what is New accounting system & Importance of new accounting system

New accounting system
what is New accounting system & Importance of new accounting system?

Concept of new accounting system

As we have already discussed in the previous chapter that shyaha srestha pranali and form srestha pranali failed to record the increasing number of transaction in a systematic way. As a result. Bhuktani srestha pranali was introduced in 2017 B.S. but this system also became unsuitable to re

cord all the revenues and expenditure of the government in a more systematic and scientific way. Therefore, to make suggestions and recommendations in a more systematic efficient accounting system, an account committee, have four members was formed on magh 20, 2017 B.S. the four members of committee comprised of:

• Accounting general of his majesty government

• Under secretary of ministry of finance (foreign aid department)

• Public administrative of the U.S. aid.

• Accounting specialist of the U.N.

The committee, after a detailed study for about 288 days. Presented a draft as suggestions and recommendations for the scientific, modernization, improvement and decentralization of accounting systems in Nepal. The draft was approved by the auditor general on 20th magh 2018. B.S. and it was also approved by his majesty the king of 2nd chaitra 2018. The system was introduced as a new accounting sytems of his majesty government and it was implemented in the office of Kathmandu valley since the fiscal year 2019/2020 B.S. it was called 'new accounting system". The new accounting system became fully operational from shrawan 2025 through Nepal.

Feature and characteristics of new accounting system

Some of the basic features of new accounting systems of his majesty government may be studied under the following headings:

1. Based on the principle of double entry system: new accounting system is based on double entry system of book keeping. Under this principle, each financial transaction has two aspects i.e. each tractions is recorded on both debit and credit sides of books of account with the same monetary value thus, arithmetical accuracy can be easily tested and accounting errors are also detected and rectified.

2. Uniformity and simplicity: new accounting systems are used in the entire government officer throughout the keeping of Nepal. It is simple to understand and easy to operate because it is based on the principle of double entry system. An employee having lower qualification can easily understand it.

3. Emphasis of banking transaction: there are more probability of misuse and manipulation of cash. The new accounting system of HMG has given more emphasis of banking transaction. every government officer should deposit all revenues into bank and payment are made through cheques except petty cash payment.

4. Classification of offices: government organizations are classified into central level offices of organization (ministry) and operating level office on the basis of their financial transaction.

5. Secrecy: in new accounting system, high degree of secrecy can be maintained for accounting records. Separate forms, receipts slips etc are used for the separate nature of transaction.

6. Based on budget heads: the new accounting systems is based upon different budget heads for making expenditures of public government officer should not make expenditures more than allocated to a head.

7. Inter-head transfer of budget: in new accounting systems, the surplus amount of a budget head can be transferred from one budget head to another budget head by taking permission of finance ministry.

8. Used of bracket: use of bracket is another most important feature of new accounting system. The bracket is used to show the amount to be credited. It the time of payment for effective budgetary control.

9. Treatment of advance: in new accounting system, an advance payment given for any expenditure is treated as budgeting expenditures at the time of payment for effective budgetary control.

10. Level of government office and decentralization: the new accounting system is given emphasis is decentralization for accounting work. The government officers have been classified into two level i.e. central level and operating level accounting. Central level account is maintained by central level office and operation level account by operating level office. Central level offices do not interfere in regular accounting work of operating level office.

11. Provision of auditing: in new accounting systems, there is the provision of audit, so audit of books of accounts is compulsory to detect and payment the misuse of government property and revenue. The office of the auditor general is responsible for audit in government officer.
Objective of new accounting system
The following are the objectives of new accounting system started by the account committee 2017:
• To provide financial data this is required time to time for preparing financial report.
• To prepared proper systematic accounting for cash and other properties to control such possible misuses.
• To provide necessary and relevant information required for the preparation of budget to the concerned office.
• To determine the level and position of officers who are responsible to submit the accounts of different projects implemented.
• To check the financial transactions if they are true and fair thought the auditing.
• To make the audit job simple, less time consuming and economical.
• To collect the historical data of budget head.
Important of new accounting system
The important of new accounting system are summarized below:
• To keep the real picture of financial transaction of government offices to prepared the records of government fund. Investment, revenue, and expenses.
• To provides all financial data, statistics and other information required for financial administration and control.
• To provide proper guidance to government for the preparation and implementations of economic plan and policy of the nation.
• To provide necessary information and financial data to the government for preparation of annual budget.
• To control the financial activities of the government because all the revenues and expenditures of government are recorded according to the financial rules and procedures.
• To prevent the measure of government revenues and its properties because there is a to provision of audit of the books of account.
• To provide certain guidelines for preparation of finical statements.
• To ensure and effective uses of the aid and loan amount provided by foreign donors and agencies.
Limitation of new accounting system
New accounting systems of HMG are also not free from weakness and limitations. Some of the limitations are:
• There is no proper mechanism to check frauds and errors committed in the books of account and also if failed to control corruption, misuse and embezzlement of government cash and properties.
• It has given less emphasis on goods, properties and assets because it has given emphasis only on expenditures.
• It is based on cash basis of accounting. No record is made on accruals basis.
• There are higher chances of misappropriation of stock (investment) due to the lack of systematic and proper store keeping system.
• It cannot provide necessary information or data for making decision on the cost of production and labor efficiency.
• It does not following the principle of double entry system in practice. For example, entry for advance transaction required triple positing inn bank cash book.
• All the forms are designed by the department of general do not fulfill the requirement of managerial need.
Levels of new accounting system
HMG's officers are divided into two levels i.e. central level and operating level under new accounting system.
Central level accounting
Central level accenting refers to the accounting maintained by central level offices. Those officers received budget directly directly from the ministry of financial and release them to operating level officers. The ministry of financial does not release budget directly to operating level officer. They co-ordinate and control the operating level officer thought the country. Ministries, department and the legal bodies come under come under central level officers. The accounting. Under this accounting, the budget received from the ministry of financial and released to operating level officer in terms of advance basis and cleaning the advances as against their monthly reports are recorded. The following are some major account maintained by central level offices.
a. Journal voucher 
b. General ledger
c. Subsidiary books
d. Advance ledger
e. Bank statements
f. Statement of advance given
g. Control ledger for the amount deposited into consolidated fund etc.
Operating level accounting
Operating level officer refer to those government branches or regional officer which received budget from central level officer and make expenditure according to the prescribed budget heads. The accounting systems adopted by operating level officer are known as operating level accounting. The operating officers are responsible for their respective central officer and have to submit their statement of expenditures to the concerned central level officer. In shown operating level:

• Receives budget under different heads.
• Incurs budget expenditure accounting to the budget instruction and prescribed rules and regulations.
• Creates records of budget received and spent.
• Forward monthly report and statement to clear advance remaining in its name.
• Gets its accounts audited internally from the office of the treasury and comptroller and financial from the department of audit general.
• Prepares budget estimate for the next fiscal year.
The following are the accounting documents maintained by the operating level officers.
a. Journal voucher
b. Bank cash bank
c. Subsidiary ledger

d. Statement of expenditures.
Different between central level and operating level accounting
Basis

1. Office
2. Accounts
3. Recording
4. Responsible
5. Forms
6. Helps

Central level accounting

• It is maintained by central level office.
• It is maintained both by the central as well as operating level accounts.
• It records budget received from ministry of finance and release made to operating level offices.
• Central level offices are responsible for the ministry of finance and reports are submitted to ministry of finance.
• Under this system only a few number of accounting and statements are used for making records.
• Central level officer helps the office of the comptrollers general in preparing central accounts.

Operating level accounting

• It is maintained by operating level office
• It is maintained only by operating level accounts.
• It keeps record of budget received from concerned central level offices and the expenditure made on different heads.
• Operating level officers are responsible to the central level officer and reports are submitted to the concerned central level officer.
• Under this system a large number of accounting forms are used for making accounting records.
• Operating level officer do not directly help in the preparation of central account.

Forms used in new accounting system
The new accounting system prescribes a number of forms to be used at central level as well as operating level officers. The following are some form in new accounting system.
1. Primary books
a. Journal voucher
b. Cash receipts
c. Cash payment slip
2. ledger
a. budget sheet
b. bank cash book
c. cash receipts book
3. reports
a. statement of expenditures
b. monthly reports regarding revenue
c. requisition form for the reimbursement of cash payment
d. monthly  report of unclear advance
e. statement of bank account
f. summary of bank account
g. statement of budget sheet
h. statement of outstanding payments
i. monthly report of security deposits
4. miscellaneous
a. cash payment slip and cash receipts control
b. budget requisition form