National Panchayat
Accounting Manual
An Introduction
A thought…
“The accounts of the government ought to be made as
simple as those of the common farmer and capable of
being understood by common farmers.”
- Thomas Jefferson
Accounting Structure
 Uses simple Three Tier Coding System i.e.
 Major Head – 4 digits- Represents Functions
 Minor Head - 3 digits- Represents Programme/Unit
 Object Head- 2 digits- Represents Object item
• Separate 2 digits sub heads have been prescribed for
Central Schemes.
Accounting Structure
S.N Function
o.
.
1.
Minor
Irrigation
Major Head
Receipt
Revenue Capita
Exp
l Exp
0702
2702
4702
Minor
Head
Description
101
Distt.
Panchayat
Programm.
2.Example to book expenditure central Scheme NRHM
Major Head 2210 –Health
Minor Head 101 – Public Health Centre
Sub Head – 15 – NRHM Scheme Head
Object Head – 02- Wages
Accounting Head 2210101-15-02
Basis of Accounting and Accounting
Systems
Double Entry
Single Entry
Accrual Basis
Cash Basis
Proposed Accounting System
 The Model Accounting System prescribes ‘Cash Based
Accounting’.
 During the various discussions held with stakeholders,
there is a general consensus that the accounts should
be prepared under Double Entry Accounting system on
Cash Basis.
 Therefore it has been decided that accounts of PRIs
will be maintained on ‘Cash Basis’ under ‘Double Entry
System.’
Introduction to DEAS
 Double entry accounting system recognizes that every
transaction has a dual affect. There are two sides of
every transaction. If one account is debited, any other
account must be credited. Every transaction affects at
least two accounts in opposite directions. It may,
however be noted, that the double entry does not mean
that a transaction is recorded twice, but it means that at
least two accounts are affected.
Introduction to DEAS
 If PRI purchases a water pipe then its: Bank Account gets reduced.
and
 Assets / stores have been increased
Golden Rules of Debit/Credit
S.No.
Categories of
Example
Rules of debit and credit
Accounts
Debit
I
Personal
Credit
Persons
and Receiver of
institutions
benefit
Giver of
benefit
Goods, assets What comes
including cash
in
Items relating Expenses /
to services i.e
salary, wages, Losses
rent trade tax
etc.
What goes
account
II
III
Real account
Nominal
account
out
Income /
Gains
Accounting Records & Formats for
DEAS
 The Model Accounting System prescribes 8 formats for
maintaining and reporting accounts of the PRIs.
 Additional books and formats for recording and
maintaining basic accounting entries recommended.
 Under the Double Entry Cash-based accounting PRI
shall be required to maintain some Primary/Original
Books of Accounts
Formats under Model Accounting
System
 Receipt & Payment Account
 Consolidated Abstract Register
 Reconciliation Register
 Statement of Receivable and Payables
 Register of Immovable Property
 Register of Movable property
 Inventory Register
 Register of Demand, Collection of Balance.
Additional Basic Accounting Books &
Formats
Cash Book
PRI 1
Journal Book
PRI 2
Ledgers
PRI 3
Receipt Voucher
PRI 4
Payment Voucher
PRI 5
Contra Voucher
PRI 6
Journal Voucher
PRI 7
DOUBLE ENTRY CASH BASED ACCOUNTING
Receipt
Payment
Deposit /
Withdrawal
Receipt
Voucher
Payment
Voucher
Contra
Voucher
Adjustments
JOURNAL VOUCHER
CASH BOOK
JOURNAL
GENERAL LEDGER
TRIAL BALANCE
RECEIPTS & PAYMENT
ACCOUNT
INCOME & EXPEND.
ACCOUNT
BALANCE SHEET
Implementation Through ‘Priasoft’
 The End User will only enter any of the following
vouchers:
 Receipt Voucher ( For any money received by PRI
 Payment Voucher (For any money paid by PRI)
 Journal Voucher (For making adjustment)
 Contra Voucher( For withdrawing/depositing cash in
Bank)
Receipt Vouchers
 Receipt Vouchers will be passed for following transactions:
 Any money received on account of income from own sources
 Funds received as Grants from Central/State/other sources
directly or through Transfers from other PRIs
 Funds received as Advance/Earnest Money/Deposit
 Funds received on account of recovery of advance given.
 Cancellation of Stale Cheques( not enchased)
 Recovery of overpayment if any.
Payment Vouchers
 Payment Vouchers will be passed for following transactions
 Payments made for Revenue like Salary, Telephone Bills,






Electricity Bills etc.
Payments made for Capital Expenditure like Construction
of Buildings & Infrastructure, Purchase of Vehicles &
Machinery etc.
Transfer of Funds to other PRIs.
Advances given to Employees/contractors/other PRIs
Repayment of Advances/Loans and Interest
Refund of revenue.
Correction in wrong booking of Receipt if separate bank
accounts are in operation..
Journal Voucher
 Journal Voucher are adjustment vouchers and will be
passed for non cash transactions like:
 Correction in source of receipt when the
accounts of both the sources are in same Bank
 Correction in Payment transactions when
accounts of both the Payers are in same Bank.
 Deductions from Payments to be paid to
respective authorities later on.
Contra Vouchers
 Contra Vouchers will be entered for followinng
transactions:
 Withdrawing cash from the Bank for making
payments in cash.
 Depositing funds in the Bank received in Cash
on accounting of revenue income or EM etc.
 It may be noted that Contra Voucher shall not
be used for transferring funds from one Bank
account to another Bank Accounts related to
separate schemes.
Vouchers to be Passed for different
Transactions
Nature of Payment
Cash withdrawn from bank
Property tax received
Recovery of Advance (Cash/Cheque)
Stale Cheques (issued but not encashed)
Grants received form Central/State/Others
Salary paid to Gopal
Advance given to contractor/employee
Transfer of Funds to other PRI
Correction in Source of Grant (Same Bank A/c)
Correction in Source of Grant (Separate Bank A/cs)
Cash deposited in bank
Voucher to be Passed
Vouchers to be Passed for different
Transactions
Nature of Payment
Voucher to be Passed
Cash withdrawn from bank
Contra
Property tax received
Receipt
Recovery of Advance (Cash/Cheque)
Receipt
Stale Cheques (issued but not encashed)
Receipt
Grants received form Central/State/Others
Receipt
Salary paid to Gopal
Payment
Advance given to contractor/employee
Payment
Transfer of Funds to other PRI
Payment
Correction in Source of Grant (Same Bank A/c)
Journal
Correction in Source of Grant (Separate Bank A/cs)
Payment /Wrong Source
Receipt correct/Source
Cash deposited in bank
Contra
Reconciliation Procedure
a.
b.
c.
d.
e.
f.
g.
h.
Bank Reconciliation
Reconciliation of Deposits
Reconciliation of receivables & collections
Reconciliation of Advances
Reconciliation of Loans
Reconciliation of Payables (contractor’s)
Reconciliation of balances with Government and other agencies.
Reconciliation of Ledgers with Subsidiary Ledgers
Bank Reconciliation
 Need of Bank Reconciliation Statement
 Pin pointing mistakes in the Bank Book maintained by the
PRI and Pass Book of the concerned Bank.
 Identifying delay in the clearance of cheques / remittances
 Checking on embezzlement
 Checking the accuracy of Bank Book.
 Accounting for Bank charges levied by the Bank and Credit
of interest given by Bank.
Bank Reconciliation
 Causes Responsible for the Difference Between the Balances of
Bank Book and Pass book.





Cheques issued by PRIs but not yet presented for payment.
Cheques deposited into the bank but not yet collected by the bank.
Cheques directly deposited by the customers in PRIs account in the bank.
Interest credited by the bank but not recorded in the Bank Book.
Interest, bank charges charged by the bank but not recorded in the Bank
Book.
 Dishonored cheques not recorded in the Bank Book.
 Cheques received and entered in the Bank Book but omitted to be
banked.
Bank Reconciliation
 Steps for Preparation of Bank Reconciliation Statement.
 PRIs may prepare the Bank Reconciliation Statement on monthly basis
and should be completed by end of the first week of the next month. Bank
reconciliation statement includes the following steps.
 Firstly tick-out the transactions appearing in both Bank Book and Pass
Book / Bank Statement of the relevant month.
 Secondly list out the transactions of Bank Book and Pass Book which are
not ticked-out. Separate list of each of the following is to be prepared.




Un-ticked items of receipt side of the Bank Book.
Un-ticked items of payment side of the Bank Book.
Un-ticked items of deposit column of Pass Book / Bank statement.
Un-ticked items of withdrawal column of Pass Book / Bank statement.
 Bank Reconciliation statement shall be prepared separately for each Bank

Bank Reconciliation
S.No.
Items
Amount (Rs.)
Plus (+)
Minus (-)
1.
Balance as per Bank Book
√
2.
Cheque issued by ULB but not presented for
payment
Cheque deposited into bank but not yet
collected
Cheque directly deposited by the customers in
ULBs bank account.
Interest credited by the bank but not recorded in
bank book
Interest / Bank charges / Collection charges
debited by the bank but not recorded in the
Bank Book
Dishonored cheques not recorded in the Bank
Book
Cheques received and entered in Bank Book
but omitted to be banked
Total
√
√
√
Balance as per bank statement / Pass Book
(Difference of plus and minus)
Grand Total
√
√
3.
4.
5.
6.
7.
8.
√
√
√
√
√
√
Reconciliation of Deposits
 For reconciliation of Deposits, PRIs will prepare
following Statement :
Sr. No.
Particulars
1.
Balance of deposits in the
beginning of accounting
period.
Add – Deposits received
during the year.
Less – Refund of deposits
during the year.
Less – Deposits adjusted
during the year.
Balance of deposit at the
end of accounting period.
2.
3.
4.
5.
Amount (Rs.)
Reconciliation of Receivables
and Collections
 Receivables and collections shall be reconciled on
yearly basis or other shorter time intervals as PRI may
decide.
 Receivable on account of taxes, fees and rent should
be derived from the respective DCB register.
 The Reconciliation Statement shall be reconciled with
the respective ledger accounts maintained by the PRI.
The reasons for differences, if any, shall be identified
and rectification entries passed in the department
which has recorded the entry incorrectly
Reconciliation of Advances

Reconciliation of advance given to Contractors/Suppliers
 The PRI shall maintain a record of the advances given to each of
the contractors/suppliers.
 The PRI who has given advance to the contractor/supplier shall
prepare a Reconciliation Statement of Advance Outstanding in the
format provided in Table below for all the contractors/suppliers. In
case there is a discrepancy between the records this statement
may have to be prepared for each contractor/supplier.
 Following Table can be used for Reconciliation of Advances given:
Reconciliation of Advances
Particulars
Amount (Rs.)
Advance outstanding at the beginning of the
accounting year
Add: Further advance given during the current
accounting year (specify all the Payment Orders
through which advance have been provided)
Total Advance Provided
Less: Advance recovered during the current
accounting year
(specify all the Statement of
Collection through which advance had been
recovered)
Less : Advance Adjusted (Give details)
Advance outstanding
accounting period
at
the
end
of
the
Reconciliation of Advances
For reconciliation of advances given to employees, following Table can be used:
Particulars
Advance outstanding at the beginning of the
accounting year
Add: Further advance given during the current
accounting year
(specify all the Payment
Orders through which advance have been
provided/replenished)
Total Advance Provided
Less: Advance recovered including recovery
from the salary during the current accounting
year
Advance outstanding at the end of the
accounting period
Amount (Rs.)
Reconciliation of Loans
 The PRI shall maintain a record of all the loans
borrowed in Register of Loan (Form PRI- 29). At the
end of each accounting year, the PRI shall prepare and
forward to the lender, a Confirmation Statement for loan
borrowed in the format provided in Table below stating
therein, the amount borrowed or disbursed directly to
Executing Agency, the amount repaid and interest
accrued and paid on the loan
Reconciliation of Loan
Particulars
Loan outstanding at the beginning of the accounting
year
Add: Instalments received during the accounting year
Sub-total loan outstanding
Less: Instalments paid during the accounting year
Net Loan outstanding at the end of the accounting
year (A)
Total Interest Payable at the beginning of the
accounting year
Add: Interest accrued during the accounting year
Total Interest Payable
Less: Interest paid during the accounting year
Total Interest Payable at the end of the accounting
year (B)
Total amount due (principal plus interest) at the end
of the accounting year (A+B)
Amount
(Rs.)
Amount
(Rs.)
Reconciliation of Payables
Sr.
No.
Particulars
A
OPENING BALANCE OF UNPAID BILLS
i.
Bill outstanding in respect of the previous accounting year
ii.
Bill outstanding in respect of years prior to previous
accounting year (This detail should be given year-wise,
wherever applicable)
B
Add: Bills received during the current period
C
GROSS TOTAL LIABILITY OUTSTANDING (A + B)
D
PAYMENTS DURING THE CURRENT PERIOD
i.
Payment of bills pertaining to the current accounting year
ii.
Payment of bills pertaining to previous year accounting year
during the current period
iii.
Payment of bills pertaining to prior to the previous accounting
years
during the current period (This detail should be given
year-wise, wherever applicable)
E
Total payments during the current period (i + ii + iii)
F
CLOSING BALANCE OF UNPAID BILLS
i.
Bill outstanding in respect of the current accounting year [B –
D(i)]
ii.
Bill outstanding in respect of the previous accounting year
[A(i) – D(ii)]
iii.
Bill outstanding in respect of years prior to the previous
accounting year (This detail should be given year-wise,
wherever applicable) [A(ii) – D(iii)]
Amount (Rs.)
Amount (Rs.)
Reconciliation of Balances with the
Government and Other Agencies
 Since PRIs are implementing various Central /State government schemes
it becomes imperative to reconcile the balances between the books of
account of the PRI and the government/agencies.
 At the end of each accounting year, the PRI shall prepare and forward to
the concerned authority/agency within 15 days from the end of the
accounting year, a Confirmation Statement stating therein
 the amount receivable from the authority/agency.
 the amount payable to the authority/agency .
 depending on whether sum is receivable from or payable to the
authority/agency.
Next Step
 A user friendly Training Manual is being prepared for
implementation of National Panchayat Accounting
Manual through Priasoft.
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