New accounting system to be followed in all central varsities
April, 02nd 2012
As the Union ministry of human resource development (MHRD) has decided to implement uniform accounting standards in educational institutions, including all 41 central universities (Allahabad University being one among them), officials have started making preparations for the same.
The new style of maintaining accounts would be followed from the financial year 2013-14 by all higher educational institutions of the country. In this backdrop, the ministry has recently conducted a meeting in Delhi which was attended by the finance officers (FOs) of all the 41 central universities of the country. The AU was represented by its FO P K Singh, a chartered Accountant (CA) himself.
"The ministry has asked all the FOs to send their suggestions and queries pertaining to maintenance of the annual accounts of their institutions on accrual basis, which earlier was based on cash basis. Once these queries and clarifications reach the ministry, all the FOs would again be called in the month of May, when the system would be explained," said P K Singh.
He further said that among various aspects which have raised certain ambiguity in terms of understanding the new accounting system, certain points were discussed at the meeting.
"We asked the experts that in accrual system, what will be the treatment for provision of gratuity and pension payments. Likewise, the FOs wanted clarification on the point that what will be the precise method of depreciation and the rate of depreciation for various assets of the institution," he added.
It is pertinent to mention that this new system of maintenance of accounts is developed by the Institute of Chartered Accountants of India (ICAI). The new system is expected to ensure proper accountability, financial discipline and proper use of funds.
The new system is being implemented following MHRD's acceptance of the recommendations made by the working group set up to formulate a uniform accounting standards for educational institutions.
In an MHRD communique forwarded by the UGC to all varsities, it has been stated that UGC is holding a consultation process with its affiliating institutions in this regard. It is following this that the meeting was convened in New Delhi.
Following the implementation of the new system, all educational institutions would now be mandated to apply accrual basis of accounting with accounting standards issued by the ICAI.
As per the recommendations accepted by MHRD, now fund-based accounting may be introduced for earmarked/designated funds and all educational institutions would be required to follow a pre-decided common format for presentation of its general purpose financial statements to ensure proper accountability.
The change will also necessitate that the statutes having specific formats for financial reporting by educational institution may also be modified on lines with the suggested formats as per the new system.
The MHRD has already conveyed it to the UGC that the ministry in coordination with ICAI shall organise capacity building programme to train the staff of educational institutions.
Commenting further, AU FO P K Singh said that for implementing and making others understand the said system of accounting, small training workshops and guidance would be provided to the employees but certainly, AU would need the help of some experts in the area who could be hired on construal basis in the next year.
Following the implementation of the new system, all educational institutions would now be mandated to apply accrual basis of accounting with accounting standards issued by the ICAI. The new system is expected to ensure proper accountability, financial discipline and proper use of funds.