ACCOUNTING FOR GOVERNMENT REVENUE

Refund and retention of revenue

When the revenue collected by a local government, exceeds budgeted revenue it is dealt with
in the following ways:

The excess revenue is either refunded; or

Reallocation / virement of funds is made
It is retained through a retention scheme

1. Refund of revenue
The excess revenue collected is refunded back to the exchequer.

2. Reallocation / virement of funds

Reallocation or virement of funds are authorized transfers of appropriated funds from
one source to another within the same vote or from one vote to another. The accounting
officer is empowered by the Appropriation Act to reallocate the fund from votes with
excess funds to votes with deficit but within the same budget ceiling
3. Retention scheme
It is the scheme that allows the accounting officer to retain a certain percentage of the
revenue collections in different votes, hence promote the collection of recurrent
revenue.
Application for this scheme shall be made by ministry to policy department, where if
approved a specific collection account shall be opened to commercial banks. Instruction
to transfer the collected revenue to retention revenue account at Bank of Tanzania shall
be issued monthly by the ministry. Proper notification of the transfer will be sent to
respective ministry.
The later was also known as Appropriation-in-Aid
Appropriation in Aid – This is specific item of revenue to be collected by the
Accounting officers and/or Regional Development Directors and directly be used by
them to offset recurrent expenditure budget.