By IANS,
New Delhi: Finance ministers from states and union territories and secretaries of various departments of federal and state governments are scheduled to meet here Tuesday to discuss reforms in accounting.
Union Finance Minister Pranab Mukherjee will inaugurate the day-long meet, a statement said Monday.
As part of comprehensive reforms in financial reporting and accounting system, the government plans to encourage accrual system of accounting from the present cash-based system.
Under the accrual system, transactions are recorded at the time when economic value is created, exchanged, transferred or impaired, irrespective of whether cash is actually exchanged or not.
The present cash-based accounting system lacks an adequate framework for accounting of assets and liabilities, depicting consumption of resources and presenting the full picture of the government’s financial position at any point of time.
In this system, there is no effective way of tracking assets created out of public money which, in turn, dilutes accountability of departments for management of government assets, the statement said.
“Reforms in the financial system are an integral part of overall reforms. A move from cash to accrual accounting will be a fundamental change which will help overcome the deficiencies of the present cash system,” the finance ministry said in the statement.
The event is being organised by the Government Accounting Standards Advisory Board, under the Comptroller and Auditor General of India.