Govt has drawn roadmap for shifting to Accrual Accounting: FM

New Delhi, May 9 (UNI) Finance Minister P Chidambaram today said the government has drawn up a roadmap for moving over from a cash-based accounting system to one which is accrual-based in the Union government and enumerated the advantages of doing so.

''While the Accural-based Accounting System has been adopted by most companies, governments have been slow in doing so. It is time to move over to this new system,'' Mr Chidambaram said while inaugrating a seminar on the subject organsied by the Rajya Sabha Secretariat.

The event was entitled: 'Initiatives and Status of Government Accounting Reforms in India and Migration to Accrual Accounting.' Others who spoke in the inaugural session included Lok Sabha Speaker Somnath Chatterjee and Comptroller and Auditor General of India V N Kaul, Rajya Sabha Deputy Chairman K Rahman Khan Cash based accounting system is followed in India for budgeting, accounting, and financial reporting.

Mr Chidambaram said this system was not the most informative way of presenting government accounts. It was limited in scope because it lacked an adequate framework for accounting for assets and liabilities depiciting consumption of resources and full picture of governments financial position at any point of time. The Finance Minister said on the other hand the Accural-based accounting was event-based and offered greater scope for expenditure management.

Mr Chidambaram listed the countries which have switched over to Accrual-based accounting, including the United Kingdom and Canada.

He said for prundent fiscal management it was not only necessary to shore up revenues, but equally important to have better control over public expenditure, for in a situation of shortage of resources, quality expenditure was the need of the hour.

Mr Chatterjee said the government at all levels has to be responsible for the management of public resources under their control and for providing social services. For the resources under control, the liabilities they incur, the cost of services they provide and for the cost of recoveries they make, the executive or the administration was accountable to the legislature."The accountability is what differentiates democracy from other systems of government", he said.

Mr Khan said accounting and budgeting reforms need to be conceived in an integral manner and positioned clearly as part of a wider public sector management reforms programme.

UNI