17 Assignment Accounts and Personal Ledger Accounts
17.1 Introduction 17.3
17.2 Policies 17.4
17.2.1 Assignment Accounts 17.4
17.2.2 Personal Ledger Accounts 17.4
17.2.3 General Policies 17.4
17.2.4 Accounting Policies 17.5
17.3 Detailed Procedures 17.6
17.3.1 Introduction 17.6
17.3.2 Establishment of new assignment account 17.7
17.3.3 Establishment of PLA 17.8
17.3.4 Processing of payments 17.8
17.3.5 Recording of expenditure 17.9
17.3.6 Year-end controls and adjustments 17.9
17.3.7 Closure 17.10
17.3.8 Reconciliation 17.10
17.3.9 Reporting 17.11
17.4 Appendix A - Assignment Account/Personal Ledger Account
Transactions 17.12
17.1 Introduction
17.1.1.1 This chapter addresses the accounting policies and procedures for assignment accounts and personal ledger accounts operated by the Government, and should be read in conjunction with Chapters 4 and 10 of this Manual, ‘Expenditures’ and ‘Project Accounting’.
17.1.1.2 Although there are some procedural differences between assignment account/personal ledger account transactions and other expenditure transactions, a consistent basis of accounting must be applied to all forms of expenditure. The modified cash basis of accounting is adopted, in accordance with the Manual of Accounting Principles.
17.1.1.3 There are personal ledger accounts and assignment accounts within the Government of Pakistan. There are two types of assignment accounts as follows:
·
assignment accounts used by SAE’s
·
assignment accounts (also known as special
imprest accounts) that are used for development projects.
17.1.1.4 Within this chapter the term assignment account refers to the latter.
17.1.1.5 Notwithstanding the above, the MoF in consultation with the Auditor General can authorise exceptions.
17.2 Policies
17.2.1 Assignment Accounts
17.2.1.1 An assignment account is a separate bank account opened in favour of a delegated authority, into which funds are released for specified purposes. An assignment account may be drawn on by the delegated authority (located in a spending Division or Department) without the requirement for certification and authorisation by the DAO/AG/AGPR.
17.2.1.2 Each assignment account is established at designated branches of the NBP in fixed currency. In cases where a project or other activity receives both GoP funding and foreign donor funding, separate Rupee and $US assignment accounts must be maintained.
17.2.2 Personal Ledger Accounts
17.2.2.1 A personal ledger account (PLA) is also a facility provided to a delegated authority in a division/department to incur expenditure up to a prescribed limit, without the requirement for certification and authorisation by the DAO/AG/AGPR. However unlike an assignment account a PLA is not a bank account; it is a separate ledger account maintained by the DAO/treasury office, with the spending limit controlled by these offices, rather than the NBP.
17.2.3 General Policies
17.2.3.1 Assignment accounts and PLA’s shall only be established with the approval of MoF, in consultation AGPR/AG.
17.2.3.2 Because both assignment accounts and personal ledger accounts by-pass a significant number of key controls specified in Chapter 4 of this Manual, their establishment and use shall be strictly limited to those situations where prompt payment is a necessary requirement of the entity.
17.2.3.3 Each application for assignment account or PLA shall be considered on a case by case basis, although such accounts are typically established for development projects.
17.2.3.517.2.3.4
Where assignment account or PLA
expenditure is incurred from the Consolidated Fund, its funding must be
included in the Schedule of Authorised Expenditure for a given financial
year. Consequently, the balance
remaining in each assignment account at the end of each financial year must
lapse (i.e. not carried forward to the next year).
17.2.3.617.2.3.5
Alternatively, where assignment account or
PLA expenditure is incurred from the Public Account (i.e. trust fund or special
deposit account), its funding shall be sanctioned by MoF or the trust-holders,
as the case may be, in accordance with the Acts, Presidential orders and other
regulations governing the use of those accounts.
17.2.3.717.2.3.6
All expenditures incurred using an
assignment account or PLA must be classified according to the Chart of
Accounts. (i.e. to the relevant object, function, fund and entity to which the
transaction relates). The nature of
expenditure, incurring entity or source of funding does not change, simply
because it has been incurred under an assignment account or PLA facility.
17.2.3.817.2.3.7
Assignment accounts and PLA’s must not be
used for the collection and recording of receipts.
17.2.3.917.2.3.8
Assignment accounts will be included in
the overall cash balance of the Government for the purposes of financial
reporting and bank reconciliation.
17.2.4 Accounting Policies
17.2.4.1 Expenditure in relation to assignment accounts will be recognised in the accounts when cheques have been drawn by the cheque signatory (i.e. upon the issue of payment).
17.2.4.2 Expenditure in relation to PLA’s will be recognised in the accounts when payment has been endorsed by the respective DAO/treasury office maintaining that account, prior to encashment.
17.3 Detailed Procedures
17.3.1 Introduction
17.3.1.1 This section describes the detailed procedures and associated controls for the operation of assignment accounts and PLA’s, including the following stages of processing:
·
establishment of assignment account or PLA
·
release of funds
·
processing of payments
·
recording of expenditure
·
cheque clearance procedure
·
year end procedure
·
reconciliation
·
reporting.
17.3.1.2 The key controls to be observed in respect of assignment and personal ledger account transactions are:
·
signing of cheques drawn on the account, by the
authorised cheque signatory, and countersigned by an co-signatory from the
responsible ministry or department
·
funds control exercised on each payment, by the
NBP in the case of assignment accounts and by the DAO / treasury in the case of PLA’s
·
endorsement of cheques drawn on PLA’s, by the
concerned DAO / treasury office
·
reconciliation of assignment account and PLA
monthly balances to the bank
·
lapsing of available funds released into
assignment accounts, at the end of the financial year.
17.3.2 Establishment of new assignment account
17.3.2.1 Upon approval for the establishment of an assignment account, an allocation of funds to the account is made under the sanction of the responsible ministry or department. This allocation will be based on clearance by MoF, who along with other central agencies, control the overall resource allocation process (eg. Public Sector Development Program, loan arrangements negotiated by EAD). The allocation shall be communicated to the relevant AG/AGPR office.
17.3.2.2 The Accountant General shall then issue a letter of assignment (form 17A) to the relevant DAO/treasury office with an endorsed copy to the branch manager of the State Bank of Pakistan, within whose area the account is opened. The letter of assignment shall specify the following details of the account to be opened:
·
account name
·
the bank branch from which it shall operate
·
authorised cheque signatory and specimen
signature
·
drawing limit of the account
·
budget head to which the release of funds shall
be made (in doing so specifying clearly whether it is a Federal or Provincial
Government account)
·
any other conditions for the operation of that
account.
17.3.2.3 Upon receipt of the letter of assignment, the delegated officer in the DAO / treasury office shall arrange for the opening of the assignment account at the designated branch of the National Bank of Pakistan, in the name of the authorised cheque signatory. At the same time, this delegated officer shall update the Appropriation Register by the amount of funds released against the assignment account. Although the balance of this account is monitored by the NBP, it is still important to reflect this information (i.e. funds available) in the records of the Government, via the Appropriation Register.
17.3.2.4 The authorised cheque signatory for the assignment account shall then be supplied with an official chequebook by the DAO/treasury office, for the purpose of official withdrawals from the account.
17.3.3 Establishment of PLA
17.3.3.1 When approval has been given for the establishment of a PLA, the AG/AGPR shall advise the relevant DAO/treasury to establish the PLA in its records. This advice will include the following details:
·
name of account
·
authorised cheque signatory and specimen
signature
·
drawing limit for the account
·
budget head to which the release of funds shall
be made (in doing so specifying clearly whether it is a Federal or Provincial
Government account)
·
any other conditions for the use of the account.
17.3.3.2 Each personal ledger account shall then be established as a separate budget head in the Appropriation Register by the relevant DAO / treasury office, for the purpose of controlling the balance of each account. Each PLA shall be maintained in a separate section of this register titled ‘Personal Ledger Accounts’ on a division/department-wise basis.
17.3.3.3 The DAO / treasury office shall then issue an official chequebook to the authorised cheque signatory, from which cheques may then be drawn.
17.3.4 Processing of payments
17.3.4.1 For both assignment accounts and PLA’s, cheques are able to be drawn by authorised signatories of those accounts, from the time chequebooks are received, or other time, as communicated by the DAO / treasury office.
17.3.4.2 Cheques shall only be drawn by the authorised cheque signatory where it is required for immediate disbursement or reimbursement of expenditures previously incurred.
17.3.4.3 All cheques drawn from assignment accounts and PLA’s must be countersigned by a delegated authority in the responsible ministry or department.
17.3.4.4 All cheques drawn in respect of PLA’s must be endorsed by a delegated officer in the DAO / treasury office prior to encashment. This delegated officer shall check the following before endorsing payment:
·
sufficient funds exist within the nominated PLA,
for the payment to be made (as indicated in the budget head in the
Appropriation Register)
·
the cheque has been drawn only by the authorised
cheque signatory
·
the cheque has been written in proper form, from
an official chequebook
17.3.4.5 The above endorsement process of PLA’s requires the relevant budget head to be provided to the DAO / treasury so that the Appropriation Register can be duly checked and updated. It also requires the cheque register to be updated, for those cheques endorsed.
17.3.5 Recording of expenditure
17.3.5.1 Because assignment account transactions do not pass through the certification and authorisation process, the expenditure cannot be recorded by the DAO/AG/AGPR upon the making of payment. The concerned DDO of the responsible ministry / department shall submit a copy of the schedule of payments, in the prescribed form, to the concerned DAO / treasury office on a daily basis (or as cheques are drawn depending on the volume).This schedule will also provide the expenditure coding details for each cheque drawn.
17.3.5.2 When this schedule of payments is received by the DAO / treasury office, the expenditure transaction shall be recorded in the Sub-Ledger / General Ledger of that office. The appropriate journal entry in this case will be:
Dr Detailed
expenditure head
Cr Bank account
17.3.5.3 In the case of PLA’s the expenditure shall be recorded in the accounts when endorsement has been given for the cheque at the DAO / treasury office. The accounting entry will be the same as that provided in the above Direction.
17.3.5.4 The Appropriation Register shall be updated against the relevant budget heads when assignment account and PLA expenditures are recorded (i.e. reduce available funds).
17.3.5.5 It should be noted that a separate cheque clearing account shall be maintained for each assignment account as a means of matching recorded expenditures to the bank scroll details of cheques actually cashed.
17.3.6 Year-end controls and adjustments
17.3.6.1 No cheques are permitted to be drawn from assignment accounts or PLA’s after 30 June, against the Schedule of Authorised Expenditure from the previous financial year. Any commitments established under those assignment accounts or PLA’s shall be duly reversed in accordance with Chapter 4 of this Manual ‘Expenditures’.
17.3.6.2 Where assignment accounts or PLA’s relate to Public Account expenditures, it is not necessary to close those accounts at year end, subject to any other conditions associated with the use of those monies.
17.3.6.3 Where the balance in the assignment account or PLA lapses at the end of the financial year, the Appropriation Register balance (i.e. funds available) against the relevant budget heads shall be reset to zero and closed, until funds are released for the following year. No entry is required to the Sub-Ledger / General Ledger, as only those cheques drawn will have been recorded as expenditure in the accounts during the year, and therefore no reversal is required.
17.3.6.4 Any amounts left outstanding in the cheque clearing account as at 30 June represent those cheques drawn before the end of the year but not yet cashed at the bank. Sufficient funds shall be retained in the respective assignment account / PLA to ensure these cheques are cleared.
17.3.6.5 The late drawing of cheques at year end does not represent good financial management practice, and is subject to directives issued by the Accountant General to avoid it.
17.3.7 Closure
17.3.7.1 Assignment accounts and PLA's must be promptly closed when the relevant activity for which they were established has completed or has been otherwise wound up.
17.3.8 Reconciliation
17.3.8.1 On a monthly basis the NBP shall send a bank scroll to the AG/AGPR for the bank account that it maintains.
17.3.8.2 Using the information contained in the bank statement the AG/AGPR shall prepare a reconciliation statement of the reported assignment account expenditures to the bank balance. The reconciliation shall consist of:
·
opening assignment account balance as per bank
statement
·
less
reported expenditures for the month by DAO/treasury
·
less payments
in bank statement but not advised by DDO
·
plus uncleared
cheques
·
equals
closing assignment account balance per bank statement.
17.3.8.3 Any unreported payments by the DDO identified in this reconciliation shall be verified with them, and appropriate adjusting entries made to bring the accounting records up to date, and reconciled to the bank statement.
17.3.8.4 In the case of PLA’s, the transactions will be included in the bank statement received for the relevant Food/Non-Food bank account by the AG/AGPR. Therefore the bank reconciliation for PLA’s will be included in the general bank reconciliation procedures provided in Chapter 6 of this Manual.
17.3.9 Reporting
17.3.9.1 To provide a consolidated summary of assignment account and PLA balances used in the bank reconciliation described above, each DAO / treasury office shall submit details of assignment account and PLA balances to their relevant AG/AGPR at the end of each month.
17.3.9.2 On a quarterly, basis ministries and departments shall submit a detailed Statement of Expenditure for all assignment accounts and PLA’s under their control, to the respective AG/AGPR offices. These reports will assist in verification of the accounting records made and further details on these expenditures should further audit analysis be required.
17.4 Appendix A - Assignment Account/Personal Ledger Account Transactions
|
Event
|
General
Ledger Entries
|
Appropriation
Register
|
|
Approve Annual Budget
|
Nil
|
Update funds available by budgeted amount
|
|
Release funds
|
Nil
|
Update appropriation control
by amount released
|
|
Endorse cheque (PLA) or
Received DDO schedule (assignment account)
|
Dr
expenditure head
Cr bank account
|
Reduce funds available by cheque amount
Reduce appropriation control by cheque amount
|
|
Year end adjustment for remaining balance of funds
|
Nil
|
Reduce funds available to 0 (zero)
Reduce appropriation control to balance off cheque
clearing account
|
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