Municipal Finance: Professional Opportunity in Bihar

Smart City a dream project of Government of India focused on infrastructural

reforms in Municipality. Urbanization plays a pivotal role in growth and employment
generation, same is also echoed by the think tanks. Municipalities are capacitated
to cope with such responsibilities. However, they are bleeding out for the lack of
professional financial management. Chartered Accountants- a smart driver of
financial management are always looked as torch bearer in this area. Government
of Bihar also recognised our importance and mandated positions of Finance
Controller and Internal Audit in every Municipality of Bihar under section 36 of Bihar
Municipal Act, 2007. Sooner or later these positions shall be occupied by our
members.
Municipalities are mandated to follow Double Entry Accounting System w.e.f. 1 st
April, 2014. (There is new set of accounting rules. But lack of skilled manpower to
implement such system is putting the objective back seat). But Municipalities do not
have skilled staffs to implement new accounting system. It is certain that
accounting services of municipalities will be outsourced. Our members must be
ready to tap the opportunity.
Staffs of Municipality lacks professional skills. There are two pronged approach to
deal with the situation. Either they will hire skilled people or train the existing
people. There will be series of capacity building programs. Chartered Accountants
have inherent qualities of revenue and financial management. They will be required
as a promoter and faculty of skill development programmes for Municipal Staffs.
14th Finance Commission has recommended larger grant to local governments. The
allocation to local governments is over twice the amount recommended by the 13 th
Finance Commission and for Municipalities it is nearly three times relative to 13 th FC
recommendations. But 20% of these grants are performance Grant which can be
given only if they fulfil three conditions-have their accounts audited, improve own
resources and publish service level benchmarks. Out of these three, two are
primarily domain of Chartered Accountants. Our services will be of great help to
Municipality in fulfilling these conditions.
It is also worth to note that at present, municipalities are not self sufficient to drive
these reforms. They need additional fund-mostly provided by international funding
agencies. These agencies also monitor the reform programmes through technical
assistance team. Our members may also be the part of such team.
In order to tap the opportunities we must be aware about functioning of
Municipality. We need to equip ourselves with relevant act, rules and standards. ICAI
has also policies on Public Financial Management and Urban Local Bodies. There are
separate set of accounting standards for Urban Local Bodies. Additionally
Government Accounting Standards Board also has publications. Members should go
through these publications. World Bank has an eight week e-course in municipal
finance which may be accessed on
http://einstitute.worldbank.org/ei/course/municipal-finances-learning-program-local-

governments. These programmes and publications are add-on for us to be an early

bird in the practice of Municipal Finance.
CA. Mukesh Kumar Mishra
FCA, DISA (ICAI)