FEDERAL AND
PROVINCIAL ACCOUNTING SYSTEMS:
4.1 The Federal Government and the
Provincial Governments have separate Public Accounts of their own into which
moneys received on account of the revenue of the Federal Government or of the
Provinces, are paid or credited and from which all disbursements of or on
behalf of the Federal Government or of the Provinces are met. The procedure to
be followed for the payments into, and the withdrawal, transfer, disbursement
of money from the Public Account and for the custody of money standing in that
account is regulated by the rules contained in the General Financial Rules,
Treasury Rules and Audit Code and Accounts Code, etc.
4.2 The Federal Government and each
Provincial Government have made separate agreements with the State Bank of Pakistan
by virtue of which the general banking business by these Governments is carried
on and transacted by the State Bank. The Federal Government operates on every
office and branch of the State Bank of Pakistan
and on every branch of the National Bank of Pakistan
acting as agent of the State Bank of Pakistan. The operations of the
Provinces are, however, confined to the offices and branches of the two banks
which fall within the area of the respective Provinces. Where there is no
branch of the Bank, the cash business is conducted by the Treasury.
4.3 Each branch of the Bank keeps two
separate accounts of the transactions undertaken by it on behalf of the
Government one for the transactions of the Federal Government and the other for
the transactions of the Provincial Government within whose area it is situated.
Separate statements of transactions in the Federal and Provincial Governments
Accounts together with all the supporting vouchers, etc. are transmitted by each
office and branch of the bank daily to the Treasury Officer or to the
Accountant General, as the case may be. At the close of each month the balances
of the two accounts are transferred to the Central Accounts section of the
State Bank of Pakistan, Karachi. The Central
Accounts Section of the State Bank of Pakistan, Karachi, acts as a general
clearing house for; he adjustment of transactions between the different
Governments.
4.4 At the beginning of each month,
each Accountant General receives from the Treasuries under his jurisdiction
monthly accounts supported by schedules, vouchers, etc. in respect of the
transactions which took place in the Treasury during the previous month. From
the accounts furnished by the Treasury and other Civil Departmental officers
accounts are compiled by Civil Accounts Offices showing the monthly receipts
and the payments pertaining to each Department for the whole accounts circle
classified under the Functions cum- Objects. Separate accounts are maintained
for each Department, each group of small Departments or each major function.
The transactions relating to Debt and Remittances appearing in the Treasury
cash accounts are collected for the whole circle of accounts under each Code
head from month to month. The final stage of compilation is the preparation of
the accounts by major functions totals showing the receipts and disbursements
under relevant code during and to the end of the month. From these consolidated
accounts are compiled the monthly and the annual accounts of the Federal and
Provincial Governments.
4.5 The transactions in Government
accounts represent the actual cash receipts and disbursements during the
financial years as distinguished from amounts due to or by Government during
the same period. The book adjustment may also be authorized by any general or
special orders issued by the Government.
4.6 The accounts are maintained in Pakistan
currency. The transactions occurring in the U. K. are, however, in terms of Sterling in certain cases.
Accounts in the Pakistan Foreign Missions are maintained in two currencies the
local currency as well as Pakistan
currency. All accounts are, however, rendered in terms of the Pakistan
Currency.
4.7 The following are the four
divisions of the Government Accounts:
1.
Revenue.
2. Capital
3. Debt.
4.
Remittance.
4.8 The Revenue deals with the
proceeds of taxation and other receipts classed as revenue and the expenditure
therefrom. The Capital deals with expenditure met usually from borrowed funds,
the expenditure being incurred with the object of either increasing concrete
assets of material character or of reducing recurring liabilities. It also
includes final receipts of a capital nature intended to be applied as a set off
to the capital expenditure. The debt comprises receipts and payments, in
respect of which Government becomes liable to repay the money received or has a
claim to recover the amounts paid together with the repayments of the former
and the recoveries of the latter. The Remittance embraces merely the adjusting
heads under which the remittances between treasuries and items in transit
between the different accounts officers appear. The initial debits or credits under
the remittance heads are cleared eventually by corresponding receipts or
payments either within the same circle of account or in another accounts
circle.
CHART OF CLASSIFICATION OF THE FEDERAL AND PROVINCIAL GOVERNMENTS RECEIPTS &
DISBURSEMENTS:
4.9 The Auditor-General of Pakistan
has issued a new chart of classification with the approval of the President,
under Article 170 of the Constitution of the Islamic Republic of Pakistan, 1973
in superession of the existing "List of Major & Minor Heads of
Accounts". The need for issuing the new chart was that since Independence, Governments
have undertaken much wider responsibilities effecting the economic growth of
the country and the welfare of the people. With these added responsibilities,
the need to improve the knowledge about the economic and social effects of
their actions for taking well-informed and well conceived policy has increased.Hence
the chart of classification, which in addition to classifying receipts and
expenditure on a functional basis for purposes of accountability, reflects a
plan of grouping transactions according to their economic character in a
readily comprehensible form. This plan facilitates the determination of
aggregates of national income and expenditure apart from bringing out the
inter-relationship between major sections of the economy. The chart also seeks
to provide a scientific information base for national policy decisions with a
view to facilitating judicious allocation of available resources amongst
competing demands and their economic use. The new classification is readily
adaptable to data processing methods and will facilitate processing of accounts
on the Computer.
4.10
The Chart is divided into two parts namely the Consolidated Fund and the Public
Account. All revenues received by a Government, all moneys received by it in
repayment of any loans and the Public Debt raised by it are credited to the
Consolidated Fund. The expenditure on revenue or capital account or on
servicing the Public Debt is debited to it. The Public account comprises all
other moneys received by or on behalf of the Government or those deposited with
the courts of law and the remittances, suspense accounts etc.
4.11 In Part I, i. e., Consolidated
Fund, the receipts are to be classified by assigning a Major Head, a Minor Head
and a Detailed Receipts Head. The expenditure is classified in two parts,
'namely, 'Functional Classification' and 'Object Classification'. The functions
are divided into Major, Minor and Detailed Functions and an item of expenditure
will be assigned a Major, a Minor and a Detailed Function. The objects are
divided into Major, Minor and Detailed Function. The objects are divided into
Major, Minor and Detailed Objects and an item of expenditure, in addition to functions,
will bear a Major, a Minor and a Detailed Object. Thus the expenditure is to be
so classified that it will at once show both the government functional
responsibility for which it is set apart and the object or purpose which it tends
to serve. In part II, i. e. Public Account the transactions are divided into
Major, Minor and Detailed Heads of Accounts.
4.12 The Function-cum-Object
Classification has been introduced by the Federal Government with effect from the 1st July, 1979 and by
the Provincial Government from the
1st July, 1980.
4.13 The proper classification of
accounts under the appropriate heads is very important. As a general
rule classification of transactions should have closer reference to
Department in which the revenue or expenditure occurs, then to the object of
the revenue expenditure or grant on which it is sanctioned, e. g., expenditure
in the Public Works Department on buildings which are under the administrative
control but are in the use of other Department, is debitable to the Public
Works Accounts rather than the Department benefited by the expenditure.
4.14 As for the classification of pay and
allowances, the whole pay and allowances of a Government Servant holding a post
should be taken against theDepartment and the post in which he is actually
serving.When a Government servant whose main duties and post fall under one
head of charge is entrusted with additional duties coming under another head, no
portion of pay and allowances should be debited to the latter head, unless
there are specific orders of the Government to the contrary. The transit pay
and allowances of a Government servant should, in the absence of pay special
orders to the contrary, debited to the office to which he is proceeding. The
traveling advance of a Government servant is charged to the same head of
account as his pay. In the following cases, however, the traveling allowance
may be debited to a different head: -
(i) In case a Government servant is required
to travel on duty connected with outside body or fund;
(ii) When Government consider it necessary to
show separately the cost of special services; and
(iii) In
cases covered by general or special orders of the Government authorizing
deviation from the general rule.
4.15 The advance of pay and Travelling
Allowance on transfer paid to a Government servant is debited under the Major
Head "4000 Advances not bearing interest".The advance for house
building and for purpose of conveyances is charged to Major Objects "800---Loans
and Repayments bearing interest". The accounts of G.P. Fund are kept under
the head "1000---Unfunded Debt".
4.16 For the purposes of
inter-departmental payments, the Departments of a Government are divided into
Service Departments and Commercial Departments according to the following principles:—
(a) Service Departments: — These
are constituted for discharge of those functions which—
(i) either are inseparable from and form part of
the idea of Government, or
(ii) are necessary to and
form part of the general conduct of the business of the Government.
Given below
are few illustrations of the Service Departments:—
Departments of Administration of Justice, Jails, Police, Education,
Medical, Public Health, Forest and Defence etc
(b) Commercial departments or
undertakings.—These are maintained mainly for the purpose of rendering
services or providing supplies on payment for the services rendered or for the
articles supplied. These departments perform functions which are not
necessarily Government functions. They are required to work to a financial
result determined through accounts maintained on commercial basis. The examples
of the Commercial Departments can be Railways, Posts, Telegraph and Telephone
Department.
4.17 A Service Department
should not make charge against another Department for services or supplies
which fall within the class of duties for which the former Department is
constituted. On the other hand, the Commercial Departments ordinarily charge and
be charged for any supplies and services to or by other Departments of
Government.
4.18 The payments of amounts due by one
Department of Government to another are ordinarily made by book transfer except
where such transfers do not suit the methods of accounts or of business adopted
by the receiving departments.
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