The new government accounting system is based on double entry system as it records every financial transaction of the government giving double effect in the books of accounts. It has classified the government offices into the central level and operating level. All the revenues and expenditures are made through the bank. This system keeps the records of financial transactions of government offices according to budget heads. New accounting system maintains uniformity in recording and preparing the financial statements of financial transactions in all the government offices.
Features / Characteristics of New Accounting System
Based on Double Entry System:The new accounting system is based on the principle of the double-entry system. Every financial transaction is recorded in the separate books of account giving double effect. This system of recording helps in easy detection of errors and frauds.
Emphasis on banking transactions: In this accounting system, there is an obligatory provision to deposit all the cash receipts into the bank and to issue cheques for the settlement of various expenditure. Due to this, an effective control can be maintained over the expenditures.
Uniformity and Simplicity:There is uniformity in this accounting system because the accounting forms, ledgers and reporting formats used in government accounting are uniform. The new accounting system is very simple and uniform that's why a person having a general knowledge of accounting principle is able to operate this system easily and independently.
Provision of the central and operating level accounting: The government offices are classified into the central level and operating level. Ministries, departments, constitutional bodies, etc. are the examples of the central level office and regional offices, district level offices and the offices of projects are the examples of operating level office.
Secrecy: The secrecy can be maintained in this accounting system because only the authorized persons are entrusted with the responsibility of maintaining accounting records. Due to this, there is no chance of disclosed of official secrecy for the outsider.
Flexibility: The new accounting system can be changed or improved according to the needs and requirements because the accounting system must be able to meet the modern requirement to make it more scientific, systematic and advanced.
Budget heads: The new accounting system is based on the classification of revenues and expenditures into different budget heads. So, the government transactions are recorded according to their respective budget heads along with their budget head numbers.
Use of Forms: In this accounting system, certain forms are used such as bank cashbook, statement of expenditure, budget sheet, etc.
Use of brackets: In this system, the bracket is used instead of the sign of subtraction. This is used especially when the advance is cleared and accounts are closed.
Provision for auditing: The new accounting system provides for regular audit. The office of the Auditor General is responsible for auditing the accounts of the government offices.
Objectives of New Accounting System
The objectives of new accounting system are as follows:
To keep systematic record
The new accounting system keeps the records of the books of accounts and prepares different statements and reports. It keeps systematic records of government transactions.
To provide financial data
The annual budget is prepared under new accounting system for which the government needs historical and estimated financial data. So, the new accounting system provides historical financial data and information for the new budget.
To safeguard the properties
The new accounting system safeguards the properties owned by the government i.e. land, building, furniture, vehicle and so on by making systematic records of them and fixes accountability to different employees for acquiring, utilizing and maintaining such properties.
To make budgetary control
The new accounting system helps to locate the expenditure if it crosses the budgetary limits. Therefore, government office cannot make expenditures in excess of budgetary allocations. Thus, the new accounting helps to make the budgetary control.
To facilitate economical auditing
The new accounting systems prepare all the records and books of accounts in a manner to facilitate the economical audit of the government offices.
Importance of New Accounting System
It provides the details financial information of government offices.
It helps in preparation of plans and formulating the government policies by providing required information and data.
All the records of revenue and expenditure of government of the public are recorded according to the financial rules and procedure.
It helps to control the financial activities of the government offices.
It provides necessary information to the government for preparing the annual budget.
It provides certain information for the preparation of financial statement.
Limitation of New Accounting System
Some of the limitation of new accounting system are:
It has given more emphasis on cash than goods, properties, machine, equipment and other assets.
It does not follow the rules and principles of double entry system of book-keeping.
It does not provide necessary information and data for making the decision on the cost production and labor efficiency.
All the forms of new accounting system do not fulfill the managerial need.
Sharma, Narendra et.al., Principles of Accounting-XI, Bundipuran Prakashan, Kathmandu