In an effort to curb the use of black money in the electoral process, the Election Commission now plans to ask political parties to conduct their finances in a corporate fashion by getting their accounts audited and publishing their audited finance sheets annually.

The EC has received a host of such recommendations from the country's auditing regulator -- the Institute of Chartered Accountants of India (ICAI) -- and will notify the official guidelines to political parties and financial enforcement agencies like the Income Tax department and the Enforcement Directorate (ED) soon.

"The EC will deliberate upon and take up the final recommendations submitted by the ICAI on May 27 and notify all the stakeholders in this regard. The final recommendations by the ICAI will help in making the electoral process free from use of illegal money power," an official involved in the drafting of the report said.

The recommendations by the top accounting body in the country come in the backdrop of the EC creating an Election Expenditure Monitoring cell within its establishment last year, which has been vital in the conduct of polls in Bihar last year and five other states recently.

The new cell, with the help of the I-T department, seized and intercepted huge sums of cash in poll-bound states and subsequent action by tax authorities led to the realisation of huge hidden tax.

The ICAI, in its final report, has recommended that "all political parties registered with the Election Commission of India may be mandated to apply accrual basis of accounting (reporting transactions on a real-time basis)."

"Every political party to follow March 31 as uniform financial year and consolidated financial statements be prepared incorporating the accounts of taluka, district and state-level party branch accounts," the ICAI recommendations suggested, adding that all political parties should follow "a common format for presentation of its general purpose financial statements."

"It is recommended that political parties must be mandated to get their accounts audited by a firm of Chartered Accountants, as appointed by the Election Commission of India. The auditors should be appointed by rotation every three years," the 38-page recommendation report of the ICAI said.

It also recommended that political parties must be mandated to "publish their audited accounts annually, which shall be available for the information and review by the concerned stakeholders and the general public at large within six months of the end of the financial year, on the parties' website.

"Annual financial statements be also published in English in leading national newspaper and in local language in the leading newspaper of the state," it said.

All registered political parties must be mandated to file the audited financial statements with the EC, the recommendations said, adding that the PAN number of the contributors of funds to the political party may be sought.

The ICAI has specifically recommended that "revenue from issuance of coupons of different denominations" by the parties shall be disclosed separately and grants, donations, contributions received by the party should have categorisation as individual donors, companies or organisations, institutions and welfare bodies.

Interestingly, the auditing body has also recommended that political parties should disclose the "fair value and quantitative details of the services renders by volunteers or members for which no payment has been made and the net gain or loss by the party on foreign currency transactions."