Office Practice and Accounting -9

UNIT
13 Government Account



























Learning objectives :


After the completion of this unit, students will be able
to understand :

• meaning and definition of government accounting.
• differences between government and commercial
accounting.
• objectives of government accounting.
• development of government accounting in Nepal.

• types of accounting systems used in Nepal.
• simple concept of auditor general, office of finance
comptroller general and office of treasury and
comptroller.


















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13 Government Account















Introduction

Accounting is the art of recording, classifying and summarizing of financial activities
to know the financial result as per requirement. It is an art of recording transactions
according to sizes, nature and types of organizations. The accounting can be classified
into two categories as such:-

i. Government Accounting
ii. Commercial Accounting

Government Accounting
Government accounting refers to the recording of all revenue and expenditure
that belong to government. It is the process of collecting, recording, classifying,
summarizing, interpreting and reporting to the concerned authority with all those
financial transactions made by a government body.


According to Oshisami and Dean, "Government Accounting is the process
of recording, analyzing, classifying, summarizing, communicating and
interpreting financial information about government in aggregate and in detail,
reflecting all transactions involving the receipts, transfer and disposition of
government fund and property."


The principles and procedures of government accounting are governed by government
financial rules, regulations and acts that may provide the relevant information for
formulation of plans and policies for taking important financial decision. It helps to
analyze the financial transactions of governmental body.

The accounting system which is being used by government of Nepal since 2019
BS is government accounting. It is also known as 'New Accounting System'. It was
implemented in the offices of Kathmandu valley since the 2019BS and since 2025 BS,
it was introduced and implemented throughout the country. This accounting system
brought uniformity in accounting all over the country.

The government accounting maintained by the government in Nepal. is classified
into two levels i.e. central level accounting and operating level accounting.


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Commercial / Business Accounting

Business accounting is the accounting system used by business organizations to record
all financial transactions relating to the business. The prime objective of commercial
accounting is profit and it is prepared on the basis of Generally Accepted Accounting
Principles (GAAP) and regulations of organization itself.
Differences between Government Accounting and Commercial/ Business Accounting

Government Accounting Commercial Accounting
Government accounting is maintained for the use Commercial accounting is maintained for the use
of government offices and general public. of business organizations and its owners.
The main purpose of government accounting is The main purpose of commercial accounting is to
to provide administrative and financial service to generate profit and prepare financial statement to
general public. know profit or loss and the financial position of
the business
Government accounting strictly follows the bud- Commercial accounting has its own budgeting and
geting system of government. estimation.
Government accounting is classified into two Commercial accounting does not have provision
levels i.e. central level accounting and operating of central and operating levels.
level accounting.
Office of Auditor General audits the book of ac- Independent and professional registered auditor
counts in government accounting. audits the books of account in commercial ac-
counting.
Government accounting is prepared on cash ba- Commercial accounting is prepared on accrual
sis. Credit transactions are not recorded in gov- basis. That implies cash as well as credit transac-
ernment accounting. tions, both are recorded in commercial accounting.

Historical development of accounting system in Nepal

Government accounting was first introduced in Nepal in the Lichchhawi period. To
record the revenue and expenditure of the government, the recording system came
into practice. During this period, the different sources of collecting government
revenues were trusts (Guthis), property taxes (Jinsikar), voluntary labour (Shramdan)
from general public. The revenue were utilized in war, construction of temples,
expenses of royal family, salary of government employees, performing of religious
rites (Puja/Yagya), etc. With the extension of trade link with Tibet, revenue from trade
and customs were also added to the list of sources of revenue during the Malla period.
After the unification of Nepal in 1825 B.S, Prithivi Narayan Shah tried to make
improvements in the accounting system. The milestone of that period in the field
of account was introduction of 'Laldhadda' to record revenues and administrative
expenses in 1871 B.S, and ‘Mothdhadda’ to record land and its revenue.

Establishment of Nijamati Kitab Khana in 1925 BS brought the system of recording
the history of employees and detail about salary of the government offices. This office
is functioning still today. In 1936 BS Khardar Gunwant, a government employee,
introduced 'Syaha Shrestha Pranali' accounting system to maintain government

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revenues and expenditures. The Shyaha Srestha Pranali was an advanced form of
recording the transactions which remained in practice upto fiscal year 2022/23 BS.
After the establishment of democracy in 2007 BS, the government became more
responsible to maintain books of accounts. As a result, the budget system was started
in 2008 BS. In 2016 B.S. "Procedure Rule for Government Fund Expenditure 2016"
was enacted with a view to bringing uniformity in financial administration. Then, in
Baisakh 2017 BS, Bhuktani Sresta Pranali was introduced. But Bhuktani Sresta Pranali
could not last long as New Accounting System was introduced as per recommendation
of accounts committee. On 20th Magh, 2017 an account committee was formed to
study and make suggestions for an appropriate and scientific accounting system.
After the detailed study for 288 days, the committee presented a draft to the finance
secretary which got recognition from the Auditor General and final approval from
king Mahendra in 2018 BS. This accounting system is known as 'New Accounting
System" of Government of Nepal, which was scientific and systematic. This system
has been followed by Government of Nepal since the fiscal year 2019/20 and still is in
practice these days.


Types of Accounting System used in Nepal

Before the introduction of New Accounting System, various accounting systems
were in practice in Nepal. A single and uniform system of accounting was lacking to
record the financial transactions. A short introduction of accounting system that was
in practice in Nepal before New Accounting System is presented below :
1. Wasil Banki Sresta Pranali (jfl;n afFsL >]:tf k|0ffnL) : It was a simple statement to
record the revenue and expenditure of government. It was suitable for those
offices which were established to record a small number of transactions and
for a short period of time. It was based on single entry system of book-keeping
where the revenues were recorded on one side of page and expenditures on the
other side. So, it was easy to find out total revenues and expenditures under
it; books were closed at the end of year or after the completion of work. This
system was not able to analyze the transactions under a number of heads.
This system was incomplete and unscientific, so it could not fulfill the need of
increased transactions.
2. Syaha Sresta Pranali (:ofxf >]:tf k|0ffnL): This system was propounded by Khardar
Gunbant in 1936 BS. It was more scientific and systematic than Wasil Banki
Sresta Pranali. This system was in practice in Nepal upto 2022/023 BS. It proves
that Shyaha Sresta pranali had a wide scope. Revenues and expenditures could
be recorded on the same leaf along with their total and balances. Under this
system, the following three types of books were used.
i. The Syaha (:ofxf) : It was an original record of financial transactions like
journal voucher of modern double entry system. It was prepared in a 'T'
shape and divided into two sides, left and right. Left side was to record
revenues and right side was to record expenditures. A leaf was folded


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into 16, 24 or 36 creases as per the requirement of the government offices
to record revenue and expenditure. At the end of the day, both sides of
Syaha were totalled and closed with single line that was called Terij and
again after the Terij is determined, the last figure of transactions upto the
previous date is added together with this sub-total to find out grand total
by underlying it by two parallel lines which is called Berij. So, Terij is
called subtotal of transactions of a day and Berij is the grand total up to
the last date of a period. A Syaha was either closed at the end of month
or at the end of fiscal year. Syaha can be divided into three types: Nagadi
Syaha for cash transactions, Jinsi Syaha for recording properties, Dharauti
Syaha for recording security deposit account.

ii. The Awarje (cfjfh]{): It was similar to the ledger of modern double entry
system. Transactions were recorded in classified manner making different
heads of revenues and expenditures in Awarje. So Awarje was classified
into two types:
a. Revenues Awarje and
b. Expenditures Awarje.

iii. The Dhapot (9kf]6): It was similar to the modern balance sheet. So Dhapot
was final summarised statement of all financial transactions of a project or
a period. It was prepared to present the summary of the government fund
position during a certain period. Dhapot were of three types :
a. Job Ending Dhapot
b. Month Ending Dhapot
c. Year Ending Dhapot

3. Faram Sresta Pranali (kmf/d >]:tf k|0ffnL) : Specially to keep the record of land
and land revenue of the terai region and city area Faram Shesta Pranali was
introduced in 1968 BS. It was named Faram Sresta Pranali because a number of
forms for a number of transactions were used. There were 51 different forms to
record and report the financial transactions. The major forms under the Faram
Sresta Pranali were as under:
• Day book of cashier

• Monthly cash book
• Ten days' report
• Fifteen days' report

• Monthly pay sheet
• Statement of land tax






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4. Bhuktani Sresta Pranali (e'QmfgL >]:tf k|0ffnL) : The budget system was introduced
in 2008 BS and Five Year Plan was started from 2013 BS. These events made
the government more responsible and accountable to the public income and
expenditure. An act "Procedural Rules for Government Fund Expenditure" was
enacted in 2016 BS for the systematic record of revenue and expenditure of
public funds. As a result of that rule, Bhuktani Sresta Pranali was introduced
in 2017 BS. It was more scientific and was based on double entry system of
book-keeping. Under this system the government offices were divided into
central office and operating level office. The striking features of this system
were financial control through audit, concept of decentralization, freezing of all
budget amounts and depositing all freeze amounts into the consolidated funds
of Government of Nepal. This system was a major breakthrough in accounting
history of Nepal.

New Accounting System

Accounting system being used in Nepal i.e. Syaha Sresta Pranali, Form Sresta Pranali
and Bhuktani Sresta Pranali, proved incomplete, unsuitable and lacked uniformity.
Due to these all, need of complete and uniform accounting system was felt. In other
words, existing accounting system could not keep all revenues and expenditures of
the government in a more systematic and scientific way. In this situation, to make
recommendation for a systematic and scientific accounting system, an account
committee was formed on Magh 20, 2017 B.S. The committee was headed by Account
General and other members of the committee were:

- Under Secretary, Foreign Aid Department, Ministry of Finance (MOF)
- Public Administration Advisor of USAID
- Accounting specialist of UNO
After a detailed and long study of 288 days, the committee reported a draft with
suggestion and recommendation for scientific, modern, improved and decentralized
accounting system in Nepal.
The draft was approved by Auditor General on 20 Magh, 2018 BS and by Government
of Nepal on 2 Chaitra 2018 BS. After the approval the government implemented
that system of accounting since the fiscal year 2019/2020 BS, which was called 'New
Accounting System'. This system is still in practice today. It is popularly known as
Government of Nepal's Accounting System. It was implemented in the offices of
Kathmandu Valley since the fiscal year 2019/2020 BS. Further, it was implemented in
Bagmati and Narayani zones in the fiscal year 2020/2021 B.S. Since Shrawan 2025 BS,
it was introduced and implemented throughout the country. This accounting system
brought uniformity in accounting all over the country.










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Features or Characteristics of New Accounting System
The following are the basic features of New Accounting System:

i. Based on double entry system of book keeping : New accounting system is
based on double entry system of book keeping where every financial transaction
has two aspects that is debit and credit. So, it is modern and scientific in nature.
ii. Uniformity and simplicity : New Accounting System brought uniformity in
accounting all over the country. Besides this, it is simple and easy to understand.
iii. Flexibility : New Accounting System is very flexible in nature. As per the
demand of transactions and with the pace of time, it can be adjusted.
iv. Emphasis on banking transactions : It is based on banking transactions. Every
government office should deposit all revenues into bank and payments should
be made through cheque except petty cash expenses.
v. Based on budget head : The New Accounting System has classified budgets
into different headings for making expenditure of public funds. This provides
the clear guideline to keep the expenditure within budget limit.
vi. Compulsory auditing : In New Accounting System, there is a compulsory
system of audit. It helps to prevent the misuse of government revenues and its
properties.
vii. Use of brackets : Another unique feature of new accounting system is use of
brackets. Mainly bracket is used in budget sheet and bank cash book to show
the amount to be credited and to be deducted.

Office of Auditor General
The Office of the Auditor General of Nepal was established on 2016/03/15 B.S. [29
June, 1959 A.D.] after the appointment of Auditor General pursuant to the then
Constitution.
The Office of the Auditor General (OAG) was established with the appointment of the
first Auditor General as per the Constitution of Nepal, 1958. Prior to establishment
of OAG, the institution named Kumari Chowk Adda used to review the government
accounts. It is assumed that Kumari Chowk was established in the year 1769 with the
aim of strengthening administrative system after the unification of Nepal. It is also
anticipated that there was also existence of audit institution prior to unification.

According to the Constitution of Nepal, on the recommendation of the Constitutional
Council, the President appoints the Auditor General. The functions, duties and
powers of the Auditor General are specified in the part -22, of the Constitution of
Nepal - 2072.

Office of Finance Comptroller General

Financial Comptroller General Office (FCGO) is the main government agency
responsible for the treasury operation of Government of Nepal. This office is under

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the Ministry of Finance and is headed by Financial Comptroller General. Office of
Accountant General was established in 2008 BS to keep the record of government
revenue and expenditures. Further it was changed into the Office of Finance
Comptroller General in 2032 B.S. It is involved in giving suggestions, recommendations
and remedial measures regarding the problem of financial administration to the
government. It prepares the central accounts on the basis of financial information
collected from various ministries and constitutional bodies. It performs the function
of internal audit and gives the direction for it. In other words, it prepares financial
statements of all central government offices including constitutional bodies.


Office of Treasury and Comptroller
The office of Treasury and Comptroller is established in all 75 districts from the fiscal
year 2038/39 B.S. for transferring the amount of approved budget from central level
to operating level offices of the government. This is an operating level office under the
Finance Ministry. It is also responsible for internal auditing of annual appropriation
of budget. At the end of fiscal year, it prepares statements of district level office on
the basis of budget and sends to the central office. Office of Treasury and Comptroller
plays very important role to manage the funds in district offices.

EXERCISE



Give very short answer to the following questions:
1. Define government accounting.
2. Name the accounting system used in Nepal before New Accounting System.
3. Who established Sayaha Sresta Pranali in Nepal?
4. When was Budgetary System started in Nepal?
5. When was New Accounting System started in Nepal?
6. In which part of Constitution of Nepal there is provision of Auditor General?

Give short answer to the following questions.

1. State the differences between government and commercial accounting.
2. Explain the accounting system used in Nepal before New Accounting System.
3. Explain the features of New Accounting System.
4. Write short note on :
i. Office of Auditor General
ii. Office of Finance Comptroller General
iii. Office of Treasury and Comptroller







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