ACCOUNTING MANUALACCOUNTING MANUAL

FOR URBAN LOCAL BODIES IN TAMILNADUFOR URBAN LOCAL BODIES IN TAMILNADU

GOVERNMENT OF TAMILNADUGOVERNMENT OF TAMILNADU

MUNICIPAL ADMINISTRATION & WATER SUPPLY

DEPARTMENT

Accounting Manual for Urban Local Bodies

Table of Contents

Chapter no Subject 01 Introduction 02 Taxes and Fees Accounting

a) Property Tax - Accounting b) Other Taxes & Fees – Accounting

03 Cash and Bank Accounting 04 Staff Salaries & Recoveries

a) Salaries Accounting b) Provident Fund – Accounting c) Retirement Benefits Accounting

05 Expenses Accounting 06 Suppliers / Materials – Accounting 07 a) Stores Accounting

b) Asphalt Accounting c) Petrol / Diesel Accounting

08 Contractors’ Accounting 09 Projects and Fixed Assets Accounting 10 Loans and Grants Accounting 11 Deposits and Advances Accounting 12 Water Supply and Drainage Fund Accounting 13 Preparation of Opening Balance Sheet 14 Compilation of Accounts 15 Appendix – I 16 Appendix - II

ACCOUNTING MANUAL FOR URBAN LOAL BODIES IN TAMILNADU

VOLUME – I

Chapter – 01

INTRODUCTION: The Urban Local Bodies viz., Municipal Corporations, Municipalities and Town Panchayats other than the Corporation of Chennai are at present maintaining their accounts on cash basis. The receipts actually received and payments actually make, under various prescribed heads of account, based on the nature of receipts and payments are accounted for, in the form of a statement of Receipts and Payments. So, the annual account prepared reflects only a cash flow, i.e., money actually received and spent during a financial year without taking into account, the accrued income and outstanding liabilities pertaining to the year. In addition to the statement of receipts and payments duly supported by necessary adjustments and transfer entries for Revenue Fund (Ordinary account) and Capital Fund (Capital Account), a Demand, Collection and Balance Statement (D.C.B Statement) for taxes, fees and other revenue items is also being annexed to the Annual, besides a Statement of Assets and Liabilities, which of course, has not assumed its importance in the present set of accounts, as the Statement showing Assets and Liabilities is not prepared in the form of Balance sheet to represent the true financial status of the Municipality. 2. The word ‘Municipality’ or ‘Municipal’ wherever used in this manual, will also refer to the Municipal Corporation, if the context so requires. 3. The word ‘Manager’ wherever used in this Manual will refer to the ‘Administrative Officer’ in the Zone and the Assistant Commissioner (Accounts) in the main office of the Corporation. 2. ACCRUAL SYSTEM OF ACCOUNTING”

(a) It has been decided to replace the present accounting system by the accrual system of accounting. This accrual accounting system is aimed at making it to conform to the generally accepted accounting principles (GAAP). In the accrual system, transactions are accounted in the period to which they relate.

(b) In this system, there is a change in reporting the financial results so as to provide

the Chief Executive (the Commissioner), the Council and the Government with the Financial Reports, in the form of tow important financial statements for the purposes noted against each.

i) INCOME & EXPENDITURE ACCOUNT: to determine the financial performance of the Municipality ii) BALANCE SHEET : to assess the financial status of the

Municipality

(c) This necessitates a change in the present system of accounting i.e. from single entry cash basis to a double entry accrual basis of accounting.

(d) This facilitates meaningful comparison of financial statements relating to different

periods. 3. GENERAL INSTRUCTIONS AND ACCOUNTING PRINCIPLES OF ACCRUAL SYSTEM:

(a) (i) The Financial Statements of the Urban Local Bodies (i.e. the Income and Expenditure Account and the Balance sheet) shall be prepared on accrual basis.

(ii) The accounting policies shall be applied consistently from one financial year to the next, as approved by the Government. Any change in the accounting policies which has a material effect in the current period or which is reasonably expected to have a material effect in later periods, shall be disclosed. In case of a change in the accounting policy, which has a material effect in the current period, the amount by which any item in the financial statements is affected by such a change, shall be disclosed to the extent ascertainable. When such amount is not ascertainable, wholly or in part, the fact shall be indicated. (iii) ‘Provision’ shall be made for all common liabilities and losses, even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. ‘Revenue’ shall not be recognized unless,

(1) the related performance has been achieved, (2) no significant uncertainty exists regarding the amount of the

consideration and (3) it is not unreasonable to expect estimated collections.

(iv) The accounting treatment and presentation in the Income and Expenditure Account and the Balance Sheet of the transactions and events shall be governed by their substance and not merely by the legal form.

(v) In determining the accounting treatment and manner of disclosure of an item in the Income and Expenditure Account and / or the Balance Sheet, due consideration shall be given to the materiality of an item. (vi) ‘Notes’ to the Income and Expenditure Account and the Balance Sheet shall contain only the explanatory material pertaining to the items in the Income and Expenditure Account and the Balance Sheet. (vii) A statement of all ‘significant accounting policies’ adopted in the preparation of the Income and Expenditure Account and the Balance Sheet, shall be included in the Municipality’s balance sheet. Where any of the accounting policies is not in conformity with accounting standards and the effect of departures from accounting standards is material, the particulars of the departure shall be disclosed, together with the reasons therefore and the financial effect thereof, except where such effect is not ascertainable. (viii) If the information required to be given under any of the items or sub items cannot be conveniently included in the Income and Expenditure Account or the Balance Sheet itself, as the case may be, it can be furnished in a separate schedule or schedules to be annexed to and forming part of the Income and Expenditure Account or the Balance Sheet itself, as the case may be, it can be furnished in a separate schedule or scheduled to be annexed to and forming part of the Income and Expenditure Account and the Balance Sheet. This is recommended where the items are numerous. (ix) The schedule referred for above, accounting policies and explanatory notes shall form an integral part of the Balance Sheet. (x) The corresponding amounts for the immediately preceding financial year for all items shown in the Income and Expenditure Account or the Balance sheet also be given in the Income and Expenditure Account or the Balance Sheet as the case may be. (xi) ‘PROVISION’ means any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability, the amount of which cannot be determined with substantial accuracy. (xii) The figures in the Income and Expenditure account and the balance sheet, if rounded off, shall be rounded off as below:

Amount of Transactions (in Rs.) Rounding off to Less than one lakh Rs. One lakh or more but less than one crore Hundred One crore or more but less than one hundred crores Thousand One hundred crores or more but less than one thousand crores

Lakh

One thousand crore or more Crore

(xiii) As cash flow statement as formulate in AF III in volume III shall be (b) It is, proposed to adopt this system,

(i) to distinguish between Revenue Fund and Capital Fund on the basis of nature of transactions.

(ii) To continue ‘Funds Concept’ of accounting under broad categories. (iii) To value / capitalize the Assets and to provide for depreciation every year

at the prescribed rates. (iv) To create SINKING FUND, if possible

(a) for repayment of Government loans, and loans obtained from the financial institutions

(b) for investing such Funds. Explanation: The concept of Sinking Fund is explained in Sl. no. 61 under paragraph 9 – ‘General Definition’ (v) to provide for doubtful Revenue items of Taxes, fees and others (vi) to maintain subsidiary ledgers for those accounts which need to be

analysed in detail (vii) to close the account books on monthly basis by preparing the prescribed

primary records, namely receipts boos, payments book and general ledger (viii) To prepare a monthly Trial balance, the income and expenditure account

and the balance sheet annually/

Explanation: The key functions of the Municipality can be grouped mainly under Capital Fnd are Revenue fund. This presentation is for

(i) Assets and facilities creation and (ii) Administration / maintenance of these assets and facilities to

render various services (ix) The above system shall apply to the Water Supply & Drainage Fund and

Elementary Education Fund. (c) (i) The following accounts will be continued to be kept separately as at present:

1. Provident Fund Account 2. Spl. Provident Fund cum Gratuity Scheme Account 3. Endowments Fund Account

4. Tamilnadu Govt. Nutritious Meals account 5. Nehru Rozgar Yojana Account 6. Tamilnadu Govt. Welfare scheme (Separate Accounts) Accounts

(ii) Some of the above Fund Accounts have trusted nature for their use for specific purposes only. The municipal commissioner is executing some other Govt. Schemes i.e. he receives money and disburses it according to the norms prescribed by the Govt. The statements of receipts and payments shall be enclosed to the balance sheet in such cases. (iii) In respect of the Assets, if any, created out of the Funds referred to in Sl. No. 4&5 above and similar scheme accounts, and ordered to be the properties of the Municipality, for their maintenance, they may have to be taken as the Assets of the Municipality. 4. Accounting Manual: (a) This Accounting Manual is meant, for learning, by the staff members and officers in the Municipalities, this Accrual System and its implementation. This manual does not encroach upon any policy implementation and the administrative system, now in force, nor does it suggest any revision in the Tax structure and other items of revenue for improving the finance. This manual is confined to various procedures / steps to be followed in compiling the Municipal account under accrual system. (b) (i) The implementation of this new improved accounting system will not be the sole responsibility of the Accounts Cell of the Municipality (ii) Necessary changes in the working of the other departments like Revenue, Engineering, Public health etc, to assume responsibilities for supporting the successful implementation of this accounting system are dealt with in the succeeding chapters of this manual. (iii) The compilation of the Accounts under this system, therefore, involves the periodical inflow of inputs from all the departments / sections of the Municipality. So, the departmental officers are collectively responsible for the compilation of accounts in time. 5. Double Entry Accounting System: (1) Account-keeping is a system of recording the effect of each financial transaction under appropriate accounts, for purposes of easy comparison with past performances and for comparison, to project for future development or improvement. The combined effect of all such transactions of a year is to arrive at the net result of the activities or services rendered to the public by the Municipality and to ascertain promptly the accurate financial position. (2) The ‘financial transaction’ means either the receipt of a benefit in the shape of cash, goods or services or imparting of such benefit. Thus, every transaction has got a two-fold

effect. It results in dealing with a number of persons or films, goods, cash, furniture and other assets or possessions, incurring certain operational and administrative expenses such as salaries to the staff, wages, purchases, advertising, stationery and printing, postage etc and also deriving Income from certain specified sources such as collection of taxes, fees, etc, under relevant statutes. (3) Double Entry Accounting system is, thus, a system of account keeping, by which, both the receiving and the giving benefit of each transaction are recorded at a time. 6. Debit and Credit: (a) The Double Entry Accounting system consists of (i) Personal accounts

a) Property or Real Accounts and b) Nominal or Fictitious Accounts

All these accounts will reflect in the form of debit and credit balances, depending upon exact nature of the transactions and the will affect the accounts in opposite directions. In order to make a complete record of each transaction, it becomes necessary to debit one account and credit another account. It is this recording of two-fold effect of each transaction that is termed as ‘Double Entry’. In other words, for every debit, there should be a corresponding credit. (b) Rules for Debit and Credit: The rules of debit and credit in respect of the above three classes of accounts are as indicated below: i) Personal Accounts Debit the receiver and Credit the giver ii) Asset or real accounts Debit what comes in and Credit what goes

out iii) Nominal or fictitious accounts Debit expenses and losses and credit gains

and income These rules shall never vary and as such, they have to be strictly followed: 7. Double Entry Accounting System vs. Single Entry Accounting System:

(a) It is explained below, how the double entry accounting system varies form the Single entry accounting system:

Double Entry Accounting System Single Entry Accounting System 1 Both personal and impersonal

accounts are reflected in this system Only the personal accounts (Debtor and Creditor) are reflected in this

system 2 All kinds of transactions are recorded

in the Subsidiary books Only transactions that relate to personal accounts are recorded

3 This system is a fool-proof one Single entry is not a system by itself and it is only an incomplete and disjointed form of double entry system

4 This has a two-fold effect of a transaction, as every debit has got a corresponding credit

Single entry accounting ignores the two fold effect of the transactions

5 A ‘Trial Balance’ can be prepared to test the arithmetical accuracy of the system

This is not possible in this system

6 The income and expenditure account could be prepared

In the absence of nominal accounts, no classified information is available regarding the gains or the losses and hence no income and expenditure account could be prepared.

7 The balance sheet could be prepared, based on the Income and Expenditure Account to assess the financial status of the Municipality

Similarly, in the absence of real or property accounts, no information regarding the various assets could be ascertained, as a result of which the Balance Sheet could not be prepared to find out the financial status of the Municipality. At best, a statement of affairs could be prepared

8 Detailed information is available for comparative study

Detailed information is lacking for comparative study

9 Since, ‘IN-BUILT CROSS CHECKS’ are available, it will be rare to commit fraud. Even if committed, it canbe detected quickly

Fraud is easily committed. And it is very difficult to detect it

10 Demands are raised for all taxes and non-taxes (Fees, leases and rent) and hence a D.C.B. statement could be prepared independently in the Accounts Cell

Since no demand is raised and accounted for, independently in the Accounts Cell, the D.C.B. statement could be prepared, only by maintaining the Demand Registers separately in the Revenue Branch

(b) Double entry accounting system shall account for, all income, whether received or

accrued and all expenses whether paid or outstanding in a financial year. The accounting system further enables preparation of ‘Trial Balance’ at the end of every month of the financial year. Consequently the Income and Expenditure Account is prepared, which will be accompanied by its relative Balance sheet for that year.

(c) The Income & Expenditure Account will reflect a real financial performance in a year facilitating a comparative study of performance with the previous year, enabling the municipal administration to take corrective and remedial measures by the Council and the Government.

(d) While the Revenue items, - both Income and Expenditure – are listed out and taken away from the Trial Balance with necessary adjusting entries, for preparation of Income and Expenditure Account, to find out Net surplus / Deficiency, there are certain other items – debit and credit balances – left out in the Trial Balance. These items, that are thus left out, shall represent the assets employed or created and deployment of finances derived from different sources.

(e) These items will be set out in the form of a statement to find out that the Municipality is running on sound lines and the financial liquidity is maintained. This statement is generally called the ‘Balance Sheet’. It is, otherwise, known as ‘Statement of Assets and Liabilities.

8. Cash Basis vs. Accrual Basis: A. General Description:

(i) Cash Basis: The method of recording transactions by which Revenue, Costs, Assets and Liabilities are reflected in the accounts in the period in which actual receipts or actual payments are made. While the cash basis is the product of Single Entry Accounting System, the Accrual Basis is an integral part of the Income and Expenditure Acount (ii) Accrual Basis: The method of recording transactions by which Revenue, Costs, Assets and Liabilities are reflected in the Accounts in the period in which they accrue. The Accrual basis of accounting includes considerations, relating to deferrals, allocations, depreciation and amortisation. B. The following are the main differences between Cash Basis and Accrual Basis (1) Cash Basis:

1. A statement of Receipts and Payments only could be prepared, based on actual cash receipts and cash payments, recorded in the Cash Book of a year.

2. There will not be any distinction between Capital and Revenue receipts or payments.

3. This statement viz, receipts and payments statement will commence with the opening balance – both cash on hand and cash at bank

4. This statement need not necessarily be accompanied by a statement of Assets and Liabilities

5. The difference between the two sides – debit and credit – will indicate the cash balance at the end of the period.

(2) Accrual Basis:

1. The Income and Expenditure Account is prepared 2. There is, always, distinction between Capital and Revenue items of

receipts and payments. 3. The Income and Expenditure Account shall include Revenue items only 4. This system shall not commence with any balance 5. It shall necessarily include all income received or accrued and expenses

paid or outstanding in a year 6. The Income and Expenditure Account is confined to the year of

accounting only and it will not include the items of Income and Expenditure – past and future years.

7. The difference between the two sides - debit and credit – will indicate the Net Surplus / Deficiency

8. This system shall, necessarily have the Balance Sheet C. Examples: (1) ‘Income’ from properties (shopping complex) 1999 - 2000 (Items watched through the Miscellaneous Demand Register) Income due for the previous year Rs. 20,000 (Arrear Demand Register) Income due for the current year Rs. 1,20,000 (Current Miscellaneous Demand Register) Income actually received in the year Arrears Rs. 5,000 Current Rs. 10,000 Cash Basis Accrual Basis Receipts Rs. 15,000 Income Rs. 1,20,000 (5,000 + 10,000) (2) ‘Expenditure’ Insurance premium paid for public health lorry (for one year from 1.9.99 to 31.8.2000) Rs. 11,800 Expenditure relating to 1999-2000 Rs. 6,883 Expenditure relating to 2000-2001 Rs. 4,917 Total Rs. 11,800

Cash Basis Accrual Basis Expenditure Rs. 11,800 Expenditure for the Current year Rs.6,883 Prepaid expenses Rs. 4,917 (Expenditure relating to next year) (3) (a) Thus, there are differences in accounting of the above financial transactions (one receipt item, and one payment item) on cash basis and on Accrual Basis (b) While, the amount actually received and the amount actually spent are respectively recorded as ‘Receipts and Payments’ in the year in which it is received and spent, in the cash system, the income due (either received/collected in full or not) and the expenditure relating to the year of accounting namely viz. 1999-2000 only are taken into account, in the accrual system. (c) In the accrual basis of accounting system, regarding the income, the difference between the income due – here it is called Demand and left uncollected (Rs. 1,20,000 – Rs. 10,000) Rs. 1,10,000 and regarding the expenditure, the insurance premium amount paid in advance of the current year i.e. for the next year (11,800 – 6,883) Rs. 4, 917/- will appear in the Balance sheet on the Asset side. (4) The flow of transactions for these items is explained below: 1. a) As soon as the demand for the current year 1999-2000 under ‘Income from Properties’ is confirmed by the Council or the Commissioner, a General Journal Voucher (GJV) is prepared and the Income due is accounted for, with the following entry in the General Ledger. Dr. Cr. Lease Amount Recoverable – Current Rs. 1,20,000 Rent on buildings (shopping complex) Rs. 1,20,000 (Being the amount of rent fixed as ‘demand’ for the shopping complex for the year 1999-2000 as confirmed by the council, recoverable from Thiru X. lessee) b) As and when the amount received in monthly instalments during the year, the same is brought to account through Bank Receipt Voucher (BRV) Dr. Cr. Bank A/c Rs. 15,000 Lease Amount Recoverable – Current Rs,.10,000 Lease Amount Recoverable – Arrears Rs. 5,000 (Being the first instalment of lease amount collected for April ’99 and the other being the collection of lease amount of the year 1998-99)

(c) Besides making entries in the Receipts book, for Cash / Cheque received and accounted through BRVs, all the above Journal entries are recorded in the General Ledger. The General Ledger balances under the four heads of account will be extracted and recorded in the Income and expenditure account as follows: Entries in the General Ledger Detailed Head Dr. Cr. Lease amount recoverable – current 1,10,000 Rent on buildings (shopping complex) 1,20,000 Lease amount recoverable – arrears 5,000 Bank Account 15,000 ----------------------------- 1,25,000 1,25,000 Note: The collection of arrear of Rs.5,000 in the Current year will affect the ‘recoverable amount’ exhibited in the Opening Balance Sheet, representing previous year’s arrears under ‘Asset’ Income and Expenditure Account for 1999-2000 Expenditure Income By rent on buildings 1,20,000 (Shopping Complex) Balance Sheet as at 31.3.2000 Liabilities Assets Lease amount recoverable 1,10,000 Current Lease amount recoverable 15,000 Arrear 2. (a) When the claim for paying the insurance premium amount is received by the Municipal Health Officer (who is incharge of the lorry) based on the premium notice of the Insurance Company, the correctness of the claim is satisfied with reference to the relevant records. Then, the Journal Voucher – here, Expenses Journal Voucher (EJV) is prepared and the following Journal Entry is passed Dr. Cr. Heavy Vehicle – Maintenance A/c 6,883 Pre-paid expenses A/c 4,917 Accounts payable A/c – Expenses 11,800 -------------------------- 11,800 11,800 (Being the insurance premium for the year 1.9.99 to 31.8.2000 paid beyond the accounting period of 1999-2000)

(b) When the cheque is drawn in favour of the insurance company, the following debit entry is passed in the Bank Payment Voucher (BPV), by making relevant entries in the ‘Payments Book’ Accounts payable A/c – Expenses 11,800 (c) All the above entries are recorded in the General Ledger and the balances extracted. The balances so arrived at, are recorded in the Income and Expenditure Account as follows: Head of account Dr. Cr. Heavy vehicle – Maintenance A/c 6,883 Pre-paid expenses 4,917

Income and Expenditure Account Expenditure Income Heavy Vehicle Maintenance Rs. 6,883

Balance Sheet as at 31.3.2000 Liabilities Assets Pre-paid expenses 4,917 (Insurance) 3. Of the balance, in Sl. no. (1) and (2) above, the following items will appear in the Balance Sheet as indicated below, subject to further accounting treatment in the year (2000-2001)

Balance Sheet as at 31.3.2000 Liabilities Assets Rs. 1. Lease amount Rs. 15,000

recoverable (Arrears) 2. Lease amount Rs. 1,10,000

recoverable (Current) 3. Pre-paid expenses 4,917 9. General Definitions: The important terms (including phrases) commonly used are explained here under, with a view to facilitate a broad and basic understanding of these terms as well as to promote consistency and uniformity in their usage. 1, Accounting Policies: The specific accounting principles and the methods of applying those principles adopted by an organization in the preparation and presentation of financial statements.

2. Account Receivable: Person from whom amounts are due for goods sold or services rendered or in respect of contractual obligations. Also it is termed as ‘debtor’ 3. Accrual: Recognition of revenue and costs as they are earned or incurred (and not as money is received or paid). It includes recognition of transactions relating to ‘Assets’ and ‘Liabilities’ as they occur, irrespective of the actual receipts or payments. 4. Accrual basis of accounting: The method of recording transactions by which ‘Revenues’ costs, assets and liabilities are reflected in the accounts in the period in which they accrue. The ‘Accrual Basis of Accounting’ includes considerations relating to ‘deferrals’, allocations, depreciation and amortisation. This basis is also referred to as ‘Mercantile basis of Accounting’ 5. Accrued Asset: A developing but not yet enforceable claim against another person, which accommodates with the passage of time or the rendering of service or otherwise. It may arise from the rendering of services (including the use of money) which, at the date of accounting, have been partly performed, and are not yet billable. 6. Accrued Expense: An ‘expense’ which has been incurred in an accounting period, but for which no enforceable claim has become due in that period against the organisation (Municipality). It may arise from the purchase of services (including the use of money) which, at the date of accounting, have been only partly performed and are not yet billable. 7. Accrued Liability: A developing but not yet enforceable claim by another person, which accumulates with the passage of time or the receipt of service or otherwise. It may arise from the purchase of services (including the use of money), which, at the date of accounting, have been partly performed and are yet not billable. 8. Accrued Revenue: ‘Revenue’ which has been earned in an accounting period, but in respect of which, no enforceable claim has become due in that period, by the organization (Municipality). It may arise from the rendering of services (including the use of money) which, at the date of accounting, have been partly performed and are not yet billable.

9. Accumulated Depreciation: The total to date of the periodic ‘depreciation’ charges, on ‘depreciable assets’. 10. Advance: Payment made, on account of, but before completion of, a contract, or before acquisition of goods or receipt of services. 11. Amortisation: The gradual and systematic writing off, of an asset or an account, over an appropriate period. The amount on which ‘amortisation’ is provided is referred to as ‘amortisable amount’. ‘Depreciation’ accounting is a form of amortisation applied to ‘Depreciable Assets’. Depletion accounting is another form of amortisation applied to ‘Wstign Assets’. Amortisation also refers to gradual extinction or ‘provision’ for extinction of a debt by gradual redemption or sinking fund payments or the gradual writing off, to revenue of miscellaneous expenditure carried forward. E.g. share issue expenses, preliminary expenses etc 12. Amoritsed Value: The ‘amortisable amount’ less any portion already provided by way of ‘Amortisation’. 13. Annual Report: The information provided annually by the Commissioner of the Municipality to the Municipal Council and the Government concerning its operations and financial position It includes the information statutorily required i.e. the Income and Expenditure Account and the Balance sheet, and notes on accounts, Auditors report thereon, and observations of the council (resolution of the council approving the report) 14. Assets: Tangible objects or intangible rights owned by the Municipality and carrying probably future benefits. 15. Auditors report: The formal expression of opinion by an independent external auditor on the financial statements of the Municipality including such reservations, qualifications and negations as may be called for and incorporating, where appropriate, such statutory affirmations as may be prescribed.

16. Bad Debts: Debts owed to the Municipality which are considered to be irrecoverable. (Here it refers to the arrears of Taxes, Fees and other revenue left uncollected beyond the prescribed period) 17. Balance Sheet: A statement of the financial position of the Municipality as at a given date, which exhibits its assets, liabilities, capital, reserves and other account balances at their respective ‘book values’. 18. Book – Value: The amount at which an item appears in the books of account or financial statements. It does not refers to any particular basis on which the amount is determined. E.g. cost, replacement value, etc. 19. Capital Assets Assets, including investments not held for sale, conversation or consumption in the ordinary course of administration. 20. Capital Work in Progress; Expenditure on Capital Assets which are in the process of construction or completion. 21. Changes in Financial Position, Statement of: A financial statement which summarises, for the period covered by it, the changes in the financial position including the sources from which funds were obtained, by the Municipality and specific uses to which such funds were applied. This is also called ‘Funds Flow Statement’. 22. Contingent Asset: As asset, the existence, ownership or value of which may be known or determined only on the occurrence or non-occurrence of one or more uncertain future events. 23. Contingent Liability: An obligation relating to an existing condition or situation which may arise in future, depending on the occurrence or non-occurrence of one or more uncertain future events.

24. Cost: The amount of expenditure incurred on or attributable to a specified article, product or activity. 25. Cost of Purchase: The purchase price including duties and taxes, freight inwards and other expenditure directly attributable to acquisition, less trade discounts, rebates, duly drawbacks and subsidies in respect of such purchase. 26. Current Assets: Cash and other assets that are expected to be converted into cash or consumed in the production of goods or rendering of servicing in the normal course of administration. 27. Current Liability: ‘Liability’ including loans, deposits and bank overdrafts which falls due for payment in a relatively short period, normally not more than twelve months. 28. Debenture: A formal document constituting acknowledgement of a debt by the Municipality usually given under the common seal of the Municipal Council and normally containing provisions regarding payment of interest, repayment of principal and security if any (generally guaranteed by the Government). It is transferable in the appropriate manner. 29. Deferral Postponement of recognition of a revenue or expense after its related receipt or payment (or incurrence of a liability) to a subsequent period to which it applies. Common examples of deferrals include pre-paid insurance and taxes, unearned subscriptions received in advance by newspapers and magazine selling companies etc.(Unearned property tax received in advance by the Municipality i.e. Property Tax received in advance of the year to which it relates) 30. Deferred expenditure: Expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods. This is also referred to as ‘deferred revenue expenditure’

31. Deferred Revenue: Revenue or Income received or recorded before it is earned and carried forward to a subsequent period or periods to which it relates. 32. Deficiency: The excess of liability over assts of the Municipality at a given date. This will also imply ‘deficit. 33. Depreciable Amount: The historical cost or other amount substituted for historical cost of a depreciable asset in the financial statements, less the estimated residual value. 34. Depreciable Asset; Asset which is expected to be used during more than one accounting period, has a limited useful life and is held by the Municipality for use in the production or supply or goods, and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of administration. 35. Depreciation: A measuring of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. It is allocated so as to charge a fair proportion in each accounting period during the ‘useful life’ of the asset. It includes ‘amortisaton of assets’ whose ‘useful life’ is pre-determined and depletion of wasting assets. 36. Depreciation Method: Any method of calculating ‘depreciation’ for an accounting period. 37. Depreciation Rate: A percentage applied to the historical cost or the substituted amount of a depreciable asset (or in case of a diminishing balance method, the historical cost or the substituted amount less accumulated depreciation.) 38. Diminishing balance method: A method under which the periodic charge for depreciation of an asset is computed by applying a fixed percentage to its historical cost or substituted amount less accumulated depreciation (net book value). This is also referred to as ‘written down value method’

39. Expenditure: Incurring a liability, disbursement of cash or transfer of property of the purpose of obtaining assets, goods or services. 40. Expenses: A cost relating to:

(1) ‘the operations of an accounting period : or (2) the revenue earned during the period: or (3) the benefits of which do not extend beyond that period

41. Fictitious Asset: Item grouped under Asst in a balance sheet which has no real value. 42. Fixed Asset: Asset held for the purpose of providing or producing goods or services and that is not held for re-sale in the normal course of administration. 43. Fixed Deposit; Deposit for a specified period and at specified rate of interest 44. Functional classification: A system of classification of expenses and revenues and the corresponding assets and liabilities to each function or activity, rather than by reference to their nature. 45. Fundamental Accounting Assumptions: Basic accounting assumptions which underline the preparation and presentation of financial statements. They are going concern, consistency and accrual. Usually, they are not specifically stated because their acceptance and use are assume. Disclosure is necessary if they are not followed. 46. Fund: The term ‘Fund’ refers to the amount set aside for a general or specific purpose, whether represented by specifically earmarked assets or not. 47. Funds Flow Statement: This is a statement of changes in the financial position whose definition is given in sl. no. 21 above

48. Income; The Income of the Municipality denotes ‘Revenue’ due to it. The revenue is the ‘gross’ inflow of cash, receivables (which included recoverables like taxes, fees, lease amounts etc) or other consideration arising in the course of the ordinary activities of the administration of the Municipality from the sale of goods, from the rendering of services and from the use by others, of the organisations’ resources yielding interest, rents from shopping complex, levy of fees for conduct of Trades etc. Revenue is measured by the charges of the services rendered to the public and by the charges and rewards arising from the use of resources by them. It excludes amount collected on behalf of third parties such as certain taxes like ST / IT etc. (here in Municipalities, Library cess collected) 49. Income and Expenditure Statement: A financial statement, often prepared by non-profit making enterprises like clubs, associations etc to present their revenue and expenses for an accounting period and to show the excess of revenue over expenses ‘(or) vice versa for that period. It is similar to profit and loss statement and is also called ‘ revenue and expense statement’ 50. Intangible Asset; Asset which does not have a physical identity eg. Goodwill, patents, copy-right etc. 51. Investment: Expenditure on Assets held, to earn interest, profit or other benefits. 52. Invesements: Assets held not for operational purposes or for rendering services i.e. assets other than fixed assets or current assets (e.g. securities, shares, debentures, immovable properties) 53. Liability: The financial obligation of the Municipality other than own funds. 54. Mortgage: A transfer of interest in specific immovable property for the purpose of securing a loan advanced, or to be advanced, an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability. The security is redeemed when the loan is repaid or the debt discharged or the obligations performed. 55. Net Assets:

The excess of the book value of assets (other than fictitious assets) of the Municipality over its liabilities. This is also referred to as NET WORTH or shareholders’ fund. 56. Net Fixed Assets: Fixed assets less accumulated depreciation thereon up-go-date. 57. Pre-paid expense; Payment for expense in an accounting period, the benefit for which will accrue in a subsequent accounting period(s). 58. Provision: An amount written off or retained by way of providing for depreciation or diminution in value of Assets or retained by way of providing for any known liability, the amount of which cannot be determined with substantial accuracy. 59. Provision for doubtful revnues: A provision made for revenue considered doubtful of recovery. 60. Revenue: See Income (sl no. 45) which is reproduced below, again The income of the Municipality denotes ‘Revenue’ due to it. The revenue is the ‘gross’ inflow of cash, receivables (which includes recoverables like taxes, fees, lease amounts etc) or other consideration arising in the course of the ordinary activities of the administration of the Municipality from the sale of goods, from the rendering of services and from the use by others, of the organisations’ resources yielding interest, rents from shopping complex, levy of fees for conduct of Trades etc. Revenue is measured by the charges for the services rendered to the public and by the charges and rewards arising frm the use of resources by them. It excludes amount collected on behalf of third parties such as certain taxes ST / IT etc, (here in Municipalities, Library cess collected0 61. Sinking Fund: A fund created for the repayment of a liability or for the replacement of an Asset. 62. Straight Line Method: The method under which the periodic charge for depreciation is computed by dividing the depreciable amount of a depreciable asset by the estimated number of years of its useful life.

63. Sundry Creditor: Amount owed by the Municipality on account of goods purchased or services received or in respect of contractual obligations. Also termed as trade creditor or account payable. 64. Sundry Debtor: Person from whom amounts are due for goods sold or services rendered or in respect of contractual obligations. Also termed as debtor, trade debtor, account receivable. 10. OTHER TERMS (USAGES) AND REGISTERS: The following are the other terms used in this manual and the registers prescribed for use in the accrual system of accounting. (1) Accounts Cell: The term ‘Accounts Cell’ shall mean the department or section in charge of,

(i) Receipts Accounting (ii) Payments Accounting (iii) General Ledger maintenance (iv) Projects Ledger maintenance (v) Compilation of Accounts i.e. preparation of monthly Trial Balances and the

annual Income and Expenditure Account and the Balance Sheet (2) Chart of Accounts: Volume I of this Manual deals with accounting procedures. Volume II is for detailing Account Code nos. for different kinds of transactions with descriptions. This system of codification of accounts would provide for a subjective ad objective analysis of income and expenditure and of balance transactions. (3) Forms and Registers: Another volume i.e. Volume III is given separately for New Forms, Registers and Formats for the Accounts. This Volume also includes 24 Schedules for gathering data for preparation of opening Balance Sheet. (4) Revenue Fund: In this fund account, all revenue receipts and revenue (ordinary) expenditure for administration / maintenance of assets and facilities created to render various services enshrined in the Acts should be accounted for.

(5) Capital Fund: This fund is meant for accounting capital receipts and capital expenditure which includes mainly project expenditure. Loans and grants received from the Government and other Financial Institutions for specific purposes (for creation of Assets / Facilities) are accounted here. When the Council decides to execute a project from out of Revenue Fund (Internal Resource), the amount for this project will be received from the Revenue Fund, by transfer, to this fund. (6) Water Supply and Drainage Fund: This fund account has to be maintained separately. The code nos. of Revenue and Capital Funds that are common in nature and that can be made applicable to this fund have to be used with the prefix assigned to this fund. (7) Elementary Education Fund: There are limited items of income and expenditure in this fund. These items are accounted with relevant prefix. (8) Identification of Funds: The fundwise prefix to be used are given below: RF - Revenue Fund CF - Capital Fund WS - Water Supply & Drainage and Sewage Farm EE - Elementary Education Fund (9) Receipts Book: (MCF 4) (Revenue Fund)

(a) In this Book, daily collections by Cash for various items of income and their remittances are entered, based on Bank Receipt Vouchers prepared and sent by the Shroff / Junior Assistant in the Treasury, duly checked and approved by the Manager / Administrative Officer to the Accounts Cell. This Book is prepared for the Revenue Fund.

(b) The cheques / DD’s received through the Register of Cheques received, are also

to be accounted in the Receipts Book. (Fund Wise), through a BRV daily.

(c) Adjustment of Receipts in the Treasurey and Credits given by the Bank should be ascertained and these items brought to this Receipts Book by preparing BRV.

(10) Bank Receipt Voucher (BRV) (MCF 3): To facilitate preparation of accounts by computer, documents are created as inputs. The document for receipt coming through the form of cash / cheque / DD, adjustment in the Treasury / Bank is called ‘Bank Receipt Voucher’. This should be serially numbered on annual basis. To be clear, no receipt can be accounted for, in the Receipts Book without preparing the BRV therefore. In the cases of credits given in the Bank Scroll or Treasury Passbook, the details should be obtained and BRV’s prepared and entered in the Receipts book. (11) Payments Book (MCF 6) : (Revenue Fund) All claims are made in the form of Bills (Pay Bills, Contract Bills, other claims etc.,) with supporting documents. They are scrutinized and passed for payment before cheques are issued. In this system, in addition to the above bills, a document called ‘Bank Payment Voucher’ should be prepared. These Payment Vouchers should be entered in this book. The totals in this book indicate the total payments, made through cheques – monthly. This book will be prepared for the Revenue Fund, Capital Fund, Water Supply & Drainage Fund and Education Fund separately. (12) Bank Payment Voucher: (BPV) (MCF 5)

a) As explained above, for every payment made by cheque, a document is created and this is called ‘Bank Payment voucher ‘. Adequate columns have been provided in this voucher to identify the department which incurs expenditure and the ‘account head’ to which the expenditure is debited. Hence the BPV should be prepared by the concerned department / section from which the payment is sought for. The Sl. No. is assigned in the Accounts Cell on annual basis, while passing the claims for payment. The BPV indicates the abstract of expenditure with account description No cheque shall be drawn without a BPV and an entry therefore, in the Payments Book.

b) The monthly receipts and payments arrived at, respectively in the Receipts Book

and Payments Book are compared with the entries in the Bank Scrolls received from the respective Banks and a plus and minus memo, called Bank Reconciliation Statement is prepared to settle the differences between these two balances.

(13) RECEIPTS & PAYMENT BOOK The Transaction in the WS&D and Elementary Education Fund are considerably less. Therefore, it is sufficient to have a combined book viz, Receipts & Payments Book to record all receipts and payments including payment on Capital Works.

(14) In the double entry system of accounting, since each transaction has got two fold effect, it should be journalised by preparing a Journal Voucher. The Journal Vouchers would be of five kinds as detailed below, for the purposes of easy identification and correct classification of expenditure / income.

(i) General Journal Voucher (GJV) (MCF 7): This journal voucher in the prescribed form is used for journalizing all kinds of income and other adjustments, affecting the income. (ii) Expenses Journal Voucher (EJV) (MCF 18): This journal voucher in the prescribed form is used for the transactions relating to all expenses, such as salary bills, T.A. bills, all other advances supplemental salary bills and bills for other services. (iii) Purchase Journal Voucher (PJV) (MCF 19); This journal voucher in the prescribed form is used for purchase of all materials. (iv) Contractors Journal Voucher (CJV) (MF 20): This journal voucher in the prescribed form is used for the payments through contract bills and other claims by the contractors. (v) Fixed Assets Journal Voucher (FAJV) (MCF 23): This journal voucher in the prescribed form is prepared for assetising the Capital Works (Projects) completed or bought out assets. (15) General Ledger (MCF 34): This will be prepared through computer, based on BRVs, BPVs and Journal Vouchers, by allotting separate folios for individual account heads. At the end of each month, the balances will be struck both under debit and credit sides and the net balance (debit or credit) in each account should be arrived at. Simultaneously, the monthly progressive (cumulative) balances should be computed for purpose of preparing monthly Trial Balances. This means that the balances under various ‘account heads’ should be extracted (struck) at the end of every month. (16) Collection Bank: The council can nominate one or more Banks for collecting Property Tax. Daily collections in the Treasury are to be remitted into this Bank. This is called the Collection Bank. Any amount required for payment will be transferred to the payment Bank. No payments should be entertained in this account.

(17) Link Bank: The term ‘Link Bank’ indicates the Lead bank or Main Bank to which the remittances in the Collection Banks are transferred periodically with the Daily Collection Statements (MCF 9), under ‘standing instructions’ with a coy of this statement to the Accounts Cell along with the receipted remittance chalans. (18) Payment Bank: This indicates the Bank in which sorts of payments are made. Funds required for payments will be transferred from the Collection Bank (LINK BANK) through cheques. (19) Bank Transfer Book (MCF 8): This is meant for noting down ‘transfer of funds’ from one Bank to another, by cheque as the case may be. (20) Inter Fund Transfer Slips (MCF 7): In the administrative expediency, it becomes necessary to transfer amount from one fund account to another, in order to meet out certain inevitable payments as a tactful and prudent financial management. Such transfer of amount is to be make by preparing the Fund Transfer Slip and by making entry in the Bank Transfer Book (MCF 8) and by drawing cheque for the amount, in the fund from which the amount is drawn. Such Transfer is shown against Code no. 3100 – Inter Fund Transfers – in the Trial Balance. (21) Inventory Material Receipts Note (IMRN) (MCF 27): This should be prepared in duplicate in the prescribed form as soon as materials on purchase order are received and accounted for in the Priced Stores Ledger and this should be signed by the Store – Keeper and the Officer In-chare of purchase and stores and one copy enclosed with the bill for being forwarded to the Accounts Cell for payment. (22) Inventory Materials Indent and Issue Note (MCF 28): This should be prepared in Triplicate in the prescribed from signed by the Indenting officer, Store – keeper and the Officer who is having control over the stores. The first copy will be given to the Indenting Officer in support of the issues made from the stores. The second copy will be sent to the Accounts Cell, through the Engineering Branch along with the EJV . CJV duly signed by the Engineer, debiting maintenance head of account / materials cost recoverable account – contractors (3053) and crediting the specific stock account (3001). The third copy will be retained in the stores.

(23) Stores Return Note (SRN) (MCF 30) : The Officer who received materials from stores will utilize them in work. If, in due course of time, he finds that some of the materials received are not required for the work, he will arrange to return them in good condition to the stores by preparing the Stores Return Note (SRN) in triplicate in the prescribed form. Such material shall be entered in the Priced Stores Ledger (MCF 26) on the receipt side and out of two copies of such stores return note, one copy must be sent to the Accounts Cell through the Engineering Branch with EJV duly signed by the Engineer incharge, debiting the specific stock accounting and crediting the maintenance account / materials cost recoverable account – contractors (3053) as the case may be. (24) Priced Stores Ledger (MCF 26): This will be maintained ‘in the stores’ in the prescribed form for receipt, issue and balance of various kinds of stores by allocating various folios. Two ledgers should be maintained, one for Inventory items and another for Non-Inventory items. The book balance of quantity aspect should be physically verified by an appropriate authority authorized for this purpose and certified to subject to taking action for regularization of shortages, if any, and bringing excess, if any, into the Priced Stores Ledger. (25) Projects Ledger (MCF 32): The Projects Ledger will be maintained in the Engineering Branch, fund wise. The instructions for maintenance of this ledger are detailed in para 5 of chapter 9 of this manual. (26) Devolution Fund: (a) Based on the 74th amendment to the Constitution of India, the Govt. ordered to

transfer funds, from the State Revenue, every year to the Local Bodies at the specified rates and to keep this amount separately so as to spend them on the authorized items listed out by the Government from time to time as mentioned below. So, a separate Bank Account should be maintained for the amounts received on quarterly basis (code n. 3064). These amounts should be accounted under Revenue Fund – Income in code No. 1053.

(b) Similarly the authorized items of expenditure should be booked to the respective

Account Heads with prefix ‘DV’ in addition to the departmental prefix like RE, AC etc.

Authorised items of expenditure:

i) Payment of power charges for Street Lights and Water Supply Maintenance.

ii) Payment of maintenance charges for Water Supply Schemes by Tamilnadu Water Supply and Drainage Board and for incurring the expenditure towards water supply maintenance by municipalities including materials such as Bleaching powder, Alum, etc., required for the purpose.

iii) Maintenance of Roads iv) Maintenance of Street Lights v) Maintenance of conversancy and other Public Health Services

including materials such as Lime, Phenyl, Bleaching Powder and other Public Health Materials.

vi) Maintenance of Underground Drainage or Open drainage. vii) Maintenance of other facilities like compost yard, Sewage Farm,

Slaughter House, Maternity centers, Dispensaries, Community centers, Public Toilets etc.

viii) Payment of Pension and other retirement benefits to retired employees for whom payments are made from the Local Bodies Fund.

ix) Payment of salary of staff including sanitary workers. x) Payment of interest on loans obtained from Govt. for Municipal

purposes.

(c) In respect of Water Supply and Drainage Fund Account, in order to spend on the authorized items specified by the Govt. the amount required therefore, should be transferred from Revenue Fund by means of a cheque. The procedure indicated in para (b) above, should be followed here, with suitable modifications thereof, for incurring expenditure using the code nos. with relevant prefix.

(27) Manual Workers General Welfare Fund: (i) Every Municipality has to remit a contribution at the prescribed rate (at

present 0.3% of the total estimated cost of each civil work) to the Manual Worker’s General Welfare Fund maintained by the Tamilnadu Labour Welfare Board, by collecting the amount from the civil engineering contractors in the form of DD at the time of issuing work orders, after finalizing the tenders.

Such contribution is payable by means of DD in the case of departmental execution of civil works also from the Municipal Fund. (ii) In the case of issue of Building Licences, the above contribution should be

calculated on the total value of the estimate of the work to be executed and the amount arranged to be remitted by means of DD payable to the above Fund,

as is being done in respect of development charges due to CMDA/LPA after making necessary entries in the Register of Building Licences.

(iii) The Town Planning Branch and the Engineering Branch of the Municipality

shall maintain separately a Register to record all such DDs and forward them on fortnightly or monthly basis, with a covering letter to the Administrator of this Welfare Fund, (this is maintained under the control of the Commissioner of Labour of the Government of Tamilnadu) with a request to acknowledge their receipt.

(iv) It is made clear that the Contribution made to this welfare fund, should not

pass through the accounts of the Municipality.

(28) Job Chart or Officer Order:

(a) A job chart should be prepared by the Municipal Commissioner, fixing responsibility on the subordinates in the Municipal Office, to prepare correctly the vouchers and journal vouchers to ensure the effective implementation of this Accounting System. This will ensure the involvement and accountability of the staff members working in the Municipality.

(b) This job chart may also be in the form of an office order issued by the Municipal Commissioner fixing responsibility specifically on the subordinates.

11. ACCOUNTING OF MONEYS RECEIVED AND PAID:

(a) It is the primary function that all moneys received and moneys paid are to be accounted for, first, Hitherto, a basic record called ‘CASH BOOK’ was maintained, wherein daily receipts and payments were recorded chronologically for a month. The Cash Book was closed at the end of the month and a statement of reconciliation called ‘Bank Reconciliation Statement’ was prepared to ascertain the various items of differences between the balance as per the cash book and the balance as per eh Bank Pass Book, for subsequent settlement.

(b) In this accounting system, the accounts are to be compiled by the Compilation section of the Accounts cell. There is no need to maintain a cash book manually. In the place of the cash book, two separate documents will be created. One is called ‘Receipts book’ and another, ‘Payments Book’. Therefore, Bank Receipt Vouchers (B.R.V.) are to be prepared and used for preparing the Receipts Book. Similarly Bank Payment Vouchers (B.P.V) are to be prepared and used for preparing the Payments Book.

12. PREPARATION OF BANK RECEIPT VOUCHERS (B.R.V):

(1) (i) (a) At present, collections of property Tax are made through Revenue Assistants by issuing receipts on the spot by carbon process. These

collections are remitted into the Municipal Treasury daily through Chalan Registers.

(b) The property tax, profession tax and water charges are remitted directly by the tax payers, in person, in the municipal office, in cash. The are received by the shroff, by issuing receipts to them (as is being done by the Revenue Assistants on the spot). Such collections are recorded in the chalan register of the respective Revenue Assistants or the Junior Assistants (according to convenience and office order issued for this purpose) and total amount collected, accounted in the names of the Revenue Assistants or by the designation of the Junior Assistants. (c) In the Treasury, besides receiving the above two collections, all other receipts are also received through triplicate chalans. They are all recorded in the CHITTA and the total of daily collections is arrived at. These collections are remitted into the Bank on the next working day. (ii) The cheques received for Property Tax etc are entered in the Register of cheques received. Separate Bank remittance chalans are prepared for each of these cheques and they are deposited at the Bank, for collection and credit.

(iii) Similarly, the amounts received through money orders are handed over to the Treasury after making necessary entries in the Register of money orders. Such cash items are accounted for in the Treasury by triplicate chalans by specific indication as M.O in red ink and also in the CHITTA.

(iv) In some Municipalities, property Tax only is accepted at the designated Bank Branches, from the Tax payers by presenting pre-prepared chalans that were already served on them by the Revenue Assistants or by chalans kept available at the Bank Branches themselves. These Collections are periodically transferred by the Collection Branches to the respective LINK BANK, where the Municipality is maintaining the Collection Account. In such cases, the Collection Branches send a DAILY COLLECTION STATEMENT to the LINK BANK with supporting receipted chalans. After making necessary entries for the amount specified in this statement, in the Bank Account maintained in the LINK BANK, this statement with the chalans is forwarded to the Municipal office.

The above methods of Collection shall also continue in this system of accounting.

(2) The prescribed chalans (MCF 1 & MCF 2) should be used for property

tax collections and collections of all other items of income with appropriate prefix and details.

(3) Bank Receipt Vouchers are to be prepared for, (i) Each day’s remittance into the bank (ii) Each cheque or a bunch of cheque that wre presented to the Bank

through the Register of cheques received (iii) Each daily statement of the collection bank accompanied by a bunch

of Bank remittance chalans, and (iv) Each adjustment bill presented at the Government Treasury for credit

to the Municipality in respect of Duty on Transfer of Property, Entertainment Tax, Magisterial Fines, Toil compensation etc., and all other receipts credited by Other departments.

(4) These Bank receipt vouchers should be serially printed and used for

preparing RECEIPTS BOOK in the Compilation Section of the Accounts Cell.

(5) At the end of each month, or on weekly basis on receipt of Bank Scroll

and the Treasury Pass book / Scroll the credits for all entries as per the Receipts book should be ensured with the Bank Scroll and the Treasury Pass book / Scroll. In this process the details of dishonoured cheques, if any, are known. Such cheques should be sent to the Shroff or the Cashier to make entries in the Register of Dishonoured Cheques (MCF 12) and received back in the Accounts Cell for being retained there. The Accounts Cell shall inform the respective departments, of the dishonoured cheques, with a request to take further action, for collection of the amounts covered by those cheques in CASH with the penalty amount.

13. PREPARATION OF BANK PAYMENT VOUCHERS (BPV):

1.Any claim for payment is to be accompanied by a bill in the prescribed form like paybill, contract bill, refund voucher etc.

2. The above bills for payment should be accompanied by the relevant Journal Vouchers and the Bank Payment Vouchers which should be serially numbered on annual basis in the Accounts Cell while passing the claims for payment and recording the vouchers in Payments Book. The PAYMENTS BOOK will be prepared with reference to BPVs and then only the cheques have to be drawn by the Accounts Cell. At the end of the month, uncashed cheques, if any, are ascertained and appropriate action taken. Wrong debits if any, given by the Bank are brought to its notice for clearing them. It is necessary that an agreement be made with the bank, to send the Bank Scroll on weekly basis, with details for debits and credits. 3. (a) The claims that arise are to be treated as LIABILITIES. So the liabilities are first to be ensured and created and then they are to be

cleared. In order to watch the clearing of liability, the transactions are journalized. (b) Journal vouchers are to be prepared in the prescribed form and accounted for, in their general ledger for preparing the Trial Balance. (c) The compilation section has to make postings daily in the GENERAL LEDGER with reference to the BRVs and BPVs.

14, CODIFICATION OF ACCOUNTS

(1) The account code nos. are given for various items of Income and Expenditure and Assets and Liabilities for all Funds viz., Revenue Fund, Capital Fund, Water Supply and Drainage Fund and Elementary Education Fund. With relevant prefix they are identified by numerical codes with 4 digits as detailed in Volume II of the manual.

(2) The Departments are identified by ALPA CODES as detailed below.

S.No. Names of Departments Alpha Code to be Used

01 REVENUE RE 02 ACCOUNTS CELL AC 03 GENERAL GD 04 COUNCIL CL 05 ENGINEERING EN 06 WORKSHOP EW 07 PARKS AND GARDENS PG 08 STREET LIGHTS SL 09 STORES ST 10 TOWN PLANNING TP 11 PUBLIC HEALTH PH 12 CONSERVANCY CN 13 SOLID WASTE MANAGEMENT SW 14 HOSPITALS & DISPANSARIES HD 15 MATERNITY & CHILD

WELFARE CENTRES MC

16 ANTI-MALARIA SCHEME AM 17 ANTI-FILARIA SCHEME AF 18 I.P.P.V/ FAMILY WELFARE

SCHEME FW

19 ANIMAL HUSBANDARY AH 20 TAXATION & APPEALS

COMMITTEE TC

21 EDUCATION ED

22 ELEMENTARY EDUCATION EE 23 ZONAL OFFICE I ZA 24 ZONAL OFFICE II ZB 25 ZONAL OFFICE III ZC 26 ZONAL OFFICE IV ZD 27 ZONAL OFFICE IV ZE 28 ZONAL OFFICE IV ZF AND SO ON 29 WATER SUPPLY & DRAINAGE WS 30 SEWAGE FARM SF

(3) The transactions – both income and expenditure – are journalized. In other words,

in respect of income, the demands are to be ensured by way of ‘Recoverables’ in order to collect the amounts in time. In the course of the year, any fresh demand that is being raised, will have to be treated as ‘Accrual’ and brought under ‘RECOVERABLES’

(4) In the cases of items of revenue where the collection itself is treated as demand,

there will be no accrual of income. As regards expenditure, liabilities are to be created first and they are to be cleared promptly.

(5) (a) So for journalizing the transactions, JOURNAL VOUCHERS (JVS) are to be

prepared. Further, with a view to identify the class of journal vouchers, they are to be printed in different colours and called as follows:

GENERAL JOURNAL VOUCHER G.J.V. EXPENSES JOURNAL VOUCHER E.J.V. PURCHASE JOURNAL VOUCHER P.J.V. CONTRACTOR JOURNAL VOUCHER C.J.V. FIXED ASSETS JOURNAL VOUCHER F.A.J.V.

In almost all cases of payments, there will be a bill (claim), a journal voucher depending on the nature of transaction and a BPV besides supporting documents. (b) A register called ‘Register for Journal Vouchers’ (MCF 25) for giving serial nos. to each kind of journal vouchers for a financial year by allotting separate folios therefor shall be maintained in the Accounts Cell. 15, COLLECTION OF ACCOUNTING – MAIN OFFICE The Collections made in the Treasury will be entered in the CHITTA (MCF 14). The Shroff will close the CHITTA and prepare an abstract for being sent to the Accounts Cell for compilation of daily receipts, with Bank Receipt Vouchers (B.R.V) duly signed by the Manager.

16. COLLECTION ACCOUNTING AT ZONAL OFFICES: If it is decided to have Zonal offices for all administrative purposes, a collections center should also function at such zonal offices. All Collections of taxes and fees should be made here as is done in the Municipal Treasury and the Accounting System will be the same as indicated above. The collections should be remitted in the nearest authorized Bank Branch after making necessary arrangements with that Branch. The Shroff shall prepare the BRV in the Zonal Office. It will be checked by the Superintendent and put up to the Administrative Officer for approval. On the next working day, the Administrative Officer or in his absence, the Superintendent / Accountant in the office should make arrangements for remittance of the money into the bank. The Receipt book (MCF 4) shall be maintained by the Accountant and his Assistant in the zonal office. 17. CODE NUMBERS FOR BANKS:

1) In this system all banks (Revenue Fund - Collection - LINK Banks and Payment Banks, Devolution Fund, Capital Fund - Receipt Bank and Payment bank, Water supply and drainage fund and EE Fund) are provided with code numbers to enable the Accounts Cell and other departments to identify the banks. The Sub-Treasury / Treasury which is also to be treated as a Bank is provided a Code Number (3065) in view of the fact that assigned revenues / Govt. loans are adjusted and repayments of loans made there. If the Govt. order that there should be more than one P.D. Account in the Treasury, such Accounts may, after opening, be given separate code numbers. However, the T. Deposit account in the Treasury need not be given in a code no. as it is of a trusted nature and does not form a part of the revenue fund or the Capital Fund.

2) The branches of the collection bank are not given code nos. Only the LINK Banks

for them are given code nos.

For eg. The Property Tax is collected through 11 branches of S.B.I. in a Corporation area and LINK Bank of the S.B.I. receives all these collections and gives credit in the Collection Account maintained by it. So, this LINK Bank only is given a code no.

CHAPTER – 02

TAXES & FEES ACCOUNTING

a) PROPERTY TAX ACCOUNTING:

1) GENERAL Property Tax is the main source of income of all Urban Local Bodies. The important aspects that should be taken care of, are detailed below:

i) Annual value of the properties should be rounded off to the next nearest 10 Rupees.

ii) Property tax should be rounded off to the next nearest Rupee. iii) Penalty as fixed by the council should be charged for each dishnoured

cheque and collected. iv) Uniform levy of 5% towards Education Tax is to be charged on the

Property Tax value. v) All adjustments, enhancements, reductions, vacancy remissions etc

should be intimated to the Accounts Cell through serially numbered ‘Property Tax Adjustment Slips (MCF 11)’ kept in a book form with pre-printed serial numbers in order to create ‘Recoverable’ – Assets in the cases of all enhancements and to reduce the ‘Recoverables in other cases’. By this, the maintenance of mutation register is dispensed with.

2) ASSESSMENTS

a) Assessed on the buildings and vacant lands within the Municipal

Limits with reference to the prescribed formula on half-yearly basis. i.e. the taxes demanded and collected for each half hear. So, the demand for each half year has to be raised TWICE in a financial year. i.e. in the months of April & October (GJBS) this demand, is naturally, based on the demand already finalized for the previous half year. The Property Tax consists of:

i) Property Tax for General Purposes ii) Water supply and drainage tax iii) Education tax

Besides an additional levy of library Cess for and on behalf of the local library authority. To account for demands raised at the beginning of every half year, the following accounting entries have to be passed through three GJVS. 1. 3002 Property Tax Recoverable A/c – Current Dr 1001 To Property Tax For General A/c Cr 2. 3013 Water Supply & Drainage Tax Receivable A/c Dr

-Current 1002 Water Supply & Drainage Tax A/c Cr 3. 3016 Education Tax Receivable A/c – Current Dr 1003 Education Tax Cr

a. Under this accounting system, the following documents are to be used.

1. Demand Register. 2. Monthly Assessment Register (monthly list in book form). 3. Properly tax adjusted Slips.(MCF 11) 4. Intimation to the Assesses, for new Assessments (Special notice). 5. Pre-Prepared chalans in respect o remittance by the tax payers

themselves at the bank (MCF 1). 6. Demand collection and Balance statement (DCB). 7. Vacancy Remission statement. 8. Tax reduction on appeal – statement. 9. Change in tax amount on court direction – statement. 10. Statement of Assessments Written – Off. 11. General journal vouchers.

(C) New Assessments: Increase in Assessments.

i. The Revenue Assistants, during their spot verification, should report every month, through the monthly lists of the houses / buildings, the construction of which was completed or which were occupied. These monthly lists are scrutinised by the Revenue Officer with the assistance of the Revenue Inspector and the tax leviable on such houses / buildings assessed. The Commissioner being the authorized officer to levy the tax, approves the above the proposal and issues orders through special notices. Whatever necessary, the Commissioner himself inspects the house / building and then approves the assessment

ii. This exercise has to be done every month in respect of all

wards in the Municipal Limit, for which the monthly lists were submitted by the Revenue Assistants. There Should not be any delay in levy (finalizing assessments) and in bringing the New houses under assessment

iii. The following schedule of time should be strictly followed :

1. Submission of monthly lists by 5th of next month the Revenue Assistant for a month . 2. Inspection and proposal by the 15th

of next month Revenue Officer

3. Formal orders through special notices 30th of next month

on the tax assessed to such new houses / buildings.

iv. As soon as the formal orders are passed and the special notices are, all

the new assessments should be accounted for, by a GJV as indicated in sub para (a) above. In other words GJVs have to be prepared on the 30th itself for all new assessments in a month, got approved by the Revenue Officer or Commissioner / Asst, Commissioner and forwarded to the accounts cell for being recorded in the General Ledger. So, every month there should be a GJV or a set of GJVs for additions or enhancements or reductions.

v. The act empowers the Commissioner to levy property tax with retrospective effect for a total period of six years, i.e. 12 half years. In such cases of retrospective levy of property tax, the tax due is for previous half years also. So, such amount cannot be treated as (income) for the accounting year. However, the collection of such property tax, so levied with retrospective effect, for previous half years has to be watched, by raising the demand in the Arrear Demand Register under the respective half year / year.

vi. Such amounts assessed through the monthly lists, for previous years in

a month should be totaled and three GJVs have to be prepared with the following entries.

3003 Property Tax - Recoverable - Arrears Dr. 1088 To prior year income Cr.

3019 Water Supply & Drainage Tax Receivable Dr.

- Arrears 1088 To prior year income Cr. 3020 Education Tax Receivable - Arrears Dr. 1088 To prior Year Income Cr. (To account for the Property Tax relating to previous years for which demand is raised in the accounting year)

(3) CHANGES IN ASSESSMENT : REDUCTION IN TAX DUE: (i) (a) There will be two occasions to reduce the assessment amount, either on appeal reduction by the Taxation Appeal Committee (TAC) or on the court direction. The changes, so ordered, have to be given effect in the existing Demand Register, by preparing Property Tax adjustment slips (MCF 11) and GJVs there for.

(b) This can be given effect in the current year (Accounting year) by preparing GJVs only by using the relevant adjustments slips (MCF 11). The Journal Entry for such deductions will be 1. 1001 Property Tax – General Purposes A/c Dr. 3002 To Property Tax Recoverable A/c Cr. 2. 1002 Water Supply & Drainage A/c Dr. 3013 Water Supply & Drainage A/c Cr. Receivable - Current 3. 1003 Education Tax A/c Dr. 3016 To Education Tax Receivable A/c - Current Cr. In cases where such reduction of tax has to be given retrospective effect, affecting the previous half years’ ‘Demands’, the following journal entry is to be passed 1. 1088 Prior year Income A/c Dr. 3003 To Property Tax Recoverable A/c Cr. - Arrears 2. 1088 Prior year Income A/c Dr. 3019 To Water Supply & Drainage A/c Cr.

Receivable – Arrears 3. 1088 Prior year Income A/c Dr. 3020 To Education Tax Receivable A/c Cr.

- Arrears (To account for the tax relating to the previous half years reduced now, an appeal or court direction in this accounting year) (ii) Consolidating the demand statement, verification by the Accounts Cell and validating both changed and unchanged particulars of assessments are to be done to finalise the assessment procedure. The Revenue Officer should see that the consolidated demand statement is finalized by the dates prescribed in para (2) (c) (iii). The Commissioner / the P.A. to Commissioner or the Zonal Asst. Commissioner should ensure the above finalisation in time. (iii) Assessees are to be informed through Demand notice (special notices). (iv) Simultaneously pre-prepared chalans in triplicate are to be furnished to the Assessees, through the Revenue Assistants in the municipalities where the system of assesses themselves remitting the tax in to the Bank in vogue.

(v) There may be clear cases of excess collection of petty amounts which could not be adjusted to the next half-year’s tax nor could it be worth refunding to the parties concerned. The excess amount so collected, should be brought under Property Tax – ‘Excess Remittance A/c’ (Account Code No. 1005). By this procedure, the demand register is updated. (4) COLLECTION SYSTEM: Property Tax Collections are to be made by the following methods: 1. Collection by the Revenue Assistants in Cash, as is hitherto done, by carbon process. (in the existing form) 2. Collection is done in the treasury functioning in the Zonal Offices by cash through the office collection register of the Chalan Register. 3. Collection by cash in the Treasury functioning at the Central Office. 4. Collection through cheques / D.Ds obtained by the Revenue Assistants / the Zonal office / Treasury and routed through the Register of Cheques Received. 5. Collection i.e. remittance in cash / cheque / D.D.s by the Assesses themselves at the bank branches with pre prepared chalans where arrangements with the Banks for accepting Property Tax are made. I Property tax - components i. As already explained, the Property Tax Collected comprises of the following Taxes and Cess 1. Property Tax – General Purposes 2. Water Supply & Drainage Tax 3. Education Tax 4. Library Cess So, ‘the property tax – general purposes’ should be accounted for, in the Revenue Fund. The Water Supply & Drainage Tax and Education Tax should necessarily be accounted for, in the Water Supply & Drainage Fund and Education Fund respectively. The Library Cess is to be temporarily accommodated in a ‘Liability Code’ in the Revenue Fund for eventual payment to the LLA by cheque. ii. Collection in cash and remittance by the Revenue Assistants through the Property Tax chalan register in the Municipal Treasury a) The property tax chalan register (MCF 13) is provided with necessary columns for,

Assessment No. Period to which the tax relates, the Amount, ‘Current’, ‘arrear’ and total printed receipt No. issued to the parties, by the Revenue Assistant under carbon

process on this spot. The Revenue Assistants should record the collections in the property tax chalan

register and arrive at the totals properly, before handing over the cash with this chalan register to the Shroff in the Municipal Treasury. The collections through printed receipts as recorded by the Revenue Assistants in the Challan Register shall be checked by the Junior Assistants / Assistant concerned by carefully verifying the Carbon copies of the receipts available in the Receipts Book.

The Shroff, on his part, should, while writing up the chitta and the relevant

income code Nos. total the collections properly and arrive at the grand total collections for the day. b) The above procedure is to be followed in respect of direct remittance ‘in cash’ in the Municipal Treasury by the tax payers and in the treasuries functioning in the Zonal Offices of the Corporation. c) The Property Tax so collected shall be accounted for, with the following entries in the BRV for the day relating to the fund concerned. I. Revenue Fund: 3060 Bank A/c Dr. 3002 To Property Tax Recoverable A/c - Current Cr. 3003 To Property Tax Recoverable A/c - Arrears Cr. 1005 To Property Tax Excess Collection A/c Cr. (To accommodate clear cases of excess collections, if any) 4043 To Library Cess Payable A/c Cr. II. Water Supply & Drainage Fund: 3139 Bank A/c Dr. 3013 Water Supply & Drainage Tax Receivable A/c - Current Cr. 3019 Water Supply & Drainage Tax Receivable A/c - Arrears Cr. III. Education Fund: 3069 Bank A/c Dr.

3016 Education Tax Receivable A/c - Current Cr. 3020 Education Tax Receivable A/c - Arrear Cr. Note: (a) The three bank chalans (pay-in-slips) should be prepared by the shroff for remittance of cash into the bank in three account Nos. for the above three funds. (b) The very purpose of prescribing three separate remittances into the three fund accounts, at the remittance stage itself, is that water supply and drainage tax should be accounted in the water supply and drainage fund account only, daily. Similarly education tax should be accounted in the education fund account only, daily. 1. In the first challan, the Property Tax and other Taxes and fees etc., relating to

the Revenue Fund as per the Chitta will be included.

2. In the Second challan, Water Supply & Drainage Tax as per the Chitta, will be shown. 3. In the third challan the education tax as per the chitta will be remitted to the Education Fund A/c.

iii). Collections through cheques / D.Ds received and entered in the Register of cheques received: a. The cheques / D.Ds will be deposited into the Collection Bank - Revenue Fund after recording the details in the daily cheque collection statement (MCF 10). The cheques will be realized after a reasonable time and given credit in the Bank scroll. So, the other components of the Property Tax are to be accommodated in the Revenue Fund only at the initial stage, by preparing a ‘BRV for cheques’ with the following narration: 3060 Bank A/c Dr. 3002 To Property Tax Recoverable A/c - Current Cr. 3003 To -do- - Arrear Cr. 4041 -1. Water Supply & Drainage Tax Payable A/c - Current Cr. 2. -do- Arrears Cr. 4042 -1. To Education Tax Payable A/c - Current Cr. 2. -do- Arrears Cr. 1005 - To Property Tax Excess Collection A/c Cr. (To accommodate clear cases of excess collections) 4043 - To Library Cess Payable A/c Cr. (To account for the collections made through cheques)

b. At the end of the month, such collections through banks as recorded in the General Ledger should be totalled. It should be ensured that all cheques deposited were realized and the amounts covered by them, given credits in the bank passbook / scroll. The amounts available on the credit side of the accounts in the General Ledger under Code Nos. 4041 – 1& 2 and 4042 – 1& 2 shall be drawn by two separate cheques by preparing a BPV, debiting the amounts to the above two accounts for being credited to the Water Supply & Drainage and Education Funds in Code Nos. WS 3013, 3019, EE 3016 and 3020 respectively before 10th of next month. (iv) Collection Through Bank: (a) (i) In some places, the property tax collections are received from the tax payers direct by the banks with arrangements with such banks. In the Town / City there are branches of the bank. In such cases the main branch only is maintaining the collection account of the Municipality. So, it is called ‘Link Bank’, as other branches of the bank are called, collection bank branches. (ii) All the Collection Bank Branches should prepare and send the Daily Collection Statement in the prescribed form (MCF 9), indicating chronological collection of Property Tax, along with the receipted copies of the remittance chalans to the LINK BANK. In turn, the LINK BANK should send such statements received from the above collection Bank Branches, to the Accounts Cell (Compilation section) of the Main office. In case of no transfer of collection to the LINK BANK, the respective Bank or Banks themselves should send the above mentioned statement to the Accounts cell of the Main office for compilation, verification and validation. Note: 1. Wherever the system of collections in the Zonal Offices is adopted, the Zonal Collection centers should receive all items of revenue except those cases which are not decentralized like Annual leases, rent of buildings and shops etc. In other words, the treasury, functioning the zonal office should receive all items of receipts. 2. The property tax only will be directly remitted by the Tax payers at the authorized Bank Branches. (b) To account for the property tax collections through Bank, in places where arrangements with the bank were made to receive the tax directly from the tax payer through pre-prepared chalan, a BRV has to be prepared by listing out all credits given by the bank with receipted chalans, with the following narration. BRV for bank collections. 3060 Bank Account Dr. 3002 To Property Tax Recoverable A/c – Current Cr. 3003 To Property Tax Recoverable A/c – arrears Cr.

4041 -1. Water Supply & Drainage Tax Payable A/c - Current Cr. 2. -do- Arrears Cr. 4042 -1. Education Tax Payable A/c - Current Cr. 2. Education Tax Payable A/c - Arrears Cr. 1005 - To Property Tax Excess Collection A/c Cr. (To accommodate clear cases of excess collections, if any) 4043 - To Library Cess Payable A/c Cr. (being the collections made by the bank, directly from the tax payers) Note: Wherever the period to which the payment of Property Tax could not be identified, such amount should be credited initially to the ‘the Property Tax Collection Suspense Account’, in Code 3004 instead of classifying it as excess collection amount, for subsequent settlement on verification of records. In such cases, after ascertaining the particulars, a G.J.V. has to be prepared to bring the amount to Property Tax account. The journal entry should be, 3004 Property Tax Collection Suspense A/c Dr. 3002/3003 To Property Tax Recoverable A/c Current / Arrears Cr. 4041 - 1. Water Supply & Drainage Tax payable A/c – Current Cr. - 2. -do- - Arrears Cr. 4042 -1. Education Tax Payable A/c - Current Cr. 2. Education Tax Payable A/c - Arrears Cr. 4043 - Library Cess Payable A/c Cr. (To account for the tax for which the details of Assessment No. and the half year were not available earlier but now brought to account on getting the details). (c) The water supply & drainage Tax part of total Tax collection, will be passed on to the Water Supply and Drainage Fund Account by issue of cheque every month, by debiting to Code No. 4041 after preparing a BPV before 10th of next month. (d) The Education Tax part of total Tax collection, will be passed onto the Education Fund Account by issue of cheque every month by debiting to Code No. 4042 after preparing a BPV before 10th of next month. (v) To account for Library cess collected and payment to LLA, the following journal entries should be passed. 4043 Library Cess payable Account Dr.

3066 To Bank Account Cr. (vi) Collection of Property Tax, rent etc., by adjustment in the Treasury (a) Most of the State Government Departments pay the Property Tax, by presenting their contingent bills in the Treasury by debiting the expenditure to their departmental head of account and crediting the Property Tax to the Municipal Account, by enclosing a triplicate chain. (b) On receipt of remittance chalan (triplicate copy) and / or receipt of details of credit from the concerned Government Department or on receipt of Treasury Scroll, BRV has to be prepared and entry made in the Receipts Book. (c) So far as the Corporation is concerned, in the absence of a separate treasury / sub – treasury account maintained in the name of the Zonal office, where the collections of Property Tax or certain other Non-Tax items such as rent for occupation of the Corporation Buildings by the Government Buildings are attended to, the main office which alone keeps account in the Treasury, shall initimate the details of credit for such items to the concerned Zonal Officers so as to enable the Zonal Officers to prepare BRVs for such collections and for bringing into account. (5) ACCOUNTING OF DISHONOURED CHEQUES;

1. When a cheque is given by the tax payer it is entered in the Register of cheques received and then deposited in to the bank. When it is found dishonoured, the Collection Bank should stamp ‘Dishonoured’ vide Advice No. ________ across the cheques and return it to the Municipal Office / Zonal Office concerned. The Bank should also prepare a statement of ‘Dishonoured Cheques’ every fortnight with the following particulars if an agreement with the collection bank is entered into as such.

a) Tax payer’s Assessment number, Division number and Bill number b) Cheque number and date c) Bank on which it is drawn d) Amount e) Reasons for Dishonour f) Reference to Sl.No. in the Register of Cheques received (In case this

statement is received from the Bank, this item (f) should be noted in the municipal office).

2. On receipt of the above statement from the Collection Bank, the compilation

section should check the entries in the Statement of Dishonoured cheques with the individual cheques, enter them in the Register of dishonoured cheques (MCF 12) and then forward the statement to the Revenue branch / Zonal office where the

demand register is maintained and the collections are posted, to take further action, to collect the amount in CASH only.

3. As the dishonoured cheque amounts do not find place in the Bank branch daily

collection statement, in respect of cheques presented directly by the parties at the Bank, no accounting entries are to be passed. (Included in the daily collection statement only, on realization of cheques)

Note: The commissioner should request the bank in writing not to give credit to the municipal account, unless and until the cheque is realized and credited.

4. A Bank payment voucher has to be prepared in triplicate with specific endorsement ‘Not Payable’ with the following entries for each of the cheques dishonoured with clear indication on the face ‘BPV for Dishonoured cheques’ and by giving cross reference of Sl. No. of the Register of Dishonoured Cheques.

3002/3003 To Property Tax Recoverable A/c Current / Arrears Dr.

4041 - 1. Water Supply & Drainage Tax payable A/c - Current Dr. - 2. -do- - Arrears Dr.

4042 -1. Education Tax Payable A/c - Current Dr.

2. Education Tax Payable A/c - Arrears Dr.

4043 - Library Cess Payable A/c Dr. To Bank A/c Cr.

It becomes necessary for the simple reason that the amounts covered by such dishonoured cheques have already been brought to account in the Receipts Book as income, through BRV for cheque collections. The credit taken in the Receipts Book for such cheques initially, could not be set right by means of GJV as no journal entries will find place in the Receipts Book and Payments Book which will reflect only the transaction with the Bank. Hence, the BPV is necessary though no payment is involved. 5. After approval of BPV, the Sl. No. in the Register of dishonoured cheques should

be noted on the back of those cheques and then the cheques filed serially. They should not be returned to the party: but filed in the Accounts Cell. It should be retained in the Accounts Cell, till the amount covered by each cheque is collected in cash or by D.d. with a penalty in each case as fixed by the council. Then, on ascertaining the cash collection, they should be handed over to the parties through the departments concerned after obtaining acknowledgements in the Register of cheques received and making entries in the Register of dishonoured Cheques (MCF 12). The Sl. No. should also be noted against the original entries for

collection of such cheques in the Register of Cheques received and simultaneously posting details of BPV under the debit shown in the Receipts Book.

6. The same procedure is applicable for similar dishonoured cheques under other

account heads of Income.

7. The Bank debit towards service charges for dishonoured cheques and shows the same in the Bank Scroll. The amount so charged has to be unnecessarily met by the Municipality.

When the dishonoured cheques are received and action taken to collect the amount covered by the cheque, IN CASH, the following two items should also be collected in cash from the party whose cheque was returned dishonoured. 1. Bank charges as debited by the Bank 2. Penalty as decided by the Council Both these items, when collected should be accounted for, in Code No. 1055 - ‘Penalty and Bank Charges for dishonoured cheques’

8. To account for the collection of Bank charges and penalty charges towards

dishonoured cheques, the following journal entry is to be made.

3060 Bank Account Dr. 1055 To Penalty and Bank Charges for Dishonoured Cheque A/c Cr.

(6) ACCOUNTING FOR PROPERTY TAX ADJUSTMENTS ENHANCEMENTS, REDUCTIONS, NEW ASSIGNMENTS, VACANCY REMISSIONS ETC.

1. On arriving at the total amount to be adjusted due to increase or decrease on account of enhancement, reduction, vacancy remission etc. Property Tax adjustment slips (MCF 11) with GJV in duplicate is to be prepared for the total amount of adjustments, every month by the Revenue Officer. Then the G.J.V. should be forwarded to the Accounts Cell, for accounting. One copy of the G.J.V. is to be returned to the Revenue Department for making necessary additions in respect of new assessments / enhancements and for revising the demand in respect of reductions in the demand register.

2. To account for monthly Property Tax enhancement / new Assessment, the journal

entry would be.

1. 3002 Property Tax Recoverable A/c - Current Dr.

3003 Property Tax Recoverable A/c - Arrears Dr. 1001 To Property Tax General Purposes A/c Cr.

1008 To prior year income Cr.

2. 4041 – 1/2 Water Supply & Drainage Tax Receivable Tax A/c Dr. Current / Arrear 1002 Water Supply & Drainage A/c Cr. 1008 Priory Year Income Cr. 3. 4042 - 1/2 Education Tax Receivable A/c Current /Arrear Dr. 1003 Education Tax A/c Cr.

1088 Priory Year Income Cr. (Being the tax increased on the orders of the Commissioner in the monthly lists)

3. To account for reduction of Tax, and for vacancy remission, the Journal entries

should be ‘passed reversely’ to the entries for enhancement as detailed above with an additional debit to code No. 2021 vacancy remission account

(7) Accounting for Property Tax Demand and Collection for Government Properties:

1. The Accounting procedure in respect of Property Tax / Service chares levy on Central and State Government properties is very similar to the one demanded from the Tax payer.

2. The complete particulars of half-yearly demands for all Divisions should be

included in one list and only the total for all divisions included in the GJV for the raising the demand.

(8) Settlement of Demand: The demands for property tax should be settled at the beginning of every half year and certified to the Revenue Officer / Commissioner / Asst. Commissioner. It is equally important to indicate that the preparation of annual demand, collection and balance statement for all revenue items is a pre-requisite for the compilation of accounts, as the account figures of all revenue items should be in agreement with the figures in the statement. b) OTHER TAXES, FEES, LEASES AND OTHER INCOME – ACCOUNTING

Profession Tax, Trade licence fees, Licence fees under P.F.A. Act, Parking fees, Market fees, Bus Stand fees, Lease / Rent on shopping complex, Fees for advertising on Lamp posts, Encroachment fees etc, where the demand is finalized at the end of the previous year or at the beginning of the financial year (Accounting year)

1. (a) In cases of certain items of income, where the demand for the year is finalized as on 1st April, the demand accounts become recoverable, in this accounting year. So, the demand register, generally called MDR, should be written up for the year before 15th April and the amount under each head of revenue items that is to be demanded and collected has to be treated as ‘Income’ for the year. Necessary General Journal Vouchers are to be prepared for them and forwarded to the Account cell for Accounting. (b) In respect of demands that are raised during the course of the year viz.,

(i) New trades commenced for which Licence fees are demandable. (ii) New shopping complex completed and leased out (iii) New area brought under ‘Levy of Parking Fees’ (iv) New Lamp posts added for advertising (v) New encroachments detected and unobjectionable encroachments

brought under Levy of Fees, fresh demands for the past of the year have to be raised and the amount calculated in the above cases.

2. (a) The GJVs are to be prepared by the departments concerned and forwarded

to the Accounts Cell for compilation of ‘Asset Items’ as indicated below.

(i) Profession Tax – recoverable (ii) Trade Licence fees – recoverable (iii) Licence fees under P.F.A. Act – recoverable (iv) Parking fees - recoverable (v) Market fees - recoverable (vi) Bus stand fees – recoverable (vii) Lease / Rent on shopping complex - recoverable (viii) Fees for advertising in Lamp posts recoverable. Encroachment fees

– recoverable etc.

(b) The above GJVs should be given effect to, by noting the amounts in the General Ledger by the Accounts cell and the other copies therefore will be sent back to the concerned departments for watching periodical collection.

(c) The following journal entries have to be passed as shown below in respect of all such items. (i) 3005 Profession Tax Recoverable Account – current Dr. 1006 To Profession Tax A/c Cr.

(ii) 3009 Licence fees Recoverable A/c – current Dr. 1017 To Trade Licence Fees A/c Cr. (iii) 3011 - Lease amount recoverable current Dr. 1022 - Market Fees (Daily Market) Annual Lease Cr. 3011 - Lease amount recoverable current Dr. 1023 - Market Fees (Weekly Market) Annual Lease Cr. 3011 - Lease amount recoverable current Dr. 1028 - Fees for bays in bus stand Cr. (d) Collection: The prescribed remittance chalans (MCF 2) should be used for collecting the amounts under the above Revenue items and the amounts accounted for under the respective Income code Nos. The code Nos. as given in the manual volume – II should be used while preparing the chalans for remittance of money, more specifically for ‘Current’ and for ‘Arrears’.

3. Income Collected and Received from Other Agencies

(a) In respect of following items of income viz

(1) Duty on Transfer of Property (2) Entertainment Tax (3) Assignment of Sales Tax (4) Magisterial fines and (5) Grant, Compensation etc, given by the State Government, the

demands could not be ascertained in advance. Hence the actual receipts are taken as income and no journal vouchers are to be prepared for raising demand in these cases. The receipts are to be accounted by BRVs only.

(b) The sanction orders are received for the income items mentioned inSl. No.s (1),(2), (3) and (5). So, a BRV is to be prepared based on the sanction order and the amount accounted for in the Receipts book. The actual credit in the Bank or in the Govt. , Treasury watched through the Bank reconciliation Statement, if the amount is not credited in the Bank or in the Govt. Treasury within the month in which it is accounted. The accounting entry will be Bank A/c Dr. 1046 To Duty on transfer of Property Cr. ad so on

(To account for the duty on transfer of property sanctioned by the Collector) 4. Items of Income – Variable:

(i) In respect of items of income which have no fixed demands and are variable in nature, the actual receipts in a particular year should be taken as INCOME.

(ii) Some of these items are given below:

(1) Building Licence fees (2) Fees for extracts of Birth & Death registration register (3) Rental collections from Kalyana Mandapams (4) Miscellaneous Income (5) Grants, Subsidies, Contributions (6) Sale of rubbish (7) Avenue Receipts (8) Hire Charges for Road Rollers (9) Charges for demolition of unauthorized construction (10) Road formation charges.

Relevant Registers like Miscellaneous Demand Register in the Revenue Department, the MDR for Grants in the Accounts cell, other Registers for the Income mentioned above, etc., should be continued to be maintained in the respective Departments to account for and to assess the total collections in a year.

(iii) All the above items are collected in the Municipal Treasury through the chalans (MCF 2). These items are recorded in the Chitta Maintained by the Shroff who receives the cash in the Municipal Treasury, and then accounted in the Receipts Book through the BRV for the day.

The accounting treatment will be Bank A/c Dr. 1019 To Building Licence Fees Cr. and so on. (To account for the licence fees and other items of Revenue collected in the Municipal Treasury).

5. Advance Collection of Licence Fees:

(i) In the case of trade licence fees, the amounts are collected in advance of the commencement of the financial year. At present, they are collected in the months of February & March and accounted for under the head ‘Deposit’ for accounting purpose. The amount so kept in the deposit is transferred after the

commencement of the financial year by a transfer entry voucher (T.E.Vr.)

(ii) In this System, the amount of Licence Fees collected in a year is construed as due for the year in which it is collected, though the grant of Licences is for the next year. The issue of Licences by the Municipality in advance of the commencement of the year is a pre-requisite to the conduct of certain trades. As such, the collection made in the year earlier to the year to which the Licences pertain, need not be considered as advance collection, and it could be taken as income of the year in which it is collected.

(iii) The licence fees are collected in the Municipal Treasury thro Chalans (MCF 2). Hence they are recorded in the CHITTA and included in the daily collections and then accounted for, in the Receipts Book through a B.R.V.

CHAPTER – 03

CASH AND BANK ACCOUNTING (1) The Cash and Bank Accounting covers the following types of transactions in all Urban Local Bodies.

1. Receipt of cash directly / through money orders / cheques / demand drafts etc. at Treasury.

2. Remittance of those receipts into Bank 3. Accounting of such receipts in the Accounts cell and other departments to which

they relate 4. Accounting of dishonoured cheques 5. Accounting of payments through cheques 6. Debit Advices received from Bank (other than transfers and dishonoured cheques) 7. Credit Advices received from Bank (other than transfers and reversals of issued

cheques) 8. Inter Fund Transfer 9. Preparation of monthly Bank reconciliation statement 10. Investment in and renewal of Fixed Deposits 11. Receipt of interest and accrual of interest on deposits 12. Withdrawal and Fore-closure of Fixed Deposits. 13. Reconciliation of outstanding deposits. 14. Accounting of Staff advances and other advances. 15. Receipt and Repayment of Deposit

16. Reconciliation of pending advances. (2) Accounts in the Banks: a) i) Separate Bank Account should be maintained for revenue receipts. In cases where the Municipality is collecting the Property Tax through various Banks like State Bank of India, Indian Bank, Indian Overseas Bank, Canara bank or Co-operative Bank etc., only Receipt (collection) Account has to be maintained. This Bank is called ‘Collection Bank’ and the account head under ‘Assets’ will be ‘Collection Account….. Bank’ The balances in such Collection Account will be periodically transferred (as agreed upon) to the Payment Account on the centralized Bank through cheques. ii) Similarly, there should be a separate Payment Account in one or two Banks authorized in this behalf. This Bank is called ‘Payment Bank’ and the account head under ‘Assets’ will be ‘Payment Account ….. Bank’. This can even be maintained separately in one or two Banks where the Collection Account is maintained. To make it more clear, if both the accounts are maintained in one Bank, there will be one Account No. for receipts and another distinct account No. for payments. If there are two Banks authorized for this purpose, there will be four Accounts i.e. two separate Accounts, for receipts and payments in one Bank and similar two Accounts in another Bank. However, it is not necessary to maintain two separate Payment Bank Accounts; but it is let to the convenience and necessity of the Municipality, to decide on the number of Payment Banks and on the frequency of the operations in each Bank. b) In respect of Capital Fund it is enough if a separate Bank Account both for receipts and payments is maintained in order to ensure that Government grants and loans received for projects, schemes and capital works and amounts received for Deposit works are directly accounted and not diverted for meeting revenue expenditure. c) Similar Bank Accounts have to be maintained separately for Water Supply & Drainage Fund Account and Elementary Education Fund Account and also for Devolution Fund and for any other schemes as per the conditions and specific instructions of the funding agencies / the Government. (3) Receipt of Cash / Cheque at Bank: (page 53) (a) In certain Municipalities / Corporations arrangements have been made with selected Banks to accept the Property Tax remitted by the Tax Payers direct, by presenting the pre prepared triplicate chalans (MCF ) for Property Tax only. In such cases, as explained elsewhere in this Manual, the collections accepted in the Collection Bank branches are transferred to the LINK BANK, with the Daily Collection Statement and the copies of the receipted chalans marked for the Municipality / Corporation. The LINK BANK, after giving a single credit entry for the total amount specified in the Daily Collection Statement, will forward them to the Accounts Cell. Regarding direct remittances by the Tax Payers in the Link Bank itself, the same procedure should be followed. The receipt

and accounting of the Daily Collection Statement with the receipted chalans will be watched by the Cashier / Accountant / Accounts Officer. (b) After due verification, a BRV will be prepared by the Cashier for the amount covered in the statement mentioned above and sent to the Accounts Cell over the signature of the Manager for the amount being taken as receipt in the Receipts Book. The receipted chalans will then, be forwarded to the Revenue Department by the Cashier for giving postings in the Property Tax Demand /Arrear Demand Register in respect of the Tax assessment nos. covered in those receipted chalans, after recording them in the respective Property Tax Chalan Register. (c) The supporting document for preparing the BRV referred to above, is the statement of Collection given by the Bank with the receipted chalans (MCF 1 in the case of Property Tax). Generally, the banks with whom agreement is signed for the purpose of receiving the property tax collection directly from the tax payers, retain the money so collected with them for about 10 days for purpose of their bank balance and they do not claim any ‘collection charges’ for such service rendered by them. So, the duration of the statement referred to above as also the preparation of BRV therefore, will be ten days. (d) In respect of cheques presented by the Tax Payers directly at the bank with the chalan (MCF 1) for remittance of Property Tax, the credits are provided by the Bank, only after realization of cheques. Hence there will be no case of dishonoured cheques for which no treatment is required inaccounts. Note: The Commissioner should request the Bank in writing not to give Credit to the Municipal Account, unless and until the cheque is realized and credited. (4) Receipt of Cash at Treasury: 1. The system of collecting Property Tax in cash through Revenue Assistants by carbon process is continued. Every day, the Revenue Assistants will enter the details of collection in the Chalan Register, (MCF 13), and after totaling and getting them checked by the Assistant in the Revenue Department with this signature, remit the amount to the Shroff at the Treasury. The Chalan Register is to be maintained with perforated sheets. The shroff, on receipt of money, will affix his signature with seal both in the chalan register and the perforated sheet which should be torn off for being enclosed to the Daily Treasury collection statement (Chitta abstract MCF 14 A & B) to be sent to the Accounts cell (compilation section) daily. So far as collections made departmentally (Market fees, Pay & Use Latrine fees, Bus stand fees, parking fees etc., collections made in information centers in office for sale of forms) are concerned, only statements of receipts with code Nos. will be prepared in duplicate by those concerned and got them signed after check by the Manager before remittance in the treasury.

The shroff, on receipt of money, will affix his signature with seal in both the statements, retaining one for being enclosed to the chitta abstrat MCF 14 A & B). Note: (1) The triplicate chalans should not be used for collections made departmentally. (2) The statements of receipts for departmental collections should bear only the Sl. No. of the day in the Chitta and not the Sl. No. of the triplicate challan, as the triplicte chalans are meant for remittance by the third parties ony. 2. The shroff shall receive money through triplicate chalans from the Tax payers and the public by assigning Sl. Nos. on yearly basis commencing from 1st April. The chalans will be signed by the cashier and the Admn. Officer / manager. (3) All cash received from Revenue Assistants / Departmental Staff and Tax payers should be entered in the chitta (MCF 14). At the end of the day, the collections should be totaled and tallied with cash on hand. The existing double lock system in the Treasury and remittance into Bank next working day will continue. The abstract, otherwise called, ‘Daily Treasury Collection Statement’ (MCF 14 a& b) will be forwarded to the Accounts cell with the Bank Receipt Voucher supported by receipted chalans, which (Accounts Cell), in turn, after verification of the statement and the BRV will make postings in the Receipts Book, retaining the copies of receipted chalans, there itself. It must be noted that the retention of receipted chalans in the case of remittance of Property Tax directly in the Bank, by the Tax Payers, will not arise, as one copy of each of the chalans is retained by the Banks themselves. Simultaneously one copy of receipted chalan must be sent to the concerned department, by the Accounts Cell under proper acknowledgement. In the above process, no copies of receipted chalans should be retained in the Treasury. (5) Collection through cheques and Accounting them: When a cheque is received, it should be entered in the Register of cheques received, kept under the control of the Manager / Admn. Officer. Generally, all cheques are received with covering letters indicating therein the required details for remittance. After checking the correctness of such details with the department concerned, the cheques will be handed over to the shroff / cashier, who will prepare pay-slip for being deposited into Bank and a daily cheque collection statement in duplicate (MCF 10) will be prepared by the shroff duly signed by the Manager / Admn. Officer. One copy of the statement will be forwarded with Bank Receipt Voucher to the Accounts cell for recording the receipts in the Receipts Book. (6) Accounting of Receipts in the Accounts Cell: (a) The following documents will be available on daily basis in the Accounts cell as far as receipts / cash are concerned, with Bank Receipt Vouchers.

1. Perforated copy of chalan register (MCF 13)

(for Taxes collected through Revenue Assistants and statements of Receipts for departmental collections)

2. Abstract of chitta (MCF 14 a & b) 3. Copies of Receipted Chalans (MCF 1 & 2) 4. Daily Cheques Collection statement (MCF 10) with the Bank Receipt

Voucher. (b) In respect of collections made at collection centers (zonal offices) and remittance direct to Bank, the system prescribed for Treasury in the Central Office as enumerated above should be followed by the Zonal Officers. The BRVs have to be prepared for recording the transactions at collection centers (zonal offices) as detailed above and the Sl. Nos. in them should have prefix as ZA, ZB, so as to identify their place of origin. (c) In respect of direct remittance by Tax payers at various Bank branches, the collection statement, along with the chalans, for which single credit entry is given by the Link Bank in the Bank scroll, should be treated as chitta statement, based on which BRV has to be prepared by the Cashier and sent to the Accounts Cell (compilation section). Regarding direct remittances by the Tax payers in the Link Bank itself, the above procedure should be followed. (7) Fixed Deposits: The entries to be passed to account for the following items are given in the manual volume – II with the required descriptions.

a) i. Cash received at treasury and remitted into Bank. ii. Cheques / DDs received and deposited into the Bank.

b) Interest / Bank charges debited by the Bank (Debit Advices). c) Interest received from the Bank (Credit Advices)

d) Transfer of amount from one bank to another by issue of cheques by

simultaneously making entries in the Bank Transfer Book

e) Investments in Fixed Deposits: i) Interest received on Fixed Deposit ii) Withdrawal of Fixed Deposit

(By making necessary entries in the investment register) 1. To account for investment in fixed deposits 3070 Fixed Deposit Account Dr.

To Bank Account Cr. 2. To account for interest accrued on Fixed Deposits 3025 Interest accrued on Fixed Deposit A/c Dr. 1067. To interest on Fixed Deposit A/c Cr. 3. To account for interest actually received on Fixed Deposit from Bank Bank Account Dr. 3025 Interest accrued on Fixed Deposit A/c Cr. 4. To account for withdrawal of Fixed Deposit on maturity or pre-mature withdrawal Bank Account Dr. 3070. To Fixed Deposit Account Cr. Necessary entries have to be made in the Investment Register by allotting separate folios for each Fund, for all such transactions. (8) Stale Cheques: (a) In respect of cancellation of cheques and time-barred cheques, the journal entries need not be reversed. Fresh cheques shall be issued against cancelled cheques wherever necessary duly obtaining foils of the cheques cancelled and making necessary endorsements as such and time-barred cheques could be re-validated without issuing fresh cheques. In other words, in those cases, the existing procedure will continue. (b) In the case of stale cheques, a separate account should be opened to which all stale cheques should be regularly transferred.

CHAPTER – 04

STAFF SALARIES AND RECOVERIES ACOUNTING

(a) SALARIES ACCOUNTING 1.Monthly Salary Bills :

(i) The general principal is that all claims should be settled after observing formalities with regard to their bonafide and the correctness of the bills presented by preparing the prescribed journal vouchers and bank payment vouchers along with the bills that are passed for payment, by the authorised officer. In other words, a liability should be created first on each claim, by preparing a journal voucher ( EJV / CJV / PJV).

(ii) The present system of preparing the pay bills by respective departments and approving them by the Heads of Departments like, Commissioner / Manager

(under delegation), Accounts officer, Municipal Health Officer / Sanitary Officer, Municipal Engineer, Town Planning Officer etc. shall continue.

(iii) In this system, each department should maintain office copies of pay bills

only in a bound volume which will be used for one or more year in each department . Every month, as soon as the pay bill, in each department, is prepared with reference to the sanctioned strength, previous month’s salary bill, Advances recoverable register and water register for recovering P.F advance and other advances, an abstract with the relevant details should be prepared in the prescribed form – Abstract of Salary bill (MCF 16).

(iv) The office copy of the pay bill with the abstract of the salary bill and an

EJV Should be forwarded to the Accounts cell, for check. After Check regarding the correctness of the debit & credit, the office copy should be forwarded to the Assistants maintaining the P. Accounts and Advance Accounts for giving postings in the P.F Abstract register / ledger, Advances recoverable register etc. and for ensuring the corrections of deductions made.

(v) After the above check and postings are over, the Accountant / Accounts

officer shall make pass order on the bill (Abstract as well as office copy of the bill) for the amount approved for payment and approve the EJB by debiting ‘Salaries Accounts’ under the relevant account codes and crediting various Staff Advance accounts, and various recovery accounts under relevant heads of Assets and Liabilities. The income tax, wherever liable, should be deducted at source (i.e. salary bill itself).

The journal entry will be as follows: (2001 – 2011) Salaries Account Dr. Note: The code numbers (2000 – 2011) are common to the salaries bills of all Departments. When the salaries bills are prepared, the respective departmental prefix should be given to the above code Nos. 3028 To Festival Advance Account Cr. 3045 To Marriage Advance Account Cr. 3027 To House Building Advance A/c Cr. 4021 To P.F. Recoveries A/c Cr.

(1) Subscription (2) Recovery of temporary advance

4022 To Co-operative Society Loan recovery A/c Cr. 4023 To RD Recoveries A/c Cr. 4029 To I.T. deducted at source (TDS) Cr.

4030 To Bank Loan recovery A/c Cr. 4044 To Salaries payable A/c (net amount) Cr. The above are only sample entries.

(vi) Thus, accounting of salaries bills is ensured. The credit entries wil find place against respective code Nos. under Revenue Fund. Then, payments against these entries have to be commenced in the first week of every month, to clear the liabilities, except Salaries Payable Account. If it is possible, to clear these liabilities on the ‘Pay day’ itself, BPVs may be prepared and cheques drawn for these amounts.

(vii) A Bank payment voucher is prepared in the Accounts Cell and cheques

drawn by debiting ‘Salaries Payable A/c’ and crediting ‘Bank A/c’ on the Pay Day to disburse the net amount of salaries.

The journal entry will be as follows: 4044. Salaries Payable A/c Dr. To Bank Account Cr. (Note: For all payments BPV shall be prepared in the Accounts Cell)

(viii) All the amounts available under ‘credit’ have to be adjusted in the cases of advances paid and those credited to the Liabilities paid to the respective accounts by means of cheques by preparing a BPV as mentioned in sub para (vi) above. It should be noted that the gross salaries are booked on the last working day of the month as the salary is paid on that day.

(ix) So, as regards adjustments of employees’ personal advances, the

respective advance accounts are credited as and when the EJV is approved. In other words, the adjustment of these personal advances (recovered) is done simultaneously, when the gross salary is accounted for, on the last working day, in view of the fact that no Payment is involved in them.

(x) The interest on ‘Interest-bearing advances’ recovered is credited

under ‘Code No. 3047’ interest on staff advances recoverable account.

(xi) As mentioned earlier, as the salaries are paid on the last working day of the month, cheques are drawn for the net amount only (Salaries Payable Account). After the month is over, i.e. in the first week of the next month, all credit entries in the EJV prepared earlier, should be

examined and separate BPVs prepared to clear all the Outside Payments (like RD, PF, Society, Bank loan etc.) by drawing cheques.

The journal entries in the BPV will be as follows; 4021 P.F. recoveries A/c Dr. To Bank A/c Cr. And so on for each item

II. Supplemental Bills:

(a) At present, the claims by supplemental pay bills for surrender leave salary, leave salary, arrears of pay and allowances etc. are settled by preparing detailed bills. The system applicable to the monthly pay bills should be followed.

(b) Based on the abstract of salary bill in MCF 16, an Expense Journal Voucher (EJV) should be prepared. Then payment is made by preparing a BPV and issuing a cheque.

The journal entries will be the same as for monthly pay bills.

III. Personal Advances – Payment and Recovery:

(a) Payment:

(i) The accounting procedure for advances and the recoveries is detailed under ‘Advances’ in the chapter on ‘Deposits and Advances Accounting’. The payment of advances to the employees like Festival Advance, Khadi advance, Handloom advance, Advance of pay on Transfer, Advance of Transfer T.A., Tour advance, etc. which are personal to the employees, for which applications are received, is processed by the departments / sections dealing with pay bills.

(ii) When the applications for sanctioning Festival advance, Handloom

advance, Advance of pay on Transfer, Advance of Transfer T.A., Tour advance etc, which are interest free and conveyance advance, Marriage advance, House Building advance etc. which are interest bearing, are received, they are processed and santion accorded by issuing proceedings. A claim is made through a BPV enclosing a copy of sanction order and giving details in the BPV itself. No ournal voucher is necessary for paying advance.

(iii) The following journal entries should be made:

e.g. 3028 Festival Advance A/c Dr. To Bank A/c Cr.

(iv) A cheque for the advance is drawn and the amount paid, after making

entry in the Advance Recoverable Register at the time of passing the claim itself.

(b) Recovery: When the F.A. etc. is recovered through bills, the following journal entry only is made as detailed under the main bill. As no payment is involved, no BPV is prepared. The journal entry for the recovery will be:- 2001-2011. Salaries A/C Dr. 3028 To F.A. A/C Cr. ….etc. (c) Remittance of FA etc. in cash:

(i) There may be instances where the employees remit F.A. etc. in cash.

In such cases, the cash is remitted through chalans with code No. etc. in the Treasury. This chalan is included in the daily collection at the Treasury and accounted for, through BRV prepared for the day and reflected in the Receipts book. The Assistant in charge of Advance in the Accounts section should, with reference to the copy of the receipted chalan given to him, give postings in red ink, for this credit in the Advance Recoverable Register, maintained by him.

(ii) By the above two methods, the timely recovery of advances is to be watched

(d) Corporations – Salary Bills – Recoveries made in the Salary Bills – Accounting System:

(1) In the Municipal Corporations, in the main office, the

Commissioner or the Assistant Commissioner (Accounts) is the drawing officer. In the zonal offices, the Assistant Commissioners concerned are the drawing officers. Major expenditure is on the salary bills. The funds required for expenditure in the zonal offices are received from the main office only with reference to the “financial forecast” Sent by the Assistant Commissioner to the commissioner every fortnight.

(2) The following accounts relating to the staff members in the main office and the Zonal offices are maintained in the main office only. 1. Provident Fund A/C. 2. Special Provident Fund A/C. 3. Group Insurance Scheme A/C.

4. Health Fund A/C. 5. House Building Advance A/C. 6. Marriage Advance A/C.

7. Advance paid to the Staff Members working in the Zonal Offices but such advance was paid in main office or other

zonal offices; but the instalments recovered from their pay bill sin zones in which at present they are working.

So, it is the responsibility of the main office i.e. Assistant Commissioner (Accounts), to maintain properly the above accounts. In order to keep proper accounts, the main office, Assistant Commissioners in the Zonal Offices should, promptly, intimate the main office of the amounts recovered from the Salary bills & the Supplementary bills by the way of journal Voucher every month.

(3) As soon as the monthly salary bills are drawn the Zonal Offices, the amount deducted in the salary bill, relating to the Accounts maintained in the main office, should be listed out in a statement to be prepared in triplicate. An EJV may also be prepared in triplicate.

The EJV prepared in the Zonal Office should contain the following Entries. 4021 Provident Fund deductions Dr. 4025 Special Provident Fund Dr. 4026 Group Insurance Scheme Dr. 4027 House Building Advance by the C.M.A. / Main Office Dr. 4033 Health Fund Deductions Dr. 3028 Festival Advance required Dr. 4077 To Inter Zonal Transfer A/c – Main Office Cr. Note: For all the above recoveries there are credit balances in the general ledger of the Zonal Offices. As they are now transferred to the main office, those accounts are now debited by crediting to code no. 4077.

(4) Two copies of the above EJV with a statement prepared should be forwarded to the main office

(5) As regards Accounting the amounts so recovered in the Zonal

Offices, the following procedure has to be followed in the main office.

(6) On receipt in the main office the Assistant Commissioner

(Accounts) shall arrange for preparing an EJV in duplicate for the amounts so transferred from the Zonal Offices with a statement and EJV in duplicate, the following journal entry.

4077 Inter Zonal transfer Account – Concerned Zonal Office Dr. 4021 P.F Deductions Cr. 4025 S.P.F. Deductions Cr. 4029 G.I.S. Deductions Cr. 4027 H.B.A. By the main office / C.M.A. Cr. 4033 Health Fund Cr. 3028 Festival Advance Cr. (The first copy of this EJV along with the accepted copy of the Zonal EJV shall be sent to the concerned zones.)

(7) By this arrangements, when the consolidated trial balance is prepared, for the Corporation as a whole, incorporating the trial balances of all Zones and the Main Office for a month, the debit and credit raised both in the main office and the Zonal Offices will be cleared in the code no. 4077

(8) The Assistant Commissioner (Accounts), in the main office,

shall arrange for making entries for the amount so transferred under the respective asset and liability codes, the Abstract of recoveries made and in the sub-ledgers such as P.F. abstract Register, Advances, Recoverable Register etc, maintained in the main office.

(9) The Entries thus made in the abstract of recoveries from the

salary bills of the main office and the amounts transferred from the Zones, the Inter Zonal Transfer Account, the remittances should be made to the credit ‘Deposit Account’, other Government Accounts etc, by drawing cheques through BPVs.

(10) By the above arrangement, the liability of the Zonal Offices is passed on to the main office, which, in turn, takes care for prompt clearance and remittance to the respective accounts. (11) The same procedure should be adopted for transfer of amounts (11) (recovered from salary bills) from one Zonal Office to

another within the Corporation.

b) (1) PROVIDENT FUND ACCOUNTING At present, the Provident Fund Account is maintained, separately, for the employees of the Municipalities. The subscription and recovery of Temporary advance are credited, by deducting from monthly salary bills. Payments of Temporary advance, part-final withdrawal and final closure of accounts are made through individual cheques drawn in favour of the employee concerned. (2) The rules relating to Government servants in G.P.F. (T.N.) rules are followed. The recoveries made are consolidated and remitted, by cheque, into the ‘T.Deposit account’ at the Government Treasury. The following records are now, maintained:

1. P.F. Abstract Register for posting credit and debit entries – Account holder wise

2. P.F. Ledger for calculating interest, based on the monthly balances in the individual accounts.

3. P.F. Cash Book 4. P.F. Treasury pass Book or Treasury scroll (Monthly) 5. Cheque Book issued by the Treasury Officer, on payment of cost.

(3) The monthly balances in the Government Treasury carry interest at the rate prescribed by the Government. So, the Municipalities, as soon as the financial year is over, are to prepare the statement of monthly credit & debit in ‘T’ Deposit Account in respect of their institutions in the prescribed proforma and claim the total interest due for a year from the Director of Local Fund Audit who sanctions the payments to them. This work should be completed immediately after the financial year is over, but before the audit is taken up, so as to get the interest due, on T. Deposit Account, sanctioned by the Director of Local Fund Audit without any delay. (4) Since the Provident Fund Account is out of a trusted nature, it should be kept separate and distinct from the REVENUE FUND of the Municipality. (5) The existing instructions for administering this Fund are adequate. It is quite essential that they are scrupulously followed. They should see that the sum total of the closing balances in individual accounts as on the last day of the financial year TALLIES with the closing balance of that financial year in ‘T.Deposit Account’ as certified to by the Treasury Officer. The interest calculated and sanctioned as indicated in para (3) above will be credited after sometime in the next year, after it is sanctioned by the Director of LF Audit. (6) (a) There will be some different between the interest on the Treasury Balance sanctioned by the Director of LF Audit and the sum total of interest calculated on the individual’s account. This may be due to

(i) Delay in remittances of monthly recoveries to ‘T.Deposit Account’ (ii) Failure to remit at all and (iii) Diversion of this amount for day to day expenditure etc. In such circumstances, the interest sanctioned by the Director of Local Fund Audit will be less than the total amount of interest calculated and credited to individual’s accounts. This difference may be met from the Revenue Fund / Water Supply and Drainage Fund of the Municipality, with the specific sanction of the council, on analyzing the reasons for difference and recording them in the form of a council resolution.

(b) The amount of such difference will be an expenditure in the Revenue Fund and it should be debited to ‘2055 – Staff Welfare Expenses’. The cheque drawn for this amount should be deposited into the Govt. Treasury for being credited to ‘T.Deposit Account’ maintained in the name of the Municipality by the Treasury Officer. (7) In the accrual system of accounts, the maintenance of this P.F. account is not disturbed. (ii) Special Provident Fund – cum – Gratuity Scheme: Since this is also of trusted nature, it should be kept separate from the REVENUE FUND. Eventually, it will be a self supporting fund in view of the fact that the accumulations of monthly collections are to be deposited in the Financial Institutions of the Government, fetching more interest. The Commissioners should pay due attention to the timely deposit of subscription in interest bearing securities, and get better financial return. However the Municipalities where the Instructions issued in G.O. Ms. No. 693 M.A. & W.S. dt. 24.7.90 and G.O.Ms, No. 230 MA&WS dt. 20.10.93 for remittance into Government Account are now being followed, shall continue to follow. The management contribution as fixed by the Govt. (presently Rs. 5,000/- in individual cases) on the eve of retirement when the individual SPF-cum-Gratuity Account is closed, shall be met from the Revenue Fund Account / Water Supply Fund A/c as the case may be by debiting to Code No. 2034 ‘Special Provident Fund Gratuity Scheme’ – Contribution. (c) RETIREMENT BENEFITS – ACCOUNTING Payment of Pension / Family Pension / Commuted Value of Pension and Death-cum-Retirement Gratuity

1. The Code Nos. are provided in the Chart of Accounts for payment of Pension, Commuted value of Pension and Gratuity and they should be used. The journal entries (EJVs) will be as indicated below:

(a) 2031. Pension (Super annuation) / Retiring / Invalid etc. / Family pension Dr. 4046 To Accounts Payable A/c – Personal Claims Cr. 4046 Accounts Payable A/c – Personal Claims Dr. To Bank A/c Cr. (b) 2032. Commuted Value of Pension Dr. 4046 To Accounts Payable A/c – Personal Claims Cr. 4046 Accounts Payable A/c – Personal Claims Dr. To Bank A/c Cr. (c) 2033 Death -cum-Retirement Gratuity A/c Dr. 4046 To Accounts Payable – Personal Claims Cr. 4046 Accounts Payable – Personal Claims Dr. To Bank A/c Cr. Similar retirement benefits payable to the employees whose monthly salaries are debitable to the Water Supply and Drainage Fund Account are chargeable to that fund account.

2. The scheme of payment of retirement benefits is in force in the Local Bodies, as follows:

i) As far as Municipal Corporations are concerned, the retirement benefits for all the employees retired / retiring and payment of Family Pension to the members of the deceased employees are directly made by them, from the Revenue Fund.

ii) In the case of Municipal employees who are covered by the Municipal Employees Pension Fund maintained and operated by the Director of Local Fund Audit, the pension contribution at prescribed rates is payable to that Fund, by the Municipalities as per the demand raised by him. Payments are made from that Fund only.

iii) In respect of employees who are not covered by the above Fund, the payments of retirement benefits and Monthly Pension / Family Pension are being made directly from the Municipal Fund based on the Audit Certificated.

iv) (a) In order to make timely pension disbursements, the Govet. Ordered inG.O. MS.No. 110 MAWS dt. 3.5.97 to deduct from the quarterly payment of the amount under Devolution Fund released by the Directorate of Municipal towards this Fund on the strength of the demand raised by the Director of Local Fund Audit and credited to the fund

maintained by him. By this process, the liability of the Municipality towards contribution to the pension fund is directly met out of the Devolution Fund. So, the above transaction should necessarily reflect in the accounts of the Municipality.

(b) The following entries shall be made for the above DEDUCTION made by the Directorate of Municipal Administration through GJV. 2039 Pension contribution Dr. 1053 To Devolution Fund Cr.

(By this journal entry, the credit to Code No. 1053 will indicated the total amount sanctioned under the Devolution Fund, inclusive of the amount adjusted towards the Pension Fund maintained by the Director of Local Fund Audit.)

3. The Register of Pensions and Family Pensions will continue to be maintained in the Accounts Cell for making monthly postings for disbursements, on the lines of the Establishment Audit Register.

CHAPTER – 05

EXPENSES ACCOUNTING Expenses Accounting deals with the following types of transations;

1. Advances for expenses 2. Travel expenses 3. Leave Travel concession 4. Pre-paid expenses 5. Repair and Maintenance 6. Payments of Electricity Consumption charges, Telephone Bills etc., 7. All expenses other than those that are dealt with under Suppliers / Materials

Accounting All the above expenses are to be accounted for, by preparing Expenses Journal Vouchers (EJV).

I. Advances for expenses: Generally, payments are made after services are rendered to the Municipality or supplies are made to it. However, there may be instances where, an advance is to be paid and then services are got done or supplies received. In such cases, the payment of advance becomes necessary. For paying advance, the bank payment vouchers have to be prepared, after observing formalities, duly signed by the officials who are initiating the claims and will be forwarded to the Accounts Cell. There is no need for an EJV. On receipt, by making entry in the Bills Inward Register (MCF 15 B), the Accounts cell will examine the correctness of the claim and pass for payment after making entry in the Advance Recoverable Register. The B.P.V. will be prepared in the Accounts Cell as below: 3054. Advance Recoverable A/c – Expenses Dr. To Bank Account Cr. (Being the advance paid to ………… for …………. as sanctioned by the ………..) II. Adjusting the above Advance:

(a) When the bill for services or supplies is received by adjusting the above advance, an EJV and the BPV have to be prepared by the user – department and signed after ensuring the satisfactory servicing or the purpose for which the advance was paid was over. After approval by the officer concerned, the EJV with BPV should be forwarded to the Accounts Cell for adjusting the advance paid earlier and settlement of the claim, over and above the advance paid.

(b) The Accounts cell, after examining the claim and after posting the advance adjustment in the Advance Recoverable register, shall pass the claim and issue the cheque in full settlement. The following journal entries will be passed, if the advance is less than the claim (bill prepared).

Specific Expenses Account Dr. 3054. To Advance Recoverable A/c – Expenses Cr. 4049. To Accounts payable A/c – Expenses Cr. 4049. Accounts payable A/c – Expenses Dr. To Bank Acount Cr. (c) (i) When the advance paid is more than the bill for services rendered or supplies

made, the balance amount should be remitted back in cash or by cheque.

This remittance of the balance is being accounted for, in the Receipts Book through BRV. The accounting entry for the above remittance is Bank A/c Dr. 3054 To Advance Recoverable A/c – Expenses Cr. (ii) When the bill for the services is approved and the expenditure is accounted, the following Journal Entry should be passed. Specific Expenses A/c Dr. 3054 To Advance recoverable A/c – Expenses Cr. III. Expenses for which advance paid: Where no advance was paid, after observing the above procedure in regard to settlement of the claim, the bill along with BPV and EJV duly signed by the departmental officer concerned will be forwarded to the Accounts cell which, in turn, will pass it and make payment after scrutiny. The following journal entries will be made. In the EJV

Specific Expenses Account Dr. 4049 To Accounts payable A/c – Expenses Cr.

In the BPV 4049 Accounts payable A/c – Expenses Dr. To Bank Account Cr. IV. Travel Expenses and LTC: The above procedure should be followed in respect of all claims for Travel expenses and LTC, depending upon the advance drawn and claim made directly without drawing any advance. V. Prepaid Expenses: Under the accrual system of accounts, the expenses should be examined whether it relates to a particular financial year or it covers a period beyond that financial year. In the latter case, the expenses will be treated as ‘PREPAID’ only, if it pertains to a period beyond three months at the end of the financial year and this amount exceeds R. 3,000/- in individual cases.

The following journal entry has to be made passed.

Specific expenses Account Dr. 3057 Prepaid Expenses Account Dr. To Bank A/c Cr.

To account for the above prepaid expenses in the next year account, the following journal entry has to be made. Specific expenses account Dr.

3057 Prepaid Expenses Account Cr. To make it clear, an example of motor vehicle tax payment is given below: The M.V. Tax of Rs. 7,000/- paid covering the period of one year from October 99 to September 2000 will be booked in accounts as indicated below. 2070 Heavy Vehicle maintenance Account Dr. Rs.3500/- (Concerned Department Code to be prefixed) 3057 Prepaid Expenses Account Dr. Rs. 3500/- To Bank Account Cr. Rs.7000/- In the next year, to account for the prepaid tax, the following journal entry has to be made. 2070 Heavy Vehicle maintenance Account Dr. Rs.3500/- 3057 Prepaid Expenses Account Cr. Rs. 3500/-

Note: In the year in which the full payment of tax is paid, the prepaid expenses will be exhibited under Assets, in the Balance Sheet. In the next year, it should be cleared by booking as expenses EJV as mentioned above. Similarly, for payments of bills relating to repairs and maintenance, electricity consumption charges, telephone bills etc, EJV and BPV have to be prepared by booking the expenditure to the relevant code Nos. VI. Imprest Accounting:

1. Te imprest amount is otherwise known as ‘permanent advance’. Besides the Commissioner in the central office, all subordinate officers like Municipal Engineer, Health Officer, Medical officers of Dispensaries and Hospitals, veterinary officer etc, are provided with the imprest to meet urgent day-to-day expenses and they will get the imprest replenished periodically as soon as 50% of the imprest amount is spent – by rendering accounts with supporting bills.

2. The concerned officers will personally be responsible to account for the imprest amount drawn by them. They should maintain imprest Recoupment Register to account for the transactions by distinctly indicating the order and date of sanction, amount sanctioned etc, for permanent reference. At the same time, the Accounts cell will maintain Register of Imprest Paid as a permanent Record.

3. (i) When the imprest is paid to a subordinate officer, for the first time, a BPV is to be prepared with copy of sanction order, signed by the officer authorized for this purpose and sent to the Accounts Cell for making payment, by drawing cheque. Then, an entry in the Register of Imprest should be made. All these amounts are ‘Assets’ only, in view of the fact that the money representing such imprest is held by various offices instead of being kept in the Bank. 3058. General Imprest Account Dr.

To Bank Account Cr.

(ii) When imprest is replenished, after approving the Imprest Payment Voucher bills etc. (For replenishment), a BPV and EJV are prepared (a) The following journal entry is to be made in the EJV

Specific expenses account Dr. 4049. To Accounts Payable A/c – Expenses Cr.

(b) When the amount replenished is paid to the subordinate officer through BPV,

the following journal entry is to be passed.

4049 Accounts payable A/c – Expenses Dr. To Bank Account Cr.

It is quite necessary that the sub-vouchers / bills met out of the sanctioned imprest amount should be analysed with reference to the nature or kind of transactions and entered in the EJV with their code Nos. A statement of claim for recoupment with an abstract should be prepared and sent to the Accounts Cell along with the sub-vouchers / bills as indicated below:

Statement of Claim for recoupment: Sl. No.

Sub-Voucher No.

Nature of Transaction

Amount Rs.

Abstract:

2018 Stationery printing 2047 Postage and Telegram 2050 Repairs & Maintenance of Tools and Plant, etc.,

VII. TDS on Interest Earned out of CCD: The Tamil Nadu Electricity Board collects convert Consumption Deposit (CCD) from its High Tension Consumers 1.5 times of the Average Monthly Consumption during the preceeding 12 Months. This Deposit is revised every year and Additional Deposit if needed also collected along with the current consumption charges. The Tamil Nadu Electricity Board pays interest at the prescribed rate (presently 5%) and deduct Tax at source on this interest income at the rate prescribed by IT rules (presently 20%). However, the Local Body being a Local Govt. is exempted from the payment of Income Tax under section 10 of the IT Act and ULB should prefer a reimbursement claim to refund the Tax deducted by TNEB. The following are the journal entries for Accounting this:

A) On receipt of intimation letter from TNEB i) For adjusting the Interest Earned towards CCD

3056 – Deposits Recoverable A/c Dr. 1067 – Interest on Investments Cr. ( Being the net interest after deducting TDS adjusted towards additional Deposit)

ii) 3056 Deposits recoverable A/c Dr.

3066/3123 To Bank Cr. iii) 3074 – TDS Receivable from IT Dr. 1067 – Interest on Income Cr.

B) On receipt of refund order form IT Dept.

3066/3123 Bank A/c Dr. 3074 To Refund of TDS Cr. (Being the refund received by cheque)

CHAPTER – 06

SUPPLIERS / MATERIALS ACCOUNTING

Materials are generally purchased by calling tenders / quotations, depending upon the value , the quantum of requirement and the need therefor. The accounting procedure for security deposits and their refund / adjustment etc.is dealt with under “Deposits and Advances Accounting”. The Accounting system for receipt of materials, from the suppliers, should be as follows : After tenders or quotations received are finalized, a purchase order will be issued. Based on this purchase order, supplies are made and accounted for.

(1) Inventory / Non – Inventory:

(a) The purchase of materials will come under two broad categories; (i) Inventory items (Non-consumable) (ii) Non-Inventory items (consumable) However, while deciding the norms for determining the inventory and non-inventory items, the nature of their utilities, the past consumption pattern and the value of the items should be taken into account. Based on these criteria, ABC analysis may be done for each item of stores, to determine high value and high consumptions items. ‘A’ indicates all non-consumable items.

‘B’ indicates both non-consumable and consumable items. ‘C’ indicates only easily and quickly consumable items. (b) All ‘A’ class items should be inventorised immediately on receipt. ‘B’

class items should be brought under the category of inventory items depending upon their nature. All ‘C’ class items should be charged off as expenditure on their purchase.

(c) In view of the above classifications, a more realistic inventory value will

be ascertained through accounts. Besides, the value of the materials will be charged off to expenses, only on actual issue of materials. This system will have a realistic expenditure status. So it is necessary to have a Priced Stores Ledger to be maintained in the stores wing.

(2) Priced Stores Ledger (MCF 26) – Receipts & Issues Accounting

All receipts should be accounted for, first, in Inventory Materials Receipt Note (IMRN – MCF 27). Similarly all issues shall be made through the Inventory Materials Indent and Issue Note (MCF 28). In addition to these two main documents, the Stores Return Note (SRN – MCF 30), Stores Adjustment Slip (SAS – MCF 31) etc should be prepared and accounted for suitably updating the Stores Ledger. Stores Ledger for cement, steel and asphalt should be maintained separately.

(3) Purchases of Materials against Advance Payment: (1) In case of advance paid for supply of materials like purchase of medicines from

Tamil Nadu Medical Services Corporation (TNMSC) and Medical Stores Department (MSD) and cement from TANCEM etc, the following accounting entries have to be made.

3051. Advance to the Suppliers Dr. To Bank Account Cr. (By preparing BPV based on proforma invoice)

(2) After observing formalities as mentioned above, the following journal entry has to

be made when materials for the above advance are received.

3001. Specific Stock Account Dr. 3051. To Advance to the Suppliers Cr. (By preparing purchase journal voucher)

(3) Whenever stock is issued through Inventory Material Indent and Issue Note, the stock will be deducted. This will become a document for passing the following journal entry (CJV).

3053. Materials Cost Recoverable Account Dr.

- Contractors 3001 To Specific Stock Account Cr.

The expenditure code No. should be noted against debit entry, if the stock is issued for departmental execution of work (EJV).

(4) When the cost of materials is recovered from the contractor, who utilized them on the work entrusted to him on contract, the following Journal entry should be passed in the CJV.

3121/3122 Projects-in-progress A/.c Dr. 3053 – Materials cost Revocerable A/c – Contractors Cr.

(To account for the cost of materials issued to the contractor and recovered from his bill through CJV).

(4) Payment After Purchase: (1) In cases, when purchases are made without making any advance payment, the

following journal entry will be made after observing all formalities. Note: As a liability arises for the stock received, payment as to be made, for which a Purchase Journal Voucher is to be prepared by debiting the stock account, and crediting ‘Accounts Payavle account-Suppliers’. 3001 Specific Stock Account Dr.

4048 To Accounts payable A/c-Suppliers Cr.

(2) To clear the above liability, a BPV is to be prepared as follows: 4048 Accounts Payable Account – Suppliers Dr. To Bank Account Cr.

(3) For materials issued for execution of work on contract, the journal entry will be

(CJV)

3053 Materials Cost Recoverable A/c – contractors Dr. (name of the work to be specified) 3001 To Specific Stock A/c Cr.

(5) Non-Inventory items such as purchase of fodder, medicines, fuel to vehicles etc.

i) In respect of purchase of non-inventory consumable items, the

following journal entry has to be made after observing all formalities for purchase.

Specific Expenses Account Dr. 4048 To Accounts Payable A/c – Suppliers Cr. (By preparing PJV) ii) For making payment, the entry in the BPV would be:

4048 Accounts payable Account – Suppliers Dr. To Bank Account Cr.

CHAPTER – 07

a) STORES ACCOUNTING

1. every Municipality should maintain a separate ‘stores’ under the direct control

and supervision of the designated official. In bigger local bodies like Municipal Corporations, Special Grade / Selection Grade Municipalities, there is a need to have a separate stores wing for Engineering. Water Supply, Public Health Departments etc. with qualified and trained staff to man them A medical stores may also be maintained if found necessary.

2. Activities:

The following activities are involved in the stores.

1. Invitation of tenders / quotations and finalisation 2. Issue of purchase order 3. Receipt of goods / materials from suppliers 4. Issue of materials on approved indents 5. Transfer from / return to stores 6. Stock adjustments 7. Scrap and unserviceable materials – collection and disposal 8. Physical Verification of Stock (periodical and surprise) 9. Asphalt and petrol purchase, issue and accounting

3. Stores Accounting System:

Basically, Stores accounting involves maintenance of ‘Quality Records’ and ‘Value Records’ i.e. Priced Stores Ledger in the stores. The stores should be classified as Inventor and Non-Inventory items.

4. Maintenance of Records for Accounting in Stores:

(a) The following records are to be maintained in the stores; 1. Priced Stores Ledger. 2. Purchase Orders. 3. Inventory Materials Receipt note (IMRN). 4. Inventory Materials Indent and Issue Note. 5. Stores Return Note (SRN). 6. Stores Adjustment Slip (SRS).

Note: For Non-Inventory materials, the existing form of indent shall be used.

(b) The present system of finalizing tenders for supplying stores’ materials shall continue. In respect of stock, the store keeper will prepare an Inventory material Receipt Note based on purchase invoice and on actual receipt of stock, duly ensuring the correctness of quantity, quality and rate and get it approved by the authorized officer. He will also prepare a Purchase Journal Voucher (PJV) and BPV duly signed by the authorized officer supported by the purchase bill / invoice and IMRN and send them to the Accounts cell for scrutiny and payment. The Accounts cell shall ensure that the following documents are available before passing for payment.

I. Suppliers Bill / Invoice II. I.M.R.N. III. P.J.V. IV. B.P.V and V. File

(c) The Accounts Cell shall pass the claim for payment and issue cheque after scrutiny. The Journal entry in the PJV and the entry in the BPV will be as follows:

In the PJV 3001 Specific Stock account Dr 4048 To Accounts payable A/C – Suppliers Cr In the BPV 4048 Accounts payable A/C – Suppliers Dr To Bank Account Cr

(d) In case advance, if any, was paid to the supplier and the same is adjusted now in this bill, the procedure to be followed is already prescribed under the chapter on “Suppliers / Materials Accounting”. The same are reproduced here for easy reference.

Journal Entries: i. For adjusting advance; 3001 Specific Stock Account Dr 3051 To Advance to the Suppliers A/C Cr 4048 To Accounts Payable A/C-Suppliers Cr ii For paying the net amount after adjustment of advance; 4048 Accounts Payable A/C – Suppliers Dr To Bank A/C Cr

(e) The above system should be followed for the transactions under

all funds with appropriate prefix. 5. Maintenance of Priced Stores Ledger (MCF 26):

(1) In this accounting system, the maintenance of Priced Stores Ledger is necessary. So, all materials received should be priced. In other words, issue prices for all materials issued from the stores should be fixed by adopting norms as mentioned below in respect of cement and steel and all other items of stock.

1. Cost price as per Supplier’s bill / Invoice 2. Transport Charges. 3. Unloading Charges. 4. Godown rent if any 5. Incidental Charges, and 6. Margin at Specified rate

(2) (a) As soon as the “issue price” is approved by the appropriate authority, this issue price should be noted at the top of each folio (meant for each material) of the priced stores ledger. This issue price should be adopted when the material is issued through Inventory material issue note and the stock announced for.

(b) At the time of issue to the contractor, the following journal entry is to be passed. 3053 – Materials Cost recoverable A/C – Contractor Dr 3001 - Specific stock A/C Cr 1045 – Other Income Cr (Being the materials issued to the work “……….(Name of the work)” giving reference to project code No.)

(c) When the work is in progress and part payment is made to the Contactors or / and when the work is completed and final payment is made, the cost is recoverable through the CJV. The following accounting entry is to be passed. 3121 / 3122 – Projects in-progress A/c Dr. 3053 Materials Cost Recoverable A/c – Contractors Cr. 4016 Additional Tender Deposit – Contractors Cr. 4035 Income Tax – Deductions – Contractors Cr. 4047 Accounts Payable A/c Contractors Cr.

(Being the payment made to the Contractor after effecting recoveries from the Contract Bill).

(d) When the Contractor is paid by a cheque, the following entry should be made in the BPV. 4047 Accounts Payable – Contractors To Bank A/c Dr. (Being the net amount paid to the Contractors) Cr.

(3) FIFO Method for Issue of materials:

The FIFO (First in – First Out) method should be followed for issue of materials and for accounting them. It is explained below: (a) In this method, the first consignment of materials received, is the first

to be issued. The items on the debit side of the stores account are to be exhausted in the chronological order. Similarly, the price fixed for a particular consignment, will be charged till the stocks covered by that consignment is over, and even in cases, where the stock covered by the purchase, is available with difference in cost, the issue price as fixed therefore, will be charged, relevant to the stock covered in the issue of materials.

(b) An example is given below, to prepare Priced Stores Ledger: 2nd Jan Purchase 300 units @ Rs. 3/- per unit 4th Jan Purchase 600 units @ Rs. 4/- per unit 6th Jan Issued 500 units 10th Jan Purchase 700 units @ Rs. 4/- per unit 18th Jan Issued 800 units 20th Jan Purchase 300 units @ Rs. 5/- per unit 23rd Jan Issued 100 units

Entries in the Priced Stores Ledger

Receipts Issues Balance Date IMRN Qty

units Rate Rs.

Value Rs.

IMIN Qty Units

Rate Rs.

Value Rs.

Total Qty Units

Rate Rs.

Value Rs.

Totalvalue

Jan2 300 3 900 300 3 900Jan4 600 4 2400 300

600 3 4

900 2400

330

Jan6 300 200

3 4

900 800

1700 400 4 1600 1600

Jan10 700 4 2800 1100 4 4400 4400Jan18 800 4 3200 3200 300 4 1200Jan20 300 5 1500 300

300 4 5

1200 1500

2700

Jan23 100 4 4400 400 200 300

4 5

800 1500

2300

6. Issue of Materials: (i) (a) In respect of materials issued to the contractors, departmentally for execution of various works, there should be a provision in the Tender Schedule for supply of materials at specified rates. The recovery is to be made only on that rates, irrespective of stores issue rates. (b) However, where a contingency has arises for the supply of materials departmentally during execution even in the absence of provision for supply of materials in the tender, then the recovery should be made either at the market rates or stores issue rates or the rates noted in the data for the work, whichever is higher. (ii) As and when the materials are issued from the stores, entries have to be made in the Inventory Material Indent and Issue Notes and in the Priced Stores Ledger by the Store Keeper duly approved by the authorised officer. The second copy of the Issue Note shall be sent to the Accounts Cell, by the Engineering Branch along with the CJV for giving effect to, the issues, in accounting with reference to the issues made to the contractors. The following journal entry will be passed: 3053 Materials Cost Recoverable A/c – Contractors Dr.

3001 To Specific Stock A/c Cr. For payments made to the contractors for execution of different works, the Contractors Ledger will continue to be maintained in the Engineering Department. (iii) On receipt, the Accounts cell will give effect to the CJV in accounting. (iv) When the balance of materials, if any, is returned out of materials already issued to a contractor for a specific work, through ‘Stores Return Note’ (SRN) prepared and approved by the authorised officer, such materials will be received in stores by the store-keeper, who will account for their receipt in Priced Stores Ledger. He will send the second copy of the SRN through the Engineering branch along with CJV duly signed by the Engineer to the Accounts Cell for accounting as follows. 3001 Specific Stock Account Dr. 2020 Other Expenses A/c Dr. 3053 To Materials Cost Recoverable A/c – Contractors Cr. Note: The difference between the issue rate and the cost price already taken to the other income to the extent of issues made, is not reversed by charging to ‘other expenses’, to the extent of materials received back to stores. (v) Wherever the materials are agreed to be supplied departmentally through stores at the agreement rates, irrespective of the stores issue prices, the difference, if any, between the

stores issue prices (invariably the agreement rates will be lesser than the stores issue prices0 and the agreement rates may be worked out and charged to the respective work by means of a CJV as indicated below: Specific Expenditure head of account Dr. 3053 Materials Cost – Recoverable A/c – Contractors Cr. 7. Accounting of materials for departmental execution of work:

(a) Here, the materials are issued to the Engineering staff on specific works based on approved estimates. As a result, the cost of the materials issued, is charged to the works directly, So, based on the approved Inventory Materials Indent (IMI), Inventory Materials Issue Note (IMIN) should be prepared by the Store-Keeper along with the EJV, duly making entry in the Priced Stores Ledger and forwarded to the Accounts cell.

(b) On receipt, the Accounts cell shall pass the following journal entry after scrutiny Specific Head of A/c – Nature of work Dr. 3001. To Specific Stock Account Cr.

(c) In case of return of materials if any, from the specified work, a reverse entry is to be made with supporting documents both in the stores and the Accounts cell by following the usual procedure i.e. by preparing EJV.

8. Issue of Materials to other Institutions: At times, requests from other municipalities for issue of materials like cement, steel etc., on loan basis will be received,. Generally such issues on loan basis should not be entertained. In exceptional circumstances, the material should be issued on payment of cost only, if the situation permits such a course of action. As cash or cheque is received towards the cost of the material issue, a BRV is to be prepared and the amount accounted for in the Receipts book. The entry will be: Bank A/c Dr. 3001 – Specific Stock A/c Cr. 9. Stores Adjustment Slip (SAS) (MCF 32):

(a) This should be prepared when; i. The quantity as per physical verification differs from the figure indicated in the priced stores ledger ii. Evaporation / shrinkage occurs owing to intrinsic characteristics of the material and iii. Material substituted on issue, resulting in wrong postings in the pried stores ledger.

(b) Besides, as a result of periodical physical stock verification, there may be excess

or shortage in quantity. There may be cases of pilferage, theft or loss due to

natural calamity. In all the above contingencies, besides taking administrative action to regularize the shortage arising out of them on proper investigation, the following accounting procedure is to be followed.

(c) In respect of excess found in quantity, it should be added to the stock with specific endorsement as ‘Excess found during physical verification’ in the stores Ledger.

(d) The shortage etc should be treated as ‘loss’ where specific recovery orders are passed fixing up responsibility as a result of departmental action, the amount covered by such recovery orders should be taken as other income (1045).

The following journal entries have to be passed;

(i) For shortages: 2091 Stores Written off A/c Dr. 3001 To Specific Stock A/c Cr.

(ii) For Excess: 3001 Specific Stock A/c Dr. 1045 To Other Income A/c Cr.

(iii) For Recoveries by fixing up responsibilities for regularization of shortages in Stock: 3072 Miscellaneous Recoveries Receivable A/c Dr. 1045 To Other Income Account Cr.

(iv) For recoveries through remittance chalan: Bank Account Dr. 1045 To Other Income Account Cr.

(v) For Recoveries through pay bills in lumpsum or in instalments: 4046 Accounts Payable A/c – Staff Dr.

3072 To Miscellaneous Recoveries – Receivable A/c Cr. 10. Scrap and old / Unserviceable / Condemned items of stores – Disposal: The value of the scrap and other old, unserviceable / condemned articles have to be ascertained and orders obtained to write them off, from the respective Tools & Plant Register and Asset Register. The journal entry to be passed this regard is:

2091 Stores Written off A/c Dr. 3001 To Specific Stock A/c Cr.

Then these items have to be entered in a register called ‘Unserviceable Stock Register (MCF 35)’ They should be sold in time in public auction after observing the usual formalities.

The entry to be passed is given below’ Bank A/c Dr. 1045 To Other Income A/c Cr. (Basis: Remittance chalan and BRV) 11. Verification of Stock:

(a) In order to ensure that the priced stores ledger is properly maintained and the stocks are issued on approved indents based on actual requirements, supported by prescribed records, the Commissioner shall arrange for periodical surprise physical verification of the stores by an officer nominated by him, independent of the officer in chare of stores and take appropriate action required therefore.

(b) The annual stock verification of the stocks as on 31st March physically, by nominating an officer of the municipality should be arranged by the Commissioner to ensure that the are no discrepancies. Appropriate action should be immediately taken on receipt of the physical verification (PV) reports.

Note: The guidelines on Inventory Valuation, as prescribed by the revised Accounting Standard (AS-2), included in Appendix – I to this Manual shall be followed, for issuance of materials.

(b) ASPHALT ACCOUNTING 1. Asphalt is an important material required for common and frequent use in the Engineering Department. This is purchased in bulk on payment of full cost in advance, based on the proforma Invoice from Indian Oil Corporation / Hindustan Petroleum / Bharat Petroleum. The payment is made by means of cheque or DD towards the cost of bitumen. 2. For transporting bitumen, (asphalt) tender is settled and payment is made as and when consignment of stock is received. So, in this case, the cost of bitumen and transport charges are involved. As the procurement itself is of a capital nature, this has to be accounted for under Capital Fund. 3. To fix the price, the following elements have to be taken into account. i. Cost price as per suppliers’ Invoice ii. Transport chares as per contractors’s bill iii. Unloading charges iv. Godown rent, if any v. Incidental charges and Margins to cover handling and overhead charges 4. The purchased quantity should be brought to stock in the Priced Stores Ledger maintained both in quantity and value by the Store-Keeper. He should immediately take action to get the approval of the appropriate authority for fixing the ‘issue price’ through

the Accounts Cell and this issue price should be predominantly indicated in Red Ink, to ensure the correctness of subsequent recovery made in the contractor’s bills. 5. To account for purchase, receipt and issue of this item, the following journal entries are to be passed. Description of Activity Journal Entry Documents to be

Prepared and enclosed i. Advance paid to the supplier

3051. Advance to the suppliers – (Bitumen) Dr. To Bank A/c Cr.

Proforma invoice of the Company and BPV

ii. On receipt of supply 3001 Bitumen Stock A/ Dr. 3051. To Advance to the suppliers – (bitumen) Cr.

Suppliers’ bill / Invoice, Inventory Material Receipt Note and PJV

iii. For payment of transport charges

3001 Bitumen Stock A/c - Dr. 4047 To Accounts payable A/c – Contractors Cr. 4047. Accounts payable Dr. To Bank A/c Cr.

Transport contractors’ bill, Inventory Material Receipt Note, PJV and BPV for payment to the transport contractor

iv. Entry for Issue price 3053 – Materials Cost Recoverable A/c – Contractors (Cost Price) Dr. 3001 Specific Stock A/c (Cost Price) Cr. 3053 – Materials Cost Recoverable A/c – Contractors (Difference between Cost price & Issue Price) Dr. 1045 To Other Income Cr.

A CJV should be prepared and this entry should be passed when the Contractors A/c is debited

v. Issue to contractors (1) For Capital work

3053. Materials cost Recoverable A/c – Contractors (Name of the Work) Dr. 3001 to Bitumen Stock A/c Cr.

Contract bill, M.Book, File, Inventory Material Issue Note (IMIN) and CJV

(2) For Repairs and maintenance work

3053. Materials cost Recoverable A/c - (Name of the work) Dr. 3001 Bitumen stock A/c Cr.

Contract bill, M.Book, File, IMIN, CJV and recovery statement must be prepared and used

Description of Activity Journal Entry Documents to be prepared and enclosed

(vi) When payment made (a) Capital Work

By CJV 3121/3122 Projects in Progress A/c Dr. 3053 Materials Cost Recoverable A/c – Contractors Cr. (Name of the work) 4035. To I.T. Deductions A/c- Contractors Cr. 1058. To Hire charges Cr. (Road Rollers etc) 4047 Accounts payable A/c Cr. - (Contractors) BY BPV 4047 Accounts Payable A/c Dr. - (Contractors) To Bank A/c Cr

B.P.V. for recovery of cost of bitumen issued for work and payment to contractor and for recovery of I.T., hire charges for Roller from the contract bill.

(b) Repairs and Maintenance Work

BY CJV (Specify Code no.) Maintenance Work Dr. 3053 Material Cost Recoverable A/c - Contractors Cr. 4035 I.T. Deduction - Contractors Cr. 1058 Hire Charges Cr. 4047 Accounts Payable A/c – Contractor Cr. BY BPV 4047 Accounts payable A/c Contractor Dr. To Bank A/c Cr.

BPV for recovery of cost of bitumen issued for the work and payment to the contractor and for recovery of T.D.S. hire charges from the contract bill.

(c) PETROL / DIESEL ACCOUNTING

1. In some of the Municipalities, in order to cater to the daily needs of the vehicles maintained by them, Petrol / Diesel pumps are installed, Petrol / Diesel purchased and issued to the vehicles and accounts maintained on prescribed lines. This is a non-inventory item. Generally, the accounting procedure for purchase and issue of Asphalt would apply to this item also. The following Journal entries will be made, when petrol / diesel is received in the tanker.

(1) 3001 Stock Account – Petrol / Diesel Dr. 4048. To Accounts payable A/c – Suppliers’ Cr. (By PJV) (2) 4048. Accounts payable A/c – Suppliers Dr. To Bank Account Cr. (By BPV) Accounting under various Account Heads: (3) Specific Expenses A/c Dr. (User – department) 3001 To Stock Account – Petrol / Diesel Cr. 2. At the end of every month, the collected indents based on which issues were made, should be sorted out and abstract of issues, date wise and user – department wise prepared. A EJV should then, be prepared for each department by enclosing the abstract with the receipted indents (through which issues were already made) and forwarded to the officials under whose control, the vehicles are placed for the discharge of official duties. This should be checked with reference to the entries made in the Log Books of the vehicles. On check, the EJV should be approved and sent back to the Store-Keeper. 3. The Store-Keeper, after ensuring that all such EJV’s with abstracts and receipted indents forwarded to the respective user – departments are received back, will send them in complete shape to the Accounts cell for accounting under proper expenses accounts, after scrutiny. 4. This exercise should be made by the Store Keeper every month by proper maintenance of stock account for receipts and issues, subject to periodical physical verification of stock on hand so that the cost of consumption of petrol / Diesel in a month is accounted for under the relevant expenses account. 4. Loss on account of evaporation:

(a) The Commissioner should arrange for verification of stock of Petrol / Diesel in the tank on quarterly basis and also when occasion demands. There is bound to be some difference between the book balance and the ground balance. The difference should be ascertained and recorded by the Verification Officer over his dated signature with the designation of the post held by him. The verification officer should send a note on the difference to the officer incharge of the Petrol / Diesel Bunk and having control over the store-keeper with a copy to the Accounts Cell.

(b) On receipt, the controlling officer should arrange to analyse the quantity in difference and the admissibility for evaporation and find out whether there was any case of abnormal difference that was rendered possible by theft, pilferage etc. If the evaporation is found to be normal i.e. within the prescribed admissible percentage, he should propose adjustment through EJV to the Accounts Cell by issuing a regularisation order.

The journal entry for this would be ; 2092 Petrol / Diesel Evaporation A/c Dr. 3001. To Stock A/c – (Petrol / Diesel) Cr. (c) If the evaporation is beyond the admissible limit, necessary investigation has to be

initiated and departmental action taken to regularize the difference in value, above evaporation limit. When orders are passed by fixing responsibility for recovery of the value, the following journal entries are to be passed in accounts.

5. (i) For regularization of Difference within and above evaporation limit:

In the EJV (a) 2092. Petrol / Diesel Evaporation A/c Dr. (within permissible limit) 2091. Stores written off A/c Dr. (beyond permissible limit) 3001 To stock A/c – Petrol / Diesel Cr. 3072. Miscellaneous Recoveries Receivable A/c Dr. 1045. To other Income A/c Cr.

(For making entry on issue of orders for recovery by fixing up responsibility for the difference beyond evaporation limit) In the BPV (b) Bank Account Dr. 3072. To Miscellaneous Recoveries Receivable A/c Cr. (For remittance of the amount through chalan) (c) 2001 – 2011. Salaries Account Dr. 3072. To Miscellaneous Recoveries Receivable A/c Cr. (For recoveries through pay bills in lumpsum or in instalments)

CHAPTER – 08 CONTRACTORS’ ACCOUNTING

(1) All civil works are executed only through contracts. The finalisation of tenders for a work is attended to, by the Engineering Department. (2) The initial transactions like remittance of deposits, refund to the unsuccessful tenderers, etc., though form part of this accounting are dealt with in the chapter on ‘Deposits and Advances Accounting’. The Accounting system for both Capital and Revenue funds is one and the same except that capital items of work are assetised / capitalized.

(3) The contractors are paid through part bills during the progress of the work, depending on the stages of execution and also on agreement conditions and final bills, when the works are completed in all respects. (4) There is no change in the system or procedure, now being obtained in regard to acceptance of tenders, recording measurements, supply of materials, maintenance of Contractors’ Ledger, recovery towards materials from the contractor’s bills etc. except those that are mentioned below, to suit this system of accounting. (5) The documents that have to accompany the part /final bills, both under Capital and Revenue Funds, are given below:

1. Contract Bill (MCF 21) 2. Measurement Book 3. Recovery statement 4. Completion Report 5. CJV in duplicate 6. BPV in duplicate

(6) Documents to be used: 1. Contractors’ Ledger 2. Material Indents and Issue Notes 3. Stores Return Notes 4. M.Book

5. Stock Book for materials where there is no separate ‘store’ and no priced stores ledger is maintained. 6. Advance Recoverable Register for advance, if any, paid to the contractor

(7) The procedure already prescribed for checking the contract certificate with reference to M.Book, agreement etc. by the Engineering Department shall continue. (8) (a) The Accounts Cell should ensure the correctness of the claim with reference to tendered rates and agreement as well as recoveries towards cost of materials issued from the stores, hire chares for Road-Roller, Tools & plant etc., recovery of advance if any paid, collection of retention money, Income Tax due etc. The claim should be accompanied by Contractor’s Journal Voucher (CJV) and Bank Payment (BPV). It must also be ensured that the Account codes, Project codes etc. have been correctly indicated both in the contract bill and CJV. (b) Besides, the Accounts cell should ensure that the contribution due (at present 0.3% of the total value of the estimated civil work) with reference to G.O. Ms. No. 222 Labour and Employment dated 1.11.94, G..O.Ms. No. 80 Labour and Employment dt. 5.6.97 and and G.O.Ms. No. 95 Labour and Employment dated 2.7.97 is collected based on the total estimated cost of each civil work by D.D. in advance, i.e. at the time of issue of work order itself and forwarded to the ‘Manual Workers General Welfare Fund’ maintained by the Tamilnadu Labour Welfare Board.

(d) (i) The journal entries involved in the transactions are as follows: either at the time of part performance (i.e. first and part contract bill) or at the time of completion (final contract bill with completion report approved by the Municipal Enineer0

3121 / 3122 Projects in progress A/c Dr. 3053 To Materials cost Recoverable A/c – Contractors Cr. 1058.To Hire charges Cr. 1045. To Other Income – Fine Cr. 4035.To Income Tax Deductions – contractors (TDS) Cr. 4016 To Tender Deposit – contractors (Retention Money) Cr. 3052. To Advance to the Contractors (adjustment of advance) Cr. 4047. To Accounts payable A/c – contractors Cr. (ii) For net amount payable to the contractor : by BPV 4047. Accounts payable A/c – Contractors Dr. To Bank A/c Cr. (iii) For remitting Income Tax deducted; by BPV 4035 Income Tax Deductions A/c – contractors Dr. To Bank A/c Cr.

(9) As regards the works for which the payments are made and which are treated as ‘capital’ and those that are to be assetised / capitalized, the accounting system is prescribed under chapter on ‘Projects & Fixed Assets Accounting’.

CHAPTER – 09

PROJECTS AND FIXED ASSETS ACCOUNTING

1. The terms ‘Expenditure – ordinary’ and ‘Expenditure – capital’ are often used in all Accounting Manuals. But the term ‘Expenditure – capital’ though properly understood, is not followed in the strict accounting sense. The double entry accounting is basically aimed at ascertaining ‘the amount recoverable’ and the Assets Created out of capital expenditure. So, the Assets are created by spending on projects. On completion of the projects and on adding other expenditure directly connected with them such as advertisement charges, expenditure on inaugural functions etc. and certain others, at the prescribed percentages, these projects are brought under ‘Fixed Assets’. 2. ‘Capital Expenditure’ refers to the expenditure that results in,

(a) acquiring Assets of permanent nature, (b) extending or improving the existing assets, and (c) enhancing the value or life of an existing asset.

3. The following procedure is to be followed in this regard,

1) The estimate for a project should be prepared in a manner by which the class and sub-class of the Asset to be created by the project can be identified at the initial stage itself i.e. at the estimate preparation stage itself.

2) Projects Ledger (MCF 32) for all capital works is to be maintained by the Engineering Branch. 3) Supervision charges and departmental labour, if any, used on the various projects executed at a time, should be appointed by the prescribed formula, at the end of each financial year by preparing work sheet, till the projects are completed and assetised / capitalized. 4) Interest charges payable on loans through which projects are executed have to be added to the cost of projects annually during ‘execution period’ by preparing work sheet till the completed and assetised / capitalized. 5) In the case of ‘Bought our Assets’ i.e. assets purchased in a form of condition ready for use (Furniture, Vehicles, Machineries etc), the price including taxes, excise duty, transport charges, if any, installation charges and incidentals in connection with the proper functioning should be capitalized.

Examples:

(i) Land purchased in a low lying area: All expenditure incurred in filling up the land, leveling etc. should be added to the cost of land and capitalized. (ii) Purchase of Machinery: Besides the cost paid on purchase, installation charges, freight, testing chares etc. paid to outside agencies other than the dealer from whom it was purchased, should be added and the whole expenditure capitalized. (7) All purchase of assets of individual nature whose value is less than Rs. 1000/- each, need not be capitalized. Only quantitative records are to be maintained for them i.e. they should be entered in the Tools and Plant Register. (8) Expenditure on major repairs and maintenance of a particular item of asset should be capitalized, if such expenditure exceeds 10% of the cost of the asset and / or more than Rs. 10,000/-. If it is less, the expenditure can be treated as ‘Revenue Expenditure’ under Revenue Fund. The ceiling indicator is only nominal in nature. In real condition, the repairs and maintenance cost may be more depending on the gravity and necessity of repairs to be carried out, with reference to wear and tear requirement condition, to make or keep the asset in good condition. If the repairs carried out are purely of maintenance nature, making it not improving its worthiness nor increasing the use of its life, the expenditure on such repairs should be treated as maintenance, irrespective of the amount involved. (9) Additions made to a particular item of asset should be treated as a separate item of Capital Expenditure and added to the Asset concerned. (10) The fixed asset value should be reflected in the books of accounts and in the Asset Register (MCF 24) at the Original Cost. (11) All assets are to be identified by ‘Identification Numbers’ so that they can be easily known by any one incharge of execution and accounting. (12) Capitalisation of assets created in a big project, should be done as and when a particular component is completed, even though the project as a whole is not completed and still in progress. 4. Accounting for Bought out Assets:

(i) (a) Assets purchased as a part of the project, for example: purchase of land for construction of building, the journal entries will be:

3121 / 3122. Projects – in – progess A/c Dr. 4047. To Accounts Payable A/c – Land Owners Cr. (EJV is prepared) 4047. Accounts payable A/c – Land Owners Dr. To bank Account Cr. (BPV is prepared & cheque issued) Relevant Asset A/c (Land) Dr. 3121 – 3122. To Projects – in – progress A/c Cr. (By FAJV)

(ii) When bought out assets are purchased for specific purpose, for example: purchase of a vehicle for a department, the journal entry will be; Relevant Asset A/c Dr. 4048. To Accounts Payable A/c Suppliers Cr. (By FAJV) 4048. Accounts payable A/c Suppliers Dr. To Bank Account Cr. (By BPV)

5. Maintenance of Projects Ledger (MCF 32): (a) The Engineering Branch should maintain the Projects Ledger and allocate a

folio for each project. (b) The following particulars are to be entered; (i) Project code and description (ii) Mode of financing (iii) Estimate / sanction reference (iv) Department involved in executing the project.

6. (a) The following code numbers should be used for the modes of financing (source of finance) as indicated against each. Code No. Source of Financing

01 Government Loans 02 Loans & Grants (Project partly by loan & partly by grant) 03 Grant (Fully financed by Government) 04 Revenue Fund 05 M.U.D.F. 06 TUFIDCO Loan 07 Partly loan and partly revenue fund (e.g. Mega City) 08 M.P. Fund 09 M.L.A. Fund 10 Here, enter the name of the financial institution. The same should

be continued for ever.

If found necessary, more code numbers can be used against each of the Financial Institutions. (b) The Project should be identified easily. For example, Project No.01-72-98 indicates the following details: 01 - Government Loan (Source of Finance) 02 - Serial No. in the Projects Ledger (Project Code No.) 03 - Year of the Project, i.e. year in which it is commenced 7. Accounting of Assets created by completing the Projects: (a) Every capital work (Project) that is completed in all respects, shall be assetised / capitalized and brought to the Asset Register (MCF 24). While capitalizing a project, the elements of ‘indirect cost’ viz. Project overhead appropriation – Expenses and project Over head appropriation – interest (if it is completed out of the loan received) should be taken into account. (b) The following accounting treatment is involved. (i) When final payment is made to the Contractor, on completion of a Project, in addition to the CJV, another Journal Voucher – Fixed Asset Journal Voucher – has to be prepared, supported by the completion report with the following entries therefor. Specific Asset A/c Dr 3121/3122 Projects – in – progress A/c Cr (Value of the work done) 1069 To Projects overhead appropriation Cr

- Expenses A/c (To cover the prescribed percentage on the value of the work done towards the supervision charges, advertisement charges, expenditure on foundation stone laying ceremony, inaugural function (Opening Ceremony) etc) (ii) 3048 To Wages of Technical Assistant Cr. 1070 Projects – Overhead appropriation – Interest-A/c Cr. (In case the work was executed with loan, the interest calculated at the prescribed percentage on the value of the work done, as explained in Code No. 1070 in the manual Volume – II) (c) The entries in the Asset Register should be made with reference to the FAJV prepared as above, with the description of the Asset created and its value, and they should be attested by the Municipal Engineer.

(d) Maintenance of Asset (Fixed) Register: All the assets that are in existence as on 31st March i.e. before switching over to the accrual system of accounting, namely, land, buildings, bridges, culverts, roads, storm water drains, including open drains, over head tanks, pumping stations, water mains, furnitures, fixtures and machineries etc., have to be brought to the Asset Register (MCF 24) category wise, as opening entries with their depreciated value with reference to periods of construction, formation of roads at prescribed percentage based on their life period. All Assets created on and from 1.4.1999 have to be entered in the Asset Register at the original cost as ar5rived at in the Fixed Asset Journal Voucher and the original cost will remain as such in the register. The periodical depreciation with reference to prescribed percentage of individual asset taking its period of life will be worked out in the depreciation worksheet (MCF 37) every year, till its value is brought to minimum of Re.1/- For purpose of revaluation, the value of individual assets will be taken as Re.1/- Entries in the Asset Register have to be made by setting apart sufficient pages for each category of asset, so that any addition or improvement or deletion can be accommodated beneath the concerned asset. 8. Execution of Projects by other agencies on Deposit work system: There are projects that are executed out of the Loans/Grants received from the Govt. by entrusting the work to other agencies like P.W.D. Highways, T.N. Construction Corporation and TWAD Board. In some cases, orders are issued to the effect that the Loans/Grants sanctioned are directly placed at the disposal of the executing agency, without first the Loans/Grants being credited to the Municipal account and then the payment being made to the executing agency. The works are called ‘Deposit Works’. The transactions therefor should be accommodated under Capital Fund. The accounting system involved is as indicated below:

(1) When the Loan/grant actually received and then payment made.

(a). For receipt of Loan/Grant Bank Account Dr 4004/4013 To Laon/Grant from Govt. Cr (b) (i) For payment to the executing agency

3125 Advance to PWD/Highways etc., Dr (or) 3131 Advance to TWAD Board Dr To Bank Account Cr

(ii) When the Laon/Grant received by book adjustments only and not by cash, a E.J.V. is to be prepared 3125 Advance to PWD/Highways etc Dr (or) 3131 Advance to TWAD Board Dr 4004/4013 To Loan/Grant Cr

In both the above cases, necessaries entries in the Loan Ledger, Loan Appropriation Register and Grants Appropriation Register should be made simultaneously to watch the eventual completion of the Projects and to obtain the statements of expenditure periodically, from the executing agencies till the Projects are completed, assetised and handed over. Based on the periodical statements of expenditure received, from the executing agencies, the following journal entries have to be made in the accounts: 3121/3122 Projects - in – progress A/c Dr 3125 To Advance to PWD, Highways etc., Cr. 3131 To Advance to TWAD Board Cr. On receipt of Completion Reports and handing over possession Relevant Assets Account Dr 3121/3122 To Projects-in-Progress A/c Cr. 9. Accounting for Retirement of Assets: The word ‘Retirement’ with regard to assets, indicates the withdrawal of Asset from actie use because it has become obsolete, unserviceable or irrepairable. So it has retired from being useful for the user. The retired Asset is disposed off, as SCRAP.

(a) To account for retirement of Asset, the following journal entry is to be passed; 2037 Loss on sale of Fixed Asset A/c Dr. 4065-4071. Accumulated Depreciation A/c Dr. To Relevant Asset Account Cr. (at original cost) (By EJV) (b) To account for realization of cash received on sale of assets either by auction

or tender, the following journal entries are to be made; Bank Acccount Dr.

(Revenue Fund) 1045 To Other Income Cr. (By BRV)

10. Depreciation: (i) The life of Assets and the rates of depreciation on them are adopted as given in Tables A and B below, based on their being adopted in the State Govt. Departments and public sector undertakings. (ii) Sop far as Assets, other than those falling under Water Supply and Drainage Fund Account are concerned, ‘The written Down Value Method’, otherwise called the ‘Diminishing Balance Method’ is followed. (iii) In respect of some of the assets under Water Supply and Drainage Fund Account, that are special to this Fund, the Straight Line Method is followed. (iv) Both the methods are explained below: (a) Written Down Value Method: Under this method, the rates of depreciation will be applicable at a fixed percentage on the diminishing balance value of the Asset each year. In other words, the percentage of depreciation is calculated on the balance value of the Asset brought forward from year to year. (b) Straight Line Method: Under this method, the rates of depreciation will be applied at a fixed percentage on the original cost of the Asset at the end of the year. (v) In both the methods, the original cost of the Assets will be retained in the Asset Register (MCF 24) (vi) The depreciation so worked out every year, in the depreciation work sheet prescribed (MCF 35), will be brought to ‘Accumulated Depreciation Account’ under the Liabilities side of the Balance Sheet. (vii) The Assets that are purchased or acquired in a year are provided depreciation as indicated below: (a) No depreciation is chargeable if the Asset is purchased or acquired in the last month, i.e. March of the financial year. (b) If the period of purchase or acquisition is less than 6 months (i.e. purchased in the month October-February) in the financial year, the rate of depreciation, should be applied for the half year in the financial year.

(c) If the above period exceeds six months in the financial year (i.e. purchased in the months April-September), the rate of depreciation should be applied for the whole year. (viii) If the Asset is in existence and used beyond the period of its life, then the Asset should be valued at Re. 1/-

TABLE A Rates of Depreciation to be adopted – on the life of Assets under the ‘Written Down

Value Method’

Sl. No.

Description of Assets

Details of Assets that are to be included

Estimated Life

Percentage of Depr.

01 Land Parks, Burial Grounds, Play grounds and any vacant site on which no construction available and kept as vacant site. This includes the open space donated by the layout promoters, to the council by transfer deeds.

- No Depreciation on Lands

02 Building-Class I Civil Structures

Office buildings, School buildings, Public conveniences, Hospitals, Dispensaries, Clinics, Maternity & Child Welfare centers, Swimming pool, Market places, Slaughter houses, Dhobi khanas, Creches, Lethal chamber, Stadia, Shopping complexes, Zoo, Bus stand, T.B. / I.B, Town hall, Community hall, Lodging houses, Cinema theatre, Staff quarters etc

50 years 5

03 Building-class-II Civil Structures

Nutritious meal centers, Compound walls

15 years 18

04 Subways and Cause ways

Cause ways, vehicular subways, pedestrian over bridges

15 years 18

05 Bridges and Flyovers

Bridges and Flyovers 40 years 7

06 Storm water Drains-open Drains & Culverts

Storm water Drains – open Drains & Culverts

15 years 18

07 Heavy Vehicles Lorry, Tractor, Bulldozer, Mechanical Sweeper, Tipper,

10 years 25

Loader, Bus, Road roller etc 08 Light Vehicles Jeeps, Cars, Power Tillers,

Motorcycles, Mini lorry, Autorickshaw etc

10 years 25

09 Other Vehicles Single driven RC, Double Driven RC, Bicycles, Cart etc (RC-Rubbish cart)

5 years 50

10 Furniture, Fixtures, Office Equipments etc

Steel chairs, Steel Tables, Wooden chairs, Wooden tables, Steel racks, Wooden racks, Steel cupboards, Typewriters, Duplicators, Xerox machines, Communication Equipments, Calculators, Air conditioners, Water coolers, Refrigerators, Fans, Electrical fittings. Other Office equipments (e.g. Bradma Registrex) Radios, TVs, Stools, Public address systems, Wireless equipments Gestetners etc.

10 years 25

11 Plant / Machinery & Equipment (excluding office equipment)

Road rollers, Mixing mortars, other Civil Engineering equipments, Medical equipments in Hospitals, Dispensaries & Maternity centres, School equipments public health equipments, Tower clocks, electrical equipments including generator, Motor pumps, other Plant & Machinery etc

10 years 25

12 Roads & Pavements Concrete (including barricades)

- 10 years 25

13 Roads & pavements black topped(including amenities)

- 6 years 40

14 Roads & pavements asphalt & WBM

- 3 years 60

15 Roads & pavements concrete, Black topped-Sub-

- 50 years 5

grade 16 Electrical

installation – Transformers, Cables

HT & LT 20 years 14

17 Electrical Installation - Lamps

Mercury Vapour Lamps, Sodium Vapour Lamps Tube Light Fittings

10 years 3 years

25 60

18 Bulls Bulls for carts 3 years 60 19 Computers Computer Machinery,

peripherals like printers, mouse etc

5 years 20

20 Carts Single & Double Bullock carts 3 years 60

TABLE – B

WATER SUPPLY AND DRAINAGE FUND ACCOUNT

Life of Assets and rates of depreciation to be adopted under Straight Line Method. Note: Life and rate of depreciation to be adopted in respect of Buildings, other civil structures, Furniture, Fixtures, Office equipments, Lorries, Jeeps & Cars are the same as applicable to other departments as mentioned in TABLE – A

Sl. No.

Description of Assets

Details of Assets that are to be included

Estimated Life

Percentage of Depr.

21 Water Supply Source and Transmission System

1. Reservoirs 2. OHT / GLR 3. Ground Water Wells / Deep

bore wells 4. Channels 5. Conduits

33 years - do - 20 years 40 years 50 years

3.0 - do - 5.0 2.5 2.0

22 Water Distribution System

Pipe Lines: 1. Upto 200 m.m. (dia) 2. Above 200 m.m. (dia)

40 years 60 years

2.5 1.67

23 Water Distribution System

1. M.S. Steel Tanks 2. India Mark II Pumps 3. 3. Hand Pumps 4. Public Fountains

5 years 5 years 5 years 5 years

20 20 20 20

24 Sewerage Collection & Transmission System

Sewerage Lines 30 years 3.33

25 Plant and (a) Water Supply 10 years 10

Machinery 1. Mechanical Filters 2. Filter Beds 3. Head works, Well points 4. Generator of Booster Station

(b) Sewerage 1. Pumping Machinery 2. Treatment Plants

10 years

10

26 Laboratory Equipments

All equipments in the Laboratories maintained for the Water Supply and Sewerage system

10 years 10.0

11. Accumulated Depreciation Fund: Under this method, the Asset Account is allowed to stand in the books at its original cost from year to year. At the end of each year, the depreciation at the rates prescribed for various kinds of assets, while charging to Income and Expenditure Account, is taken to Accumulated Depreciation Fund Accounts of respective assets, by preparing depreciation work sheet in MCF 35.

(i) If the amount out of this fund is invested in Fixed Deposit, the entry will be as below:-

Accumulated Depreciation Fund Investment A/c Dr To Bank Cr

(ii) The periodical interest realized on such Fixed Deposits will be

accounted as under:- Bank A/c Dr To Accumulated Deprecation Fund A/c Cr.

Such interest earned should also be invested in the same type of Fixed Deposit. The above accounting system will enable providing a fund for their replacements at the time when the old assets have to be discarded and replaced by new ones, without, in anyway, disturbing the financial condition of the Municipality. Note: The guidelines on Accounting for fixed assets, as prescribed by the revised Accounting Standard (AS-10) included in Appendix – II to this Manual shall be followed for Accounting of Assets.

CHAPTER – 10

LOANS AND GRANTS ACCOUNTING (a) (i) The Government extend the financial assistance to the Municipalities, by way of LOANS and GRANTS for creating assets in order to earn income therefrom and for providing infrastructure facilities in the municipal areas. Besides Loans are received from Financial Institutions like TUFIDCO, TNUDF, HUDCO etc. At times, ways and means advance is also obtained from the Government to tide over financial difficulty faced by them. Specific grants are sanctioned by the Government for implementation of specific schemes by them. (ii) The fundamental principle is that the loans and grants specifically sanctioned for capital works / projects etc. should be utilized for the purpose for which they are sanctioned and that they should not be diverted for any other purposes. To avoid such wrong or improper utilization, it is necessary that the funds received under this category are kept distinct from the REVENUE FUND. With this object in view, a separate fnd called ‘CAPITAL FUND’ is to be created and mainained. (iii) So, the ‘CAPITAL FUND’ should have a separate Bank Account. In this Fund, by accounting all loans and grants for specific purposes, the progress of the expenditure on Projects is effectively watched. However, the grant i.e. allocation of state resources by means of financial devolution based on specific norms, on the recommendation of the State Finance Commission called ‘Devolution Fund’ ways and means advance and other revenue grants such as M&CW grant, Anti-filaria grant etc. should be accounted under REVENUE FUND only. (iv) The capital grant referred to above, is in the nature of contribution to the equity of the Municipality. Hence it should be transferred to the contribution account on completion of a project, to the extent of the cost of the asset created out of such grant. Accordingly, provision is made in the Assets and Liabilities Account under CAPITAL FUND. (b) Receipts: The LOAN LEDGER, now in force, should be continued to be maintained to watch the receipt and repayment of loan. (1) On receipt of loan, the following journal entry is to be made Bank Account Dr To Loan Account Cr (Specify Account Code No)

(2) For repayment of loan / Ways and means Advances the following journal entry is to be made. Loan Account / Ways and means Advances A/c Dr (3123) To Bank A/c Cr (This is paid from Capital Fund) (3) For payment interest on loan i.e. Interest portion of the annuity 2029 – Interest of Loan A/c Dr (3066) – To Bank A/c Cr (This is paid from Revenue Fund) (i) For utilization of loan amount for the purpose for which it was received, the Loan Appropriation Register will be continued to be maintained. (ii) Similarly, the MDR for grants will continue to be maintained for watching the receipt. The Grant Appropriation Register should be maintained for utilization of the grant. On receipt of the grant, the following journal entry shall be made; Bank Account Dr 4014. To Grant from the Government Cr (Nature of grant to be specified) The accounting system for incurring expenditure out of the loans and grants and assetising such expenditure periodically, on completion of works or projects, is prescribed under the previous chapter. (iii) The Grant Appropriation Register is provided with columns for noting down the progress of expenditure. The Capital expenditure incurred shall be accounted for in the Projects Ledger and the ‘Projects-in-Progress’ Account in the General Ledger (MCF 34) (c) Revenue Grants: As regards the revenue grants that are very specific, like grant for M&CW scheme, Anti-malaria programme etc., the amount of grant due should be worked out and the claim preferred immediately after the financial year is over, but before the closure of the accounts for the year. The grant so due, should be brought to ‘Grants Receivable Account’ by a G.J.V. with the following entries 3020. Specific Grant Receivable Account Dr (Nature of Grant to be specified) 1052. To Grants for Schemes Implementation Cr

(d) Capital Grants (To be included) (e) Reconciliation of Outstanding Loans (i) At the end of the financial year, a Loan & Grants STATUS REPORT should be prepared. The total of loans outstanding at the end of the year should be tallied with the respective folios in the General Ledger as well as Loan Ledger. (ii) Similar reconciliation should be done periodically with the Accountant General’s office or office of the Director of Municipal Administration as per the instructions of the DMA / the Government, from time to time. (f) Sinking Fund: When the financial position improves, action should be taken to create a SINKING FUND with the sanction of the council and the Government to enable the Municipality to become a viable one. Consequently action should be taken to get ‘Credit Rating’ certificate by one of the independent agencies.

CHAPER – 11

DEPOSITS AND ADVANCES ACCOUNTING

(a) (i) The Accounting under “Deposits and Advances” is an important function attended to, by the accounts cell.

(ii) The deposits that are received from the Lessees, Contactors, Staff members and others should find place in under “Liabilities”, in view of the fact that they are either refundable, when claimed , on proper authority or adjusted to service heads under specific orders of the appropriate authority. The deposits, here, include security deposit.

(iii) There is a misconception that items of receipt (income) that could not be Classified can be conveniently brought under “Deposit”. This is undesirable, unhealthy, and not permissible, because in the long run, to say after a year, there is a possibility of refunding such items to person to whom these items are not, in fact, due. As account code numbers have been assigned to all items of income, there is absolutely no need to resort to accounting a particular item of revenue, under “DEPOSIT” instead of accounting it under the relevant Account code No. under Income.

(iv) The advances paid to the staff members and others should find place under “Assets”, in view of the fact that they are either recovered as such or adjusted to the specific service head. (v) Advances to the employees are paid as a sort of staff welfare measure. Similarly, advances for other purposes are allowed, to expedite a purchasing or executing work, in view of urgency of the matter and for supply of cement, bitumen etc. So, advances should be recovered in time, as per rules or adjusted as soon as the purposes, for which they are drawn, are over.

(vi) Therefore, a periodical review of the pending advances by the Authority is quite necessary, by initiating close pursuit of action against those to whom advances were paid.

(vii) The accounting entries to be made for the credits and debits under these two account heads are given below.

(1) DEPOSITS :

The deposits will be classified as :

a) Tender Deposit – Contractors (for execution of works) b) –do- -- Suppliers (for satisfactory supply of materials) c) Security Deposit – Revenue (Leases, auctions, bids, servicing etc.,) d) –do- -- Staff e) Deposits -- Others The tender deposit and lessee deposit will include security deposit fixed and collected additionally. Accordingly five distinct Account code nos. are given. The register of deposits should be maintained separately for the above five kinds or in a single register allocating separate pages depending upon the volume of transactions. Deposit amounts should not be used for revenue expenditure and deposits which are not refundable in nature should be transferred to the capital accounts of the concerned funds. The deposits received from applicants of Water supply and drainage new house service connections accounted for in code no.ws1081 should be treated as “capital receipts” by keeping them in a separate bank account (code no.3140) and the amount should be used, only for “debt – servicing”, execution of capital works and for major repairs under water supply and drainage account heads. The major repair would mean 10% of the depreciated value of the asset or Rs 10, 000/- whichever is higher spent on making the asset in an usable condition. The deposits collected from the contractors, suppliers, lessees etc., and also other non-refundable deposits (e.g. lapsed deposits) should not be used for

either revenue or capital expenditure. The amounts available in these account code nos. should be reconciled and they should be invested in short term deposits once in a quarter. Immediate actions should be taken to reconcile that deposits amounts in the various codes nos. with the register of deposits which were already diverted for revenue expenditure and to invest them in a phased manner in short term deposit on quarterly basis. To account for Journal Entries Necessity / Purpose i) Receipt Bank Account Dr.

To specific deposit Account Cr

When the deposit is remitted either in cash or by cheque or DD, it will be covered in the daily BRV

ii) Refund Specific Deposit A/c Dr. To Bank Cr

Asusual, the existing deposit refund voucher duly approved by the authorized officer should be first prepared and BPV duly signed by him, insisting on enclosing original chalan/receipt or certificate for verification of credit entry in the records, making an endorsement for refund over the attestation by the commissioner/Asst commissioner (accounts), where the party’s chalan is not given at the time of receiving deposit

iii) Adjustment Specific Deposit A/c Dr To specific receipt head of account to which it should be adjusted Cr

As no payment is involved, no BPV is to be prepared. Only EJV is to be prepared with specific order copy and with due intimation to the depositor

iv) Forfeiture Specific deposit A/c Dr 1073. To deposit forfeited account Cr

Here also, since no payment is involved, only EJV is to be prepared with a copy of specific order for forteiture and due intimation to the concerned party

v) Lapsed Specific deposit A/c Dr 1074 To Lapsed deposit Account Cr

No payment is involved, as in the above two cases. It is enough if an EJV is prepared based on approved list with a copy of specific orders lapsing the deposits to the council

(2) Advances: I. Payment: The advance includes,

a) Payment of employees’ advances such as Festival Advance, Marriage advance, handloom advance / khadi advance, flood advance, house building advance, conveyance advance, advances of pay and travel expenses on the eve of transfer, tour advance, immediate relief advance etc.

b) Advance to suppliers c) Advance to contractors d) Other advances

The advance recoverable register is to be maintained separately for each kind of advance. II. Adjustment / Recovery:

a) The advances paid are to be recovered by adjustment from pay bills of staff,

suppliers’ bills contractors’ bills etc. In some cases, the advances will be recovered in cash.

b) In respect of advances paid to the suppliers, contractors and others, the adjustment will be of two kinds as explained below

c) When the bill amount is more than the advance paid, the advance will be adjusted and the balance of the bill will be paid.

d) When the bill amount is less than the advance paid, the advance will be adjusted and the balance of advance will be recovered in cash or by cheque.

To account for Journal Entries Necessity / Purpose

i) (a) Staff Advance – Interest free

Advance (specific kind of advance) account Dr To Bank Account Cr

A BPV is to be prepared enclosing a copy of the proceedings sanctioning the advance by making simultaneous posting in the advance recoverable register maintained both in the accounts cell and the department concerned. This will precede passing of bill for payment

i) (b) Interest bearing advance like marriage advance

GJV 3047 Interest on Staff advance - recoverable) 1,000

Interest should be calculated and the General Journal voucher prepared, to ensure that the interest

1071 Interest on Staff advance 1,000 BPV 4045 Marriage advance 10,000 3066 - Bank A/c 10,000

amount is recovered after the recovery of advance amount is over Note: (1) Separate pages shall be allotted in the register of advances recoverable to accommodate recovery of interest after the advance amount is recovered (2) Though the interest of Rs. 1,000/- can be recovered after 5 years, the income by way of interest is accounted in the accounting year in which the advance was paid. This is only a notional account and hence it does not substantially affect the Income & Expenditure A/c

ii) Advance to the suppliers 3051. Advance to the suppliers Dr. To Bank Account Cr.

A BPV is to be prepared enclosing a copy of the sanction order for payment, duly making posting in the advance recoverable register maintained in the accounts cell. Besides, the administrative sanction concerned has to watch the adjustment of advance paid as soon as the specified purpose/object for which it is paid is over.

To account for Journal Entries Necessity / Purpose iii) Advance to the contractors

3052. Advance to the contractors A/c Dr To Bank account Cr

The above procedure is applicable in this case also.

Explanation: When the advance given in Sl. No. ii) & iii) above, is adjusted by getting an account for it from the supplier/contractor, and by receiving the article or by getting the work done, the I.T at prescribed rate should be deducted and the net payment is made iv) Advances recoverable - expenses

3054 Advance recoverable A/c –

In cases where advances are paid for specific purposes

Expenses Dr (Nature of advance to be specified) To Bank account Cr

such as advance for transport charges paid to the engineer, advance for purchase of stationery articles for urgent requirement, to a staff member etc, a BPV is to be prepared with specific sanction of the appropriate authority, making entry in the advance recoverable register maintained in the accounts cell

v) Other advances 3055 Other advances A/c Dr To Bank A/c Cr

The advances not covered in the above categories will be booking in this code, such as advance to noon-meal account, funeral rites payment etc, by preparing a BPV enclosing a specific sanction order of the commissioner and by making entries in the advances recoverable register

vi) Adjustments a) Pay bill recoveries

2001-2011 Salaries A/c Dr To advance account 3028 – Festivel Advance Cr 3045 – Marriage advance Cr - and so on Cr

The monthly salary bill should be accompanied by a EJV in which all recoveries with account code nos. are specified. When the above EJV is given effect to, this journal entry is to be made. The same procedure is applicable for recoveries made from supplemental salary bills, by preparing an EJV

b) Recovery of advance by CASH

Bank Account Dr To advances account 3028- Festival advance Cr 3045 – Marriage Advance Cr - and so on Cr

When the festival advance or any other personal advance is remitted in cash through chalan with code no. etc in the treasury, the chalan is included in the daily collection of the Treasury and accounted for through BPV prepared for

the day and reflected in the receipt book. As one copy of the above receipted chalan is forwarded to the assistant incharge of the advances accounting in the accounts cell, he should with reference to the copy of chalan received, give posting in red ink in the advance recoverable register

c) Adjustment of advance to the suppliers

By PJV (1) Specific Expenses A/c Dr (or) Specific stock A/c Dr 3051. To advance to the suppliers A/c Cr 4035 T.D.S A/c Cr Suppliers 4048. To accounts payable A/c – Suppliers Cr By BPV 4048. Accounts payable A/c Suppliers Dr To Bank A/c Cr (2) 4035 – T.D.S. A/c Dr (3123) - bank A/c Cr (When I.T is remitted to I.T. department)

A BPV is to be prepared on receipt of suppliers’ bill and after scrutiny of the correctness of the claim duly supported by stock entry, simultaneously making posting in the advance recoverable register. This becomes necessary when payment is made to the supplier over and above the advance already paid and now adjusted in the books of accounts. The Income Tax due should also be deducted at source.

d) Adjustment of advance to the contractors

By CJV (1) Specific expenses A/c Dr 3052. To Advance to the Contractors A/c Cr 4035.T.D.S.Contractor Cr 4047 To accounts payable A/c contractors Cr

The procedure applicable in the case of advance to suppliers is equally applicable here with suitable modification thereof. But care should be taken to see that T.D.S. aspect is not lost sight of

By BPV

4047. Accounts payable A/c Contractors Dr To Bank A/c Cr (2) 4035 T.D.S. A/c Dr (3123) Bank A/c Cr (When I.T. is remitted to the I.T. Dept)

e) Adjustment of other advances

By EJV Specific expenses A/c Dr 3055. To other advances recoverable A/c (to be specified) Cr 4049. To accounts payable A/c - Expenses Cr By BPV 4049. Accounts payable A/c expenses Dr To Bank A/c Cr

- do -

Specific expenses A/ Dr 3055. To other advances recoverable A/c Cr

There may be cases where the expenses incurred out of the advance will be lesser than the advance paid/drawn. In such cases, besides presenting the adjustment bill with the EJV, the balance of advance is to be remitted in cash through chalan. For the balance of advance remitted in cash through chalan, and included in the Treasury Daily Collection and covered in the BRV, the copy of receipted chalan meant for the assistant in charge of advances should be used for making entry in red ink in the Advance Recoverable Register

CHAPTER – 12

WATER SUPPLY AND DRAINAGE FUND ACCOUNTING

The policy of the Government is that the water supply and drainage fund should be kept separate and distinct inorder to assess its self sufficiency. But in many of the municipalities, this fund accounting is continued to be maintained under the General Fund (Revenue fund). In three municipal corporations and in some municipalities it is kept separate. This account has to be necessarily kept separate and distinct as ‘REVENUE ACCOUNT’ and ‘CAPITAL ACCOUNT’ within the water supply & drainage fund account. 1. REVENUE ACCOUNT: 1. Income: The following items are to be accounted under ‘Income’

(i) The water supply and drainage tax component of property tax (ii) Charges for water supplied through individual house service connections for

which Demand Registers are maintained (Metered / Tap rate charges) (iii) Cost of application forms for new connections (iv) Centage charges on providing new connections (v) Recovery towards cost of materials supplied by the municipality and used for

providing new connections (vi) Cost of supplying water through lorries on prepayment (vii) Other income – water supply (viii) Sewerage connection charges in case where the sewerage system is available (ix) Sewage farm receipts (x) Other income – Sewerage

The code nos. provided in the chart of accounts for income account heads should be used to the above income items, with departmental prefix ‘WS & SF’ allotted to this department. One important aspect that should be noted in this account is that the deposits received from the house owners for new service connections need not be accounted under ‘Liabilities’ as we do, in the case of revenue fund and capital fund, because no occasion would normally arise for refund to the house owners. So, it should be accounted under code no. 1081 in the capital account meant for utilizing on repayment of loan / execution of specific scheme or for carrying out major repairs by maintaining a separate bank account. This deposit is known as ‘initial amount’ for giving new water supply and drainage connections. So, it should be invested in short term deposit in the bank in such a

manner that it is readily available to repay the loan on due dates. As such, this deposit should not be used for Revenue Expenditure. (2) Expenditure: The following items are to be accounted under ‘Expenditure’”

(i) Salaries of Engineers and other Engineering staff and the staff like sewage farm superintendent and supporting staff incharge of water supply and sewerage including ministerial staff attending to these sections.

(ii) Maintenance charges for pumping stations including electricity charges (iii) Purchase of bleaching powder, alum and other chlorination materials. (iv) Vehicles – maintenance including cost of petrol / diesel (v) Bore wells for water supply – maintenance (vi) Cost of maintenance for sewerage system (vii) Cost of maintaining Sewage farm (viii) Royalty payable to the Government (ix) Demand raised by TWAD board for maintaining combined water supply

schemes (x) Interest on loans (xi) Repayment of loans (xii) Other expenses

The code nos. provided in the chart of accounts for expenditure account heads should be used to the above expenditure items with the departmental prefix ‘WS & SF’ allotted to this department. 2. CAPITAL ACCOUNT: The loans or capital grants received are to be directly accounted in the ‘Capital Account’. The expenditure incurred, are accounted under this Capital Account by maintaining the Projects Ledger. Necessary ‘account heads’ have been provided for this purpose. The accounting system is the same that is applicable to other Funds. 3. ACCOUTING PROCEDURE: (i) The following authorized items of Revenue Expenditure may be met from the Devolution fund in terms of G.O. Ms. No. 109. MAWS dated 3.5.97.

1. Electricity charges – Water supply 2. Monthly maintenance charges claimed by TWAD board 3. Water supply maintenance including purchase of bleaching powder, alum etc 4. Maintenance of underground drainage system 5. Maintenance of sewage farm 6. Payment of pension contribution and retirement benefits 7. Staff salaries

8. Interest on loans (ii) The actual amount required for the above purposes, should be assessed and got transferred from code no. RF 1053 and credited to code no. WS1053 by cheques and then only payments made and accounted for, under the respective heads of accounts by providing prefix ‘DV’ to such of those cod nos. and BPVs through which they are paid. (iii) It should be noted that only the exact amount (Gross) required should be worked out and got transferred to this fund account. For some reason or other, if any amount so transferred as above is found to be more than the amount actually spent, then such amount should, forthwith, be remitted back to the credit of code no. RF 1053. The underlying idea behind this is that only the required amount should be received from the Devolution fund in the Revenue Fund account. (iv) In respect of Pension Contribution payable on behalf of superior employees working in this department, to the Pension Fund of the Director of local Fund Audit, the amount due is deducted by the Director of municipal administration from the Devolution fund released by him on quarterly basis and remitted to the Director of Local Fund Audit. Hence the following adjustment entries only have to be made in the accounts through G.J.V. WS2039 Pension Contribution to the Municipal Employees Pension Fund Dr WS1053 To Devolution Fund Cr 5. Compilation of accounts: The following records and Accounts have to be prepared for compilation of the monthly and annual accounts relating to the water supply and drainage fund.

1. Daily (i) Receipt book (ii) Payment book (iii) General Ledger

2. Monthly

Trial balance

3. Annual The Income & Expenditure Account and the Balance sheet are integrated in those accounts prepared for the municipality as a whole.

6. General 1.The Municipal Engineers are incharge of both civil works and water supply works and hence they should apply their mind while processing the claims and incurring expenditure, to specify code no. under which the expenditure should be incurred. For example, there are two jeeps under the control of the Municipal Engineer, one for civil work and another for water supply. The maintenance expenses, payment of M.V.T., insurance etc., should be analysed first and specific code nos. indicated on the vouchers prepared by him. 2. Another claim is payment of power charges, one for street lights and another for head works, booster station etc, under water supply. While proposing for payment, the EJVs and BPVs should be prepared with correct classification of expenditure. 3. With such a close co-operation and support form the departmental officers, the accounts cell would be in a position, to clear the liabilities, expeditiously and classifying the expenditure properly.

CHAPTER – 13

PREPARATION OF OPENING BALANCE SHEET

1. The preparation of opening balance sheet as on the date of introduction of accrual system of accounting is an important item of work. 2. The main objective is to ascertain the various municipal assets and liabilities and thereby its net worth and to provide a starting point for the operation of the accrual system. 3. As a prelude, detailed data have to be gathered from this existing records and various sources. In order to collect such data in respect of all kinds of assets and liabilities at any given date, 24 schedules have been designed and included in vol – III of this manual , with instructions, wherever necessary, to fill up the schedules with required details. Hence efforts should be made to gather the relevant details without any omission and to ensure their accuracy at all levels. 4. Three balance sheets have to be prepared based on the data gathered through the various schedules mentioned above for the following funds.

(i) Revenue Fund and Capital Fund (ii) Water supply and Drainage fund (iii) Elementary Education fund

5. Any inaccuracy or incompleteness in any of the assets / liabilities listed under different funds will affect the amount shown by accumulated surplus in the balance sheets which is nothing but to balance figures on both sides of the liabilities and assets. Hence future adjustments have to be made in this amount based on changes, if effected, in other items. 6. The model opening balance sheet annexed to this chapter are arranged in such a manner that the code nos. allotted for them can be easily adopted for subsequent integration with the first balance sheets to be prepared in the accrual system. 7. Based on the preparation of the Opening balance sheet – Fundwise – Opening entries have to be made in the Form of a GJV for each Fund, debiting the value of all assets and crediting the various liabilities. The difference shall be taken as accumulated surplus (liabilities side) or accumulated deficit (asset side) 8. The formats for the Income and Expenditure account and the balance sheet are included in the Accounting Manual Volume - III.

…………… MUNICIPALITY ..…………. CORPORATION

Opening Balance Sheet as on 1st Apr for Revenue and Capital Funds

Liabilities Rs Assets Rs

• Govt Loans • Ways & Means Advance • Loans from other

Financial Agencies • Tender deposits

# Contractors # Suppliers

• Security Deposits # Suppliers # Contractors # Staff # Others

• P.F. Recoveries Payable • Interest payable • C.M.D.A. / LPA Contribution - Payable • Account payables …………. …………. • Library cess payable

• Land • Buildings (including

High & Higher Secondary School buildings)

• Cause Ways & Subways • Storm Water drains

(including open drains) • Culverts • Vehicles * Heavy * Light * Others • Furniture, Fixtures &

Office equipments • Plant & Machinery • Roads, Street & Lanes • Electrical – * Cables * Luminary fittings * Sub-stations • Projects-in-progress

• Outstanding bills • Outstanding Salaries • Education Tax payable • Water Supply & Drainage Tax payable • Accumulated Surplus

• Investments • Stock • Advances

* Suppliers * Staff * Others

• Property tax recoverable • Other taxes and fees recoverable • Arrear Grants

recoverable • Assigned revenue recoverable • Road cut charges

recoverable • Cash on hand • Cash at bank of various Accounts

Note: For inclusion of more Assets & Liabilities and reference of Code numbers refer to Form no. AFII in Volume III.

…………… MUNICIPALITY ..…………. CORPORATION

Water Supply and Drainage Fund Opening Balance Sheet as on 1st Apr ……………….

Liabilities Rs Assets Rs

• Govt Loans • Ways & Means Advance • Loans from other

Financial Agencies • Tender deposits

# Suppliers # Contractors

• Security Deposits # Suppliers # Staff # Others

• Recoveries from Employees’ Pay bills - payable

• Interest on loan Payable • Maintenance charges Payable to TWAD Board / Metro Water Board • Account Payables

…………….. ……………..

• Outstanding bills • Outstanding salaries • Accumulated Surplus

• Land • Buildings • Resorvoirs • Booster Station • Pumping station • O.H.T.s • Water supply main • Plant & Machineries in

sewage farm • Sewerage Mains • Ground water wells • Deep bore wells • India Mark II pumps • Vehicles * Heavy * Light * Others • Furniture, Fixtures &

Office equipments • Plant & Machinery • Projects-in Progress • Investments • Stock • Advances -

* Suppliers * Staff * Others

• Water supply & Drainage tax receivable

• Water charges recoverable

• Arrear Grant recoverable • Cash on hand • Cash at bank

Note: For inclusion of more Assets & Liabilities and reference of Code numbers refer to Form no. AFII in Volume III.

…………… MUNICIPALITY ..…………. CORPORATION Elementary Education Fund

Opening Balance Sheet as on 1st Apr ……………….

Liabilities Rs Assets Rs • Outstanding salaries • Other payables • Accumulated Surplus

• Land • School Buildings • Vehicles (including

school vans, if any) • Furniture, Fixtures &

Office equipments • Bank balance • Pension payment to the

Teachers – recoverable from the Govt.

• Education tax - receivable

Note: For inclusion of more Assets & Liabilities and reference of Code numbers refer to Form no. AFII in Volume III.

CHAPTER – 14

COMPILATION OF ACCOUNTS

All activities will result in ultimate financial transactions which are to be recorded in their two fold effects under this system in original books of entry, that is, in ‘Receipts Book’ and ‘Payments Book’ and also in the other subsidiary ledgers like projects ledger, deposit register, advance recoverable register, priced stores ledger etc. The basic documents which are responsible for maintenance of the above records are BRVs, PBVs, GJVs, EJVs, PJVs, CJVs and FAJVs, the importance and preparation of which are already explained in this manual in detail. 2. The following financial statements are to be prepared for a year to ensure proper functioning are made or liabilities created, only on authorized objects and purposed related to their functioning. (a) Monthly

(i) Trial balance (ii) Projects expenditure statement

(b) Annually

(i) Income and Expenditure account (AF 1A and AF 1B) (ii) Balance sheet (AF II)

3. Trial Balance The following documents have to be posted daily and closed monthly to prepare the trial balance

(i) Receipts book (ii) Payments book (iii) General Ledger

(a) Receipt book The bank receipt vouchers (BRVs) numbered serially are prepared for daily collections and remittances should first ensure that the copies of BRVs are all available in a chronological order. Whenever the credit entries are to be reversed on account of dishonoured cheques, the Bank Payment Voucher (BPV) para 5 of para (5) ‘Accounting of Dishonoured cheques’ under chapter ’02. (a) Property Tax Accounting’ should be available.

These two documents should be used for preparing the receipt book. (b) Payments book The copies of all Bank Payment Vouchers (BPVs) serially numbered through which cheques were drawn, in a serially arranged manner should also be transferred to the compilation section of the accounts cell. From the in-puts viz. BPVs the payments book is brought out as out-put. (c) Preparation of Bank Reconciliation Statement: The bank scroll which is the bank’s record of the transactions between the bank and the municipality for receipts and payments at any particular date agree with the bank balances as shown in the receipts book and payments book. Note: The commissioner should appraise the manager of the need to furnish the bank scrolls on weekly basis and withdrawals systematically to guard against possible defalcations of the money meant for remittance and manipulation in writing cheques. This is an important function to ensure that the balances in the receipts book and the payments book agree with those in the bank scrolls at the end of each month. The differences are bound to occur for various reasons. Reconciliation statement should be prepared ‘monthly’ to indicate the items of disagreement on any given date after ticking off all the items in the scroll with the entries in the receipts / payments books. The unticked items in the bank scroll will relate to the credits given but not credited or cheques issued but not presented by the parties for payment. By preparing ‘plus & minus memo’ which is otherwise known as Bank Reconciliation statement, agreement could be effected subject to the subsequent settlement by close watch over those items. (d) General Ledger (MCF 34) Every transaction covered either by BRV or BPV or Journal Vouchers (GJV, EJV, PJV, CJV & FAJV) after first being recorded in the books of original entry viz, receipts book, payments book and bank transfer book finds its subsequent destination in General Ledger in which the transactions reflect in a more properly arranged classified and condensed form. Thus the summary of the transactions recorded in the receipts book, payments book, bank transfer book and in different kinds of journal vouchers would be posted head may represent either an asset or an expense. Similarly the NET credit balance of any account head represents either a liability or a gain. The General Ledger for Water supply & Drainage fund and elementary education fund should also be maintained separately on the above lines. 4. Preparation of Trial balance:

The principle of double entry is that for every debit, there must be a corresponding credit. It follows that the sum total of the debit balances in various account heads in the general ledger should be equal to the sum total of the credit balances in the other account heads. This could be the proof and the income and expenditure account and the balance sheet. It must be noted that the case on hand at Treasury and balance with bank collection account / the payment account as indicated in the receipts book and payments book after taking into account transfers out and transfers in through bank transfer book should be included in the trial balance. 5. The trial balance may not be construed as a conclusive proof as to the absolute accuracy of the books since some discrepancies as detailed here under are bound to creep in.

(i) Omission of any entry in the original book (ii) A wrong entry in the original book (iii) Posting an item to the wrong account (iv) Compensating errors (v) Errors in totaling (vi) Errors in extracting balances (vii) Errors in totaling and balancing the ledger accounts (viii) Errors in posting from JVs to the general ledger (ix) Errors of principle (x) Omission to post one aspect of an entry

(b) Posting one aspect to the wrong side of the account head (c) Posting one aspect of an entry twice under the same ledger account head 6. Some of the steps that have to be taken to find out those errors and set right them are given below Note: At times the trial balance will show odd or exceptional balances. For eg, asset account (always to show debit balance) would show credit balance and so also an expenses account, a net credit balance instead of a net credit balance instead of a net debit balance. Steps to be taken:

1. Re-check the totals of the trial balance 2. See that the inclusion of cash and bank balance in not omitted. 3. Based on the side, i.e. debit side or credit side, if the difference exists, it

may be an amount exactly equaling the difference that has been left out unposted

4. Scan the journals to see that the total debits and credits of each entry tally 5. Check the totals of the subsidiary ledgers

Thus the trial balance having been agreed, the income and expenditure account should be prepared. 7. Projects Expenditure Statement

(a) This should be prepared monthly from the project wise cost to date, n the projects ledger and the totals of the ledger should be reconciled with the projects-in-progress account in the general ledger. This would act as an additional check on the accurate maintenance of the Project records.

(b) Interest paid on loans should also be added on to the cost of the project during the construction period only. Supervision charges and cost of departmental labour among the various projects in execution annually and finally on completion.

(c) The capital grants are in the nature of contribution to the equity of the local body. They to the extent of the cost of the asset created out of such grants.

(d) Thus this statement would provide ‘cost data’ indicating budgeted sanction, balance available, expected over-run and expected date of completion of each project.

8. Income and Expenditure Account It includes all income earned during a year whether actually received or not and all expenditure incurred whether actually paid or not. It does not commence with any balance. It includes revenue items only. The same procedure is applicable for the Income and Expenditure accounts of Water supply and Drainage fund account and Elementary Education fund account with the prefix provided therefor. It will cover only the income or expense belonging to the year for which it is prepared. The difference between the two sides would mean either net surplus for the year or net deficiency for the year and it must always be accompanied by the relative balance sheet. The following steps will be the guidelines in the preparation of this account

1. Exclude the opening and closing cash and bank balances 2. Eliminate all the items of capital receipts and payments 3. Exclude income of the previous period or any income received in advance 4. Provide for accrued income i.e. the income earned during the period but not

received 5. Exclude expenditure either of the preceding period or the succeeding period 6. Provide for expenditure due but not paid (outstanding bills that are payable) 7. Provide for reserve for doubtful

Thus the income and expenditure account is prepared summarizing all revenue income and expenditure to determine the net revenue surplus / deficit in the financial year and taken to the balance sheet as excess income over expenditure or excess expenditure over income 9.Balance sheet:

(a) A balance sheet is a statement prepared with a view to measure the exact financial

status of the municipality at the end of the financial year (accounting year). It is prepared from the balances representing Assets (Fixed and Current) and Liabilities (Long term and Current liabilities) in the Trial balance to determine the net worth as at the end of that period.

A balance sheet covering all the funds should be prepared for the municipality as a whole. If necessary the fundwise balance sheet segregated from this balance sheet. The balance sheet shall generally include the following schedules (statements) as annexures thereto. 1. The schedule of assets showing the details of descriptions, opening balances with

value, additions and deletions, depreciation and their closing balances. 2. Schedule showing the various liabilities like deposits repayable etc 3. Schedule showing the different kinds of advances pending recovery or adjustment 4. Schedule showing the various grants received and kept utilized at the end of the

year 5. Loan schedule showing the various loans received and the amounts standing

unutilized at the end of the year and 6. Loan account indicating the loans outstanding at the end of the year 7. Schedule showing the details of investments

The software package is so designed as to take out all such schedules (statements) required to be enclosed to the balance sheet.

(b) The statements of the receipts and the payments for all other accounts mentioned

in para (3) c under chapter ’01 Introduction’ and a statement of receipts and payments in respect of the Devolution Fund should be prepared and annexed to the consolidated balance sheet and placed before the council.

10. Due date for finalisation of acounts: The accounts mentioned above shall be finalized in all respects duly signed by the commissioner on or before 30th June next and placed before the council on or before the date prescribed by the Govt. 11. General: The preparation of all such statements would establish built-in discipline in the accounts cell and major accounting errors, such as wrong treatment of a revenue / capital item, omission to provide for any liability etc., would get highlighted and corrective action could be taken, besides exhibiting the true Financial Position in a financial year (accounting year) to assess the institution’s Financial Liquidity Value.

APPENDIX – I

Valuation of Inventories (AS – 2)

Statements of Accounting Standards (AS 2) Revised

Valuation of Inventories

(In this Accounting standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the statements of Accounting Standards’. The following is the text of the revise Accounting Standard (AS) 2, ‘Valuation of Inventories’ issued by the council of the Institute of Chartered Accountants of India. This revised Standard supersedes Accounting Standard (AS) 2, ‘Valuation of Inventories’, issued in June, 1981. The revised standard comes into effect in respect of accounting periods commencing on or after 1.4.99 and is mandatory in nature. Objective A primary issue in accounting for inventories is the determination of the value at which inventories are carried in the financial statements until the related revenues are recognized. This Statement deals with the determination of such value, including the ascertainment of cost of inventories and any write-down thereof to net realizable value. Scope 1. This statement should be applied in accounting for inventories other than : (a) Work in progress arising under construction contracts, including directly related service contracts (see Accounting Standard (AS) 7, Accounting for construction contracts); (b) Work in progress arising in the ordinary course of business of service providers; (c) shares, debentures and other financial instruments held as stock-in-trade; and (d) producers’ inventories of livestock, agricultural and forest products and mineral oils, ores and gases to the extent that they are measured at net realizable value in accordance with well established practices in those industries. 2. The inventories referred to in para 1 (d) are measured at net realizable value at certain stages of production. This occurs, for example, when agricultural crops have been harvested or minerals oils, ores and gases have been extracted and sale is assured under a

forward contract or a government guarantee, or when a homogenous market exists and there is a negligible risk of failure to sell. These inventories are excluded from the scope of this statement. Definitions 3. The following terms are used in this statement with the meanings specified: Inventories are assets:

(a) held for sale in the ordinary course of business (b) in the process of production for such sale; or (c) in the form of materials or supplies to be consumed in the production

process or in the rendering of services (d) Net realizable value is the estimated selling price in the ordinary course of

business less the estimated costs of completion and the estimated costs necessary to make the sale.

4.Inventories encompass goods purchased and held for resale, for eg, merchandise purchased by a retailer and held for resale, computer software held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the enterprise and include materials, maintenance supplies, consumables and loose tools awaiting use in the production process. Inventories do not include machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular, such machinery spares are accounted for in accordance with accounting standard (AS) 10, Accounting for Fixed Assets. Measurement of Inventories 5. Inventories should be valued at the lower of cost and net realizable value. Cost of Inventories 6. The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of Purchase 7. The costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable by the enterprise from the taxing authorities), freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebates, duty drawbacks and other similar items are deducted in determining the costs of purchase. Costs of Conversion

8. The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings and the cost of factory management and administration. Variable production overheads are those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and indirect labour. 9. The allocation of fixed production overheads for the purpose of their inclusion in the costs of conversion is based on the normal capacity of the production facilities. Normal capacity is the production expected to be achieved on an average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. Variable production overheads are assigned to each unit of production on the basis of the actual use of the production facilities. 10. A production process may result in more than one product being produced simultaneously. This is the case, for eg, when joint products are produced or when there is a main product and a by-product. When this is the case, they are often measured at net realizable value and this value is deducted from the cost of the main product. As a result, the carrying amount of the main product is not materially different from its cost. Other Costs 11. Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. For eg, it ma be appropriate to include overheads other than production overheads or the costs of designing products for specific customers in the cost of inventories. 12. Interest and other borrowing costs are usually considered as not relating to bringing the inventories to their present location and condition and are, therefore, usually not included in the cost of inventories. Exclusions from the Cost of Inventories 13. In determining the cost of inventories in accordance with para 6, it is appropriate to exclude certain costs and recognize them as expenses in the period in which they are incurred. Examples of such costs are:

(a) abnormal amounts of wasted materials, labour, or other production costs; (b) storage costs, unless those costs are necessary in the production process prior to a

further production stage (c) administration overheads that do not contribute to bringing the inventories to their

present location and condition; and

(d) selling and distribution costs Cost Formulas 14. The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects should be assigned by specific identification of their individual costs. 15. Specific identification of cost means that specific costs are attributed to identified items of inventory. This is an appropriate treatment for items that are segregated for a specific project, regardless of whether they have been purchased or produced. However, when there are large numbers of items of inventory which are ordinarily interchangeable, specific identification of costs is inappropriate since, in such circumstances, an enterprise could obtain predetermined effects on the net profit or loss for the period by selecting a particular method of ascertaining the items that remain in inventories. 16. The cost of inventories, other than those dealt with in para 14, should be assigned by using the first-in, first-out (FIFO), or weighted average cost formula. The formula used should reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition. 17. A variety of cost formulas is used to determine the cost of inventories other than those for which specific identification of individual costs is appropriate. The formula used in determining the cost of an item of inventory needs to be selected with a view to providing the fairest possible approximation to the cost incurred in bringing the item to its present location and condition. The FIFO formula assumes that the items of inventory which were purchased or produced first are consumed or sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the enterprise. Techniques for the Measurement of Cost 18. Techniques for the measurement of the cost of inventories, such as the standard cost method or the retail method, may be used for convenience if the results approximate the actual cost. Standard costs take into account normal levels of consumption of materials and supplies, labour, efficiency and capacity utilization. They are regularly reviewed and if necessary revised in the light of current conditions. 19. The retail method is often used in the retail trade for measuring inventories of large numbers of rapidly changing items that have similar margins and for which it is impracticable to use other costing methods. The cost of the inventory is determined by

reducing from the sales value of the inventory the appropriate percentage gross margin. The percentage used takes into consideration inventory which has been marked down to below its original selling prices. An average percentage for each retain department is often used. Net Realisable Value 20. The cost of inventories may not be recoverable, if those inventories are damaged, if they have become wholly or partially obsolete, or if their selling prices have declined. The cost of inventories may also not be recoverable if the estimated costs of completion or the estimated costs necessary to make the sale have increased. The practice of writing down inventories below cost to net realizable value is consistent with the view that assets should not be carried in excess of amounts expected to be realized from their sale or use. 21. Inventories are usually written down to net realizable value on an item-by-item basis. In some circumstances, however, it may be appropriate to group similar or related items. This may be the case with items of inventory relating to the same product line that have similar purposes or end uses and are produced and marketed in the same geographical area and cannot be practicable evaluated separately from other items in that product line. It is not appropriate to write down inventories based on a classification of inventory, for eg, finished goods or all the inventories in a particular business segment. 22. Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made as to the amount the inventories are expected to realize. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date. 23. Estimates of net realizable value also take into consideration the purpose for which the inventory is held. For eg, the net realizable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. If the sales contracts are for less than the inventory quantities held, the net realizable value of the excess inventory is based on general selling prices. Contingent losses on form sales contract in excess of inventory quantities held and contingent losses on firm purchase contracts are dealt with in accordance with the principles enunciated in Accounting Standard (AS) 4, Contingencies and events occurring after the balance sheet date. 24. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the materials may be the best available measure of their net realizable value. 25. An assessment is make of net realizable value as at each balance sheet date.

Disclosure 26. The financial statements should disclose:

(a) The accounting policies adopted in measuring inventories, including the cost formula used; and

(b) The total carrying amount of inventories and its classification appropriate to the enterprise

27. Information about the carrying amounts held in different classification of inventories and the extent of the changes in these assets is useful to financial statement users. Common classifications of inventories are raw materials and components, work in progress, finished goods, stores and spares, and loose tools.

APPENDIX – II

Accounting for Fixed Assets (AS – 10)

The following is the text of the accounting standard 10 (AS 10) issued by the Institute of Chartered Accountants of India on ‘Accounting for fixed assets’. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognized stock exchange and other large commercial, industrial and business enterprises in the public and private sectors. INTRODUCTION 1. Financial statements disclose certain information relating to fixed assets. In many enterprises, these assets are grouped into various categories, such as land, buildings, plant and machinery, vehicles, furniture and fittings, goodwill, patents, trade marks and designs. This statement deals with accounting for such fixed assets except as described in para 2 to 5 below. 2. This statement does not deal with the specialized aspects of accounting for fixed assets that arise under a comprehensive system reflecting the effects of changing prices but applies to financial statements prepared on historic cost basis. 3. This statement does not deal with accounting for the following items to which special considerations apply:

(i) forests, plantations and similar regenerative natural resources;

(ii) Wasting assets including mineral rights, expenditure on the exploration for and extraction of minerals, oil, natural gas and similar non-regenerative resources

(iii) Expenditure on real estate development and (iv) Livestock

Expenditure on individual items of fixed assets used to develop or maintain the activities covered in (i) to (iv) above, but separable from those activities, are to be accounted for in accordance with this statement. 4. This statement does not cover the allocation of the depreciable amount of fixed assets of future periods, since this subject is dealt with in Accounting Standard 6 on ‘Depreciation Accounting’. 5. This statement does not deal with the treatment of Government grants and subsides, and assets under leasing rights. It makes only a brief reference to the capitalization of borrowing costs and to assets acquired in an amalgamation or merger. These subjects require more extensive consideration than can be given within this statement. DEFINITIONS 6. The following terms are used in this statement with their meanings specified. 6.1. ‘Fixed asset’ is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business. 6.2. Fair market value is the price that would be agreed to, in an open and unrestricted market between knowledgeable and willing parties dealing at arms length who are fully informed and are not under any compulsion to transact. 6.3. Gross book value of a fixed asset is its historical cost or other amount substituted for historical cost in the books of account of financial statements. When this amount is shown net of accumulated depreciation, it is termed as net book value. EXPLANATION 7. Fixed assets often comprise a significant portion of the total assets of an enterprise and therefore are important in the presentation of financial position. Furthermore, the determination of whether an expenditure represents as asset or an expense can have a material effect on an enterprise’s reported results of operations. 8. Identification of Fixed Assets 8.1. The definition in para 6.1 gives criteria determining whether items are to be classified as fixed assets. Judgment is required in applying the criteria to specific

circumstances or specific types of enterprises. It may be appropriate to aggregate individually insignificant items and to apply the criteria to the aggregate value. An enterprise may decide to expense an item which could otherwise have been included as fixed assets, because the amount of the expenditure is not material. 8.2. Stand-by equipment and servicing equipment are normally capitalized. Machinery spares are usually charged to the profit and loss statement as and when consumed. However, if such spares can be used only in connection with an item of fixed assets and their use is expected to be irregular, it may be appropriate to allocate the total cost on a systematic basis over a period not exceeding the useful life of the principal item. 8.3. In certain circumstances, the accounting for an item of fixed asset may be improved if the total expenditure thereon is allocated to its component parts, provided they are in practice, separable and estimates are made of the useful lives of these components. For eg, rather than treat an aircraft and its engines as one unit, it may be better to treat the engines as a separate unit, if it is likely that their useful life is shorter than that of the aircraft as a whole. 9. Components of Cost 9.1. The cost of an item of fixed asset comprises its purchase price, including import dues and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Examples of directly attributable costs are:

(i) site preparation (ii) initial delivery and handling costs (iii) installation cost such as special foundations for plant and (iv) professional fees for eg, fees of architects and engineers

The cost of a fixed asset may undergo changes subsequent to its acquisition or construction on account of exchange fluctuations, price adjustments, changes in duties or similar factors. 9.2. Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition of fixed assts for the period upto the completion of construction or acquisition of fixed assts are also sometimes included in the gross book value of the asset to which they relate. However, financing costs (including interest) on fixed assets purchased on a deferred credit basis or on monies borrowed for construction or acquisition of fixed assets are not capitalized to the extent that such costs related to period after such assets are ready to be put to use. 9.3. Administration and other general overhead expenses are usually excluded from the cost of fixed assets because they do not relate to a specific fixed asset. However insome circumstances such expenses as are specifically attributable to construction of a project or

to the acquisition of a fixed asset or bringing it to its working condition, may be included as part of the cost of the construction project or as a part of the cost of the fixed asset. 9.4. The expenditure incurred on start-up and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as an indirect element of the construction cost. However the expenditure incurred after the plant has begun commercial production, i.e. production intended for sale or captive consumption is not capitalized and is treated as revenue expenditure even though the contract may stipulate that the plant will not be finally taken over, until after the satisfactory completion of the guarantee period. 9.5. If the interval between the date of a project is ready to commence commercial production and the date at which commercial production actually begins is prolonged, all expenses incurred during this period are charged to the profit and loss statement. However the expenditure incurred during this period is also sometimes treated as ‘deferred revenue expenditure’ to be amortised over a period not exceeding 5 to 5 years after th commencement of commercial production. 10. Self-Constructed Fixed Assets 10.1 In arriving at the gross book value of self-constructed fixed assets, the same principles apply as those described in para 9.1. to 9.5 included in the gross book value are costs of construction that relate directly to the specific asset and costs that are attributable to the construction activity in general and can be allocated to the specific asset. Any internal profits are eliminated in arriving at such costs. 11. Non-Monetary Consideration 11.1. When a fixed asset is acquired in exchange for another asset, its cost is usually determined by reference to the fair market value of the consideration given. It may be appropriate to consider also the fair market value of the asset acquired if this is more clearly evident. An alternative accounting treatment that is sometimes used for an exchange of assets, particularly when the assets exchanged are similar, is to record the asset acquired at the net book value of the asset given up, in each case an adjustment is made for any balancing receipt or payment of cash or other consideration. 11.2 When a fixed asset is acquired in exchange for shares or other securities in the enterprise, it is usually recorded at its fair market value or the fair market value of the securities issued, whichever is more clearly evident. 12. Improvements and Repairs 12.1. Frequently, it is difficult to determine whether subsequent expenditure related to fixed asset, represents improvements that ought to be added to the gross book value or repairs that ought to be charged to the profit and loss statement. Only expenditure that

increases the future benefits from the existing asset beyond its previously assessed standard of performance is included in the gross book value, eg. An increase in capacity. 12.2. The cost of an addition or extension to an existing asset which is of a capital nature and which becomes an integral part of the existing asset is usually added to its gross book value. Any addition or extension which has a separate identify and is capable of being used after the existing asset is disposed of is accounted for separately. 13. Amount Substituted for Historical Cost 13.1. Sometimes financial statements that are otherwise prepared on a historical cost basis include part or all of fixed assets at a valuation in substitution for historical costs and depreciation is calculated accordingly. Such financial statements are to be distinguished form financial statements prepared on a basis intended to reflect comprehensively the effects of changing prices. 13.2. A commonly accepted and preferred method of restating fixed assets is by appraisal normally undertaken by competent valuers. Other methods sometimes used are indexation and reference to current prices which when applied are cross checked periodically by appraisal method. 13.3. The revalued amounts of fixed assets are presented in financial statements, either by restating both the gross book value and accumulated depreciation so as to give a net book value equal to the net revalued amount or by restating the net book value by adding therein the net increase on account of revaluation. An upward revaluation does not provide a basis for crediting to the profit and loss statement for accumulated depreciation existing at the date of revaluation. 13.4. Different bases of valuation are sometimes used in the same financial statements to determine the book value of the separate items within each of the categories of fixed assets or for the different categories of fixed assets. In such cases, it is necessary to disclose the gross book value included on each basis. 13.5. Selective revaluation of assets can lead to unrepresentative amounts being reported in financial statements. Accordingly when revaluations do not cover all the assets of a given class it is appropriate that the selection of assets to be revalued be made on a systematic basis. For eg, an enterprise may revalue a whole class of assets within a unit. 13.6. It is not appropriate for the revaluation of a class of assets to result in the net book value of that class being greater than the recoverable amount of the assets of that class. 13.7. An increase in net book value arising on revaluation of fixed assets is normally credited directly to owner’s interests under the heading of revaluation reserves ad is regarded as not available for distribution. A decrease in net book value arising on revaluation of fixed assets is charged to profit and loss statement that, to the extent that

such a decrease is considered to be related to a previous increase on revaluation that is included in revaluation reserve, it is sometimes charges against that earlier increase. It sometimes happens that an increase to be recorded is a reversal of a previous decrease arising on revaluation which has been charged to profit and loss statement in which case the increase is credited to profit and loss statement to the extent that it offsets the previously recorded decrease. 14. Retirements and Disposals 14.1. An item of fixed asset is eliminated from the financial statements on disposal. 14.2. Items of fixed assets that have been retired from active used and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognized immediately in the profit and loss statement. 14.3. In historical cost financial statements, gains or losses arising on disposal are generally recognized in the profit and loss statement. 14.4. On disposal of a previously revalued item of fixed asset, the difference between net disposal proceeds and the net book value is normally charged or credited to the profit and loss statement except that, to the extent such a loss is related to an increase which was previously recorded as a credit to revaluation reserve and which has not been subsequently reversed or utilized, it is charged directly to that account. The amount standing in revaluation reserve following the retirement or disposal of an asset which relates to that asset may be transferred to general reserve. 15. Valuation of Fixed Assets in Special Cases 15.1. In the case of fixed assets acquired on hire purchase terms, although legal ownership does not vest in the enterprise, such assets are recorded at their cash value, which if not readily available, is calculated by assuming an appropriate rate of interest. They are shown in the balance sheet with an appropriate narration to indicate that the enterprise does not have full ownership thereof. 15.2. Where an enterprise owns fixed assets jointly with other (otherwise than as a partner in a firm) the extent of its share in such assets, and the proportion in the original cost, accumulated depreciation and written down value are stated in the balance sheet. Alternatively the pro rata of cost of such jointly owned assets is grouped together with similar fully owned assets. Details of such jointly owned assets are indicated separately in the fixed assets register. 15.3 Where several assets are purchased for a consolidated price, the consideration is apportioned to the various assets on a fair basis as determined by competent valuers. 16. Fixed Assets of Special Types

16.1.Goodwill, in general, is recorded in the books only when some consideration in money or money’s worth has been paid for it. Whenever a business is acquired for a price (payable either in cash or in shares or otherwise) which is in excess of the value of the net assets of the business taken over, the excess is termed as goodwill. Goodwill arises from business connections, trade name or reputations of an enterprise or from other intangible benefits enjoyed by an enterprise. 16.2 As a mater of financial prudence, goodwill is written off over a period. However, many enterprises do not write off good will and retain it as an asset. 16.3. Patents are normally acquired in two days: (1) Purchase, in which case, patents are valued at the purchase cost including incidental expenses, stamp duly, etc and (ii) by development within the enterprise, in which case, identifiable costs incurred in developing the patents are capitalised. Patents are normally written off over their legal term of validity or over their working life, whichever is shorter. 16.4. Know-how in general is recorded in the books only when some consideration in money or money’s worth has been paid for it. Know-how is generally of two types:

(i) relating to manufacturing processes and (ii) relating to plans, designs and drawings of buildings or plant and machinery.

16.5. Know how related to plans, designs and drawings of buildings or plant and machinery is capitalized under the relevant asset heads. In such cases, depreciation is calculated on the total cost of those assets, including the cost of the know-how capitalized. Know-how related to manufacturing processes is usually expensed in the year in which it is incurred. 16.6 Where the amount paid for know-how is a composite sum in respect of both the types mentioned in para 16.4., such consideration is apportioned amongst them on a reasonable basis. 16.7. Where the consideration for the supply of know-how is a series of recurring annual payments as royalties, technical assistance fees, contribution to research etc, such payments are charged to the profit and loss statement each year. 17. Disclosure 17.1. Certain specific disclosures on accounting, for fixed assets, are already required by Accounting Standard I on ‘Disclosure of Accounting Policies’ and Accounting Standard 6 on ‘Depreciation Accounting’. 17.2. Further disclosures that are sometimes made in financial statements include:

(i) gross and net book values of fixed assets at the beginning and end of an

accounting period showing additions, disposals, acquisitions and other movements;

(ii) expenditure incurred on account of fixed assets in the course of construction or acquisition; and

(iii) revalued amount substituted for historical cost of fixed assets, the method adopted to compute the revalued amounts, the nature of any indices used, the year of any appraisal made, and whether an external valuer was involved in case where fixed assets are stated at revalued amounts.

ACCOUNTING STANDARD (The Accounting Standard comprises para 18 to 39 of this Statement, The Standard should be read in the context of paras 1 to 17 of this Statement and of the Preface to the Statements of Accounting Standards) 18. The items determined in accordance with the definition in para 6.1 of this statement should be included under fixed assets in financial statements. 19. The gross book value of a fixed asset should be either historical cost or a revaluation computed in accordance with this standard. The method of accounting for fixed assets included at historical costs is et out in paras 20 to 26; the method of accounting of revalued assets is set out in paras 27 to 32. 20. The cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to its working condition for its intended use, Financial costs relating to deferred credits or to borrowed funds attributable to construction or acquisition of fixed assets for the period upto the completion of construction or acquisition of fixed assets should also be included in the gross book value of the asset to which they relate. However, the financing costs (including interest) on fixed assets purchased on a deferred credit basis or on monies borrowed for construction or acquisition of fixed assets should not be capitalized to the extent that such costs relate to periods after such assets are ready to be put to use. 21. The cost of a self-constructed fixed asset should comprise those costs that relate directly to the specific asset and those that are attributable to the construction activity in general and can be allocated to the specific asset. 22. When a fixed asset is acquired in exchange or in part exchange, for another asset, the cost of the asset acquired should be recorded either at fair market value or at the net book value of the asset given up, adjusted for any balancing payment or receipt of cash or other consideration. For these purposes fair market value may be determined by reference either to the asset given up or to the asset acquired, whichever is more clearly evident. Fixed asset acquired in exchange for shares or other securities in the enterprise should be

recorded at its fair market value, or the fair market value of the securities issued, whichever is more clearly evident. 23. Subsequent expenditures related to an item of fixed asset should be added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. 24. Material items retired from active use and held for disposal should be stated at the lower of their net book value and net realizable value and shown separately in the financial statements. 25. Fixed asset should be eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. 26. Losses arising from the retirement or gains or losses arising from disposal of fixed asset, which is carried at cost, should be recognized in the profit and loss statement. 27. When a fixed asset is revalued in financial statements, an entire class of assets should be revalued, or the selection of assets for revaluation should be made on a systematic basis. This basis should be disclosed. 28. The revaluation of financial statements of a class of assets should not result in the net book value of that class being greater than the recoverable amount of assets of that class. 29. When a fixed asset is revalued upwards, any accumulated depreciation, existing at the date of the revaluation, should not be credited to the profit and loss statement. 30. An increase in net book value arising on revaluation of fixed assets should be credited directly to owners’ interests under the head of revaluation reserve, except that, to the extent that such increase is related to and not greater than a decrease arising on revaluation previously recorded as a chare to the profit and loss statement, it may be credited to the profit and loss statement. A decrease in the net book value arising on revaluation of fixed asset should be charged directly to the profit and loss statement except that to the extent that such a decrease is related to an increase which was previously recorded as, credit to revaluation reserve and which has not been subsequently reversed or utilized, it may be charged directly to that account. 31. The provisions of paras 23.24 and 25 are also applicable to fixed assets included in financial statements at a revaluation. 32. On disposal of a previously revalued item of fixed asset, the difference between net disposal proceeds and the net book value should be charged or credit to the profit and loss statement except that to the extent that such a loss is related and which has not been subsequently reversed or utilized, it may be charged directly to that account. 33. Fixed assets acquired on hire purchase terms should be recorded at their cash value, which if not readily available, should be calculated by assuming an appropriate rate of

interest. They should be shown in the balance sheet with an appropriate narration to indicate that the enterprise does not have full ownership thereof. 34. In the case of fixed assets owned by the enterprise jointly with others, the extent of the enterprise’s share in such assets, and the proportion of the original cost, accumulated depreciation and written down value should be stated in the balance sheet. Alternatively, the pro rate cost of such jointly owned assets may be grouped together with similar fully owned assets with an appropriate disclosure thereof. 35. Where several fixed assets are purchased for a consolidated price, the consideration should be apportioned to the various assets on a fair basis as determined by competent valuers. 36. Goodwill should be recorded in the books, only when some consideration in money or money’s worth has been paid for it. Whenever a business is acquired for a price (payable in cash or in shares or otherwise) which is in excess of the value of the net assets of the business taken over, the excess should be termed as ‘goodwill’. 37. The direct costs incurred in developing the patents should be capitalized and written off over their legal term of validity or over their working life, whichever is shorter. 38. Amount paid for know-how for the plans, layout and designs of buildings and / or design of the machinery should be capitalized under the relevant asset heads, such as, buildings, plant and machinery etc. Depreciation should be calculated on the total cost of those assets, including the cost of the know-how capitalized. Where the amount paid for know-how is a composite sum in respect of both the manufacturing process as well as plans, drawings and designs for buildings, plant and machinery, etc., the management should apportion such consideration into two parts on a reasonable basis. Disclosure 39. The following information should be disclosed in the financial statements:

(i) gross and net book values of fixed assets at the beginning and end of an accounting period showing additions, disposals, acquisitions and other movements;

(ii) expenditure incurred on account of fixed assets in the course of construction or acquisition; and

(iii) revalued amount substituted for historical costs of fixed assets, the method adopted to compute the revalued amounts, the nature of indices used, the year of any appraisal made, and whether an external valuer was involved, in case where fixed assets are stated at revalued amount.

CHART OF ACCOUNTS

Accounting Manual For Urban Local Bodies

Chart of Accounts with code nos. Accounts Heads and Descriptions Therefor

1000. INCOME INTRODUCTION: 1. The Income Accounts are designed to show the revenue earnings generated by the Urban Local Bodies from various sources, such as,

(i) Taxes (ii) Licence fees (iii) Income from properties (iv) Assigned revenue (v) Service charges (vi) Grants and contributions (vii) Sale and hire charges (viii) All income relating to Water Supply & Drainage Fund (ix) Other income

2. The balances in the individual ‘Account Heads’ (as per the General Ledger) should be transferred to the credit of income account, while, the closing of accounts is being done at the end of the financial year. 3. It should be clearly noted that LOANS received for various CAPITAL WORKS, PROJECTS and SCHEMES, and CAPITAL GRANTS and CONTRIBUTION for specific projects are to be accounted for, under CAPITAL FUND for which separate code numbers are provided. 4. The code numbers (1001 to 1999) have been assigned here, for all items of Income. 5. The Departments / Sections in the Municipality have been given with ALFA codes (two letters) to identify them distinctly. This has been explained under chapter ’01. Introduction’ in the Accounting Manual – Volume I. 6. The prefix ‘RF’ should be used in all documents for the items of Income under Revenue Fund. The prefix ‘WS / SF / ED / EE’ should be used whenever an item of income relates to the Water Supply & Drainage / Sewage Farm / Education / Elementary Education respectively.

For eg, if an item of revenue is received under ‘Other Income’, of Revenue Fund, this should be accounted for, with prefix RF1045 and with prefix WS1045 when it relates to Water Supply & Drainage. Thus, though the code is common to both, it should be classified with reference to the prefix used. Account Code no.

Account Head Description

1001 Property Tax for General purposes

(i) Gross Demand LSS other specific revenue (Water Supply and Drainage Tax, Education Tax and Library cess) should be credited to this Account, with a corresponding debit to code No. 3002 – Property Tax – Recoverable – Current. (ii) There is no need to segregate Scavenging Tax and Lighting Tax, and they should be grouped with Tax for General purposes as one item as these tax items are meant for services and as no self sufficiency for them is aimed at. (ii) Credit to this account should be raised immediately at the beginning of the half year, based on the previous half year demand, first in the month of April and second in the month of October. Besides credit should be aised monthly as soon as the monthly lists for new assessments and enhancements are finalized and also when final orders on appeal are passed, through a GJV based on Property Tax Adjustment slips (MCF 11) (iv) Chalans (MCF1) printed in TRIPLICATE for remitting Property Tax clearly indicae the account code numbers.

(v) As and when collections are made, the amount already debited to code no. 3002, will get reduced to that extent, in view of the fact that the other components of property tax were already credited to the respective fund accounts. But, in respect of collections towards Water supply & drainage tax and Education tax, the amounts collected through cheques initially credited to the respective TAX PAYABLE accounts are cleared, when actual transfers are made to the respective TAX Accounts (WS3013 & EE3016) The daily cash collections of these taxes are accounted for in these fund accounts.

1002 Water Supply and Drainage Tax

(i) A component of the Property Tax that should be separately accounted for in this head of

account. (ii) Credit to this Account through G.J.V. should be raised as indicated in sub para (iii) of description against Code no. 1001, simultaneously when credit is given under code no. 1001. (iii) In the chalan prescribed in triplicate, code no. 3013 is specifically indicated after Code no. 3002, so as to enable the Shroff the properly and easily account for the collection under this head. (iv) In respect of collections through cheques, the Accounts Cell should, as soon as the General Ledger for a month is posted, transfer the credit balance available in the code no. 4041 to a separate Fund Account called ‘Water Supply and Drainage Fund’ by cheque, by preparing a BPV. 4041 – (1) Water Supply and Drainage Tax payable A/c Dr To bank Account Cr

1003 Education Tax (i) A levy of Tax as an addition to the Property Tax under the relevant Act that should be credited to this head of account. (ii) Credit to this account should be raised monthly, by debiting to code no. 3016 through a G.J.V. simultaneously when credit is given for account code nos. 1001 and 1002. (iii) In the chalan prescribted in TRIPLICATE for collecting property Tax, code no. 3016 is specifically given so as to enable the Shroff to properly and easily account for the collection under this head. (iv) In respect of collections through cheques, the Accounts Cell should, as soon as the General Leger for a month is posted, transfer the monthly collection to the Elementary Education Fund, by cheque by passing the following entry in the B.P.V. 4042 – (1) Education Tax Payable A/c Dr To Bank A/c Cr

1004 1005 Excess Remittance –

(Collection) Property When the property tax collections are analysed, there are possibilities of clear cases of excess

Tax and other Revenue items

collections of trivial amounts warranting neither refund nor adjustment to subsequent half year Tax, treated as ‘deferral’. After accounting for the Tax due, (out of the Tax collected) under the code nos. 3002, 3013, 3016 and 4043, the excess collection, if any is to be accounted for, here. If there is no case of excess collection, this account head needs no operation. The excess collection under other items of revenue should also be accounted here.

1006 Profession Tax Profession Tax collected and due (left uncollected for the current year) is accounted for, here

1007 Pilgrim tax The Tax is received from Railways and the amount booked on actual basis

1008 Tax on Carriages and Animals

(i) Tax collected under this account is accounted here. The tax is payable on half yearly basis. (ii) When the demand is finalized, every half year, credit is given to this account, twice a year through a G.J.V.

1009 Tax on Carts Descriptions as above 1010 Servant Tax This is collected in Municipalities in hilly areas

as per the District Municipalities Act 1011 Advertisement Tax Advertisement Tax collected under the provisions

of the Act 1012 1013 1014 1015 1016 Fees under Places of

Public Resorts Act Self explanatory

1017 Trade Licence Fees All collections of licence fees relating to the issue of Licences to ‘Licenceable Trades’ as well as fees for renewal of old Licences during the current year. The licence fee collected in a year is the amount due to be collected for the year in which it is collected, though the issue of licences is for the next year. It includes installation fees. The additional fee collected towards belated payment of Licence fees shall also be booked here.

1018 Licence Fees under PFA Act

The description against code no. 1017 is equally applicable here.

1019 Building Licence Fees All collections relating to the fees for the issue of Building permits to the owners for construction of new buildings or extension or alteration of existing buildings, shall be accounted here. This

will include the Planning Permission fee at the prescribed percentage, site approval fees i.e. Lay out approval fees and renewal fees for renewing the Building Licence.

1020 Encroachment Fees Fees of unobjectionable encroachments on street margin as decided by Council. This includes temporary Festival Pandal and Summer Pandal.

1021 Parking Fees The fees collected in the notified parking areas for vehicles either by lease or departmental collection

1022 Market fees – Daily market

Credit should be raised at the beginning of the year through a GJV on the strength of the Council’s resolution confirming the lease amount for the accounting year. The initial deposit representing three or four monthly instalments of the lease amount collected in advance, shall be accounted for, under Deposit Account in code no. 4018 and the monthly instalment collected will be brought under Code no. 3011, since credit was already given to this head of account through a GJV on confirmation of lease with a simultaneous debit to code no. 3011. For the last three or four months’ instalments, the amount in the deposit will be adjusted by means of a FJV. ‘Penal fees’ collected for belated payment of monthly instalments, if any, will be classified under the head ‘Other Income’ in coden o. 1045. This will include collection of fees from vendors and daily collection by the Revenue Assistants from those selling temporarily for a short duration of time i.e. for 2 or 3 hrs within the market

1023 Market Fees – Weekly Market

-do-

1024 Private Market Fees The periodical collections of fees from all private markets.

1025 Advertisement Fees The lease amount collected as fixed by the Council for advertising on Lamp Posts and Hoardings erected within the Municipal Limit credit will be raised in this account at the beginning of the year by a GJV with a corresponding debit to code no. 3011

1026 Fees for Bays in Bus stand

The fees called Bus stand fees, Vendor’s fees and collections for cloak room, collected either by lease or by departmental collection. In respect of lease confirmed by the Council, credit should be raised at the beginning of the year by a GJV with

a corresponding debit to code no. 3011 1027 Fees for Slaughter

Houses The fees will be collected either by lease or departmental collection. In respect of lease confirmed by the Council, the accounting treatment is the same as in code no. 1022

1028 Cart stand / Lorry stand / Taxi stand fees

Cycle stand fees / Lorry stand fees / Taxi stand fees. In respect of the lease confirmed by the Council, the accounting treatment is the same as on code no. 1022.

1029 Survey fees (1) The amount remitted in the Municipal Treasury, towards

(a) Field line fees (b) Sub division fees (1/3rd share of these two

items payable to the Govt) and (c) Fees for giving extracts of survey field

register and sketch or commonly called Patta certificate (full amount to the municipality)

(2) The 2/3rd of the fees collected for the first two items, in the Taluk Office for the areas falling outside the municipal limits, but coming within the town survey limit, should be obtained from the local Asst. Director of survey and land records, by raising a demand. (3) The amount receivable from / payable to the Govt. should be calculated at the end of each financial year and shown under Assets or Liabilities till the eventual receipt or payment as per the agreed sharing pattern. (4) Action should be taken either to get the amount due from the Survey department of the Govt. or to pay the amount to the Govt, with reference to the statement prepared as specified above in Sl no. 3

1030 Cinema Theatre - Income

All income including entrance fees, parking fees, fees for screening slides, hoardings, snack bars etc

1031 Development charges Charges collected along with building licence fees, for development of roads, provision of street lights etc in approved and unapproved layouts.

1032 Fees for Fishery Rights Lease of the right to fishing in lakes / ponds belonging to the Municipality. The accounting treatment is the same as in code no. 1022

1033 Rent on and Lease of Lands

Income from Vacant lands let out for conduct of Exhibitions, Circus, Dramas etc, and from the Produce of Lands (Sewage farm) if any. This also

includes rent for the land on which hoardings erected, rent for maidan for conducting public meetings and lease of Sewage farm used for cultivation, lease of lands in the Water reservoir for plantation cultivation and other cultivation. In respect of lease confirmed by the Council the accounting treatment is the same as in code no. 1022

1034 Income from Ferries Self explanatory 1035 Income from Fairs &

Festivals The contributions received from temples on the notified Fairs & Festivals.

1036 Rent on shopping complex

The monthly rent fixed on allotment of shops in shopping complex, shops in regular markets etc. The rent due for a year should be assessed at the beginning of the year and credit is given to this code no. with a corresponding debit to code no. 3017 by a GJV.

1037 Rent for Community Hall

The rent fixed and collected for hiring of Community halls, kalai arangam, Kalyana mandapams including cleaning charges and hire charges for furniture, town hall etc.

1038 Rent on buildings The monthly rent recovered from pay bills of staff and officers for occupation of quarters including ICDS buildings.

1039 Fees for pay and use toilets

The amount collected either by lease or by departmental collections. Regarding lease the accounting treatment is the same as in code no. 1022

1040 Rent from Travellers Bungalows and Rest houses

Self explanatory

1041 Road cut-Restoration charges

The amount collected on the application for new water supply pipe line / drainage connections includes road cut restoration charges. This should be collected through a separate chalan to account for, under this code

1042 Avenue receipts All income earned on lease or auction of usufructs of Avenue trees etc

1043 Demolition charges for unauthorized constructions and building service charges

The amount collected as ‘building service charges’ for removal of debris left heaped on the road / streets at the time of construction shall be accounted here. Where notice given, for demolition of unauthorized construction is ignored by the concerned party, the cost for demolition by the Municipality itself, that is collected, will be accounted here. The ‘charge’

will include the one i.e. collected for debris removal in front of the houses that are kept accumulated by the house owners deliberately. In case of refund this account shall be debited.

1044 RF

Other fees Distraint and warrant fees, fees for cremation and burial, electrical crematoria, compounding fees, fees for removing encroachments, septic tank cleaning charges, fees for registration of contractors the renewal fees collected from them, surveyor licence fee and the renewal fees from them, fees for name Transfer in the Property Tax Demand Register, Charges for collecting the used lease for meals / tiffin in Kalyana mandapams, hotels, restaurants etc.

1044 Other fees WS

Fees collected for issuing licence to the private plumbers and the renewal fees. Fees collected for Name Transfer of Water Supply and Drainage connections in the Demand register.

1045 Other income Cost of tender schedules, printed forms issued at the Information Centre levy of charges for belated payment of monthly instalment of lease amount for weekly /daily market, belated remittances of rent on shops in shopping complex, rent for clas rooms for conducting examinations, fees collected for film shooting, rent for the carts to carry dead bodies and all other income which are not classified under any specific head of income, have to be accounted here. The electricity charges collected from the parties who occupied the Kalyana mandapams, Electricity charges collected from the organizers of public meetings held on Municipal Maidans shall also be booked here

1046 Duty on Transfer of Property

The duty on transfer of Property actually received during the year, will be accounted in this head

1047 Entertain-ment Tax The Entertainment Tax actually received from the Govt will be accounted in this head

1048 Magisterial Fines The actual amount received in this head 1049 Compensation for Toll -do- 1050 Assigned Revenue The actual receipt of the apportionment of Sales

tax, if any (assigned by commercial Tax department)

1051 Grant for natural calamities

Amount received or reimbursement of expenditure incurred on provision of food, shelter during flood, fire etc

1052 Grants for Schemes The grants for implementation of various

Implementation schemes such as Maternity and Child welfare, Anti-Malaria, Anti-Filaria etc, and grant received under Elementary Education Fund

1053 Devolution Fund (including State Finance Commission Fund)

The actual amount received with reference to Govt order under the scheme of Financial Devolution from the state Govt. This includes the actual amount transferred to the Water supply & Drainage Fund and also amount covered by adjustment towards Municipal Employees, Pension fund, Employees Pension Fund, Audit fees etc, which will be brought to account through a GJV.

1054 Copy application fees Fees for extract of Birth and Death registration register, fee for property tax demand abstract etc

1055 Penalty and Bank charges for dishonoured cheques

The bank charges as debited by the bank and the penalty amount as fixed by the council, collected from the tax payer for the dishonour of cheque given by him towards tax and other dues inclusive of those relating to other funds.

1056 Law charges and court cost recoveries

Amounts recovered from the parties for the expenses incurred by the Municipality towards stamp duly etc, as informed by the lawyer and the cost recovered through the court will be accounted in this head. The court cost will comprise of tax amount or any other item of revenue covered by suit and the expenses incurred towards court cost. They have to be segregated and accounted accordingly

1057 Profit in Sale of Assets (Out of sale proceeds, cost would be adjusted under ‘ASSET ACCOUNT’ and the balance, if any, booked under this account head) This account relates to the difference between the net realized value on the disposal of the asset of the Municipality and the net book value at the time of sale.

1058 Hire charges Rent realized on letting out the tools and plant of the Municipality like road rollers

1059 Sale of rubbish / debris / Silt

The amount collected towards sale of rubbish debris and silt removed from Sewage Farm

1060 Sale of compost manure

Self explanatory

1061 Sale of stock & stores Amount realized from the disposal of unserviceable store items which are obsolete or unusable under all funds

1062 Sale of scraps Amount received from the disposal of scrap

materials accumulated in various departments of the municipality mainly workshops, printing presses, Bullock carts, bulls etc.

1063 Sale of products Revenue items generated out of the sale proceeds of pots and plants in various parks and gardens and other products manufactured mainly with an intention to sell them on competitive rates. It includes sale of grass and usufructs collected from the Sewage Farm.

1064 Receipts from Hospitals and Dispensaries

Amount by way of collecting any fee or other charges for the services rendered and other recoveries made in Hospitals and Dispensaries.

1065 Pension and leave salary contributions

The pension and leave salary contribution collected from the other institutions / Govt. on behalf of employees deputed on foreign service terms.

1066 Miscellaneous recoveries

All recoveries ordered by the Commissioner or the Authorised Officers in one lumpsum or in monthly instalments through pay bills, towards shortages in stock account, unauthorized or irregular issues, pilferage, recoveries of excess payment made to the contractors etc, have to be given credit to this account, by debiting the amount to code no. 3072 for recovery in one lumpsum or in instalments and for crediting to the same head of account.

1067 Interest on investments / Fixed Deposits

Interest received on various fixed deposits and other types of deposits held by TNEB, Telephone department etc.

1068 Interest from Bank Any interest as per Bank credit advice and a credit entry for interest given in the Bank Scroll will be booked by preparing a BRV

1069 Projects – Overhead Appropriation Expenses

This is an adjustment entry by which ‘receipts’ are shown here, by preparing journal voucher (G.J.V/F.A.J.V) while reckoning the cost of projects annually. A specified percentage is to be computed on the direct cost of all capital schemes – direct cost is arrived at, after paying to the contractor and supplier who executed a project in the financial fear towards personnel cost on administration and supervision. The amount so computed or a percentage prescribed (now 11% adopted) should be credited to this account head and corresponding debit given to ‘the projects – in – progress’ account head. Detailed information are also given under the chapter on ‘Projects and

Fixed Assets Accounting’ – Vol I of the Accounting Manual. In as much as the personnel cost of the engineering staff and the administrative staff could not be precisely worked out and charged to the individual projects, this notional account is to be operated.

1070 Projects – Overhead appropriation - Interest

Interest on projects during the execution period of a Capital Scheme is to be booked to such projects executed out of loans. This exercise will be carried out annually and the amount of such interest will be debited to ‘Projects – in Progress’ (i.e. this amount will be added to the project cost) head of account and the same amount taken credit to this account. Interest on loans for such projects is paid from REVENUE FUND. So the interest as indicated below is worked out and added to the project cost. Interest cost = (Cumulative construction cost + half of the construction upto the beginning of the year cost in this year) * Rate of interest of loan

1071 Interest on staff advances

Interest due on staff advances at the prescribed rates and instalments on various interest – bearing advances (Marriage advance, Conveyance advance etc) as worked out, will be credited to this accounts by raising demand in code no. 3047 for future recovery to be credited to this account

1072 I.P.P. – V Grant Self explanatory 1073 Deposits forfeited Deposits received from contractors, suppliers and

other outsiders that have been forfeited for various reasons are to be treated as Income and the amount taken is credited to this account. This exercise is done after establishing that the Municipality need not refund such deposits. In other words, an order forfeiting the deposit has to be issued and a copy marked to the Accounts cell for proceeding further to take action on the above lines.

1074 Deposits lapsed The deposit amounts that are kept in the Deposit Register for a reasonable time, are found to be not claimed by the depositors, with proof of remittance of the amounts even after the prescribed period of the purposes for which they

have been paid. In such cases, the deposits may be lapsed and taken as revenue of the Municipality, by making entries in the Register or Lapsed Deposits. Ofcourse, if any claim is received for the amounts lapsed and entered in the Register of Lapsed Deposits, subsequently with adequate proof, the same may be entertained and the amount paid with the specific sanction of the council and the amount debited to account code no. 2030.

1075 Dividend on shares The dividend as and when declared and paid on the shares held by TUFIDCO or any other financial institution in which shares are taken on the instructions from the Govt shall be booked here

1076 Insurance claim amount

The amount received from the Insurance company on claim for the death of bull covered by Insurance scheme and for vehicles insured for accident coverege

1077 Rent on Bund Stalls Lease amount (monthly rent) received from the occupiers of the bunks letout on lease

1078 Garden / Parks - Receipts

Any amount fixed by the council towards entry and for the amusements provided in the Garden / Parks maintained by the Municipality

1079 Income from road margins

Any amount fixed by the council and collected from the hawkers selling cosmetics and other things.

1080 Drainage fees from building/float promoters

The amount collected towards providing Drainage to the new building at the time of issue of building plan permission

1081 Initial amount for new water supply / drainage connections

Fixed amount remitted by house owners for getting new house service connections for water supply and drainage. As repayment of initial deposit is only hypothetical, the same shall be treated as income without corresponding liability. As repayment of initial deposit is only hypothetical, the same shall be treated as income without corresponding liability. This amount should be remitted in a separate Bank Account (code no. 3140) with periodical investment in fixed deposit. This amount should be utilized for execution of Capital Expenditure, Debt Servicing and for carrying out major repair.

1082 Water Supply Connection charges

The cost of application form, centage charges collected for inspection / supervision and for labour, recoveries towards the material supplied,

repair charges etc have to be accounted here 1083 Metered / Tap rate

water charges The income towards charges for providing water through water taps (Tap rate and metered rate). The demand raised through G.J.V. should be accounted here

1084 Charges for Water Supply through lorries

The income earned by supplying water through lorries on payment of cost

1085 Septic tank cleaning charges

Wherever there is drainage scheme and wherever the septic tank cleaning work is undertaken the charges collected will be credited to this account

1086 Sewerage connection charges

The cost of application form, centage charges, repair charges and other charges collected for providing new sewerage connections where the system is available

1087 Specific maintenance Grant – contribution for Water Supply and Drainage

The receipt of specific maintenance grant from the Government or contribution from any other organization for water supply and drainage work / scheme is booked here.

1088 Prior year Income Any income that has not been accounted for in the respective years nor forseen but received in the current year, will be booked in this account

2000. EXPENDITURE

INTRODUCTION: Expense Accounts are so designed as to ascertain the expenditure on monthly basis and annual basis, department wise and also activity wise, with a view to identify easily the expenditure for a specific purpose or activity. Annually, the balances in the detailed accounts of the expenditure as per the General Ledger will be shown on the debit side of the Income and Expenditure account. 2. Accordingly, the revenue expenditure are classified functionally under the following broad departmental heads, with Alpha codes as indicated below. 01. REVENUE DEPARTMENT -RE 02. ACCOUNTS CELL -AC 03. GENERAL DEPARTMENT -GD 04. COUNCIL -CL 05. ENGINEERING DEPARTMENT -EN 06. –do- WORKSHOP -EW 07. –DO- PARKS & LIGHTS -PG 08. –DO-STREET LIGHTS -SL 09. –DO- STORES -ST 10. TOWN PLANNING DEPARTMENT -TP

11. PUBLIC HEALTH DEPARTMENT -PH 12. CONSERVANCY -CN 13.SOLID WASTE MANAGEMENT -SW 14.HOSPITALS & DISPENSARIES -HD 15. MATERNITY & CHILD WELFARE -MC 16. ANIT-MALARIA SCHEME -AM 17.ANTI-FILARIA SCHEME -AF 18. I.P.P - V/ FAMILY WELFARE -FW 19.ANIMAL HUSBANDRY -AH 20. TAXATION APPEALS COMMITTEE -TC 21. EDUCATION -ED 22. ELEMENTARY EDUCATION -EE 23. ZONAL OFFICE – 1 -ZA 24. -do- -ZB 25. -do- -ZC 26. -do- -ZD 27. -do- -ZE 28. -do- -ZF and so on. 29. WATER SUPPLY AND DRAINAGE -WS FUND 30. SEWAGE FARM -SF 3. Wherever Zonal offices are ordered to function and the Zonal officers are Drawing and Disbursing officers, such offices will be identified with ALPHA CODES and the officers are allowed to operate with the same Account Code nos. as in the case of officers in the main office, with prefix ‘ZA’ and so on. 4. Similarly in the case of utilization of the Devolution Fund, on authorized items, the code nos. are to be prefixed with the letter ‘DV’ additionally. This will enable to prepare a separate statement of receipts and payments for this Fund. 5. The Water Supply and Drainage Fund Account is to be maintained separately. In order to keep this account distinct, the code numbers have been assigned with prefix ‘WS & SF’. 6. The following code nos. are common to all departments/sections/zonal offices etc, and they should be used with prefix assigned to each of them. Separate code nos. have been given for those items of expenditure which are directly applicable to the respective depts./ sections etc. 2001. Pay including personal pay 2002. Special pay 2003. D.A. 2004. Interim relief 2005. H.R.A. 2006. C.C.A.

2007. Cash allowance 2008. Conveyance allowance 2009. Medical allowance 2010. Other allowances 2011. Ex-gratia / Bonus 2012. Travel expenses 2013. Leave Travel concession 2014. Supply of uniforms 2015. Telephone charges 2016. Light vehicles maintenance 2017. Legal expenses 2018. Stationery and printing 2019. Advertisement charges 2020. Other expenses 2025. Conveyance charges 2041. Prior year expenses 2046. Books & Periodicals and magazines 2047. Postage and telegrams 2048. Electricity consumption charges 2049. Office building maintenance 2050. Repairs and maintenance of tools and plant 2051. Training programme expenses 2052. Professional charges 2053. Pension and leave salary contributions 2055. Staff welfare expenses 2070. Heavy vehicles maintenance 2107. Cost of medicines 2108. Rent for buildings

Note: 1. In the journal vouchers, all details required for classification and payments should be furnished in the column provided for ‘Narration’.

2. All claims for payments are to be supported by bills / invoices etc 3. In the pay bills, the seal bearing BPV no. and EJV no. with date in which they are passed for payment has to be affixed and attested by the Accountant / Accounts officer 4. All pay bills including supplemental are to be supported by abstract of salaries and supplemental bills. (MCF 16)

Account code no.

Account Head Description

2001 - 2011

PAY, DA, etc These accounts are for the gross salaries payable to all the officers and staff members in each department, jeep / car drivers as per the sanctioned strength. Details in EJVs are to be given in individual code nos. with departmental prefix nos. Till computer operation comes into being, it is better if the postings are made code wise for 2001-2011 in the General Ledger and also shown in the Trial Balance

2012 Travel expenses The expenses on traveling allowance for the discharge of official duties by the officers and the staff of respective department outside the jurisdiction of the local body. The name of the officer, period of claim etc have to be furnished in the EJV

2013 Leave travel concession

The expenses on the grant of LPC to the eligible employees and their family members as per the procedure prescribed therefor. The claim should be supported by the proceedings.

2014 Supply of uniforms The expenditure on supply of uniforms to the eligible employees as per the scale prescribed by the Govt. The period for which and the scale at which supply was made should be furnished. It includes stitching charges

2015 Telephone charges The payment of telephone charges for the telephones provided in the office and for the officers in their residences. The narration in the EJV should indicate the location, to whom provided (the designation of the officer), period etc should be furnished

2016 Light vehicles maintenance

Cost of petrol/diesel, repairs and replacements, payment of MVT etc, for the vehicle or the jeep allotted in the respective depts. Vide also code no. 2070 for further descriptions. If the cost of repairs on any vehicles exceeds 10% of its original cost at any one time, the same should be capitalized as it enhances the working condition of the vehicle

2017 Legal expenses 1. All kinds of legal expenses that are incidental to the respective depts 2. Request from the advocate, case file no.,

amount paid previously have to be furnished 2018 Stationery &

printing The cost of forms and registers either purchased or printed, the purchase of stationery articles etc by the general dept that are meant for use by all depts. should be booked to the G.D. Besides the cost of forms and registers specially used in respective depts., and purchase of stationery items that are exclusively required for those departments should be booked to the department concerned with the prefix applicable to the depts. This will include Xeroxing, binding etc Note: Purchase of hi-tech pens / ball point / ink pens / for individual officers’ use is not permissible

2019 Advertisement charges

All advertisement charges relating to the depts. concerned

2020 Other expenses Any other expenses not classified elsewhere which are of rare and unusual nature have to be booked. This code could be used very sparingly to accommodate special nature of expenses

2021 Property Tax – Vacancy Remission

Remission in the Property Tax granted as and when individual cases are decided and orders passed. Debit entry is raised through a G.J.V. based on the Property Tax Adjustment Slip (MCF14) duly crediting the property tax recoverable account – current / arrears for this transaction.

2022 Provision for doubtful collection of revnue items

The major dues to be collected in the Municipality would relate to Property Tax recoverables. Out of the total amount due, it is likely that a certain portion might prove to be doubtful of realization, if they have become barred by limitation of time or for any other reason. There may also be cases of certain other items of revenue, the collection of which being impossible in due course of time. To meet this contingency, a provision has to be made under this account at the end of every Accounting year. The provision would be determined on a percentage basis on the total outstandings. The year’s provision will be shown under this head and cumulative

provision will be indicated in code no. 4039. 2023 Irrecoverable

Revenue items – Written off

As and when the irrecoverability of taxes and fees and other items of revenue, established, after exhausting all measures enjoined in the Act and the rules framed there under, such amount would be written off, with the specific sanction of the council. The items of revenue covered by the above sanction will be expunged from the respective Demand Registers.

2024 M.O.Commission (Pension)

In some cases, the monthly pension subject to ceiling fixed by the Govt, have to be sent by M.O. bearing the commission from Municipal Funds. The expenditure on M.O. Commission may be included in the cheque, while drawing the amount of pension and the expenditure classified accordingly.

2025 Conveyance charges All expenses connected with handing over office letters by messengers to other offices and for encashment of self cheques etc, will be booked here.

2026 Computer Operational Expenses

All expenses connected with the maintenance of computes inclusive of service charges and purchase of stationery items therefor

2027 Interest charged by the bank

Any interest debited by the Bank as per the debit advice and a debit entry given in the Bank Scroll towards interest, will be booked by preparing a BPV (not payable)

2028 Bank charges Any debit in the Bank Scroll should be examined and details obtained from the Bank before booking under this head by preparing a BPV (not payable). This includes the charges debited by the bank on dishonoured cheques. The commission for collection of outstation cheques should be recovered from the parties concerned by watching over it.

2029 Interest on Loans / Ways & Means Advance / Overdraft

To the extent pertains commitment charges to creation of assets should be capitalized under 3121 or 3122 till the asset is created

2030 Lapsed deposit - refund

Where an occasion arises to refund the deposits that were already taken as lapsed deposits in accounts after the time limit was over, that refund amount will be booked in this head, treating it as revenue expenditure.

2031 Pension (Super annuation/Retiring/I

Expenditure on payment of pension, family pension, commuted value of pension, Death

nvalid etc./Family Pension/ Adhoc pension

cum retirement Gratuity will be booked under the respective account heads. Expenditure on monthly payment of pension and family pension to the retired employees and to the nominated family members respectively will be booked here.

2032 Commuted value of pension

The payment of commuted value of pension otherwise knows as ‘Commutation of pension’ on retirement

2033 Death-cum-retirement Gratuity

The payment of gratuity is accounted in this head

2034 Special Provident Fund-cum-Gratuity scheme contribution

The management contribution as fixed by the Govt (presently Rs.5000/- in individual cases of retirement) is debitable to this account. By prudent investment of the subscription amount even this could be met out of that fund

2035 Group Insurance scheme – Management contribution

The management contribution to be paid periodically at the rate prescribed by the Government in respect o all employees on roll in the Municipality is to be assessed and paid to the Government Account. The contribution due shall be worked out separately for General Staff, Staff whose salary is paid from Water supply & Drainage Fund and for Staff working in Nutritious Meals centers

2036 Audit fees The audit fees payable to Government account as demanded by the Audit Department either by letter or by specific mention in the audit report have to be charged to this head as and when received.

2037 Loss on sale of asset This account relates to losses incurred while disposing of the Municipality’s obsolete and unserviceable assets. When the sale value is more, the surplus is to be accounted under code no. 1057 viz. profit in sale of assets

2038 Depreciation Depreciation on all the different types of assets is to be accounted for at the prescribed rates under this head by means of an E.J.V. for transfer of this amount to the respective accumulated depreciation account through depreciation work sheet (MCF 370

2039 Pension contribution to Municipal Employees Pension

Even though the pension contribution payable to the Municipal employees Pension Fund, maintained by the Director of Local Fund Audit, is subject to adjustment out of the

Fund amount released by the Directorate of Municipal Administration every quarter of the financial year under the scheme of Devolution fund, from the state fund, the amount so adjusted should be booked here. As per G.O.Ms. No. 110 MA&WS(Election) Department dated 3.5.97, w.e.f. 1.4.97. The onus of providing for pension contribution liability to the Pension Fund maintained by the DLFA, rests with the Govt. Hence, no liability code for this provided.

2040 Municipal Contribution to other Funds / schemes

The govt. sanction some schemes like National Slum Development Programme on 50:50 basis i.e. the Govt shall pay 50% of the scheme and the Municipality should match with the other 50% by way of its contribution. The Govt. grant received for such schemes accounted under 4014 should also be transferred to the scheme accounts

2041 Prior Year Expenses In exceptional circumstances, any expenses which relate to prior years not paid nor provided for earlier will be accounted under this head. And also to identify the quantum of such extraordinary claims settled during the current year

2042 Hospital stoppages / reimbursement of medical expenses

The expenditure on reimbursement of hospital inpatient charges other than diet charges and wherever reimbursement of Medical Expenses availed by the staff will be booked here

2043 Expenses on food sampling

Expenditure on taking food samples under the Prevention of Food Adultration Act should be booked here

2044 Provision for encroachment

Wherever Municipal properties are under encroachment, till they are made free from encroachment, provision has to be made as per the recognition norm given in vol II of the accounting manual by creating a liability in code no. 4101

2045 2046 Books and

periodicals and magazines

Purchase of books for reference, purchase of news papers magazines etc, as per the scale if any fixed by the Govt

2047 Postage and telegrams and fax

The total expenses on the sue of postal stamps and issue of telegrams for the office as a

charges whole are to be booked here. Fax charges also to be booked here

2048 Electricity consumption charges for office buildings

The electricity charges for the office building and other buildings are debitable to this head

2049 Office building - maintenance

It includes replacement of electrical, sanitary fittings etc and general upkeep of the office building ward offices / Divisional offices etc

2050 Repairs and maintenance of office furniture etc

The cost on repairs and replacement of the general items of tools and plants in all the depts. such as typewriters, water coolers, roneo / Xerox machine, tables, chairs etc

2051 Training programme - expenses

The cost on giving training both internal and external – to the officers and staff of the entire municipality irrespective of the depts. in which they are working

2052 Professional charges The fees paid to professionals / consultants / technical experts engaged on contract for formulating new schemes, preparing new projects, master plan etc for obtaining feasibility reports etc, Finally when a particular project is complete, this must be taken for assetisation

2053 Pension and leave salary contributions

Pension and leave salary contributions, payable for and on behalf of all deputationists working in the municipality

2054 Contributions Contributions payable to the related agencies such as CMDA / LPA, TNIUS and other institutions. It includes contribution payable to the chamber of municipal chairman and All India council of Mayors.

2055 Staff welfare expenses

i) The expenditure incurred on any specific authorized welfare schemes beneficial to all employees of the municipality ii) The difference between the interest earned on ‘T’ deposit account and the interest paid to the P.F subscribers will be debited to this head of account based on council resolution

2056 Exhibition Expenses The expenses incurred by all departments in participating in the exhibition conducted by the State govt / Municipality / authorized non-Govt organsations. This includes expenditure incurred on Flower show

2057 2058

2059 2060 2061 Sitting fees /

honorarium for the councillors and meeting expenses

The fees/honorarium payable at the prescribed rate for the councilors for attending the council meetings and the meetings of committee and all other expenses related to the council hall, Chairman room Mayor chamber etc

2062 Council department – Travel expenses

Travel expenses paid to the Mayor and Deputy mayor or the chairperson and vice-chairperson and the councilors for their authorized journeys / tours undertaken out of their municipal jurisdiction

2063 Expenses on hospitality / entertainment

The amount expended on welcome addresses given to the High dignitaries, reception given to the VIPs dinner hosted by Mayor / Chairperson etc as per the guidelines and permission given by the State Govt

2064 Expenses on opening ceremonies

The expenses relating to laying of foundation stones for projects and opening such projects will be initially booked here. Ultimately, when the cost of project is assetised and capitalized, such expenditure will be added with the project cost by a F.A.J.V. and the total cost of the project finalized

2065 Election expenses The cost of conducting elections of the Councillors, Chairpersons, Mayor etc and expenditure incurred for by – elections for Municipal councilors

2066 2067 2068 2069 2070 Heavy vehicles -

Maintenance The cost of maintaining heavy vehicles used by the department including fuel, M.V.T. insurance cost on retreading tyres etc Similarly when repairs and servicing are carried out in excess of 10% of the original cost of a vehicle at one time, shall be capitalized as it enhances the working condition of the vehicles as well as its life

2071 Repairs & Maintenance – Roads & Pavements concrete

Self-explanatory

2072 Repairs & - do -

Maintenance – Roads & Pavements – Black topping and asphalt

2073 Repairs & Maintenance – Buildings

- do -

2074 Repairs & Maintenance – subways & causeways

- do -

2075 Repairs & Maintenance – Bridges & flyovers

Self explanatory

2076 Repairs & Maintenance – Maintenance storm water drains, open drains and culverts

- do -

2077 Repairs & Maintenance – Instruments,Plant & Machinery

- do -

2078 Restoration of road cuts

This account is operated for road cuts restoration. The expense on restoration of road cuts made for giving new water supply / drainage connections to the house owners will be booked here

2079 Maintenance of nutritious meal centres

At times, specific grants are received from the govt, for carrying out repairs to the nutritious meal centers and replacement of utensils and vessels due to wear and tear. The expenditure incurred therefor are to be booked here

2080 Maintenance for improvements to slum areas

It is the policy of the Govt. to undertake periodical improvements to the slum areas for which specific grants are given on 50:50 basis or on full grant basis. If the scheme envisages carrying out the maintenance work only, such expenditure are to be booked here

2081 Maintenance charges for railway crossings / over bridges

Maintenance charges for railway level crossings / over bridges as claimed by the railways, every year are booked here

2082 2083 2084 Maintenance of All expenditure connected with the

gardens / parks maintenance of gardens / parks 2085 Plants, Manure,

implements etc The cost on purchase of plants implements, manure, fertilizers etc for Parks & Gardens and for Sewage farms

2086 Power charges for Sewerage system / pumping stations

Power charges payable for electricity consumption in the pumping station and other sewerage systems

2087 WS

Power charges for water head water works / pumping stations / booster stations

Power charges payable for the electricity consumption in the pumping stations, booster stations, water supply headworks

2088 Power charges for street lights

The periodical payment of electrical consumption charges to the TNEB. The TNEB is raising Power Consumption bills for the street lights in the municipalities on bimonthly basis. It is therefore, imperative that a close watch is to be made to settle the power consumption bills and to avoid creating liabilities

2089 Maintenance expenses for street lights

The cost of purchase in piecemeal of tubelights, bulbs and other accessories required for replacement in normal course of maintenance. Conversion charges from tube lights, Sodium vapour lights etc, are all toe be booked here

2090 Wages Normally persons may be engaged on nominal muster roll (NMR) as technical assistants on daily wages under the work charged establishment of the respective work estimates and this will be covered within the petty supervision charges of sanctioned estimates.

2091 Stores – written off This account contains the value of stores items which are written off of stock as unserviceable. The debit to this account will be made through an E.J.V.

2092 Petrol / Diesel evaporation

In municipalities, having a separate diesel / petrol bunk of their own, the cost of petrol / diesel within the permissible limit of evaporation covered by regularization orders should be booked here through an E.J.V.

2093 2094 2095 Survey charges One or two sub-inspectors of the survey and

land records dept, with the supporting staff

(field assistants) are stationed in the municipal office and their services are utilized for survey and land record purposes within the municipal limit and also within the town survey limits. The amount payable on this account should be ascertained and debited to this account, and a liability provided therefor under code no. 4040

2096 Removal of debris The cost of removing debris by special arrangement whenever they are found heaped blocking the normal passage as this does not form part of garbage

2097 2098 2099 2100 Sanitary /

Conservancy expenses

All expenditure on maintaining bulls (except those booked in code no. 2119) like insurance, shoeing, coir, medicines for bulls, destruction of stray dogs / pigs, public toilet maintenance, cost of dust bins etc are booked

2101 Expenses on sanitary materials

Purchase of materials, required for sanitary work, disinfectants, soaps, oil, chapels, sweeping materials, fuel and chemical for fogging machine etc

2102 Pauper charges The payment made for disposing of unclaimed dead bodies based on supporting evidence

2103 Fairs and festivals The expenditure incurred specifically on notified fairs and festivals. This will enable to claim contribution due as prescribed from temple authorities vide code no. 1035

2104 2105 Improvements to

compost yard At times, specific grants are received from the Govt. for making improvements to the compost yard.

2106 Anti-filaria / Anti malaria operations

All expenditure on the scheme

2107 Cost of medicines Cost of all items of medicines purchased or supplied through stores to the dispensaries and hospitals

2108 Rent for buildings The amount payable to the buildings taken on rent for running hospitals, dispensaries, maternity center schools etc

2109 Hospital expenses other than

Washing charges, gas, cleaning charges, cost of linen, telephone and other expenses

medicines 2110 Diet to patients Bread, milk, egg etc to the patients n the

maternity centers and hospitals 2111 2112 2113 2114 2115 2116 2117 2118 2119 Fodder (Animal

feed) The amount on hay, cotton seeds, oil cake and other animal feed

2120 Zoological garden maintenance

The cost of maintaining the zoo, if any, including the personnel cost of persons employed for the upkeep of the zoo

2121 Running of libraries / reading rooms

All expenditure and incidentals in running libraries / reading rooms

2122 Maintenance of lodging houses, rest houses, TB, IB

Self explanatory

2123 Maintenance of kalyana mandapams, community hall, townhall, kalai arangam

Self explanatory

2124 Cinema Theatare maintenance

All expenditure on running cinema theatres including the maintenance charges

2125 Maintenance expenses – water supply / sewerage works

Fees for headworks inspection by the chief electrical inspector to the Govt. etc maintenance of pipe lines repairing of burst etc., supply of alum, bleaching powder, clorination charges

2126 Maintenance expenses – elementary schools

Maintenance of elementary school buildings owned by the municipality repairs to buildings, furnitures, leveling play ground etc

2127 2128 Royalty The royalty paid to the PWD for drawing

water from river sources / resorvoirs 2129 Maintenance

charges to TWAD Board / Metro Water Board / Water Cess to the Tamilnadu Pollution

In most of the municipalities, the TWAD board, after completion of the water supply schemes, continues maintaining the work of supplying water, from the water resources, till it reaches the OHT by its own manpower stationed at pumping stations, wayside mains,

control board booster stations etc. The same procedure is applicable in the case of payment of Water Cess to Tamilnadu Pollution Control board (TNPCB)

2130 Hire charges for supply of water through private lorries / tankers

In case of necessity, where water is to be supplied by hiring of private lorries to the residents in the areas in which neither public fountains are provided nor house service connections are given, such expenditure is to be booked here

ASSETS and LIABILITIES

3000. ASSETS

The assets exhibited under the various fund accounts will show the nature of assets of the Municipality as indicated below: A. Revenue Fund: The current assets will be broadly exhibited as under and as detailed with cod nos. 3001 to 3100

1. Stock 2. Property tax recoverable 3. Other tax and fees recoverable 4. Lease amounts recoverable 5. Employees’ Advances recoverable 6. Other advances recoverable 7. Cash balance 8. Bank balance 9. Fixed deposit under revenue fund and 10. Suspense accounts, if any

B. Capital Fund: The fixed assets will mainly come under this fund and they are as detailed in cod nos. 3101 to 3130.

C. Water Supply and Drainage Fund The assets relating to this fund are classified within the above code nos. whichever applicable D. Elementary Education Fund: The assets relating to this fund are classified within the above code nos. whichever applicable. While using the above code nos. the prefix applicable to the respective fund should be added. A. Revenue Fund RF B. Capital Fund CF C. Water supply & Drainage fund WS for Water supply SF for sewage farm D. Elementary

Education Fund EE The above codification will facilitate the preparation of balance sheet for the Municipality as a whole as well as fund wise balance sheets Account code no.

Detailed Account Head

Description

3001 Specific stock Account

This account will account for the quantities and the value of various types of inventory on hand at the end of the financial year. Various materials to be used on the works and for the departments under the control of municipal engineer, Health officer / Sanitary office / Medical officer and all other subordinate officers who are incharge of (i) Stock account - Engineering (ii) Stock account – public health (iii) Stock account – medical (iv) Stock account – electrical and others (v) Stock account – petrol / diesel (vi) Stock account – asphalt (vii) Stock account – cement (viii) Stock account – steel (ix) Stock account – other engineering materials and (x) Stock account – Water supply and drainage materials will be brought under this account head The balances under various categories of inventory items (non consumables) will be arrived at as on 31st March and exhibited under this head

3002 Property tax – recoverable current

This account represents the consolidated total tax due to the municipality at the end of the financial year, for the latest year for which demand notices had been served. This should agree with the DCB statement finalized at the end of the year

3003 Property tax – recoverable arrears

This account represents the consolidated total of tax due to the municipality towards property tax for five years immediately preceding the current year. This should agree with the arrears shown in the DCB statement

3004 Property tax collection suspense account

This account is provided mainly to accommodate rare cases of collections for which the details required for straight away crediting the amount to the respective years are not available. On ascertaining the details, the amount in this account should be cleared by means of a GJV.

3005 Profession Tax recoverable –

The profession tax is payable by the tax payers on half yearly basis. So when the demand is finalized at the end of each half year, this account will be debited

Current with the amount of demand so finalized by preparation of a GJV. The balance (demand raised in the year but not collected) will represent as Profession tax recoverable

3006 Professional tax recoverable - arrears

The description against code no. 3003 will apply with suitable modification thereof

3007 Other taxes – recoverable - current

This account represents the total amount of balances that are left uncollected under other taxes and for which DCB statements are prepared at the end of the year, duly agreeing with the balances in the statement

3008 Other taxes recoverable - arrears

The description against code no. 3003 will apply suitably

3009 Licence fees and other fees –recoverable - current

The description against cod no. 3007 is suitably applicable here

3010 Licence fees and other fees –recoverable - arrears

Same as in the case of code no. 3003

3011 Lease amounts – recoverable – current

Demand will be raised at the beginning of the financial year based on settlement of leases and bought to account.

3012 Lease amounts – recoverable - arrears

The description against code no. 3003 will apply suitably

3014 Water charges recoverable – current

This account represents the demand raised for total water charges, due, and left uncollected at the end of the year

3015 Water charges recoverable - arrears

This will represent the water charges due for previous year left uncollected at the end of the financial year agreeing with the figures in the DCB statement

3016 Education tax receivable - current

Same as in the case of code no. 3013

3017 Rent on buildings recoverable current

The rent due from the occupants of municipal quarters, municipal housing colonies and quarters for sanitary workers. There are cases, where the retired employees of their family members continue to occupy the quarters

3018 Rent on The rent due from the occupants of municipal

buildings recoverable - arrears

quarters municipal housing colonies and quarters, for sanitary workers, pending collection as per the arrear demand register has to be exhibited in this code

3019 Water supply and drainage tax receivable arrears

Same as in the case of code no. 3003

3020 Education tax receivable arrears

Same as in the case of code no. 3003

3021 Accounts receivable – sale of properties

This account represents the amount to be collected from parties to whom the municipality sold any of the assets

3022 Survey fees receivable

Vide code no. 1029 for description

3023 Specific grant receivable

This account represents the estimated amount of a specific item of revenue grant that has been committed by the state government like M and CW grant etc, but received in the financial year in which it is normally to be received

3024 Cost on sale of land / buildings recoverable

This account represents the amounts recoverable from parties, employees etc to whom the municipality has sold its land and buildings on hire purchase or outright purchase

3025 Interest accrued on fixed deposit / dividend due on shares

There may be some fixed deposits made out of municipal funds. In such cases, interest on fixed deposits, due for the year but not received till the end of the financial year, is taken into account.

3027 Road cut restoration – others recoverable

The description against code no. 3026 is applicable here

3029 Handloom advance

The accounting procedure detailed in code no. 3028 shall be followed

3030 Khadi advance

The accounting procedure detailed in code no. 3028 shall be followed

3031 Education advance

This is an interest free advance. The accounting procedure detailed in code no. 3028 shall apply

3032 Flood advance

- do -

3033 Immediate relief advance

An advance of Rs. 5000/- or the amount prescribed by the Govt. from time to time, shall be paid to the family of the employee who dies while in service

3034 Advance for This is an interest free advance, to be recovered in the

solar cookers prescribed instalments. 3035 Tansi advance This is also an interest free advance recovered in the

prescribed instalments 3036 Advance of

T.A. to the family of the deceased employee

When an employee dies in service, the family is likely to settle in their home town on the place of their choice other than the head quarters, for which they should be paid advance.

3037 Tour advance The advance paid to the officers and employees for undertaking official tours outside jurisdiction should be booked here. The advance if any paid to the Mayor / chairperson / deputy mayor / vice chairperson and other councilors for their official tours should also be booked here

3038 Advance of pay and T.A. on Transfer

Generally, the employees, when transferred from one station to another, are paid advances of pay and T.A. in the stations from which they are relieved. The above two items have to be settled only by cheques. The journal entries to be passed are as follows: (1) 3038. Advance of pay / TTA A/c Dr To Bank A/c Cr. (For payment to the staff concerned on the eve of his transfer) (20 Bank A/c Dr 3038 To advances of pay / TTA A/c Cr (When the cheque is received from the new station and brought to account by preparing BRV)

3039 Warm clothing advance

This is an interest bearing advance. The accounting procedure is the same as for the marriage advance.

3040 Calculator advance

This is also an interest bearing advance

3041 Computer advance

This is also an interest bearing advance

3042 Bicycle advance

This is an interest bearing advance. The accounting procedure applicable to other advances shall apply to this advance also

3043 Motorcycle advance

-do-

3044 Car advance -do- 3045 Marriage

advance This is an interest bearing advance. The accounting procedure indicated in code no. 3028 shall normally

be followed 3046 House

building advance

The accounting procedure indicated in code no. 3028 shall be followed

3047 Interest on staff advances – recoverable account

Interest has to be calculated at the prescribed rates and recovered from the employees in respect of all interest – bearing advances paid to them, after the advance (principle) is fully recovered. If the interest so calculated will be of a substantial amount and it cannot be recovered in one instalment, it should be recovered in easy instalments as in the case of original advance ie the amount of instalment fixed should not exceed the instalment amount fixed for the advance This is an important function that should be attended to, by the accounts cell at the time of recovering the last instalment of any interest bearing advance from an employee The above procedure is not applicable to the HBA in which case the interest due will have to eb worked out only on recovery of the entire advance and the number of monthly instalments fixed by issue of proceedings separately

3048 Wages to technical assistants – petty supervision charges

The payment of wages to technical assistants employed on NMR under work charged establishment and met out of petty supervision charges provision in the sanctioned estimates of the respective projects will be initially booked in this code subject to clearance by inclusion in the value of the particular asset created by execution of a project, at the time of assetisaton / capitalisation

3049 Collection of arrears of taxes doubtful

Taxes left uncollected after they have barred by limitation of time have to be brought to this account for final settlement either by collection / recovery or write off

3050 Collection of arrears of non taxes (Fees) - doubtful

Same position as in the case of code no. 3049

3051 Advance to the suppliers

This account relates to the amount advanced to the suppliers for supplying materials, as per the conditions agreed to, between the municipality and the suppliers, after observing formalities in this regard

3052 Advance to This account relates to the amount advanced to the

the contractors

contractors for ‘operation and maintenance work’ to be done by them as per the agreement. These advances are to be adjusted s and when the contractors’ bills are received for payment. The accounting system is explained under the chapter on ‘Contractors Accounting’

3053 Materials cost recoverable A/c contractors

This account relates to the materials issued to the contractors, from the ‘stores’ for execution of capital works and also for operation and maintenance work to be done by them. So the accounting entries are to be made on three occasions, first at the time of issue of materials, second at the time of return of materials by the contractors and third at the time of paying the contractors’ bills for the materials used by them for the works. 1. When the materials are issued 3053 materials cost recoverable A/c Contractors Dr 3001 to specific stock A/c Cr 1045 to other income Cr

2. When the materials are returned by the contractors

3001. specific stock A/c Dr 2020. other expenses Dr 3053. To materials cost Recoverable A/c - Contractors Cr

3. When the cost of materials used by the contractors, is recovered from their bills

3121/ 3122 projects in progress Account Dr 3053 To materials cost Recoverable A/c - Contractors Cr The difference between the issue price and the cost price is credited to the other income head of account when the materials are issued and debited to other expenses account, when the materials issued are returned to the stores

3054 Advance recoverable - expenses

This account relates to the amount paid as advance to the staff members or outsiders for purchasing certain items urgently or for providing some services. The accounting system is explained under the chapter

on ‘Expenses Accounting’ 3055 Other

advances recoverable

Advances sanctioned for other purposes and that could not be accommodated under any of the accounts head for advances under code no. 3051, 3052 and 3054 are booked to this account and recoveries / adjustments watched. This account is credited as and when the advances are recovered or adjusted under proper authority.

3056 Deposits recoverable

This account relates to the amount deposited with various outside Institutions such as Telephone dept, electricity board etc. These deposits are treated as assets and shown under this head until they re recovered or adjusted Generally, these deposits are continued to be treated as assets for years together, in as much as they are to be retained by the Institutions that are rendering services to the municipality. Therefore the recovery or adjustment is quire remote (i) The journal entries, at the time of paying such deposit will be as follows: 3056 Deposits Recoverable A/c Dr To Bank A/c Cr (Through a BPV) (ii) When the deposit is recovered, through a BPV; Bank A/c Dr 3056 To deposits Recoverable A/c Cr (iii) When the deposit is adjusted against the service bill, if any, through EJV Specific head of A/c Dr 3056 To deposit Recoverable A/c Cr

3058 General Imprest Account

This account represents the sum total of all imprest amounts sanctioned and paid to various subordinate officers of the municipality, both in the main office and at outside locations like dispensaries, zonal offices etc. The sum total of all such amounts should tally with the amount exhibited in this head of account

3059 Cash account This account represents the cash balance in the Treasury at any point of time, more specifically required for the purpose of trial balance and balance sheet

This account is credited through BRV when the same is deposited into the Bank next day by remittance chalan

3061 Collection account ……. Bank

The accounting system prescribed against code no. 3060 should be followed

3062 Collection account ……. Bank

The accounting system prescribed against code no. 3060 should be followed

3063 Collection account ……. Bank

The accounting system prescribed against code no. 3060 should be followed

3064 Devolution fund Account …… bank

The amount received from the CMA periodically with reference to G.O.Ms no.109 MAWS dept dt. 3.5.97 should be accounted here

3065 Personal deposit account _ TREASURY

This account is debited with all credits offered by the treasury officer for duty on Transfer of Property, Entertainment tax, magisterial fines, Govt loans and Govt grants etc i.e. inflows from the Govt The same code no. shall be used with the pre-fix for PD account – Elementary education till it is closed

3066 Payment account …. bank

All routine payments from revenue fund like salary bills, expenses, suppliers’ bills, contractors’ bills etc are made through this account. This account is debited, when the inter fund transfer is made from the collection account …… bank (code no. 3060 – 3063) This account is to be operated on alternate days or weeks, according to convenience, if more than one payment account ….. bank is operated

3067 Payment account ….bank

This account is also to be operated on alternate days or weeks i.e. on days or weeks when the account no. 3066 is not operated

3068 Old bank account …….. bank

This account represents the revenue fund transactions of old bank account, prior to switching over to this accounting system. This account will be closed, once all the transactions pertaining to it are ascertained and the balance is fully reconciled and adjusted

3069 Elementary education fund ….. bank

The transactions relating to elementary education have to be accommodated in this bank account

3070 Fixed Deposit 3071 Pension and

Leave salary contributions receivable

Please see description against code no. 1065 to account for the amount due to be received

3072 Miscellaneous When orders are issued for recovery for the shortages

recoveries receivable

etc, in the stores or in other items in monthly instalments through pay bills, the total amount so ordered should be brought to this account by crediting to the account no. 1066. The monthly recoveries will be credited to this account

3073 Accumulated depreciation fund – investment

Based on the depreciation worked out at the prescribed rates for fixed assets at the end of the financial year (Depreciation work sheet) and charged to the income and expenditure account, the amount so worked out, is taken to the credit of accumulated depreciation fund account of individual assets. Such amounts invested periodically are shown in this account

3074 TDS on interest on CCD by Tneb - receivables

The TNEB every year based on high tension power consumed during the previous 12 months collects deposit at 1.5 times of the average monthly consumption and pay interest @ 5% annually. Gulf on this interest. The TNEB deducts interest Tax (preferably) at source

3075 to 3089 3090 SJSRY/NRY

Bank Accounts

These are the funds received from GOI and do not form part of municipal funds. The role of municipality is that of the custodian and executor of various specific schemes decided / approved by the Govt.

3091 to 3099 3100 Interfund

Transfer In the administrative expediency, it becomes necessary to transfer amount from one fund account to another in order to meet out certain inevitable payments as a tactful and prudent financial management. Such transfer will be shown against this code in the trial balance, by making postings in the general ledger

3101 Land-Gross block

All expenditure incurred by the municipality towards (i) acquisition of land and (ii) improvement to such lands

are to be accounted under this account. Cost of lands is always to be accounted under this head and should not be shown under any other Asset account

3102 Buildings – Gross Block

(i) All the expenditure incurred on purchase and construction of buildings are to be accounted under this head (ii) Expenditure incurred towards any addition to the existing buildings, any modifications which result in change of the class of the buildings and any major

repairs (exceeding 10% of the original cost of the building) at any one time are also to be accounted under this head

3103 Subways and Cause ways GROSS BLOCK

This account head includes the cost of causeways, vehicle subways, pedestrian subways and pedestrian overbridges.

3104 Bridges and flyovers – GROSS BLOCK

The expenditure incurred on the construction of bridges and flyovers are to be accounted under this head. In addition, all major repairs exceeding 10% of the original cost of any bridge or flyover at any one time are also to be booked under this account head

3105 Storm water drains, open drains and culverts – GROSS BLOCK

All expenditure incurred in the construction of new storm water drains, open drains and culverts are to be accounted under this head. In addition, all major repairs exceeding 10% of the original cost of an individual storm water drain or culvert at any one time are also to be booked under this account head

3106 Heavy vehicles – GROSS BLOCK

This asset account contains the cost of all types of all heavy vehicles such as lorries, tractors, bulldozers, mechanical sweepers, tippers

3108 Other vehicles – GROSS BLOCK

This account is meant for accounting the cost of all vehicles other than those covered under account heads 3106 & 3107

3109 Furniture Fixtures and Office equipments - GROSS BLOCK

This account head includes the cost of various types of furniture and office equipments like steel chairs, steel tables, wooden chairs, wooden tables, steel racks, wooden racks, water coolers, refrigerators, radios, televisions and other office equipments such as bradma machines, registrix etc used in all departments in the office etc

3110 Electrical instllations – Lamps / Tube light fittings – GROSS BLOCK

The electricity board does not provide any kind of lamps. The board will provide electrical posts in the newly formed colonies etc, on payment of estimated amount as claimed by it and replaces the existing posts within the municipal areas at its cost for providing street lights.

3111 Electrical installations – Others – GROSS STOCK

The cost of all electrical fittings which include fans etc installed in any of the municipal office premises including those in various unit offices, dispensaries, hospitals should be accommodated here.

3112 Plant and Machineries – GROSS

The cost of all Plants and Machineries such as road rollers, tar boilers, trailors, mixers etc.

BLOCK Roads & Pavements: General: The roads / streets / lanes of the municipality that are declared as ‘Public’ are classified under three categories: Concrete Black – topped Others (metalled & earthen) Separae account heads are to be operated for each of these three categories. The word ‘Roads’ shall mean ‘Streets’ and ‘Lanes’ also. The following types of expenditure are to be booked under these accounts

1. Cost of forming new roads 2. Cost of widening existing roads 3. Cost of relaying existing roads 4. Cost of upgrading roads from one category to another (to be booked under

category to which a road is upgraded) 5. Cost incurred in laying pavements

Similarly depreciation for these assets is to be accumulated under separate account heads. 3113 Roads & pavements

– Concrete – GROSS BLOCK

This asset head includes the cost of all roads and pavements made of concrete mixture. The cost of all new additions to this category, like widening and ralaying of any existing road, the cost of upgrading from inferior type of road to concrete road and the cost of conversion will be debited to this account head.

3114 Roads & pavements –Black topped – GROSS BLOCK

This account head consists of the cost of all roads and pavements laid with asphalt. The cost of laying additional roads, widening, relaying existing roads and upgrading and conversion of existing roads to the level of this category, will be included in this category

3115 Roads & pavements – Others – GROSS BLOCK

This account includes the cost of all other types of roads & pavements. The cost of laying new roads will be debited to this account

3116 Instruments & equipments in hospitals and dispensaries etc

The cost of instruments and equipments for hospitals, dispensaries, M&NCW centers and other health posts should be booked here

3117 Tools & Plant Gross Block

The cost of new tools purchased in sets for maintenance of hand pumps etc should be booked here

3118 Public Fountains – Gross block

The cost of providing public fountains will be debited to this account

3119 PIP – Indirect cost – non grant

To account interest paid during the infrastructure, advt charges, inaugural functions etc

3120 PIP – Indirect cost - do -

– Govt grant 3121 Projects in

progress account All expenditure relating to capital projects executed by the municipality during a financial year should be accumulated under this head. On completion of the project, the expenditure accumulated under this account will be transferred to the respective fixed assets account head mentioned earlier

3122 Projects in progress A/c Govt Grants

This account is provided to accommodate and identify the project executed out of the Govt grants. The description against code no. 3121 shall also apply here

3123 Capital fund …..bank

A bank will be nominated for accommodating all inflows and outflows of the capital fund. I.e. both receipts and payments can be accommodated in one account, in view of the fact that receipt items will be very few. This account reflects the balance in the bank

3124 Capital fund …..bank

If the council decides to have one more bank account in some other bank, for capital fund, a bank account may be opened accordingly. This account reflects the balance in the bank

3125 Advance to PWD / highways / TN Construction Corpn ltd

The entire amount of loan / grant for a period received is placed at the disposal of the executing agency and progress of work watched

3126 M.P. Fund Amount received out of MPs allotment fund from the District collector for executing specific capital work

3127 M.L.A. Fund Amount received out of MLAs allotment fund form the district collector for executing specific capital work

3128 Deferred revenue expenditure

Heavy expenditure which is primarily of a revenue nature such as preliminary expenses in floating a new project or underwriting commission, brokerage, discount on issue of debentures or venturing on market loan, advertisement charges to popularize a new project etc, the benefit derived from which is likely to extend beyond the year in which it is incurred, it is a general accepted accounting policy to allow such an expenditure to be temporarily capitalized, treating it as a current asset to be spread equally over 3 to 5 years for which the benefit is to be enjoyed.

3129 Basic amenities scheme

Self explanatory

3130 National slum developmental programme

Self explanatory

3131 Advance to TWAD board / Metro water

The amount required for execution of a project by this agency will be paid in advance based on obtaining periodical statement of expenditure

board 3132 Water supply –

Head works, OHT etc and water supply mains

3133 Drainage and Sewerage pipes, conduits, channels etc

3134 Ground water wells / deep bore wells

3135 Hand pumps – India Mark II

3136 Reservoirs 3137 Sullage water

removal tankers

3138 Other items 3139 Water supply &

Drainage fund …. Bank

A bank will be nominated for accommodating of all income and expenditure including capital nature. In other words, both receipts and payments can be accommodated in one account as the transactions are not heavy as compared to that of revenue fund

3140 Water supply & Drainage fund …. Bank

The initial amount for providing new Water Supply and Drainage connections collected form house owners should be deposited in this accounted and utilized for repayment of loans or for execution or capital works.

3141 Drainage fees from building flat promoters …. Bank

The amount collected and accounted in code no. 3149 will be deposited in this bank code

3142 Under ground drainage scheme initial deposits ……..bank

The amount collected and accounted in code no. 3149 will be deposited in this bank code

3143 to 3149

3149 Drainage fees from building flat promoters

Fees for drainage facility covered in the construction of the flats will be credited in this code. The amount so collected shall be kept in a bank account assigned with codeno. 3141

3150 Under ground drainage scheme initial deposit

The initial deposits collected form the house owners for providing underground drainage scheme facility to them are accounted here by keeping a separate bank account with code no. 3142

3151 10th finance The operation of this fund can be accommodated in the

Commission Fund

bank account for Devolution fund (Bank code no. 3064)

3152 Decentralised District Plan

The operation of the fund received under this scheme can be accommodated in the capital fund bank account code no. 2123

4000. LIABILITIES

The liabilities as enumerated under various Fund Accounts will show the nature of the liabilities of the municipality as indicated below: The current liabilities relating to the payment due to the suppliers, the contractors, the dealers etc, other outstandings and the recoveries made from the pay bills of the employees and those from other bills are broadly classified under the revenue fund / capital fund. The contributions loans and grants from the Govt, the payments due to the contractors for execution of projects and the accumulated depreciation accounts of all fixed assets are mainly classified under the capital fund. Similarly the liabilities relating the to the Water supply and Drainage fund and the elementary education fund accounts are also accommodated within the code no. provided for the revenue and capital funds, so far as they are similar items of liabilities in nature. Wherever certain items are particular to those funds, they are given specifically separate code nos. The code nos. now provided form 4001 to 4087 have to be used with prefix ‘RF’ for Revenue fund ‘CF’ for Capital fund ‘WS’ for Water supply & Drainage ‘SF’ for Sewage farm and ‘EE’ for Elementary Education fund The above codifications will enable the preparation of the balance sheet of the municipality as a whole as well as the fundwise balance sheets. Account code no.

Detailed account head

Description

4001 Accumulated surplus / deficit

This account will reveal the accumulated surplus over the years. The NET surplus or deficit for each year is obtained, once the Income and Expenditure account is drawn up, from where it is to be transferred to this account at the end of the financial year

4002 Income and Expenditure account

This account is drawn up each year to reveal the net surplus or deficit form revenue transactions. All expense accounts are closed and exhibited in this account

4003 Ways and means advance

This advance indicates the short-term borrowing by the municipalities, meant primarily to tide over the financial difficulties in meeting its day to day administrative expenses. This advance is

given by the Govt, repayable in lumpsum or in limited annual instalments.

4004 Loans from the Govt

This account indicates various loans for specific capital schemes received form the govt and also the loan that was converted from ways and means advance specified in code no. 4003

4005 Loan from HUDCO

This account relates to loans received from HUDCO. The procedure indicated in code no. 4004 shall be followed here

4006 Loan from TUFIDCO

This account relates to loans received from TUFIDCO. The above procedure shall be followed here alo

4007 Loan from TNUDF

The procedure of accounting is the same as in code no. 4004

4008 Laon from …. bank

Any loan from the bank as authorized by the Govt, for projects is to be accounted here

4009 Overdraft from ….bankl

At times, the municipality is likely to be permitted by the State Government to have an overdraft account with in the bank in which it is having an account. This account indicates the amount up to which overdraft facility could be availed

4010 Diversion from other municipal fund

When a municipality decides to undertake execution of a major scheme, by diversion of surplus amount available in any other municipal fund

4011 Contribution from municipal fund

The amount spent or given form any of the municipal fund as matching contribution at the percentage for execution of schemes approved by the Govt or for the execution of the Capital works of its own shall be treated as ‘Contribution’

4013 Contributions from the Govt

This account represents the Capital Grant out of which the capital work (project) is completed and the work assetised.

4016 Tender deposit contractors

The tender deposits received form the contractors, security deposit paid by them and the ‘retention money’ held, out of value of work done by the contractor as per agreement condition are accounted for, here. The repayment also is passed through this account

4019 Security Deposit – Staff

The receipt and repayment of security deposit form / to certain employees of the municipality, to whom security deposit is prescribed, are to be accounted under this head

4020 Deposits – Others The election deposits and the deposits received for purposes other than those for which specific

code no. are provided are to be accounted here – Election deposit

4022 Co-operative Society Loan recoveries

The recoveries made in the salaries’ bills of the employees concerned for their dues to the co-operative society, if any, as per the statement received from it are to be credited and be cleared

4023 RD recoveries The recoveries towards Post office recurring deposit and their remittance to the post office will be accommodated here

4026 F.B.F. / Group insurance scheme recoveries

The subscriptions recovered under Group insurance scheme i.e. family benefit fund are to be remitted to the Govt. Till such time they are remitted, they are accounted here

4029 Income tax deduction at source from employees - TDS

The income tax recovered form the salary bills of the employees is to be credited to this account. This account will be debited at the time of remitting it to the I.T. department through the chalan prescribed therefor

4033 Health fund subscription

The total amount of subscription at the prescribed rate recovered from the pay bills of the employees, towards the health fund constituted by the Govt. should be accounted here and remitted to specified authority.

4035 Income Tax deductions

The income tax and surcharge deducted from the contractors’ / suppliers bills will be credited to this account.

4037 Sales tax and surcharge on Sales tax –payable

The sales tax and surcharge on sales tax, collected on tender schedules, sale of products, scraps etc, are to be taken to this account. When they are remitted to the Govt this account will be debited

4048 Accounts payable - suppliers

The description given above will apply here also

4049 Accounts payable - expenses

This account covers the amounts payable to the outsiders for services rendered and for all the other expenses. Credits are raised in this account on the basis of the bills after scrutiny and debits on the basis of payments made. Deposit refunds should also be given this code number

4053 Contribution to the CMDA / LPA payable

The contribution to the CMDA / LPA to be paid at the rate prescribed by the Government based on gross revenue receipts is to be worked out and credited to this account and this account debited when payment is actually made

4055 Road cut restoration deposit –

Deposits received form the Telephone dept for restoring Road cuts made by it are accounted here. After the expenditure is incurred, the

telephone department

balance, if any, has to be transferred to that department. Hence it is a liability shown here

4056 Road cut restoration deposit - others

The above description shall apply here also

4058 Royalty payable Similar will be the position in the case of payment to govt, for water drawn from river or reservoir of the Govt. and payable as royalty

4060 Kahdi advance recovered – Payable to khadi board

The above procedure shall be adopted for the payment to the khadi board for the purchase of khadi cloth by the employees

4061 Buildings – accumulated depreciation

This account represents the cumulative depreciation worked out on all assets mentioned in code no. 3102. vide para 11 of chapter ‘09 Projects and Fixed Assets Accounting’ in the Accounting manual Vol I

4062 Subways and causeways – accumulated depreciation

The above procedure is applicable to assets in code no. 3103

4063 Bridges and flyovers – accumulated depreciation

- do -code no. 3104

4064 Storm water drains, open drains and culverts, accumulated depreciation

- do – code no. 3105

4065 Heavy vehicles accumulated depreciation

- do - Code no. 3106

4066 Light vehicles accumulated depreciation

- do - Code no. 3107

4067 Other vehicles accumulated depreciation

- do - Code no. 3108

4068 Furniture, Fixtures, Office equipments - accumulated depreciation

- do - Code no. 3109

4069 Electrical - do - Code no. 3110

installations – Lamps & Tube lights fittings - accumulated depreciation

4070 Electrical installations – Others - accumulated depreciation

- do - Code no. 3111

4071 Plant & Machinery - accumulated depreciation

- do - Code no. 3112

4072 Roads & Pavements – concrete - accumulated depreciation

- do - Code no. 3113

4073 Roads & pavements – black topped - accumulated depreciation

- do - Code no. 3114

4074 Roads & pavements – others - accumulated depreciation

- do - Code no. 3115

4075 Maintenance charges fro railway level crossings / Over bridges - payable

If the claim is received in the financial year (accounting year) form the railways , the same may be paid by debiting the code no. RF2081. Otherwise on receiving the claim, due for payment, a provision has to be made under this code by a journal voucher, for subsequent payment

4078 Instruments & Equipments in hospitals and dispensaries etc – Accumulated depreciation

The procedure explained in code no. 4061 shall be followed. Vide asset code no. 3116

4079 Tools & Plant - Accumulated depreciation

-do- code no. 3117

4080 Public fountains - -do- code no. 3118

Accumulated depreciation

4081 Head works, OHT etc Water supply Mains - Accumulated depreciation

-do- code no. 3132

4082 Drainage, Sewerage pipes, conduits etc - Accumulated depreciation

-do- code no. 3133

4083 Ground water wells / deep bore wells - Accumulated depreciation

-do- code no. 3134

4084 Hand pumps – India Marks (II) - Accumulated depreciation

-do- code no. 3135

4085 Reservoirs - Accumulated depreciation

-do- code no. 3136

4086 Sullage water removal tankers - Accumulated depreciation

-do- code no. 3137

4087 Other items -do- code no. 3138 4088 Audit fees

payable -do- code no. 2036

4089 Pension & leave salary contribution payable

-do- code no. 2053

4090 SJSR/NRY Bank Grant

-do- code no. 3090

4100 Capital reference – whenever land or any other assets given free of cost, the value there of shall be taken as the value of the respective asset account with corresponding entry as Capital reserve on the Liability side forming part of the Capital, as per valuation norm given in the Accounting manual

4101 -do- 2044

RECOGNITION NORMS FOR MUNICIPAL ASSETS AND REVENUE

RECOGNITION NORM FOR MUNICIPAL ASSETS & REVENUES

REVISED NOTE (30-12-99)

LANDS: All the lands assigned, gifted, allotted and purchased by the Urban Local Bodies (ULBs) should be taken in the Asset Register and the same reflected in the Balance sheet. The ULBs get the lands by the following methods

i) By direct purchase from the land owners ii) By acquisition following the Land acquisition procedures on payment of

compensation fixed by the Govt. iii) Open spaces in the lay-out gifted by the promoters as a precondition for the

approval of lay-out plan iv) Lands gifted to UBLs by public, organizations etc, with specific condition v) Gifted lands without any conditions vi) Lands alienated by Government free of cost to ULBs for a specific usage. vii) Vested lands (Revenue lands of Govt) like cattle stand, grazing ground, etc viii) Lands alienated by Government free of cost to ULBs without any condition

The following norms may be adopted for the recognition of these lands. Sl.No. ASSET CLASSIFICATION &

ACCOUNTING STANDARD (AS) RECOGNITION NORM

1 2

LANDS PURCHASED BY ULBS(S.No. i&ii) AS 10 deals with Accounting for Fixed Assets which includes land, building, plant & machinery, vehicles, furniture & fittings, Design, Pattern, goodwill and trade marks. AS 10 describes the fixed asset as an asset held with the purpose of producing or providing goods or services and is not held for future sale. This also describes the cost of the asset as its purchase price including the import duties and any directly attributable cost of bringing the asset to its working condition for its intended use LANDS GIVEN FRE OF COST(S.no. v&vii) These are the lands obtained by the ULBs

These lands should be valued at the cost of purchase including legal expenses, Filling cost, Fencing, improvements, etc if any These lands are without any

3 4 5

without any consideration / gifted and also without any conditions attached. The ULBs are free to use in the manner it desires

As per the provisions in AS 12, these are similar to non-monetary grants received

from Government and needs to be recorded at nominal value

LANDS GIVEN FREE OF COST (S.no.iv&vi) AS 12 deals with Accounting for Government grants. Accordingly to this standard, Non-Monetary Governmental grants such as Land and other resources given free of cost are to be recorded to non-depreciable assets (which will have no depreciation in the course of its life) should be credited to Capital Reserve so that it can form part of the contribution to the capital. GIFTED OPEN SPACES IN THE LAY-OUT (S.no. iii) AS 10 recognizes an item as asset only when it is held with the intention of being used for the purpose of producing or providing goods or services GOVT LANDS VESTED WITH THE ULB (S.no. v & vii) AS 10 recognizes an item as asset only when it is held with the intention of being used for the

condition and the Municipality is free to decide on the usage. Hence the same can be valued at the guideline rate and the amount credited to Capital Reserve as source of acquiring these assets These are the lands gifted to the ULBs for a specific purpose and cannot be used for any other purpose. These lands are not available to ULBs for sale. As suggested in the AS 12 the nominal value of these lands calculated on a token value of Re.1.00 and the same credited to capital Reserve as source of acquiring these assets These are the lands gifted by the Layout promoters & public to maintain as open space as parts & play fields. These lands, even though the property of the ULB, they cannot put it to any other use. Hence a token value of Re.1 for each piece of such land should be assigned crediting the Same as capital Reserve. However any developmental work incurred in these lands to bring them into use as parking space, play-field, part etc. should be capitalized as asset. These are not owned by the ULBs but are only vested with

purpose of producing or providing goods or services

ULBs. They are only trustees of these lands. Govt. only obtains a NOC from the ULB before alienating the same to any parties or changing the usage and hence should not be takenin the Books of Accounts of the ULBs.

CUT OFF DATE FOR VALUATION OF LANDS As a general policy, to adopt uniform procedures across ULBs, it is proposed to calculate the value (other than those where only token value is to be adopted) as per the guideline register as on 1.4.99. For Sl.No. ii above, the land acquired by means of land acquisition, the cost at which they were acquired is to be adopted, since these lands can be used only for the purchase for which they were acquired.

ENCROACHMENTS Often the ULBs lands are encroached by public and practically it becomes impossible to evict the encroachments due to socio-political considerations even though the ULBs are saddled with many legal powers to remove the same. Hence it is necessary to decide on the treatment of encroachments in the books of Accounts. The following provisioning norms are suggested for the treatment of encroachments. i) Encroachments between 1-2 years 50% provisioning ii) More than 2 years & Govt. / Court stay against eviction 90% provisioning Maximum of 90% provisioning is suggested to retain the asset in record without totally eliminating through provisioning.

NON SALEABLE ASSETS There are Non-saleable assets with UBLs like parks, playfields, water bodies, roads, drainage, sewers etc. Mostly the land for these might have been obtained free of cost and hence will not have any value and no necessity for valuation. However the ULB spends money for developing these lands to bring it to the required usage. AS 10 (Accounting Standard for Fixed Assets) of ICAI explains as ‘Fixed Asset is an asset held with the intention of being used for the purpose of producing or providing Goods or Services and is not held for sale in the normal course of Business’.

In this line the cost of the development work made for creating these amenities on the land should be assetized and recorded under the respective category after depreciating for the usage at the rate prescribed in the Accounts Manual for each category of Asset. If the lands were purchased for these purpose it should be valued as indicated in Table 1 and para-3.

BUILDINGS All the buildings of the local bodies at the actual construction cost during the year of construction should be taken as cost. The incidental expenditure incurred such as Planning permission, testing and quality control, charges paid to service agencies, design supervision charges and interest during the construction should be added and the final value arrived. As far as the rate of interest to be adopted, if the cost of construction was met through Loan capital, the interest rate of loan can be taken as follows: Interest cost = Construction cost x Rate of interest of x Half construction Loan capital period For the purpose of valuation, the land cost of the building should not be included with building, but should be included under land with the gross value. It is found that most of the ULBs do not have the original cost details of buildings constructed in the past. To standardize the valuation procedure, it is suggested that building constructed prior to 3/99 should adopt PWD schedule of rate as of March 99 multiplied with the area of building. The depreciation amount for the number of years of life of the building should be calculated and deducted from the value so arrived for the net value of the building as of 1.4.99. For subsequent constructions, only the actual cost should be arrived as suggested above. VEHICLES, FURNITURE, FITTINGS ELEC. INSTALLATION & EQUIPMENTS: These should be valued at their purchase cost along with the expenditure incurred in making them operational such as Taxes, duties, Freight, Installation charges etc. if any expenditure incurred to enhance the efficiency of these Assets of Maintenance cost at a particular point of time then the same should be added to the gross value of these assets as discussed under maintenance Vs improvement works. From the actual value of these items due depreciation for the life of these assets should be deducted to arrive the net value. In the case of street lights, only the fittings are the properties of the ULBs and the same should be taken as assets for incurring the maintenance expenditure. The replacement of bulb is a maintenance item and should be treated as expenditure and not asset. MAINTENANCE VS IMPROVEMENT WORKS:

There is a confusion prevailing over the treatment of subsequent expenditure incurred over the fixed assets as whether to treat it as repair & Maintenance and charge the same against Income & Expenditure or as capital expenditure and book it directly to the gorss book value of the Fixed assets. The Accounting Standard for fixed Assets in para 12 explains that when an expenditure is incurred to increase the future benefits from the existing asset beyond its previously assessed standard of performance it is considered as improvement expenditure and the same is included in the Gross book value. When this cost of addition becomes an integral part of the existing asset it is added to the gross book value. If this has a separate identify and is capable of being used after the existing asset is disposed of, it is accounted for separately. As per Accounting Standard 6 (Depreciation Accounting), the quantum of depreciation to be provided in an accounting period involves the exercise of judgement by management in the light of technical, commercial, accounting and legal requirements and accordingly may need periodical review. If it is considered the original estimate of useful life of an asset requires any revision, the anamortised depreciable amount of the asset is charged to the revenue over the revised remaining useful life.

a) Routine maintenance expenditure are charge over the income & Expenditure of the respective year and hence should not be taken as asset. As explained in para 7 & 8 under CHAPTER 9 of the Revised Accounts Manual only expenditure over Rs. 1000 should be capitalized as assets. Also the major maintenance expenditures if it is over Rs. 10000 or 10% of the value of the asset, then the same should be treated as capital works and added to the gross block of the respective asset.

b) Improvement works such as road widening, upgradation from gravel to black top, putting up road separator, storm water drain, concrete duct for utilities, Air conditioning the vehicles etc should be taken as value at the actual cost.

c) Losses and damages during the life of the asset due to usage, natural calamities, etc should be written off (the full outstanding value of that period) in that year of occurrence and the value of new work only should be taken as value.

TREATMENT OF LOSSES: If an asset is damaged during the course of its life due to accident and natural calamities i.e. Road and street light washed off during flood, the same is a capital loss and should be written off as a charge to the Income & Income Expenditure statement of that year. Similarly for arriving the opening balance, such non-existing assets should be excluded after following the established procedures.

REVENUE RECOGNITION Accounting Standard 9 describes the revenue as the Gross inflow of cash, Receivables or other consideration arising in the course of the ordinary activities of an Organisation

from the sale of goods, from the rendering of service and from the use by others of the organization resources yielding interest, royalties and dividend. Revenue is measured by the charges made to the customers for services rendered to them and by charges and rewards arising from the use of resources by them. Recognition is mainly concerned with the timing of recognition of revenue in the statement of profit & loss of an enterprise. When uncertainties exist regarding the determination of the amount, or its associated costs, these uncertainties may influence the timing of revenue recognition. Demand for taxes & fees and other incomes should be raised only when it is due as per law, contract etc. As for as Property Tax is concerned there is no uncertainty in regard to the collection of the same. The uncollected property tax will have first charge over the property as per taxes. Also the ULBs are saddled with legal powers to recover the same through japti. Therefore the demand raised for taxes and fees should be taken as revenue as and when the same is demanded (i.e. on its due date) and recorded in the books of accounts through a journal entry and shown as RECEIVABLES. The collection of these demand should be credited to the Bank account by debiting the respective RECEIVABLES A/C. The Act provides raising of property Tax demand on omitted properties for only upto 6 years backwards, beyond which the ULBs cant have legal claim. In this line, the following provisioning is suggested to charge against the Income & Expenditure Account of the current year by making equivalent amount as PROVISION FOR DOUBTFUL REVENUES. Subsequently if any of these amount is collected, the same may be taken as income by reducing the provision already made. SL CATEGORY PROVISIONING

A. DOUBTFUL CATEGORY 1 Uncollected Taxes for more than 3 years 100% value 2 Revenue not collected

For more than 2 years 100% value

3 Arrears due to court stay 100% value 4 Escaped Licence Fees 100% value B. SUBSTANDARD CATEGORY 1 Arrears referred to court but no stay 50% value 2 Uncollected Taxes for 1-2 years 50% value 3 Revenue not collected

For 1-2 years 50% value

C STANDARD CATEGORY 1 Uncollected Arrear below 1 year 0% value 2 Demand due from Govt / Govt organization 0% value Full provision for the uncollected tax will amount the same as being done in the Cash based Accounting System .Also as explained already the uncollected property tax will have first charge over the property concerned. Further the ULB may be able to recover the dues through the provisions in the Revenue Recovery Act. Hence no amount of

property tax when not decided otherwise in the court of law will become uncertain warranting provision. However in case of Lease revenues, etc, which cannot be identified with any Fixed Assets need stringent provisioning. The above suggestion is considering he efficiency of ULB and can be modified reasonably. The same should be adopted for other tax items. STAMP DUTY DUE FROM GOVT. The Government passes 90% of the Stamp duty collected at the time of registration of properties. This amount is communicated by the registration department periodically to the ULB. Since the actual amount due from the Govt on this account is communicated quarterly, the same should be taken into account on receipt of the same on quarterly basis.

ACCOUNTING MANUAL FOR URBAN LOCAL BODIES IN TAMILNADU

FORMS & FORMATS

GOVERNMENT OF TAMIL NADU MUNICIPAL ADMINISTRATION & WATER SUPPLY DEPARTMENT

MCF 1 Date Bank Copy ………….Municipality / Corporation Property Tax Remittance Chalan Chalan No. Section Division/Ward Assessment no. No. Assessee’s Name: Address of the house: Sl. Period Property Tax No. Rs. Total Rs. Arr. Curr. Arr. Curr (1) (2). (3) (4) (5) (6) Total Rupee in words Remitter’s Signature Signature Bank Seal N.B. This receipt is valid subject to realization of cheque

MCF 1 Date Municipal Copy ………….Municipality / Corporation Property Tax Remittance Chalan Chalan No. Section Division/Ward Assessment no. No. Assessee’s Name: Address of the house: Sl. Period Property Tax No. Rs. Total Rs. Arr. Curr. Arr. Curr (1) (2). (3) (4) (5) (6) Total Rupee in words Remitter’s Signature Signature Bank Seal N.B. This receipt is valid subject to realization of cheque

MCF 1 Date Tax Payer’s Copy ………….Municipality / Corporation Property Tax Remittance Chalan Chalan No. Section Division/Ward Assessment no. No. Assessee’s Name: Address of the house: Sl. Period Property Tax No. Rs. Total Rs. Arr. Curr. Arr. Curr (1) (2). (3) (4) (5) (6) Total Rupee in words Remitter’s Signature Signature Bank Seal N.B. This receipt is valid subject to realization of cheque Note:

1. If tax is to be paid for additional period, additional forms must be used 2. The tax payers are advised to keep the receipt in safe.

. ……………………… Municipality / Corporation Form No. MCF 3 BANK RECEIPT VOUCHER ZONE

FUND: RF/CF/WS & D / EEF Chalans from …….. BRV No. To…… Date: BANK Account Account Head Code

Dr. Cr. Narration Rs.

(1) (2) (3) (4) Prepared by Checked and approved Compilation Section By Posted Shroff / Jr. Assistant Manager At page …… of At page ….. of ______________ Receipts book General Ledger Administrative Officer Assistant Enclosures:

1) Chitta Abstract 2) Triplicate chalan copies ……… 3) Chalan register extracts of revenue assistants 4) Statement of receipts for departmental collections

Debit column is provided separately as it is necessary to account the collection with different bank accounts within a FUND.

Form No. MCF 4 REVENUE FUND / CAPITAL FUND W.S. & DRAINAGE FUND Month & Year: ELEMENTARY EDUCATION FUND

……… Municipality / Corporation

Bank Code No. Bank A/c No. RECEIPTS BOOK Date

BRV No.

Cash Rs.

Cheque Rs.

Date of Credit in the Bank (in red)

Collection by Bank / Adjustment in Treasury Rs.

Transfer out Rs.

Transfer in Rs.

Dishonour of cheque Rs.

Daily Balance Rs.

Initials of Acct / A.O

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Instructions:

1) The receipts book shall be maintained in the Accounts cell. 2) Column 5 is meant for noting in RED INK the dates of credit in the Bank for

receipts by cheques so as to prepare Bank Reconciliation Statement every month. 3) It is enough if the total amount of BRV is entered in columns 3 or 4 or 6 based on

collection by cash / cheque / bank. 4) All adjustments made in the Treasury for duty on transfer of property,

entertainment tax etc for remittance by Govt. departments towards property tax, Water charges etc, shall be exhibited in col. 6 by preparing BRVs therefor.

Form No. MCF 5 …………………. Municipality / Corporation Claimants’ Bill no. : BANK PAYMENT VOUCHER Deptal. Date : Code

Prepared by Checked by Approved by Compilation SectionPosted by Page

Asst. Deptl Acct. Manager / Commissioner / Asst. No. Officer with Ad. O. Commissioner ( ) In Designation Payments and Date: Asst. Book

Instructions: MCF 5 (contd…)

1. The BPV should be pre-numbered and prepared by the Accounts cell only as and when payments ready for the bills sent by various depts. along with the journal voucher.

2. Wherever entries are made in the subsidiary ledgers such as advance recoverable register, deposit register demand register etc, reference to Folio No. in the subsidiary ledger should be entered under the column ‘Sub-Ledger’ at the time of the claim being processed and passed in the Accounts Cell for payment.

3. The credit column is not provided separately as it is implied that the bank account will be credited.

…………. Municipality / Corporation

Form No. MCF 6 PAYMENTS BOOK Bank Code nos. Date BPV

No. A/c Code

Payee Partic ulars

Cheque no

Amt Rs.

Amt Rs.

Amt Rs.

Amt Rs.

Amt Rs.

Date of encash ment (in red ink)

Daily balance Rs.

Dated initials of the cheque signing officer ( )

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

Instructions:

1. This must be maintained in the Accounts cell 2. Additional columns are provided for ‘amount’ to accommodate payment

accounts, devolution fund and Treasury account. This will facilitate easy preparation of Bank reconciliation statement.

3. The column ‘Daily Balance’ will indicate the balance individual Bank Accounts as and when the transaction takes place in those Accounts.

Instructions:

1. This must be in Book form with pre-printed serial number 2. The book must be in duplicate for use by the Corporation. The first copy shall be

sent to the zone from whose ‘Collection Account’ funds are transferred to the main office (Revenue Fund)

3. Similarly this shall be used for transfer of funds from the Revenue Fund Account of the main office, to the payment account of the zones.

4. This book shall also be used for transfer of funds from Bank code o. 3139 and 3140 relating to Water supply and Drainage Fund of zones to the main office.

5. The entire collections in bank code no. 3069 relating to elementary education fund of the zones shall be got transferred to the main office, by using this book.

6. While the bank transfer book is maintained in the main office, for all such transfers and postings therefor made in the General ledger in code no. 3100, its enough if such transfers from and to are posted in the General Ledger in code no. 3100 of the zones.

7. No BRV is necessary for above transfers.

INTER FUND TRANSFER SLIP

Form No. MCF 7 ….. Municipality / Corporation No.Date:

Transfer From, Transfer to………………… ………………………………… ………………………………… ………………

Bank A/c no. Bank A/c no.

Bank Code Dr. Bank Code Cr. Cheque no. Purpose andNo. (Amount) No. (Amount) & narrationTransferred Rs. Dateto Transfered Rs.

from

………………. Municipality / Corporation

BANK TRANSFER BOOK

From No. MCF 8 Date (1)

Purpose of Transfer

Cheque No. (3)

DEBIT Gl Folio (4)

Bank Code (5)

Amount Rs, (6)

CREDIT GL Folio (7)

Bank Code (8)

Amount Rs. (9)

Initials of the Commr/ Asst Commr (Accounts) (10)

Note: 1. All transfer of funds from one account to another shall be made by preparing a fund transfer slop (MCF 7) and after making entries in this book.

3. While the debit and credit indicated as recorded in the bank scroll, postings in the General Ledger in code no. 3100 are to be made as reflected in the records of ULBS. It means the entry in the debit side will have to be posted on the credit side of this code and vice versa as the recordings in this book are made as bring made by the bank books.

Form No. MCF 9

DAILY COLLECTION STATEMENT OF PROPERTY TAX From The manager, …………….. (collection bank) …………………

To The manager ……………. (Link bank) ……………….

Sir, We have collected this day …………. (date of collection) Rs. ……………… (Rupees …………………………) in our ……………………. Branch towards property tax The details of bills / chalans collected are given below: Sl. No. (1)

Division / Ward no. (2)

Bill no. (3)

Chalan no. (4)

Amount (Rs.) (5)

Yours faithfully Manager Encl. Receipted chalans

Endorsement of Link Bank Verified and given credit for Rs. ……………. Forwarded to the commissioner (Accounts Cell) , …….. Municipality / Corporation. Manager Link Bank.

Instructions: M.C.F. 9 (Contd…)

1. This should be prepared in Triplicate – one to the Accounts cell a/w BRV, another to the concerned section and the third copy retained in the Treasury.

2. Since Link Bank also collects the Property Tax, it is enough if this form meant for Link Bank is printed and supplied in duplicate. The first copy with receipted chalans will be sent by this bank to the commissioner.

………….. Municipality / Corporation Form No. MCF 10 Date: DAILY CHEQUE COLLECTION STATEMENT

Sl. No. Sl. No.

in the register of cheques received

Name of party

Particulars A/c code no.

Cheque no. & Date

Drawn on

Amount Rs.

Bank chalan no. & date

Ledger folio no.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Total Cashier

Manager / Administrative Officer

Instructions:

1. This should be prepared in triplicate – one to the Accounts cell along with the BRV, one to the concerned branch and the other copy retained in the Treasury.

2. Separate pay-in-slip / remittance chalan should be prepared for each cheque to watch the realization of individual cheques.

Form No. MCF 11 …….. Municipality / Sl.No. Corporation

PROPERTY TAX ADJUSTMENT SLIP

Enhancement New Assessment

Reduction Vacancy Remission

AddressZone No.

Division / Ward No.

(+) )-)Rs. Rs.

Annual Value

General PurposeWater Supply & Drainage Tax

Education Tax

Library Cess

TotalNo. of half

years affected Reason

Remission Amount Rs.

Rs. Rs.

Total Amount to be realised / adjustedIncrease Amount (Property Tax - Recoverable)

Decrease Amount (Property Tax - Recoverable)

Date of final assessment

Reference No.

Assessment No.

Particulars Existing Proposed Half year

Form No. MCF 12 .......... Municipality / Corporation

REGISTER OF DISHONOURED CHEQUES

Sl No.

Date of Rt. From

Cheq e no. & Date

Bank on which drawn

Reason for disho nour

Amo unt Rs.

BPV No. (not paya

A/c Code

Sl. No. in the register of cheq

Mode & Date of

Date of collec tion of

Folio no. of sub ledger

Initials of manag er

bank le) for reverse entry

ues receiv ed

collec tion subseq uently

penalty and amou nt Rs.

for reverse entry

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) N.B.

1. The serial number entered in column 1 of this register should be ringed off only when the penalty amount as fixed by the council for each dishonoured cheque is collected and brought to account

2. This register will be maintained in the Municipal Treasury 3. Subledger referred to in col. 12 will mean Demand Registers for Property Tax,

Profession tax / Water charges, MDR for other revenue items etc.

Form NO. MCF 13 …….. Municipality …….. Corporation

a. PROPERTY TAX CHALAN REGISTER

Name of Revenue Asst. Date.

Collection Details of Property Tax

Sl. No. Asst.

No. Period Amount Excess

Collec tion if any

Rect. No. of revenue assist rect. book

Arrear Current Arrear Current (1) (2) (3) (4) (5) (6) (7) (8) Rs. Rs. Rs. Total Verified W.r. to demand Register Revenue Asst. Tax clerk

Shroff cashier / manager / Ad.o.

Form NO. MCF 13 …….. Municipality …….. Corporation

REVENUE FUND – CHITTA

S.No. Chalan Name Acco 1017 1018 1019 1029 1040 1044

no. of the party

unt code no.

Trade Licence fee Rs

PFA Fee

BL Fee

Survey Fees

TB rent

Other fees

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Total Rupees ………………….. Shroff Manager / Admn. Officer

Form NO. MCF 14 …….. Municipality …….. Corporation

b. Water Supply & Drainage Fund Chitta

S.No. Chalan Name Acco 1081 1082 1084 3014 3015 1044

no. of the party

unt code no.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Total Rupees ………………….. Shroff Manager / Admn. Officer

Form No. MCF 14-a …….. Municipality / Corporation

a. Revenue Fund – Chitta Abstract Date of Cash collection Sl. A/c code Amount Ledger

No No. Head Rs. Folio No.

1 3003 2 3002 3 4043 4 3005 5 3006 6 3011 7 1017 8 1018 9 1019 10 1054 11 1045 And so on Total 1 3019 2 3013 Total 1 3020 2 3016 Total Grand

Total

Denominations 500 x 100 x 50 x 20 x 10 x 5 x 2 x 1 x Coins Total Water supply chitta Collection Total N.R.Y. etc

Over all days Collection (Rs. In words ……………………………………….

1. Classifications checked

2. Total cash collections physically Verified and found to be correct

Shroff / Cashier Manager / Administrative officer. Form No. MCF 14-b …….. Municipality / Corporation

b. Water supply & Drainage Fund Chitta Abstract

Date of Cash collection Sl. No

A/c code No. Head

Amount Rs.

Ledger Folio No.

1 1081 2 1082 3 1084 4 3014 5 3015 6 1044 7 1045 Where drainage

scheme is functioning

8 1085 9 1086 And so on Total

(Rs. in words ……………… Shroff / Cashier Manager / Administrative officer. N.B. This total amount should be taken to the revenue fund chitta abstract to arrive at the over all total collections of each day in the Treasury. Instructions: (To be printed on the first page of the chitta register)

1. The chitta is to be maintained in register form 2. The sl. No. in column (1) of the chitta is for each days collections. 3. Chalan numbers are to be given serially on annual basis i.e. from April to March 4. There is no need to give chalan no. for collections by revenue assistants as they

are covered by chalan registers. So also collections made departmentally by staff only serial no. in col (1) should be given.

5. Account code no. must be noted both in the chalans presented by parties and in column (4) of this register where the code no. is not printed separately

6. At the end of the day, an abstract should be prepared with code wise collections in the form given above, in duplicate, one for the chitta itself and other for the bank receipt voucher (BRV)

7. The classifications should be checked and then the BRV prepared by the Shroff 8. The overall abstract for RF collections, water supply collections, N.R.Y.

T.N.U.D.F. etc, shall be entered in the R.F. chitta itself and grand total struck. 9. The chitta for water supply & Drainage fund should be maintained separately 10. The denominations for the day’s grand total collections shall also be entered in

the R.F. chitta itself for purpose of cash verification by the manager / administrative officer so that everything will be compact in one chitta itself.

11. The shroff will arrive at the details of components of property tax and the education tax in the profession tax at approved percentages of levy at the end of every day in the chitta and show in the abstract and arrange for remittances of cash accordingly by separate pay-in-slips

Form No. MCF 15-a .......... Municipality / Corporation

Bills Inward Register

Sl No.

Date of Rt.

Current no. in personal

From whom recei

Parti culars

Bill / Inv

Date Gross amou nt

Dedu ctions

Net amou nt

BPV no. &

Types of JV & No

Initials of depart

register ved oice no.

Rs.

Rs.

Rs.

Date mental officer

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Guidelines

1. This should be maintained in the main office departments and zonal offices of the corporations and in the various wings other than the accounts cell

2. This register will serve as an important record to provide for payments in the next financial year ‘under liabilities’

3. The same register is prescribed separately for the accounts cell as MCF 15-b 4. This must be received periodically by the commissioner / P.a. to the commr. /

Asst. Commr (Zone) Form No. MCF 15-b .......... Municipality / Corporation

Bills Inward Register Accounts cell)

Month : Year:

Sl No.

Date of Rt.

Sl. No. in the departm ental register

Dept. from which recei ved

Bill No.

Date Partic ulars

Gross amou nt Rs.

Dedu ctions Rs.

Net amou nt Rs.

BPV no. & Date

Initials Acctt / A.O.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Instruction: This register must be periodically checked by the commr. / P.A. to the commr. / Asst. commr. (Zone) Form No. MCF 18 ……………… Municipality / Corporation EXPENSES JOURNAL VOUCHER Dept:

No.

Date

Name of party:

Party bill no.

Date Bills inward register no.

Date Service order / agree ment no.

BPV no. Account code no.

Account head

Ledger folio no.

Debit Rs.

Credit Rs.

Narration (Write details of claim)

(1) (2) (3) (4) (5) (6) (7) Total

User Department / Claim Processing Department: It is certified that the claim is in accordance with the order placed and the expenditure claimed was checked with reference to the details available in file no. …….. / the supplemental claim is made after checking the original relevant records and necessary entries were made in the original records / service books etc. The claim amount is within the approved budget provision and approved for payment. Designation of the officer and Date Enclosure: Abstract of salaries (MCF 16) / Party’s bill / Invoice Accounts cell The bill was scrutinized and passed for payment of Rs. ….. only) by cheque after recovering / adjusting of Rs. ……….. Acctt. A.O. Asst. Commr / Commr.

Details of recoveries / adjustment of advance etc Folio no. In advance recoverable register

Folio no. GL Ledger Posted JA / Asst.

Instructions MCF . 19 1.For all types of purchases whether inventory or non-inventory items, this journal should be used. 2. If the purchase order is placed on the suppliers on annual contract basis and the payments are made as and when supplies are received, an abstract of payments made upto the previous bills is to be recorded on the reverse of the PJV every time till the contract period is over so as to ascertain the progress of supply as well as the progress of expenditure within the total amount of purchase order.

Abstract Sl. No.

Supplier’s Bill Date No.

BPV No. Date

Amount Rs

Payment upto this bill Rs.

Quantity received up to this bill

Balance in the purchase order

Balance amount available

Remarks

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Officer in charge of the stores Accountant / A.O.

Form No. MCF 20 ……………... Municipality/ Corporation Dept CONTRACTORS’ JOURNAL VOUCHER Project Code no.

No.

Date

Name of the contractor Name of work

M.Book no. Pages ….

Sl. No.

Account Code

Account Head

BPV No Dr Rs.

Cr Rs.

Narration Ledger Folio No.

(1) (2) (3) (4) (5) (6) (7) 1 3121/

3122 Projects in Progress A/c

2 4016 Tender Deposit Contractors

3 4035 Income tax deductions

4 3053 Material cost recoverable contractors

5 1058 Hire charges for tools & plant

MCF 21

Part – II DETAILS FOR PAYMENT

Value of work done

Details of recoveries Part bill previously paid (Rs.)

Net payment (Rs.)

Already recovered (Rs.)

Now to be recovered (Rs.)

(1) (2) (3) (4) (5) (6) Previous Present -------- Total

Total

JE/AEE Engineer

Passed for Rs. (in words) Rupees ………………… By cheque Rs. By adj Rs. ______ Total Rs.

CJV No. & Date BPV no. & Date Acctt / AO Commissioner

Note: 1. Columns 3 + 5 will be equal to the previous value of work done in column 1

3. Columns 4 + 5 will be equal to the payment value of work done in column 1

From No. 22 …………… Municipality ………………… Corporation Dept

CONTINUATION SHEET OF CONTRACT BILL Bill No.

Name of the work Estimate No. Appropriation No. Estimate Amount

Project Code

Sl. No. Work

Description Quantity executed or supplied

Rate Per Amount Rs.

Remarks

To Date Since Last bill

Upto date

Since last bill

(1) (2) (3) (4) (5) (6) (7) (8) (9) Prepared by JE

Checked by AEE Date;

Approved by Municipal / Corpn. Engineer Date:

Form No. MCF 23 ……. Municipality / Corporation Fixed Asset Journal Voucher

No. Date

Supplier / Contractor

Completion Certificate no.

Project Code Asset Description Compln. Date of Purchase

A/c code (1)

Account Head (2)

Dr Rs. (3)

Cr. Rs. (4)

Ledger folio no. (5)

Narration (6)

Relevant Account code no. 3121 / 3122

Projects in – progress A/c

69 1. Supervision charges value of work done x 11 / 100= 2. Advt. Charges 3. Laying in foundation expenses 4.Inaugural function expenses 5. Professional charges 6. Installation charges 7. Levelling the ground 8. Repairs to vehicles and other assets 9. ….. Total 1070 Interest Value of work done x 2/100 x period of construction

1069 Projects overhead appropriation expenses

1070 Projects overhead appropriation interest

(Cumulative construction cost at the beginning of the year + half of the current year cost) x interest rate of the loan

3048 Wages to the

Technical Assistant

Total Prepared by JE / AE Date

Checked by AEE Date

Approved by Exe. Engr Date

Posted by Date

Asset Register Folio No.

Acctt. / A.O. Commr. / Asst. Commr (A/cs)

Instructions:

1. This must be prepared in duplicate – one with voucher, the other for the department relevant file

2. This journal voucher should accompany the final bill / claim for bought out assets 3. On approval of this journal voucher, the Sl. No. in the Projects Ledger should be

ringed off in the Projects Ledger maintained in the Engineering Branch 4. In respect of repairs and maintenance carried out to the vehicles, plant and

machineries etc, the expenditure incurred to enhance the efficiency of these assets at a particular point of time, if it is more than 10% of the original value of the asset, or Rs. 10,000/- that amount should be capitalized

5. The calculation of interest on utilizing the loan should be from the date of work order issued to the date of completion of work

Form No. MCF 24 …. Municipality / Corporation

ASSET REGISTER Details @ Class: Sub class: Sub classification: Location: Unit to measurement: Date FAJV

No. Descr iption

Date of const / purch ase

Area measur ment / No.

Cost Addi tions cost

Improv ement cost

Dele tions cost

Balance

Measu rement No.

Cost Initials of ME / EE

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

@ The following details should be entered in the details’ column Buildings Class of buildings, sub-classification, date of construction, location etc Bridges, Culvert etc Sub-classification, date of construction, location etc Storm Water Drains Date of construction, location etc Electrical Installations Sub-classification, location etc Cables Electrical Installations Sub-classification, location & identification etc Lamp Posts Heavy vehicles / light Sub-classification, date of purchase, model make weight. Makers

identifying no. Vehicles equipment (like engine no./ chassis no. etc)

Plants & Machinery etc Asset identifying no. etc OHT – capacity – height as required for each kind of asset Head waer works, reservoirs, channels, pumping stations, booster stations, ground water well (diameter & length) Borewell, India mark II pumps, Public fountains. Deletion would include disposals, transfers and sale of assets. MCF 24 contd Instructions: (To be printed on the front page of the register) 1. The maintenance of this register is the full responsibility of the engineering

branch, irrespective of the fact that the assets of different kinds are available in various locations within the jurisdiction of the Municipality / Corporation.

2. The Municipal / Corporation engineer will arrange for annual physical verification of all items of assets and take appropriate action where there is discrepancy.

3. Acknowledgements should be obtained from the departmental officers in whose custody the different assets are placed for their official use and kept in safe in the engineering branch.

4. The value of assets in these register should always be at original cost 5. The annual description at prescribed rates shall be worked out in the depreciation

work sheet (MCF 37) and indicated therein their dimunition value 6. The entry in this register should be attested by the engineer 7. Separate asset register shall be maintained by the town planning officer for lands 8. Entries have to be made in this register category wise such as parts, noon meal

centers, hospitals and dispensaries, ward offices, high schools, higher secondary schools etc

9. This register shall be maintained separately for each fund. Capital fund, waer & Drainage fund and elementary education fund.

Form No. MCF 25 ….. Municipality Dept. Code ……. Corporation

REGISTER FOR JOURNAL VOUCHERS Type of JV Financial 19…. To Year ……………. Sl. No. Date Account

code no. Account head

Dr. Cr. Remarks Initials f Acctt / A.O.

(1) (2) (3) (4) (5) (6) (7) (8) Instructions:

1. This register shall be maintained till the entire financial accounting system is computerised

2. Separate pages should be set apart for each type of Journal Voucher, giving Sl. No. for the financial year.

Form No. MCF 26 … …Municipality Issue price ……. Corporation (in red ink)

PRICED STORS LEDGER Purchase order file no. Description Unit: Maximum limit Minimum of stock Re-order level: Receipts Issues Balance Date Name

of the supp lier

IMRN no

Da te

Uni ts

Rate Rs.

Cost pric e Rs.

To whom issu ed

IMI no. Date

IMIN no.

Date units

Cost price

Units Cost price

Rem arks

Init ials of store keeper

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

(13) (14) (15) (16) (17)

Instructions:

1. This register is to be maintained only at cost price for inventory items (non – consumable0

2. The issues are to be made on fifo method (first in first out) 3. The issue price should be worked out and shown visibly at the top of the page in

red ink. The issue price should be indicated only in the IMIN. 4. The entries for the consumables items like ALUM, bleaching powder, medicines,

fodder etc, shall be made in the stock registers maintained in the concerned departments.

Form No. MCF 27 … …Municipality Sl. No ……. Corporation

INVENTORY MATERIAL RECEIPT NOTE ‘Stores’ Purchae order file no.

Supplier ……………… ………………………. ……………………….

Date: Ref: To delivery chalan / Note and Date

Sl. No. (1)

Description of items (2)

Unit (3)

Quantity received (4)

Unit rate Rs. (5)

Value of materials (6)

Remarks (7)

Stores Accounts cell Prepared by

Checked by

Folio no. in stores ledger

Approved by

Checked by. Jr. Asst

Accountant / A.O.

Instructions:

1. This must be maintained in a book form with pre-printed serial nos 2. It must be prepared in duplicate – one to be sent to engineering branch for being

enclosed to the PJV for adjustment of advance or for payment

MCF 28 ……. Municipality / Corporation

INVENTORY MATERIAL INDENT & ISSUE NOTE Sl. No.

Date: Item no. Name

of work with the name of contr actor

Mate rial descry iption

Unit Quan tity requi red

Acco unt code

Qty issued

Rate Rs.

Value Rs.

Refer ence to folio in PSL

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Indenting official with designation and date

Store keeper with date

Approved by Municipal Engineer / City engineer

Acknowledgement for receipt of materials Quantity Signature and designation with date

Instructions

1. This should be maintained in book form and prepared in triplicate handing over one to the indenting official, one to the accounts cell with journal vouchers and another to the retained in stores.

2. Materials issued to be contractors should cover the cost price, transport charges, loading / unloading charges, storage charges and margin

3. The issue rates in all cases must be in whole rupees 4. The difference between the recovery rate and the issue price shall also be treated

as other income. If the recovery rate is lesser than the issue price, the difference shall be charged to the works to which the materials were issued.

5. The question of fixing issue price taking certain elements such as storage charges, margin etc, may not arise in the case of materials issued for departmental works and it is enough in these cases if the cost price is adopted for issue of materials.

Form No. MCF 30 Dept …….. Municipality / Corporation Stores Sl. No.

Stores Return Note Date:

Return by whom: ……………………… Sl. No. Mater

ial descry iption

A/c Code

IMIN no. & date

Qty return ed

Qty accep ted

Amount Cost Other Price incide ntals cove red in issue price

Refer ence stores ledger

(1) (2) (3) (4) (5) (6) (7) (8) (9)

User Department Prepared by Checked & Returned by Indenting officer with Designation & date:

Stores Section Received by Accepted by Store Keeper Stores officer

MCF 30 contd Instructions:

1. Columns 1 to 5 to be filled up by department by which the stores were received 2. Columns 6 to 9 to be filled up in stores section 3. Out of 3 copies, after making entries on the receipt side of the priced stores

ledger, one will be issued to the department which returned the materials, one to the engineering branch for preparing CJV and for sending to the accont cell and other one retained in stores.

4. This must be in a book form with pre-printed serial numbers and printed in triplicate

5. All retrieved materials by replacement with new ones shall be returned to the stores by following the existing procedure and for making entries in the register of unserviceable articles.

Form No MCF 31 ………… Municipality Sl.No. …………. Corporation Dept Stores Adjustment Slip Date: Sl. No. (1)

Mater ial Descr iption (2)

A/c Code (3)

Balance before adjust ment (4)

Qty as per stores ledger Quantity Plus Minus (5) (6)

Reaso ns (7)

Rate Rs. (8)

Plus Rs. (9)

Minus Rs. (10)

Stores Section Prepared by Checked and Approved by Storekeeper Stores officer

Accounts Cell

Checked by Posted in Value records Stores Jr. Asst Accountant / A.O

Instructions:

1. This should be printed in duplicate with pre printed numbers 2. Out of two copies prepared by stores, one should be sent to the engineering

branch for proposing necessary CJV and for sending the same to the Account Cell for adjustment.

From no. MCF 32 ………… Municipality File No. …………. Corporation

PROJECTS LEDGER Executing dept

Project Description

Source of finan cing

Sanc tion on refer ence

No. Date

Project Code Asset code no.

Folio in asset regist er

Projc ts in prog ress code no

3121 3122

Estimate no.Date Amount of estimate

Sl. No.

Date Date of work order exec uted

Date of comm ence ment

Date of comp letion or purc hase

CJV / PJV Dire ct cost

Det ails of indi rect cost

Amo unt Rs.

Indi rect cost inte rest

Proj ect cost capi talis ed Rs.

FAJV no. & date

Dtd. Initi als of engi ner / Acct / A.O

No Date (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Instructions:

1. This ledger will be maintained by the engineering branch 2. Every time, a new project or work is taken up for execution on issue of work

order, the project code no. should be allotted 3. The project code no. should be given for a calendar year and not for the financial

year 4. Separate project leader shall be maintained for capital works under capital fund

and water supply and drainage works under water supply and drainage fund. Form No MCF 33 ………… Municipality Page No. …………. Corporation

Unserviceables Stock Register Sl. no.

Date Mate rial descry iption

Order in which treat ed as unserv iceable

Qty Book value Rs.

Ref to folio no. in stores ledger / asset ledger

Ref to auction

Value of sales Rs.

Rem arks

Dt. Initials of engineer

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Form No MCF 34 ………… Municipality Page No. …………. Corporation

General Ledger A/c Codeno. A/c Head Month Date Dept

code no.

BRV / BPV no.

Journal Narration Dr. Rs.

Cr. Rs.

Net Balance

Type No. Dr. Cr. Instructions:

1. Separate folios should be set apart for each account code for recording the transactions consecutively for 12 months with progressive monthly totals

2. In cases where there are debits and credits, they should be recorded in the same folios of the respective codes and not in separate folios

3. Only the net balance of debit or credit should be arrived at, at the end of each month, duly attested by the accountant / Accounts officer

4. The net balances of each code no. should be taken to the monthly trial balances. Form No MCF 35 ………… Municipality …………. Corporation

Depreciation Work Sheet

Sl. No. Class of assets

Asset code no

Opening balance as on Rs.

Addit ion during the year Rs.

Delet ions during the year

Balance on which depre ciation

Rate of depreci ation

Depre ciation Amount Rs.

Rs. is calcula table (4+5-6)

(1) (2) (3) (4) (5) (6) (7) (8) (9) Prepared by Asst Date

Checked by A.E.E Date

Approved by Engineer Date

EJV No Date

Received Checked and Taken to A/c Acctt / A.O.

Form No MCF 36 ………… Municipality …………. Corporation

Project Expenditure Statement For the Month ….. 19 Sl. No.

Proje ct code

Execu ting dept

Proj ect descr iption

Estim ate cost

Esti mated date of comp letion

Comm ence ment month / year

Asset code

Expe cted date of comp letion

Expe cted over run

Expr. Up to previ ous month Rs.

Expr. Durin g the month Rs.

Progre ssive Expr Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Note: This should be prepared in triplicate – one for accounts cell, one for engineering branch and third for sending outside as and when required for review meeting. Form No MCF 37 ………… Municipality …………. Corporation Trial Balance as on ……………. A/c code Account head Dr Cr

Total

Notes: (To be printed on the front page of the ledger)

i) The RF/CF/WS/SF/EE etc, should be used for preparation of this statement for revenue fund and capital fund (one) water supply and drainage fund (one) and E.E. fund separately, all in duplicate.

ii) This form should be filled up with code nos. iii) In respect of corporations, the zonal office trial balance should be prepared

separately and included in the consolidated trial balance of the corporation by providing columns for each zone and main office in a separate register for this purpose

iv) A statement showing the abstract of receipts and expenditure with a bank reconciliation statement shall be annexed to the trial balance, both for the main office and the zonal offices.

v) Where two or more bank accounts are maintained for one fund like revenue fund, a chart showing the abstract of receipts and expenditure and the differences in the book balances and the bank balance in individual bank accounts shall be prepared and enclosed to the trial balance.

From No. AF 1A ---------------- Municipality / Corporation

Abstract Income and expenditure Account for the year ended 31st march------

Expenditure Actuals previous year Rs. (1)

Code No. (2)

Account head (3)

Revised Budget Estimate (4)

Amount Current year Rs. (5)

A Personnel Cost

(i) Salaries (ii) Others

B Terminal and retirement benefits

C Operating expenses

D Repairs & maintenance

E Programme expenses

F Administrative expenses

G Finance Expenses

H Depreciation

TOTAL

Instructions to fill up the above heads:

1. In order to have bird’s eye view of the detailed Income and Expenditure account, an abstract of Income and expenditure account has now been prescribed with the major heads by the alphabets

2. The alphabets ‘A’ to ‘H’ shall cover the detailed account code numbers as specified below:

A. Personnel Cost: (i) Salaries : 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 To make it more clear, all personal claims made through pay bills will come under this head (ii) Others : 2012, 2013, 2014, 2025, 2042, 2051, 2055 B. Terminal and Retirement Benefits :2031, 2032, 2033, 2034, 2035, 2039, 2053 C. Operating Expenses :2043, 2084, 2086, 2088, 2089, 2090, 2091,

2092, 2096, 2100, 2101, 2102, 2107, 2108, 2109, 2110, 2119, 2120, 2121, WS2087

D. Repairs & Maintenance :2016, 2049, 2050, 2070, 2071, 2072, 2073, 2074, 2075, 2076, 2077, 2078, 2079, 2080, 2081, 2085, 2122, 2123, 2124, 2125, 2128,

2129

WS 2128 & 2129. E 2126

E. Programme Expenses :2052, 2056, 2064, 2065, 2103, 2105, 2106 F. Administrative Expenses :2015, 2107, 2018, 2019, 2020, 2024, 2026,

2040, 2046, 2047, 2048, 2054, 2061, 2062, 2083, 2095

G. Finance Expenses :2021, 2022, 2023, 2027, 2028, 2029, 2030,

2036, 2044

H. Depreciation :2037, 2038 From No. AF 1A (contd) ---------------- Municipality / Corporation

Abstract Income and expenditure Account for the year ended 31st march------

Income

Actuals previous year Rs. (1)

Code No. (2)

Account head (3)

Revised Budget Estimate (4)

Amount Current year Rs. (5)

A Property tax

B Other taxes

C Assigned revenue

D Devolution fund

E Service charges and fees

F Grants & contribution

G Sale and hire charges

H Other income

TOTAL

Instruction The alphabet heads have to be filled up with the code nos. indicated under each head A. Property Tax : 1001, WS 1002, E 1003, 1005 B. Other Taxes : 1006, 1007, 1008, 1009, 1010, 1011 C. Assigned revenue : 1046, 1047, 1048, 1049, 1050 D. Devolution fund : 1053 E. Service charges and fees : 1016, 1017, 1018, 1019, 1020, 1021,

1024, 1025, 1026, 1029, 1032, 1039, 1044, 1054, 104, 1080, 1081, 1080, 1082, 1083, 1084, 1085, 1086

F. Grants & Contribution : 1051, 1052, 1072, 1087 G. Sale and hire charges : 1057, 1058, 1059, 1060, 1061, 1062,

1063 H. Other income` : 1022, 1023, 1027, 1028, 1030, 1031,

1033, 1034, 1035, 1036, 1037, 1038, 1040, 1041, 1042, 1043, 1045, 1055, 1056, 1065, 1066, 1067, 1068, 1069, 1070, 1071, 1073, 1074, 1075, 1076, 1077, 1078, 1079

Form No. AF 1B _________________ Municipality / Corporation

Detailed Income & Expenditure Account for the year ended 31st March ------------

Expenditure

Actual Previous

year Rs. (1)

Code no.

(2)

Account Head

(3)

Revised Budget

Estimate Rs. (4)

Amount current year

Rs. (5)

3001-2011 Pay, DA,HRA,CCA,CA, Conv. allowance

2012 Travel expenses 2013 Leave travel concession 2014 Supply if uniform 2015 Telephone charges 2016 Light vehicle

maintenance

2017 Legal expenses 2018 Stationary and Printing 2019 Advertisement charges 2020 Other expenses 2021 Property tax vacancy

remission

2022 Provision for doubtful collection of revenue items

2023 Revenue items – written off

2024 M.O. Commission (Pension)

2025 Conveyance charges 2026 Computer operational

expenses

2027 Interest charged by the bank

2028 Bank charges 2029 Interest on loans / ways

and means advance / overdraft

2030 Lapsed deposit – refund 2031 Pension / family pension 2032 Commutation

2033 D.C.R.G 2034 S.P.F.G.S 2035 G.J.S.- Management

contribution

2036 Audit fees 2037 Loss on sale of asset 2038 Depreciation 2039 Pension contribution to

the pension fund

2040 Municipal contribution to other funds

2042 Hospital stoppages / reimbursement of medical expenses

2043 Expenses on food sampling

2046 Books and periodicals 2047 Postage and telegrams 2048 Electricity consumption

charges for office buildings

2049 Office building – maintenance

2050 Repairs and maintenance of office tools and plants

2051 Training programme expenses

2052 Professional chares 2053 Pension and L.S.

contributions

2054 Contributions 2055 Staff welfare expenses 2056 Exhibition expenses 2061 Sitting fees for the

councilors

2062 Council department – Travel expenses

2063 Expenses on hospitality and entertainment

2064 Expenses on opening ceremonies

2065 Election expenses 2070 Heavy vehicle

maintenance

2071 Repair & Maintenance –

Roads & pavements – concrete

2072 Repair & Maintenance – Roads & pavements – Black topping and asphalt

2073 Repair & Maintenance – Buildings

2074 Repair & Maintenance – Subways & Cause ways

2075 Repair & Maintenance – Bridges and flyovers –

2076 Repair & Maintenance – Storm water drain, open drains & culverts –

2077 Repair & Maintenance – Plant & Machinery –

2078 Road cuts 2079 Maintenance of nutritious

meal centres

2080 Maintenance for improvements to slum areas

2081 Maintenance charges for railway level crossings / Over bridges

2084 Maintenance of garden / parks

2085 Plants & Implements etc 2086 Power charges for

sewerage system / pumping stations

2087 Power charges for water head works pumping stations / booster stations

2088 Power charges for street lights

2089 Maintenance expenses for street lights

20920 Wages 2091 Stores – written off 2092 Petrol / Diesel

evaporation

2095 Survey charges 2096 Removal of debris 2100 Expenses on sanitation /

conservancy 2101 Scavenging materials 2102 Pauper charges 2013 Fairs and festivals 2015 Improvements to

compost yard

2106 Anti-filaria / Anti malaria operations

2107 Medicines 2108 Rent on buildings 2109 Hospital expenses other

than medicines

2110 Diet to patients 2119 Fodder (animal feed) 2120 Zoological gardens –

maintenance

2121 Running of libraries / Reading rooms

2122 Maintenance of lodging houses / rent houses / TB / IB

2123 Maintenance of kalyana mandapams / community hall / town hall / kalai arangam

2124 Cinema Theatre – maintenance

2425 Maintenance expenses – schools/water supply/ sewerage

2126 Maintenance expenses – elementary schools

2128 Royalty 2129 Maintenance charges to

TWAD board / Metro Water board

2130 Hire charges for supply of water through private lorries / Tankers

Net Surplus of the year From No. AF 1B (contd) ---------------- Municipality / Corporation

Income and expenditure Account for the year ended 31st march------

Income

Actual

Previous year Rs. (1)

Code no.

(2)

Account Head

(3)

Revised Budget

Estimate Rs. (4)

Amount current year

Rs. (5)

1001 Property tax for – general purposes

1002 Water supply and drainage tax

1003 Education tax 1005 Excess remittance –

property tax and other items

1006 Profession tax 1007 Pilgrim tax 1008 Tax on carriages and

animals

1009 Tax on carts 1010 Servant tax 1011 Advertisement tax 1016 Fees under places of

public resorts etc

1017 Trade licence fees 1018 Lincece fees under

P.F.A. Act

1019 Building licence fees 1020 Encroachment fees 1021 Parking fees 1022 Market fees – daily

(annual lease)

1023 Market fees – weekly (annual lease)

1024 Private market fees 1025 Fees for advertising on

lamp posts

1026 Fees for bays in bus stand

1027 Fees for slaughter house (annual lease)

1028 Cart stand fees (annual lease)

1029 Survey fees 1030 Cinema theatre income

1031 Road development charges

1032 Fees for fishery rights 1033 Rent on and lease of

lands

1034 Income from ferries 1035 Income from fairs &

festivals

1036 Rent on shopping complex

1037 Rent for community hall

1038 Rent on buildings 1039 Fees on pay & use

toilets (annual lease)

1040 Rent from travelers bungalows & rest house

1041 Road cut – restoration charges

1042 Avenue receipts 1043 Demolition charges for

unauthorized construction

1044 Other fees 1045 Other income 1046 Duty on transfer of

property

1047 Entertainment tax 1048 Magisterial fines 1049 Compensation for toll 1050 Assigned revenue 1051 Grant for natural

calamities

1052 Grant for schemes implementation

1053 Devolution fund 1054 Copy application fees 1055 Dishonoured cheques

charges

1056 Law charges and court cost recoveries

1057 Profit in sale of assets 1058 Hire charges 1059 Sale of rubbish / debris

/ silt 1060 Sale of compost

manure

1061 Sale of stock and stores 1062 Sale of scraps 1063 Sale of products 1064 Receipts from hospital

and dispensaries

1065 Pension and leave salary contributions

1066 Miscellaneous recoveries

1067 Interest on investments 1068 Interest from bank 1069 Project overhead

appropriation – expenses

1070 Project overhead appropriation - interest

1071 Interest on staff advances

1072 I.P.P.V. – grant 1073 Deposits forfeited 1074 Deposits lapsed 1075 Dividend on shares 1076 Insurance claim

amount

1077 Rent on bunk stalls 1078 Garden / park receipts 1079 Income from road

margins

1081 Initial amount for water supply new service connections

1082 Income for giving new water supply service connections

1083 Metered / tap rate charges

1084 Charges for water supply throughout lorries

1085 Septic tank cleaning charges

1086 Sewerage connection

charges 1087 Specific maintenance

grant – water supply

Net deficiency for the year

Total Form no. AF II ………………… Municipality / Corporation

Balance Sheet as on 31st March ……

As at

Previous year

(1)

Code no.

(2)

Liability

(3)

Rs.

(4)

LIABILITIES 4003 Ways & means advance 4004 Loans from government 4009 Overdraft 4005 Loan from HUDCO 4006 Loan from TUFIDCO 4007 Loan from TNUDF 4008 Loan from bank 4010 Diversion from other

municipal fund

4011 Contribution from municipal fund

4012 Contribution from private party

4013 Contribution from Government

4014 Grants from Government 4061 to 4074 Accumulated Depreciation

Account Schedule – ‘A’

4078 to 4086 - do - 4001 Accumulated surplus /

deficit

CURRENT LIABILITIES 4016 Tender deposit – contractors 4017 Tender deposit – suppliers 4020 Deposit – others 4018 Security deposit - revenue 4019 Security deposit - staff

4015 Advance collection of taxes & non taxes

4043 Library cess payable 4021 to 4034 Recoveries from staff pay

bills payable – schedule ‘B’

4059 Handloom advance recovered – payable to co-opted

4060 Khadi advance recovered – payable to khadi board

4076 ENTYCE advance recovered 4039 Provision for doubtful

collection of revenue items

4041 (1) & (2)

Water supply & Drainage tax payable (Current and arrears)

4041 (1) & (2)

Education tax payable (Current and arrears)

4044 Salaries payable 4045 Unpaid salaries 4046 Accounts payable account –

personal claims

4047 Accounts payable account - Contractors

4048 Accounts payable account – Suppliers

4049 Accounts payable account – Expenses

4050 Other payables 4051 Interest payable account 4087 Other items OUTSTANDINGS 4035 I.T. Deduction from

contractors

4036 Other recoveries 4037 Sales tax and surcharge on

sales tax – payable

4038 Power charges payable – street light

4040 Survey charges – payable 4052 G.I.S. management

contribution

4053 Contribution to the CMDA / LPA payable

4054 Municipal contribution to specific schemes

4055 Road cut restoration deposit – telephone department

4056 Road cut restoration deposit – others

4057 Water supply maintenance chares payable to TWAD Board / Metro water board

4058 Royalty payable 4075 Maintenance charges for

railway level crossings / overbridges payable

4077 Inter zonal transfer account Form no. AF II ………………… Municipality / Corporation

Balance Sheet as on 31st March …… As at

Previous year

(1)

Code no.

(2)

Assets

(3)

Rs.

(4)

FIXED ASSETS 3101 Land 3102 Buildings 3103 Subways & Causeways 3104 Bridges & flyovers 3113 Roads & pavements – concrete 3114 Roads & pavements – black topped 3115 Roads & pavements – others 3105 Storm water drains, open drains and

culverts

3106 Heavy vehicles 3107 Light vehicles 3108 Other vehicles 3109 Furniture, fixtures and office

equipments

3110 Electrical installations – lamps / tube light fittings

3111 Electrical installations – others 3112 Plant & machinery 3116 Instruments & equipments in

Hospitals & Dispensaries

3117 Tools and plants 3118 Public fountains 3121 Projects – in – progress account 3122 Projects – in – progress – Government

Grants 3132 Water supply – head works, OHT etc.

& water supply mains

3133 Drainage pipes, conduits 3134 Ground water wells / deep bore wells 3135 Hand pumps India mark II 3136 Reservoirs 3138 Other items 3137 Sullage water removal tankers 3149 Drainage fees from building flat

promoters

3150 Under ground drainage scheme – initial deposits

CURRENT DEPOSITS 3001 Specific stock 3002 Property tax – recoverable - current 3003 Property tax – recoverable – arrears 3004 Property tax collection suspense

account

3005 Profession tax – recoverable – current 3006 Profession tax – recoverable – arrears 3007 Other taxes – recoverable – current 3008 Other tax – recoverable – arrears 3009 Lincece fees and other fees –

recoverable – current

3010 Lincece fees and other fees – recoverable – arrears

3011 Lease amounts - recoverable – current 3012 Lease amounts - recoverable – arrears 3013 Water supply and drainage tax –

receivable

3014 Water charges recoverable – current 3015 Water charges recoverable – arrears 3016 Education tax – recoverable 3017 Rent on buildings recoverable -

current

3018 Rent on buildings recoverable – arrears

3019 Water supply & drainage tax receivable – arrears

3020 Education tax receivable – arrears 3024 Construction cost recoverable 3023 Specific grant receivable 3026 Road cut restoration – telephone

department – recoverable

3027 Road cut restoration – others – recoverable

3021 Accounts receivable – sale of properties

3022 Survey fees receivable 3048 Wages to technical assistants 3049 Collection of arrears of taxes –

doubtful

3050 Collection of arrears of non-taxes (fees) – doubtful

3056 Deposits – recoverable 3025 Interest accrued on fixed deposit /

dividend due on shares

3028 to 46 Staff advance recoverable (schedule ‘C’)

3047 Interest on staff advances – recoverable

3071 Pension & leave salary contribution receivables

3052 Advances to the contractors 3051 Advances to the suppliers 3131 Advance to TWD / Metro water board 3053 Materials cost recoverable –

contractors

3054 Advance recoverable – expenses 3055 Other advances – recoverable 3125 Advance to PWD / highways etc 3058 General imprest account 3059 Cash on had 3060 to

3063 Cash at bank ……. Collection bank

3066 to 3067

Cash at bank ……. Payment bank

3064 Cash at bank ……. Devolution fund 3070 Fixed deposit 3100 Inter fund transfer 3123 to 24 Cash at bank ……. Capital fund 3068 Cash at old bank 3069 Elementary education fund …. Bank 3139 to 40 Water supply & drainage fund …

bank

3141 Drainage fees collected from building flat promoters ……. bank

3142 Underground drainage scheme – initial deposits …… bank

3065 P.D. account – Treasury 3126 M.P. Fund – Bank account 3127 M.L.A. Fund – Bank account OTHER ITEMS 3057 Prepaid expenses 3072 Miscellaneous recoveries receivable 3073 Accumulated depreciation investment 3128 Deferred revenue expenditure 3129 Basic amenities scheme – bank

account

3130 National slum development programme – do

3152 Decentralised district plan - do Schedule A to balance sheet

Statement on Net block as on 31st march ……..

Code no. Descrip tion asset

Net block Addition / deletion during the year

Deprecia tion during the year

Cum depreci ation upto the year

Net block as of 31.3….

(1) (2) (3) (4) (5) (6) (7) 3102 Buildings 3013 Subways &

Causeways

3104 Bridges & flyovers

3105 SWD, open drains and culverts

3106 Heavy vehicles

3107 Light vehicles

3108 Other vehicles

3109 Furniture, fixtures & office equipemen ts

3110 Electrical insallations – lamps & tube light

fittings 3111 Electrical

installa tions - others

3112 Plant & machinery

3113 Roads & pavements – concrete

3113 Roads & pavements – black topped

3115 Roads & pavements – others

3116 Instrucments & equipments in hospitals and dispensaries

3117 Tools & plants

3118 Public fountains

3132 Headwork, OHT etc, water supply mains

3133 Drainage, sewerage pipes, conduits etc

3134 Ground water wells / deep bore wells

3135 Hand pump – India mark II

3136 Reservoirs 3137 Sullage

water removal tankers

TOTAL

AF II (Cont)

………. Municipality / Corporation

Schedule B to balance sheet

Recoveries from staff pay bills – payable

Code no. Account Head Amount Rs.

4021 P.F. Recoveries 4022 Co-operative society loan 4023 RD / CTD recoveries 4024 L.I.C. policies – Premium recoveries 4025 Special provident fund-cum-Gratuity scheme –

recoveries

4026 F.B.F. / Group Insurance scheme recoveries 4027 External housing recoveries 4028 Deputationist recoveries 4029 Income tax deduction at source from employees 4030 Bank loan recoveries 4031 Court recoveries 4032 H.B.A., special F.B.F. subscription 4033 Health fund subscription 4034 Recoveries to other municipalities 4036 Other recoveries 4059 Handloom advance recovered – payable to co-optex 4060 Khadi advance recovered – payable to khadi board 4076 ENTYCE advance recovered TOTAL Rs.

AF II (Cont)

………. Municipality / Corporation

Schedule C to balance sheet

Staff Advances

Code no. Account Head Amount Rs.

3028 Festival advance 3029 Handloom advance 3030 Khadi advance 3031 Education advance 3032 Flood advance 3033 Immediate relief – advance 3034 Advance for solar cookers 3035 Tansi advance 3036 Advance of T.A. to the family to the deceased

employee

3037 Tour advance 3038 Advance of pay and T.A. on transfer 3039 Warm clothing advance 3040 Calculator advance 3041 Computer advance 3042 Bicycle advance 3043 Motorcycle advance 3044 Car advance 3045 Marriage advance 3046 House building advance TOTAL Rs.

From No. AF IV

………. Municipality / Corporation

Endowment Fund Account for the year ….

Receipts and Payments Account

Receipts Payments Date Details Rs. Date Details Rs.

To Balance Investment …… Cash at bank …..

By Expenditure on Objects / purposes for which endowment created (prizes, functions etc)

To Investment on Fixed Deposit

By Investments

To Income form endowed properties

By Postages etc

To Other Income By maintenance of Choultries / buildings endowed

To Contribution by Donors (for creating new endowments)

By Balance Investment ……. Cash at Bank …...

Total Rs. Total Rs. Accountant / Accounts Officer Commissioner / Asst. Commissioner (A/cs)

SCHEDULES FOR PREPARING THE OPENING BALANCE SHEET

Schedule No. 1

________________ Corporation / Municipality Division No. ____________

LAND

Land owned, acquired or purchased by the Corporation / Municipality Sl. no. Sur

vey no.

Loc ation

Owned or acqui red / purch ased / alienat ed gifted

Extent (area) acre or cent or ground or sq.m

Docu ment details

Usage as per record

Present status of the land

Rate per Sq.M Rs.

Total value Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Instructions for filling up the columns 1. All the lands in the name of the ULB including those areas which were recently merged with the Corporation / Municipality should be included without omission. 2. In the column, ‘present status of the land’, if there is an unauthorized encroachment it should be specifically mentioned. 3. All the lands on which buildings and other assets in schedule no. 2, to 4,8,10,11 and 19 should necessarily find place here 4. The valuation of all kinds of land should be as per the recognition norm given in Volume II

Schedule No. 2

________________ Corporation / Municipality Division No. ____________

BUILDINGS

Buildings owned, constructed or transferred by the Corporation / Municipality Sl. no.

Name of the build ing

Loca tion

Total area of the site

Plinth area of the build ing

Name of const ruction

Usage of the build ing

Year of comp letion

Cost of const ruct ion at the time of comp letion Rs.

Deprec iation allow ed Rs.

Total value as on 31.3…. Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Instructions for filing up the columns:

1. Individual items of building with details to be furnished 2. Buildings have to be classified as class ‘I’ or class ‘II according to the PWD

norms. 3. The valuation of all kinds of buildings should be as per the recognition norm

given in Volume II

Schedule No. 3

________________ Corporation / Municipality Division No. ____________

BRIDGES, CULVERTS, FLYOVERS, SUBWAYS AND CAUSEWAYS Sl. no. Locat

ion (name if any)

Area Year of constr uction

Cost of constr uction Rs.

Written down value of depreci ation as on 31.3…. Rs.

Net value as on 31.3… Rs.

Remarks if any

(1) (2) (3) (4) (5) (6) (7) (8) Note: Separate sheets may be used for

(i) Bridges & culverts (ii) Subways & Causeways (iii) In respect of flyovers, where the flyovers are constructed and handed over to

the Corporation / Municipality they may be furnished separately.

Schedule No. 4

________________ Corporation / Municipality Division No. ____________

Storm Water Drains including Open Drains

Sl. no. Year of

constr uction

Name of the road & street in which the drains are available and used

Width of the drain

Length of the drain

.Total cost Rs.

Written down value of depreci ation as on 31.3…. Rs

Net value as on 31.3… Rs.

(1) (2) (3) (4) (5) (6) (7) (8) Note:

(i) The term ‘Storm Water drain’ shall include retaining wall, ordinary side open) drains and used for collecting drainage water from residence / complex.

(ii) The term does not include ‘Sewerage Mains’ for which separate information should be furnished.

(iii) The value of land over which the storm water drain is constructed should not be taken.

Schedule No. 5

________________ Corporation / Municipality ZONE/ Division No. ____________

Vehicles

Sl. no.

Regis tration no.

Make Number Engine Chasis no. no.

Date of pur chase

User depar tment

Purpo se for which used

Origi nal cost Rs.

Written down value as on 31.3…. Rs

Note:

(1) In the above categories, animal drawn carts, three wheelers and other vehicles that could not be classified as Heavy vehicles or Light vehicles are to be accounted under other vehicles.

(2) The cost of bulls may also be furnished separately with the following details: Date of purchase Cost of purchase

Schedule No. 6

________________ Corporation / Municipality Division No. ____________

Furniture, Fixtures and Office equipments Sl. no. Name Quantity Rate at

which purcha sed

Year of purchase

Total purchase cost Rs.

Depre ciation if any Rs.

Written down value of depreci ation as on 31.3…. Rs

(1) (2) (3) (4) (5) (6) (7) (8) Note:

(i) Separate sheets may be used for schools, offices, hospitals, dispensaries, residential quarters etc

(ii) All particulars should be furnished with reference to Tools and Plant register and actual verification only

(iii) It is important that all other amenities provided in the local body’s quarters that are occupied by the officers like A.C., Aircooler, Gaisers etc are accounted for

(iv) Intercoms provided for use in the office at the cost of the Municipality are to be listed out here

(v) Individual items whose present worth is above Rs. 1,000/- and above may be listed. Items of value of Rs.1000/- or less may continue to find place in the T & P register and not here. This is applicable in the case of single item only. This will not apply to common items of furniture, chairs, tables etc,whose individual value might be less than 1000/-

Schedule No. 7

________________ Corporation / Municipality Division No. ____________

Plant & Machinery

Sl. no. Name No. Year of

purchase Cost of purchase Rs.

Written down value as on

(1) (2) (3) (4) (5) (6) Note: (i) All items in the engineering, public health and other departments specially meant

for them should be described here. (ii) Electrical machines and other machineries that are meant for water supply and

sewerage purposes may be furnished separately. The items available in the Head works, pumping stations, Booster stations, OHT are to be furnished separately for Water Supply and Drainage Fund Account.

Schedule No. 8

________________ Corporation / Municipality Division No. ____________

Roads, Streets and Lanes

Sl. no. Name of

the road Nature of the road

Length in metres

Breadth in metres

Year of comple iton

Total value Rs.

Written down value as on 31.3. Rs.

(1) (2) (3) (4) (5) (6) (7) (8) Note:

(i) The schedule may be prepared w.r.t. register of Roads and on actual measurements at present.

(ii) Separate sheets need not be used for metal roads, C.C. roads, B.T.roads or Earthen road. It is enough that this schedule is prepared for each division with out any omission

(iii) The value or the cost involved in the formation relaying etc, should alone be taken in account. The value of land on which such roads are formed need not be taken. Since the same is taken at a token value in the Land schedule.

Schedule No. 9 (a)

________________ Corporation / Municipality Division No. ____________

Electrical Cables

Sl. no. Division

no. Locat ion / Name of the road

Year in which cables were laid Year K.M.

New cables laid in K.M.

Value Written down value as on

Remarks

(1) (2) (3) (4) (5) (6) (7) (8) (9) Note: If no cable was provided at the cost of the municipality, this schedule will be NIL

Schedule No. 9 (b)

________________ Corporation / Municipality Division No. ____________

Lamp Posts and Luminary Fittings

Sl. no.

Name of the road / street

Kind of light provi ded

Year in which lights provi ded

New lights added

Original Value

Posts Rs.

Lumi nary fitt ings Rs.

Value Rs.

Posts Rs.

Lumi nary fitt ings Rs.

Value Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Note:

(i) If the lamp posts were provided by the TNEB based on payment of estimate charges covering the cost of lamp posts and also if they replaced at its cost their value need not be included here.

(ii) Luminary fittings provided by the municipality should be included here (iii) Lamp post provided within the Municipal areas such as parks, etc such cost

should be included

Schedule 10

Substations (Transformers)

Sl no. (1)

Location (2)

Description (3)

Number (4)

Original value (5)

Written down value as on (6)

Note:

If no substation is owned by the Corporation / Municipality, a NIL statement may be given.

Schedule No. 11

________________ Corporation / Municipality Division No. ____________

List of Capital Works in Progress

Sl. no. (1)

Name of the scheme (2)

Source of finance (3)

Year in which sanctioned (4)

Estimated amount (5)

Total expend iture as on 31.3… (6)

Remarks (7)

Note:

(i) If the scheme or the capital work is executed with the aid of Government loans or grant, it may be specified so, with G.O. number and date

(ii) If it is undertaken from the Municipal fund, it may be indicated as from own source

(iii) Even in case, the work is not commenced after the estimate was sanctioned, and all formalities were observed for commencement of work but for some reason or other work order was not issued, the information as such, may be furnished and the column (6) above may be kept blank. (This is required for opening the projects ledger)

Schedule No. 12

________________ Corporation / Municipality Division No. ____________

INVESTMENTS Opening Balance as on ……. Sl. no. (1)

Name of the bank or Insti tution or Post office (2)

Date of deposit (3)

Date of maturity Rs. (4)

Amount of Deposit Rs. (5)

Maturity value Rs. (6)

Note: Investments under revolving fund, endowment fund, special provident fund etc, need not be included here The details deposits paid to the Telephones Department for provision of telephones and the current consumption deposits paid to the Tamil Nadu Electricity Board have to be gathered and shown in a separate statement – vide code no. 3056 and included in the opening balance sheet.

Schedule No. 13

________________ Corporation / Municipality Division No. ____________

INVESTMENTS

Name of the Institution _____________ Closing Stock on 31.3…..

Sl. no. (1)

Name of the material (2)

Closing stock quantity (3)

Closing stock value Rs. (4)

Remarks (5)

Note: (i) It is necessary that closing stock under Revenue Account and Capital Account

is shown separately, because in the new system of Account there is a separate Account called Capital Fund Account

(ii) Stock in the General stores, General workshops etc, may be furnished in separate schedules.

(iii) The stock of materials which are of consumable nature such as fodder for animals , bleaching powder, phenyl, medicines etc, need not be included in this schedule

(iv) List of contractors to whom materials were issued for execution of works earlier to 31.3….. but this cost is pending recovery from their contract bills should be shown separately with their value in code no. 3053

Schedule No. 14

________________ Corporation / Municipality _______________ Department.

List of Advances paid to the suppliers

Amount of ending

advance as Sl. no. (1)

Name of the supplier (2)

Nature of purchase (3)

Quantity ordered (4)

Amount of advance paid (5)

Date of payment (6)

Quantity (7)

Account (8)

Note: 1. Separate statements may be furnished department wise 2. The staff advances need not be included in this schedule 3. Advances paid to the contractors, suppliers, staffs for purchase of certain items

required for office use or for other varied purposes and other advances have to be gathered separately.

Schedule No. 15

________________ Corporation / Municipality

Bank Balances as per cash books

Sl. no. (1)

Name of bank / treasury (2)

Account number (3)

Closing balance as on 31.3. as per cash book (4)

Remarks if any (5)

Note:

(i) The balance as on 31.3…… should be the balance as per the cash book, not as per the Bank Scroll or Treasury Pass Book which is covered by Bank Reconciliation.

(ii) Cash Balance on hand on ……………… may be indicated at the end.

Schedule No. 16

________________ Corporation / Municipality

Property Tax, Profession Tax, Other Taxes, Fees etc Recoverables

Total Arrears Sl. no. (1)

Div no. (2)

1997-98/II (3)

1997-98/I (4)

1996-97/II (5)

1996-97/I (6)

1995-96/II (7)

1995-96/I (8)

Prior years to 95-96/I (9)

Total (10)

Note: (i) This statement should be prepared with reference to the balance arrived as on

31.3…. in the Arrear Demand Registers and Current Demand Registers (ii) Separate statement may be used for

Property tax Profession tax Trade licence fees Fees under PFA act Leases Rent on buildings / shops etc

(iii) All the above items may be totaled and furnished in an abstract agreeing to the

figures shown in the DCB statement for the year ended 31.3…

Schedule No. 17 ________________ Corporation / Municipality

List of Grants Due from the Government as on 31.3…….

Sl. no. (1)

Name of the scheme (2)

Year (3)

Total expenditure incurred Rs. (4)

Amount of grant due Rs. (5)

Ref.no. in which it is claimed / proposed to be claimed (6)

Note:

(i) All grants that are committed by the Government are to be furnished (ii) In case, the grants that are sanctioned but the amount not credited as on

31.3.2000 should find place here. (iii) For eg, for the expenditure incurred in the year 1997-98, the grant is due in

1998-99 only. But such items should also find place here, because the expenditure is incurred upto and including 31.3.98 and on which there is a legitimate claim by the Corporation / Municipality. So this is a case of amount recoverable.

(iv) All grants due under M & C.W., Anti-malaria / Anti-filaria andIPP-V schemes should be listed out.

Schedule No. 18

________________ Corporation / Municipality

Employees’ Advances Pending Recovery as on 31.3…….

Sl. no. (1)

Name of the department (2)

Nature of advance (3)

Year in which sanctioned (4)

Total amount sanctioned (5)

Total amount pending as on (6)

Remarks (7)

Note: If the details are many, separate sheets may be used for individual kind of advances

Schedule No. 19

________________ Corporation / Municipality

Assets of Water Supply and Drainage Schemes / Branch

Sl. no. (1)

Nature of asset (2)

Location (3)

Descrip tion with measure ments, area, diameter (4)

Month and year of comple tion (5)

Total value Rs. (6)

Depreci ation allowed Rs. (7)

Net value as on 31.3…. Rs. (8)

Instructions: Separate sheets may be used for different kinds of assets mentioned below;

1. Resorvoirs 2. Head water works 3. Open well works 4. Open wells with pump sets 5. Deep bore wells 6. Bore well s with pump sets 7. India mark II pumps / hand pumps 8. OHTs 9. Reservoir transmission / distribution system 10. Conduits, channels etc 11. Water supply mains in KMs / Meters (roadwise / street wise may be token and

totaled) 12. Public fountains (location wise and street wise and then totaled) 13. Drainage / Sewerage mains in Kms (road wise and street wise and then totaled) 14. Sewerage pumping stations 15. Quaters in Reservoirs, Head water works etc 16. Any other assets (specify location)

Schedule No. 20

________________ Corporation / Municipality

Any other kind of Asset or Recoverable Sl .no. (1)

Nature of asset or recoverable or claim (2)

Period to which it relates (3)

Amount due Rs. (4)

Remarks (5)

Note:

(i) The road formation charges that were spent form revolving fund, but still not recoverable from the house / plot owners may be detailed here

(ii) All endowment assets like buildings, lands, F.D. N.S.C. etc may be included here under the separate heading ‘ENDOWMENTS’

(iii) The Water Supply & Drainage Tax and Education Tax components of Property tax receivable from the general fund have to be shown under the respective funds.

Schedule No. 21

________________ Corporation / Municipality

Loans Pending Repayment as on 31.3…. Sl. no. (1)

Particu lars of loans (2)

G.O. & Date (3)

Original loan amount (4)

Purpose (5)

Date of credit (6)

Balance of loan pendings as on 31.3…2000 pending (7)

Amount of interest due payable as on 31.3.200 (8)

Penal interest for belated repayment of instalment of laon (9)

Note:

(i) As the liability as on 31.3.2000 has to be precisely assessed, the interest due on 31.3.2000, may be proportionally worked out and indicated incase the annuity is repayable in the course of the year

(ii) In cases, where the loans are not at all repaid, or belatedly repaid, the element of penal interest has to be known. So, in such cases, the rate of penal interest mentioned in the Government order may be ascertained and worked out for the period till 31.3.2000 and specifically mentioned in RED INK in column (9) under interest due.

Schedule No. 22

________________ Corporation / Municipality

Deposits Repayable Sl. no. (1)

Nature of deposit (2)

Year (3)

Amount of deposit / repayable (4)

Remarks (5)

Note: The deposits repayable have to be grouped and shown separately under five categories 1. Tender Deposits Contractors All EMDs additional deposits paid by and

collected from the Contractors for execution of various works

2. Tender Deposit Suppliers Deposits paid by the suppliers for satisfactory completion of supply contracts

3. Security Deposit Revenue All deposits paid for leases, auctions, bids, servicing etc

4. Security Deposit staff 5. Deposits – Others All other items not covered under above

four categories.

Schedule No. 23

________________ Corporation / Municipality

List of Outstanding Bills as on 31.3…. (Liabilities) Sl. no. (1)

Name of the claimant (2)

Nature of claim (3)

Suppliers’ bill No. or M.Book. No. and file no. (4)

Stock account page no. (5)

Amount payable on ……….. (6)

1. The details of bills or invoices received before 31.3.2000 / yet to be received for supplies and services made before 31.3.2000.. have to be gathered from all departments / sections and included in the schedule.

2. All arrears of personal claims / retirement benefits due for payment before 31.3.2000 …. But pending payment for some reason or other have to be ascertained and included in the schedule.

3. A register of liabilities under the following headings has to be opened and maintained till they are finally settled

i) All personal claims ii) Payments to the contractors iii) Payments to the suppliers iv) For all other expenses such as electricity bills, telephone bills, repairs

and maintenance, water charges / maintenance charges payable to the TWAD board etc.

Schedule No. 24

________________ Corporation / Municipality

List of Any other Liabilities as on 31.3.2000 Sl. no. (1)

Name of the claimant (2)

Nature of claim (3)

Amount claimed and payable (4)

Records / reference no. by which the liability was established (5)

Note: The Group Insurance Management contribution including those working in the Nutritious Meal center, contribution payable to the CMDA/LPA, audit fees TNIUS Coimbatore, 2/3 establishment charges payable to the survey and Land records Dept (Town surveys) etc, have to be worked out and included in the schedule. This should also includes the unutilized grants.