14 Public Account Transactions

Table of Contents

14.1 Introduction 14.3

14.2 General Policy 14.4

14.2.1 Definition 14.4

14.2.2 Application 14.4

14.2.3 Classification 14.4

14.3 Accounting Policy 14.6

14.3.1 General 14.6

14.3.2 Accounting records 14.6

14.3.3 Accounting entries 14.6

14.4 Detailed Procedures 14.9

14.4.1 Introduction 14.9

14.4.2 Public Account receipts 14.9

14.4.3 Public Account payments 14.10

14.4.4 Other transactions 14.11

14.5 Reconciliation of Public Account transactions 14.12

14.6 Reporting of Public Account balances 14.13

· ‘All revenues received by the Federal Government, all loans raised by that Government, and all monies received by it in repayment of any loan, shall form part of a consolidated fund, and shall be known as the Federal Consolidated Fund’.

· ‘All other monies:

a) received by or on behalf of the Federal Government; or

b) received by or deposited with the Supreme Court or any other court established under the authority of the Federation

shall be credited to the Public Account of the Federation’.

14.2.1.2 A similar provision exists within the Provincial section of the Constitution (Article 118) defining the Provincial Consolidated Fund and the Public Account of a Province. Therefore, a separate Public Account will exist for the Federal Government and each of the Provincial Governments.

14.2.2 Application

14.2.2.1 The Public Account represents those monies for which the Government has a fiduciary duty but which it is not at liberty to appropriate for the general services of the Government.

14.2.3 Classification

14.2.3.1 The Public Account consists of trust accounts and special deposit accounts. These are defined as follows:

· trust accounts - legal entities in their own right, under the stewardship of the Government, and as such expected to produce financial statements in their own name. These trust accounts are normally established under an Act of Parliament or Presidential Order.

Examples of trust accounts include provident and benevolent funds, employee’s insurance funds and trust accounts of certain departments (eg. Railways).

· special deposit accounts - those accounts comprising of Public Account monies that are operated under the authority of the Ministry of Finance, but are not trusts. As they are not legal entities, reporting would be generally by way of statements of receipts and payments.

Examples of special deposit accounts include relief funds, civil and criminal court deposits, welfare funds and development funds.

14.2.3.2 Classes of trust accounts and special deposit accounts will exist at major and detailed heads, as provided in the Chart of Accounts. In the Chart of Accounts the detailed Public Account head will be given by the ‘Fund’ element. Both the receipts and payments of a particular trust account or special deposit account shall be charged to these heads.

14.3 Accounting Policy

14.3.1 General

14.3.1.1 No authority shall incur expenditure or enter into any commitment involving expenditure from the Public Account, unless it is sanctioned under the governing Act, Order or other regulation for the particular trust account or special deposit account.

14.3.1.2 The balances held in Public Account heads shall be carried forward from year to year, in accordance with the relevant Acts, Presidential Orders or other statutes governing each trust fund and special deposit account.

14.3.2 Accounting records

14.3.2.1 Each transaction occurring in the Public Account shall be recorded in the Sub-Ledger of the DAO/AG/AGPR against the appropriate detailed account head, in accordance with the detail prescribed in Direction 4.4.4.2 of this Manual (Expenditures).

14.3.2.2 The General Ledger shall record all expenditures and receipts of the Public Account on a daily totals basis for each detailed account head, in accordance with the detail prescribed in Direction 4.4.4.4 of this Manual (Expenditures).

14.3.2.3 The balance contained in the Budget Head Register, for each of the Public Account heads, represents the funds sanctioned for expenditure to be incurred against that head.

14.3.2.4 Records of financial assets and liabilities shall be maintained for each trust account in the Public Account by the AG/AGPR offices. The Public Account records will be kept in a separate register to the Consolidated Funds records. This will be called the “Public Accounts Register”. These records shall be updated on a progressive basis.

14.3.3 Accounting entries

14.3.3.1 The following accounting entries relating to Public Account transactions shall be made in the Sub-Ledger/General Ledger:

14.3.3.2 Receipts - receipts shall be recorded in the Public Account as follows:

Dr Bank Account (Public Account)

Cr Relevant Public Account Head

[to record receipt of cash into Public Account - at detailed head level].

14.3.3.3 For non-reciprocal contributions, such as public donations to particular fund, no liability will arise, as the funds are not expected to be repaid to the contributor.

14.3.3.4 However for reciprocal contributions, such as deposits into a savings scheme or contributions by Government employees into a provident fund, the amount deposited shall be eventually returned to the contributor, thus creating a liability. In these cases, the liability record / register shall be updated to reflect the increased liability on the Government to repay the funds.

14.3.3.5 The liability records shall be adjusted from time to time to record subsequent events. For example, where civil or criminal court deposits which are later forfeited (i.e. through a breach in conditions) the amount forfeited should be transferred into the Consolidated Fund as revenue and the liability record reduced accordingly.

14.3.3.6 Payments - the following entry shall be recorded when a payment is made, as approved expenditure under the rules and regulations of a trust (e.g. disaster relief fund), or as repayment of a previously deposited amount (e.g. savings scheme or court deposit):

Dr Relevant Public Account Head

Cr Bank Account (Public Account)

[to record payment from the Public Account - at detailed head level].

14.3.3.7 In the case of repayments of deposits (e.g. savings schemes), the liability record/register shall be updated to reflect the decrease in liability arising from the payment.

14.3.3.8 Transfers to and from the Consolidated Fund - where funds held in the Public Account are utilised in operations by the Government, the amount transferred to the Consolidated Fund should be also recorded as a receivable and payable.

14.3.3.9 When Public Account funds are transferred to the Consolidated Fund, the following entries shall be recorded:

Dr Relevant Public Account Head

Cr Bank Account (Public Account)

[to record the transfer of cash out of the Public Account].

Dr Bank Account (Consolidated Fund)

Cr Public Account Receipts (CF)

[to record the receipt of cash into the Consolidated Fund].

14.3.3.10 At the same time the above entries are made, the asset (receivable) records shall be updated to reflect the increase in amount receivable to the relevant trust fund and the liability records updated to reflect the increase in amount payable from the Federal and Provisional Government.

14.3.3.11 When the Government makes a repayment to the Public Account, the following entry shall be made:

Dr Bank Account (Public Account)

Cr Relevant Public Account Head

[to record the receipt of cash into the Public Account].

Dr Relevant Expenditure Head (CF)

Cr Bank Account (Consolidated Fund)

[to record the transfer of cash out of the Consolidated Fund].

14.3.3.12 At the same time the above entries are made, the asset records shall be updated to reflect the decrease in amount receivable to the relevant trust fund and the liability records updated to reflect the decrease in amount payable from the Federal and Provisional Government.

14.4 Detailed Procedures

14.4.1 Introduction

14.4.1.1 The key controls to be observed in respect of Public Account transactions are as follows:

· withdrawals from any trust account or special deposit account established in the Public Account must be for the purpose laid out in its governing Act or Presidential Order, and other regulations prescribed by the Government

· all withdrawals from the Public Account, shall be duly approved by a delegated authority

· withdrawal from a Public Account head shall only be permitted up to the balance of the fund, as given in the Budget Head Register. The amount withdrawn shall be subject to the available cash limit sanctioned by the Ministry of Finance.

14.4.2 Public Account receipts

14.4.2.1 Public Account receipts may be collected through the following mechanisms:

· at a branch of the National Bank or State Bank of Pakistan, for Public Account receipts generally

· at a National Savings Centre, Post Office or commercial bank in relation to savings and deposit schemes (savings accounts, defence certificates, prize bonds etc.)

· at a court, in relation to court deposits.

14.4.2.2 In all cases above, the receipts collected from the various sources shall be submitted to a designated branch of the National Bank of Pakistan or State Bank of Pakistan, which are then submitted, by bank scroll, to the respective DAO/AG/AGPR office.

14.4.2.3 The procedures for recording Public Account receipts by the DAO/AG/AGPR shall be in accordance with the procedures laid down in Chapter 5 of this Manual, ‘Receipts’. The DAO’s record of Public Account receipts shall be submitted each month to the relevant AG/AGPR office for consolidation.

14.4.2.4 Monies deposited into the Public Account shall, unless otherwise specified, increase the balance of the particular trust account or special deposit account, as indicated in the General Ledger of the DAO/AG/AGPR.

14.4.3 Public Account payments

14.4.3.1 Payments from the Public Account vary according to the type of trust account or special deposit account being used. They can be summarised into the following categories:

· general payments, such as expenditure from a disaster relief fund, welfare fund or refugee fund

· withdrawals from savings bank deposits, savings certificates and deposit certificates

· payments / refunds in relation to court deposit refunds

· payments to employees (e.g. GP fund final payment)

· payments from personal ledger accounts

14.4.3.2 General payments made from the Public Account shall broadly follow those procedures covered in Section 4.5 of this Manual (Chapter 4, ‘Expenditures’). The key steps outlined in this Section are:

· approval of expenditure by a delegated authority

· preparation of claim voucher, with supporting documents

· registration of claim voucher by DAO/AG/AGPR office

· certification and authorisation of claim voucher by the DAO/AGPR/AG office

· issue of payment by the DAO/AG/AGPR to the claimant, as indicated on the claim voucher, including funds clearance.

· issue of daily advice note by DAO/AG/AGPR to designated bank branch

· recording of expenditure in Sub-Ledger and General Ledger and updating of asset and liability records accordingly

· monthly consolidation of accounts by AG office.

14.4.3.3 The authority delegated to incur expenditure from the relevant trust fund or special deposit account shall first obtain a letter of sanction from the MoF providing the authority to spend funds from that account up to an allocated limit. This sanction shall also be communicated to the AG/AGPR office who will then inform the relevant DAO to which the claim will be submitted. The DAO shall then enter this amount into the Budget Head Register. When the claim voucher is submitted to the DAO, a copy of the MoF sanction shall be provided.

14.4.3.4 Withdrawals from savings bank deposits, savings certificates and deposit certificates may be made from a number of locations, depending on the type of scheme involved, including post offices, national savings centres and banks. All of these institutions shall report details of withdrawals made against each Public Account head to the designated branch of the NBP or SBP, for submission (through bank scroll) to the relevant DAO/AG/AGPR.

14.4.3.5 Refunds of civil and criminal court deposits shall be obtained from the designated NBP/SBP bank branch into which the deposit was made, upon sanction by the concerned court. The subsequent accounting transaction shall be recorded by the DAO/AG/AGPR from the daily scroll received from the relevant bank branch.

14.4.3.6 Procedures for final payments and advances made in relation to GP fund are indicated in Section 4.8 of this Manual (Chapter 4, ‘Expenditures’).

14.4.3.7 Withdrawals from personal ledger accounts, where these have been established, shall be made through the DAO/AG/AGPR in accordance with the guidance provided in Chapter 10 of this Manual ‘Project Accounting’.

14.4.3.8 Monies withdrawn from the Public Account shall, unless otherwise specified, decrease the balance of funds available against the particular trust account or special deposit account in the Budget Head Register, and also be reflected in the balance contained in the General Ledger.

14.4.4 Other transactions

14.4.4.1 Another class of transactions in the Public Account is transfers made to or from the Consolidated Fund. These types of transactions must first be sanctioned by a delegated authority in the MoF, and communicated to the AG/AGPR office for recording in the General Ledger.

14.4.4.2 From time to time certain funds in the Public Account may be utilised by the Government in meeting expenditures. Authorised payments can also be made from the Consolidated Fund into the Public Account, provided their is budgetary provision under the Schedule of Authorised Expenditure. These include payments into renewal reserve funds, depreciation funds and other trust accounts.

14.4.4.3 The accounting entries for such transfers are indicated in Section 14.3.7 of this Chapter.

14.5 Reconciliation of Public Account transactions

14.5.1.1 Cash transactions relating to the Public Account shall be reconciled as part of the routine monthly bank reconciliation process, in accordance with Chapter 6 of this Manual, ‘Bank Reconciliation’.

14.6 Reporting of Public Account balances

14.6.1.1 A ‘Public Account Summary Schedule’ shall be produced by each DAO as part of the monthly consolidation pack submitted to the AG/AGPR as specified in the Financial Reporting Manual.

14.6.1.2 The Public Account Summary Schedule shall contain, for each trust account and special deposit account, the receipts and payments for the month. Refer to Section 2.4 of the Financial Reporting Manual for the format of this report.

14.6.1.3 In the monthly ‘Statement of Cashflows’ a section containing details of all major heads in the Public Account shall be produced by DAO's and submitted each month to the AG/AGPR, as specified in the Financial Reporting Manual.

14.6.1.4 The cashflow report shall show the net increase or decrease in cash for the month and year to date for each major Public Account head.

14.6.1.5 Trust Accounts within the Public Account shall also provide financial statements in accordance with their governing Acts, Orders and Regulations.

14.6.1.6 The Federal and Provisional Government Statement of Assets and Liabilities shall include, as liabilities, balances of any amounts payable to Public Account trust accounts and special deposit accounts. Refer to the Financial Reporting Manual, Section 3.3 ‘Statement of Assets and Liabilities’ for the format of this report.

Translate

Wednesday, January 9, 2013

Accounting Policies & Procedures Mannual Chap 14