Meaning of Government Accounting
Government accounting is a special branch of accounting that is concerned with management and administration of all financial activities of government. It is one which collects, classify, record, summarize, and interpret all financial transactions comprising of revenues and expenditures of public offices.
Government accounting is an important tool available with the government for keeping a complete track record of all its funds i.e. from where they are coming and where they are going. It is a single entry system of accounting where there is no need of cross-checking of records as the government does not perform for making profits.
This approach of accounting is used by all entities of government such as state, country, federal, municipal and entities for special purpose. Every government agency follows generally accepted accounting principles (GAAP) for recording their financial data in order to bring uniformity and transparency in their accounting processes.
Types of Government Accounting
There are three types of accounts that are included in government accounting as per the Indian constitution. These accounts are: –
- Consolidated Funds
- Contingency Funds
- Public Accounts
These funds are maintained by the Union government and every state government. It is termed as ‘Consolidated fund of India’ or ‘Consolidated fund of State’. Consolidated funds comprise of all revenues acquired by government, all loans raised via issuing treasury bills by government, funds received by means of advances and all money received for repayment of loans that were made previously out of consolidated funds. This fund is sub-divided into: Revenue and expenditures, loans and advances, and capital receipts and disbursement.
A separate contingency fund is maintained by both the central government and state government separately. This fund is of imprest nature. The contingency fund is available for disposal at the governor or president for enabling advances made by him out of this fund. Advances are made for meeting expenses that are unforeseen and pending authorizations by State legislatures or the Parliament.
Separate public accounts are maintained by both the union government and state governments. The public account is in the name of ‘The Public account of India’ or ‘The Public account of State’. It includes all public money received on behalf of Central or State government except the one included in consolidated funds and disbursement is made from such funds as per the prescribed rules. The two main parts included in public accounts are Debit (excluding one composed in the consolidated fund), and Deposits and Remittances.