Special Class note for

CMA Professional Level –II

201-Advanced Financial Accounting-I

CMA
Professional Level –II
201-Advanced Financial Accounting-I
Government Accounting
Special
Nature and scope of Government Accounting;
Class-7 201.10 Government
Summary of differences to Commercial Accounting;
Accounting
The frame-work and Structure of Government Accounting in Bangladesh;

System of Accounts;
nd
2
Finance and Revenue accounts;
Session
Period accounts;

budgets and annual development programme.

Government accounting is the process of recording, analyzing, classifying, summarizing communicating and interpreting
financial information about government in aggregate and in detail reflecting transactions and other economic events
involving the receipt, spending, transfer, usability and disposition of assets and liabilities

The purposes of government accounting are:

i. To carry out the financial business of government in a timely, efficient and reliable manner (e.g. to make
payments, settle liabilities, collect sums due, buy and sell assets etc.) subject to necessary financial controls.
ii. To keep systematic, easily accessible accounting and documentary records as evidence of past transactions and
current financial status, so that detailed transactions can be identified and traced and all aggregates can be
conveniently broken down into their constituent parts.
iii. To provide periodic financial statements, containing appropriately classified financial information, as a basis for
(a) stewardship and accountability and
(b) decision-making.
iv. To maintain financial records suitable for budgetary control, internal control and the needs of auditors.
v. To provide means for effective management of government assets, liabilities, expenditures and revenues.

Summary of differences to Commercial Accounting: Sub-systems of a government accounting

system are as follows:
A government accounting system normally has eight main components: - General ledger (a system of classified ledger
accounts allowing all revenues and
• Documents providing evidence of transactions expenditures to be sorted into appropriate
• Bank accounts through which payments and receipts are handled categories)
• Accounting records (cash book, ledgers etc.) - Cash book
• Procedures and controls - Payroll
• A means of aggregation of accounting data - Payables
• Internal accounting reports - Receivables
• External accounting reports (financial statements) - Assets and liabilities including cash
• Staff management

International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS Board for use by
public sector entities around the world in the preparation of financial statements. These standards are based on International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
Government accounting is that branch of accounting, which is used in government institution. The government accounting
is different from other branches of accounting such as commercial accounting.

The accounting system used in government offices to record and report their financial transactions is known as
government accounting. Government accounting is concerned with systematic and scientific recording of government
110
Md.Monowar Hossain FCMA,FCPA,ACS,ACA Monday, June 23, 2014
Audit Consultant (General Manager),
Rupali Bank Ltd.
 Special Class note for
CMA Professional Level –II
201-Advanced Financial Accounting-I

revenues and expenditures. It is the systematic process of collecting, recording, classifying, summarizing and interpreting
the financial transactions relating to the revenues and expenditures of government offices. It reveals how public funds
have been generated and utilized for the welfare of the general public.

Therefore, government accounting may be defined as an accounting system used in government institution for the
purpose of recording, classifying, summarizing and communicating the financial information regarding the collection and
utilization of public funds and properties. It is concerned with keeping records of government revenues and their
expenditure in different development and administrative works. It reflects the receipt and payment position of the public
funds.

Differences Between Government Accounting And Commercial Accounting : Following are the main differences between
government accounting and commercial accounting:
1. Meaning
The accounting system maintained by the government offices is known as government accounting. The accounting system
maintained by business organizations is known as commercial accounting.

2. Objective
Government accounting is maintained by the government offices to know the position of public fund. Commercial
accounting is maintained by business organizations to know the profit or loss and the financial position of the business.

3. Budget
Government accounting strictly follows the government budgeting system. commercial accounting does not follow the
government budgeting system.

4. Basis
Government accounting is prepared on cash basis. Commercial accounting is prepared on cash as well as accrual basis.

5. Level of Accounting
Government accounting has the system of central level and operating level accounting. Commercial accounting has no
provision of central level and operating level accounting.

6. Rules and Provisions

Government accounting is strictly maintained by following the financial rules and provisions of government. Commercial
accounting is maintained by following the rules and principles of 'Generally Accepted Accounting Principles'.

7. Information
Government accounting provides information to the government about the receipts, transfer and deposition of public
funds. Commercial accounting provides information to the concerned parties about the operating result and financial
position of the business.

8. Auditing
An Auditor General Office audits the book of accounts kept under government accounting. A professional auditor can
audit the books of accounts kept under commercial accounting.

The frame-work and Structure of Government Accounting in Bangladesh:

This mandatory approach arises from the fact that there is the need to:
(a) ensure uniformity in the preparation and presentation of Government Accounting reports throughout the country;
(b) ensure that accountants comply with the Generally Accepted Accounting Principles in the discharge of their
functions;
(c) ensure the compliance with existing regulatory frameworks;
(d) ensure the compliance with the domestic accounting need of our country.
111
Md.Monowar Hossain FCMA,FCPA,ACS,ACA Monday, June 23, 2014
Audit Consultant (General Manager),
Rupali Bank Ltd.
 Special Class note for
CMA Professional Level –II
201-Advanced Financial Accounting-I

Accounting Systems:
The Accounting Systems division is tasked with the management of all activities for the operation of the accounting,
auditing and related systems in place or planned for implementation at the CGA, its sub-offices and optionally at the
office of Comptroller & Auditor General (C&AG). The division is managed along functional lines with two key areas of
activity:
- to provide all end-user technical support of all hardware, software and applications; to deliver training and to liaise
with the functional support officers of the Accounting systems to resolve end-user problems. This function also includes a
helpdesk officer to log, assign and track problem calls;
- to provide system/database administration, backup/recovery, reporting system password control and expert advice on
areas requiring intimate database knowledge of the accounting/auditing systems.
These sections are not limited in their activities and may provide further services for the effective operation and everyday
management of the systems of CGA, C&AG and also to provide supporting services to Financial Management Academy
(FIMA).
Characteristic Type of Organization
Business Not-for-Profit Government
• Has a need for accounting Υ Υ Υ
• Operates according to a legal budget - - Υ
• Has equity shareholders Υ - -
• Receives voluntary contributions - Υ Υ
• Levies and enforces collection of taxes - - Υ
• Revenues are based on exchange transactions Υ Υ Υ
• Follows fund accounting - Υ Υ
• Subject to IFRS pronouncements Υ Υ -
• Is exempt from NBR income taxes - Υ Υ
• Financial reporting focuses on entity as a whole Υ Υ Υ

Finance and Revenue accounts;

Period accounts;

budgets and annual development programme.

112
Md.Monowar Hossain FCMA,FCPA,ACS,ACA Monday, June 23, 2014
Audit Consultant (General Manager),
Rupali Bank Ltd.