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KUSP-New Accounting System
   
 
Double Entry Accrual Based System
In order to bring clarity in the Municipal Financial Management System the old Single Entry System of Accounting, being followed by the urban local bodies has been replaced by Doubled Entry Accrual Based System. Necessary amendment to the West Bengal Municipal (Financial and Accounting) Rules, 1999 has been made in order to provide necessary the chart of accounts, forms and format and manual on transaction entries, and also the guideline for preparation of opening Balance Sheet. This new system has been brought into force for the Municipalities in KMA area from the financial year 2006-2007, and the ULBs in this area have already prepared the opening Balance Sheet under the new system, and for the remaining ULBs the new system has started from the year 2007-08.

Before introduction of the Double Entry Accrual Based System of Accounting the ULBs used to follow single entry cash basis of accounting. The cash basis of accounting records transactions only on receipt and payment of cash (for income and expenditure items) and not when such income and expenses accrue to ULBs. As a result, an analysis of the true and fair view of the activities of the ULBs is not possible as income accrued (but not received) and expenditure incurred (but not paid for), are not reflected in the financial statements of the ULBs.

In terms of the recommendations of the CAG's Task Force on Accounting Reforms for Urban Local Bodies and the National Municipal Accounts Manual released by the Ministry of Urban Development, Government of India, Government of West Bengal has decided to introduce Accrual Based Double Entry System in all ULBs in the State. The Government is also committed to introducing double entry Accrual based accounting system, in view of the Memorandum of Understanding signed with Government of India to access funds under the Urban Reforms Incentive Fund (URIF).

The double entry Accrual System of accounting has replaced of existing system of single entry cash based accounting in ULBs.
New Accounting System
  1. The single entry cash basis of accounting has been replaced by double entry Accrual Based System of accounting.
  2. The new accounting system complies with the following requirements, unless mentioned specifically for a different treatment:
    • Generally Accepted Accounting Principles i.e. Accounting Standards issued by the Institute of Chartered Accountants of India.
    • The West Bengal Municipal Act, 1993.
    • West Bengal Municipal(Finance and Accounting), Rules 1999. [Revised rules have been made effective for KMA ULBs from 2006-07 and for the other ULBs from 2007-08.]
    • National MunicipalAccounts Manual issued by the Ministry of Urban Development, Government of India.
  1. The following important reports will be generated from the double entry Accrual System of accounting.
    • Trial Balance
    • Income Expenditure Statement
    • Balance Sheet
    • Receipts and Payments Account;and
    • Cash Flow Statement
 
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