aakar account 10 final_080

201 Approved by CDC, Nepal Government Accounting System 21212 Expenses of fund on contribution based employee’s pension and gratuity This includes expenses to be borne by the government in the contribution based pension and gratuity fund for the employees. 21213 Expenses of fund on contribution based employee’s insurance This includes amount to be borne by the Government in the contribution based insurance fund for the employees. 21214 Employee’s Welfare Fund This includes amount to be deposited in the employee welfare fund and retirement fund pursuant to the prevailing rule. 21219 Other Social Security Expenses This includes other expenses related to social security for the employees except those mentioned above. 21220 Expenses of Office Bearer’s This includes amount, except for the employees, to be paid for the social security of office bearer at the social security prevailing rule. No amount shall be debited in this head. 21221 Expenses of Fund on Security of Employee This includes the expenditure to be incurred by government on the social security of office bearer from the fund established as per prevailing law. 21222 Expenses of Contribution based Pension and Gratuity Fund of Officials This includes the amount as per prevailing law to be paid in case to office bearers’ pension and gratuity based on contribution. 21223 Expenses of Fund on Contribution Based Insurance This includes payment made, pursuant to the prevailing rule, to the office bearer from the contribution based insurance fund on the prevailing rule for the office bearer. 21224 Expenses of Employee’s Welfare Fund This includes payment made, pursuant to the prevailing rule, to the welfare fund set up for the office bearer. 21229 Other Social Security Expenses of Office Bearer This includes payment made, pursuant to the prevailing rule, to the welfare fund set up for the office bearers. 22000 Use of Goods and Service This includes cost of using services and goods required for the Government Office. No amount shall be debited in this base head. 22100 Service Fee This includes the cost of using the services required for the Government Office. No amount shall be debited in this main head. 22110 Service Fee This includes the expenditure made on charges for using Drinking Water, Tap Water, Electricity and Communication Services Supply in office, and the charge related to these services. No amount shall be debited in this head 22111 Water and Electricity This includes cost of using water supply and drainage facility, and for their installation as well as the amount for the use of water by the office.

202 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 22112 Communication Fee/ charges This includes fee for telephone, internet website hosting except the equipment related to the communication and expenses related to the communications. This also includes the postage stamp for the letter, parcel, registry, the expenses on return/ proof of delivery of mail item, and the currier charges. 22113 Service Charge of Public Utility This includes the expenses for the public utilities such as drinking water, electric light, television, etc. used by the public. 22200 Operation and Maintenance Expenses of Capital Assets This includes the necessary Current Cost of Government Capital Assets such as the Government vehicles, Machinery equipment. It cannot be debited from this main Head. 22210 Operation and Maintenance Expenses of Vehicle/ Transport Means This include the cost of Fuel, Lubricants used in the transport means for official purposes, and the cost of their routine maintenance. No amount shall be debited in this head. 22211 Fuel ( For Officials) This includes cost of fuel and lubricants, etc. for use in the vehicles used by the office bearers. 22213 Fuel (For Office Purpose) This includes fuel and lubricants, etc. for using the vehicle on official purpose. But, if the fuel for transportation of construction material mentioned in the cost estimate. 22213 Vehicle Repair and Maintenance Expenditure / cost This includes the necessary expenses for the operation and maintenance of office vehicles like fuel, lubricants, etc. This also includes the cost of necessary goods such as battery and wages. However, expenditure on replacement of parts for the purpose of extending the life of vehicles must be included in the capital expenses of the concerned budget head. 22214 Insurance and Renewal Expenditure/cost This includes the insurance expenses of already built public assets such as road, bridge, canal, power house, machinery implements, insurance of vehicle, and insurance fee of third party liability as well as means of transport renewal of insurance fee. However, the insurance expenses during the construction period should be included in the concerned capital head expenses. 22220 Machinery and Equipment Operation and Maintenance This includes the regular as well as repair & maintenance expenses of office machinery and implements. Amount cannot be debited in this head. 22221 Machinery and Equipment Maintenance and Operation Expenditure This includes regular and maintenance expense for the operation of machinery & tools in office.

203 Approved by CDC, Nepal Government Accounting System 22230 Constructed Public Property Maintenance Expenditure This includes expenses of current nature for the regular operation of already built public assets. Expenditure cannot be entered in this head. 22231 Constructed Public Property Maintenance Expenditure This includes expenses of current nature for the regular repair & maintenance, and painting of already built fixed capital assets such as road, bridge, canal, power house and building. 22290 Operation and maintenance expenditure of other property This includes the operation and maintenance expenses of assets other than fixed. expense cannot be written under this head. 22291 Operation and Maintenance Expenditure of Other Property This includes expenses of current nature for operation and maintenance of assets other than fixed. 22300 Office Goods and Services This includes the expenses for the procurement of office goods and services. Expenditure cannot be written under this main head. 22310 Office Goods and Services This includes the cost of the goods necessary for the office, expenses related to services as well as books and items purchase. No expenditure can be written in this head. 22311 Stationeries and Office Goods The following expenses are included in this: a. Bank fee, compensation, and other such service; b. Paper used daily in the office, forms, record files, stapler, punching machine, and other necessary goods needed for these as well as sundry items needed for office like pens, toner, pencils; c. Other office goods lasting less than one year; d. Necessary auxiliary goods for security machinery and implements; e. Expenses on goods lasting for more than one year such as curtains, pen drive, but less than Rs. 5,000/unit, and other office goods; f. Transportation expenses of goods in Government use. 22312 Feeding for Livestock This includes the expenses for the management of feed for public animals and birds. 22313 Books and Materials Expenditure This includes the expenses for books distributed free of cost to students by public schools, expenses for the purchase of sports and educational materials as well as books bought for the use of public library. 22314 Fuel for other purpose This includes the fuel expenses for Government use like kerosene, gas, firewood, coal, and machinery implements other than vehicles as well as all kinds of batteries. However, the expense for battery used in vehicle is included in expense code no. 22213.

204 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 22315 Newspaper, Printing and Information Publication Expenditure The following expenses are included in this: a. Necessary printing expenses for the office. b. Newspapers and expenses for books for the operation of daily office work. c. Expense for public notice publication on government notice, auction, tender, low bidding, high bidding, as well as printing and notice publication cost. 22319 Expenditure on Operation of Other Office This includes other office operation costs except those mentioned above. 22400 Expenditure on Service and Consultancy This includes expenses paid for obtaining service and consultation fee or costs related to service. Expenditure cannot be written in this main head. 22410 Expenditure on Consultancy and other Service This includes expenses paid for obtaining the necessary service and consultation fee or costs related to service in course of Government work. Expenditure cannot be written in this head. 22411 Expenditure on Services and Consultancy This includes the following amounts: a. Remuneration not included under capital formation, such as study, research, etc. not involved in such, and b. It includes cost of consultancy and expert service for causing enquiry, investigation by specialist and advisory service. Expenditure cannot be written in this head. 22412 Expenditure on Information System and Software Operation It includes renewal cost of information system and software operation, consultancy service cost, and regular improvement cost. 22413 Contract Services Fee/ charges This includes the periodic or time to time payment of service fee of contract for maintaining office security, cleaning, garden maintenance, office letter delivery/messenger service, and receiving, agriculture advocacy, first aid service, driving vehicle, operating and maintaining telephone, fax, computer, photocopy machine, etc. 22414 Cleaning Service Fee This includes expenses for the cleaning of public sector infrastructure (road, market area, religious sites, park, etc.). 22419 Other Services Fee This includes payment of other service fees not mentioned above. 22500 Program Related Expenditure This includes other expenses related to raw material, labor and production of other materials and as well as all kinds of expenses on production of goods, and expenses related to public seminar, public training conduction, awareness raising information, and advertisement, and allowance for resource person offering services to service receiving group. Expenditure cannot be written in this main head.

205 Approved by CDC, Nepal Government Accounting System 22510 Training and Workshop This includes expenses on training and seminar as well as workshop. Expenditure cannot be written under this head. 22511 Employees Training Expenses This includes the expenses for training given to staff for their career and capacity development, seminar, workshop conduction as well as daily travel allowance for participation and allowance for instructor, resource person. 22512 Expenditure Related to Skill Development and Public Awareness and Workshop This includes expenses on public training conduction on income generation, skill development, empowerment, public awareness such as allowance for instructor and resource person, allowance for participants, sundries, snack expenses, hall rent, and daily allowance as approved for trainees, and travel expenses for implementing the program as per approved program. 22521 Production Material/Service Expenditure This includes the expenditure involved with raw material and other inputs and labor and other expenditure directly associated with the production are added for a product to become final, and is put for cash sale. The cost of raw material purchase and price of other material and other cost related to the production e.g.( postage stamp, post card, domestic goods, pesticide; two footed/ four footed animals for high breeding, fisheries, mushroom farming/cultivation), other agriculture related produce, topography map from survey department, legal book, reproduction of goods, postcard depicting various scenes and national heritage, brochure), the cost of material which has life less than one year, and the cost of transportation of these things, including the cost of seeds and sapling for sales and distribution, etc. But, the cost of transportation of capital things for delivery at office, and the capital cost spent on afforestation shall be added to the concerned heading and price determined in the inventory book. 22522 Program Expenditure Except for the skill development and public awareness, training and workshop under above mentioned 22512, this head includes cost of organizing all other programs such as in health, education, agriculture, women, tourism as well as the program cost related to the production and services flow for (apart from selling). 22529 Miscellaneous Program Expenditure This includes programs of worship, reciting, ritual sacrifice, recitation conducted by religious, cultural organization, and program cost not falling under any other cost headings.

206 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 22610 Monitoring, Evaluation and Travelling Expenditure This includes the cost of monitoring and evaluation, and the travel expenses, daily allowance, residential cost, out of pocket cost, sundry and contingency cost received on Government duties or on the implementation of program, and in the course of official transfer. No amount shall be debited in this main heading. 22611 Monitoring, and Evaluation Expenditure This includes cost, such as, for monitoring and evaluation, and inspection, and the cost for the evaluation, office bearer and the daily travel allowance. 22612 Travelling Expenditure This includes following: (a) The travel cost in the sanctioned rate for the employees who is transferred from one office to another, or, who has been transferred on deputation, and the accompanied family members, the applicable travel allowance for using transport means and on foot travel (e.g: transportation cost, air travel tax, travel related insurance cost and sundry cost sanctioned by the Government) foot, for the accompanying sanctioned family members. (b) The travel cost and daily allowances provided to the employee on his transfer, and his/her family member accompanying him/her pursuant to the prevailing rules. (c) This includes transportation cost receivable, daily allowance, lodging charge, insurance cost, sundry and contingency cost provided on the visit to the interior of the country and foreign countries in the course of Government duty or implementation of the program. 22613 Travelling Expenditure of VIP and Delegation This includes transportation cost, air flight/aviation tax, travel insurance, daily allowance, lodging cost for the special person and delegation, and sundry as well as contingency cost on their foreign visit. 22619 Other Travelling Expenditure This includes travel related cost provided to the person call upon to serve as witness in the case of Government side. If the travel allowance has to be provided for any person not grant in 22611, 22612 and 22613, such allowance shall have to be provided under the prevailing law. 22710 Miscellaneous Expenditure This includes various types of miscellaneous expenses required in the course of Government function. No amount shall be debited in this head.

207 Approved by CDC, Nepal Government Accounting System 22711 Miscellaneous Expenditure This includes following amounts: (a) The sanctioned expenses related to the entertainment, refreshment, and feast. (b) Necessary expenses related to the security of office. (c) The expenses on reception of the guest and hospitality. (d) Miscellaneous expenses to be made but not mentioned in any other head. 22721 Assembly Conduction Expenses It includes the expenses related to village or town’s assembly conduction. 27111 Social Security This includes the following expenses: (a) Financial assistance or grant provided to the elderly, helpless, physically challenged, widow or persons decided by the state. (b) Food expenses provided to the sick. (c) Food, ration, clothes and other facility related expenses provided to prisoners. 27112 Other Social Security This includes medical treatment expenses provided to national personality or other common public, and financial assistance provided to victim as a result of death or any other cause. 27211 Scholarship It includes the amount of cash, property or facility to be provided as grant in the form of scholarship to the students studying in educational institutions like schools, colleges and universities and also includes the amount of scholarship to be provided to the employees working in government service. 27212 Rescue, Relief and Rehabilitation Expenses It includes the amount of compensation to be provided to the person of organization in case of loss caused due to calamity or any other events. 27213 Medical Purchase Expenses This includes the expenses incurred in the distribution of free of cost or to be used for patients’ treatment medicines by entities like hospital, primary health center, aurveda dispensary, etc. and health goods purchase inclusive of transportation expenses. 27311 Pension and Disability Allowance This includes pension facility and disability allowance provided to retired office bearer or employee. 27312 Gratuity This includes the gratuity expense to be provided to retired office bearer or employee. 27313 Accumulated leave of retiree This includes the expenses for accumulated leave of retired office bearer or employee. 27314 Medical treatment of Retirees This includes the medical treatment expenses to be provided to retired office bearer or employee.

208 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 27315 Facility or assistance to deceased employee This includes the facility to be provided to deceased employee or family, the amount of assistance provided to the family of the deceased employee, compensation to the employee provident fund and additional amount by Government to the deceased employee. 28140 Rent This includes expenses on the rent of capital assets such as land, house, godown leased for governmental use. Expenditure cannot be entered under this head. 28141 Land Rent This includes the amount of rent to be paid to the landowner for governmental use of land and/or including the compensation for crops. 28142 House Rent This includes the house rent for the use of office or godown and residence facility for government officials. 28143 Rent for vehicles, machinery and equipment This includes the expenses on transport vehicles, machinery implements including other capital assets leased for government use. However, the amount of rent for public construction works shall be included under the concerned capital expenses. 28149 Other Rent This includes rent payable for purposes other than those mentioned above. 28911 Current Contingency Expenses Under this budget head may be proposed only such expenses that could not be explicitly proposed under the expenses head but which would be required to be included in next year’s budget. However, while allocating funds such expenses must be included and spent under the concerned budget head. Under this budget head authorization to spend disbursement cannot be done nor expenditure entered. 2. Capital Expenditure The indications of the expenditure incurred by all three levels of government for the nature of capital are as follows: B.H.No. Budget Heads Interpretation/Explanation 31111 Residential building construction/ purchase This includes expenses towards the construction or purchase of residential building for office bearers and employees. While purchasing building in case the cost estimate of the land occupied by the building and compound including other infrastructure expenses (land, furniture and fixtures) can be done separately, money should be provisioned accordingly under the expense head.

209 Approved by CDC, Nepal Government Accounting System 31112 Non-residential building purchase/ construction This includes expenses towards the construction/purchase of office building, compound wall of the land, animal shed, shed. While purchasing building in case the cost estimate of the land occupied by the building and compound including other infrastructure expenses (land, furniture and fixtures) can be done separately, money should be provisioned accordingly under the expense head. 31114 Land Development Work This includes the cost estimate of land development including other directly related expenses. 31121 Vehicles This includes the following expenses: (a) Cost of vehicles for transportation (such as jeep, motorcar, bus, truck, motorcycle, scooter, bicycle. Tractor for transportation work, animals for pulling cart like bullock and horse, etc.). (b) The cost of engine replacement of vehicle during repair. (c) Transport rent, tax, customs, transportation insurance incurred while importing the vehicle or engine. (d) Purchase of means of air transportation (airplane, helicopter, etc.) and their machinery components. 31122 Machinery and Equipment/Tools This includes the expenses incurred in the purchase of Machine and machinery implements except transport vehicle exceeding one year of life. (a) Cost of machinery and implements such as heavy machinery of various kinds, machinery implements related to farming, tractor (other than for transportation), generator, transformer, factory goods, machines regarding construction, communication equipment, scientific machine and goods, goods for technical drafting, goods for measurement and weight, office machine & implements such as fax, mimeograph, computer, printer, etc. (b) Expense of main component of such machinery and implements in case of needing repair. (c) Cost of the necessary rent, demurrage, fee, tax, custom, freight insurance, etc. (d) Expenses related to items needed for Government offices lasting for more than one year or costing more than Rs. 5,000/unit. i. Implements required for hospital. ii. Agricultural implements, sundry goods needed for treating livestock. iii. Technical goods for drawing, design. iv. Heater, fan, electricity meter, UPS, hard disc and cost for fitting, and cost of other small technical goods. However, it is required to purchase items costing less than Rs.5,000/unit, it should be entered as office expenses.

210 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 31123 Furniture & Fixtures It includes in respect of furniture, furnishing and fixtures for the use of Government office (a) purchase price and (b) related transportation cost, freight insurance, custom. 31131 Animal Asset and Horticulture Development Expenses This includes expenses of permanent nature for the commercial rearing of live animals and fowl for obtaining production more than once (reproduction, milk production, wool production, animal transport) and the development of other commercial agriculture and plants development (fruits, seeds seedlings, resin, leaves, double yield cash crops). 31132 Expense on Research and Development This includes all types of capital expenses in conducting all kinds of research, intellectual property right, research and development as well as aesthetic works. 31134 Expense on Computer Software Construction and Procurement This includes all types of software development (including consultant’s expense) includes procurement and substantial upgrading expense and database. 31135 Capital Consultancy Expense It includes public works related (a) Feasibility expenses (b) Survey, design drawing expenses (c) Exploration, excavation and investigation expenses (d) Technical consultancy expenses included in the cost of capital construction and other study, research and consulting expenses. 31141 Security system and equipment acquisition expenses It includes the expenses related to purchase of necessary weapons and security equipment like security tank, armed craft and other durable armed equipment for maintaining peace and security. 31151 Road & Bridge Construction This includes expenses related to the construction of new and old black topped, semi-metaled or graveled and earthen roads as well as the directly concerned components of road construction such as bridge, culvert, and suspension bridge, trail bridge inclusive of related fuel and security expenses. 31152 Railway & Airport Construction This includes expenses in connection with railway and airport construction as well as directly connected expenses such as fuel, security boundary. 31153 Hydropower Infrastructure Construction This includes expenses related to power house construction, transmission and distribution system construction as well as electricity development inclusive of directly connected expenses such as fuel, security. 31154 River Embankment and Dam Construction This includes expenses on construction of river embankment, dam, as well as retaining wall and directly related works.

211 Approved by CDC, Nepal Government Accounting System 31155 Irrigation Infrastructure Construction This includes expenses related to the construction of dam, canal, distributary canal, shallow and deep tube well and directly related study, investigation, fuel and security. 31156 Water Supply Infrastructure Construction This includes expenses regarding reservoir construction for water supply, construction of treatment and distribution system, pipe laying, water tank construction, boring inclusive of directly related fuel, security, etc. 31157 Forest and environment Protection This includes expenses related to nursery establishment, greenhouse, shed and road construction, bioengineering and environment protection. 31158 Sanitation Infrastructure Construction This includes expenses for construction related to sewerage, sanitary drain, solid waste treatment center, dumping site and other infrastructure related to sanitation. 31159 Other Public Construction Works Other public works related expenses not included from 31151 to 31158 above must be included here. 31411 Land purchase/ acquisition This includes the cost of land purchase or acquisition including compensation, applicable fee, tax, and other expenses. Summary of Budget Heads B.H.No. Budget Heads 21111 Employee remuneration (Salary) 21131 Official remuneration 21121 Dresses 21122 Food material 21123 Medical treatment expenses 21131 Local allowance 21132 Dearness allowance 21133 Field allowance 21134 Meeting allowance of employees 21135 Employee incentive allowances 21136 Foreign allowances 21139 Other allowance 21141 Meeting allowance for official

212 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 21142 Other facilities for official 21149 Other allowances of officials 21211 Expenses of social security fund of employee 21212 Expenses of fund on contribution based employee’s pension and gratuity 21213 Expenses of fund on contribution based employee’s insurance 21214 Employee’s welfare fund 21219 Other social security expenses 21221 Expenses of fund on security of employee 21222 Expenses of contribution based pension and gratuity fund of officials 21223 Expenses of fund on contribution based insurance 21224 Expenses of employee’s welfare fund 21229 Other social security expenses of office bearer 22111 Water and electricity 22112 Communication charges 22113 Service charge of public utility 22211 Fuel (officials) 22213 Fuel (office purpose) 22213 Vehicle maintenance expenditure /cost 22214 Insurance and renewal expenditure/cost 22221 Machinery and equipment maintenance and operation expenditure 22231 Constructed public property maintenance expenditure 22291 Operation and maintenance expenditure of other property 22311 Stationeries and Office Goods 22312 Birds and animal feed 22313 Books and materials expenditure 22314 Fuel–other purpose 22315 Publication expenditure of newspaper, printing and information 22319 Expenditure on operation of other office 22411 Expenditure on services and consultancy 22412 Information system and software operating costs 22413 Contract services fee 22414 Cleaning service fee

213 Approved by CDC, Nepal Government Accounting System 22419 Other services fee 22511 Expenditure related to training of staff 22512 Expenditure on skill development and public awareness and workshop 22521 Production material/service expenditure 22522 Program expenditure 22529 Miscellaneous program expenditure 22611 Monitoring evaluation expenditure 22612 Travelling expenditure 22613 Travelling expenditure of VIP and delegations 22619 Other travelling expenditure 22711 Miscellaneous expenditure 22721 Assembly conduction expenses 27111 Social security 27112 Other social security 27211 Scholarship 27212 Rescue, relief and rehabilitation expenses 27213 Medical purchase expenses 27219 Other social assistance 27311 Pension and disability allowance 27312 Gratuity 27313 Accumulated leave of retirees 27314 Medical treatment of retirees 27315 Facility or assistance to deceased employee 28141 Rent of land 28142 House rent 28143 Rent for vehicles, machinery and equipment 28149 Other rent 28911 Current contingency expenses 31111 Residential building construction/purchase 31112 Non-residential building purchase/construction 31114 Land development work 31121 Transport vehicle

214 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 31122 Machinery and equipment 31123 Furniture & Fixtures 31131 Animal asset and horticulture development expenses 31132 Expense on research and development 31134 Expense on computer software construction and procurement 31135 Capital consultancy expenses 31141 Security system and equipment acquisition expenses 31151 Road & bridge construction 31152 Railway & airport construction 31153 Hydropower infrastructure construction 31154 River embankment and dams construction 31155 Irrigation infrastructure construction 31156 Water supply infrastructure construction 31157 Forest and environment protection 31158 Sanitation infrastructure Construction 31159 Other public construction works 31411 Land purchase/acquisition Glossary Revenue : income of the government decentralization : providing rights to lower level employees Consolidated fund : kind of fund received by government as a revenue, loan, donation, etc. Budget : financial plan including revenue and expenses Appropriation : separating /allocating the amount of budget Imprest fund : revolving fund Budget allocation : financial plan that distributes accordingly Budget release : budget discharge Leakage : escape, wastage Operating level : functioning level Reimburse : To compensate with payment Transparency : Openness, clearness Uniformity : lacking diversity, similarity Auditor : a person who checks the account

215 Approved by CDC, Nepal Government Accounting System Exercise A. Answer the following questions in one sentence. 1. What is government accounting? 2. What is New Accounting System? 3. When was budgeting system introduced in Nepal? 4. When was an account committee formed? 5. From which fiscal year was New Accounting System started in Nepal? 6. Why is bracket used in accounting system? 7. What is Central Level Accounting? 8. Which institution does the final audit of government offices? 9. When was Kumari Chowk Adda established in Nepal? 2073(R) 10. What is the Office of Finance Comptroller General? 11. What is current expenditure? 12. Which institution does internal audit of Government Offices? 13. What type of ink is used by internal auditor and final auditor? 14. What is internal auditing? 15. Write the budget heading numbers of Transfer - TADA, Travelling and Daily Allowance. 16. Who appoints Auditor General? 2074(R) 17. What is capital expenditure? 18. Which office prepares accounting forms used in government offices? 2068(R) 19. Who is the final auditor of company ? 2073, 2071(R) 20. Write the full form of AGF No. 2067 (S) 21. Who performs final audit of Government Office? 22. Which office prepares accounting forms used in Government Office of Nepal? 23. Under which ministry is the Office of Finance Comptroller General ? 2066(R) 24. What is Government accounting system? 2065(S) 25. Which institution carries out final audit of district level government offices ? 26. Write the budget head Insurance and Gratuity? 2071(R) B. Give short answers to the following questions. 27. Highlight the necessity of New Accounting System and explain any of its three features in brief. 28. What is New Accounting System? Describe its any four objectives in brief. 29. Explain in brief the importance of New Accounting System with fine points? 2073(S), 2073(R)

216 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 30. What do you mean by New Accounting System? Explain any four features of New Accounting System. 31. Write any two similarities and three dissimilarities between Government Accounting System and Business Accounting System. 2074, 2071(R) 32. Explain the level of accounting. 33. Write any five differences between Office of Finance Controller General and Office of the Auditor General. 34. Introduce “Treasury and Account Comptroller’s Office” and write any four functions, duties and rights. 35. Write any five functions and duties of the Office of the Auditor General. 36. What is Auditing? Explain any four objectives of auditing. 37. Write any five differences between Internal Audit and External Audit. 38. Explain any five point of importance of auditing. 39. Write the difference between central level accounting and operating level accounting. 40. Why is audit compulsory in government and business office? Justify with five reasons. 2072(R) 41. Why auditing is necessary in Government Accounting ? Differentiate in three points between internal audit and final audit ? 2072(S), 2068(R) 42. Why is the new accounting system necessary? Explain any three of its features. 2069, 2067(S) 43. Justify the continuous use of New Accounting System in government offices with any five causes. 2067(R) 44. Write any five differences between internal audit and final audit. 2066(S), 2070(R) 45. Describe in brief any five objectives of New Accounting System. 2066(R) 46. Write any five differences between Government account and Business account. 2065(S) 47. Introduce audit and mention three differences between internal audit and final audit. 2065(R) Project Work a. Visit a government office and ask the accountant about the features of accounting system, ways or methods of accounting, forms used under the system, etc. Make a report. b. Observe the internal and external audit of any organization of your locality.

217 Approved by CDC, Nepal Government Accounting System Journal Voucher Unit 8 Journal Voucher CDC Syllabus 8.1 Introduction, types and use/practice 8.2 Petty cash fund- introduction and importance 13 Periods Debit: The Receiver Credit: The Giver Personal Account Debit: What comes in Credit: What goes out Real Account Debit: Expenses or Loss Credit: Incomes or Gain Nominal Account After studying this unit, students will be able to : write the meaning of journal voucher, state the objectives of journal voucher, prepare journal voucher for different transactions, write the meaning of petty cash fund, explain the objectives of petty cash fund, write objectives and explain the types of petty cash fund, prepare petty cash fund. Learning Objectives

218 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal 1. Meaning of Journal Voucher When any transaction takes place in a government office, it should be entered in the original book except for petty payments made out of the petty cash fund. It is a most important form or format used for making the original or primary record of the government transactions in a chronological order. Different accounts involved in a transaction are debited and credited along with the amounts in the respective column and they are supported by a brief explanation of the entries, called narration. Thus, a journal voucher, also, termed as goshwara voucher in Nepali, may be defined as the primary entry of the government transactions made in chronological order showing the accounts to be debited and credited along with their respective amounts. It is also supported by a brief narration. A particular feature of a journal voucher i.e. goshwara voucher is that each transaction is entered in a separate form. In order to bring uniformity among the offices in the use of this form, this voucher is also prepared as per the format prescribed by Auditor General’s Office i.e. it is identified as Auditor General Form (AGF) No. 203 (for Expenditure and Miscellaneous transactions). Key Point Journal voucher is a primary entry of the government transactions made in chronological order showing the accounts to be debited and credited along with their respective amounts. 2. Objectives of journal voucher The following are the main objectives of journal voucher: i. To keep financial transaction of government offices in systematic and chronological order. ii. To show the effect of debit and credit of each financial transaction. iii. To show the detail information about the transactions. iv. To provide legal evidence of transactions. v. To facilitate audit. vi. To facilitate preparation of ledgers and final accounts. 3. Importance of Journal Voucher Journal voucher is important because of the following advantages: a. It provides of evidence of transactions. b. It provides systematic record of financial transaction of government offices. c. It helps to prepare Bank Cash Book, Monthly Statement of Expenditure, Budget Sheet and other accounts. d. It provides the records of all financial transactions of government office in chronological order. e. It helps in improving the efficiency of financial administration of office. f. It helps in rectifying errors, frauds and corruption which are committed in accounting. g. It makes every accounting staff responsible of record-keeping. h. It helps to give financial information at the time of auditing and reporting.

219 Approved by CDC, Nepal Journal Voucher 4. Specimen of Journal Voucher The specimen of Journal Voucher is given below: AGF No. 203 (a) Central / Province / Local level (b) ....................... Ministry / Department / Office Office Code No.: (c) .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others (d) .......... Date (f) .............. Budget Sub-Head No. (e) ........................................................... Main J.V. No. (g) ................... Electronic transaction No. (h) S.N. Code/ sub-head No. Activity/ Program Code No. Particular L.F. No. Source’s Debit Rs. Credit. Rs. Level Bearing Institution Type Method of Payment 1 2 3 4 5 6 7 8 9 10 11 Total (12) xxx xxx Total amount in words (i) ............................................................................................... Brief narration of the transaction (j) (......................................................................................................................................) For Payment Purpose only S.N. Name of Payee Bank A/C No. / Receipt No. PAN No. Paid Amount No. of Enclosures: Total (l) Prepared by : ................. Submitted by :................... Approved by: ............ Date : ............................. Date : ............................. Date : ....................... Designation: ................. Designation: ................. Designation: ............. Note The process of recording journal voucher of revenue, expenditure and miscellaneous are similar to each other. However, the journal voucher of revenue should be passed by using the AGF No. 103 as per the nature of transaction. But journal voucher of expenditure and miscellaneous are to be passed by using the AGF No. 203, previously it was prepared in the AGF No. 10. As per new system of recording journal voucher, all the payments are made through District Treasury Controller Officer (DTCO) Treasury Single Account (*TSA) so treasury controller office Treasury Single Account should be credited for every First Part Third Part Second Part Fourth Part

220 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal payment, before it was credited by the name of Nepal Rastra Bank. Similarly, District Treasury Controller Office Treasury Single Account should be debited when budget release is recorded for the budge expenditure, before it was debited by the name of Nepal Rastra Bank. As per new amendment made by the Government of Nepal, budget release amount should be equal to the amount of budget expenditure and budget release should be made immediately for the every budget expenditure including advance as well as the fixed assets received from central level office. So, there should be amount of budget release for everyone budget expenditure and advance as well as fixed assets receive from central level office but here the questions of journal voucher are provided as per required of the chapter. The above specimen of goshwara voucher can broadly be divided into four parts. The necessary details to be filled in each section are mentioned as given below: First Part (a) Name of the government i.e. central or province or local government is mentioned on the top. (b) Name of office, department or ministry is mentioned below the name of government. (c) Code number of office is mentioned in the third line. (d) Type ofjournal voucheri.e.receipt, expenditure, deposit or others should be specified on the left hand side. (e) Budget sub-head number should be mentioned below the type of journal voucher. (f) Date of preparing journal voucher is mentioned below the journal voucher number. (g) The serial number of journal voucher from the commencement of the current fiscal year is mentioned in the right hand side. (h) If the transaction of voucher is related with electronic form, electronic transaction number is recorded with printed form just below the date. Second Part Column Information to be written 1 The serial number of the transaction is mentioned in this column. 2 Financial code or sub-head number/budget head number ofthe transaction is mentioned in this column. 3 The code number of the program or activity is written in this column. 4 Name of account debited and credited for the transaction is recorded in this column. 5 Page number of the ledger account where 6 Level of source of transaction i.e. central or province or local is mentioned in this column. 7 The name of institution bearing source i.e. government or any other organization is mentioned in this column. 8 Type of source of transaction like cash, grant or loan, etc. is mentioned. 9 The method of payment like cash or any other is mentioned in this column. 10 Debit amount of the transaction is written in this column. 11 Credit amount of the transaction is written in this column. 12 Total amount of debit and credit is mentioned here.

221 Approved by CDC, Nepal Journal Voucher Third Part (i) The total amount in words is mentioned here. (j) The short narration of the voucher related transaction is mentioned here. (k) The detail for the payment purpose is mentioned in this table. Fourth Part (l) The signature, date and position of the employees preparing, submitting and approving the journal voucher are mentioned in this place. 5. Things to be Considered While Preparing Journal Voucher Preparing journal voucher of the transactions is not a difficult task. One should be careful about the rules, principle and practice of the entries. The following are the things to be considered while preparing a journal voucher (AGF No. 203): i. Separate vouchers should be prepared for each transaction. ii. Entries should be made on the basis of the principles of double entry system. iii. The words B.E. (Budget Expenditure) should be mentioned after the word ‘Dr’ while making records of actual expenditure but it must not be mentioned in case of advance expenditure unless it is cleared. iv. Necessary documents of journal voucher must be attached to support the journal vouchers. v. It must be neat and clean and based on the reality. vi. The debit and credit totals must be equal for each transaction. vii. The amount should be written in words, not in numerical. viii. Mention the amount in the respective columns, straightforward in debit and credit accounts. ix. Give the narration just afterthe entry of accounts in the particulars column, beginning with ‘Being’ or ‘For’. x. Mention the budget head number and program code number, if any, in column number 2 and 3. xi. The name, date and post along with the signature of the person preparing the voucher, submitting the voucher and approving the voucher should be mentioned at the last. xii. Fill detail informations about the payment in the case of payment. 6. Rules for Debit and Credit The New Accounting System of Government of Nepal is completely based on the principle of double entry book-keeping system. Thus, the rules for debit and credit are exactly the same as studied under the book keeping in the class nine. Here, the rules/ principles for debit and credit are discussed pointwise under two approaches. i. Account approach It classifies the heading which may be involved in various financial transactions, into three accounts. The accounts, involved in the transactions, examples and the respective rules/principles for debit and credit are discussed below:

222 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal a. Personal Account Personal account is related with an individual, firm and institution. When the credit transaction takes place, the rule of personal account should be used. The rules for debit and credit are; Debit - the receiver and Credit - the giver b. Real Account Real account is related with assets and properties or things, the rule of real account should be used. The rules for debit and credit are; Debit - what comes in and Credit - what goes out c. Nominal Account Nominal account is related with income, expenses, profit and loss, the rule of nominal account should be used. The rules for debit and credit are; Debit - expenses or losses and Credit - incomes and gains Types of Account Examples Rules/Principle of Debit and Credit a. Personal A/c (related with person, firm, organization when credit transaction occurred) Ram, Sita, Haihar, ABC Co., XYZ Institute, PQR Academy, Megha Bank Ltd., etc. Dr. the receiver Cr. the giver b. Real A/c (related with assets and properties or things) Cash, furniture, land and building, computer, machinery, etc. Dr. What comes in Cr. What goes out c. Nominal A/c (Income, expenses profit, loss) Salary, rent, allowance, budget release, revolving fund release, commission, discount, wages, etc. Dr. Expenses & Losses Cr. Incomes & gains ii. Accounting equation approach There is an accounting equation of assets, liabilities, expenses and income (revenue). Under this approach the entries are made according to the equation. The equation is: Assets + Expenses = Capital + Revenue + Liabilities. Debit Credit Increase of Assets, Expenses and Losses Decrease of Assets, Expenses and Losses Cash, furniture, land and building, computer, machinery, etc. Dr. What comes in Cr. What goes out Decrease of Capital, Revenue and Liabilities Increase of Capital, Revenue and Liabilities

223 Approved by CDC, Nepal Journal Voucher 7. Treasury Single Account (TSA/DTCO) At present, Nepal Government applied the Treasury Single Account (TSA) system. TSA is related to the management of public funds thereby to enhance the efficiency and effectiveness of public financial management. Treasury Single Account (TSA) is a bank account or a set of linked bank accounts through which the government transaction i.e. all receipts and payments and get a consolidated view of cash position at the end of each day. TSA was initiated for making public sector financial transaction (like; financial planning, expenditure management and cash management) more realistic with the help of simple, economic, effective and transparent system. It also aims to make the treasury system of Government of Nepal in line with internationally practiced treasury system and make it more development friendly with the application of the modern tools. Treasury Single Account (TSA) system supports aggregate fiscal discipline, optimum use of resources and effective service delivery. Under this accounting system, the Operating Level Office receives the details statement of allocation of budget and an authorization letter from the central level office. The Operating Level Office manages for spending the budget and spends the budget within the limitation of budget under the different budget heads and sub-heads. The Operating Level Office spends the budget, collect the bills, prepare statements and request to the District Treasury and Comptroller’s Office (DTCO) to prepare the cheque for deducting from the account of concerned office. After that, the District Treasury and Comptroller’s Office (DTCO) verifies the bills and draws the cheque and returns the cheque, bills and statements to the related office. After that, the related office distributes the cheque to the concerned parties. Key Point TSA system is an unified structure of government accounts where all receipts and payments are transacted through single bank account with strong electronic linkages among spending units and monitoring agencies that gives a daily consolidated picture of government funds so as to have an efficient use of cash. Objectives and Benefits of TSA TSA has following objectives: a. To ensure effective aggregate control over government cash balances. b. To allow complete and timely information on government cash resources. c. To appropriation control. d. To improve operational control during budget execution. e. To reduce bank fees and transaction costs. f. To facilitate efficient payment mechanism. g. To keep bank reconciliation and quality of financial data. 8. Types of Journal Voucher The Journal Voucher (Goshwara Voucher) AGF No. 203 can broadly be classified under the following four categories:

224 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal A. General/Expenditure Journal Voucher B. Advance Expenditure Journal Voucher C. Miscellaneous Journal Voucher D. Annual Closing Journal Voucher Each of the types is discussed below, with some illustrations: A. General/Expenditure Journal Voucher The journal voucher, which is maintained for recording the payment of expenditure immediately after the receipt of goods or services, is called general or expenditure journal voucher. It is the most common and primary entry of the transactions. The procedures of the entries of such voucher are: i. Mention the word B.E. for Budget Expenditure and the head of expenditure (but not the sub-head or item of expenditure) immediately after the word “Dr.” and “Cr.” Treasury Single Account just below the debit line as: AGF No. 203 Central / Province / Local level ....................... Ministry / Department / Office Office Code No.: .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others........... Date: ................................... Budget Sub-Head No. ........................................................................ Main J.V. No. ...................... Electronic transaction No...... S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. B.E. (Name of the budget head) Cr. DTCO-Treasury Single Account (Being payment made for .......) xxx xxx Total xxx xxx For example: A motorbike is purchased for office use and paid Rs. 2,25,000 by cheque no. 001. S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31121 Dr. B.E. Vehicles Cr. DTCO-Treasury Single Account (Being motorbike purchased for office use) 225000 225000 Total 225000 225000 Prepared by : .......................... Submitted by : .......................... Approved by: .............................. Date : .............................. Date : .............................. Date : .............................. Designation: ......................... Designation: .............................. Designation: ..............................

225 Approved by CDC, Nepal Journal Voucher ii. Mention the expenditure head number in the concerned column i.e.31121 in this example. iii. Mention the amount i.e. Rs. 2,25,000 in the above example in the respective columns, straightforward in debit and credit accounts. iv. Give the narration just afterthe entry of accounts in the particulars column, beginning with ‘Being’ or ‘For’. The following illustrations will clear the concept about the general or expenditure journal voucher. Illustration - 1 Prepare Journal Voucher for the following transactions, which occurred in the District Administration Office, Bhaktapur. i. On 078-5-20, Paid to Ramu Furnitures against the purchases of furniture of Rs. 20,000. ii. Paid electricity charges of Rs. 1,500 for the consumption of electricity in the office on 078-5-23. iii. Purchased office supplies for Rs. 10,000 and paid on 078-5-28. iv. Paid to the house owner for office rent of the month Bhadra on 078-5-29 of Rs. 18,000. v. On 2078-5-30, paid Rs. 15,500 to A to Z Advertising Centre against the advertisement and publicity of office information. vi. Paid Rs. 5,000as per the bill for purchase of sweets and candle for Dashain on 078-6-5. vii. Paid against a bill of insecticide and chemical fertilizer of Rs. 6,500, for horticulture on 2078-6-12. Solution - i AGF No. 203 Central / Province / Local level ....................... Ministry / Department / Office Office Code No.: .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others........... Date: 2078-5-20 Budget Sub-Head No. ........................................................................ Main J.V. No. ...................... Electronic transaction No...... S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31121 Dr. B.E. Furniture & Fixtures Cr. DTCO - Treasury Single Account (Being furniture purchased for office use from Ramu furniture) 20,000 20,000 Total 20,000 20,000 Prepared by : ........................... Submitted by : ........................... Approved by: .............................. Date : .............................. Date : .............................. Date : .............................. Designation: Accountant Designation: Sr. Accountant Designation: Office Chief

226 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal Solution - ii S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22111 Dr. B.E. Water and Electricity Cr. DTCO - Treasury Single Account (Being electricity charges paid) 1,500 1,500 Total 1,500 1,500 Solution - iii S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22311 Dr. B.E. Stationeries & Office Goods Cr. DTCO - Treasury Single Account (Being amount paid for office supplies) 10,000 10,000 Total 10,000 10,000 Solution - iv S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 28142 Dr. B.E. House Rent Cr. DTCO - Treasury Single Account (Being office rent paid for the month of Bhadra) 18,000 18,000 Total 18,000 18,000 Solution - v S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22311 Dr. B.E. Stationeries & Office Goods Cr. DTCO - Treasury Single Account (Being paid for advertisement and publicity of office information) 15,500 15,500 Total 15,500 15,500 Solution - vi S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22711 Dr. B.E. Miscellaneous Expenses Cr. DTCO - Treasury Single Account (Being amount paid for purchase of Sweets and Candle for Dashain festival) 5,000 5,000 Total 5,000 5,000

227 Approved by CDC, Nepal Journal Voucher Solution - vii S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22521 Dr. B.E. Production Materials and Services Cr. DTCO - Treasury Single Account (Being insecticides and chemical fertilizer purchased for horticulture) 6,500 6,500 Total 6,500 6,500 B. Advance Expenditure Journal Voucher For the control of the government expenditure, the payment should be made only after the goods or services are obtained. But sometimes payments are made before hand i.e. before the receipt of goods or services, such a payment or expense is called advance expenditure. Amount paid in advance is not actual or real expenditure but should be entered in the journal voucher as advance expenditure because it is regarded as an expense until it is returned. Thus, transactions related with advance expenditures are recorded twice under the New Accounting System, first at the time when advance is given and another at the time of clearance. a. When Advance is given: When an advance is given to any person or party, his/her name, post and other relation along with the purpose is debited and the bank i.e. DTCO - Treasury Single Account is credited as: AGF No. 203 Central / Province / Local level ....................... Ministry / Department / Office Office Code No.: .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others........... Date: ................................... Budget Sub-Head No. ........................................................................ Main J.V. No. ...................... Electronic transaction No...... S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. Post and Name advance for budget head Cr. DTCO - Treasury Single Account xxx xxx Total xxx xxx The following illustrations will clear the concept about advance expenditures and their journal vouchers.

228 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal Illustration - 2 i. District Administration Office, Kaski, paid Rs. 20,000 to Section Officer Mr. Hari Sharma as an advance for transfer daily and travelling allowance on 2078-8-3. ii. On 2078-8-5, paid Rs. 15,000 to Store Keeper Mrs. Jyoti Singh as advance for purchasing furniture of Rs. 10,000 and bicycle of Rs. 5,000. iii. L/C (Letter of credit) is paid in advance to Honda Co. Japan for Rs. 1,50,000 for the purchase of a XL Honda Motorcycle on 2078-8-15. iv. Rs. 15,000 is given in advance to Section Officer Mr. Ram Prasad Tiwari or his 5 days official tour to Kathmandu on 2078-8-17. v. On 2078-8-20, Accountant Ramhari Sharma was given as an advance of Rs. 24,000 in total for buying a typewriter of Rs. 6,000, office uniform of Rs. 3,500 and office furniture of Rs. 14,500. . Solution - i AGF No. 203 Central / Province / Local level District Administration Office, Kaski Office Code No.: .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others........... Date: 2078-8-3 Budget Sub-Head No. ........................................................................ Main J.V. No. ...................... Electronic transaction No...... S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22612 Dr. Advance given to S.O. Mr. Hari Sharma for Travelling Expenses Cr. DTCO - Treasury Single Account (Being advance for TADA given to the Section Officer Mr. Hari Sharma) 20,000 20,000 Total 20,000 20,000 Solution - ii S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 31121 Dr. Store Keeper Miss. Jyoti Singh: Advance for Furniture & Fixtures Advance for Vehicles Cr. DTCO - Treasury Single Account (Being advance given to the Store Keeper Miss. Singh for purchasing furniture and bicycle.) 10,000 5,000 15,000 Total 15,000 15,000

229 Approved by CDC, Nepal Journal Voucher Solution-iii S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31121 Dr. Honda Co. Japan advance for Vehicle Cr. DTCO - Treasury Single Account (Being issued a LC in advance to the Honda Co. for purchasing a XL Honda Motorcycle for office) 1,50,000 1,50,000 Note: Issued of LC is treated as advance given. Total 1,50,000 1,50,000 Solution - iv S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 22612 Dr. Advance given to S.O. Ram Prasad Tiwari for Travelling Expenses Cr. DTCO - Treasury Single Account (Being advance given to Section Officer Mr. Tiwari for official tour to Kathmandu) 15,000 15,000 Total 15,000 15,000 Solution - v S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31122 21121 31123 Dr. Accountant Mr. Ramhari Sharma: advance for Machinery and Equipments advance for Uniform, Dress advance for Furniture & Fixtures Cr. DTCO - Treasury Single Account (Being advance given to the Accountant Mr. Sharma for typewriter, office uniform & furniture for the office) 6,000 3,500 14,500 24,000 Total 24,000 24,000 B. Clearance of Advance Advance taken should be cleared within the stipulated time period as prescribed in ‘Advance Clearance Rules 2032’ or as per the directions of Comptroller General’s Office. The person/party taking advance should submit statement for the clearance of such an advance either by incurring expenditure or even returning the amount, not being spent.

230 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal An advance may be cleared in any one of the following ways, when the statements are received from the concerned person/party, requesting for such a clearance: a. Returning the total amount of advance, not being spent/zero expenses. b. Actual expenditure being equal to the amount of advance/equal expenses. c. Actual expenditure being more than the amount of advance/over expenses. d. Actual expenditure being less than the amount of advance/below expenses, e. Partial clearance. f. Transferring the amount of advance to other person. Note: The beginning four ways of clearing advance (excluding the last two ways) will be discussed in this chapter as the last two ways are beyond this course. Illustration - 3 On 2078-11-15, an advance was given to Mr. K.B. Khadka, Officer of Civil Aviation Department, Chitwan of Rs. 40,000 for furniture. S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. Officer Mr. K.B. Khadka advance for furniture & fixtures Cr. DTCO - Treasury Single Account (Being advance given to the Officer Mr. Khadka furniture) 40,000 40,000 Total 40,000 40,000 Clearance Under Different Conditions a. Returning the total amount given; not being spent/zero expenses. This condition may also be of two types: i. Returning the amount in cash. ii. Returning the amount through bank deposit. i. Returning the amount in cash Dr. Cash Cr. Post Name clearance of advance for .............. (budget head) While bank deposit; Dr. DTCO - Treasury Single Account Cr. Cash

231 Approved by CDC, Nepal Journal Voucher On 2078-11-20, Officer Mr. K.B. Khadka returned the cash Rs. 40,000, as the being cancelled and got the clearance. S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. Cash Cr. Officer Mr. K.B. Khadka, clearance of advance for furniture & fixtures (Being advance cleared by Mr. Khadka for furniture as the whole amount returned) 40,000 40,000 Total 40,000 40,000 Depositing the cash into the bank S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. DTCO - Treasury Single Account Cr. Cash (Being cash deposited into Bank) 40,000 40,000 Total 40,000 40,000 ii. Returning the amount through bank deposit with bank voucher) S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. DTCO - Treasury Single Account Cr. Post Name clearance of advance for ........... (budget head) xxx xxx Total xxx xxx On 2078-11-20, Officer Mr. K.B. Khadka, returned the amount through bank voucher of Rs. 40,000, as the being cancelled and got the clearance. S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. DTCO - Treasury Single Account Cr. Officer Mr. K.B. Khadka clearance of advance for Furniture & Fixtures (Being advance cleared as the whole amount returned) 40,000 40,000 Total 40,000 40,000

232 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal b. Actual expenditure being equal to the amount of advance/Equal expenses S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. BE ............. (budget head) Cr. Post Name clearance of advance for ..........(budget head) xxx xxx Total xxx xxx On 2078-11-20, Officer Mr. K.B. Khadka submitted the bill of 40,000 and got the clearance. Solution: S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. B.E. Furniture & Fixtures Cr. Officer Mr. K.B. Khadka Clearance of advance for Furniture & Fixtures (Being advance cleared as the whole amount spent) 40,000 40,000 Total 40,000 40,000 c. Actual expenditure being more than the amount of advance/over expenses S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. BE .............. (budget head) Cr. Post Name clearance of advance for ............. (budget heads) Cr. DTCO - Treasury Single Account xxx xxx xxx Total xxx xxx On 2078-11-20, Officer Mr. K.B. Khadka’s advance for the furniture was being cleared by approving the bill of Rs. 45,000. Solution: S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. B.E. Furniture & Fixtures Cr. Officer Mr. K.B. Khadka clearance of advance for Furniture & Fixtures Cr. DTCO - Treasury Single Account (Being advance cleared and issuing a cheque for the additional amount.) 45,000 40,000 5,000 Total 45,000 45,000

233 Approved by CDC, Nepal Journal Voucher d. Actual expenditure being less than the amount of advance/below expenses. This condition may also be of two types: i. Making expenditure and returning the excess amount in cash ii. Making expenditure and returning the excess amount through bank. S.N. Code/ sub-head No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. BE ................. (budget head) Dr. Cash/DTCO - Treasury Single Account Cr. Post Name clearance of advance for ..........(budget head) xxx xxx xxx Total xxx xxx i. Returning the excess amount in cash. On 20th Falgun, 2078 Officer Mr. K.B. Khadka submitted the bill of expenditure Rs. 35,000 and balance Rs. 5,000 returned in cash after purchasing furniture and got clearance. Solution: S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31121 Dr. B.E. Furniture & Fixtures Dr. Cash Cr. Officer Mr. K.B. Khadka, clearance of advance for furniture & fixtures (Being advance cleared as the bill and surplus cash submitted.) 35,000 5,000 40,000 Total 40,000 40,000 Depositing the cash into the bank S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment Dr. DTCO - Treasury Single Account Cr. Cash (Being cash deposited into bank) 5,000 5,000 Total 5,000 5,000 ii. Returning the excess amount through bank On 20th Falgun, 2078, Officer Mr. K.B. Khadka submitted the bill of expenditure for Rs. 35,000 along with the bank voucher for the excess of Rs. 5,000 and the clearance is made.

234 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal Solution: S.N. Code/subhead No. Activity/ Program Code No. Particulars L.F. No. Source’s Debit Rs. Credit Rs. Level Bearing Institution Type Method of Payment 31123 Dr. B.E. Furniture & Fixtures Dr. DTCO - Treasury Single Account Cr. Officer Mr. K.B. Khadka clearance of advance for Furniture & Fixtures (Being advance cleared by approving the submitted bill and bank voucher) 35,000 5,000 40,000 Total 40,000 40,000 C. Miscellaneous Journal Voucher The journal vouchers for all the transactions otherthan general expenditure, advance expenditure and their clearance are categorized as miscellaneous journal vouchers. A large variety of transactions come under this type. They are as follows: a. Budget release or disbursement b. Deductions from salary c. Petty cash fund and its reimbursement d. Security deposit and contract tax e. Rectification of errors f. Budget transfer g. Closing journal vouchers a. Budget Release According to the new budget release system of government accounting, Operating Level Office receives the information about the appropriation of annual budget on different heading from Ministry of Finance. The operating level office should make the governmental financial activities as per the budget allocated by the Ministry of Finance. First of all the Operating Level Office should prepare the payment order to District Treasury Controller Office (DTCO) for the payment of different budget expenditure advance and other financial transactions. The payment order should be made the basis of bill and vouchers that are made within the Operating Level Office. The amount of budget expenditure is always equal to the amount of budget release. i. When the amount of budget expenditure is made In general the amount of budget expenditure is always equal to the amount of budgetrelease on the new system of budgetrelease. The Operating Level Office makes the expenditure in different budget head on the basis of the budget allocated by the Ministry of Finance. Under it payment order should be issued to District Treasury Controller Office (DTCO) for making the payment of budget expenditure. The Operating Level Office records the amount of budget expenditure as budget release. When the amount of

235 Approved by CDC, Nepal Journal Voucher budget expenditure is made, Treasure controller Office Treasury single Account should be debited and budget release received for the concerned head should be credited by the corresponding amount. The journal voucher of budget expenditure made can be shown as below: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Payment release (Related head) xxx xxx Total xxx xxx Illustration - 1: On 1st Kartik, District Education Office, Chitawan received a payment order from DTCO for an expenditure made for the month Ashwin amounting to Rs. 2,50,000. S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Payment release (Being payment release order received for the expenditure) 2,50,000 2,50,000 Total 2,50,000 2,50,000 ii. When the fixed assets received from central level The fixed assets required for different governmental office can also be received from central level office. The central level office purchased the required fixed assets by the Operating Level Office and send it to Operating Level Office. The amount of fixed assets received from Central Level Office should be recorded as budget release. When the fixed assets received by Operating Level Office from central level office, budget expenditure along with the related budget head should be debited and budget release for related budget head should be credited. The journal voucher of fixed assets received from central level office can be shown as below: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. B.E. Name of the budget head Cr. Budget release for (Related budget head.) xxx xxx Total xxx xxx Illustration - 2: On 10th Magh, Agriculture Office, Chitwan received machinery and equipment of Rs. 3,00,000 from central level office and recorded as budget release.

236 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Budget release for machinery and equipment (Being machinery and equipment received and recorded as budget release.) 3,00,000 3,00,000 Total 3,00,000 3,00,000 iii. Budget Release and Revolving Fund Every month, an office gets budget release for the month, equal to the expenses made by it in the last month. It should be noted, however, that an office must spend, at least, 50% of the amount of the Revolving Fund (Imprest Fund) in each month, otherwise it doesn’t get the reimbursement for the expenses of such month. But the office gets release order for the amount equal to the expenses so incurred, it is to be adjusted from the Revolving Fund. a. When the amounts of budget release order and bank order are equal Every month an office gets budget release for the month equal the expenses made by it in the last month. The entry is: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Budget Release (Being budget release and bank order received) xxx xxx Total xxx xxx On 2078-5-3 received Rs. 3,00,000 as a budget release order for the reimbursement of the month of Shrawan from the Office of the Treasury and Comptroller through bank transfer. Solution: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Budget Release (Being reimbursement of revolving fund expenditure through bank transfer received) 3,00,000 3,00,000 Total 3,00,000 3,00,000

237 Approved by CDC, Nepal Journal Voucher b. When the amount of budget release order is less than the bank order, Dr. DTCO - Treasury Single Account (equals to bank order letter) Cr. Revolving Fund (difference amount) Cr. Budget Release (equals to budget release order letter) (Being budget release and bank order received) On 2078-5-3, District Forest Office, Palpa, received an intimation of the bank order of Rs. 200,000 and budget release order of Rs. 150,000 as the reimbursement of the expenditure of previous month, through the Office of the Treasury and Comptroller. Solution: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Cr. Revolving Fund Cr. Budget Release (Being bank order and budget release order received and the excess money transferred to the revolving fund) 2,00,000 50,000 1,50,000 Total 200,000 2,00,000 c. When the amount of budget release order is more than the bank order, Dr. DTCO - Treasury Single Account(equals to bank order letter) Dr. Revolving Fund (difference amount) Cr. Budget Release (equals to budget release order letter) (Being budget release and bank order received.) On 2078-5-3, District Forest Office, Jhapa, received the bank order of Rs. 200,000 and budget release order of Rs. 2,50,000 as the reimbursement of the expenditure of previous month, through the Office of the Treasury and Comptroller. Solution: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Treasury Single Account Dr. Revolving Fund Cr. Budget Release (Being bank order and budget release order received and the excess money transferred to the revolving fund) 2,00,000 50,000 2,50,000 Total 2,50,000 2,50,000

238 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal d. When the budget release received in terms of Goods/Commodities Sometime, the operating level office received the budget in terms of goods and commodities. For those conditions; Dr. BE (Budget Head) ... Cr. Additional/Supplementary Budget release (Being additional/supplementary budget release received) Example: On 2078/5/7, a car is received from central level office valued of Rs. 40,00,000/- with necessary documents and release order to adjust the expenditure as additional/ supplementary/budget release. AGF No. 203 Central / Province / Local level ....................... Ministry / Department / Office Office Code No.: .................... Journal Voucher (Expenditure / Miscellaneous) Types of Journal Voucher: Receipt/Expenditure/Deposit/Others........... Date: 2078-5-7 Budget Sub-Head No. ........................................................................ Main J.V. No. ...................... Electronic transaction No...... S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 31121 Dr. BE Vehicles Cr. Additional/supplementary/ Budget release (Being car is received from central level office as additional budget release) 40,00,000 40,00,000 Total 40,00,000 40,00,000 B. Deductions From Salary At the end of every month, salary and allowances are distributed to the employees of an office for the duties performed by them during the month. Some amounts as per the rules and regulations and/or as the request of an employee are deducted from out of the salary. Personnel provident fund (employees’ provident fund), income tax, tejarath sapati (personnel loan), clearance of advance remained in the name of a certain employee, as his request or according to the rules and regulations, etc. are some common examples of such deductions. The important deductions are introduced below with their accounting treatment.

239 Approved by CDC, Nepal Journal Voucher i. Personnel Provident Fund It is that fund, which is raised by collecting the compulsory deduction from the salary of the permanent employees of a government office, company or corporation. The employer office contributes the cent percent of the deduction to the fund. In Nepal, the personnel provident fund deduction is 10% of the total regular (monthly) salary and the employer office contributes the cent percent of the deduction to the fund. The entry for Personnel Provident Fund deduction is: Dr. B.E. Salary 21111 Cr. Personnel Provident Fund Cr. DTCO - Treasury Single Account While depositing the Personnel Provident Fund deduction in the concerned office or A/c, the entry is made as: Dr. Personnel Provident Fund Cr. DTCO - Treasury Single Account Suppose, the total salary of the permanent employees of an office is Rs. 20,000; then the calculation of gross salary and Personnel Provident Fund deduction is made as: Salary 20,000 Personnel Provident Fund (10%) 2,000 The net salary receivable is 18,000 a. The total salary including the contribution of the office to the Personnel Provident Fund becomes Rs. 22,000. (i.e. 20,000 + 2,000) b. The Personnel Provident Fund (the sum of Personnel Provident Fund deduction and contribution of the office) is Rs. 4,000 (i.e. 2,000+2,000) Net salary payable (a-b) = 18,000 Total Personnel Provident Fund deposit 2,000+2,000) = 4,000 ii. Income Tax/Social Security Tax Income tax is the amount of tax to be paid by the employees out of their salary. In cash, only when an employee earns taxable salary, he/she is subject to pay such a tax. At least 1% of salary should pay as social security tax to government by any organization. Though an employee can pay the income tax individually after drawing the salary from the office, the general tradition is that the income tax is deducted by the office, at source while distributing the salaries and, thus, it is also a deduction from the salary. Two entries should be passed in case of this deduction too, as in the case of Personnel Provident Fund. While deducting income tax: Dr. B.E. Salary Cr. Income Tax/Social Security Tax Cr. DTCO - Treasury Single Account

240 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal While depositing the deduction i.e. income tax and social security tax in the concerned A/c, Dr. Income tax/Social Security Tax Cr. DTCO - Treasury Single Account iii. Personnel Loan(Tejarath Sapati) The staff/personnel/employees of an office may fall into some economic crises. So, they take loan from the office, on condition of repaying it from their salary each month. Thus, it is also deducted from the salary of the concerned staff employees. The accounting treatment is the same as to the other deductions. While deducting the personnel loan from the monthly salary, Dr. B.E. Salary Cr. Personnel Loan/ Tejarath Sapati Cr. DTCO - Treasury Single Account While depositing the deduction in the concerned A/c, Dr. Personnel Loan Cr. DTCO - Treasury Single Account iv. Citizen Investment Fund A staff can voluntarily deposit certain amount on monthly basis in a fund called citizen investment fund. While deducting the citizen investment fund from the monthly salary; Dr. B.E. Salary Cr. Citizen Investment Fund Cr. DTCO - Treasury Single Account While depositing deducted amount: Dr. Citizen Investment Fund Cr. DTCO - Treasury Single Account (Being deducted amount of citizen investment fund is deposited into concerned account v. Combined Condition of Salary Deductions a. While salary distributing/Offer Deducting Provident Fund, Provident Fund Loan, Personnel Loan/Tejarath Sapati, Citizen Investment Fund and Income Tax or Social Security Tax. Journal Voucher is given below:

241 Approved by CDC, Nepal Journal Voucher Dr. B.E. Salary Cr. Provident Fund Cr. Provident Fund Loan Cr. Personnel Loan/ Tejarath Sapati Cr. Citizen Investment Fund Cr. Income Tax/Social Security Tax Cr. DTCO - Treasury Single Account (Being salary distributed) b. While salary and allowance distributing at a time after deducting provident fund, provident fund loan, personnel loan/Tejarath Sapati, Citizen Investment Fund, Income Tax, Social Security Tax and Advance Salary. The specimen of journal voucher is given as follows: Dr. B.E. Salary Dr. B.E. Allowance Cr. Provident Fund Cr. Provident Fund Loan Cr. Personnel Loan/ Tejarath Sapati Cr. Citizen Investment Fund Cr. Income Tax Cr. Social Security Tax Cr. Advance Clearance of (Name of Person) Cr. DTCO - Treasury Single Account (Being salary distributed after deducting necessary above deduction headings) c. Combined journal voucher while deducted amount depositing into concerned offices: The specimen format of journal voucher is given below: Dr. Provident Fund Dr. Provident Fund Loan Dr. Personnel Loan/ Tejarath Sapati Dr. Citizen Investment Fund Dr. Income Tax Dr. Social Security Tax Cr. DTCO - Treasury Single Account (Being deducted amount deposited into the concerned offices)

242 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal Illustration - 3 On 2078-12-2, the Custom Office, Birgunj, distributed salary to its employees for the month of Falgun, 2078, amount to Rs. 50,000 subject to the following deduction: Personnel Provident Fund 5,000 Income Tax 2,000 Solution: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 21111 Dr. B.E. Salary Cr. Personnel Provident Fund Cr. Income Tax Cr. DTCO - Treasury Single Account (Being salary for the month of Falgun paid by deducting Personnel Provident Fund and income tax.) 50,000 5,000 2,000 43,000 Total 50,000 50,000 While depositing Personnel Provident Fund into concerned A/c: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Personnel Provident Fund Cr. DTCO - Treasury Single Account (Being Personnel Provident Fund deposited into the concerned A/c.) 5,000 5,000 Total 5,000 5,000 While depositing the income tax into the concerned A/c: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Income Tax Cr. DTCO - Treasury Single Account (Being income tax deposited into the concerned A/c.) 2,000 2,000 Total 2,000 2,000 Note: The depositing of the deductions may be entered together in the same voucher by debiting the respective deduction accounts and crediting Treasury Single Account. In such a case if different cheques are issued, the separate numbers should be mentioned in the ‘Cheque No.’ blank and the total sum of amount in the ‘Cheque Amount’ blank.

243 Approved by CDC, Nepal Journal Voucher Illustration - 4 On 29-11-2078, salary of the month of Falgun Rs. 65,000 is distributed after deducting Rs. 8,000 for provident fund, Rs. 2,000 for personnel loan and Rs. 1000 for income tax and the balance. And the deducted amounts were sent to deposit in the respective accounts. Solution; S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 21111 Dr. B.E. Salary Cr. Personnel Provident Fund Cr. Personal Loan Cr. Income Tax/Social Security Tax Cr. DTCO - Treasury Single Account (Being salary paid for the month of Falgun after deducting the deductions) 65,000 6,500 2,000 1,000 55,500 Total 65,000 65,000 While depositing the deductions into the respective accounts: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Personnel Provident Fund Cr. DTCO - Treasury Single Account (Being the deductions deposited into the respective accounts.) 6,500 6,500 Total 6,500 6,500 S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Personnel Loan Cr. DTCO - Treasury Single Account (Being the deductions deposited into the respective accounts.) 2,000 2,000 Total 2,000 2,000

244 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Income Tax/Social Security Tax Cr. DTCO - Treasury Single Account (Being the deductions deposited into the respective accounts.) 1,000 1,000 Total 1,000 1,000 Illustration - 5 On 5th of Falgun, 2078, salary for the month of Magh Rs. 2,50,000 was distributed after deducting provident fund Rs. 25,000, citizen investment fund of Rs. 5,000, income tax Rs. 2,000 and employees loan Rs. 6000, on 6th Falgun, and the next day, the deducted amounts were deposited into the concerned accounts. Solution: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 21111 Dr. B.E. Salary Cr. Personnel Provident Fund Cr. Citizen Investment Fund Cr. Income Tax/Social Security Tax Cr. Employees’ Loan Cr. DTCO - Treasury Single Account (Being salary paid to the staff after the necessary deductions.) 2,50,000 25,000 5,000 2,000 6,000 2,12,000 Total 2,50,000 2,50,000 While depositing the deductions in the respective accounts: S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Personnel Provident Fund Dr. Citizen Investment Fund Dr. Income Tax/Social Security Tax Dr. Employees’ Loan Cr. DTCO - Treasury Single Account (Being deducted amount is deposited into concern account.) 25,000 5,000 2,000 6,000 38,000 Total 38,000 38,000

245 Approved by CDC, Nepal Journal Voucher C. Petty Cash Fund In every office, there are a number of expenditures of the large and very small value. It becomes inconvenient and impracticable to issue cheque for very small amounts for the payment of expenses. In order to facilitate such small payment, a small fund of cash is raised in periodic way like weekly, fortnight, monthly, etc. in almost all the offices. Such a fund is known as petty cash fund. It is created under the responsibility of a certain person, called petty cashier. It is created in the beginning of the current fiscal year for a certain period, say a week fortnight, month, etc. and reimbursed in the beginning of the second period and this process goes onward during the whole year. At the close of the current year i.e. end of the last period, it is also closed and the amount is sent to the bank. The petty cash fund is again raised in the beginning of the coming year and accordingly, this goes onward. The accounting treatment for the raising of petty cash fund and its reimbursement is discussed below. The amount paid by Petty cashier is recorded in the payment voucher and should be verified by authorised person. According to ‘Financial Administration Rules 2065’, central level office has made the provision of creating petty cash fund upto Rs. 5,000 to Rs. 20,000 after the implementation of DTCO - Treasury Single Account in petty cash fund. Petty cash fund is closed at the fiscal year by depositing remaining cash into Bank before final closing. While establishing petty cash fund, Dr. Petty cash fund Cr. DTCO - Treasury Single Account (Being petty cash fund created) While reimbursing petty cash expenditure, Dr. B.E. ...... (Head of Expense) .... Dr. B.E. .... (Head of Expense) ....... Cr. DTCO - Treasury Single Account (Being petty cash fund reimbursed) } Individually While closing petty cash fund, Dr. B.E. ..... (Head of Expense) (...... If) Dr. DTCO - Treasury Single Account (remaining amount) Cr. Petty cash fund (Being petty cash fund closed) Illustration - 6 i. A cheque of Rs. 5000 was issued to Krishna Dhakal, the Petty Cashier of the office, to create a petty fund on 2078-4-10. ii. On 2078-4-16, a fresh cheque was issued for the reimbursement of the petty expenditures made by him during the period as:

246 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal Postage and stamps Rs. 40 Telegraphic charges Rs. 55 Payment for stationeries Rs. 25 Refreshment expenses Rs. 20 Worshiping materials Rs. 15 Taxi fare Rs. 65 Newspaper expenses Rs. 33 Solution - i S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. Petty Cash Fund Cr. DTCO - Treasury Single Account (Being Petty Cash Fund is created under the responsibility of Petty Cashier Mr. Dhakal.) 5,000 5,000 Total 5,000 5,000 Solution - ii S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 22311 22112 22711 22522 Dr. B.E. Stationeries and Office Goods Dr. B.E. Communication Charge Dr. B.E. Miscellaneous Expenses Dr. B.E. Programme Expenses Cr. DTCO - Treasury Single Account (Being the petty expenses during the period reimbursed.) 163 55 20 15 253 Total 253 253 Objectives of Petty Cash Fund Petty cash fund has many objectives, specially in making the payment of very small expenditures easily and in orderto lessen the burden of the accountant by keeping records of a number of very small expenditures. The important objectives of petty cash fund are as given below: i. To overcome the inconvenience of issuing cheques for the small payments like tea, coffee, bus fare, coolie charges, wages to casual labours, newspaper, postal stamps, etc. ii. To minimise the misuse of cash while making very small payments, by assigning particular responsibility to a certain employee of the office. iii. To reduce the accounting burden to the accountant or assistant accountant by determining a separate duty and responsibility under a certain employee in the office. iv. To identify the separate position ofthe petty expenditures during various periods and see the status of fund so that, a proper control can be made on the petty expenditure.

247 Approved by CDC, Nepal Journal Voucher v. To facilitate the posting in ledger because all the expenditures of a certain period are recorded in the journal voucher at once, at the time of re-imbursement and can be posted into ledger at once. Types of Petty Cash Fund There are generally two types of petty cash fund: ordinary system and imprest system. i. Ordinary System of Petty Cash Fund Under this system, the petty cashier is given a certain sum of money for a certain period, say a week, fortnight or month to meet all petty expenses. At the last of the certain period i.e. the week, fortnight or month, the petty cashier produces the vouchers along with the balance of amount, if any, before the head cashier or accountant. The head cashier then verifies the vouchers and makes the entry of the total amount spent, into his cash book. Then the petty cashier is given a certain necessary amount for the coming period, which may be less than, equal to or more than the former fund. The same process goes onward for the whole year. Since there’s a provision for fluctuating the fund for the different periodical time, the control element is poor under this system. ii. Imprest System of Petty Cash Fund Under this system, the petty cashier is given a certain fixed sum of money in the beginning of a certain period, say a week, fortnight or month or suggested to make petty payments out of it. At the end of that certain period, the petty cashier produces the vouchers before the main cashier. The main cashier then verifies the vouchers and enters the total amount spent into his cash book and gives an amount to the petty cashier equal to the amount spent by him/her so that, in the beginning of the coming period. He/she will have the same amount in the fund as it was in the earlier period. This process goes onward for the whole year and even sometimes for the series of years to come. The petty cash fund is created, under this system, scientifically with the study of past experience, firm’s policy and future probability so that, the fund so created will be sufficient to meet the periodical expenses. d. Budget Transfer While making expenditures as per the annual appropriation under different heads, there may exist the possibility of the annual appropriation being inadequate under some heads and excess under some other heads. In order to avoid such situation, the provisions are made under the New Accounting System of GON to transfer amount from the heads having surplus budget to the ones having scarce. But this should be approved from the Office of the Treasury and Comptroller. Budget may be transferred from one head to another within the same office or between the offices of Government of Nepal. Thus, budget transfer refers to the acts of transferring an amount from one budget head to another or from one government office to another. The accounting treatment of such budget transfer is illustrated below: i. For inter-head transfer of budget, within the same office: Dr. BE (Head, from which budget is transferred) Cr. BE (Head, to which budget is transferred)

248 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal ii. For inter-office transfer of budget: In the book of the office receiving transfer Dr. DTCO - Treasury Single Account Cr. Budget Release (Being budget transfer received from office) In the book of the office giving transfer, Dr. Budget Release Cr. DTCO - Treasury Single Account (Being budget transferred from budget expenditure to ............ office) Illustration - 7 i. On 2078-7-5, Rs. 15,000 was transferred from budget head uniform to budget head food on the basis of approval received. Solution - i S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 21121 21122 Dr. B.E. Uniform / Dress Cr. B.E. Food Materials (Being budget transferred from uniform to food materials) 15,000 15,000 Total 15,000 15,000 e. Security Deposit and Contract Tax Some government transactions are related with public constructions orlarge quantity purchase of materials or capital assets. Forthis, government invites tenders and quotations from the registered contractors to carry out the constructional work or to supply materials at a quoted price. The contractors who submit tenders should deposit an amount equal to 5% of the quoted price individually in the stated bank account of the office as security deposit, commonly known as earnest money. The amount of the earnest money deposited by the contracts is known only after the sealed bids or tenders are opened. The tenders are opened at a pre-specified date in the presence of the contractors or their authorized representatives. Generally, the tender is accepted which has quoted the least price of the work subject to the provisions and procedures of rules and regulations. Additional security deposit may be asked if needed, from the accepted contractor and the security deposits of the rejected ones are refunded. The contractor, whose tender is accepted, now begins the work. After the completion of a certain portion of the work, he presents a running bill to the office by asking for the

249 Approved by CDC, Nepal Journal Voucher payment to incur his expenses. It is certified by the architect of the office and payment is made on the basis of the running bill. Such a process may continue from time to time as necessity until the work is completed. At the time of the payment of the running bills, 5% of the amount is deducted as security deposit, next 5% as contract tax and other necessary deductions if any. The remaining amount is paid through cheque. Security deposit is a security to the government against any wilful misconduct or violation of contract by the contractor in the conduct of contractual work. When the work is completed and certified by the architect, a clearance letter is issued to the contractor and as usual the amount is paid with necessary deductions. His security deposit cumulated so far is returned through the established procedures. In order to avoid the chances of misuse and manipulation of the amount of security deposit, it should be separated from the amount of annual appropriation and deposited into a separate security deposit account in the bank. On the other side, contract tax is a revenue from the price (income) received by the contractor and, thus, deposited into contract tax account at the time of every deduction and finally collected into the consolidated fund of the government at the end of fiscal year or after the completion of the work and clearance of the contract price. The following illustration may clear the concept of security deposit and contract tax and their accounting: While depositing amount of security deposit into bank, Dr. DTCO - Treasury Single Account (Security deposit account) Cr. Security deposit account of ........... (Name of contractor) (Being the amount of security deposit received through bank) While paying amount of contract bill, Dr. BE ............. (Budget head) Cr. Security deposit account of ........... (Name of contractor) Cr. Contract tax Cr. DTCO - Treasury Single Account (Being the amount of contract bill paid deducting necessary amount) While paying amount of contract tax, Dr. Contract tax Cr. DTCO - Treasury Single Account (Being the contract tax deposited to revenue account of government) While paying the amount of security deposit of contractor, Dr. Security deposit account of .............. (Name of contractor) Cr. DTCO - Treasury Single Account(Security deposite A/c) (Being amount of security deposit returned to contractor Mr...............)

250 Aakar’s Office Practice and Accountancy - 10 Approved by CDC, Nepal While refunding security deposit to contractor after the completion of contract, Dr. Security deposit account of ............... (Name of contractor) Cr. DTCO - Treasury Single Account (Being refunded of the security deposit to contractor) Illustration - 8 Prepare Goshwara Vouchers for the following transactions related with contractual dealings in the books of Land Reform Office, Rupandehi. i. On 2078-8-15, security deposit of Rs l,00,000 Rs. 90,000, Rs. 1,05,000 and Rs. 1,10,000 received from contractors Mohan & Co., Kailash & Co., Khatri Constructions and Khanal & Co. respectively through bank vouchers along with their tenders for the construction of building of the office. ii. Out of the first running bill of Rs. 500,000, the amount was paid through cheque to the contractor after deducting 5% security deposit and 5% contract tax on 2078-8-16 and the deducted amounts were deposited into the respective accounts on the same day. Solution - i S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method Dr. DTCO - Security Deposit A/c Cr. Security Deposit of Mohan & Co. Cr. Security Deposit of Kailash & Co. Cr. Security Deposit of Khatri Constructions Cr. Security Deposit of Khanal & Co. (Being security deposit received from the contractors through bank) 4,05,000 1,00,000 90,000 1,05,000 1,10,000 Total 4,05,000 4,05,000 S.N. Code/ B.H. No. Activity/ Program Code No. Particulars L.F. No. Source Debit Rs. Credit Rs. Level Source Bearing Organization Types Payment Method 31111 Dr. B.E. Building Construction Cr. Security Deposit of Mohan and Co. Cr. Contract Tax Cr. DTCO - Treasury Single Account (Being amount paid to the contractor as per the 1st running bill after deducting Security deposit and contract tax) 5,00,000 25,000 25,000 4,50,000 Total 5,00,000 5,00,000