Standards for govt accounts this week

The first accounting standards for government guarantees is expected to be implemented from April, 2005. The proposal, which is with the finance ministry, will be cleared this week.

Other standards in the pipeline are those relating to disclosures of debt and borrowings of the government, loans and advances forwarded by the government and presentation of financial statements.

The standards will be binding on both state and central government bodies. "It has been observed that states have gone overboard in taking infrastructure loans, while there is no way of ascertaining the extent of guarantees issued as they are contingent liabilities and hence not recorded in the government's accounts," S Sathyamoorthy, Comptroller and Auditor General, said at a press conference today.

The standards would be introduced in a phased manner by first bringing the central government bodies under its ambit and then the state government bodies, he added.

He said the Government Accounting Standards Advisory Board, set up by Comptroller and Auditor General of India, was aiming at streamlining the government accounting system, and expected that in 5 to 10 years the government's accounts would be more user friendly, legible and harmonised with the global accounting standards.

He said standards relating to cash-flow statements, grants and aid and presentation of financial statements had been cleared by the board and would be submitted to the finance ministry in six months.

"At present, the financial statements are very bulky and unwieldy. This is the reason why we are proposing a system in which the accounts would be presented in different volumes. One volume would be a summary statement, while the details would be accommodated in other volumes," Sathyamoorthy said.

The financial account of the government bodies contained 17 to 18 statements, but after the standard would be introduced the accounts would be more in line with the way a balance sheet is prepared, he added.