Bodies
ICAI through CP&GFM is formulating Accounting Standards for Local Bodies (ASLBs)1 to harmonise diverse accounting practices that are being followed in Local Bodies. ASLBs are based on international benchmark IPSASs, modified considering peculiar operations of Local Bodies and Indian conditions.
A total of 31 ASLBs have been issued till date2 including one cash based ASLB to facilitate transitioning from cash to accrual accounting. ASLBs issued by the Council of ICAI are recommendatory in nature and become mandatory from dates specified by respective State Governments. Uttarakhand has incorporated implementation of ASLBs in their State Municipal Accounts Manual.
“ICAI through CP&GFM has prepared and submitted a suggested roadmap for phased implementation of ASLBs in Urban Local Bodies (ULBs).”
CP&GFM has also submitted representations to the States suggesting suitable amendments required in respective State Municipal Acts to enable smooth implementation of accounting reforms. ICAI is pursuing State Urban Departments to undertake research studies to understand the impact of ASLB implementation on accrual based Financial Statements in local bodies.
Historically, ICAI through the ICAI Accounting Research Foundation (ICAI ARF) had assisted the Municipal Corporation of Delhi (MCD) and Kolkata Municipal Corporation (KMC) in implementing accounting and financial management reforms, which opened this pioneering practice area for Chartered Accountants.
ICAI has released several publications on various aspects of Public Finance and Government Accounting3. Recently, ICAI (through CP&GFM & ICAI ARF) and NITI Aayog released a joint Research Study on “Transition to Accrual Accounting: Models and Learnings for ULBs” covering the reform journey of selected States with an indicative 18-month transition timeline and key milestones.
Strategic Collaboration: MoU with NIRD&PR, Hyderabad
A Memorandum of Understanding (MoU) was signed between ICAI (CP&GFM) and the National Institute of Rural Development and Panchayati Raj (NIRD&PR), Hyderabad to collaborate for: development of accounting/auditing standards for rural local bodies; ensuring accountability and transparency through social audit; maintenance of proper books of Accounts & Finance by rural development functionaries; better systems of internal audit and control through data mining; and preparation of detailed project reports (DPR) by rural micro and small entrepreneurs.
Capacity Building Exercise
The Committee is actively involved in capacity building of accounts and finance staff across all tiers of Government in India and Public Sector Undertakings (PSUs) through webinars4, workshops, training programmes, and e-learning modules5 on:
- Implementation of accrual accounting systems including sustenance;
- Financial management reforms and capital market access for municipal bonds;
- Revenue augmentation to support Local Bodies in becoming self-reliant and self-sustainable;
- e-GramSwaraj and overview of Audit Online; and other contemporary public finance topics.
Institutional Partnership with Government of Tamil Nadu
An MoU has been signed between ICAI (CP&GFM) and the Commissioner of Treasuries and Accounts, Government of Tamil Nadu for knowledge transfer and skill development of their officials. In pursuance of the same, multiple training sessions have been organized with more in the planning stage.
Certificate Course on Public Finance & Government Accounting (14 Modules)6
CP&GFM conducts this landmark Certificate Course to equip ICAI members and Government officials, having already trained around 2,500 participants:
Professional Opportunities for Members
Chartered Accountants can play an eminent role in Government across diverse domains: improving accounting, financial reporting & management, auditing, budgeting, drafting, implementation & audit of various Government schemes, and enabling efficient and smooth functioning of day-to-day operations of the Government for better service delivery and optimal resource utilization.
ICAI is actively pursuing Government Organisations to explore the possibility of establishing a separate accounts and finance cadre in Government including Local Bodies, and engaging Professionals in Accounts, Audit and Finance Departments either on permanent roles, contractual basis, or as advisors.
“Certificate Course on Public Finance & Government Accounting organised by CP&GFM has been recognised by the O/o C&AG for allotment of marks in empanelment criteria of CA firms.”
The course is also given preference by multiple Government Departments and Municipal Corporations in tender allotments and project assignments.
Conclusion
Accounts prepared based on Accounting Standards ensure transparency and accountability in financial operations of the Government and quality decision making. Government is the biggest spender of Indian economy. Therefore, there is an urgent need to standardise Government Accounts. ICAI is pursuing Government to adopt Accounting Standards (that are converged IPSASs) across all levels of Government.
The involvement of professionals in the Public Finance and Government Accounting domain is scarce as of now. Therefore, the ICAI is focussing on creating awareness amongst Chartered Accountants to develop this one of the least explored practice areas and exploring possibilities of engaging more members in this field.