The Hindu Business Line : New accounting system for municipal bodies

THE Comptroller and Auditor General of India (CAG) and the Ministry of Urban Development are developing a "training module and a national software" for the accounting system proposed in the national municipal accounting manual (NAM), according to Ms Anusua Basu, Deputy CAG of India.

Inaugurating a symposium on Financial and Accounting Reforms in Municipal Bodies, organised by the Institute of Chartered Accountants of India (ICAI), Ms Basu said that municipal staff in all the States would be trained in the new accounting system on the basis of the training module and the accounting manual.

She said that the accounting reform process in the urban local bodies would be facilitated with the computerisation of the accounting formats as soon as the software was developed.

After the 74th constitutional amendment, urban local bodies have been made institutions of self-government, empowering them to discharge functions assigned to them under the constitution.

The NAM was formally launched on December 31, 2004. The Manual addressed the three pillars of urban governance, namely, accounting system, citizen's right to participation and disclosure responsibilities.

The Deputy CAG said that the constraint of resources coupled with the mounting demands for public accountability had highlighted the need for reforms in the municipal accounting system. "Proper and transparent financial reporting by urban local bodies is perhaps the most important means to achieve the objective of accountability," Ms Basu said.

To strengthen the financial position of the urban local bodies, the 12th Finance Commission has provided grants-in-aid of Rs 5,000 crore to the States/Union Territories during the period 2005-10.

Speaking at the inaugural session, Dr Ashok Haldea, Secretary, ICAI, said that the main issue facing the urban local bodies was not the debate on cash based or accrual based accounting, but the issue of adopting a framework that reflected economic reality and added value to the decision making process of stakeholders.

Stating that fund-based accrual accounting has been the norm across the world, Mr Sunil Goyal, Chairman of ICAI's professional development committee (PDC) hoped that this accounting system would be the ultimate target for urban local bodies in the country.

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