HUBLI: The Union Ministry of Urban Development has prepared a national municipal accounts manual with the help of the Comptroller and Auditor-General (CAG) of India to enable the States to develop specific municipal accounts manual.

The manual, say sources in the Union Ministry of Urban Development, is illustrative in nature and can serve as a professional guide and States are welcome to get in touch with the Ministry or office of the CAG. While there is no proposal to take punitive measures against local bodies that do not follow the manual, the manual says the implementation of certain urban reforms, including the municipal accounting reforms, will be made conditional for getting Central assistance under the proposed National Urban Renewal Mission.

The need to strengthen the accounting and reporting system in the civic bodies has arisen because of the 75th Constitution Amendment under which the States are expected to devolve responsibility, powers and resources to the urban local bodies as envisaged in the 12th Schedule of the Constitution.

Most of the urban local bodies follow the cash basis system and do not prepare the balance sheet. Accurate position of assets and liabilities cannot be ascertained from this.

Realising the importance of financial reporting by the urban local bodies, the Eleventh Finance Commission had entrusted the CAG the responsibility of exercising control and supervision over proper maintenance of accounts and auditing in all urban local bodies.

Accounting format

A Task Force was constituted by the CAG for prescribing the budget and accounting formats with proper codification and classification of budget and account heads. The report of the Task Force, which inter alia, recommended the introduction of the accrual system of accounting, implementation of improved accounting policies and use of model budgeting and accounting format by the urban local bodies, was considered by the Union Ministry of Urban Development and Poverty Alleviation and circulated among all States and Union Territories in April 2003.

The Union Ministry of Urban Development, it is said, has accorded priority for the municipal accounting reforms to strengthen the urban local bodies and make them sustainable units of local self-government.

The Union Ministry says this will help municipal bodies manage their financial matters in an efficient and effective manner.

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