Photo by sr IVatsa s ha ndIlya
Public Finance are recognized only when cash is received and deposited. Similarly, expenses are recorded in the accounting period when bills are paid. Says M.N. Vidyashankar, IT secretary of Karnataka, “The accrual-basis accounting in urban local bodies is the only way forward. The sooner we adopt it the better, because we need to keep track of projected liabilities. Such an accounting system contributes to the setting of more realistic targets.” Apart from the automated numerical computation in the financial management system, accounting of transactions occurs in keeping with preconfigured rules and guidelines of the National Municipal Accounting Manual, says a municipality official. All this has several implications for government and citizens. But does such a mechanism respond to citizens’ demand for public finance-related information?
Tracing Demand The state of Karnataka has 212 ULBs, which includes corporations, city municipal councils and town municipal councils. The Nirmala Nagara project seeks to empower each of these by 2009, and its first phase began across 63
ULBs in August this year. It entailed putting in place an integrated financial management system among other implementations such as property tax information system with GIS. (This allows authorities to monitor, using maps, properties that arenot paying property tax.) In government circles, such an investment in IT — even in phases — has its cynics who question its need. For the Nirmala Nagara project, the answers came from the citizens themselves, as the pilot demonstrated. This phase commenced in July 2005, involving seven ULBs, including Mysore, Bijapur and Raichur. The module, a public grievance and redressal system, yielded 60,000 complaints in 10 months. The response gave the Directorate of Municipal Administration (DMA), which oversees the functioning of ULBs, greater confidence in implementing the financial management system. Recalls Nilaya Mitash, a former DMA director who was involved in the implementation then, “We began to develop a draft accounting manual, in 2004, which later became the Karnataka Municipal Accounting Manual (KMAM). The system now produces all the statutory reports specified in the KMAM.” The latter was developed based on the National Municipal Accounting Manual, recommendations of the Comptroller & Auditor General of India task force and the Institute of Chartered Accounts of India.
“The sooner we adopt accrual-basis accounting, the better. It enables setting up realistic targets.” — M.N. Vidyashankar, IT secretary, Karnataka
46
Govern Main.indd 46
n o v e m B e R 1 , 2 0 0 6 | REAL CIO WORLD
How It Works The data relating to income and expenditure hosted in the eGov system are broadly divided under enterprise, general and water supply funds. So, an accountant in a municipality begins by choosing the fund, under which the transaction (and the entry thereof) needs to be made. For a payment to be recorded in the system, the accountant must prepare the procurement order in the name of the party. This order demands details such as name of the contractor selected (after the tender and bidding process), work order, voucher number, date of voucher, etcetera. Only after this can the accountant raise a bill to the extent of the amount stated in the procurement order. The financial management system does not accept a bill whose information varies from that of the procurement order. Further, based on the nature of revenue or expenditure, each
Vol/1 | I ssuE/24