Accounting Policies & Procedures Mannual 2

1          Introduction

Table of Contents

 

 

 

1.1     Purpose of the Manual                                                                                                                                             1.3

1.2     Structure of the Manual                                                                                                                                           1.4

1.3     Reader Guidance                                                                                                                                                       1.5

1.4     Authority, Applicability, Distribution and Maintenance of the Manual                                                      1.6

1.4.1       Authority                                                                                                                                                            1.6

1.4.2       Effective date                                                                                                                                                    1.6

1.4.3       Application                                                                                                                                                        1.6

1.4.4       Compliance                                                                                                                                                       1.7

1.4.5       Distribution, maintenance and update                                                                                                         1.7

1.1              Purpose of the Manual

1.1.1.1          The purpose of this Manual is to set out the detailed policies and procedures to be used in accounting for the Government of Pakistan’s financial transactions.

1.1.1.2          Under Article 170 of the Constitution, the Auditor General can prescribe detailed policies and procedures in respect of the following:

·         all transactions of centralised accounting entities

·         specific transactions of self accounting entities which operate within overall control of the Auditor General e.g. staff related payments

·         transactions adjustments of self accounting entities with the centralised accounting entities or in between themselves

·         reporting requirements of the self accounting entities.

1.1.1.3          This Manual contains the detail to accompany the overall framework set out in the Manual of Accounting Principles (MAP).

1.2              Structure of the Manual

1.2.1.1          The Manual is structured according to the major financial management activities of the Government.

1.2.1.2          The organisation of the chapters and sections within the Manual is shown in the Table of Contents.

1.2.1.3          The first two chapters provide an introduction and an overview to the accounting system.

1.2.1.4          The following three chapters cover the core processes of budgetary control, expenditures and receipts.

1.2.1.5          Chapters 6 and 7 cover the supporting processes of bank reconciliation and financial reporting.

1.2.1.6          Subsequent chapters address the policies and procedures for supplementary processes and for other financial management activities of the Government.

1.3              Reader Guidance

1.3.1.1          There are five levels of heading in the Manual:

·         level 1 - chapter

·         level 2 - section

·         level 3 - sub-section

·         level 4 - direction

·         level 5 - bullet point

1.3.1.2          The organisation of the sections and sub-sections within each chapter is shown in the Table of Contents at the front of each chapter.

1.3.1.3          The layout of each page within this Manual is standardised.  The title of the Manual and the name of the chapter are displayed in the top left and right corners of each page respectively.  The footer for each page contains the issue date, page number and file reference.

1.3.1.4          The general structure of each chapter within this Manual is standardised, dealing with the subject matter in the following sections (where this structure is inappropriate some chapters omit certain sections or are detailed in a different manner):

·         introduction

·         general policies

·         accounting policies

·         accounting treatment

·         detailed procedures

·         procedures for specific class of transactions.

1.3.1.5          A list of abbreviations and definitions of terms commonly used in this Manual is included for reference purposes.

1.3.1.6          The Appendix includes proformas of the registers and the forms to be used in the application of this Manual.

1.4              Authority, Applicability, Distribution and Maintenance of the Manual

1.4.1          Authority

1.4.1.1          This Manual is issued under the authority of the Auditor-General of Pakistan, in accordance with Article 170 of the Constitution of Pakistan, read with Pakistan (Audit and Accounts) Order 1973.

1.4.2          Effective date

1.4.2.1          The effective date for application of this Manual is the date of issue of the Manual by the Auditor-General.

1.4.2.2          All accounting entities will have up to two financial years (commencing from 1 July subsequent to the effective date of release) to be in full compliance with this Manual.

1.4.3          Application

1.4.3.1          Accounting entities - An accounting entity is any unit of the Government e.g. ministry, division and department, whose principal source of funding is an appropriation from the Government of Pakistan, and which is not an exempt entity (as listed in Schedule 2 of the MAP).

1.4.3.2          There are two types of accounting entity, namely centralised accounting entities and self accounting entities.

1.4.3.3          Centralised accounting entities - a centralised accounting entity is any accounting entity for whom the Accountant-General has primary responsibility for the transaction processing, recording and reporting functions of that entity.  At no stage does this arrangement absolve the Principal Accounting Officer of his/her responsibilities for financial management, in accordance with Paragraph 8.1 of the MAP.

1.4.3.4          Self-accounting entities - a self-accounting entity is any accounting entity for whom the Principal Accounting Officer has primary responsibility for the accounting and reporting functions.  A list of self-accounting entities is contained in Schedule 1 of the MAP (current at the date of issue of this Manual).

1.4.3.5          Exempt entities - an exempt entity is any entity listed in Schedule 2 of the MAP (current at the date of issue of this Manual).  These include independent entities and commercial undertakings and entities established under a state resolution or a notification of the Government or under Companies Ordinance, but placed administratively under a Ministry or Division for the purpose of accountability (also refer to Organisational Structure section of Chapter 2 ‘Overview’).

1.4.4          Compliance

1.4.4.1          Compliance with this Manual is mandatory for all centralised entities.  Chapter 9 ‘Self-accounting entities’ sets out more detail on the applicability of this Manual to self-accounting entities.

1.4.4.2          Exempt entities are outside the scope of this Manual and are therefore not required to comply.

1.4.4.3          Compliance with the directives and principles contained in this Manual are mandatory as the principles and directives have been issued under the Pakistan (Audit and Accounts) Order 1973.

1.4.4.4          The Pakistan (Audit and Accounts) Order 1973, provides that the Auditor-General will be responsible for keeping the accounts of the Federation and of each Province, other than certain specified entities.  The Order is issued subsequent to Article 170 of the Constitution of the Islamic Republic of Pakistan which states that ‘the accounts of the Federation and of the Provinces shall be kept in such form and in accordance with such principles and methods as the Auditor-General may, with the approval of the President, prescribe’.

1.4.4.5          In the event that an accounting policy or a procedure in this Manual conflicts with other manuals or directives, other than those amending this Manual, the accounting policy or procedure in this Manual will prevail.

1.4.4.6          Centralised entities shall not implement accounting policies or procedures in conflict with, or contrary to, those set out in this Manual.  The self-accounting entities may formulate detailed accounting policies and procedures in pursuance of the MAP with the approval of the Auditor-General.

1.4.5          Distribution, maintenance and update

1.4.5.1          The Auditor-General of Pakistan is responsible for:

·         the initial issue of the Manual to all Accountant General offices, District Account offices and the Principal Accounting Officers of centralised and self-accounting entities

·         the maintenance and update of the Manual, including distribution of any updates or amendments to all Accountant General offices, District Account offices and the Principal Accounting Officers of centralised and self-accounting entities.

1.4.5.2          In each Accountant General office, District Account office and for each centralised and self-accounting entity, the AG/DAO/ PAO is responsible for ensuring that:

·         initial copies of the Manual are distributed to all Accounts Officers within their entity

·         all subsequent updates and amendments of the Manual are distributed to all Accounts Officers within their entity.