Annex X

Report
Presentation of
Annexure X
M. K. Chattopadhyay
Controller of Finance
PBSSM
on preparation of Annual Accounts under new
concepts on 16/07/2013
Suggestions to prepare the Final
Accounts by the SIS a registered
society and not the owner of the
Capital Assets created by the SMCs
from the grants given by GoI and
State Government through the SIS
A question was raised by Mr. U. K. Verma,
Consultant TSG, EdCIL that as per standard
accounting principle for preparation of Final
Accounts of a registered society the Assets
created by investing the grants without the
ownership should not be shown in the
Balance sheet and the grant received during
a particular year should be considered as
income of the society to the extent grants
have been utilised during the year.
I do agree with the views of
Mr. U.K. Verma, but the FMP Manual
prescribed the treatment of capital
assets in different way and the capital
assets created by investing the grant
received from GoI and State
Government without ownership has
been shown as fixed assets in the
Balance Sheet
Though as per FMP manual provisions
the Fixed assets created without
ownership is shown in Balance Sheet
but there is no system to provide
depreciation on fixed assets which is
against the principle of normal
mercantile system of accounting.
To overcome the above mentioned
problems I suggest the following
accounting systems should be followed
considering the SIS a registered society
and receiving grants from Govt. and
implementing the Govt. flagship
programme under different activities
given under a certain approved outlay.
Govt. Grants are received by SIS
under two categories :
• Under Capital Heads for creation of fixed
assets, such as School Building, ACR, Toilets,
Boundary, Drinking Water facilities, TLE etc.
• Under General Head for payment of teachers
salary, Free Text Books, Uniform, School Grant,
Office Exp.(including salary of Officers and
Staff ,Purchase of office equipment, Stationery
etc.)Training etc.
Accounting Entries Required are as
follows:
• For recording the Grants received—
Bank Account
Dr
1000
To Capital Grants (GoI)
300
To Capital Grants (State)
200
To General Grants (GoI)
200
To General Grants (State)
150
To 13th F C Grants
150
(As per accounting principle all grants received are
treated as liabilities and subjected to submission
of U C)
• When SIS releases fund to user agencies for
certain activities following entries are required:
Advances against
Capital Activities Account Dr 500
Advances against
General Activities Account Dr 300
To Bank
800
• After collection of UCs following entry is required :
Capital Assets Expenses
Account
Dr 400
General Activities
Expenses Account
Dr 290
To Advances against
Capital Activities Account
To Advances against
General Activities Account
400
290
( limited to the amount for which Ucs have been received)
• For recording the expenses under project
management cost for acquiring fixed assets
for the SIS :
Office Equipment
Account
Dr 50
To Bank
50
(this amount will not be transferred to
Income & Expenditure Account but to be
shown in B/S in Assets side)
• For recording other expenses under project
management cost :
Project Mgmt. Cost A/c
To Bank
Dr
50
50
• For Transferring the expenses on account of
capital assets, general activities, and project
management expenses to Income and
Expenditure A/c other than the expenses to
be utilised against 13th F C grants :
Income & Expenditure A/c Dr 590
To Capital Assets Expenses
Account
400
To General Activities
Expenses Account
140
To Project Mgmt. Exp. A/c
50
• For recording the interest income :
Bank A/c
Dr. 50
To Interest Received
50
• For transferring the interest income to
Income & Expenditure A/c :
Interest Received A/c Dr
50
To Income & Expenditure A/c
50
• For booking the expenses under 13th F C
grants :
13th F C Grants A/c Dr 150
To General Activities
A/c(say teachers salary)
150
• For transferring the amount of grants received
except 13th F C grants less interest income to the
extent it is required to match the expenses
booked against particular activities on collection
of U Cs :
Capital Grants (GoI)
Dr
250
Capital Grants (State) Dr
150
General Grants (GoI)
Dr
100
General Grants (State) Dr
40
To Income & Expenditure A/c
540
• For the fixed assets acquired such as office
equipment for the SIS , the ownership of
which vests upon the SIS, equivalent amount
be transferred from General Grants to
General Reserve Fund Account by passing the
following entry :
General Grants (State) Dr
50
To General Reserve Fund A/c
50
• While preparing consolidated Annual
Financial Statement the expenses on
account of fixed assets expenses as
the owner and advances given
during the year but
remain
unutilized at year end for both
Capital and Non Capital Activities
should be included to match the
utilization of fund received.
Income & Expenditure Account
Expenditure
Amt.(Rs.)
Income
Amt.(Rs.)
To Capital Assets Exp
400
By Interest Income
To General Activities Exp
140
By Grants Received :
50
Capital Grants GoI
250
Capital Grants State
150
General Grants GoI
100
To Project Mgmt. Exp
General Grants State
Total
590
Total
50
40
590
BALANCE SHEET
LIABILITIES
Amt.(Rs.)
ASSETS
Amt.(Rs.)
Gerenal Reserve Fund
50 Equipment
Capital Grants Goi
Advances for Capital
50 Assets activities
100
Capital Grants State
Advances for general
50 Activities
10
General Grants GoI
General Grants State
Total
100 Bank Balance
50
150
60
310 Total
310
• As the Income & Expenditure account is
prepared on the principle that so much of the
grant will be treated as income which is
required to match the amount
of the
expenses less other income for which UCs
have been received and the balance of grants
will remain as liabilities subject to utilisation in
next year. So this amount will be shown in B/S
under Liabilities side.
• A separate schedule be prepared for Capital
Assets created without the ownership which is
not a part of B/S but will exhibit the Grants
invested for creation of assets for Schools and
this schedule should be updated every year by
showing the investment upto last year as
opening balance of investment, add
investment during the year , Total cumulative
investment at year end. This will be only for
the investment against which UCs have been
collected.
• Advances remain unadjusted for both
Capital Assets and Non-capital Assets will
be shown in the balance sheet and a
separate schedule will be prepared.
• In subsequent year if UCs collected against
outstanding advances of previous years following
entries are required:
For Advance of Capital Assets—
Capital Grants (GoI & State) Dr 100
To Advance for Capital
Asset Activities
100
For Advance of General Activities—
General Grants (GoI & State) Dr 10
To Advance for General
Activities
10
( These adjustment will not be reflected in Income &
Expenditure A/c of the current year)
If any amount is received back from the user agency
against fund given earlier years and which was booked
as expenditure, the following treatment shall be given
in the A/Cs
1) Bank A/C Dr.
500
To Refund against
previous year expenditure A/C
500
2) Refund against previous
year expenditure A/C
Dr.
500
To General Reserve/Capital Reserve 500

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