Concept, Features, Objectives and Origin of Government Accounting

Concept of Government Accounting

Government accounting refers to the accounting system implemented and followed by the government offices to record the financial transactions of the government. It includes the records of government revenue, expenditure, penalties, subsidies, grants, loans, etc. Government accounting refers to the process of recording, classifying, summarizing and interpreting the financial transactions of the government.

"Government accounting is the process of recording,analyzing, classifying, summarizing, communicating and interpreting financial information about government in aggregate and in detail, reflecting all transactions involving the receipts, transfer and disposition of government funds and property."-Oshisami and Dean

In conclusion, government accounting is the act of recording, classifying, analyzing, summarizing, interpreting and communicating the records of government financial information like government revenues and expenditure in different administrative and development works.

Features of Government Accounting

The main feature of government accounting are as follows:

1. Based on the double-entry system:Government accounting is the most scientific and systematic system of book-keeping. It is based on the double-entry system. So, every transaction of government accounting is recorded showing their double effect.
   
   
2. Government Regulation:The government accounting is maintained according to the government rules and regulations.
   
   
3. Profit and loss:The main objective of the government is to maintain law and rules in the country. So, it does not reveal profit and loss but it reveals how public funds have been used.
   
   
4. Banking transactions:All the funds and transaction of the government are operated from the bank. A separate bank account is opened for the banking transactions of the government accounting.
   
   
5. Budget heads:All the expenses of the government offices are recorded into different budget heads. This helps to control the expenditure.
   
   
6. Budgetary control: Government accounting facilitates budgetary control. No government can make expenditure more than the allocated budget amount.
   
   
7. Auditing: The government must audit the books of account maintained by the government to avoid misuse and misappropriation of government revenues and expenditure.
   
   

Objective of Government Accounting

• To record government revenues and expenses.
• To get control over the expenditure within the ceiling of the budget.
• To provide information about allocated expenses and their utilization.
• To provide financial information and data for budget preparation.
• To safeguard the government property.
• To make auditing simple and economical.

Origin and Growth of Government Accounting in Nepal

Government Accounting of Nepal was first introduced in the Lichhavi period. It is said a small number of financial transactions used to be performed in Lichhavi and Malla period. In Lichhavi period, Voluntary Labour Tax, Jinsi Kar (Property tax) and Trusts (Guthis) were the sources of government revenue but it was not collected. In 1871 B.S., in the Shah period, the financial transactions increased voluminously which made it necessary for the origin of a systematic accounting. Laldhadda, a book was created for recording administrative revenue and expenditures. In 1879, another book called 'Mothdhadda' was created for recording details about the land and land revenues.

In 2007 B.S., the autocratic Rana Regime was overthrown and democracy was established in Nepal. From 2008 B.S., and onwards the budgetary system was introduced and in 2016 B.S., Ashad 16, an office of Auditor General was established. In 2017 B.S., Baishakh 1, Bhuktani Sreshta Pranali was brought into use. On Magh 20, 2017 B.S., an accounts committee was formed to study and make suggestions for an appropriate and scientific accounting system. After conducting a detailed study, this committee submitted a draft report to the government which was approved from the office of the auditor general as a book-keeping and accounting system for this country. On Chaitra 2, 2018 B.S., this accounting system obtained its final approval. Since that period, this accounting system has been accepted and recognized as Government's New Accounting System.

It is based on the principles of double entry system of book-keeping. It has been followed since the fiscal year 2019/20 in Nepal.

References:

Sharma, Narendra et.al., Principles of Accounting-XI, Bundipuran Prakashan, Kathmandu

Koirala, Yadav Raj et.al., Principles of Accounting-XI, Asmita Books Publication, Kathmandu

Shrestha, Dasharaha et.al., Accountancy-XI, M.K. Prakashan Kathmandu