Agencies Involved in Government Accounting (नेपालको सरकारी लेखा प्रणालीमा संलग्न विभिन्न निकायहरू)

A budget is not executed by one office. It is prepared by one body, voted by another, released by a third, spent by thousands, accounted for by a fourth, audited by a fifth and examined by a sixth. This unit names the six, says what each does, and explains how the government's money reaches a district office through the banking arrangement.

14.1 Introduction: the agencies of the government accounting system

Government accounting is a chain of accountability, and every link in it is an institution with a defined job. One body decides how much may be spent, another makes the money available, another spends it, another records it, another audits it, and the last one is the people's own representative assembly, which asks what happened to the money it voted.

14.2 Ministry of Finance, Financial Comptroller General Office, National Planning Commission

Ministry of Finance (अर्थ मन्त्रालय) is the ministry that manages the government's money. Its functions are: to prepare the budget and the annual financial statement for the government; to frame revenue and tax policy and the fiscal policy of the country; to manage the consolidated fund, the contingency fund and government borrowing; to arrange internal and external loans and grants; to control and monitor public expenditure; to fix the terms of government borrowing and of the foreign exchange rate policy in consultation with Nepal Rastra Bank; and to represent the government in financial negotiations with foreign lenders and donors. It also lays the Annual Report of the Financial Comptroller General Office before the legislature.

Financial Comptroller General Office (महालेखा नियन्त्रक कार्यालय, FCGO) is the office under the Ministry of Finance that actually runs the government accounting system. Its functions are: to release the budget to the spending offices against the appropriation; to keep the central accounts of the government; to supervise and guide the Treasury and Comptroller Offices; to consolidate the accounts of every office and prepare the annual financial statement and the monthly and annual reports; to maintain the uniform chart of accounts and the prescribed formats; and to operate the computerised systems (FMIS, CGAS, TSA, SUTRA). It is, in short, the accountant of the whole government.

National Planning Commission (राष्ट्रिय योजना आयोग) prepares the country's periodic development plan, decides the priorities and the sectoral ceilings within which the budget is made, appraises and approves large development projects, and recommends the resource envelope for the plan period. It supplies the Medium-Term Expenditure Framework which the Ministry of Finance uses to build each year's budget. Without it, the budget would be a list of requests with no plan behind it.

14.3 Treasury and Comptroller Offices

The Treasury and Comptroller Offices (कोष तथा लेखा नियन्त्रक कार्यालय) are the local arms of the Financial Comptroller General Office and the government's paymaster. They exist at the central level, in each province and in each district, where the district office is known as the DTCO and the provincial one as the PTCO.

Functions.

1. To receive the budget release from the FCGO and pass it on to the offices within its jurisdiction.
2. To make the payments of the offices on the basis of the payment orders passed to it — by cheque or by electronic transfer from the government's account.
3. To keep the operating level accounts for the offices in its area, and to consolidate the monthly statements of expenditure that the offices send.
4. To control expenditure against the release, and to refuse payment where the head has no balance or the payment order is defective.
5. To operate the single account fund (TSA) in the district, so that all government payments in the district come out of one account.
6. To make the bank reconciliation with the Nepal Rastra Bank and the commercial banks, and to report the district's financial position to the FCGO.
7. To keep the accounts of revenue deposits made by the offices and forward them to the consolidated fund.
8. To provide the figures on which the FCGO's consolidated statements are built.

A district office therefore does not pay anybody by itself. It passes a payment order to the DTCO; the DTCO checks the head, the release and the authority, and pays. That separation is deliberate: the office that decides to spend does not hold the money.

14.4 Office of the Auditor General, Public Accounts Committee, Nepal Rastra Bank

Office of the Auditor General (महालेखापरीक्षकको कार्यालय) is the constitutional audit body described in unit 13. In this unit its place in the chain matters: it is the one agency that is deliberately placed outside the spending line, so that it can examine it. It audits the accounts of the federation, the provinces, the local levels, the constitutional bodies, the courts, government corporations and foreign aid, and reports to the President, who lays the report before Parliament.

Public Accounts Committee (सार्वजनिक लेखा समिति) is a committee of the legislature. Its function is to examine the audit report, to call the Secretary of the ministry or the head of the office concerned and ask him to explain each observation, to take evidence from the Auditor General's office, to direct the recovery of money or the correction of a system, and to report to the House. It is the committee that turns an audit observation into an action — and therefore the body that makes the Auditor General's independence worth having.

Nepal Rastra Bank is the banker to the government. It keeps the accounts of the government and of the government offices, receives government revenue and makes government payments through the Treasury and Comptroller Offices, holds the government's foreign exchange and manages the issue of treasury bills and bonds by which the government borrows from the market. Under the banking arrangement of government offices, every office's money is kept in the Nepal Rastra Bank or in a commercial bank with which the government has an agreement, and no office keeps a private bank account of its own.

14.5 Banking arrangement of government offices

The banking arrangement (बैंकिङ व्यवस्थापन) is the set of rules that govern how government money is kept in the bank and how it is paid out.

1. One designated account. Under the single account fund (Treasury Single Account, TSA), an office keeps one account for its transactions, and it is opened only with the bank named by the Financial Comptroller General Office — ordinarily the Nepal Rastra Bank at district level, or a commercial bank under an agreement.
2. Release credited to the account. The budget release passed by the Treasury and Comptroller Office is credited directly to the office's account.
3. Payment by cheque or electronic transfer. The office passes a payment order to the Treasury and Comptroller Office, which issues the cheque or makes the transfer. Payment is not made in cash except for petty expenses expressly allowed.
4. Revenue deposited, never spent. Revenue is deposited into the government account the same day, and the office may not pay an expense out of it.
5. Daily and monthly records. Every receipt and payment is entered in the bank cash book (म.ले.प.फा.नं. २०९); the office reconciles the bank every month and sends the bank reconciliation with the monthly statement of expenditure.
6. No overdraft, no idle balances. The account may not be overdrawn, and money that is not needed is not left lying in an office account, because the single account sweeps it to the centre.
7. Cheque custody and control. Cheque books are kept under lock, cheques are signed only by the officer authorised to sign them, and an unused or spoilt cheque is accounted for.

Why the arrangement matters. Three things are achieved by it. The government knows at any moment how much cash it has, because the money is not scattered over thousands of private accounts. Expenditure cannot escape the budget, because the office cannot pay out of money it has collected. And reconciliation is possible, because there is one account per office and one set of records against one passbook.

Practice questions

Group A — Very short answer (1 mark each)

1. Which office prepares the annual budget of the Government of Nepal? [1]
2. Write any two functions of the Ministry of Finance. [1]
3. What is the role of the Financial Comptroller General Office? [1]
4. What is the full form of FCGO? [1]
5. What is a DTCO and what does it do? [1]
6. Which office releases the budget to a spending office? [1]
7. Who is the banker to the Government of Nepal? [1]
8. What is the function of the National Planning Commission? [1]
9. Name the two names of government offices that use central level accounting. [1]
10. What is the single account fund? [1]
11. Name the parliamentary committee that examines the audit report. [1]

Group B — Short answer (5 marks each)

1. Name the agencies involved in the government accounting system of Nepal and explain the functions of any four. [5]
2. Explain the functions of the Ministry of Finance. [5]
3. What is the Financial Comptroller General Office? Explain its functions. [5]
4. Explain the functions of the Treasury and Comptroller Offices. [5]
5. Explain the banking arrangement of government offices. [5]
6. Explain the role of the Public Accounts Committee and of Nepal Rastra Bank in the government accounting system. [5]

Group C — Long answer (8 marks each)

1. Explain the agencies involved in the government accounting system of Nepal and their functions, and describe the banking arrangement of government offices.
2. Explain the government accounting system of Nepal from the preparation of the budget to the settlement of the audit report, naming the agency responsible at each stage. [8]