C Rangarajan, chairman of the Twelfth Finance Commission, today said government accounting must show whether targets had been achieved within given resources, instead of harping only on following norms.
Inaugurating an international seminar organised by the Controller General of Accounts, Rangarajan said several institutional changes in government accounting might be needed to achieve these yardsticks.
He said colonial mentality had led to the accent on doing things right instead of ensuring that government programmes achieved results with scarce resources.
The former Reserve Bank of India (RBI) Governor said while the recently passed Fiscal Responsibility and Budget Management Bill had created an institutional framework for ensuring fiscal discipline, it had not set a roadmap for reaching the goal.
He also said government accountants could play an important role in reducing fiscal deficit by ensuring better expenditure control, improving public expenditure productivity and better cash management.
They would also have a role in the presentation of the medium-term fiscal policy statement by the government in Parliament, as mandated by the Bill, he added.
Voicing concern over the spate of corporate accounting scandals, Rangarajan said accounting practices had been designed to conceal information from the public rather than to educate and inform them.
The exposure of these financial reporting practices had led to a great deal of scepticism about the profession of accountants, he said, adding that there was a need for better ethical standards among the professionals, who were often found to be hand-in-glove with the management.
Drawing a parallel with government accounting standards, Rangarajan said the fundamental issue remained the same -- whether the accountants had been able to present the true picture about their institutions to the public.
The Controller General of Accounts, Aruna Makhan, said the government was increasingly expanding the scope of outsourcing its services.
As a result, it was becoming more business like and shifting from its traditional focus to managing for results, she added.
Makhan said the present accounting standards did not permit a comprehensive evaluation of programmes and services and, therefore, there was a need to move to an accrual-based system of accounting.
She said this would encourage a culture of performance in government departments and make the public sector more responsive to what people needed.
Rangarajan also said the focus of the reforms in the country
