Kochi, Aug 25: Comptroller and Auditor General (CAG) of India Vinod Rai today said 'accrual system of accounting' would be introduced in budget formulation in place of present cash accounting system to usher in more transparency.
Delivering a talk on 'Strengthening Financial Management Systems,' organised by the Infrastructures Kerala Ltd (INKEL) here, Mr Rai said a road map had been prepared for the switchover and the transition would take three to five years to complete.
He said the present problem of 'asset-liability mismatch' could be done away with the introduction of the new system and the governments would be more accountable in the process of budget allocation and formulation.
''The transition process would be started in one year's time and the Government Accounting Advisory Board will advise on the switchover,'' he said.
Everyone concerned was enthused about the introduction of the system and about 20 states had come forward to take the cue, Mr Rai noted.
On the strengthening of the local bodies, Mr Rai said capacity building in terms of training the officials of the local bodies was necessary to ensure that proper development was taking place with the utmost utilisation of resources allocated to the panchayats.
The CAG's Technical and Guidance Support Scheme was helping in horning the skills of local body officials, he added.
''Capacity building is very important as panchayat presidents or other officials, who were dealing with money to the tune of Rs one lakh or so, suddenly have about Rs three crore for the development, and they should know how to manage it and channelise the money on the right path of development,'' he noted.
In the case of local bodies, 'tracking the rupee' was also important as the tax paying public had the right to ask whether their money had been utilised at the optimal level.
''The government and its officials are accountable to the public and should know whether money allocated for a particular purpose has been utilised in the right manner,'' he said.
Stating that the infrastructure in the country should be improved as an 'economy grew on the backbone of physical infrastructure, he said ''we are lacking roads, ports, airports and power and this was impediment in the growth of the economy,'' he cautioned.