The Hindu Business Line : Changes in Govt accounting system — Ghosh panel suggestions to be referred to advisory board

THE Government Accounting Standards Advisory Board of India (GASAB) will have an opportunity to discuss the recommendations of the D.N. Ghosh Committee before submitting its views on the same to the Government, the Comptroller and Auditor-General of India (CAG), Mr V.N. Kaul, said here today.

CAG has constituted a committee, headed by former SBI Chairman Mr D.N. Ghosh, to recommend a decadal roadmap for changes in the Government accounting system. Its terms of reference include review of the existing cash-based system.

The committee has also been asked to consider whether the existing system required a change.

The Government accounting system is based predominantly on cash basis, except for few functions where additional disclosures are made. GASAB was established by CAG in August 2002 as an advisory body chaired by the Deputy Comptroller and Auditor-General.

"The D.N. Ghosh Committee report would be with us very soon. It was to have been submitted by December 15. The recommendations would be sent to GASAB for its consideration before the views of GASAB are forwarded to the Finance Ministry," Mr Kaul told newspersons on the sidelines of the conference of State Finance Secretaries, organised by the office of the CAG.

The conference had been convened to deliberate on the challenges in preparation and presentation of finance accounts so as to meet the information needs and expectations of the stakeholders.

The principal objective of setting up GASAB is to formulate accounting standards for the Union and State Governments to improve the usefulness of financial reporting to the various stakeholders from a viewpoint of understandability, reliability, relevance, timeliness, consistency and comparability across different arms/ units of the Government.

GASAB has representation from four major accounting departments of the Government — Indian Audit and Accounts Department, the Indian Civil Accounts Department, the Indian Defence Accounts Department and the Indian Railways Accounts Department.

Meanwhile, in his inaugural address at the conference, Mr Kaul also made it clear that he had no pre-conceived notion that the prevailing Government accounting system should undergo a change.

He pointed out that the issues such as size of the country, federal system and absorptive capacity for new systems should be factored in before going in for a change.

"Its not easy to shift from one system to another," he said, while making a case for a cautious approach to changes in Government accounting system.

One of the limitations of the current cash system is that it fails to accurately represent the amount of resource usage and take account of future commitments.

It is being perceived in certain quarters that the appropriate form of accounting for the government may be substantially accrual based, although it may still need to retain certain good elements of cash based accounting.