UTTAR PRADESH JAL NIGAM - upjn.inSIS/Accounting Manual/Accounting Manual.pdfAcronym Full Form AE...

UTTAR PRADESH JAL NIGAM

Accounting Manual (Including Stores Procedures)

April 2010

A.F. Ferguson & Co. New Delhi

Uttar Pradesh Jal Nigam Accounting Manual

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Table of Contents Chapters

Section / Subject Code

Section / Subject Page No.

Preface to Accounting Manual 9 – 12

1.00 Section: Chart of Accounts 13 – 28 1.01 An Overview of Chart of Accounts and Related Aspects 15

1.02 Codification Structure for Chart of Accounts 16

1.03 Codification Structure for Subsidiary Ledger Accounts 19

1.04 Codification Structure for Works Projects 21

1.05 Codification Structure for Functional Budget 25

1.06 Codification Structure for Profit/ Cost Centres 26

1.07 Codification Structure for Analysis Parameters 27

1.08 Codification Structure for Locations/ Offices 28

2.00 Section: Stores 29 – 59 2.01 Receipt of Purchased Materials 32

2.02 Supplier‟s Bill Passing 36

2.03 Transfer of Materials – Intra-unit 40

2.04 Transfer of Materials – Inter-unit 43

2.05 Consumption of Materials 47

2.06 Sale of Materials / Scrap Materials 51

2.07 Physical Verification of Materials 54

2.08 Inventory Management 57

3.00 Section: Works Expenditure 60 – 73 3.01 Works expenditure incurred through engaging the contractors 63

3.02 Transfer and Closure of Projects 66

3.03 Maintenance of existing projects 70

4.00 Section: Loan, Deposits, Grant and Investment 74 – 93 4.01 Loans taken for UPJN 77

4.02 Loans and advances given by UPJN 80

4.03 Loans received by UPJN for works purpose on behalf of local bodies, others, etc.

83

4.04 Deposit (Grants) from Government for works purpose 87

4.05 Deposit from local bodies / others for works purpose 89

4.06 Investments 91

5.00 Section: Fixed Assets 94 – 122 5.01 Acquisition / Self constructed / Development of Fixed Assets /

Intangible Assets / Project Asset 100

5.02 Revaluation of Fixed Assets / Intangible Assets 105

5.03 Inter-unit transfer of Fixed Assets and Project Asset 107

5.04 Transfer of Project Asset between Works Project / Recovery of Project Asset as Fixed Assets

110

5.05 Fixed Assets and Project Asset issued to contractors – lent and returned

113

5.06 Depreciation on Fixed Assets / Amortisation on Intangible Assets 115

5.07 Sale of Fixed Assets and Project Asset 117

5.08 Physical Verification of Fixed Assets and Project Asset 120

6.00 Section: Revenue and Collection 123 – 133 6.01 Centage on Works Projects 125

6.02 Survey, Investigation and Project Preparation Fees 128

6.03 Sale of tender forms 131

6.04 Revenue Adjustments 132


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Section / Subject Code

Section / Subject Page No.

7.00 Section: Revenue Expenses 134 – 146 7.01 Accounting for Revenue Expenses 136

7.02 Expenses incurred by one Unit on behalf of other Unit 143

7.03 Provision for doubtful debts and writing off bad debts 145

8.00 Section: Personnel 147 – 180 8.01 Salaries 148

8.02 General Provident Fund (GPF) Transactions 153

8.03 Group Insurance Scheme (GIS) Transactions 157

8.04 Employee Loans and Advances 161

8.05 Reimbursement of Expenses to Employees 165

8.06 Full and Final Settlement 167

8.07 Permanent/ Temporary Imprest 170

8.08 Accounting on Transfer of Employees 174

8.09 Recoveries/ Reimbursement - Staff on Deputation 177

8.10 Allocation of Personal Expenses to Works/ Fixed Assets 180

9.00 Section: Cash and Bank 181 – 211 9.01 Fund Remittance – HO to Units 183

9.02 Fund Remittance – Units to HO 186

9.03 Transactions through Personal Ledger Account 188

9.04 Transactions through Bank 190

9.05 Transactions in Cash 201

9.06 Physical Verification of Cash 204

9.07 Bank Reconciliation Statement 208

9.08 Deposit of Statutory Dues 210

10.00 Section: Inter Unit Transactions (IUTs) 212 – 222 10.01 Raising Advice of Transfer - Debit/ Credit (ATD/ ATC) 214

10.02 Accepting Advice of Transfer - Debit/ Credit (ATD/ ATC) 218

10.03 Reconciliation of Inter Unit Transaction (IUT) accounts 221

11.00 Section: Preparation of Accounts 223 – 245 11.01 Maintenance of Books of account and Documents Control 224

11.02 Preparation of Monthly Accounts and consolidation thereof 226

11.03 Preparation of Final Accounts and consolidation thereof 233

11.04 Merger and Demerger of Accounting Unit 238


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Appendices

Format

Reference No. Format Name Page No.

Appendix I: Chart of Accounts 245 – 282

Appendix IIA: Books of Account 283 – 299 BA/01 Journal Voucher 284

BA/02 Bank Payment Voucher 285

BA/03 Bank Receipt Voucher 286

BA/04 Cash Payment Voucher 287

BA/05 Cash Receipt Voucher 288

BA/06 Contra Voucher 289

BA/07 Journal Book 290

BA/08 Bank Book 291

BA/09 Cash Book 292

BA/10 General Ledger 293

BA/11 Subsidiary Ledger 294

BA/12 Analyses Level – I / Analyses Level – II / Function Level – I / Function Level – II / Profit/Cost Centre Level – I / Profit/Cost Centre Level – II

295

BA/13 Trial Balance (General Ledger) 296

BA/14 Trial Balance (Subsidiary Ledger) 297

BA/15 Trial Balance (Group Head) 298

BA/16 Trial Balance (Schedule) 299

Appendix IIB: Subsidiary Records/ Register 300 – 338 Section 2.00: Stores

MT/R01 Stores Entry Register 302

MT/R02 Daily Transaction Register 303

MT/R03 Stores Ledger 304

MT/R04 Supplier Bill Register 305

Section 3.00: Works Expenditure

WE/R01 Contractor Bill Register 306

WE/R02 Works Register 307

WE/R03 Works Register Summary 308

WE/R04 Demand and Collection Register 309

Section 4.00: Loan, Deposit, Grant and Investment

LD/R01 Loan Register (for loans taken by UPJN for its purpose) 310

LD/R02 Loan Disbursed Register 311

LD/R03 Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf)

312

LD/R04 Deposits (Grant) Register 314

LD/R05 Deposits Register 315

LD/R06 Investment Register 316

Section 5.00: Fixed Assets

FA/R01 Fixed Assets Register / Intangible Assets Register 318

FA/R02 Project Asset Register 319

FA/R03 Junior Engineer Asset Register 320

Section 7.00: Revenue Expenses

RE/R01 Prepaid Expense Register 321

Section 8.00: Personnel

PA/R01 Unpaid Salary Register 322

PA/R02 Unpaid Bonus/ Ex-Gratia Register 323

PA/R03 General Provident Fund Register 324

PA/R04 General Provident Fund Broad Sheet 325


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Format Reference No.

Format Name Page No.

PA/R05 Group Insurance Scheme Register 326

PA/R06 Group Insurance Scheme (Summary) Register 327

PA/R07 Group Insurance Scheme Claim Register 328

PA/R08 Employee Advance/ Loan Register 329

PA/R09 Reimbursement Register 330

PA/R10 Permanent/ Temporary Imprest Register 331

PA/R11 Demand Register (Staff Deputed Outside UPJN) 332

PA/R12 Demand Register (Staff Deputed At UPJN) 333

Section 9.00: Cash and Bank

CB/R01 Cheque Dishonour Register 334

CB/R02 Stale Cheque Register 335

CB/R03 Physical Cash Verification Register 336

CB/R04 Statutory Dues Register 337

Section 10.00: Inter Unit Transactions

IUT/R01 Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR)

338

Appendix IIC: Forms 339 – 373 Section 2.00: Stores

MT/F01 Goods Receipt Note 340

MT/F02 Materials Transfer Note 341

MT/F03 Self Consumption Note 342

MT/F04 Materials Consumption Note 343

MT/F05 Materials Sale Note 344

MT/F06 Materials Adjustment Note 345

MT/F07 Physical Verification Report – Materials 346

Section 3.00: Works Expenditure

WE/F01 Receipt Challan 347

Section 5.00: Fixed Assets

FA/F01 Asset Receipt Note 348

FA/F02 Asset Transfer Note 349

FA/F03 Indent 350

Section 8.00: Personnel

PA/F01 Expenses Statement 351

PA/F02 Permanent/ Temporary Imprest Application 353

Section 9.00: Cash and Bank

CB/F01 Money Receipt 355

CB/F02 Cash Certificate 356

CB/F03 Bank Reconciliation Statement 357

Section 10.00: Inter Unit Transactions

IUT/F01 Advice of Transfer - Debit/ Credit (ATD/ ATC) 358

IUT/F02 Inter Unit Transaction Balance Confirmation Certificate (IUTBCC) 360

IUT/F03 Schedule of Inter Unit Transactions (IUTs) 361

IUT/F04 Inter Unit Reconciliation Statement 362

IUT/F05 Joint Inter Unit Reconciliation Statement 364

IUT/F06 List of Transactions for Which ATDs/ ATCs not Raised 365

IUT/F07 List of ATDs/ ATCs Raised for which 'Acceptance' not Received from the Responding Unit(s)

366

IUT/F08 List of ATDs/ ATCs for which 'Acceptance' not Sent to the Originating Unit(s)

367

IUT/F09 Units with which IUT Accounts not Reconciled 368

IUT/F10 List of Disputed IUTs 369

Section 11.00: Preparation of Accounts

POA/F01 Check-List for Preparation of Monthly / Final Accounts 370

POA/F02 Balance Confirmation 373


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Format Reference No.

Format Name Page No.

Appendix III: Monthly / Final Accounts 374 – 399 POA/01 Balance Sheet 375

POA/02 Income and Expenditure Account 376

POA/03 Schedules to Balance Sheet and Income and Expenditure Account

377

POA/04 Cash Flow Statement 398


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Abbreviations

Acronym Full Form

AE Assistant Engineer

ARN Asset Receipt Note

ATC Advice of Transfer Credit

ATD Advice of Transfer Debit

ATN Asset Transfer Note

BPV Bank Payment Voucher

BRS Bank Reconciliation Statement

BRV Bank Receipt Voucher

CB Contract Bond

CO Circle Office

COA Chart of Accounts

CPV Cash Payment Voucher

CRV Cash Receipt Voucher

CV Contra Voucher

DCR Demand and Collection Register

DO Division Office

DTR Daily Transaction Register

EE Executive Engineer

GO Government Order

GRN Goods Receipt Note

HO Head Office

I/O Input / Output

IA Intangible Assets

IUT Inter Unit Transaction

JE Junior Engineer

JE (T) Junior Engineer (Technical)

JV Journal Voucher

MAN Materials Adjustment Note

MB Measurement Book

MCN Materials Consumption Note

MR Money Receipt

MSN Materials Sale Note

MTN Materials Transfer Note

NRV Net Realisable Value

O&M Operation and Maintenance

PLA Personal Ledger Account

PI Permanent Imprest

PV Physical Verification

PVR Physical Verification Report

SCN Self Consumption Note

SWM Solid Waste Management

TDS Tax Deducted at Source

TI Temporary Imprest

ULB Urban Local Body


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Acronym Full Form

UPJN Uttar Pradesh Jal Nigam

WIP Works in Progress

ZO Zonal Office


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PREFACE TO ACCOUNTING MANUAL

Background 1. A. F. Ferguson & Co. (AFF) has been retained by Uttar Pradesh Jal Nigam (UPJN) for revision of Accounting Manual including Stores Procedures, development of computerised application for Accounting and Store Functions and providing Implementation Support to UPJN with respect to revised accounting manual and computerised systems. 2. As part of this assignment, AFF is required to revise the Accounting Manual (including Stores Procedures) for UPJN. 3. This document contains the Revised Accounting Manual (including Stores Procedures) for UPJN. Key objectives of the revisions in Accounting Manual 4. The Accounting Manual for UPJN is intended to:

Comply with the Generally Accepted Accounting Principles

Strengthen the internal controls

Eliminate the redundant and duplicate activities

Strengthen the financial reporting

Provide standardised procedures, formats and registers relating to accounting and stores systems

Facilitate computerisation of accounting and stores systems

Facilitate capacity building of the finance and accounts staff. to make them familiar with the accounting and stores procedures of UPJN

Coverage of the Accounting Manual 5. The Accounting Manual covers the accounting and stores procedures. The coverage of Accounting Manual has been provided in the table below:

Section Code Section Name

1.00 Chart of Accounts

2.00 Stores

3.00 Works Expenditure

4.00 Loan, Deposit, Grant and Investment

5.00 Fixed Assets

6.00 Revenue and Collection

7.00 Revenue Expenses

8.00 Personnel

9.00 Cash and Bank

10.00 Inter Unit Transactions

11.00 Preparation of Accounts

Appendix Ref. No. Appendix Name

Appendix I Chart of Accounts

Appendix IIA Books of Account

Appendix IIB Subsidiary Records / Register

Appendix IIC Forms

Appendix III Monthly / Final Accounts

6. The above Sections have been further divided into Subjects.


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AFF’s Approach to the Accounting Manual 7. AFF commenced the study of existing system on October 6, 2009. For this purpose, the consultants visited various sections/ departments of Head Office and the select unique field offices/ units of UPJN. 8. After completion of the field visits, AFF‟s key observations, implications and brief recommendations in the areas of Accounting and Store systems were documented and discussed with the key concerned officials of UPJN. 9. The existing Accounting Manual and above field visits, meetings/ discussions formed the basis for development of this Accounting manual. 10. To prepare the revised Accounting Manual, AFF undertook the following activities:

Need gap analysis to identify the area of improvements in the accounting procedures

Identified non-compliances with the Generally Accepted Accounting Principles

Regrouping of the accounting procedures required in the existing manual to make it more user friendly

Prepared simplified formats

Define accounting policies with respect to accounting of various nature of transactions being undertaken by UPJN

Defined frequency / timing for every activity / action to be undertaken in a process

Provided at the end of each subject, formats to be used including details like document type, title, frequency, responsibility of preparation, distribution to concerned person / section.

Internal controls embedded in the process

Step by step detailed Accounting Entries to be passed at various stages of transactions

Comprehensive Chart of Accounts

Brief background about the subject provided in every Section wherever required to understand the procedure in the right context

Practicality of implementation of accounting manual in computerised scenario

Improved grouping of various subjects e.g. separate chapter on IUT transactions.

Cross-linking and cross-referencing of various section and subjects to make it more understanding

Structure of the Accounting Manual 11. Accounting Manual for UPJN has been divided into various Sections. Each Section of the Accounting Manual has been structured as under:

Section Background

Accounting Policies

Coverage of Section

Subject 12. Each Section has been further divided into subjects. Each Subject of the Accounting Manual has been Structured as under:

Subject Background

Step by step procedure covering: Activities / Action Person / Section responsible for the activity Frequency / Timing of the activity

Documents / Records covering: Format reference Document title Document type Frequency Person responsible Distribution to Office / Section


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Accounting entries Additional internal controls / checks, if any

Users of the Accounting Manual 13. The users of this Accounting Manual shall be the Finance and Accounts Department and various Sections at Head Office, Zonal Office, Circle Office, Division Office, GM Unit and other field offices (hereinafter referred to as Unit or Units unless otherwise specifically referred to). Also, this Accounting Manual shall be referred by concerned Engineers and other Authorities at various stages. The overall users of the Accounting Manual has been provided below:

14. The above structure gives an overview of the accounting set up – in terms of accounting units at Head Office, Zonal Office, Circle Office, Divisional Office, GM Unit Office, etc. The Cash Cell, Banking Section, Loan Section, HRD Unit, Purchase unit, Community Participation Unit, Employee LIC Group Insurance Unit are the accounting units at Head Office where as the Balance Sheet Unit and Compilation Unit are the support functions at HO. 15. Divisions / Unit / Sub-divisions are all accounting units. Zonal Offices act as accounting as well as compilation unit. The ZO consolidates the trial balance of Division / Unit / sub-division under it. ZOs submit their trial balance to the Compilation unit at HO for consolidation of accounts for UPJN as a whole. The Circle offices are non-accounting units and are attached to one of the zone/ division for their salary and administrative expenses Administration of the Accounting Manual 16. This Accounting Manual shall be maintained by all the concerned sections/ departments of the Divisions/ Units for a ready reference purpose. 17. Any amendment to this Accounting Manual shall be effective only after it has been authorised by the Designated Committee/ Authority as constituted f by UPJN for this purpose at HO level. 18. Amendments to the Accounting Manual shall be based either on a specific request from any Unit or periodic reviews undertaken by the Designated Committee/ Authority. A request for change in


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this Accounting Manual shall be forwarded to the Chief Account Officer at HO level, who shall present it to the Designated Committee/ Authority for discussion and consideration for amendment. 19. Based on the order passed by the Designated Committee/ Authority (as constituted by UPJN for this purpose at HO level), changes shall be incorporated in this Accounting Manual. The proceedings/ discussions relating for any decision (whether to amend this Accounting Manual or not) shall be recorded as minutes of the meetings and all the relevant documents shall be filed in a separate file. 20. All the Units shall be intimated about the amendments in this Accounting Manual through a circular stating the paragraph(s) and line(s) to be replaced and date from which the change would be effective. Every circular stating any amendment in this Accounting Manual shall be attached with this Accounting Manual. After making amendment in the Accounting Manual every amendment would be incorporated with a footnote stating the effective date of amendment. Circulars/ notification issued by UPJN 21. This Accounting Manual shall have the overriding effect on all the earlier circulars/ notifications/ office orders/ memorandum/ rules and regulations/ guidelines relating to accounting procedures as prescribed by UPJN from time to time. 22. However Circulars/ notifications/ office orders/ memorandum/ rules and regulations/ guidelines (hereinafter referred collectively / individually as “Policies”) relating to accounting policies as prescribed by UPJN from time to time shall be referred (to the extent of policies aspects) to carry out the accounting.


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1.00 Section: Chart of Accounts Section Background: 1.01 This Section provides the structuring and codification of COA and related parameters which shall be used in recording and analysing the accounting data by UPJN. 1.02 The proposed codification structure discussed in this Section has been developed taking into consideration the long-term needs of the organisation and the requirement of the Information Technology (IT) enabled environment. Further the codification structure has been designed in a manner that flexibility can be maintained in terms of including new heads within the given structure as and when needed. Creation/ Deletion of codes 1.03 Based on the order passed by the Designated Committee / Authority, the codes shall be created by the respective users/ section/ department of UPJN. The proposed guidelines in respect of creation/ deletion of code (based on the codification structure as provided in this Section of the Accounting Manual) has been provided in a table below:

Particulars Codes to be created/ deleted by

Chart of Accounts

Schedule Balance Sheet Section at Head Office

Accounts Category Head Balance Sheet Section at Head Office

Accounts Group Head Balance Sheet Section at Head Office

General Ledger Compilation Section/ Accounts Section at Head Office

Subsidiary Ledger Compilation Section/ Accounts Section at Head Office However Subsidiary Ledger Accounts relating to following can be created by Unit which is required to pass the accounting transactions:

Party Name

Employees name

Analysis & Reporting Parameters

Works Projects MIS/ Project Monitoring Section at Head Office

Works Group

Works Class

Works Type

Scheme

Project

Project Components

Funding Agency

Funding Components

Project Cost Components

Functional Budget Budget Section at Head Office

Analyses Parameters MIS Section, Monitoring Section, Accounts Section, Balance Sheet Section, as the case may be, at Head Office


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Coverage of this Section 1.04 This Section covers the following Subjects:

Sl. No.

Subject Subject code

1. An Overview of Chart of Accounts and Related Aspects 1.01

2. Codification Structure for Chart of Accounts 1.02

3. Codification Structure for Subsidiary Ledger Accounts 1.03

4. Codification Structure for Works Projects 1.04

5. Codification Structure for Functional Budget 1.05

6. Codification Structure for Profit/ Cost Centres 1.06

7. Codification Structure for Analysis Parameters 1.07

8. Codification Structure for Locations/ Offices 1.08


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Section: Chart of Accounts Section Code: 1.00

Subject: An Overview of Chart of Accounts and Related Aspects

Subject Code: 1.01

This subject provides an overview of COA and related aspects discussed in this Section.

1. The proposed COA and related aspects discussed in this Section are as under:

Chart of Accounts

Subsidiary Ledger Account

Works Project

Functional Budget

Profit/ Cost Centre

Analysis Parameters

Locations/ Offices 2. An overall structure of the COA and its linkage with above related aspects has been presented below:

3. A detailed note on designing of the COA, related parameters and their codification structure has been provided in the subsequent Subjects of this Section. The detailed COA has been provided as Appendix I of this Accounting Manual.


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Subject: Codification Structure for Chart of Accounts

Subject Code: 1.02

This Subject provides the codification structure of the COA.

1. The COA has been structured in such a manner that it shall have in-built linking with grouping of accounts and schedule of the Balance Sheet and Income and Expenditure Account. 2. The proposed structuring of COA is provided in a table below:

Components of COA Intended Use

Schedules Schedules and sub-schedules shall be in line with the proposed format of Balance Sheet and Income and Expenditure Account of UPJN

Accounts Category Head

Accounts Identification Heads shall be “Liability”, “Asset”, “Income” and “Expenditure” which would facilitate categorisation of detailed General Ledger Accounts included under each of these Account Group Heads

Accounts Group Head Accounts Group Heads shall represent the broad Group of Accounts under the above Accounts Category Heads

General Ledger Account

This shall be the Accounts Head which would be used for passing the accounting entries (i.e. natural head of accounts)

3. Proposed codification structure of COA has been discussed under the subsequent paragraphs. Schedule Code 4. The codes for Schedules of the Balance Sheet and Income and Expenditure Account shall be allotted with a running serial number starting from 01. These schedule codes shall be reflected as the first two digits in the codification structure of the Accounts Category Head Code, Accounts Group Head Code and the General Ledger Account Code. 5. In line with the above, codes for the schedules shall be allotted as illustrated below:

Schedule Name Schedule Code

Capital Grant, Subsidy, Contribution 01

Secured Loans 04

Unsecured Loans 05

Current Assets, Loans and Advances 09

Current Liabilities and Provisions 10

Centage Income 12

Personnel Expenses 18

Accounts Category Head Code 6. For Accounts Category Head code, a single digit numeric code shall be used. The Accounts Category Heads shall be “Liability”, “Asset”, “Income” and “Expenditure” which would facilitate categorisation of detailed General Ledger Accounts included under each of these Accounts Category Heads.


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7. Codes for the Accounts Category Head shall be allotted as illustrated below:

Accounts Category Head Name Accounts Category Head Code

Liability 01

Asset 02

Income 03

Expenditure 04

Accounts Group Head Code 8. A 2 digits numeric code shall be suffixed to the Schedule Code and the Accounts Category Head for identifying Accounts Group Heads. This will ensure that flexibility is maintained in terms of including new account group heads as and when needed. These 2 digits code along with the Schedule Code and the Accounts Category Head code shall give the 6 digits “Accounts Group Head Code” as illustrated below:

Schedule Name Schedule Code

Accounts Category

Head

Accounts Category

Head Code

Accounts Group Head

Two Digit Code

Accounts Group Head

Code

Capital Grant, Subsidy, Contribution

01 Liability 1

Capital Grant from GoI

01 01.101

Capital Subsidy from GoI

10 01.110

Current Assets, Loans and Advances

09 Asset 2 Cash Balance in Hand

30 09.230

Imprest with Employees

50 09.250

Current Liabilities and Provisions

10 Liability 1 Creditors 05 10.105

Staff related liabilities

09 10.109

Centage Income 12 Income 3 Centage Income - Construction Works Project

01 12.301

Centage Income - Maintenance Works Project

02 12.302

Personnel Expenses

18 Expenditure 4 Salaries, Allowances and Bonus

01 18.401

Pension 04 18.404

General Ledger Account Code 9. General Ledger Account code shall be a combination of the Accounts Group Head code and a further 4 digits code for identifying General Ledger Accounts. 10. A 4 digits code shall be suffixed to the “Accounts Group Head code” and the combination of the Accounts Group Head code and these 4 digits shall constitute the 10 digits “General Ledger Account Code” as illustrated below:


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Accounts Group Head

Accounts Group Head

Code

General Ledger Account Four digits code

General Ledger Account code

Capital Grant from GoI

01.101 Capital Grant from GoI 0010 01.1010010

Cash Balance in Hand

09.230 Cash 0010 09.2300010

Imprest with Employees

09.250 Permanent Imprest 0010 09.2500010

Temporary Imprest 0020 09.2500020

Creditors 10.105 Account Payable – Contractor

0010 10.1050010

Account Payable – Supplier 0020 10.1050020

Staff related liabilities

10.109 Salary Payable 0010 10.1090010

Pension Payable 0130 10.1090130

Centage Income - Construction Works Project

12.301 Centage Income - Construction Works Project

0010 12.3010010

Centage Income - Maintenance Works Project

12.302 Centage Income - Maintenance Works Project

0010 12.3020010

Fines and Penalties Levied

16.301 Fines & Penalties Levied – Contractors

0010 16.3010010

Fines and Penalties Levied – Suppliers

0020 16.3010020

Salaries, Allowances and Bonus

18.401 Basic Pay 0010 18.4010010

Dearness Allowance 0020 18.4010020

Pension 18.404 Pension Expense 0010 18.4040010


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Subject: Codification Structure for Subsidiary Ledger Accounts

Subject Code: 1.03

This Subject provides the codification structure of the Subsidiary Ledger Accounts.

1. In case where any General Ledger Accounts would be operated as a 'Control Accounts', Subsidiary Ledger Accounts shall be used to facilitate further analyse separate accounts under these Control Accounts.

2. All those General Ledger Accounts which shall be operated as Control Accounts shall be grouped for the purpose of identifying the „Types of Subsidiary Ledger Accounts‟ as illustrated below:

General Ledger Accounts (Control Accounts) Type of Subsidiary Ledger Accounts

Accounts Payable – Suppliers Party Name Accounts Payable – Contractors

Advance to Suppliers

Advance to Contractors

Deposit from Suppliers

Deposit from Contractors

Temporary Imprest with Employees Employee Name Permanent Imprest with Employees

House Building Advances

WIP Materials Name of Works Projects

WIP Cost

Centage Income – Construction Works Project

Centage Income – Maintenance Works Project

Capital Grant from GoI Scheme Name

Capital Grant from GoUP

Inter Unit Transaction – Funds Transfer Unit Name

3. The above linkage would facilitate use of a Type of Subsidiary Ledger Accounts with multiple General Ledger Accounts (Control Accounts). 4. Subsidiary Ledger Accounts shall be created as per the above Types of Subsidiary Ledger Accounts. These independent Subsidiary Ledger Accounts shall be linked with the respective General Ledger Accounts (Control Accounts) to be operated as General Ledger specific Subsidiary Ledger Accounts. 5. After identifying the type of Subsidiary Ledger Accounts, codification for Subsidiary Ledger Accounts shall be independent of codification of General Ledger Accounts (Control Accounts).

6. The codification structure for Subsidiary Ledger Accounts has been discussed under the following heads:

Codification for Type of Subsidiary Ledger Accounts

Codification for Subsidiary Ledger Accounts Codification for Type of Subsidiary Ledger Accounts

7. A 3 digits alpha code shall be used for each Type of Subsidiary Ledger Accounts as illustrated below:


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Type of Subsidiary Ledger Accounts

Code for Type of Subsidiary Ledger Accounts

Party Name PTY

Employee Name EMP

Name of Works Projects WRP

Scheme Name SCH

Unit Name UNT

Codification for Subsidiary Ledger Accounts

8. Subsidiary Ledger Accounts shall be defined under each of the above types of Subsidiary Ledger Accounts.

9. A 3 digits alphabetic numeric code for type of Subsidiary Ledger Accounts shall be suffixed with 7 digits code for that particular Subsidiary Ledger Account which shall constitute a 10 digits alpha-numeric code to be used for defining the General Specific Subsidiary Ledger Account code as illustrated below:

General Ledger Account (Control Accounts)

Type of Subsidiary Ledger Accounts

Subsidiary Ledger Account

Accounts Payable – Suppliers PTY

PTY0000001

PTY0000002

PTY0000003

Advance to Suppliers PTY PTY0000001

PTY0000002

PTY0000003

Deposit from Suppliers PTY PTY0000001

PTY0000002

PTY0000003

Temporary Imprest with Employees

EMP EMP0000001/ Employees Code

EMP0000002/ Employees Code


Permanent Imprest with Employees

EMP EMP0000003/ Employees Code



House Building Advance EMP0000003/ Employees Code



WIP Cost Materials WRP RNW0010101

RNW0010102

UOW0010101

Inter Unit Transaction – Funds Transfer

UNT 10 Digit Unit Code


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Section: Chart Of Accounts Section Code: 1.00

Subject: Codification Structure for Works Projects

Subject Code: 1.04

This Subject provides the Codification Structure for Works Projects The combination of Works Project and General Ledger Account would be used for recording and monitoring the Works project expenditure.

Works Projects 1. Works Project code shall be a 10 digit alpha-numeric code as illustrative below:

1 alpha digit for Works Group Code

1 alpha digit for Works Class Code

1 alpha digit for Works Type Code

Numeric digits for Scheme Code

Numeric digits for Project Code

Numeric digits for Project Component Code 2. The proposed structuring of Works Project is provided in a table below:

Levels of Works Projects Categories

Works Group Rural Development Department

Urban Development Department

Public Works Department

Others

Works Class Construction

Operation & Maintenance (O & M)

Project and Consultancy

Others

Works Type Water Supply

Sewerage

Drainage

Solid Waste Management (SWM)

Sustainability

Others

Scheme Scheme (as sanctioned by Government)

Project Projects (as sanctioned under the above schemes)

Project Component Project Components (as defined under above projects)

3. The proposed codification structure for Works projects is discussed in the subsequent paragraphs. Works Group

4. A single digit alphabetic code shall be allotted to the Work Group e.g. for Rural Development Department „R‟, for Urban Development Department „U‟, for Public Works Department „P‟, for Others „O‟. This would facilitate categorisation of detailed work expenditure under each of these groups. Works Class 5. A single digit alphabetic code shall be allotted to the Work Classes for any works project e.g. for Construction „C‟, for Operation & Maintenance (O&M) „M‟, for Project and Consultancy „P‟, for Others „O‟.


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6. A single digit alphabetic code shall be suffixed to the relevant Work Group for identifying Work Class. This 1 digit alphabetic code along with Work Group code shall constitute the 2 digits alphabetic code for “Works Class” as illustrated below:

Works Group

Work Group Code

Works Class One Digit Code

Works Class Code

Rural Development Department

R Construction C RC

Operation & Maintenance (O&M) M RM

Project and Consultancy P RP

Others O RO


U Construction C UC

Operation & Maintenance (O&M) M UM

Project and Consultancy P UP

Others O UO

Works Type 7. A single digit alphabetic code shall be suffixed to the relevant Work Class for identifying Work Type e.g. for Water Supply „W‟, for Sewerage „S‟, for Drainage „D‟, for Solid Waste Management (SWM) „M‟, for Sustainability „T‟, for Others „O‟. 8. This 1 digit alphabetic code along with 2 digits alphabetic Work Class code shall constitute the 3 digits alphabetic code for “Works Type” as illustrated below:

Works Class Work Class Code

Works Type One Digit Code

Works Type Code

Rural Development Department – Construction

RC Water Supply W RCW

Sewerage S RCS

Drainage D RCD


M RCM

Sustainability T RCT

Others O RCO

Urban Development Department – O&M

UM Water Supply W UMW

Sewerage S UMS

Drainage D UMD


M UMM

Sustainability T UMT

Others O UMO

Scheme 9. Scheme code shall be a combination of the relevant Alphabetic Work Class Code and a further 3 digits numeric code for identifying Schemes. 10. A 3 digits numeric code shall be suffixed to the relevant Work Class Code and the combination of the 3 digits alphabetic Work Class Code and these three digits numeric code shall constitute the six digits alphanumeric “Scheme Code” as illustrated below:

Work Class Work Class Code

Scheme Three Digits Code

Scheme Code

Rural – Construction – Water Supply

RCW Scheme A 001 RCW001

Scheme B 002 RCW002

Urban – O&M - Water Supply

UMW Scheme A 001 UMW001

Scheme B 002 UMW002


Page | 23

Project 11. Project code shall be a combination of the relevant Alphabetic Scheme Code and a further two digits numeric code for identifying Project. 12. A two digits numeric code shall be suffixed to the relevant Scheme Code and the combination of the six digits alphanumeric Scheme Code and these two digits numeric code shall constitute the eight digits alphanumeric Project Code as illustrated below:

Scheme Scheme Code

Project Two Digits Code

Project Code

Rural – Construction – Water Supply – Scheme A

RCW001 Project A 01 RCW00101

Project B 02 RCW00102

Urban – O&M - Water Supply – Scheme A

UMW001 Project A 01 UMW00101

Project B 02 UMW00102

Project Component 13. Project Component code shall be a combination of the relevant Alphabetic „Project Code‟ and a further 2 digits numeric code for identifying Project Component. 14. A 2 digits numeric code shall be suffixed to the relevant “Project Code” and the combination of the 8 digits alphanumeric Project Code and these 2 digits numeric code shall constitute the 10 digits alphanumeric “Project Component Code” as illustrated below:

Project Project Code Project Component

Two Digits Code

Project Component Code

Rural – Construction – Water Supply – Scheme A – Project A

RCW00101 Project Component A

01 RCW0010101

Project Component B

02 RCW0010102

Urban – O&M - Water Supply – Scheme A – Project A

UMW00101 Project Component A

01 UMW0010101

Project Component B

02 UMW0010102

15. For the purpose of analysing the works project expenditure - funding agency, funding components and cost components wise, a composite codification structure which shall be linked with works project has been structured as below:

Cost monitoring factors Categories

Funding Agency GoI,

GoUP

MLA

MP

Community participation

External funding agency

Funding Components Grant

Contribution

Loan

Deposit

Project Cost Components Labour

Materials

Other

Note: The above shall be provided while defining the project code as discussed earlier.


Page | 24

Funding Agency 16. UPJN receives funds either from the respective outside parties (e.g. Urban Local Bodies, etc.) or from Central and/ or State Government or directly from the funding agencies (e.g. ADB, World Bank, etc. on behalf of outside parties/ Government) for execution of the construction projects. All these agencies shall be termed as funding agencies. 17. Every funding agency shall be allotted with a running serial number starting from 01 as illustrated below:

Name of Funding Agency Funding Agency Code

Central Government i.e. GOI 01

State Government – Uttar Pradesh 02

Urban Local Bodies – Name of Urban Local Body 03

Jal Sansthan – Name of Jal Sansthan 04

Asian Development bank (ADB) 05

World bank (WB) 06

MLA - Area 07

MP – Area 08

Community Participation 09

Funding Components 18. Funds provided by the funding agencies to execute the works projects can be in form of loan, grant, subsidy, deposits, etc. 19. Each funding component shall be allotted with a running serial number starting for 01 as illustrated below:

Name of Funding Component Funding Component Code

Loan 01

Grant 02

Subsidy 03

Deposit 04

Project Cost Components 20. Cost components of any project to be executed by UPJN shall broadly be categorised in to Labour, Materials, Project Asset, Centage, Others, etc. 21. Each cost component shall be linked with the respective General Ledger Account as illustrated below:

Cost Components of Project Cost components Code

Labour Cost Respective General Ledger Account Head

Materials Cost Respective General Ledger Account Head

Project Asset Cost Respective General Ledger Account Head

Centage Cost Respective General Ledger Account Head

Others Cost Respective General Ledger Account Head


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Subject: Codification Structure for Functional Budget

Subject Code: 1.05

This Subject provides the Codification Structure for Functional Budget.

1. Budget can be defined/ allocated at the following levels:

General Ledger Account

Project Component

2. Budget at General Ledger Account level shall be defined for the year. However budget for Project Component shall be defined for the project life.

3. Budget codes for General Ledger Account and Project Component shall be the codes of General Ledger Account and Works Project, respectively.

4. Budget at General Ledger Account level can be defined for various functions at two levels as illustrated below:

Functional Budget Level I Functional Budget Level II

Works Construction

Operation & Maintenance (O&M)

Capital Furniture and Fixtures

Plant and Machinery

Data Processing Equipment

Revenue Centage Income

Other Income

Expenditure Personnel

Administration

Interest and Financial Charges

Accounts and Audit

Supervision

5. The codes for the each level of Functional budgets shall be allotted as illustrated below:

Functional Budget Level I

Functional Budget Level I Code

Functional Budget Level II Functional Budget Level II Code

Works F1001 Construction F2WRC00001

Operation & Maintenance (O&M)

F2WRM00001

Capital F1002 Furniture and Fixtures F2CAP00001

Plant and Machinery F2CAP00002

Data Processing Equipment F2CAP00003

Revenue F1003 Centage Income F2REV00001

Revenue Grant F2REV00002

Interest Income F2REV00003

Other Income F2REV00004

Expenditure F1004 Personnel F2EXP00001

Administration F2EXP00002

Interest and Financial Charges F2EXP00003

6. Budget at Project Component shall be defined at the time of creating a Project Component Code.


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Subject: Codification Structure for Profit/ Cost Centres

Subject Code: 1.06

This Subject provides the Codification Structure for Profit/ Cost Centres.

1. Profit centres and cost centres shall be identified by Head office and informed to different Accounting Units which can be any department, activity, office, machine, group, etc. 2. Based on the allocation of revenue and expenses, accounting shall be done under the respective profit/ cost centres. Accounting under profit centres and cost centres concept shall facilitate in analysing and improving the profitability and/ or efficiency of that profit centres and cost centres. 3. Profit centre and cost centre can be identified at any level in the UPJN‟s hierarchy. Accordingly there may be either more than one profit centre and cost centre under any office or more than one office under a particular profit centre and cost centre. Profit centre

4. Profit centre is an accounting term that refers to a department or function in the organisation to which the revenue and the cost are separately identified to determine the result of such activity or function.

5. A ten digit code starting shall be used for various profit centres. These profit centres may include areas of business (e.g. urban, rural, etc.), business categories (construction of Construction schemes, maintenance of existing schemes, etc.) Cost centre

6. Cost centre is an accounting term that refers to a department or function in the organisation to which the costs are separately identified to determine the cost efficiency and variance from the budgeted cost of that department or function.

7. A ten digit code shall be used for various cost centres. These cost centres may include cost of activities or group of activities/ functions, e.g. Supervision Charges, Accounting & Audit Expenses, Secretariat Expenses, etc.


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Subject: Codification Structure for Analysis Parameters

Subject Code: 1.07

This Subject provides the Codification Structure for Analysis Parameters.

1. The analysis parameters shall be tagged on to the General Ledger Account(s). It shall be used to group a particular type of transactions under related General Ledger Accounts.

2. Analysis of transactions can be done at two levels of analysis parameters as illustrated below:

Analysis Parameter Level I Analysis Parameter Level II

Works - Construction Works Project 1

Works Project 2

Works - Operation & Maintenance (O&M) Works Project 3

Works Project 4

Capital Furniture and Fixtures

Plant and Machinery


Non-Works Personnel

Administration

Interest and Financial

Amount Provided Towards Losses

Income Tax

3. The codes for the each level of Functional budgets shall be allotted as illustrated below:

Analysis Parameter Level I

Analysis Parameter Level I

Code

Analysis Parameter Level II Code

Analysis Parameter Level II Code

Works - Construction A1001 Works Project 1 10 Digit Works Project Code

Works Project 2 10 Digit Works Project Code

Works - Operation & Maintenance (O&M)

A1002 Works Project 3 10 Digit Works Project Code

Works Project 4 10 Digit Works Project Code

Capital A1003 Furniture and Fixtures A2CAP00001

Plant and Machinery A2CAP00002


A2CAP00003

Non-Works A1004 Personnel A2NWR00001

Administration A2NWR00002

Interest and Financial A2NWR00003


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Subject: Codification Structure for Locations/ Offices

Subject Code: 1.08

This Subject provides the Codification Structure for Locations/ Offices.

1. Location code represents the office to which the transactions relate. These codes shall provide the linkage of hierarchical reporting and help in consolidation of accounts.

2. Each location code shall have 4 levels in line with the existing organisation hierarchy in UPJN as illustrated below:

3. For the purpose of defining the location code, Accounting Units at head office shall be kept at the level of Division level.

4. Based on the above a ten digits numerical code shall be used for the different level offices of UPJN as illustrated below:

Offices HO ZO CO DO Office Code

Head office 1 00 00 00000 1000000000

Zonal office (ZO)1 1 01 00 00000 1010000000

Zonal office 2 1 02 00 00000 1020000000

Circle office (CO) 1 of Zonal Office 2 1 02 01 00000 1020100000

Divisional office (DO) 3 of circle office 1of Zonal Office 2 1 02 01 03000 1020103000

Head offices

Zonal office 2 Zonal office 3 Zonal office 1

Circle office 1 Circle office 2 Circle office 3

Divisional office 1 Divisional office 2 Divisional office 3

1 digit

code

2 digits

code

2 digits

code

5 digits

code


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2.00 Section: Stores Section Background: 2.01 This Section covers the Stores accounting and related procedures . 2.02 Stores and Materials have been interchangeably used in this Section. Accounting Policies 2.03 The main accounting policies that shall be followed relating to Stores accounting are provided in the subsequent paragraphs: Purchase of Materials a.) All the materials purchased shall be identified to a particular Works project and shall be

accounted for under the WIP Materials Account of the corresponding Works project. In case of materials purchases made are not identified to a particular Works project, it shall be booked to Central Stores Account.

b.) The materials shall be valued at the landed cost i.e. basic price, excise duty, sale tax, freight and

other incidental & directly attributable expenses (e.g. loading / unloading expenses). c.) In case of imports, the cost of materials shall include the following:

Cost Insurance Freight (C.I.F.) value of materials

Custom duty.

Port charges, landing charges and clearing agent's commission

Local transport charges

Other incidental expenses and local taxes, if any.

Gain / loss on account of foreign exchange fluctuation

d.) In case of any price variation, retrospectively, to any materials (subsequent to the receipt of materials at store and passing of bill), which results in amount payable to/ recoverable from supplier, the same shall be identified and accounted for as and when and shall be charged to the WIP Materials Account or Central Stores Account as the case may be. In case the corresponding materials have already been consumed, the same shall be charged off to the relevant WIP Materials Consumed Account of the Works project.

Inter unit transfer of materials e.) All materials transfers (between Junior Engineer, Project, Unit, location) shall be made against

MTN duly approved by the respective Designated Authority. Materials transfer shall be accounted for as and when the materials has been issued or received. Materials transfer shall be valued at weighted average rate.

f.) All materials receipts from other Units shall be valued at the same rate at which there have been transferred by other Units. Accounting for these receipts shall be done as and when the materials are received.

g.) The materials received from other Units shall be valued at the same rate as intimated by the Transferor Unit in the respective Advice of Transfer Debit (ATD).

h.) The cost of transport of materials transferred from the Transferor location/ store to the Transferee location/ store shall be charged to the WIP Materials Account of the transferee Works project or Central Store Account, as the case may be.

Consumption of materials


Page | 30

i.) Materials consumption shall be accounted for as and when the materials have been consumed and valued at weighted average rate.

Valuation of closing stock of Materials j.) Closing stock of materials shall be valued at the lower of the cost or net realisable value. Net

realisable value (NRV) of the inventory should be estimated on the basis of most reliable evidence at the time of valuation.

Allocation of stores expense k.) UPJN incurs stores expenses for the maintenance of Stores. These expenses shall be first

accounted for under the relevant expense heads and shall be apportioned / allocated subsequently.

l.) Stores expenses shall include the following items:

Godown rent

Stores maintenance expenses

Other expenses relating to stores. m.) At every month end, the above stores expenses, on an appropriate basis, shall be allocated to

the:

Cost of respective materials items lying with the store; or

In case where the respective materials items have already been consumed, then to the respective Works projects under the account head WIP Materials Consumed Account

However in case of store expenses which are directly identifiable to any Works project, the store expenses shall be allocated to the WIP Materials Account of the concerned Works project.

Sale of materials / scrap n.) The sale of materials / scrap shall be accounted for on dispatch of materials to the selected buyer. o.) In general, any income or loss on sale of materials shall be credited / debited to Income / Loss

from Sale / Disposal / Surplus / Write Off of Material Account. The scrap sale can be on account of sale of unused materials identified as scrap or sale of used materials identified as scrap. In general, the sale of scrap (used materials identified as scrap) shall be credited to Income from Sale of Scrap Account. However, for sale of materials / scrap pertaining to Works project, the treatment shall be as per the Policies prescribed by UPJN.

Materials in transit p.) At the period end, if the ownership of materials has been passed to UPJN then based on the

information available and respective Purchase Order (PO) / Contract Bond (CB), a provision for the cost of materials in transit shall be created. Subsequently, at the time of actual receipt of the materials, this provision shall be adjusted with the amount of actual liability of the materials purchased.

Other accounting policies q.) In case of unused materials items which are identified as scrap or obsolete materials, the

valuation of these materials items shall be done at cost or Net Realisable Value (NRV) whichever is lower and the difference shall be charged off to the Income and Expenditure Account (in case where materials items are not identified to any Works project) or WIP Cost Others Account (in case where materials items are identifiable to any Works project).


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Sl. No.


1. Receipt of Purchased Materials 2.01

2. Supplier‟s Bill Passing 2.02

3. Transfer of Materials – Intra-unit 2.03

4. Transfer of Materials – Inter-unit 2.04

5. Consumption of Materials 2.05

6. Sale of Materials / Scrap Materials 2.06

7. Physical Verification of Materials 2.07

8. Inventory Management 2.08


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Section: Stores Section Code: 2.00

Subject: Receipt of Purchased Materials Subject Code: 2.01

Subject Background: This subject covers the accounting procedure to be followed in relation to receipt of purchased materials. Materials are purchased by UPJN directly through supplier or through Permanent Imprest (PI) provided to concerned officials (e.g. Junior Engineer/ Assistant Engineer). In case of materials purchased directly from supplier, Dispatch Instruction is issued to the supplier providing details of the materials item required, its quantity, location of receipt, etc. Based on the Dispatch Instruction, supplier supplies the materials. The materials supplied to UPJN shall be inspected by third party agency before supply to UPJN. Based on the Inspection Report, it shall be decided whether the materials shall be accepted or rejected for supply to UPJN. After receipt of materials at UPJN, entry shall be made in Stores Entry Register of the concerned store. Subsequent to receipt, UPJN may decide to have testing of the materials supply and accordingly decide whether to accept or reject the materials. In case the materials received are damaged, Materials Outward Gate Pass shall be prepared for return of damaged materials to the supplier. Subsequent to acceptance of materials, Goods Receipt Note (GRN) shall be prepared by Junior Engineer and shall be valued at Accounts Section. In all cases, materials shall be first provisionally valued and accounted for in GRN based on the rates provided in respective Purchase Order (PO) / Supply Order / Contract Bond (CB). Thereafter, materials shall be actually valued based on the supplier bill received. Procedure for bill passing and accounting of bill has been covered under Subject Code: 2.02 In context of the above, this subject is covered under the following heads:

Receipt of materials

Preparation of GRN

Valuation of GRN

Purchase of materials through Permanent Imprest

Freights and incidentals on purchases

Procedure:

Sl. No.

Person / Section

Responsible

Activity / Action Frequency / Timing

Receipt of materials at UPJN location

1. Storekeeper / Security Personnel

When materials are received at stores / site, make stores entry in Stores Entry Register, immediately providing details of materials received, Delivery Challan / Bill ref. etc. Essentially the purpose of making the stores entry is to record the actual time and date of the materials receipt for any future reference purpose.

Put the stores entry no., date and time of receipt of materials, on the Delivery Challan / Bill.

At the time of entry of materials at stores/ site

2. Junior Engineer (JE) / Storekeeper

When materials are unloaded, ensure the following key aspects: o Stores entry has been made by Storekeeper in the

Stores Entry Register for the concerned materials. o Stores entry no., date and time of receipt of

materials, on the Delivery Challan / Bill.

At the time of unloading the materials


Page | 33

Sl. No.

Person / Section

Responsible


o Check Inspection Report – for inspection undertaken at supplier‟s site‟ (if any), shall available with the Store Section (to be checked by JE)

o Check that the materials are received as per the details provided in Dispatch Instruction.

o The materials quantity is not in excess of the quantity for which Dispatch Instructions has been issued.

o The materials are in normal conditions and are not damaged. Reject the materials quantity that is apparently damaged.

Calculate the quantity of materials received, materials damaged vis-à-vis mentioned in Delivery Challan/ Bill.

Update Measurement Book (MB)

Acknowledge the copy of Delivery Challan/ Bill of the supplier by putting a receipt stamp and mention the quantity of materials accepted as well as materials damaged and rejected. o In case the quantity actually received is lower than

the quantity mentioned in Delivery Challan/ Bill then mention the quantity short received on Delivery Challan/ Bill.

o In case the quantity actually received is more than the quantity mentioned in Delivery Challan/ Bill then excess quantity shall be returned to the supplier.

Prepare Materials Outward Gate Pass for damaged materials/ excess materials returned and take receipt signature of the transporter / supplier representative on it.

Preparation of GRN

3. Junior Engineer

In case materials‟ testing is required to be done, send the materials for testing purpose

Within one day of receipt of materials

4. Junior Engineer

Receive Inspection Report

In case where Inspection Report indicates rejection of materials, reject materials, prepare Materials Outward Gate Pass and take receipt signature of the transporter/ supplier representative on it.

Prepare GRN with complete details for materials accepted (in case of rejection of entire lot of materials, GRN shall not be prepared ) o In case of inspected materials, GRN date shall be

the date of receipt of Inspection Report otherwise GRN shall be prepared on the same day on which stores entry is made.

Update Daily Transaction Register (DTR) based on GRN for the materials quantity accepted.

Forward GRN, MB along with Delivery Challan/ Bill and / or Materials Outward Gate Pass (in case of materials rejected) to Assistant Engineer (AE).

As and when Same day

5. Assistant Engineer

Scrutinise, approve and forward the GRN, MB and Delivery Challan/ Bill to Accounts Section.

Same day on receipt of GRN

Valuation of GRN

6. Accounts Section

On receipt of GRN, verify GRN with the MB, Delivery Challan/ Bill, PO / Dispatch Instruction, CB, etc.

Within one day of receipt of


Page | 34

Sl. No.

Person / Section

Responsible


Value GRN based on the rates agreed with the supplier and finalise it.

GRN

7. Accounts Section

Prepare Journal Voucher (JV), for the GRN Value, and obtain approval from Designated Authority.

Based on JV, update Journal Book, Stores Ledger, Supplier‟s Bill Register, General Ledger, Subsidiary Ledger and Works Register. The Supplier Bill Register shall be maintained Stores Entry No. wise.

Same day on valuation of GRN

Purchase of materials through Permanent Imprest

8. Junior Engineer / Assistant Engineer / Accounts Section

Adopt the same procedure for purchase of materials undertaken through PI as provided in Subject Code: 8.07

Adopt the same procedure of Receipt of Materials at UPJN location, and preparation, valuation and accounting of GRN, as provided above.

Policies prescribed by UPJN, if any, shall be applicable for testing of the materials purchased through PI.

As and when indicated

Freights and incidentals on purchases

9. Junior Engineer / Assistant Engineer / Accounts Section

If freight and incidentals charges are paid on materials through PI, then adopt the same procedure for transactions undertaken through PI as provided in Subject Code: 8.07

Mention the GRN reference on the freight bill / vouchers pertaining to the freight.

Provide details of freight and incidentals on GRN in remarks column.

Within one day of receipt of PI / TI vouchers

10. Accounts Section

In case of freights and incidentals expenses incurred for which payment shall be made by Unit, receive and pass the freight bill.

Prepare JV and obtain approval from Designated Authority. In case where materials have been consumed, WIP Materials Consumed Account shall be debited (Accordingly update Stores Ledger after preparation of JV), otherwise, WIP Materials Account / Central Stores Account shall be debited.

Based on JV, update Journal Book, Stores Ledger (in case materials not consumed), General Ledger, Subsidiary Ledger and Works Register.

Provide details of freight and incidental on GRN in remarks column.

Within one day of receipt of freight bill

Formats

Format Ref.

Document Title

Document Type

Frequency Responsibility Distribution to

MT/R01 Stores Entry Register

I/O At the time of entry of materials at stores/ site

Storekeeper / Security Personnel

---

MT/F01 GRN I/O As and when materials are received and accepted

Junior Engineer Own Copy

Assistant Engineer

Accounts Section

MT/R02 Daily Transaction Register

O Same day on finalisation of GRN

Junior Engineer ---


Page | 35

Format Ref.

Document Title

Document Type


MT/R03 Stores Ledger

O Same day on valuation of GRN

Accounts Section

---

MT/R04 Supplier‟s Bill Register


Accounts Section

---

WE/R02 Works Register

I/O Same day on valuation of GRN

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents

Accounting Entries Person / Section

Responsible

1.

Receipt of Materials from Supplier

JV GRN Debit Relevant WIP Materials Account / Central Stores Account Credit Bills Awaited Account

Accounts Section

2. Receipt of Materials from Supplier through PI

JV GRN Debit Relevant WIP Materials Account / Central Stores Account Credit Permanent Imprest Account

Accounts Section

3. Freight and incidental expenses through PI

JV Supporting Vouchers / Bills

Debit Relevant WIP Materials Account / Central Stores Account / WIP Materials Consumed Account Credit Permanent Imprest Account

Accounts Section

4. Freight and incidental expenses through Transporter bill (supplier or outside party)

JV Transporter Bill

Debit Relevant WIP Materials Account / Central Stores Account / Relevant WIP Materials Consumed Account Credit Account Payable – Contractor / Account Payable - Supplier Account

Accounts Section


Page | 36


Subject: Supplier’s Bill Passing Subject Code: 2.02

Subject Background: This subject covers the accounting procedure to be followed in relation to passing supplier‟s bill and payment thereon. Any difference between supplier‟s bills passed and the provisional values as per GRN shall be accounted for under relevant WIP Materials Account / Central Stores Account. However, at the time of such adjustment, in case, the respective materials items have already been consumed and the relevant WIP Materials Account shows nil balance, the difference amount shall be charged off directly to the relevant WIP Materials Consumed Account of the Project. In context of the above, this subject is covered under the following heads:

Supplier‟s bill passing

Advance payment to supplier

Payment to supplier against supplier‟s bill

Procedure:

Sl. No.

Person / Section

Responsible


Supplier’s bill passing

1. Junior Engineer (Technical)

Receive supplier‟s bill from the supplier and put a date stamp on it for the date of receipt.

Refer GRN, MB, Delivery Challan, etc. and scrutinise supplier bill and check that the bill details has the Delivery Challan duly acknowledged by the Junior Engineer.

Ensure the following key aspects while passing the bill: o The quantity mentioned in supplier bill is same as that

mentioned in the respective GRN. o The rate is as per the respective Purchase Order / CB

/ revised price variation statement, etc., as applicable, through which the rates were agreed with the supplier.

o Undertake casting, cross casting of the bill and ensure that the bill is as per the terms and conditions agreed.

o Pass the bill for the amount payable accordingly.

Forward the supplier bill along with the MB and Delivery Challan, to Accounts Section.

As and when supplier bill is received Within one day of receipt of bill

2. Accounts Section

Receive supplier‟s bill along with the MB and Delivery Challan and put a date stamp on it for the date of receipt.

Ensure that every supplier bill must have a corresponding GRN. Supplier bill without GRN shall not be passed.

Update Supplier‟s Bill Register for the details of supplier bill received. The Supplier Bill Register shall be maintained Stores Entry No. wise

Ensure the following key aspects while passing the bill: o Stores entry reference details are provided (by JE /

Storekeeper of UPJN) on the Delivery Challan. o The quantity mentioned in supplier bill is same as that

mentioned in GRN. o The rate is as per the PO / CB / revised price variation

statement, etc., as applicable, through which the rates

As and when supplier bill is received Within one day of receipt of bill


Page | 37

Sl. No.

Person / Section

Responsible


were agreed with the supplier. o Undertake casting, cross casting of the bill and ensure

that the bill is as per the terms and conditions agreed. o Pass the bill for the amount payable on quantity

accepted.

3. Executive Engineer (EE)

Undertake an overall check on the supplier‟s bill and approve the bill for payment.

As and when supplier bill is received for approval

4. Accounts Section

Prepare JV and obtain approval from the Designated Authority, for the amount payable to the supplier based on the bill passed.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Supplier‟s Bill Register and Works Register.

Update Stores Ledger for the difference between GRN Value and the bill passed value, in any. Such difference might arise on price variations, etc.

Within one day of receipt of approval from Executive Engineer


5. Accounts Section

Advance payment shall be made to the supplier only as per the agreed terms and conditions.

Receive Performa Invoice from supplier for the advance.

In case advance is to be paid to retire dispatch documents from the bank, verify particulars of Bank Advice with Dispatch Instruction / PO / CB through which materials were instructed to be supplied and percentage of payment was agreed to be paid (e.g. this is an usual case in case of imported materials).

Take necessary approvals from Designated Authority and forward supporting documents to Cashier for payment.

As and when

6. Cashier Receive supporting documents.

To process payment, adopt the procedure for bank payments as provided in Subject Code: 9.04

Prepare BPV.

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger, MB and Works Register.


Payment to supplier against supplier’s bill

7. Accounts Section

The payment to supplier shall be made on or after the due date of payment for the amount passed against the bill and net of advance paid, if any, earlier.

Forward JV with supporting documents to Cashier for payment.

On the day of making payment

8. Cashier Receive JV with supporting documents


Prepare BPV.

Based on BPV, update Bank book, Supplier‟s Bill Register, General Ledger, Subsidiary Ledger and Works Register.

Update MB for the supplier‟s bill passed and payment made.



Page | 38

Formats

Format Ref.

Document Title

Document Type


MT/F01 GRN I/O As and when materials are received


Assistant Engineer

Accounts Section

Junior Engineer (Technical)

MT/R04 Supplier‟s Bill Register

I/O Same day of Receipt of GRN/ Receipt of Bill/ Passing of Bill/ Advance Payment/ Payment to Supplier against Bill

Accounts Section

---


O Same day of updation of Supplier‟s Bill Register

Accounts Section

---


O As and when Accounts Section

--

Accounting Entries

Sl. No. Event Voucher type

Source documents


Responsible

1.

On passing supplier bill

JV GRN and Supplier‟s Bill

Debit Bills Awaited Account (for the GRN amount) Credit Account Payable -Supplier Account Relevant WIP Advance Account (for advances given earlier, if any)

Accounts Section

2. In case GRN value is higher than bill passed amount

JV Supplier‟s Bill Register – difference between GRN and bill passed amount

Debit Account Payable -Supplier Account Credit Relevant WIP Materials Account / Central Stores Account

Accounts Section

3. In case GRN value is lower than bill passed

JV Supplier‟s Bill Register – difference between GRN

Debit Relevant WIP Materials Account / Central Stores Account

Accounts Section


Page | 39

Sl. No. Event Voucher type

Source documents


Responsible

amount and bill passed amount

Credit Account Payable -Supplier Account

4. Advance Payment to Supplier

BPV Performa invoice / bank advice

Debit Relevant WIP Advance Account/ Advances - Supplier Account Credit Bank Account

Cashier

5. Payment to Supplier against supplier‟s bill

BPV Supplier‟s Bill Debit Account Payable -Supplier Account Credit Bank Account

Cashier


Page | 40


Subject: Transfer of Materials – Intra-Unit Subject Code: 2.03

Subject Background: This subject covers the accounting procedure to be followed in relation to the transfer of materials within Unit. The materials may be transferred within Unit between Works projects, JE and Locations. It may happen that the materials are transferred for use in one Works project from another Works project or within Works project having different components based at the same location or at another location managed by same JE or different JE. Materials may also be transferred in case of transfer of JE. For transfer of materials, the JE requiring materials shall prepare Materials Transfer Note (MTN) which shall be for requisition of materials as well as transfer of materials. However in case where the materials have been sent voluntarily, the MTN shall be prepared and sent by the Transferor JE and signature of Transferee JE shall be taken (Transferee JE need not prepare MTN in such cases). In context of the above, this subject is covered under the following heads:

Requisition of materials for transfer

Transfer of materials

Receipt of transferred materials

Valuation of MTN, GRN and MAN

Procedure:

Sl. No.

Person / Section

Responsible



1. Transferee - Junior Engineer

Prepare MTN, providing the details of Works project, materials required, quantity required, etc.

Obtain approval of AE and EE

Authorise a Person to receive materials on its behalf in case JE does not go to receive the materials from Transferor and authenticate the signature of receiver

Subsequently, send the MTN to Transferor JE for transfer of materials.

As and when materials are required to be transferred

2. Executive Engineer

Identify the location/Junior Engineer, from where materials can be optimally transferred.

Approve and forward the MTN to Transferor – JE.

Same day on receipt of MTN


3. Transferor – Junior Engineer

Receive MTN from EE/ JE and check it to ensure that all the necessary information (materials item, quantity required, approval of EE, etc.) has been provided to make a transfer of materials.

Issue materials against the MTN received.

Obtain signature of the Transferee JE or its authorised representative on MTN on dispatch of materials.

Provide details in the MTN for the materials dispatch vis. actual quantity dispatched, etc.

Prepare Materials Outward Gate Pass for transfer of materials.

Update the DTR with MTN details and also the details of the Works project, if any, out which materials have been

On dispatch of materials


Page | 41

Sl. No.

Person / Section

Responsible


dispatched.

Forward MTN to AE.

4. Transferor – Assistant Engineer

Scrutinise, approve and forward the MTN to Accounts Section.

Same day of receipt of MTN


5. Transferee – Storekeeper / Security Personnel

On receipt of materials along with MTN, make stores entry in Stores Entry Register immediately by providing details of materials received, etc.

As and when materials are received

6. Transferee – Junior Engineer / Storekeeper

When materials are received, ensure the following: o Check that the materials are received as per the

details provided in copy of MTN. o The materials are in normal conditions and are not

damaged.

Measure the quantity of materials received, materials damaged vis-à-vis quantity dispatched as mentioned in MTN.

Prepare GRN with complete details for materials dispatched by Transferor JE.

For any difference between quantity dispatched as per MTN and actual quantity received / damaged, prepare Materials Adjustment Note (MAN) to adjust the quantity short received / damaged

Update DTR based on GRN and MAN for the materials quantity.

In case of shortage of quantity received, mention the actual quantity short received in the MAN and person responsible for shortage, if any.

Update the DTR with the Works project details for which materials have been received. This Works project shall be the same Works project that was mentioned in the MTN initiated by the Transferee Junior Engineer.

Forward GRN, MAN and MTN to AE.

Same day of receipt of materials

7. Transferee – Assistant Engineer

Scrutinise, approve and forward GRN, MAN and MTN

Same day of receipt of MTN, GRN and MAN

Valuation of MTN, GRN and MAN

8. Accounts Section

On receipt of MTN from Transferor AE, verify MTN and value MTN based on the weighted average rate derived.

On receipt of GRN and MAN from Transferee AE, value the GRN and MAN based on the weighted average rate.

The balance quantity short received (as per MAN) shall be debited to the account of person responsible and accordingly recovery shall be made from that person.

Within one day of receipt of MTN, GRN and MAN

9. Accounts Section

Prepare JV for the MTN, GRN and MAN Value and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Stores Ledger and Works Register.

Same day


Page | 42

Formats

Format Ref.

Document Title

Document Type



I/O At the time of receipt of materials at stores


---

MT/F02 MTN I/O As and when Materials required As and when materials dispatched

Junior Engineer – Transferee Junior Engineer – Transferor

Own Copy

Assistant Engineer

Accounts Section

Transferor Junior Engineer

Transferor Assistant Engineer


Junior Engineer - Transferee

Own Copy

Assistant Engineer

Accounts Section

MT/F06 MAN I/O As and when materials shortage identified / damaged

Junior Engineer – Transferee

Own Copy

Assistant Engineer

Accounts Section

MT/R02 DTR O Same day on transfer of materials / on receipt of materials

Junior Engineer – Transferor Junior Engineer – Transferee

---


O Same day on valuation of MTN, GRN and MAN

Accounts Section

---



Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

On transfer of materials

JV MTN Debit Relevant WIP Materials Account (Transferee Works project) / Central Stores Account Account Recoverable - Others Account (for recovery against materials short received) Credit Relevant WIP Materials Account (Transferor Works project) / Central Stores Account

Accounts Section


Page | 43


Subject: Transfer of materials – Inter-Unit Subject Code: 2.04

Subject Background: This subject covers the accounting procedure to be followed in relation to the transfer of materials between two Units. Inter-unit transfers are transfers between Works projects / JE / Locations between two Units. The process of inter-unit materials transfer is similar to that of intra-unit transfers, except to the fact that the accounting Units shall be separate for the Transferor and Transferee of materials. In context of the above, this subject is covered under the following heads:




Valuation of MTN by Transferor Unit

Valuation of GRN and MAN by Transferee Unit

Procedure:

Sl. No.

Person / Section

Responsible



1. Transferee - Junior Engineer

Prepare MTN, providing the details of Works project, materials required, quantity required, etc.

Obtain approval of AE and EE

Authorise a Person to receive materials on its behalf in case JE does not go to receive the materials from Transferor and authenticate the signature of receiver

Subsequently, send the MTN to Transferor JE for transfer of materials.

As and when materials are required to be transferred

2. Transferee - Executive Engineer

Identify the Unit in case from where materials can be optimally transferred.

Approve and forward the MTN to Transferor Unit.



3. Transferor Unit – Executive Engineer

Receive MTN from Transferee Unit.

Identify the location/JE of Transferor Unit, from where materials can be transferred optimally.

Forward MTN to Transferor – JE.


4. Transferor – Junior Engineer

Receive MTN from EE and check it to ensure that all the necessary information (materials item, quantity required, approval of EE, etc.) has been provided to make a transfer of materials.

Issue materials against the MTN received.

Obtain signature of the Transferee JE or its authorised representative on MTN on dispatch of materials.

Provide details in the MTN for the materials dispatch vis. actual quantity dispatched, etc.

Prepare Materials Outward Gate Pass for transfer of materials.

Update the DTR with MTN details and also the details of

On dispatch of materials


Page | 44

Sl. No.

Person / Section

Responsible


the Works project, if any, out which materials have been dispatched.

Forward MTN to AE.

5. Transferor – Assistant Engineer

Scrutinise, approve and forward the MTN to Accounts Section.



6. Transferee – Storekeeper / Security Personnel

On receipt of materials along with MTN, make stores entry in Stores Entry Register immediately by providing details of materials received, etc.

As and when materials are received

7. Transferee – Junior Engineer / Store Keeper

When materials are received, ensure the following: o Check that the materials are received as per the

details provided in copy of MTN. o The materials are in normal conditions and are not

damaged.

Measure the quantity of materials received, materials damaged vis-à-vis quantity dispatched as mentioned in MTN.

Prepare GRN with complete details for materials dispatched by transferor JE.

For any difference between quantity dispatched as per MTN and actual quantity received / damaged, prepare MAN (to adjust the quantity short received / damaged)

Update DTR based on GRN and MAN for the materials quantity.

In case of shortage of quantity received, mention the actual quantity short received in the MAN and person responsible for shortage, if any.

Update the DTR with the Works project details for which materials have been received. This Works project shall be the same Works project that was mentioned in the MTN initiated by the Transferee Junior Engineer.

Forward GRN, MAN and MTN to AE.

Same day of receipt of materials

8. Transferee – Assistant Engineer

Scrutinise, approve and forward GRN, MAN and MTN. Same day of receipt of MTN, GRN and MAN

Valuation of MTN by Transferor Unit

9. Accounts Section – Transferor Unit

On receipt of MTN from Transferor AE, verify MTN and value MTN based on the weighted average rate derived.

Raise an Advice of Transfer Debit (ATD) to intimate the materials item wise value of materials transferred to Transferee Unit – Accounts Section. Refer Subject Code: 10.01 for procedure relating to raising ATD

Within one day of receipt of MTN, GRN and MAN


Prepare JV and obtain approval from Designated Authority.

Based on JV update Journal Book, General Ledger, Subsidiary Ledger, Stores Ledger and Works Register.

Same day of valuation of MTN

Valuation of GRN and MAN by Transferee Unit


Page | 45

Sl. No.

Person / Section

Responsible


11. Accounts Section – Transferee Unit

Receive and review ATD and supporting documents and forward the perforated copy to the Transferor Unit. Refer Subject Code: 10.02 for procedure relating to accepting ATD

On receipt of GRN, MAN and MTN from Transferee AE and ATD from Transferee Accounts Section, value the GRN and MAN, based on MTN and ATD received from Transferor Unit.

The balance quantity short received (as per MAN) shall be debited to the account of person responsible and accordingly recovery shall be made from that person.

Within one day of receipt of MTN and ATD


Prepare JV for the GRN and MAN Value and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Stores Ledger and Works Register.

Same day of valuation of MTN

Formats

Format Ref.

Document Title

Document Type



I/O At the time of receipt of materials at stores

Store keeper / Security Officer – Transferee JE

---

MT/F02 MTN I/O As and when Materials requisition / transferred

Transferee JE / Transferor JE

Own Copy

Transferee Assistant Engineer


Transferor Assistant Engineer

Accounts Section (both the units)


Transferee - Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

MT/F06 MAN I/O As and when materials shortage identified / damaged

Transferee - Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

MT/R02 DTR O Same day on transfer of materials / on receipt of materials

Transferor JE / Transferee JE

---

IUT/F01 ATD I/O Same day on valuation of MTN

Accounts section Own Copy

Transferee Unit



Accounts Section ---


Page | 46




Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

On transfer of materials to other Unit

JV MTN & ATD Debit IUT – Materials Account Credit Relevant WIP Materials Account (Transferor Works project) / Central Stores Account

Accounts Section - Transferor

2. On receipt of materials from other Unit

JV MTN & ATD Debit Relevant WIP Materials Account (Transferee Works project) / Central Stores Account Account Recoverable - Others Account Credit IUT – Materials Account

Accounts Section – Transferee


Page | 47


Subject: Consumption of Materials Subject Code: 2.05

Subject Background: This subject covers the accounting procedure to be followed in relation to the consumption of materials including departmental consumption or consumption through contractors for Works projects. The consumption of materials shall be accounted for based on the measurement undertaken for the materials consumed and at weighted average rate. Based on materials consumed, a Consumption Statement shall be prepared and details shall be provided in Measurement Book maintained by concerned JE. The consumption can be through departmental consumption or consumption out of materials advanced to contractors. In case of departmental consumption, Self Consumption Note (SCN) shall be prepared whereas in case of consumption through contractors Materials Consumption Note (MCN) shall be prepared. The materials may be advanced to contractor for consumption either on „free of cost‟ or „chargeable basis‟. Materials advanced to Contractor free of cost means the materials which are to be used by the contractor for works purpose and do not form part of the materials to be supplied by the contractor for works as per the respective CB. The materials advanced to contractor „free of cost‟ shall be treated as if under the custody of concerned Junior Engineer. MTN shall be prepared for materials advanced to contractor. On consumption of these materials, MCN shall be prepared. MTN and MCN shall be prepared by JE and valued by Accounts Section. Materials advanced to contractor on chargeable basis shall be treated as if it is sale of materials. Materials Sale Note (MSN) shall be prepared for materials advanced to contractor on chargeable basis. The same has been covered in the Subject Code: 2.06 In context of the above, this subject is covered under the following heads:

Departmental consumption

Materials advanced to contractor

Consumption of materials advanced to contractor

Penalty for materials not returned by contractor

Procedure:

Sl. No.

Person / Section

Responsible


Departmental consumption

1. Junior Engineer

Undertake measurements for the works undertaken and materials consumed

Prepare Consumption Statement for the materials consumed.

Prepare SCN for the materials consumed.

Update DTR based on SCN

Forward SCN and Consumption Statement along with MB to AE

As and when measurement is undertaken


Scrutinise, approve and forward SCN, Consumption Statement and MB to Accounts Section and JE(Technical)

Same day on receipt of SCN and related documents


Page | 48

Sl. No.

Person / Section

Responsible



Receive the SCN, Consumption Statement and MB.

Check the Consumption Statement and approve it.

Within one day of receipt of SCN and related documents

4. Accounts Section

Receive SCN and check it with respect to Consumption Statement and MB, undertake casting and cross-casting. Ensure that all the required details are available in the above documents.

Undertake valuation of SCN based on the weighted average rate.

Prepare JV and obtain approval from Designated Authority, to account for materials consumption.

Based on JV, update Journal Book, Stores Ledger, General Ledger, Subsidiary Ledger and Works Register

Within one day of receipt SCN and related documents

Materials advanced to contractor

5. Junior Engineer

Estimate the quantity to be advanced as Free of Cost

Prepare MTN for the quantity of materials advanced to the contractor.

Obtain the signature of the contractor / its authorised representative on MTN and dispatch materials to contractor.

Update DTR based on MTN.

Prepare Materials Outward Gate Pass for dispatch of materials

Dispatch materials to Contractor.

Forward MTN to AE.

As and when


Scrutinise, approve and forward MTN to Accounts Section.


7. Accounts Section

On receipt of MTN from AE, value MTN based on the weighted average rate derived.

Prepare JV, for the MTN value in case of materials advanced Free of Cost to Contractor, and obtain approval from Designated Authority

Based on JV, update Journal Book, Stores Ledger, General Ledger, Subsidiary Ledger and Works Register.

Within one day of receipt of MTN

Consumption of materials advanced to contractor

8. Junior Engineer

Update MB based on the measurements undertaken of the work done and prepare a Consumption Statement for the materials consumed on the work.

Prepare MCN for the materials item consumed / returned by contractor.

Update DTR based on MCN for materials consumed as well as returned, if any by the contractor.

Forward MCN and Consumption Statement along with MB to JE (Technical)

As and when


Scrutinise, approve and forward MCN, Consumption Statement and MB, approve it and forward it to Accounts Section and JE(T).

Same day of receipt of MCN


Receive the SCN, Consumption Statement and MB.

Check the Consumption Statement and approve it.

Same day of receipt of MCN


Check MCN with respect to Consumption Statement and Within one day of receipt of


Page | 49

Sl. No.

Person / Section

Responsible


MB, undertake casting and cross-casting.

Ensure that all the required details are available in the above documents.

Undertake valuation of MCN based on the weighted average rate applied to its corresponding MTN.

Prepare JV and obtain approval from Designated Authority, for the MCN in case of materials were earlier advanced as free of cost to contractor.


MCN

Penalty for materials not returned by contractor

12. Junior Engineer

In case excess materials issued free of cost has not been returned by the Contractor, inform Accounts Section through a letter about recovery of the same from contractor‟s bill.

Prepare MAN for the materials not returned by the Contractor and forward it to AE.

Update DTR based on MAN.

As and when


Scrutinise, approve and forward MAN to Accounts Section.

Same day of receipt of MAN


Receive MAN from AE.

Undertake valuation of MAN based on the weighted average rate applied for the corresponding MTN.

In such case, penalty shall be charged to contractor against unreturned materials and the cost of unreturned materials shall also be recovered. The penalty shall be affected as per the relevant clause of the CB.

Prepare JV based on MAN.


Within one day of receipt of MAN

Formats

Format Ref.

Document Title

Document Type


MT/F03 SCN I/O As and when Consumption Statement is prepared

Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

MT/F02 MTN I/O As and when Materials is advanced

Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

Contractor‟s Copy

MT/F04 MCN I/O As and when Consumption Statement is prepared

Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

MT/F06 MAN I/O On adjustment of stock quantity for reasons

Junior Engineer

Own Copy

Assistant Engineer

Accounts Section

MT/R02 DTR O Same day on finalisation of SCN / MCN / MTN

Junior Engineer

---


Page | 50

Format Ref.

Document Title

Document Type



O Same day on valuation of SCN / MCN / MTN

Accounts Section

---


I/O Same day on valuation of SCN / MCN / MTN

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On Departmental Consumption

JV SCN Debit Relevant WIP Materials Consumed Account Credit Relevant WIP Materials Account

Accounts Section

2.

On materials advance to contractor free of cost to contractor

JV MTN Debit Relevant WIP Materials Account Credit Relevant WIP Materials Account

Accounts Section

3. On materials consumption by contractor

JV MCN Debit Relevant WIP Materials Consumed Account Credit Relevant WIP Materials Account

Accounts Section

4. In case of materials not returned by contractor

JV MAN Debit Account Payable – Contractor Account Credit Relevant WIP Materials Account Fines & Penalties Levied – Contractors Account (for materials unreturned)

Accounts Section


Page | 51


Subject: Sale of Materials / Scrap Materials Subject Code: 2.06

Subject Background: This subject covers the accounting procedure to be followed in relation to the sale of materials / scrap. Sale of materials shall be on account of obsolete/ scrap / excess materials sold through selection of outside buyers or materials issued to contractor on chargeable basis on a particular Works project. In case of materials sale other than to contractor, UPJN selects the buyer through open tenders or other suitable method. Materials issued to contractor on chargeable basis has some margin over and above the cost of materials. After selection of buyer, the materials shall be dispatched to the buyer and MSN shall be prepared. MSN shall be prepared by JE and valued by Accounts Section In case of materials sold to selected buyer, the payment shall be received before dispatch of materials based on the Policies prescribed by UPJN. In case of materials advanced to contractor on chargeable basis, the value of materials shall be recovered from the contractor‟s bill or against advance payment. In context of the above, this subject is covered under the following heads:

Identification of materials / scrap for Sale

Receipt of payment

Preparation of MSN and dispatch of materials

Valuation of MSN

Procedure:

Sl. No.

Person / Section

Responsible


Identification of materials / scrap for Sale

1. Junior Engineer / Executive Engineer / Accounts Section

JE shall identify materials / scrap to be sold (usually at the time of physical verification of materials items)

Based on the Policies prescribed by UPJN, the buyer shall be selected.

As and when/ during physical verification of materials items

Receipt of payment and its Accounting

2. Cashier Receive payment for materials / scrap sold. Adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare BRV.

Based on BRV, update Bank Book, General Ledger and Subsidiary Ledger.

As and when Same day of receipt of payment

Preparation of MSN and dispatch of materials


Instruct JE to dispatch quantity of prescribed materials to the selected buyer.

As and when

4. Junior Engineer

Based on instruction from EE, prepare MSN, providing details of Works project from which materials shall be dispatched, quantity to be dispatched, nature of materials whether normal, unused materials - scrap, used materials – scrap, etc. and mention the fact that the MSN is prepared for materials sold.

Attach approval note along with MSN

As and when instructions received from Executive Engineer On dispatch of


Page | 52

Sl. No.

Person / Section

Responsible


Prepare Materials Outward Gate Pass for dispatch of materials.

Take the signature of the buyer or its authorised representative on Materials Outward Gate Pass and provide them copy of it.

Update DTR under a particular Works project from which materials have been dispatched / sold.

Forward MSN to AE for materials sold

materials to buyer


Srutinise, approve and forward the MSN to Accounts Section.

Same day of receipt of MSN

Valuation of MSN

6. Accounts Section

On receipt of MSN from AE, value the MSN based on the weighted average rate derived and also enter the sale value in MSN.

Identify income or loss on sale of materials, as the case may be.

As and when

7. Accounts Section

Prepare JV, for sale of materials and income or loss on sale of materials, and obtain approval from Designated Authority.

Based on JV, update Journal Book, Stores Ledger, General Ledger, Subsidiary Ledger, and Works Register.

Within one day of receipt of MSN

Formats

Format Ref.

Document Title

Document Type


MT/F05 MSN I/O As and when the materials are dispatched.

Junior Engineer Own copy

Assistant Engineer

Accounts Section

MT/R02 DTR O Same day on receipt of GRN

Junior Engineer ---


O Same day on receipt of GRN

Accounts Section

---


I/O Same day on receipt of GRN

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of money from buyer of materials

BRV Tender document

Debit Bank Account Credit Account Payable – Others Account

Cashier

2. On dispatch of Materials including unused materials

JV MSN Debit Account Payable – Others Account

Accounts Section


Page | 53

Sl. No.

Event Voucher type

Source documents


Responsible

identified as scrap (in case income / loss is to be borne by Works project)

WIP Cost Others Account (in case of loss) Credit Relevant WIP Materials Account WIP Cost Others Account (in case of income)

3.

On dispatch of Materials including unused materials identified as scrap (in case income / loss is to be borne by UPJN)

JV MSN Debit Account Payable – Others Account Income / Loss from Sale / Disposal / Surplus / Write Off of Material Account Credit Relevant WIP - Materials Account / Central Stores Account Income / Loss from Sale / Disposal / Surplus / Write Off of Material Account

Accounts Section

4. On dispatch of used materials identified as scrap (in case sale proceeds is to be borne by Works project)

JV MSN Debit Account Payable – Others Account Credit WIP Cost Others Account

Accounts Section

5. On dispatch of used materials identified as scrap (in case sale proceeds is to be borne by UPJN)

JV MSN Debit Account Payable – Others Account Credit Income from Sale of Scrap Account

Accounts Section


Page | 54


Subject: Physical Verification of Materials Subject Code: 2.07

Subject Background: This subject covers the accounting procedure to be followed in relation to stock adjustments on shortage / surplus identified on physical verifications. The Physical verification committee shall be formed consisting person other than the persons who are responsible for maintaining materials location. This committee shall undertake physical verification and submit a physical verification report to identify the shortage / surplus of materials available at site vis-à-vis recorded in books. In context of the above, this subject is covered under the following heads:

Physical verification

Preparation of Physical Verification Report

Reconciliation with Stores Ledger and adjustments for shortage / surplus

Procedure:

Sl. No.

Person / Section

Responsible


Physical verification

1. Physical Verification Committee

Carry out the physical verification of the materials as per the Policies, if any, prescribed by UPJN

Physically verify materials store covering all the storage locations including Central / Divisional stores, Junior Engineer site, other locations, etc. In case there is nil stock at a particular location, it shall be clearly specified.

At least once during the year


Adjust the stock movements in terms of receipt / issue in / from the store location during physical verification based on the measurements undertaken and documented through GRN, MTN, SCN, MCN, and MSN for recording receipt / issue of materials at the storage location.

After physical verification

Preparation of Physical Verification Report


Prepare Physical Verification Report (PVR) – Materials and record the actual measurement and quantity of materials as per verification for each item of materials, time and date of physical verification. The PVR shall be signed by all the Committee members

Mention any assumptions made for physical verification, if any

Identify materials shortage / surplus by comparing PVR and DTR.

Mention the physically verified quantity in DTR to represent the actual available quantity in stock.

Forward PVR to Accounts Section


Reconciliation with Stores Ledger and adjustments for shortage / surplus

4. Accounts Section

Receive PVR from Physical Verification Committee

Reconcile PVR with Stores Ledger, to identify shortage / surplus quantity of materials, if any to keep the DTR and Stores Ledger tallied in respect of quantities of

Within seven days of receipt of PVR


Page | 55

Sl. No.

Person / Section

Responsible


materials.

Calculate the value of the identified shortage / surplus quantity of materials based on Weighted Average Method

5. Accounts Section

Based on PVR, prepare Materials Adjustment Note to make entries for the materials quantity discrepancy in the Stores Ledger on the last date of month on which physical verification has been undertaken.

In case of shortage, reduce materials quantity and value in Stores Ledger, through MAN. Transfer the value to the stores shortage / surplus - pending investigation Account. o On the decision taken by appropriate authority for

shortage, account for debit corresponding JE / person responsible (in case of recovery) or debit WIP Cost Other Account (in case of write off approval) and credit stores shortage / surplus - pending investigation Account

In case of surplus, increase the materials quantity and value in Stores Ledger, through MAN. Transfer the value to WIP Materials Account of the corresponding Works project at the available weighted average rate and credit WIP Cost Others Account / Income from Stores Surplus Account.

Prepare JV, for the shortage / surplus, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger and Works Register.

As and when

Formats

Format Ref.

Document Title

Document Type


MT/F07 Physical Verification Report - Materials

I/O On physical verification

Physical Verification Committee

Own Copy

Accounts Section

Head of Office

MT/F06 MAN I/O As and when the materials are adjusted.

Junior Engineer

Own copy

Assistant Engineer

Accounts Section

MT/R02 DTR O As and when physical verified quantity is finalised

Junior Engineer

---


O As and when the valuation of physical verification shortage / surplus is done

Accounts Section

---


I/O As and when the valuation of physical verification shortage / surplus is done

Accounts Section

---


Page | 56

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On identification of shortage

JV PVR Debit Stores shortage / surplus - pending investigation Account Credit Relevant WIP Materials Account (concerned Works project) / Central Stores Account

Accounts Section

2. On identification of surplus

JV PVR Debit Relevant WIP Materials Account (concerned Works project) / Central Stores Account Credit Stores shortage / surplus - pending investigation Account

Accounts Section

3.

On decision taken on shortage by Designated Authority – approval of shortage

JV Decision taken by Designated Authority

Debit Relevant WIP Cost Others Account (concerned Works project) / Central Stores Account Credit Stores shortage / surplus - pending investigation Account

Accounts Section

4.

On decision taken on shortage by Designated Authority – approval of surplus


Debit Stores shortage / surplus - pending investigation Account Credit WIP Cost Others Account / Income / Loss from Sale / Disposal / Surplus / Write Off of Material

Accounts Section

5. On decision taken on shortage by Designated Authority – recovery from person responsible


Debit Account Recoverable – Others Account Credit Stores shortage / surplus - pending investigation Account

Accounts Section


Page | 57


Subject: Inventory Management Subject Code: 2.08

Subject Background: This subject covers the procedure of inventory management including criteria for identification and categorisation of inventory items based on their physical/ usability status, procedure for disposing off the scrap, obsolete and non-moving inventory items, aging of inventory items, inventory management techniques, etc. Criteria for identification and categorisation of inventory items based on their status

All inventory items lying in store shall be identified and categorised based on their use and physical condition as under:

Identification categories

Identification criteria Abbreviation Used

Regularly Usable

Items which are used on a regular basis (subject to items which are specifically identified as non obsolete/ scrap)

R

Obsolete Items which are identified as obsolete due to outdated technology or otherwise (Subject to items which are specifically identified as scrap)

O

Scrap Fresh items declared as scrap S

Old & Used (Repairable)

Items which are re-used/ re-issued and/ or lying in store for repair (being repairable items) including scrap generated

O/U

All scrap and obsolete items shall be identified and disposed off on a regular basis to ensure that the funds are not being blocked unnecessarily

This shall be ensured by carrying out physical verification (at least once during the year) and an ageing analysis of the inventory with the objective of identifying such materials. Such items shall ideally be segregated and kept separately from other materials.

UPJN shall lay down Policies for determining / declaring any item as obsolete or scrap and the manner of their disposal. All the items identified for disposal shall be collected at the respective Store of Units (immediately after identification) and disposed off immediately.

Procedure for disposing off the obsolete, non-moving and scrap items

The steps to be followed for disposing off the obsolete and scrap items are as under: o Identify and prepare a list of obsolete, non-moving and scrap items. o Circulate the list to other locations to ensure that the materials is not required at any location. o Forward a copy of the final list to the Competent Authority for approval to pass necessary

order for declaration of obsolete, non-moving and scrap items. o Get the inspection of items done by competent authority to obtain approval for disposal

(wherever appropriate) o Dispose-off slow moving items which are lying for a considerable period with no scope of

utilisation in immediate future (to minimise losses caused due to depreciation in value of the materials).

o Call quotations from various parties for the sale of materials identified for disposal. Ageing of inventory items

During the physical verification exercise, ageing (in years) of inventory items shall be done under the following categories:


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Categories Criteria

<1 year Items which are lying for less than a year

1 to 3 years Items which are lying for one year or more but less than three years

3 to 5 years Items which are lying for three years or more but less than five years

5 to 10 years Items which are lying for five years or more but less than ten years

10 to 20 years Items which are lying for ten years or more but less than twenty years

>20 years Items which are lying for twenty years or more

Inventory Management Techniques

UPJN shall adopt the following inventory management techniques: o ABC Analysis o VED Analysis o Perpetual Inventory System o Economic Order Quantity o Safety stock Level

ABC analysis

Efficient store keeping requires sufficient control over all inventory items of stores. However, comparatively greater care is necessary in case of costlier items. ABC analysis is used for identifying these items. The method requires classification of the inventory into categories, proportional to the inventory total cost, designated as A, B and C category items as under: o Category A comprises of items which represent the most significant amount of investment in

inventory. o Category B comprises of the items of secondary importance. o Items in category C are higher in quantity, but of less value in relation to the total inventory

amount.

While exercising control over stores, items of category A shall be given the maximum attention. Their levels of stock shall be strictly controlled. In case of items of category B, ordinary stores routine shall be observed but policies regarding levels of stock may not be so strictly adhered to as for the items in category A. Items of category C do not require continuous monitoring.

VED analysis

Under VED technique, items are classified into Vital, Essential and Desirable on the basis of criticality of the item as perceived by the user department.

Perpetual Inventory System

Perpetual inventory system requires recording of stores balances after every receipt and issue, to facilitate regular checking and to obviate closing down for stock taking. The basic objective of this system is to make available the details relating to the quantity and value of each item at all times. The system thus provides a rigid control over stock of materials as physical stock can regularly be verified with the stock records kept in the stores. Perpetual inventory system requires: o Maintenance of both bin cards as well as Stores Ledger on perpetual inventory system o Adoption of continuous stock taking i.e. continuous checking of the physical quantity with the

quantities shown in the bin card and the Stores Ledger by an independent personnel covering different sections of the stores in rotation.

Economic Order Quantity (EOQ)

EOQ is essentially an accounting formula that determines the point at which the combination of order costs and inventory carrying costs are the least. The result is the most cost effective quantity to order. o Annual Usage - Expressed in units, this is the forecasted annual/periodical usage. o Order Cost - This is the sum of the fixed costs that are incurred each time an item is ordered.

These costs are not associated with the quantity ordered but primarily with physical activities required to process the order. These would include the costs relating to: Processing of the purchase order and/or requisition, Any approval steps,


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Processing of the receipt, Incoming inspection, Invoice processing and vendor payment.

(It shall be noted that these are costs associated with the frequency of the orders and not the quantities ordered)

o Carrying cost -Carrying cost is the cost associated with having inventory on hand. It is primarily made up of the costs associated with the inventory investment and storage costs. For the purpose of the EOQ calculation, if the cost does not change based the quantity of inventory on hand, it shall not be included in carrying cost. In the EOQ formula, carrying cost per unit is used. The primary components of carrying costs are as under: Interest. If money is borrowed to pay for the inventory, the interest rate would be part of

the carrying cost. Insurance. Since insurance costs are directly related to the total value of the inventory, it

would be included as part of carrying cost. Taxes. If any tax is required to be paid on the value of the inventory it would be included. Storage Costs.

Formula - Q = [2UP/S]^1/2 Where, Q = Economic order quantity U = Quantity (units) purchased or used in a year/period P = Ordering cost of an order S = Carrying cost of one unit

Maintaining EOQ - The values for Order cost and Carrying cost shall be evaluated at least once in a year taking into account any changes in interest rates, storage costs and operational costs.

Safety Stock

Safety stock is the lowest quantitative balance of materials, which must be maintained in hand at all times so that the work is not stopped on account of non-availability of materials. The following parameters shall be taken into consideration for monitoring and fixing the level of safety stock: o Consumption value (ABC classification) o Criticality (VED classification and also availability of substitutes) o Reliability of suppliers. This is measured on:

Quality (Number of rejections) Variability in lead time of delivery Responsiveness (ability to dispatch materials quickly in case of emergency orders) Distance from plant (low lead times reduce variance)

The above techniques shall be used to manage inventory in a scientific and efficient manner as under: o Materials shall be classified as per ABC and VED techniques for better physical control as

well as monitoring of stock level. o Ordering quantity shall be decided on the basis of EOQ technique. Since the materials is to

be ordered quarterly, EOQ shall be calculated for a quarter. To apply this technique Carrying cost and Ordering cost shall be calculated as has been detailed above. For Annual usage, quantity required for the respective quarter can be used in place of the annual requirement. Also a provision for safety stock shall be added to the materials required in a quarter. EOQ shall be calculated for each quarter at the beginning of the year itself. (EOQ for a quarter may undergo a change in case a revised requirement is received from the field units).

o Perpetual inventory system shall be followed for regular and effective control over the stock lying at the stores. This would facilitate timely and correct reporting of the stock level to the Planning/MM Cell thus ensuring proper planning and monitoring of stock.


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3.00 Section: Works Expenditure Section Background: 3.01 This Section covers the Works expenditure accounting and related procedures. Classification of Works 3.02 UPJN carries out the following class of works:

Construction projects

Maintenance of existing projects Construction projects 3.03 UPJN carries out water supply related construction projects on behalf of other outside parties (local bodies, Jal Sansthan, etc.). After completion, these projects are handed over to the respective parties. Maintenance of existing projects 3.04 At present there are certain cases where the projects executed by UPJN were not transferred to the respective parties due to certain valid reasons. In view of this, these projects are also being maintained by UPJN and the prescribed „user charges‟ (e.g. water supply charges) from the users (i.e. general public) are being recovered by UPJN. Funding of Works Expenditure Funding for Construction projects 3.05 To execute the construction projects, funds are received by UPJN either from the respective outside parties (e.g. Urban Local Bodies, etc.) or from Central and/ or State Government or directly from the funding agencies (e.g. Asian Development Bank (ADB), World Bank, etc. on behalf of outside parties/ Government). Funds received from outside parties may be in the nature of Loan or Subsidy/ Grant to those parties. However for accounting purpose these funds shall be treated as „Deposits‟ by UPJN. 3.06 However there are cases where funds disbursed by Central and/ or State Government or by funding agencies are in the nature of Loan to UPJN and UPJN is required to repay these loans and to pay interest thereon. In these cases these funds shall be treated as loan received by UPJN for accounting purpose. Funding for Maintenance of existing projects 3.07 For the purpose of maintenance of the existing projects, UPJN receives grants from Central/ State Government. However for accounting purpose these funds shall be treated by UPJN as „deposits‟. Works Cost 3.08 A total of the following shall constitute as Works Cost for any particular project:

Expenditures incurred but not paid (i.e. labour, materials consumed and other directly attributable expenditures)

Expenditures incurred and paid

Expenditure not yet incurred but payment made in advance against those expenditure

Unconsumed Materials (being shown as stock) lying at site/ Store

Centage on all the above


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Works Cash Outlay 3.09 A total of the following shall constitute as Cash Outlay on Works for any particular project:

Expenditures incurred and paid (i.e. labour, materials consumed and other directly attributable expenditures

Expenditures not yet incurred but payment paid in advance against those expenditure

Centage on all the above Categorisation of Works Project 3.10 The categorisation of above works projects shall be under:

Works Projects

Categorisation

Work Group Rural Development Department


Public Works Department

Others

Works Class Construction

Operation & Maintenance (O & M)

Project and Consultancy

Others

Works Type Water Supply

Sewerage

Drainage


Sustainability

Others

Scheme Schemes (as sanctioned by Government)

Project Projects (as sanctioned under the above schemes)

Project Components

Project Components (as defined under above projects)

This shall be the lowest level of project categorisation under which the works expenditure shall be recorded. For every project components there shall be parallel General Ledger account head with the necessary Subsidiary Ledger. For details Refer Section Code: 1.00 Chart of Accounts.

Accounting Policies 3.11 The main accounting policies that shall be followed relating to Works Expenditure accounting are provided in the subsequent paragraphs.

a.) Accounting for all works expenditure related transactions shall be done on an accrual basis. b.) Water supply charges collected / to be collected from maintenance projects shall not be treated

as income of UPJN. At the period end, any unutilised deposit (in the form of water supply charges or receipts of grant from Government for maintenance projects) or excess expenditure, if any on the maintenance projects shall be treated as payable or recoverable, respectively, amount from the Government. This amount shall be treated as per the terms and conditions associated with the respective deposits received by UJPN from the Government.

Coverage of this Section 3.12 This section covers the following Subjects:


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Sl. No.


1. Works expenditure incurred through engaging the contractors 3.01

2. Transfer and Closure of Projects 3.02

3. Maintenance of existing projects 3.03

3.13 Accounting aspects and related procedures relating to the following have been covered under the following sections/ subjects:

Deposits / Loan / Grants - Refer Section Code: 4.00 - Loan, Deposits, Grant and Investment

Stores – Refer Section Code: 2.00 - Stores

Centage – Refer Section Code: 6.00 - Revenue and Collection

Works Expenditure incurred through PI / TI – Refer Section Code: 8.00 - Personnel


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Section: Works Expenditure Section Code: 3.00

Subject: Works expenditure incurred through engaging the contractors

Subject Code: 3.01

Subject Background: This subject covers the accounting procedure to be followed in relation to the works expenditure incurred through engaging the contractors. Accounting of work expenditure on both classes of projects (Construction projects and maintenance of existing projects) shall be the same. Every Works project shall be allotted a separate Project Code and Account Heads and all the works expenditure shall be identified to a particular project. In context of the above, this subject is covered under the following heads:

Preparation/ Receipt of contractor‟s bill

Passing of contractor‟s bill

Advance payment to contractor

Payment to contractor against contractor‟s bill / amount retained earlier The above procedure shall be applicable to the account for the expenditure on both the classes of projects i.e. construction projects and maintenance of existing projects.

Procedure:

Sl. No.

Person / Section

Responsible


Preparation/ Receipt of contractor’s bill

1. Junior Engineer (JE)

Update Measurement Book (MB) for the details of works undertaken.

As and when

2. Junior Engineer

Prepare running / final bill as per the MB and Contract Bond (CB) and jointly agree with the contractor; or

Receive the running / final bill from the Contractor, pass it as per the MB and CB. Put a date stamp for the date of receipt on contractor‟s bill.

In case of materials supplied by UPJN as part of the CB, prepare Materials Consumption Note (MCN) – Refer Subject Code. 2.05 for procedure related to consumption.

Forward running / final bill to the concerned Assistant Engineer (AE) along with MB and MCN, if any, for review and approval purpose

As and when/ on achieving the respective milestone as agreed in the CB


Receive the running / final bill from concerned JE along with MB and MCN, if any. Put a date stamp for the date of receipt on contractor‟s bill.

Scrutinise the running / final bill & MCN and verify it with MB and CB.

Approve and forward it to concerned JE (Technical)

As and when running / final bill is received

Passing of contractor’s bill


Receive contractor‟s running / final bill along with MB and MCN, if any, from the AE.

Put a date stamp for the date of receipt of contractor‟s bill.

Scrutinise the running / final bill and verify it with MB and

As and when running / final bill is received


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Sl. No.

Person / Section

Responsible


CB.

Pass the bill for the amount payable to the contractor.

Forward the contractor‟s running / final bill along with MB and MCN, if any, to concerned Accounts Section

5. Accounts Section

Receive contractor‟s bill along with MB and MCN, if any.

Put a date stamp for the date of receipt on contractor‟s bill. Scrutinise and verify the contractor‟s bill with MB and CB

Pass the bill for the amount payable to the contractor.

In case of water testing fees, security deposit for defect liability period, etc. are to be retained, deduct the same from the amount payable to the contractor.

Forward contractor‟s bill along with MB, CB and MCN, if any, to the concerned Executive Engineer (EE).

As and when


Receive contractors bill and undertake an overall check of the contractor‟s running / final bill and approve the bill for payment.

As and when contractor bill is received for approval

7. Accounts Section

Prepare Journal Voucher (JV).

Based on JV, update Journal Book, Contractor‟s Bill Register, General Ledger, Subsidiary Ledger and Works Register.

As and when approved by Executive Engineer

Advance payment to contractor

8. Accounts Section

Advance payment shall be made to the contractor only as per the agreed terms and conditions.

Ensure that there are no previous unsettled advances recoverable from the contractor.

Receive Performa Invoice from contractor for the advance.

Take necessary approvals from Designated Authority and forward supporting documents to Cashier for payment.

As and when

9. Cashier Receive supporting documents


Prepare Bank Payment Voucher (BPV).

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger, Contractor‟s Bill Register and Works Register.

Update MB with the advance payment details.


Payment to contractor against contractor’s bill / amount retained earlier


Forward the JV with supporting documents to Cashier for payment.

The payment to contractor shall be made on or after the due date of payment for the amount passed against the bill and net of advance, if any, paid earlier and water testing fees, security, etc. to be deducted.

The payment to contractor for any amount retained earlier as deposit shall be paid on or after the due date/ milestone achieved/ maintenance period expired, etc. and amount passed for payment by the designated authority.

As and when


To process payment, adopt the procedure for bank payments as provided in Subject Code: 9.04.

Prepare BPV.

Based on BPV, update Bank Book, General Ledger,



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Sl. No.

Person / Section

Responsible


Subsidiary Ledger, Contractor‟s Bill Register, and Works Register.

Update MB with the payment details.

Formats

Format Ref.

Document Title

Document Type


WE/R01 Contractor‟s Bill Register

O As and when contractor bill is passed / paid

Accounts Section

---

WE/R02 Works Register I On contractor‟s running / final bill passing / payment

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Bill Passing JV Contractor‟s Running/ Final Bill

Debit Relevant WIP Labour Account Credit Account Payable - Contractor Account / Relevant WIP Advance Account (for advances paid earlier, if any) Tax deducted at source – Contractors a /c Relevant Deposits from contractors Account (E.g. testing fees) / Security deposit Account / Other relevant accounts, if any

Accounts Section

2. Advance Payment to Contractor

BPV Performa Invoice / CB

Debit Relevant WIP Advance Account Credit Bank Account

Cashier

3. Payment to Contractor against contractor‟s bill / amount retained earlier (e.g. deposit)

BPV Contractor‟s Running Bill

Debit Account Payable -Contractor Account / Relevant Deposit from Contractors Account Credit Bank Account

Cashier


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Subject: Transfer and Closure of Projects Subject Code: 3.02

Subject Background: This subject covers the accounting procedure to be followed in relation to the transfer and closure of Construction projects. This subject is covered under the following heads:

Preparation of Project Completion Certificate

Transfer of completed Works project and accounting thereof

Transfer of WIP and accounting thereof

Procedure:

Sl. No.

Person / Section

Responsible


Preparation of Project Completion Certificate

1. Junior Engineer

On completion of the projects component, JE shall prepare “Project Completion Certificate” providing details regarding completion of component. The Project Completion Certificate shall also include the following details: o The scheme has been completed in all respects o All the source documents vis. GRN, MCN, SCN, MTN,

MSN, etc. have been submitted to Accounts Section pertaining to the projects component.

o There is no unreported liability on the projects component or any advance pending adjustment.

o There is no materials balance lying with respect to Works projects component. (In case, any materials are lying with JE, then the same shall first be cleared by transfer of the same to another scheme, central / divisional stores or sale).

Forward the Project Completion Certificate to AE

On completion of projects components


Receive the Project Completion Certificate for the projects component completed and verify the details.

Approve and forward the Project Completion Certificate, on projects component completion, to Accounts Section requesting closure of the projects components.

As and when

Transfer of completed Works project and accounting thereof

3. Transferor - Accounts Section

Receive the Project Completion Certificate from AE.

Ensure that the all the source documents vis. GRN, MCN SCN, MTN, MSN, contractor‟s bill, supplier‟s bill have been duly accounted for.

Ensure that the Works Register has been prepared up to date and tallies with the books of account.

For closure and transfer the completed Works projects the following accounting procedure shall be adhered: o In case where Unit which is responsible to execute the

project and is also maintaining the corresponding deposit account, prepare JV, for completion and closure of project, and obtain approval from Designated Authority

As and when


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Sl. No.

Person / Section

Responsible


o In case where Unit which is responsible to execute the project but the corresponding deposit account is being maintained at Head Office (HO) / other Unit, prepare JV for completion of project and raise Advice of Transfer Debit (ATD) on HO / other Unit. Refer Subject Code: 10.01 for procedure relating to raising ATD.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Works Register.

4. Transferee – Accounts Section (HO / Unit)


Prepare JV, for closure of the project, and obtain approval from Designated Authority. Any outstanding balance under Deposits Account shall be reflected as recoverable / payable amount from / to the concerned party.


As and when

Transfer of WIP and accounting thereof

5. Transferor - Accounts Section

In case where responsibility for execution of works is transferred from one Unit to another Unit, prepare JV, and obtain approval from Designated Authority, for transferring the entire outstanding balances under all the related WIP accounts and under deposit account to the concerned transferee and raise ATD on that Unit. Refer Subject Code: 10.01 for procedure relating to raising ATD

As and when

6. Transferee – Accounts Section (HO / Unit)


Prepare JV, for transfer of relevant WIP, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger and Works Register.

As and when

Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD I/O On transfer of completed Works projects component / Works in Progress

Transferor – Accounts Section

Own copy

Transferee Accounts Section

Head Office



Accounts Section

---


Page | 68

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On completion of projects component

JV JE‟s Project Completion Certificate

Debit Relevant Completed Works Projects Account Credit Relevant WIP Labour Account Relevant WIP Materials Consumed Account Relevant WIP Cost Others Account Relevant WIP Centage Account Other relevant Account, if any


2. On preparation of originating ATD for transfer of completed Works projects component to Unit / HO

JV JV for completion of projects component

Debit IUT – Completed Works Projects Account Credit Relevant Completed Works Projects Account


3. On receipt of ATD from transferor for transfer of completed Works projects component

JV ATD Debit Relevant Completed Works Projects Account Credit IUT – Completed Works Projects Account

Transferee – Accounts Section

4. On closure of projects

JV ATD Debit Relevant Deposits Account (Works related) Credit Relevant Completed Works Projects Account


5. On preparation of originating ATD for transfer of Works in progress for continuation

JV JE‟s Project Completion Certificate

Debit IUT – Works in Progress Account Credit Relevant WIP Labour Account



Page | 69

Sl. No.

Event Voucher type

Source documents


Responsible

Relevant WIP Cost Others Account Relevant WIP Materials Consumed Account Relevant WIP Centage Account Relevant WIP Project Asset Account Relevant WIP Advance Account Relevant WIP Materials Account Other Relevant Account

6. On receipt of ATD from transferor for transfer of WIP

JV ATD Debit Relevant WIP Labour Account Relevant WIP Cost Others Account Relevant WIP Materials Consumed Account Relevant WIP Centage Account Relevant WIP Project Asset Account Relevant WIP Advance Account Relevant WIP Materials Account Other Relevant Account Credit IUT – Works in Progress Account



Page | 70


Subject: Maintenance of existing projects Subject Code: 3.03

Subject Background: This subject covers the accounting procedure to be followed in relation to demand and collection of water supply charges on the Works project maintained by UPJN. UPJN collects water supply charges from the consumers of water supply through the projects maintained by it. Maintenance of the project is on a continuous basis. These charges as collected by UPJN are utilised in maintaining the existing projects. In view of the above, the works expenditure incurred on maintenance projects shall be adjusted against Deposits (in the form of grant) received from Government as well as water supply charges collected from consumers at the period end. The balance of deposits lying or unadjusted works expenditure shall be carried forward for adjustment next period. In context of the above, this subject is covered under the following heads:

Raising of demand for water supply charges

Receipt of water supply charges

Provisioning for doubtful demand

Write off of doubtful demand

Period end procedure

Procedure:

Sl. No.

Person / Section

Responsible


Raising of demand for water supply charges

1. Junior Engineer

Maintain Demand and Collection Register (DCR), maintenance scheme wise

Raise the bill against consumers for the collections to be made on or before the due date.

Enter the bill details for each consumer in the respective DCR.

As and when the bills is raised.

2. Accounts Section

At the end of current billing period, cast the total of demand raised for all the consumers.

Prepare JV, for the bills raised, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger

At the end of current billing period

Receipt of water supply charges

3. Junior Engineer

On receipt of water supply charges, issue money receipt to the consumer.

Adjust the money received with the outstanding arrears in the preference of overdue water supply charges and current demand

Update DCR for respective consumer

Prepare, Receipt Challan providing consumer wise collection made and bifurcating into overdue water supply charges, previous demand and current demand.

Submit Receipt Challan along with money receipts and Cash / Cheque to Cashier

As and when

4. Cashier On receipt of Receipt Challan along with money As and when


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Sl. No.

Person / Section

Responsible


receipts and cash / cheque, cross check and cast the totals against cash well as cheque received. Put a stamp of actual cash / cheque received on Receipt Challan.

5. Cashier Based on Receipt Challan, prepare Bank Receipt voucher (BRV) / Cash Receipt Voucher (CRV).

To process receipts, adopt the procedure for bank / cash receipts as provided in Subject Code: 9.04 / 9.05

Based on BRV / CRV, update Bank Book / Cash Book, General Ledger and Subsidiary Ledger.

As and when

Provisioning for doubtful demand

6. Junior Engineer

Carry out a scrutiny and analysis of the water supply charges recoverable from consumers.

At the end of reporting period calculate the closing arrears and estimate the doubtful demand, if any, for every consumer.

Intimate the Accounts Section regarding provision to be made for doubtful demand.

At the end of reporting period

7. Accounts Section

Prepare JV, for the doubtful water supply charges recoverable, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and DCR.

On receipt of intimation from JE

Write off of doubtful demand

8. Junior Engineer

Carry out a scrutiny and analysis of the water supply charges recoverable from consumers.

Identify those water supply charges which are non-recoverable.

Intimate the Accounts Section regarding doubtful demand to be written off.

As and when

9. Accounts Section

Prepare JV, for the write off of non-recoverable water supply charges, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger & DCR.

On receipt of intimation from JE

Period end procedure

10. Junior Engineer / Accounts Section

Submit all the DCR to Accounts Section for reconciliation with the balance as per books of account.

Closing Arrears as per DCR should tally with balance in Water Supply Charges Recoverable Account.

In case of difference, identify the reconciliation difference and pass the necessary accounting entry, if any.

At the reporting period end.


At the period end the WIP Cost, WIP Materials Consumed, WIP Cost Others and WIP Centage of the maintenance schemes shall be adjusted against the Deposits Account (including Water Supply Charges Deposits Account).

Prepare JV, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger.

At the reporting period end.


Page | 72

Formats

Format Ref.

Document Title Document Type


WE/R04 Demand and Collection Register

I/O As and when Junior Engineer

---

WE/F01 Receipt Challan I/O As and when collections are made

Junior Engineer

Own Copy

Accounts Section

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On billing for water supply charges

JV Bills/ DCR Debit Water Supply Charges Recoverable Account Credit Water Supply Charges Deposits Account

Accounts Section

2. On collection of water supply charges

BRV / CRV MR Debit Bank Account / Cash Account Credit Water Supply Charges Recoverable Account

Cashier

3. On provisioning for doubtful demand

JV Intimation from JE

Debit Doubtful Water Supply Charges Account Credit Provision for Water Supply Charges Account

Accounts Section

4. On write off of doubtful water supply charges

JV Approval from designated authority

Debit Provision for Water Supply Charges Account (if provision made earlier) Credit Doubtful Water Supply Charges Account (if provision made earlier)

Accounts Section

Debit Water Supply Charges Deposits Account

Accounts Section


Page | 73

Sl. No.

Event Voucher type

Source documents


Responsible

Credit Water Supply Charges Recoverable Account

5. On closure of the WIP Accounts (Cost, Materials consumed, Centage, others, etc.) of the maintenance schemes

JV __ Debit Relevant Deposits Account (maintenance project) Water Supply Charges Deposit Account Credit WIP Labour Account WIP Materials Consumed Account WIP Cost Others Account WIP Centage Account Other Relevant Account

Accounts Section


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4.00 Section: Loan, Deposits, Grant and Investment Section Background: 4.01 This Section covers the Loan, Deposits, Grant and Investment accounting and related procedures. . 4.02 As per the Uttar Pradesh Water Supply & Sewerage Act, 1975 and the current business of UPJN, inter alia, the main business activities that UPJN carries out are as under:

Financing the schemes for the supply of water and for sewerage and sewage disposal

Execution of work projects on behalf of urban local bodies, etc.

To operate, run and maintain any water work and Sewerage system, if and when directed by the State Government

Loan 4.03 For carrying out the above activities, UPJN takes loan for financing the Works projects relating to supply of water and for sewerage and sewage disposal. Generally these Works projects are executed by UPJN on behalf of the urban local bodies, etc. Disbursement of loan to these agencies may be in the form of funds or in the nature of value of Works projects executed and handed over to them. For this, UPJN is responsible to recover the loan and interest amount from urban local bodies, etc. and repay the loan and pay the interest to the loan providers. 4.04 Further UPJN may also avail loans for its normal operation or for procuring capital items. 4.05 In this Section, for accounting purpose, these funds have been treated as loans (both as received by UPJN for financing of Works projects and for its own purpose) received and disbursed by UPJN. Accounting for receipt of both types of loans shall be same. Deposits 4.06 To execute the construction projects, funds are received by UPJN either from the respective outside parties (e.g. Urban Local Bodies, etc.) or from Central and/ or State Government or directly from the funding agencies (e.g. ADB, World Bank, etc. on behalf of outside parties/ Government). Funds received by those outside parties may be in the nature of Loan or Subsidy/ Grant for them but in case those funds are disbursed by those parties to UPJN then accounting purpose these funds shall be treated as „Deposits‟ by UPJN. Investment 4.07 In addition to loans, this Section also covers the accounting procedure relating to investments, in general, made by UPJN. 4.08 Based on the above, the coverage of this Section has been provided below. Accounting Policies 4.09 The main accounting policies that shall be followed relating to loan, deposits, grant and investment accounting are provided in the subsequent paragraphs: Loans taken by UPJN a.) Interest paid / payable on any loans shall be accounted for on an accrual basis.. Loans given by UPJN b.) Interest receivable on any loans shall be accounted for on an accrual basis..


Page | 75

c.) When the management is of the opinion that recovery of any loan is doubtful, an adequate provision shall be created for it. When the management is of the opinion that the loan will not be recovered, then the respective loan/advance amount shall be written off.

Grant received d.) If the Company receives any Grant in the nature of revenue, the same shall be treated in

accordance with terms and conditions attached with the grant. e.) Accounting policy for Capital Grants has been covered in Section: 5.00 Fixed Assets of this

Accounting Manual.

Investment f.) A current investment is an investment that is by its nature readily realisable and is intended to be

held for not more than one year from the date on which such investment is made. A long term investment is an investment other than a current investment even though it may be readily marketable.

g.) Long-term investments shall be carried in the financial statements at cost. It is necessary to create a provision for diminution to recognise a permanent decline in the value of investments. Such provision shall be deducted from the carrying amount of the investments. The reduction in value shall be charged to the Income and Expenditure Account. Any subsequent increase shall be credited to the Income and Expenditure Account to the extent of the amount debited earlier, i.e. the carrying value shall not exceed the original acquisition cost.

h.) Current investments are carried in the financial statements at the lower of cost or fair value. Any

reduction in the carrying amount of the investments (not temporary reduction) shall be debited to the Income and Expenditure Account.

i.) Fixed deposits for earmarked funds shall be treated as investments e.g. fixed deposits against

General Provident Fund. j.) Income on investments, etc. shall be accounted for on an accrual basis i.e. income receivable

whether due or not shall be taken in the books of account as on the closing date of the period end.

k.) Income / loss on sale of investments shall be accounted for on transfer of ownership. e.g.

transfer of ownership in case of securities shall be the date of delivery. Income / loss on redemption of investments shall be accounted for on the due date of redemption.

l.) When an investment is disposed of, the difference between the carrying amount and the net sale

proceeds (gross sale proceeds minus expenses directly attributable to sale) is to be charged to the Income and Expenditure Account.

m.) In case an investment is made at different points of time at different acquisition costs and a

portion of such investment is sold, then weighted average method shall be applied to arrive at the cost of the investments disposed.

n.) Interest, dividends, etc. in connection with the investments shall be treated as income and

credited to Income and Expenditure Account, if they are earned after acquisition of the investments. Sometimes, such incomes may accrue in the pre-acquisition period but are paid after the acquisition, so any such pre-acquisition incomes in connection with the investments shall be treated as capital profit and they shall be adjusted against the acquisition cost.

o.) In the case of dividend income, final dividend shall be recognised in the period when the dividend

is declared in the annual general meeting of the investee company. Interim dividend shall be accounted for in the period of approval by the board of the investee company.


Page | 76


Sl. No.


1. Loans taken for UPJN 4.01

2. Loans and advances given by UPJN 4.02

3. Loans received by UPJN for works purpose on behalf of local bodies, others, etc.

4.03

4. Deposit (Grants) from Government for works purpose 4.04

5. Deposit from local bodies / others for works purpose 4.05

6. Investments 4.06


Page | 77

Section: Loan, Deposits, Grant and Investment

Section Code: 4.00

Subject: Loans taken for UPJN Subject Code: 4.01

Subject Background: UPJN may take loans to finance the schemes for the supply of water and for sewerage and sewage disposal as well as for its own use. These loans shall be dealt with at Head Office (HO) only and details of these loans (relating to receipts, repayment, interest payment, etc.) shall be entered in the Loan Register which shall be maintained at HO. The accounting procedures for receipt of loans (both as received by UPJN for financing of Works projects and for its operations) shall remain the same. Loans may be taken from Government, financial institution, etc. which may be short term or long term in nature. Short-term loans are those loans which are due for not more than one year as on the date of the balance sheet. Interest on loans are accounted for as and when it is accrued and due. At the period end, interest accrued but not due shall also be accounted for. However, this interest accrued but not due shall be adjusted in the next period by passing the JV. In context of the above, this subject is covered under the following heads:

Receipt of Loan

Interest accrued and due on loan

Repayment of installment of principal loan and interest thereon

Interest accrued but not due on loan

Procedure:

Sl. No.

Person / Section

Responsible


Receipt of Loan

1. Cashier To process receipt of loan and adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare Bank Receipt Voucher (BRV).

Based on BRV, update Bank Book, General Ledger and Subsidiary Ledger.

Update the loan details in Loan Register and prepare schedule of repayments including principal & interest in Loan Register

As and when Same day on receipt of loan

Interest accrued and due on loan

2. Accounts Section

Calculate interest accrued and due payable on outstanding loans on due date. Interest accrued and due is the interest which is liable to be paid on due date.

Week before the due date

3. Accounts Section

Prepare Journal Voucher (JV), for the interest accrued and due, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Loan Register.

On due date

Repayment of installment of principal loan and interest thereon

4. Accounts Section

Prepare loan repayment schedule providing details of loan wise principal and interest amount to be paid for each loan on a due date.

Week before the due date

5. Cashier To process payment, adopt the procedure for bank payments as provided in Subject Code: 9.04

Prepare Bank Payment Voucher (BPV)



Page | 78

Sl. No.

Person / Section

Responsible


Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Loan Register.

of receipt of intimation

Interest payable accrued but not due on loan

6. Accounts Section

At the period end, calculate interest accrued but not due on loans, for the no. of days / month from the last due date. Interest accrued but not due is the interest which is yet to be due for payment.

Prepare JV, for the interest accrued but not due, and obtain approval from Designated Authority.


Adjust the above JV in the next period by passing the JV.

At the period end

7. Accounts Section

Adjust the JV passed for interest accrued but not due on loans in the next period by passing the JV.

At the start of next period

Formats

Format Ref.

Document Title

Document Type


LD/R01 Loan Register

I/O On receipt / payment of loan and interest related transactions

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Receipt of Loan BRV Loan agreement / loan sanction order

Debit Bank Account Credit Relevant Loan Account (works / non works purpose)

Cashier

2. Interest accrued and due on Loan

JV Loan agreement / loan sanction order / loan register

Debit Relevant Interest expense Account (works / non works purpose) Credit Relevant Interest Accrued and Due on relevant Loan Account (works / non works purpose)

Accounts Section

3. Repayment of loan and interest thereon

BPV Loan agreement / loan sanction

Debit Relevant Loan Account (works / non works

Cashier


Page | 79

Sl. No.

Event Voucher type

Source documents


Responsible

order / loan register

purpose) Relevant Interest Accrued and Due on relevant Loan Account (works / non works purpose) Credit Bank Account

4. Interest accrued but not due on Loan (period end)

JV Loan register

Debit Relevant Interest expense Account (works / non works purpose) Credit Relevant Interest accrued but not due on loan taken Account (works / non works purpose)

Accounts Section

5. JV for interest accrued but not due on Loan accounted for in previous period (to be accounted for in next period)

JV JV for interest accrued but not due passed in the previous period

Debit Relevant Interest accrued but not due on loan taken Account (works / non works purpose) Credit Relevant Interest expense Account (works / non works purpose)

Accounts Section


Page | 80


Section Code: 4.00

Subject: Loans and advances given by UPJN Subject Code: 4.02

Subject Background: UPJN may disburse loans to local bodies for their water supply and sewerage schemes. For this, UPJN is responsible to recover the loan and interest amount from urban local bodies, etc. and repay the loan and pay the interest to the loan providers. This subject covers the accounting procedures relating to the loan and advances given to these agencies in the form of funds. In context of the above, this subject is covered under the following heads:

Disbursement of loan and advances

Interest accrued and due on loan and advances

Receipt of installment principal loan and advances & interest thereon

Interest accrued but not due on loan and advances

Procedure:

Sl. No.

Person / Section

Responsible


Disbursement of loan and advances

1. Accounts Section

At the time of disbursement of loan to local body, others, etc., ensure that all the documentation has been completed pertaining to loan and loan has been approved internally by Designated Authority.

On disbursement of loan



Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Loan Disbursed Register.

Same day

Interest accrued and due on loan and advances

3. Accounts Section

Calculate interest accrued and due. Interest accrued and due is the interest which is liable to be received on due date.

Prepare intimation for interest accrued and due and send it to the borrower.

Fifteen days before due date

4. Accounts Section

Prepare Journal Voucher (JV), for the interest accrued and due, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Loan Disbursed Register.

On due date

Receipt of installment of principal loan and advances & interest thereon

5. Cashier To process receipt, adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare BRV.

Based on BRV, update Bank Book, General Ledger and Subsidiary Ledger and Loan Disbursed Register.

Same day on receipt of installment

Interest accrued but not due on Loan and Advances

6. Loan - Accounts Section

At the period end, calculate interest on loans accrued but not due, for the no. of days / month from the last due date. Interest accrued but not due is the interest which is yet to

At the period end


Page | 81

Sl. No.

Person / Section

Responsible


be due for receipt.

At the period end prepare JV, for the interest accrued but not due, and obtain approval from Designated Authority.



Formats

Format Ref.

Document Title

Document Type


LD/R02 Loan Disbursed Register

I/O On receipt / payment of loan and interest related transactions

Loan - Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Disbursement of Loan

BPV Loan agreement / loan sanction order

Debit Relevant Loan and Advances to Outside Agencies Account Credit Bank Account

Cashier

2. Interest accrued and due on Loan

JV Loan agreement / loan sanction order / loan disbursed register

Debit Relevant Interest Income Accrued and Due - Loan and Advances to Outside Agencies Account Credit Interest Income on Loans & Advances to Outside Agencies Account

Accounts Section

3. Interest accrued but not due on Loan (period end)

JV Loan Disbursed Register

Debit Relevant Interest Income Accrued But Not Due - On Loan and Advances to Outside Agencies Account Credit Relevant Interest income Account

Accounts Section

4. JV for interest accrued but not due on loan

JV JV for interest accrued but not due passed in

Debit Relevant Interest income

Accounts Section


Page | 82

Sl. No.

Event Voucher type

Source documents


Responsible

accounted for in previous period (to be accounted for in next period)

the previous period

Account Credit Relevant Interest Income Accrued But Not Due - On Loan and Advances to Outside Agencies Account

5. Receipt of installment of loan and interest thereon

BRV Loan agreement / loan sanction order / Loan Disbursed Register

Debit Bank Account Credit Relevant Loan and Advances to Outside Agencies Account Relevant Interest Income Accrued and Due on Loan and Advances to Outside Agencies Account

Cashier


Page | 83


Section Code: 4.00

Subject: Loans received by UPJN for works purpose on behalf of local bodies, others, etc.

Subject Code: 4.03

Subject Background: This subject deals with accounting aspects relating loan received from Government, etc. on behalf of local body, others, etc., for woks projects to be executed for it. Loans are received by UPJN from Government, etc. for Works project (vis. Water supply, sewerage, etc.) on behalf of urban local bodies, others, etc. Against these Loans, Works project are required to be executed by UPJN. In context of the above, at the time of receipt, the loan shall be credited to Loan Account. Subsequently, these loans shall be debited as Loans and advances to urban local bodies / others and credited to Deposits (Loan) Account. On closure of project, the Deposits (Loan) Account shall be adjusted against completed Works project. These loans shall be maintained and accounted for at Head Office level only. Interest on loans and advances recoverable are accounted for as and when it is accrued and due. At the period end, interest accrued but not due shall also be accounted for. However, this shall be adjusted in the next period by passing the JV. Interest on loan payable to Government, etc. are accounted for as and when it is accrued and due. In context of the above, this subject is covered under the following heads:

Receipt of loan from Government, etc.

Interest accrued and due for payment against Loan taken from Government, etc. on behalf of local body, others, etc.

Interest accrued and due for receipt from local body, others, etc. against Loan taken from Government, etc. on its behalf

Receipt of installment of principal loan and interest thereon from local body, others, etc.

Repayment of installment of principal loan and interest thereon to Government, etc.

Procedure:

Sl. No.

Person / Section

Responsible


Receipt of Loan from Government, etc.


Prepare BRV.

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf).

Same day on receipt of loan

2. Accounts Section

On receipt of the above loan, prepare JV, for Deposits received in the form of loan and loan & advances given to local bodies / others (based on the Government order through which loan is disbursed), and obtain approval from Designated Authority

Based on JV, update Journal Book, Subsidiary Ledger and General Ledger and Loan Register (for Loan received from

Same day of receipt of loan


Page | 84

Sl. No.

Person / Section

Responsible


Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf)

Interest accrued and due for payment against loan taken from Government, etc. on behalf of local body, others, etc.

3. Accounts Section

Calculate interest accrued and due for payment against loan taken from Government, etc.


4. Accounts Section

Prepare JV, for the interest accrued and due, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger, Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf) .

On due date

Interest accrued and due for receipt from local body, others, etc. against loan taken from Government, etc. on its behalf

5. Accounts Section

Calculate interest accrued and due for receipt from local body, others, etc. against Loan taken from Government, etc. on its behalf.


6. Accounts Section

Prepare JV, for the interest accrued and due, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger, Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf).

On due date

Receipt of installment of principal loan and interest thereon from local body, others, etc.

7. Accounts Section

Before due date, prepare loan and interest recovery intimation and send it to local bodies for intimating payment of loan to local bodies.

Fifteen before due date of loan installment


On receipt of payment from local bodies, prepare BRV.

Based on BRV, update Bank Book, Subsidiary Ledger and General Ledger and Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf).

Same day on receipt of installment

Repayment of installment of principal loan and interest thereon to Government, etc.

9. Accounts Section

Prepare loan repayment schedule providing details of loan wise principal and interest amount to be paid for each loan on a due date. Forward this schedule to the Cashier.

Week before due date


Prepare BPV.

Based on BPV, update Bank Book, Subsidiary Ledger and General Ledger

Update Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf) with the details of repayment made for principal loan and interest thereon.

On or before due date


Page | 85

Formats

Format Ref.



LD/R03 Loan Register (for Loan received from Government, etc. on behalf of local body, others, etc. for execution of Works project on its behalf)

I/O On Receipt / Disbursement / Closure of Loan

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of Loan

BRV Government Order for loan

Debit Bank Account Credit Relevant Loan Account (works / non works)

Cashier

JV Government Order for loan

Debit Relevant Loan and Advances to Outside Agencies Account Credit Relevant Deposits (Loan) Account

Accounts Section

2. Accounting for interest accrued and due payable & recoverable

JV Loan Register

Debit Relevant Interest Income Accrued and Due - Loan and Advances to Outside Agencies Account Credit Relevant Interest Accrued and Due on relevant Loan Account (works / non works)

Accounts Section

3. Receipt of Loan and interest installment from local bodies.

BRV Government Order for loan

Debit Bank Account Credit Relevant Loan and Advances to Outside Agencies Account Relevant Interest Income Accrued and Due - Loan and Advances to Outside

Cashier


Page | 86

Sl. No.

Event Voucher type

Source documents


Responsible

Agencies Account

4. Repayment of loan and interest thereon

JV Government Order for loan

Debit Relevant Loan Account (works / non works) Relevant Interest Accrued and Due on relevant Loan Account (works / non works) Credit Bank Account

Accounts Section


Page | 87


Section Code: 4.00

Subject: Deposits (Grants) from Government for works purpose

Subject Code: 4.04

Subject Background: Grant received by UPJN from Government department, local body, etc. for executing the works projects shall be treated as Deposits (Grant). These deposits shall be adjusted with the expenditure incurred on the works projects on completion of works. These deposits shall be adjusted by the same Unit which maintains the respective deposits account. In context of the above, this subject is covered under the following heads:

Receipt of Deposits (Grant)

Disbursement of Deposits (Grant) to Units

Procedure:

Sl. No.

Person / Section

Responsible


Receipt of Deposits (Grant)

1. Accounts Section

Update the grant details, based on Government Order, in Deposits (Grant) Register

As and when


Prepare BRV

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and Deposits (Grant) Register.

Same day on receipt of Grant

Disbursement of Deposits (Grant) to Units


Prepare BPV and raise ATD. Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Deposits (Grant) Register

As and when

Formats

Format Ref.

Document Title

Document Type


LD/R04 Deposits (Grant) Register

I/O On receipt / disbursement / closure of Deposits (grant)

Accounts Section

---


Page | 88

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of Deposits (Grant)

BRV Government Order and receipt of money

Debit Bank Account Credit Relevant Deposits (Grant) Account

Cashier

2. On disbursement of Deposits (Grant) to Unit

BPV Head Office Order

Debit Funds Remittance between Units - Grant Account Credit Bank Account

Cashier


Page | 89


Section Code: 4.00

Subject: Deposits from local bodies / others for works purpose

Subject Code: 4.05

Subject Background: Deposits are received by UPJN from Government department, local body, etc. for executing the works projects. These deposits shall be adjusted with the expenditure incurred on the works projects on completion of works. These deposits shall be adjusted by the same Unit which maintains the respective deposits account. In context of the above, this subject is covered under the following heads:

Receipt of Deposit from local bodies / others for works purpose

Disbursement of Deposits to Units for works purpose

Procedure:

Sl. No.

Person / Section

Responsible


Receipt of Deposit from local bodies / others for works purpose

1. Accounts Section

Update the deposit details, based on Disbursement Order of local bodies, in Deposits Register

As and when

2. Cashier Based on the above, adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare BRV

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and Deposits Register

Same day on receipt of deposits

Disbursement of Deposits to Units for works purpose

3. Cashier For disbursement of deposits from HO / Unit to Unit, adopt the procedure bank payments as provided in Subject Code: 9.04 and raise ATD. Refer Subject Code: 10.01 for procedure relating to raising ATD.

Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Deposits Register

As and when

Formats

Format Ref.

Document Title

Document Type


LD/R05 Deposits Register

I/O On receipt / disbursement / closure of Deposits

Accounts Section

---


Page | 90

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of Deposits

BRV Disbursement Order

Debit Bank Account Credit Relevant Deposits for works Account (from local bodies / others)

Cashier

2. On disbursement by HO of Deposits to Unit

BPV Head Office Order

Debit Funds Remittance between Units - Deposits Account Credit Bank Account

Cashier


Page | 91


Section Code: 4.00

Subject: Investments Subject Code: 4.06

Subject Background: UPJN‟s investments may be against any earmarked funds (e.g. GPF) or in general. These investments may be in the form on shares, debentures, bonds, fixed deposits, etc. The investment can be broadly classified into current investment and long term investment. A current investment is an investment that is by its nature readily realisable and is intended to be held for not more than one year from the date on which such investment is made. A long term investment is an investment other than a current investment even though it may be readily marketable. Income on investments are accounted for as and when it is accrued and due. At the period end, income accrued but not due shall also be accounted for. However, this shall be adjusted in the next period by passing the JV. In context of the above, this subject is covered under the following heads:

Making Investment

Income on Investment

Income accrued but not due on Investment

Investment Realisation

Procedure:

Sl. No.

Person / Section

Responsible


Making Investment

1. Cashier After taking approval from respective Designated Authority, adopt the procedure for bank payments as provided in Subject Code: 9.04

Investment shall be paid by cheque / direct transfer from the account of UPJN.

Prepare BPV

Based on BPV, update Bank Book, Subsidiary Ledger and General Ledger and Investment Register

As and when

Income on Investment

2. Accounts Section

On availability of information regarding income accrued and due, prepare JV, for the income accrued and due, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Investment Register.

On due date

Income accrued but not due on Investment

3. Accounts Section

In case income is fixed and guaranteed, then calculate income on investments accrued but not due, for the no. of days / month from the last due date. Income accrued but not due is the income which is yet to be due for receipt.

At the period end prepare JV, for the income accrued but not due, and obtain approval from Designated Authority.

Based on JV, update Journal Book, Subsidiary Ledger and General Ledger.


At the period end

4. Cashier To process receipt, adopt the procedure for bank receipts as Same day


Page | 92

Sl. No.

Person / Section

Responsible


provided in Subject Code: 9.04

On receipt of income, prepare BRV.

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and Investment Register.

on receipt of income

Investment Realisation


Prepare BRV.

Based on BRV, update Bank Book, Subsidiary Ledger and General Ledger.

Update Investment Register with the details of repayment made for principal loan and interest thereon.

Same day

Formats

Format Ref.

Document Title

Document Type


LD/R06 Investment Register

I/O On receipt / payment of Investment and income related transactions

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Making Investment

BPV Investment related document

Debit Relevant Investment Account Credit Bank Account

Cashier

2. Income accrued and due on Investment

JV Investment related document

Debit Relevant Income Accrued and Due on Investment Account Tax Deducted At Source Recoverable - Income on Investment Account Credit Relevant Income on Investment Account

Accounts Section

3. Receipt of income on investment

BRV Investment related document

Debit Bank Account Credit Relevant Income Accrued

Cashier


Page | 93

Sl. No.

Event Voucher type

Source documents


Responsible

and Due on Investment Account

4. Interest accrued but not due on Investment (period end)

JV Investment related document

Debit Relevant Income Accrued but not Due on Investment Account Credit Relevant Income on Investment Account

Accounts Section

5. JV for income accrued but not due on Investment accounted for in the previous period (to be accounted for in next period)

JV JV for Income accrued but not due on investment passed in the previous period

Debit Relevant Income on Investment Account Credit Relevant Income Accrued but not Due on Investment Account

Accounts Section

6. Realisation on Investment

BRV Investment Register

Debit Bank Account Credit Relevant Investment Account

Accounts Section


Page | 94

5.00 Section: Fixed Assets

Section Background: 5.01 This Section covers the Fixed Assets accounting and related procedures. Accounting Policies 5.02 The main accounting policies that shall be followed relating to fixed assets accounting are provided in the subsequent paragraphs: Fixed Assets

a.) As a general policy, the cost of fixed assets shall comprise its purchase price / construction price

and any directly attributable cost of bringing the assets to its working condition for its intended use. Any expense (if it does not increase the capacity / efficiency of the corresponding fixed assets) incurred subsequent to the period when fixed assets was ready to use, shall not be capitalised and shall be treated as revenue expenditure.

Bought out Fixed Assets

b.) In addition to the cost of bought out fixed assets, the following components of cost (only

illustrative) incurred for putting the fixed assets in „ready to use‟ condition shall be considered for capitalisation of fixed assets:

Basic cost of the fixed assets including non recoverable/ non reimbursable billed taxes and duties such as import duty, excise duty (MODVAT), sales tax, value added tax and similar other taxes and duties.

Freight up to the place of installation

Octroi

Brokerage

Stamp duty for transfer of assets in UPJN‟s name

Registration fee charged by statutory authorities for registration of assets

Delivery and handling cost for bringing the fixed assets in the current location and condition

Cost of installation

Cost of spare part to make the assets ready to use

Transit Insurance (also in case of imports)

Self constructed Fixed Assets

c.) In addition to the above mentioned costs, the cost (incurred up to the date of assets ready to use) of self constructed fixed assets shall also include the below mentioned costs:

Project Insurance,

Site preparation expenses for installation of fixed assets

Contractor‟s cost

Hiring charges for hiring construction equipments

Borrowing and financing cost (i.e. interest during construction, processing fee for loan, etc.) on the fixed assets

Repairs and maintenance expenses, if any, before the assets is ready to use

Expenditure incurred during trial run

Installation cost

Up gradation cost if any to increase the efficiency of the fixed assets

d.) Abnormal loss during construction period shall not be capitalised, but charged to the Income and Expenditure Account.

Other Specific Fixed Assets


Page | 95

e.) Other specific fixed assets and their associated costs for capitalisation are provided below:

Land o Compensation for acquisition of land and legal charges thereon o Compensation for trees on acquired land o Payment to tenants for withdrawal of tenancy rights / compensation paid for vacating the

land.

Building o Bought out building

Basic cost of building Statutory Registration fee Cost of obtaining permits, sanctioned plans, occupation certificates from municipal or

other bodies with respect to building o Self constructed building

Labour, material, equipment hiring charges and overheads cost for construction Site preparation expenses Cost of demolition of unwanted structure in the place where building is constructed Cost of financing up to the date of obtaining completion certificate from architect Repairs and maintenance expenses incurred up to the date of obtaining completion

certificate from architect When a building is purchased along with the land, the purchase cost shall be allocated between the land and building based on technical and commercial valuation by expert valuers.

Plant and Machinery (including installed / erected / assembled) o Contractors cost in case of outsourcing of the entire erection / construction of plant and

machinery o Foundation cost o Hiring of construction equipment e.g. in case of building, assembling, etc.

Vehicles o Road tax registration charges o Registration fee o Cost of spare parts (if purchased at the time of purchase of vehicle) to make the assets

ready to use

Furniture and Fixtures, Electrical Fittings, Office Equipments o Contractors cost o Fees of interior designer, architect, etc.

Capitalisation of amount recovered / payable to contractor / supplier as per contract

f.) All liquidated damages recoverable/ deducted from the contractor shall be reduced from the cost

of the assets being constructed / procured. All bonus payable to the contractors as per the CB shall be added to the cost of the assets being constructed/ manufactured/ procured.

Accounting for wholesome / partial loss of Fixed Assets

g.) In case the fixed assets is damaged/ destructed/ lost etc. to the full extent which makes the fixed

assets non-usable then the fixed assets shall be decapitalised 100% and written off as abnormal loss of fixed assets. The scrap of such fixed assets shall be transferred to scrap stock and accounted for accordingly.

h.) In case the fixed assets is partially damaged/ destructed etc. then the cost of restoring / reconstructing / rebuilding the fixed assets to its condition before damage / destruction shall be capitalised and the proportionate value of the assets damaged / destructed based on technical evaluation shall be decapitalised and written off as abnormal loss of fixed assets e.g. water transmission pipeline of 20 kms. installed for transmission of water from the treatment plant to reservoir is damaged to the extent of 2 kms., then in such case the cost of restoring 2 kms. shall be capitalised and the carrying value of 2 kms. damaged pipeline shall be written off as abnormal loss of fixed assets.

Government grant received against specific Assets


Page | 96

i.) Government grant received in cash against purchase of fixed assets shall be treated as Capital

Grant (Balance Sheet item). Government Grant against which fixed assets has been purchased / acquired / constructed shall be credited to Income and Expenditure Account on a periodical basis to the extent of depreciation / amortisation charged to assets.

j.) In case where any fixed assets is received as grant, these assets would be capitalised and accounted for in the books of account at a nominal value i.e. Re. 1.

Capitalisation of cost of Improvement / repairs

k.) If any Fixed Asset is required to be maintained subsequent to its usage in order to receive the

desired output, the cost of maintenance of the assets shall be treated as revenue expenditure. However, if the expenditure incurred subsequent to its capitalisation for improvisation in the capacity and utilisation of assets then such expenditure shall be capitalised. However, major expenditure incurred for overhaul/ repair and maintenance of an assets shall not be treated as capital expenditure, if the overhaul/ repair of an assets (e.g. overhauling of plant and machinery and whitewash of building), is required to be done on a regular basis for upkeep of the assets and working of the assets in its normal conditions and the existing capacity.

Capitalisation of Fixed Assets value less than Rs. 5000/- l.) Any individual Fixed Asset, which costs below Rs.5,000/- shall be capitalised and accounted for

under the respective block of fixed assets. However for such fixed assets, 100% depreciation shall be charged in the first year itself. After charging depreciation at 100%, there shall be no further depreciation charged in subsequent periods. However, if the total value of such individual fixed assets (which cost below Rs.5,000/- individually) is more than 10% of the block of fixed assets under which they fall, then the entire value of fixed assets shall be capitalised and depreciated at the applicable depreciation rate to that particular block of fixed assets.

Date of capitalisation of Fixed Assets

m.) The date of capitalisation shall be taken as the date on which the Fixed Asset is first ready to use.

This shall be known from the following:

In case of plant and machinery - ready to use certificate given by the Engineering department

In case of assets bought out fixed assets - purchase date

In case of assets constructed from own sources - ready to use certificate given by the architect/ Engineer

Other memorandum records pertaining to the assets. Revaluation of Fixed Assets

n.) An increase in net book value arising on revaluation shall be credited to a reserve account under

„Revaluation Reserve Account‟. A decrease in net book value arising on revaluation of fixed assets is charged to Income and Expenditure account. Revaluation reserve shall be reduced on a periodical basis by transferring the equivalent amount of depreciation charged on the revalued portion of the cost of the respective fixed assets. Revaluation of a class of fixed assets shall not result in the net book value of that class of asset being greater than the realisable value of the asset.

Disposal / Sale of Assets

o.) In case of sale of fixed assets where the consideration value is higher than the original cost of

fixed assets then the difference between the consideration received and the original cost shall be taken to Capital Reserve as it is capital profit and the balance profit (i.e. difference between original cost and book value) shall be credited to Income and Expenditure Account.


Page | 97

p.) The book value of the scrap of fixed assets (i.e. Gross block net of Accumulated Depreciation) shall be written off and charged to the Income and Expenditure Account. The amount realised on disposal of scrap shall be accounted as “Income from Sale of Scrap Account”.

q.) Any loss (equal to the difference between the revalued book value and sale proceeds) on the sale of revalued fixed assets shall be reduced from the revaluation reserve and the balance loss shall be debited to the “Income / Loss from Sale / Disposal / Surplus / Write Off of Fixed Assets Account”. In case, after adjustment of loss any balance is lying in revaluation reserve pertaining to fixed assets sold, it shall be credited to the Income and Expenditure Account.

r.) Any profit (equal to difference between the sale proceeds and revalued book value) on sale of revalued assets shall be credited to the Income and Expenditure Account. Further, the amount lying, if any, in revaluation reserve pertaining to that Asset shall be credited to the Income and Expenditure Account.

s.) Fixed assets that have been retired from active use and held for sale shall be stated at lower of net book value or net realisable value.

Shortage of Fixed Assets on physical verification

t.) Fixed assets accounted for in books of account and recorded in the Fixed Assets Register but physically missing (based on the Physical Verification Report) shall be treated based on the decision taken by UPJN. In case where the value of such fixed assets is to be recovered from person responsible then that shall be accordingly recovered, otherwise it shall be written off.

Assets under dispute

u.) All the fixed assets accounted for in the books of account of UPJN which are under dispute or

litigation shall be disclosed in the financial statements along with notes/remarks that these are under dispute and also the status of the legal case as at the reporting date of the Financial Statements.

Transfer of Fixed Asset between Units

v.) In case of transfer of fixed assets from one Unit to other, the related amount of Gross Block and

Accumulated Depreciation (i.e. up to the end of the immediately preceding financial period) as appearing in the books of the Transferor Unit as on the date of transfer shall be transferred to the Transferee Unit. The depreciation for the entire financial period in which the assets have been transferred shall be allocated to both the Units on proportionate period of use basis. The transportation cost in case of inter-unit transfer of fixed assets shall not be capitalised and shall be accounted for as revenue expenditure

Intangible Assets

w.) An Intangible Asset is an asset having no physical substance but is identifiable and held for use

for the purpose of providing goods or services or for rentals or administrative purpose. An intangible assets shall be recognised only if it is identifiable, controlled by the organisation, has measurable cost and measurable future economic benefits is expected to flow to UPJN (future economic benefits may be in the form of cost control, revenue generation, etc. which can be measured). Generally, the following may be identified as intangible assets:

Trademarks, trade names

Internet domain names

Technology-based intangible assets

Patented Technology

Computer Software e.g. Acquisition / development of computer software for UPJN

x.) The following cost components shall be considered for capitalisation of Intangible Asset in general (including bought out or internally generated):


Page | 98

Basic cost of the assets

Non-recoverable taxes and duties

Project Insurance, especially for self generated intangible assets up to the date of assets ready to use

Statutory duties payable if any on intangible assets acquisition.

Registration fee charged by statutory authorities for registration of intangible assets, if any

Cost incurred to make the intangible assets ready to use e.g. Installation fee paid to the software supplier for successful loading of the software.

Cost of financing till the intangible assets is ready to use

Expenditure incurred during trial run e.g. expenditure incurred during software implementation till its final approval.

Cost of up gradation, which increases the efficiency of the intangible assets

Any expenditure that is directly attributable in generating the intangible assets such as legal and professional charges directly attributable to intangible assets

Salary, wages and other employment cost of the personnel directly involved in the generation of intangible assets

Expenditure on material and services used or consumed in generating the intangible assets

Overheads which are necessary to generate the assets and can be allocated on consistent and reasonable basis to the intangible assets.

Project Asset y.) Project asset is similar to fixed assets, except to the fact that they are acquired, purchased,

constructed for execution of an identified Works Project and out of the funds of Works Project. In case where project asset are purchased for a particular Works project, the cost of those project asset shall be debited to WIP Project Asset Account.

z.) However in case where Fixed Asset purchased are not directly relating to any Works project but

are used for Works Project, then the amount of deprecation for use of these Asset on the Works project shall be charged to that Works Project.

Depreciation on Fixed Assets / amortisation of Intangible Assets

Method of depreciation

aa.) Depreciation shall be provided consistently as per the method of depreciation and at the rates as

prescribed by UPJN. In case there is any change in the method of depreciation, then the depreciation shall be calculated retrospectively and the difference thereon shall be charged to Income and Expenditure Account. This fact shall be disclosed separately in the Financial Statement.

Depreciation Reserve

bb.) Depreciation Reserve shall be created for replacement of fixed assets in accordance with the Policies prescribed by UPJN. Depreciation reserve is created / credited every financial period through appropriation of surplus of income over expenditure.

cc.) No depreciation shall be charged on land. Depreciation on revalued Assets

dd.) In case of revaluation of assets, depreciation shall be charged on the revalued Gross Block. Apportionment of depreciation amount on works ee.) In case where any fixed assets is identified as being used on any Works project then the

proportionate amount of depreciation of that fixed assets shall be debited to WIP Cost Others Account of respective Works project.


Page | 99

ff.) In case where any fixed assets is returned by contractor (which was lent earlier to contractor),

then the net book value of that Fixed Asset shall be assessed by the concerned Junior Engineer (which shall be the fair value). The net book value so assessed shall be deducted from the net book value before use of that Fixed Asset by contractor and the balance shall be the depreciation to be charged on the Works Project on which the fixed assets has been used by debit to WIP Cost Others Account.

Amortisation of Intangible Assets gg.) Intangible assets shall be amortised over the period of its licence/permits/tenure or the period as

prescribed by UPJN. Apportionment of amortised amount on works hh.) In case where any intangible assets is identified as being used on any Works project then the

proportionate amount of amortisation of that intangible assets shall be debited to WIP Cost Others Account of respective Works project

Coverage of this Section 5.03 This Section covers the following Subjects on:

Sl. No.


1. Acquisition / Self constructed / Development of Fixed Assets / Intangible Assets / Project Asset

5.01

2. Revaluation of Fixed Assets / Intangible Assets 5.02

3. Inter-unit transfer of Fixed Assets and Project Asset 5.03

4. Transfer of Project Asset between Works Project / Recovery of Project Asset as Fixed Assets

5.04

5. Fixed Assets and Project Asset issued to contractors – lent and returned 5.05

6. Depreciation on Fixed Assets / Amortisation on Intangible Assets 5.06

7. Sale of Fixed Assets and Project Asset 5.07

8. Physical Verification of Fixed Assets and Project Asset 5.08


Page | 100

Section: Fixed Assets Section Code: 5.00

Subject: Acquisition / Self constructed / Development of Fixed Assets / Intangible Assets / Project Asset

Subject Code: 5.01

Subject Background: This subject covers the accounting procedure to be followed in relation to Acquisition/ Self-constructed / Development of fixed assets / intangible assets / project asset. Overall the procedure pertaining to the above shall be similar to that provided in Section 2.00 - Stores and Section 3.00 - Works Expenditure. Fixed assets are held with the intention of being used for the purpose of producing or providing goods or services and are not held for sale in the normal course of business. Accordingly, any expenditure which results in creation of a new fixed assets or substantially increases the capacity or the benefit that can be derived from an existing asset and such benefit is of enduring nature shall be treated as fixed assets. Fixed assets / intangible assets can be acquired, purchased or constructed out of the UPJN funds or from grant from Government. It may also be received from Government in the form of Grant to UPJN. Project asset is acquired, purchased or constructed out of the UPJN funds or deposits received for Works project purpose from Government, local body, others, etc. Fixed assets / intangible assets / project asset may be movable or immovable in nature. In case of immovable asset, it may have been constructed or assembled at the site itself. Capital Works in Progress (WIP) refers to the construction / development of fixed assets / intangible assets e.g. construction of office buildings or staff quarters for employees or development of software for UPJN. In context of the above, this subject is covered under the following heads:

Acquisition / self-constructed / development of fixed assets / intangible assets / project asset


Payment to supplier against supplier‟s bill

Freight and incidentals on fixed assets / intangible assets / project asset

Procedure:

Sl. No.

Person / Section

Responsible


Acquisition / self constructed / development of fixed assets / intangible assets / project asset


When assets are entered in UPJN location, make stores entry in Stores Entry Register, immediately providing details of fixed assets received, Delivery Challan reference, etc.

On receipt of fixed assets

2. Designated Authority

When assets purchased for UPJN is received, ensure the following: o Stores entry has been done by Storekeeper in the

Stores Entry Register. o Check that the assets are received as per the details

provided in Purchase Order (PO) / Supply order o The assets are in normal conditions and are not

damaged

At the time of receipt of fixed assets / intangible assets


Page | 101

Sl. No.

Person / Section

Responsible


In case of any intangible assets or immovable fixed assets, there shall be no stores entry.

Update MB based on measurement undertaken, if any.

Prepare Asset Receipt Note (ARN) and forward ARN to Designated Authority for approval. In case of constructed / developed Asset ARN shall be prepared on completion of asset.

Update Junior Asset (JE) Asset Register (to maintained by the person in whose custody the fixed assets / intangible assets / project asset is available)


Scrutinise, approve and forward the ARN and supporting documents to Accounts Section.

Same day on receipt of ARN

4. Accounts Section

Receive and review ARN.

In case of constructed / developed Asset, identify the expenditure incurred pertaining to the Capital WIP. It shall be ensured that all the expenditure incurred has been duly accounted for in Capital WIP.

Ensure that the Completion certificate, if assets constructed, by Designated Authority is received.

The Measurement Book (MB) is updated for the various measurements undertaken pertaining to the works.

The above process would be similar even for project asset constructed / developed.

In case of Capital work in progress for project asset, the expenditure shall be debited to WIP Project Asset Account.

Value ARN based on the rates agreed with the supplier / contractor, other directly attributable cost incurred, etc. and finalise it. In case of fixed assets constructed or intangible assets developed, the ARN shall be valued based on the balance lying in Capital WIP account for the identified fixed assets

As and when

5. Accounts Section

Receive and pass supplier's / contractor‟s bill based on the rates agreed in Contract Bond (CB) and quantity received as per ARN. For passing the bills of supplier follow the process as provided in Subject Code: 2.02. For passing the bills of contractor follow the process as provided in Subject Code: 3.01

In case of fixed assets / intangible assets / project asset acquired out of grant (cash or kind), verify with sanction order.

Overall scrutinise all the documents pertaining to the fixed assets / intangible assets whether moveable or immovable, to ensure that the fixed assets / intangible assets are owned by UPJN and its value is identifiable.

Prepare Journal Voucher (JV) and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Supplier Bill Register / Contractor Bill Register and Fixed Assets / Intangible Assets / Project Asset Register.

In case of project asset, update Works Register.

Forward JV with supporting to Cashier for payment.

On receipt of the supplier‟s bill/ grant sanction order Same day of passing of bill



Page | 102

Sl. No.

Person / Section

Responsible


6. Accounts Section

Advance payment shall be made to the supplier only as per the agreed terms and conditions.

Receive Performa Invoice from supplier for the advance.

In case the advance is to be paid to retire dispatch documents from the bank, verify particulars of Bank Advice with Dispatch Instruction / PO / CB through which fixed assets / intangible assets / project asset were instructed to be supplied and percentage of payment was agreed to be paid (e.g. this is an usual case in case of imported items).

Take necessary approvals from Designated Authority and forward supporting documents to Cashier for payment

As and when

7. Cashier Receive supporting documents.



Based on BPV, update Bank Book, General Ledger and Subsidiary Ledger.



Payment to supplier against supplier’s bill


The payment to supplier shall be made on or after the due date of payment for the amount passed against the bill and net of advance paid, if any, earlier.


Prepare BPV.

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger, Supplier Bill Register


Update MB for the supplier‟s bill passed and payment made


Freight and incidentals on fixed assets / intangible assets / project asset

9. Junior Engineer / Assistant Engineer Accounts Section

Mention the ARN reference on the freight bill / freight vouchers pertaining to the freight.

Provide details of freight and incidentals on ARN in remarks column.

Check and pass the freight bill / voucher.

In case the freight pertains to the Asset, the same shall be debited to the cost of corresponding asset. However, in case freight pertains to the materials for construction of asset, then the same shall be added to the cost of Capital WIP.


Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, and Works Register (In case of project asset).

As and when vouchers are received.


Page | 103

Formats

Format Ref.

Document Title

Document Type



O At the time of receipt of fixed assets / project asset at stores


---

FA/F01 ARN I/O On receipt / capitalisation of fixed assets / intangible assets / project asset

Designated Authority

Own Copy

Accounts Section

Designated authority

FA/R03 JE Asset Register

O On preparation of ARN


--

FA/R02 Project Asset Register

O On finalisation of ARN

Accounts Section

--

FA/R01 Fixed Assets / Intangible Assets Register

O On finalisation of ARN

Accounts Section

--

MT/R04 / WE/R01

Supplier Bill Register / Contractor Bill Register

O On receipt of bills and payment against it

Accounts Section

--


O As and when project asset related expenses are incurred / paid

Accounts Section

--

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Receipt of fixed assets / intangible assets (other than grant) / project asset

JV ARN Debit Relevant Fixed Assets Account / Intangible Assets Account / WIP Project Asset Account Credit Account Payable -Supplier Account Relevant Advances for capital items Account / Relevant WIP Advances Account (for adjustment of advances, if any)

Accounts Section

2. Receipt of Assets (by way of grant)

JV ARN Debit Relevant Fixed Assets Account / Intangible Assets Account

Accounts Section


Page | 104

Sl. No.

Event Voucher type

Source documents


Responsible

Credit Relevant Grant Account

3. On Capitalisation of Assets constructed / developed

JV ARN Debit Relevant Fixed Assets Account / Intangible Assets Account Credit Relevant Capital WIP Account

Accounts Section

4. Payment to supplier against supplier‟s bill

BPV Supplier‟s Bill

Debit Account Payable - Supplier Account Credit Bank Account

Cashier

5. Advance payment to supplier

BPV Performa Invoice / Bank Advice

Debit Relevant WIP Advances Account (in case of Project Asset) / Relevant Advances to supplier for capital items Account (in case of Fixed Assets / Intangible Assets) Credit Bank Account

Cashier

6. Incidental expenses on fixed assets / intangible assets / project asset

JV Bill / Voucher

Debit Relevant Fixed Assets Account / Intangible Assets Account / WIP Project Asset Account Credit Relevant Account

Accounts Section


Page | 105


Subject: Revaluation of Fixed Assets / Intangible Assets

Subject Code: 5.02

Subject Background: This subject covers the accounting procedure to be followed in relation to revaluation of fixed assets / intangible assets. The revaluation of fixed assets / intangible assets shall be done, when it is assessed by the management that the net book value of the fixed assets / intangible assets does not depict the true fair value of the assets. However, it is important to note that the revaluation of assets is not done frequently but is done over a longer period of the life of asset. The revaluation of fixed assets / intangible assets shall be done by expert valuer appointed by UPJN. Based on the expert‟s Valuation Report, the fair value of the assets shall be identified and accordingly considered for accounting.

Procedure:

Sl. No.

Person / Section

Responsible


Revaluation of Fixed Assets / Intangible Assets and accounting thereon


Forward the Valuation Report of the expert valuer to Designated Authority for approval.

As and when


Approve / disapprove the Valuation Report.

In case of approval, pass the order for revaluation and forward it to Accounts Section.

As and when

3. Accounts Section

Receive the approval on Valuation Report.

Based on the Valuation Report, prepare JV and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Fixed Assets Register.

As and when for the period during which valuation is undertaken

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On the revaluation (in case valuation is higher than book value)

JV Valuation Report

Debit Relevant Fixed Assets Account / Intangible Assets Account Credit Revaluation reserve Account

Accounts Section

2. On the revaluation (in case valuation is lower than book value)

JV Valuation Report

Debit Loss on Revaluation of Assets Account Revaluation reserve Account (in case earlier revaluation was on higher side) – to the extent of lower of balance lying in it or decrease in

Accounts Section


Page | 106

Sl. No.

Event Voucher type

Source documents


Responsible

value of Assets. Credit Relevant Fixed Assets Account / Intangible Assets Account


Page | 107


Subject: Inter-unit transfer of Fixed Assets and Project Asset

Subject Code: 5.03

Subject Background: This subject covers the accounting procedure to be followed in relation to transfer of fixed assets / project asset from one Unit to another Unit within UPJN. The inter-unit transfer may occur on need basis. In this case the Gross Block and Accumulated Depreciation of the fixed assets shall be transferred from one Unit to another. Project asset shall be transferred to another Unit at the lower of fair value of the project asset or the original cost. In context of the above, this subject is covered under the following heads:

Requisition for transfer of Fixed Assets / Project Asset

Transfer of Fixed Assets / Project Asset

Receipt of transferred Fixed Assets / Project Asset

Procedure:

Sl. No.

Person / Section

Responsible


Requisition for Transfer of Fixed Assets / Project Asset

1. Junior Engineer/ Assistant Engineer (Transferee)

Prepare Indent providing the details of fixed assets / project asset required.

It may be happen that the JE may not go to receive the Asset from Transferor JE. In such a case, JE shall authorise a Person to receive Asset on its behalf.

Obtain approval of AE and forward it to Executive Engineer (EE).

As and when fixed assets / project asset are required to be transferred

2. Executive Engineer (Transferee)

Approve the Indent and send it to EE (Transferor) Unit.

As and when

3. Executive Engineer (Transferor)

Receive Indent from Transferee Unit.

Identify the location/JE, from where fixed assets / project asset are to be transferred.

Forward Indent to Transferor AE.

Within next day of receipt of Indent

4. Assistant Engineer (Transferor)

Scrutinise, approve and forward the Indent to concerned JE.

Same day of approval

Transfer of Fixed Assets / Project Asset

5. Junior Engineer (Transferor)

Check the Indent to ensure that all the necessary information has been provided to make a transfer of fixed assets / project asset.

Prepare Asset Transfer Note (ATN).

Take the signature of the Transferee JE or its authorised representative on ATN.

Provide copy of ATN to the recipient of fixed assets / project asset.

Update JE Asset Register.

Forward ATN to AE.

On transfer of Assets


Scrutinise, approve and forward the ATN to Accounts Section.

Within next day of receipt of ATN


Page | 108

Sl. No.

Person / Section

Responsible


(Transferor)


On receipt of ATN from Transferor AE, verify ATN and value ATN.

Raise an Advice of Transfer Debit (ATD) on Transferee Unit. Refer Subject Code: 10.01 for procedure relating to raising ATD

Prepare JV, for the ATD raised, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Fixed Assets Register / Project Asset Register.

In case of project asset update Works Register based on the value of project asset for which ATD is raised.

As and when Within one day of receipt of ATN

Receipt of Transferred Fixed Assets / Project Asset


When fixed assets / project asset is received at UPJN location, make store entry in Stores Entry Register, immediately providing details of fixed assets / project asset received, Delivery Challan reference etc.

On receipt of fixed assets / project asset

9. Junior Engineer (Transferee)

When assets are received, ensure the following: o Check that the assets are received as per the

details provided in ATN o The assets are in normal conditions and are not

damaged. o Prepare ARN. o Update JE Asset Register o Forward ARN to AE.

On receipt of fixed assets / project asset

10. Assistant Engineer (Transferee)

Scrutinise, approve and forward the ARN to Accounts Section.

Same day


Receive ARN


Prepare JV and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Fixed Assets Register / Project Asset Register.

In case of project asset update Works Register based on the value of project asset for which ATD is raised.

As and when Within one day of receipt of ATD and ARN

Formats

Format Ref.

Document Title

Document Type


FA/F03 Indent

I/O On requisition of fixed assets / project asset

Junior Engineer (Transferee)

Own Copy

Executive Engineer (Transferor)


FA/F02 ATN

I/O On transfer of fixed assets / project asset

Junior Engineer (Transferor)

Own Copy

Assistant Engineer

Accounts Section


Page | 109

Format Ref.

Document Title

Document Type


Receiver‟s copy

FA/F01 ARN I/O On receipt of fixed assets / project asset

Junior Engineer (Transferee)

Own Copy

Assistant Engineer

Accounts Section

IUT/F01 ATD I/O On transfer of assets to another Unit

Accounts Section

Own Copy

Transferee Unit


O Same day on finalisation of ATN / ARN

Junior Engineer (Transferor/ Transferee)

--

FA/R01 / FA/R02

Fixed Assets Register / Project Asset Register

O Same day on valuation of ATN / ARN

Accounts Section (Transferor/ Transferee)

--

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Transfer of fixed assets between Unit (Transferor)

JV ATN & ATD Debit IUT – Fixed Assets/ Project Asset Account Relevant Accumulated Depreciation Account Credit Relevant Fixed Assets Account

Transferor Accounts Section

2. Transfer of project asset between Unit (Transferor)

JV ATN Debit IUT – Fixed Assets/ Project Asset Credit WIP Project Asset Account

Transferor Accounts Section

3. Transfer of fixed assets between Unit (Transferee)

JV ARN Debit Relevant Fixed Assets Account Credit IUT – Fixed Assets/ Project Asset Relevant Accumulated Depreciation Account


4. Transfer of project asset between Unit (Transferee)

JV ARN Debit Relevant WIP Project Asset Account Credit IUT – Fixed Assets/ Project Asset



Page | 110


Subject: Transfer of Project Asset between Works Project / Recovery of Project Asset as Fixed Assets

Subject Code: 5.04

Subject Background: This subject covers the accounting procedure to be followed in relation to transfer of project asset between Works Project and recovery of project asset as fixed assets. Project asset of one Works project may be of use in executing another Works project. In such cases project asset shall be transferred from one Works project to another. In case project asset is transferred between Works projects or recovered as fixed assets, project asset shall be transferred at the lower of fair value of the project asset or the original cost. In context of the above, this subject is covered under the following heads:

Transfer of Project Asset between Works Project

Recovery of Project Asset as Fixed Assets

Procedure:

Sl. No.

Person / Section

Responsible


Transfer of Project Asset between Works Project

1. Junior Engineer/ Assistant Engineer (Transferee)

Prepare Indent providing the details of project asset required.

It may be happen that the JE may not go to receive the project asset from Transferor JE. In such a case, JE shall authorise a person to receive project asset on its behalf.

Obtain approval of AE and forward it to EE.

As and when project asset are required to be transferred

2. Executive Engineer (Transferee)

Approve the Indent and send it to Transferor JE. As and when

3. Junior Engineer / (Transferor)

Check the Indent to ensure that all the necessary information has been provided to make a transfer of project asset

Prepare ATN

Take the signature of the Transferee JE or its authorised representative on ATN

Provide copy of ATN to the recipient of project asset

Update JE Asset Register

Forward ATN to AE.

As and when On transfer of project asset

4. Junior Engineer (Transferee)

When assets are received, ensure the following: o Check that the assets are received as per the

details provided in ATN o The assets are in normal conditions and are not

damaged. o Prepare ARN. o Update JE Asset Register o Forward ARN to AE.

Same day of receipt of ATN and project asset

5. Assistant Engineers (of Transferor

Scrutinise, approve and forward ATN to Accounts Section.

As and when


Page | 111

Sl. No.

Person / Section

Responsible


and Transferee Works Project)

6. Accounts Section

Receive ATN and value it.

Based on ATN, prepare JV and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Project Asset Register and Works Register.

Within one day of receipt of ATN

Recovery of Project Asset as Fixed Assets


Prepare Indent authorising the transfer of the assets

Forward to AE of Works Project concerned.

Receiving of project asset from Works Project to divisional fixed assets


Sign on Indent and forward to JE in charge of Works Project.

On receipt of Indent from EE

9. Junior Engineer

Prepare ATN

Obtain signature of the recipient of project asset.


On receipt of approved Indent


Scrutinise ATN, sign on ATN and forward to Accounts Section

On receipt the ATN copy from JE


Receive and value ATN

Based on the value derived prepare JV and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Project Asset Register, Fixed Assets Register and Works Register

As and when

Formats

Format Ref.

Document Title

Document Type


FA/F03 Indent

I On requisition of project asset

Executive Engineer

Own Copy

Transferor of assets

AE

Accounts Section

FA/F02 ATN I/O On transfer of project asset

Junior Engineer

Own Copy

Receiver of assets

AE

Accounts Section


O On receipt/ transfer of the assets as required

Junior Engineer

--



--

FA/R02 Project Asset Register


--

FA/R01 Fixed Assets Register


--


Page | 112

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Transfer of project asset between Works Project (Transferor)

JV ATN Debit Relevant WIP Project Asset Account (Transferee Works Project) Credit Relevant WIP Project Asset Account (Transferor Works Project)

Accounts Section

2. Recovery of project asset and entered in fixed assets

JV ATN Debit Relevant Fixed Assets Account Credit Relevant WIP Project Asset Account (Transferor Works Project)

Accounts Section


Page | 113


Subject: Fixed Assets and Project Asset to contractors – lent and returned

Subject Code: 5.05

Subject Background: This subject covers the accounting procedure to be followed in relation to fixed assets / project asset lent to contractor / returned by contractor. Fixed assets and project asset are lent to contractors for use in the Works projects. In such case, there shall be no accounting entries of project asset in books of account for fixed assets and project asset. Only the corresponding registers shall be updated. In context of the above, this subject is covered under the following heads:

Lend Fixed Assets / Project Asset to contractors

Return of Fixed Assets / Project Asset by contractor

Procedure:

Sl. No.

Person / Section

Responsible


Lend Fixed Assets / Project Asset to contractors

1. Junior Engineer

Prepare ATN and obtain signature of contractor or its authorised representative on it.


Forward ATN to AE.

On transfer of project asset / fixed assets


Scrutinise ATN, approve and forward it to Accounts Section.

On receipt of ATN

3. Accounts Section

Receive ATN.

Update Fixed Assets / Project Asset Register

Mention the ATN details in the Contract Bond (CB) File.

As and when

Return of Fixed Assets / Project Asset by contractor

4. Junior Engineer

Receive fixed assets / project asset from Contractor.

Prepare ARN and obtain signature of contractor or its authorised representative on it

Update JE Asset Register

Forward ARN to AE

On transfer of project asset / fixed assets


Scrutinise ARN, approve and forward it to Accounts Section.

On receipt of ARN

6. Accounts Section

Receive ARN and update Fixed Assets / Project Asset Register

Mention the ATN details in the CB File.

As and when


Page | 114

Formats

Format Ref.



FA/F02 ATN I/O On lending of assets to Contractor


Contractor

AE

Accounts Section

FA/F01 ARN I/O On receipt of assets from Contractor


Contractor

AE

Accounts Section


O On finalisation of ARN / ATN

Junior Engineer --

FA/R01 / FA/R03

Fixed Assets Register / Project Asset Register

O On receipt of ARN / ATN

Accounts Section

--


Page | 115


Subject: Depreciation on Fixed Assets / Amortisation on Intangible Assets

Subject Code: 5.06

Subject Background: This subject covers the accounting procedure to be followed in relation to depreciation / amortisation on fixed assets / intangible assets. All depreciable / amortisable fixed assets / intangible assets shall be depreciated / amortised over a period of its useful life. The depreciable assets are assets having limited useful life held by UPJN for use in the production / provision of goods / services, for external rental purpose or for administrative purpose and are expected to be used during more than one accounting period. Such assets are not held for the purpose of sale in the ordinary course of business. If assets have been purchased during the period, then depreciation / amortisation shall be charged for the proportionate period. In context of the above, this subject is covered under the following heads:

Depreciation / Amortisation

Procedure:

Sl. No.

Person / Section

Responsible


Depreciation / Amortisation

1. Accounts Section

At the end of period compute depreciation on fixed assets / amortisation on intangible assets within each assets group at the prescribed rates

Ensure that assets has not been fully depreciated before the beginning of the financial period

In case of revalued assets, calculate the corresponding proportion of depreciation to be charged to revaluation reserve.

In case of assets acquired from grants (other than free of cost), calculate the amount of amortisation from grant.

Prepare schedule of Depreciation / Amortisation of assets group wise.



Update the depreciation value into Fixed Assets Register / Amortisation value into Intangible Assets Register

At the end of the financial period


Page | 116

Formats

Format Ref.



FA/R01 Fixed Assets Register / Intangible Assets Register

O At the end of financial period

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Depreciation on fixed assets

JV Intangible Assets Register

Debit Relevant Depreciation Account Credit Relevant Accumulated Depreciation Account

Accounts Section

2. Portion of depreciation on revalued assets

JV Fixed Assets / Intangible Assets Register

Debit Revaluation Reserve Account Credit Relevant Accumulated Depreciation Account

Accounts Section

3. Charging depreciation on WIP Cost of the Works projects

JV ARN Debit Relevant WIP Cost Others Account Credit Relevant Depreciation Account

Accounts Section

4. Amortisation of intangible assets

JV Intangible Assets Register

Debit Relevant Amortisation Account Credit Relevant Accumulated Amortisation Assets Account

Accounts Section

5. Amortisation of Grant (for assets other than free of cost)

JV --- Debit Relevant Grant Account Credit Relevant Account

Accounts Section


Page | 117


Subject: Sales of Fixed Assets and Project Asset

Subject Code: 5.07

Subject Background: This subject covers the accounting procedure to be followed in relation to sale of fixed assets and project asset. Fixed assets and project asset are normally identified for sale keeping in view the aspects like its utility to UPJN, repair and maintenance cost incurred on it, it becoming obsolete, damaged etc. After it has been identified for sale, the procedure as per the Policies of UPJN shall be adopted for sale. In context of the above, this subject is covered under the following heads:

Identification of Assets to be sold / disposed

Receipts against Assets sold

Dispatch of Assets to buyer

Procedure:

Sl. No.

Person / Section

Responsible


Identification of Assets to be sold


Prepare a Survey Report on the condition of the assets (including project asset) at least once in a year and identify assets to be sold.

Forward report to the Designated Authority.

As and when


Based on Survey Report, adopt the procedure prescribed for sale of assets.

Pass written order for sale of assets (including project asset) and send it to JE / AE.

On approval of Survey Report

Receipts against Assets sold

3. Cashier Receive payment for assets (including project asset) sold.

To process receipt, adopt the procedure for receipt as provided in Subject Code: 9.04

Prepare BRV

Based on BRV, update Bank Book General Ledger, Subsidiary Ledger and Fixed Assets / Intangible Assets / Project Asset Register.

Same day of receipt

Dispatch of Assets to buyer

4. Junior Engineer

Prepare ATN for assets (including project asset) to be sold.

Prepare Gate Pass and obtain receiver's signature on it.


Forward ATN to AE.

On receipt of order for sale


Scrutinise, approve and forward ATN to Accounts Section. On receipt of ATN

6. Accounts Section

From Fixed Assets / Intangible Assets / Project Asset Register extract cost of Assets and depreciation thereon to end of last financial period.

Value ATN based on the above.

Prepare JV, for sale and identification of Income / Loss from sale, and obtain approval from Designated Authority

On approval of ATN


Page | 118

Sl. No.

Person / Section

Responsible


Based on JV, update Journal Book, General Ledger Subsidiary Ledger and Fixed Assets / Intangible Assets / Project Asset Register


Formats

Format Ref.

Document Title

Document Type


FA/F02 ATN I/O On dispatch of asset


Buyer

AE

Accounts Section

FA/R01 Fixed Assets / Intangible Assets / Project Asset Register

O On finalisation of ATN

Accounts Section --


O On finalisation of ATN

Accounts Section --

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of payment from buyer of assets

BRV Money Receipt

Debit Bank Account Credit Account Payable – Others Account

Cashier

2. Sale of assets

JV ATN Debit Account payable - Others Account / Other Relevant Account Relevant Accumulated Depreciation / Amortisation Account Revaluation Reserve Account (if any balance lying corresponding to the asset) Income / Loss from Sale / Disposal / Surplus / Write Off of Fixed Assets Account (in case of loss) Credit Relevant Fixed Assets Account / Intangible Asset Account

Accounts Section


Page | 119

Sl. No.

Event Voucher type

Source documents


Responsible

Income / Loss from Sale / Disposal / Surplus / Write Off of Fixed Assets Account (in case of profit)

3. Sale of project asset

JV ATN Debit Accounts Payable – Others Account / Other Relevant Account Credit WIP Project Asset Account

Accounts Section


Page | 120


Subject: Physical Verification of Fixed Assets and Project Asset

Subject Code: 5.08

Subject Background: This subject covers the accounting procedure to be followed in relation to physical verification of fixed assets and project asset. Physical verification of fixed assets and project asset shall be done to identify its existence, its present condition, etc. The shortages identified needs to be either recovered from the person responsible or shall be written off, as the case may be. In context of the above, this subject is covered under the following heads:

Physical Verification of Fixed Assets and Project Asset

Adjustment for shortage

Write off of shortage

Procedure:

Sl. No.

Person / Section

Responsible


Physical Verification of Fixed Assets and Project Asset

1. Accounts Section

Prepare list of fixed assets and project asset as per Fixed Assets Register and Project Asset Register and provide this list to Physical Verification Committee

As and when physical verification is to be undertaken.


Carry out the physical verification of the fixed assets and project asset at any time during the year as per the Policies of UPJN

Physically verify fixed assets covering all the locations including HO, Unit office, other sites (if any), etc.

As and when


Prepare Physical Verification Report (PVR) and record the actual measurement and quantity of fixed assets and project asset as per verification as against list of fixed assets and project asset provided by Accounts Section. Mention any assumptions made for physical verification, if any. The PVR shall be signed by all the members of Committee undertaken the physical verification at the concerned location.

Identify shortage, if any, of fixed assets and project asset.

Forward PVR to Accounts Section and Designated Authority.


Adjustment for shortage

4. Accounts Section

Receive PVR from Physical Verification Committee

Identify value of the fixed assets and project asset which are found short. Based on PVR and valuation made prepare proposal for adjustment of shortage and submit it to Designated Authority for approval.

Prepare JV, for adjustment of shortage of assets, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Fixed Asset / Project Asset

On receipt of PVR


Page | 121

Sl. No.

Person / Section

Responsible


Register

Write off of shortage


Review the proposal of shortage of fixed assets and project asset and take decision accordingly, o Writing off the shortage for assets / project asset o Assigning the responsibility for recovery from person

responsible, if any.

Intimate the decision taken to Accounts Section.

After receipt of PVR

6. Accounts Section

Based on the decision taken by Designated Authority, prepare JV for either following, as the case may be: o Writing off shortage of assets (In case of project

asset there shall be no JV) o Recovery of shortage form person responsible and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, Fixed / Intangible Assets / Project Asset Register

In case of project asset update Works Register.

On receipt of order from Designated Authority

Formats

Format Ref.

Document Title

Document Type


FA/R01 Fixed Assets Register

O At the time of booking shortage

Accounts Section

--


O At the time of cross verifying the physical quantity

Physical Verification Committee

--

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. For booking the shortage of assets

JV PVR Debit Relevant Accumulated Depreciation Account Fixed Assets Shortage Pending Investigation Account Credit Relevant Fixed Assets Account

Accounts Section

2. For writing off the assets

JV Order for write off by Designated Authority

Debit Income / Loss from Sale / Disposal / Surplus / Write Off of Fixed Assets Account Credit Fixed Assets Shortage Pending

Accounts Section


Page | 122

Sl. No.

Event Voucher type

Source documents


Responsible

Investigation Account

3. For assigning responsibility to JE for recovery

JV Order for recovery by Designated Authority

Debit Relevant Claim receivable Account Credit Fixed Assets Shortage Pending Investigation Account / Relevant WIP Project Asset Account

Accounts Section


Page | 123

6.00 Section: Revenue and Collection Section Background: 6.01 This Section covers the Revenue and Collection accounting and related procedures. 6.02 Accounting aspects and related procedures relating to the following have been covered under separate Sections of this Accounting Manual:

Income from investments - Refer Section No. 4.00

Income / loss on sale of scrap / materials - Refer Section No. 2.00

Income / loss on sale of assets - Refer Section No. 5.00

Grants received from Governments for maintaining the existing projects and revenue realised from those projects - Refer Section No. 4.00 and Section No. 3.00 respectively.

Accounting Policies 6.03 The main accounting policies that shall be followed relating to revenue and collection accounting are provided in the subsequent paragraphs: a.) Revenue shall be recognised and accounted for only in case where there is a reasonable

certainty about its ultimate collection. Recognition of revenue, for the items for which the ultimate collection is not reasonably certain, shall be deferred till their actual collection for the accounting purpose. Subject to the above, the accounting for all the revenue items shall be done on an accrual basis.

Centage Revenue b.) Centage revenue shall be accounted for as and when expenses on Works projects are incurred.

The accounting of Centage income on materials purchased and advances given shall be deferred and accounted for under Centage Suspense. In case of materials consumption/ adjustment of WIP advance, Centage Suspense account shall be debited and Centage income shall be credited based on the value/ amount of materials consumed/ advances adjusted.

Survey investigation and project report preparation fee c.) Survey investigation and project report preparation fees for projects (proposed to be executed by

UPJN) shall be accounted for as and when the project report is approved. In case these project reports are prepared on behalf of third parties where UPJN is not executing the project, then these fees shall be accounted for on submission of project deliverables.

Income from sale of scrap d.) Income from sale of scrap shall be accounted for on dispatch of scrap. Excess provision / unclaimed credits written back e.) The liabilities and expenses provided for in previous periods, which (on a prudent assessment)

are no longer required shall be written back, under a separate head “Excess provision / unclaimed credits written back Account”.

f.) Unclaimed credit balances which are lying unadjusted in an account for a longer period and there

are valid ground to write them off, shall be taken to the Income and Expenditure Account under “Excess Provision / Unclaimed Credits Written Back”, provide there shall not be pending litigations with respect to these Unclaimed credit balances.


Page | 124

Extra-ordinary items g.) Extraordinary items are income or expenses that arise from events or transaction that are clearly

distinct from the ordinary activities of the entity and therefore not expected to recur frequently or regularly. Extraordinary items nature and amount shall be disclosed separately in the Income and Expenditure Account for the period in order to measure its impact on current period‟s excess of income over expense or vice versa. The disclosure can be made either in the Income and Expenditure Account itself or in the Notes to Accounts. e.g. Major loss on account of destruction of plant and machinery, building, etc. due to earthquake, flood, fire and other natural calamities or due to man-made actions like riots, civil commutation, war, etc.

Prior Period items h.) Prior period items are income or expenses which arise in the current period as a result of errors or

omissions in the preparation of the financial statements of one or more periods. The nature and amount of prior period items shall be separately disclosed in the Income and Expenditure Account in a manner that their impact on the current period‟s profit or loss can be perceived.

i.) Prior period items do not include other adjustments necessitated by circumstances, which though

related to prior periods, are determined in the current period, e.g., arrears payable to workers as a result of revision of wages with retrospective effect during the current period.

j.) Any revenue pertaining to the previous period(s) which could not be recognised and accounted

for in those period(s) due to any error and/ or omission and is realised in the current period shall be shown separately as “Prior Period Revenue Account”.

Coverage of this Section

6.04 This Section covers the following Subjects:

Sl. No.


1. Centage on Works Projects 6.01

2. Survey, investigation and project preparation fees 6.02

3. Sale of tender forms 6.03

4. Revenue Adjustments 6.04


Page | 125

Section: Revenue and Collection Section Code: 6.00

Subject: Centage on Works Projects Subject Code: 6.01

Subject Background: This subject covers the accounting procedure to be followed in relation to centage on Works projects. This subject is covered under the following heads:

Centage Suspense

Centage Income The procedural and accounting aspects as described in this Subject shall be applicable to the account for the centage on both the classes of projects i.e. construction projects and maintenance of existing projects. Further the above procedural and accounting aspects shall also be applicable in case of any other similar income (supervision charges, accounts and audit charges, establishment charges, etc.) in place of or in addition to Centage which may be charged as income on the Works projects. Rate (%)/ basis of charging centage and its applicability on Works projects shall be as per the terms and conditions associated with the relevant schemes, notification/ circular issued by the Government and Policies prescribed by UPJN in this regard.

Procedure:

Sl. No.

Person / Section

Responsible


Centage Suspense

1. Accounts Section

For calculation of Centage Suspense, refer Works Register, Store Ledger and WIP – Materials Account

Calculate Centage Suspense amount for the materials purchased/ transferred on projects and WIP advances given to contractors/ suppliers on which centage is earned.

Centage suspense amount shall be calculated project wise and based on the rate and method as prescribed for that purpose.

As and when

2. Accounts Section

Prepare Journal Voucher (JV), for Centage Suspense, and obtain approval from Designated Authority


At any point of time the outstanding Centage Suspense Amount in Centage Suspense Account shall be equal to the amount which would come by applying the centage percentage on the value of outstanding balance in WIP Materials Account / WIP Advance Account.

Same day

Centage Income

3. Accounts Section

For calculation of Centage Income, refer Works Register

Calculate Centage Income on the project expense actually incurred (e.g. materials consumed, labour and other cost incurred, etc.) on which centage is earned.

Centage income amount shall be calculated project wise and based on the rate and method as prescribed for that purpose.

As and when

4. Accounts Prepare JV, for Centage Income, and obtain approval from Same day


Page | 126

Sl. No.

Person / Section

Responsible


Section Designated Authority


At any point of time the centage income amount in Centage Income Account shall be equal to the amount which would come by applying the centage percentage on the value of total WIP Cost actually incurred during the period (e.g. materials consumed, labour and other cost incurred, etc.)

Formats

Format Ref.

Document Title

Document Type


WE/R02 Works Register O At month end

Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On purchase of project material

JV Bill / Voucher

Debit Relevant WIP Centage Account Credit Relevant Centage Suspense Account

Accounts Section

2. On WIP advance relating to projects to contractors and suppliers

JV Advance bill / voucher

Debit Relevant WIP Centage Account Credit Relevant Centage Suspense Account

Accounts Section

3. On receipt of project material from other Unit/ project

JV MTN Debit Relevant WIP Centage Account Credit Relevant Centage Suspense Account

Accounts Section

4. On transfer of project material to other Unit/ project

JV MTN Debit Relevant Centage Suspense Account Credit Relevant WIP Centage Account

Accounts Section


Page | 127

Sl. No.

Event Voucher type

Source documents


Responsible

5. On consumption of project material on project

JV MCN / SCN Debit Relevant Centage Suspense Account (to the extent of materials consumed) Credit Relevant Centage Income Account

Accounts Section

6. On accounting for centage income on incurring the project expenditure

JV Expense bill / voucher

Debit Relevant WIP Centage Account (expenditure other than materials consumption) Credit Relevant Centage Income Account

Accounts Section


Page | 128


Subject: Survey Investigation and Project Preparation Fees

Subject Code: 6.02

Subject Background: This subject covers the accounting procedure to be followed in relation to Survey, Investigation and Project Preparation fees for the surveys / projects prepared by UPJN. UPJN carries out survey / investigation and prepares project report for implementation of any project. These projects may be implemented by UPJN or by third party. Based on the project report prepared, the approving authority reviews and approves the project as well as the cost of the project to be incurred. UPJN charges fees for carrying out survey / investigation and project preparation. In context of the above, this subject is covered under the following heads:

Identification and valuation of survey investigation and project preparation fee

Transfer of WIP Cost on account of fees to implementing Unit.

Procedure:

Sl. No.

Person / Section

Responsible


Identification and Valuation of Survey Investigation and Project Preparation Fee


Identify whether any survey investigation and project preparation fee is recoverable. Further identify whether the fee pertains to: o the project to be executed by UPJN (in this case the fee

is payable if the project is approved) or o the project prepared on behalf of third party, where

UPJN is not executing the Project (in this case fee is payable as and when the project deliverable is submitted and agreed).

Intimate Accounts Section about the quantum of fees and its recoverability.

On approval of project or submission of project deliverable, as the case may be Same day

2. Accounts Section

In case fee is for the project to be executed by UPJN, account for the fees on approval for the project.

In case fee is for the project not to be executed by UPJN, raise the claim on third party for the fee recoverable and account for the fees on submission of project deliverable.



Update Works Register for the project to be executed by UPJN


Transfer of WIP Cost on account of fees to implementing Unit

3. Accounts Section (Transferor Unit)

In case, fee is accounted for in one Unit but the implementation is carried out at other Unit. In that case transfer the relevant WIP Cost and WIP Centage on account of fees to the other implementing Unit.

Prepare Advice of Transfer Debit (ATD) and forward it to Transferee Unit. Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on ATD, prepare JV and obtain approval from Designated Authority



Page | 129

Sl. No.

Person / Section

Responsible


Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Works Register

4. Accounts Section (Transferee Unit)


Based on ATD, Prepare JV and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Works Register, etc.


Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD I/O On transfer of WIP Cost and Centage thereon


Own copy


Head Office


O At month end Accounts Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On fees receivable against project approval (project to be executed by UPJN)

JV On approval of the project

Debit Relevant WIP Cost Others Account Credit Survey Investigation and Project Preparation Fee Account

Accounts section

2. On fees receivable against submission of project deliverable (project not to be executed by UPJN)

JV On submission of Project deliverable

Debit Survey Investigation and Project Preparation Fee Receivable Account Credit Survey Investigation and Project Preparation Fee Account

Accounts section

3. On transfer of WIP Cost against fees to implementing Unit

JV ATD Debit IUT – Works in Progress Account

Transferor – Accounts section


Page | 130

Sl. No.

Event Voucher type

Source documents


Responsible

Credit Relevant WIP Cost Others Account

4. On transfer of WIP Cost against fees to implementing Unit

JV ATD Debit Relevant WIP Cost Others Account Credit IUT – Works in Progress Account

Transferee – Accounts section


Page | 131


Subject: Sale of tender forms Subject Code: 6.03

Subject Background: This subject covers the accounting procedure to be followed in relation to sale of tender forms. Tenders may be sold and cash/ cheques/ DDs may be collected by any of the departments/ sections of UPJN. Every departments/ sections shall maintain a record showing sale of tenders and amount collected. Cash/ cheques/ DDs collected on account of sale of tenders shall be remitted by that departments/ sections on the same day to the respective Cashier. In case where cash on of sale of tender is directly received by the cashier, the Designated Authority shall intimate the cashier about the amount (including tax, etc., if any,) and the nature of income so that cashier can account for the income under the correct account head.

Procedure:

Sl. No.

Person / Section

Responsible


1. Cashier Receive cash / cheque/ DD for tender forms sale.

Adopt the procedure for bank / cash receipts as provided in Subject Code: 9.04 and 9.05 respectively

Prepare Bank Receipt Voucher (BRV) / Cash Receipt Voucher (CRV)

Based on BRV / CRV, update Bank Book / Cash Book, General Ledger and Subsidiary Ledger.

On receipt of cash / cheque

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On receipt of Cash / cheque

BRV / CRV

Money Receipt

Debit Bank Account / Cash Account Credit Income from sale of tender forms Account

Cashier


Page | 132


Subject: Revenue Adjustments Subject Code: 6.04

Subject Background: This subject covers the accounting procedure to be followed in relation to income related adjustments. This subject covers the following related sub-process:

Pre-received income

Income receivable

Write back of the deposits / claims, etc.

Prior period income

Procedure:

Sl. No.

Person / Section

Responsible


Pre-received income

1. Accounts Section

Identify pre-received income based on the revenue received for a period beyond the current financial period e.g. Advance rent received in which partial is for the next financial period.



As and when

Income receivable

2. Accounts Section

Identify income receivable based on the revenue not received up to the current financial period e.g. interest income.



At the period end

Write back of the deposits / claims, etc.

3. Accounts Section

Identify excess / unclaimed deposits, payables, etc. or excess provisions made, if any.



As and when

Prior period income

4. Accounts Section

Identify Prior period income, if any.



As and when


Page | 133

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Pre-received income

JV Bill / Voucher

Debit Relevant Income Account Credit Pre-received Income Account

Accounts Section

2. Income Receivable

JV -- Debit Relevant Income Receivable Account Credit Relevant Income Account

Accounts Section

3. Write back of the excess / unclaimed deposits, payables, etc. or excess provisions made

JV Approval from Designated Authority

Debit Relevant Deposits / Claims / Provisions Account Credit Excess Provision / Unclaimed Credits Written Back Account

Accounts Section

4. Prior Period Income

JV -- Debit Relevant Account Credit Prior Period Income Account

Accounts Section


Page | 134

7.00 Section: Revenue Expenses

Section Background: 7.01 This section covers the Revenue expenses accounting and related procedures. 7.02 Revenue expense is treated as an expense to be matched against revenue and incurred for the purpose of running normal business operations. 7.03 In context of UPJN, revenue expense are generally categorised under the following groups:

Personnel Expense

Administrative Expense

Interest and Finance Expense

Depreciation and Amortisation 7.04 Above revenue expense form part of the Income and Expenditure Account of UPJN. 7.05 However the accounting aspects and related procedures relating to the following type of expense have been covered under separate Sections of this Accounting Manual:

Employee related expense and benefits – Refer Section Code: 8.00 – Personnel

Depreciation / Amortisation – Refer Section Code: 5.00 – Fixed Assets

Stores expense – Refer Section Code: 2.00 – Stores

Interest expense – Refer Section Code: 4.00 – Loan, Grant, Deposits and Investment

7.06 Further the accounting aspects and related procedures relating to the following type of expenditure (other than revenue expenditure) have been covered under separate Sections of this Accounting Manual

Capital Expenditure – Refer Section Code: 5.00 – Fixed Assets

Works projects Expenditure – Refer Section Code: 3.00 – Works Expenditure Accounting Policies 7.07 The main accounting policies that shall be followed relating to revenue expenses accounting are provided in the subsequent paragraphs: a.) Revenue expense shall be accounted for on an accrual basis. Revenue expenses paid during the

period which pertains to the next financial period shall be treated as prepaid expenses. b.) All items of revenue expense recognised in a period shall be included in the determination of net

profit or loss for the period including extraordinary items of revenue expense, prior period items of revenue expense and the effects of changes in the accounting estimates.

c.) Provision shall be made for all debts which are doubtful of recovery. Further, the debts which are

not recoverable shall be written off as bad debts and recognised as such in the Income and Expenditure Account. However, if any provision for doubtful debts has been created, then bad debts shall first be adjusted against the same and balance, if any, shall be written off as bad debts. In case a debt which was written off earlier is recovered or excess provision is created against a debt, then the same shall be accounted for as Bad Debts Recovered in the same period in which the respective debt is recovered or provision against any debt remain excess.


Page | 135


Sl. No.

Subject Subject Code

1. Accounting for Revenue Expenses 7.01

2. Expenses incurred by one Unit on behalf of other Unit 7.02

3. Provision for doubtful debts and writing off bad debts 7.03


Page | 136

Section: Revenue Expenses Section Code: 7.00

Subject: Accounting for Revenue Expenses Subject Code: 7.01

Subject Background: This subject covers the accounting procedure to be followed in relation to revenue expenses incurred by UPJN. Every revenue expense incurred shall have a supporting or contractor bill/ voucher. These expenses may be directly incurred by any department/ section but shall be paid by Accounts Section or by the employees of UPJN through PI / TI. Expense bill/ voucher shall be authorised, first by the respective authority which is primarily responsible for incurring the expense and then by Head of Accounts Section and by the concerned authority for accounting and payment purpose. Supporting documents for expense shall be attached with the voucher through which expense shall be accounted for and the payment voucher shall have the reference of the voucher through which expense shall be accounted for. There would be certain revenue expense which would be incurred for any Works Project or may pertain to any fixed asset. These expenses shall be accounted under respective Works Project or capitalised with that particular fixed asset. Bill/ supporting documents for such revenue expense shall be marked accordingly by the respective authority (which is primarily responsible for incurring the expense) at the time of approving the expenses. This would facilitate proper accounting of the expense. Prepaid expenses Prepaid expenses shall be accounted for as expenses in the financial period in which the benefit these expenses shall accrue the benefit e.g. Insurance premium on vehicles paid for the period which partially falls in the current financial period and partially in the next financial period. Extra-ordinary items Extraordinary items are income or expenses that arise from events or transaction that are clearly distinct from the ordinary activities of the entity and therefore not expected to recur frequently or regularly. Extraordinary items nature and amount shall be disclosed separately in the Income and Expenditure Account for the period in order to measure its impact on current period‟s excess of income over expense or vice versa. The disclosure can be made either in the Income and Expenditure Account itself or in the Notes to Accounts. e.g. Major loss on account of destruction of plant and machinery, building, etc. due to earthquake, flood, fire and other natural calamities or due to man-made actions like riots, civil commutation, war, etc. Prior Period items Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more periods. The nature and amount of prior period items shall be separately disclosed in the Income and Expenditure Account in a manner that their impact on the current period‟s profit or loss can be perceived. The following are the select examples of prior period items:

Effect on account of mathematical mistake in calculation of depreciation in earlier periods.

Under valuation of closing stock on account of non-consideration of stock

Non-provisioning of certain expenses last period against which actual expenses are incurred in the current period e.g. Electricity bill, telephone bill, etc.

Identification of theft of stock in the subsequent period which happened in earlier period and was not considered for stock valuation in that period.


Page | 137

Salary arrears approved and not provided in the earlier period but not paid earlier

Prior period items do not include other adjustments necessitated by circumstances, which though related to prior periods, are determined in the current period, e.g., arrears payable to workers as a result of revision of wages with retrospective effect during the current period. Miscellaneous expenditure to the extent not written off Miscellaneous expenditure comprises items of expenditure which are not entirely charged to income in the period in which they are incurred, but are carried forward in the Balance Sheet to be amortised in subsequent periods. No expense shall be carried forward as miscellaneous expenditure, unless some benefit from the expenditure can reasonably be expected to be received in future and the amount of such benefit is reasonably determinable. The amount to be carried forward shall not exceed the expected future revenue/ other benefits related to the expenditure. In any case period shall not exceed five years. The accounting procedure of the extraordinary items, prior period items and miscellaneous expenditure to the extent not written off shall be similar to that of any other revenue expenses being incurred. In context of the above, this subject is covered under the following heads:

Bill / voucher passing

Payment against expenses incurred

Advance payment against expenses

Miscellaneous expenditure to the extent not written off

Procedure:

Sl. No.

Person / Section

Responsible


Bill / voucher passing

1. Accounts Section

Receive from the Designated Authority, the bill / voucher of various suppliers/ contractor/ service provider/ employees towards expense.

Put a date stamp for the date of receipt at Accounts Section and update Supplier Bill / Contractor Bill Register. Supplier Bill / Contractor Bill Register shall facilitate the tracking of bill details since its receipt till payment.

While passing the bills, ensure the following key aspects: o Approval of the Designated Authority o Bill is supported by the relevant supporting

documents/worksheets o Recovery of advance paid, if any, is being made o Deduction on account of any other recoveries to be

made from the bill has been made o Amount of bill is as per the Purchase Order (PO) /

Contract Bond (CB), if any and other terms and conditions etc. have been complied with

o In case any expense verification requires measurement of works undertaken against expense, then the Measurement Book (MB) must be updated.

Undertake casting, cross casting of the bill and verify the bill in all respect.

In addition to the above, comply with the relevant Policies

On receiving of the bill / voucher of expense Within one day of receipt of bill


Page | 138

Sl. No.

Person / Section

Responsible


prescribed by UPJN for verifying and approving the expenses and their accounting. These expenses would include vehicle running expense, repair & maintenance, rent & hire charges, security expense, professional charges, telephone/electricity bills, advertisement & publicity bills, etc. Additional internal controls in relation to such expense have been provided later in this subject.

Pass the bill / voucher by putting a „passed for payment stamp‟ and specify the amount by which bill passed.

Calculate the prepaid expenses (expenses which pertain to next financial period(s)) so that these can be accounted for accordingly e.g. rates and taxes, insurance premium of vehicle, etc. paid in advance


Undertake an overall check on the bill / voucher and approve the bill for payment on or after the due date.

On receipt of bill / voucher for approval

3. Accounts Section

Prepare Journal Voucher (JV), for the amount payable and deductions on account of TDS, other taxes, deposits, etc. to be made, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Supplier Bill / Contractor Bill Register.

In case of prepaid expenses if any, update Prepaid Expense Register.

After approval of bill by EE

4. Accounts Section

Prepaid expenses accounted for during the period shall be required to be accounted for as expenses during the next period.

Based on the details available in Prepaid Expense Register regarding prepaid expenses to be adjusted, prepare JV, for the prepaid expenses (to the extent for which the expense pertain to that financial period) in the next financial period, and obtain approval from Designated Authority.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Prepaid Expense Register.

On the beginning of the new financial period

Payment against expenses incurred

5. Cashier On or after the due date, the payment shall be made for the amount passed against the bill and net of advance paid, if any, earlier.

Adopt the procedure for bank / cash payments as provided in Subject Code: 9.04 and 9.05 respectively

Prepare Bank Payment Voucher (BPV) / Cash Payment Voucher (CPV)

Based on BPV / CPV, update Bank Book / Cash Book, General Ledger, Subsidiary Ledger and Supplier Bill / Contractor Bill Register.

Update MB, if any, for the details of payment made e.g. building repairs and maintenance.


Advance payment against expenses

6. Accounts Section

Receive approval for advance to supplier/ contractor against expenses to be incurred.

Ensure the following key aspects: o Advance payment is to be made as per the agreed

terms and conditions.

On receiving the approved advance


Page | 139

Sl. No.

Person / Section

Responsible


o In case of normal advance, receive Performa Invoice from for the advance.

o The terms & conditions of the CB / work order have been fulfilled which are required for providing advance

o Requisite bank guarantees, if any, have been received and are confirmed from the issuing bank.

request


Prepare BPV.

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Supplier Bill / Contractor Bill Register.

Same day

Formats

Format Ref.



MT/R04 / WE/R01

Supplier Bill / Contractor Bill Register

I/O As and when bill received, passed & payment made

Accounts Section

--

RE/R01 Prepaid Expense Register

I/O As and when prepaid expense identified and adjusted

Accounts Section

--

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Booking of expenses in case of credit period is allowed

JV Bill / Voucher

Debit Relevant Expense Account Prepaid Expense Account Credit Relevant Liability Account

Accounts Section

2. Cash expense CPV Bill / Voucher

Debit Relevant Expense Account Prepaid Expense Account Credit Cash Account

Accounts Section

3. Accounting of prepaid expenses as expense

JV Bill / Voucher

Debit Relevant Expense Account Credit Prepaid Expense Account


Page | 140

Sl. No.

Event Voucher type

Source documents


Responsible

4. Payment of expenses

CPV/ BPV

Bill / Voucher

Debit Account Payable- Supplier Account/ Account Payable - Contractor Account / Permanent Imprest Account / Temporary Imprest Account Credit Cash Account / Bank Account

Cashier

5. Advance Payment

BPV Bill / Voucher

Debit Advances – Supplier Account / Advances – Contractor Account Credit Bank Account

Cashier

6. At the time of settlement of expense against advance

JV Bill / Voucher

Debit Relevant Expense Account Prepaid Expense Account Credit Relevant Advance Account

Accounts Section

7. Booking of prior period expense

JV Voucher Debit Relevant Prior Period Expense Account Credit Relevant Account

Accounts Section

8. Booking of extra ordinary expense

JV Voucher Debit Extra ordinary expense Account Credit Relevant Account

Accounts Section

9. Booking of miscellaneous expenditure to the extent not written off

JV Bill / Voucher

Debit Miscellaneous expenditure to the extent not written off Account Credit Relevant Liability Account

Accounts Section

10. Amortisation of misc. expenses

JV -- Debit Relevant Expense Account

Accounts Section


Page | 141

Sl. No.

Event Voucher type

Source documents


Responsible

Credit Miscellaneous expenditure to the extent not written off Account

Additional Internal Controls:

Sl. No.

Nature of Key Expense

Additional Internal Controls

1. Printing & Stationery

A Stationery Stock Register shall be maintained to record details of opening balance, receipt, issue and closing balance of stationery items. For each stationery items there would be separate folio in Stationery Stock Register.

Every transaction entered in the Stationery Stock Register shall be initialled by the person who shall enter the transaction in it.

Periodic physical verification of stationery items shall be carried out and any difference in the stock as per register and actual stock shall be enquired and accounted for.

2. Repair & maintenance on any fixed asset

In case repairs and maintenance work is carried out against work order / CB issued to contractor then Certificate shall be provided by the Designated Authority that the work has been completed up to satisfaction and has been carried out in accordance with specification provided, if any.

If any deduction is to be made from contractor‟s bill on account of delay in execution of work, unsatisfactory performance of work etc., an office note shall be prepared to this effect providing the detail of penalty/deduction to be imposed.

In case UPJN has taken an insurance cover on the asset, a claim shall be raised on the insurance company and the insurance survey is conducted before and after the repair has been carried out.

Insurance claim recognised in the books of account shall be adjusted from the expenses incurred on restoring the asset in its previous condition and the excess expense shall be charged to respective Repairs and Maintenance Account.

3. Vehicle running expense

Vehicle running expenses shall be accounted for and paid based on the Policies prescribed by UPJN.

It shall also be ensured that: o Average fuel consumption does not vary significantly for one

vehicle. o Average fuel consumption of same make and type of vehicle does

not differ significantly from each other. o Fuel is procured on the basis of duly authorised petrol requisition

slip. o In case of fuel expense on credit basis, the bill is received from

petrol pump on a monthly basis providing details of vehicle no. wise date wise fuel filled in the vehicle.

4. Rent and hire charges

Rent is paid in respect of all premises within the due date as per the rent agreement.

In respect of vacated premises, security deposit is received back from the owner or adjusted against the rent liability.

Tax at source has been deducted, wherever applicable.

5. Security expense For passing the bill daily attendance of security guards has been provided


Page | 142

Sl. No.

Nature of Key Expense

Additional Internal Controls

In the contractor bill, the rate charged by the contractor shall be in accordance with the contract entered with the security service agency and the no. of days claimed per security guard shall be in accordance with the attendance record maintained.

Statutory deductions, contribution and deposit in respect of provident fund, ESI, other contribution, etc. shall be in accordance with relevant statutory obligations.


Other deductions/adjustments to be made from the bill of security service agency have been made in accordance with terms of contract.

6. Rates and Taxes Payment is made before due date to avoid any penal action.

In case payment is not made, adequate provision shall be created for the same.

7. Legal and Professional fees

Fee charged is in accordance with the terms and condition of the work order or any other agreement.

Services has been rendered in accordance with the terms of work order and accepted by the concerned Unit


Advance paid to the consultant, if any is adjusted.

Any other deduction/adjustment, required to be made in accordance with the terms of agreement, has been made.

8. Advertisement & publicity expense

All advertisements charged for in the bill shall be supported by proof of advertising media/publisher/agency, etc.

Rates and other charges charged in the bill are as per the rate agreement with the advertising agency.

Media-wise number of advertisements actually appeared tally with the number of advertisement charged for. Proof of advertisements in the form of newspapers, magazines, etc. has been provided with the bill.



Page | 143


Subject: Expense incurred by one Unit on behalf of other Unit

Subject Code: 7.02

Subject Background: This subject covers the accounting procedure to be followed in relation to expenses incurred by one Unit of UPJN on behalf of another Unit. Any Unit of UPJN may incur certain expenses on behalf of another Unit. Similarly certain expense already accounted for by any Unit might be required to be transferred to other Unit later. These expenses include traveling expense of any employee of other Unit, vehicle expenses, etc. In case where at the time of incurring the expenses, it is known that these expense are being incurred on behalf of other Unit then instead of Relevant Expense Account, relevant Inter Unit Transaction (IUT) Account shall be debited. In case after incurring expenses, it is identified that it pertains to another Unit, then the IUT Account shall be debited and Relevant Expense Account shall be credited on identification. These expenses shall be accounted for in the Unit for which expenses has been incurred. In context of the above, this subject is covered under the following heads:

Expenses incurred on behalf of another Unit

Expenses incurred for Unit by another Unit

Procedure:

Sl. No.

Person / Section

Responsible


Expenses incurred on behalf of another Unit

1. Accounts Section (Transferor Unit)

When expense is incurred on behalf of another Unit, follow the process for accounting for expense as provided in Subject Code. 7.01 above.

Raise an Advice of Transfer Debit (ATD) for the expenses for which other Unit is to be debited. Refer Subject Code: 10.01 for procedure relating to raising ATD.


Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Supplier Bill / Contractor Bill Register

As and when

Expenses incurred for Unit by another Unit

2. Accounts Section (Transferee Unit)




On receipt of ATD from Transferor Unit – Accounts Section


Page | 144

Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD I/O As and when

Accounts Section (Transferor Unit)

To the other Unit

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. On incurring an expense on behalf of other Unit

JV Bill / Voucher and ATD

Debit IUT - Others Account Credit Account Payable - Supplier Account / Account Payable - Contractor Account / Permanent Imprest Account / Temporary Imprest Account

Accounts Section – Transferor Unit

2. For transferring expense to other Unit

JV Bill / Voucher and ATD

Debit IUT - Others Account Credit Relevant Expense Account


3. On responding to ATD

JV ATD Debit Relevant Expense Account Credit IUT - Others Account

Accounts Section – Transferee Unit


Page | 145


Subject: Provision for doubtful debts and writing off bad debts

Subject Code: 7.03

Subject Background: This subject covers the accounting procedure to be followed in relation to provisioning against doubtful debts and writing off bad debts. There may be accounts receivables, advances, etc. (including pertaining to works projects) which might not be recovered for a long time or are doubtful of recovery. In case it is doubtful of recovery, provision for doubtful debts shall be made whereas in case of ascertainment that debt shall not be recovered, the same shall be written off and charged to Income and Expenditure Account. In context of the above, this subject is covered under the following heads:

Provision for doubtful debts

Recovery against doubtful debts

Writing off bad debts

Receipt against written off bad debts

Procedure:

Sl. No.

Person / Section

Responsible


Provision for doubtful debts

1. Accounts Section

Review and identify the accounts receivables or advances given to employees or to contractors, etc.

Prepare a list of doubtful debts, if any and send to Designated Authority for approval

At the beginning of month of March of the reporting period


Scrutinise the doubtful debts.

Based on the facts, if debt is found to be doubtful of recovery, then approve for provision for doubtful debts.

On receiving the list form accounts

3. Accounts Section



On receiving of approval from Designated Authority for provision for doubtful debts

Recovery against doubtful debts

4. Accounts Section

In case of recovery against doubtful debts, the provision needs to be assessed and shall be accordingly reduced / increased.

On recovery against doubtful debt

Writing off bad debts

5. Accounts Section

In case it is assessed that the debt is not recoverable at all, then put up the proposal for write off to the Designated Authority.

As and when


Review the proposal and if it is assessed that debt is not recoverable, then approve for write off of debt.

As and when

7. Accounts Section



On receipt of approval from Designated Authority for write off of debt.

Receipt against written off bad debts


Page | 146

Sl. No.

Person / Section

Responsible


8. Cashier In case any recovery arises against the bad debt written off in the last periods, the same shall be treated as Bad Debts Recovered.

To process receipt, adopt the procedure for cash / bank receipts as provided in Subject Code: 9.04 and 9.05 respectively.

Prepare Bank Receipt Voucher (BRV) / Cash Receipt Voucher (CRV)

Based on BRV / CRV, update Bank Book / Cash Book, General Ledger and Subsidiary Ledger

On recovery of bad debts

Accounting Entries Sl. No.

Event Voucher type

Source documents


Responsible

1. At the time of making provision for doubtful debts

JV Assessment of doubtful debt

Debit Bad Debt Account Credit Provision for doubtful debt Account

Accounts Section

2. At the time of writing off the bad debts

JV Approval from Designated Authority

Debit Provision for doubtful debt Account / Bad Debt Account (to the extent not provided for) Credit Relevant Accounts Receivable Account / Relevant Advances Accounts / Other Relevant receivable Account

Accounts Section

3. In case of recovery against bad debt written off

CRV/ BRV

Receipt against bad debt

Debit Cash/ Bank Account and / or Provision for doubtful debt Account (in case recovery made against provision for doubtful debt account) Credit Bad Debt Recovered Account (to the extent written off / provided for earlier) Relevant Accounts Receivable Account / Relevant Advances Accounts / Other Relevant receivable Account (to the extent not written off earlier)

Cashier


Page | 147

8.00 Section: Personnel Section Background: 8.01 This Section covers the Personnel accounting and related procedures. Accounting Policies 8.02 The main accounting policies that shall be followed relating to personnel accounting are provided in the subsequent paragraphs: Salaries

a.) Expenses on salaries and related allowances (including pensions, bonus and ex-gratia, etc.) shall

be accounted on accrual basis in the same period in which these expenses are accrued. Pay arrears shall be accounted for in the same period in which the pay revisions are declared.

Reimbursement of Expenses to employees on claim basis

b.) Transactions relating to employees‟ claim shall be accounted for in the same accounting period in which they are claimed. These employees‟ claims include leave travel allowance, reimbursement of medical expenses, etc.

Employees‟ terminal/ retirement benefits

c.) Employees‟ terminal benefits shall include Gratuity, Pension, and Leave Encashment etc. These expenses shall be accounted for based on actuarial valuation. The disclosure of the same shall be made accordingly in the Notes to Accounts.

Employees cost eligible for Capitalisation/ chargeable to works

d.) The employees‟ cost shall initially be accounted for under the expense account heads. The reclassification (between capital expenditure and revenue expenses) of these costs to the 'capital works' or „works expenditure‟ shall be done subsequently by credit to the relevant expense heads.

Loans and advances to employees

e.) Guarantees given by UPJN on behalf of its employees to financial institution/ bankers for

repayment of loans/ advances (in case of any default in repayment of loans/ advances taken by employees of UPJN e.g. house building advance) shall be disclosed as contingent liabilities in the Notes to Accounts with the quantum of outstanding of loan amount or for the amount for which guarantees have been given by UPJN.


Sl. No. Subject Subject code

1. Salaries 8.01

2. General Provident Fund (GPF) Transactions 8.02

3. Group Insurance Scheme (GIS) Transactions 8.03

4. Employee Loans and Advances 8.04

5. Reimbursement of Expenses to Employees 8.05

6. Full and Final Settlement 8.06

7. Permanent/ Temporary Imprest 8.07

8. Accounting on Transfer of Employees 8.08

9. Recoveries/ reimbursement - Staff on Deputation 8.09

10. Allocation of Personal Expenses to Works/ Fixed Assets 8.10


Page | 148

Section: Personnel Section Code: 8.00

Subject: Salaries Subject Code: 8.01

Subject Background: This subject covers the accounting procedure to be followed in relation to:

Salaries including allowances such as dearness allowance, special pay, house rent allowance, etc.

Pensions for retired employees

Pay arrears (salaries and pensions)

Bonus and ex-gratia

Deductions from salaries/ pensions such as GPF deductions, GIS deductions, recovery of advances, TDS etc.

Unpaid salaries, bonus and ex-gratia, pay arrears, etc. Though the pay bills for salaries, pay arrears, pensions, bonus and ex-gratia (hereinafter referred to as salaries) shall be prepared by the Establishment Section, separately, the accounting procedures for them shall be similar. Thus the process of accounting for pay arrears, pensions, bonus, ex-gratia and related deductions has been described as „salaries‟ in this subject. Based on the relevant data/ information/ received from the Accounts Section and Policies prescribed by UPJN, the Establishment Section shall prepare the pay bills. All the components of salaries and deductions shall be shown in pay bill under separate columns in such a manner so that the accounting for the same can be done for each items of pay bill separately. e.g. Recoveries against loans and advances shall be segregated, between recoveries against the loans and advances made by UPJN and the loans and advances disbursed through financial institution/ bankers. Further the recoveries against loans and advances made by UPJN shall be segregated into the principal and interest amount recovered separately. The aspects relating to accounting and payment of unpaid salaries (including bonus and ex-gratia, etc.) have also been covered in this subject. To record the unpaid salaries and payment thereof, a separate Unpaid Salary Register/ Unpaid Bonus/Ex-Gratia Register shall be maintained. At the end of each year, provisions for employees‟ terminal benefits (pensions, gratuity and leave encashment) shall be done based on actuarial valuation at the Accounts Section – Head Office (HO). In context of the above, this subject is covered under the following heads:

Bill passing for salaries

Payment of salaries

Unpaid salaries/ bonus / ex-gratia

Payment of unpaid salaries/ bonus / ex-gratia

Procedure:

Sl. No.

Person / Section

Responsible


Bill passing for salaries

1. Accounts Section

Receive the pay bill duly approved by the Designated Authority from the Establishment Section

As and when

2. Accounts Section

Scrutinise and verify the pay bill for the following key aspects: o The arithmetic correctness of the pay bill o Inclusion of all components of allowances and

On the same day of receipt of pay bill


Page | 149

Sl. No.

Person / Section

Responsible


deductions based on the data/ information sent to Establishment Section, relevant records maintained by the Accounts Section and the pay bills of previous months/ periods

o Deduction of statutory dues/ taxes in accordance with the respective Statute

o Recoveries e.g. against advance/ loans, Group Insurance Scheme (GIS) deductions, etc. based on the records maintained by the Accounts Section

Obtain clarifications from the Establishment Section if any, and receive revised pay bill duly approved by the Designated Authority

As and when

3. Accounts Section

Prepare Journal Voucher (JV) to account for salaries and obtain approval from Designated Authority

Affix the stamp „passed for payment‟ and specify the amount to be paid

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, relevant Register(s)

Forward the JV along with the supporting documents to the Cashier for Payment

On the same day of receiving the approved pay bill

Payment of salaries

4. Cashier Receive the JV along with the supporting documents.

Process payment for the salary payable in accordance with the pay bill passed for payment.

To process payment, adopt the procedure for cash / bank payments as provided in Subject Code: 9.04 / 9.05

Prepare Bank Payment Voucher (BPV) / Cash Payment Voucher (CPV) - in case of payments made in cash

Obtain the signature of employees receiving salary in Cash on the pay bill

Based on BPV/ CPV, update Bank Book / Cash Book, General Ledger and Subsidiary Ledger

As and When Same Day

Unpaid salaries/ bonus / ex-gratia

5. Accounts Section

Scrutinise Salary Payable Account, Bonus Payable Account and the Ex-gratia Payable Account and indentify the salaries, bonus and ex-gratia which remain unpaid for a period of more than 6 months/ as per Policies prescribed by UPJN

Prepare JV to account for the Unpaid Salary/ Bonus/ Ex-Gratia and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Unpaid Salary Register/ Unpaid Bonus/Ex-Gratia Register

Inform the Establishment Section for the Unpaid Salaries/ Bonus/ Ex-Gratia so that the Establishment Section can consider the same in preparation of pay bill for the future periods

After 6 months from the end of the month in which the pay/ bonus/ ex-gratia becomes payable/ as per Policies prescribed by UPJN

Payment of unpaid salaries/ bonus / ex-gratia

6. Accounts Section

Receive the application (duly checked and approved by the Establishment Section) from the employee for claim of the unpaid salaries/ bonus/ ex-gratia and check the relevant account for the amount of unpaid salaries/ bonus/ ex-gratia payable

Obtain authorisation for payment of the unpaid salary/



Page | 150

Sl. No.

Person / Section

Responsible


bonus/ ex-gratia from Designated Authority on the application received

After receiving the approval, affix the „passed for payment stamp‟ on application and specify the amount to be paid

Forward the application to the Cashier for payment

7. Cashier Receive the application


Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Unpaid Salary Register/ Unpaid Bonus/Ex-Gratia Register


Formats

Format Ref.



PA/R08 Employee Advance/ Loan Register

O As and when

Accounts Section/ Establishment Section

---

PA/R03 General Provident Fund Register

I/O As and when


---

PA/R04 General Provident Fund Broad Sheet

O As and when


---

PA/R06 Group Insurance Scheme Register

O As and when


---

PA/R01 Unpaid Salary Register

I/O As and when


PA/R02 Unpaid Bonus/ Ex-Gratia Register

I/O As and when


Accounting Entries

Sl. No.

Event Voucher type

Source documents

Accounting Entries Person/ Section

Responsible

1.

Accounting for Salaries/ Pension Payable

JV Pay Bill Debit Relevant Salaries Account Credit Relevant Deductions from Salaries Account

Relevant Recoveries Account

Payable to Financial Institutions towards Employee‟s HBA Account

Relevant Interest Income on Advance to Employees Account

Accounts Section


Page | 151

Sl. No.

Event Voucher type

Source documents


Responsible

Tax Deducted at Source (TDS) – Salary Account

Relevant Salaries Payable Account

2. Payment of Salaries

BPV/ CPV

Pay Bill Debit Relevant Salaries Payable Account Credit Bank Account / Cash Account

Cashier

3. Accounting for Unpaid Salary/ Bonus/ Ex-Gratia

JV Pay Bill/ Bonus/ Ex-Gratia Bill

Debit Salary Payable Account/ Bonus Payable Account/ Ex-Gratia Payable Account Credit Unpaid Salary Payable Account/ Unpaid Bonus Payable Account/ Unpaid Ex-Gratia Payable Account

Accounts Section

4. Payment of Unpaid Salary/ Bonus/ Ex-Gratia

BPV Employee‟s approved application

Debit Unpaid Salary Payable Account/ Unpaid Bonus Payable Account/ Unpaid Ex-Gratia Payable Account Credit Bank Account / Cash Account

Cashier

5. Provision for Retirement Benefits (Additional Provision)

JV Actuarial Valuation Report (if any)

Debit Leave encashment Account/ Gratuity Expenses Account/ Pension Expense Account Credit Provision for Leave Encashment Account/ Provision for Gratuity Account/ Provision for Pension

Accounts Section


Page | 152

Sl. No.

Event Voucher type

Source documents


Responsible

Account

6. Provision for Retirement Benefits (Reduction in Provision)

JV Actuarial Valuation Report (if any)

Debit Provision for Leave Encashment Account/ Provision for Gratuity Account/ Provision for Pension Account Credit Leave encashment Account/ Gratuity Expenses Account/ Pension Expense Account

Accounts Section


Page | 153


Subject: General Provident Fund (GPF) Transactions

Subject Code: 8.02

Subject Background: This subject covers the accounting procedure to be followed in relation to GPF transactions. Accounting for GPF deduction, interest provision, GPF advance, deduction against GPF advances shall be as per the Policies prescribed by UPJN and relevant laws. Accounting for GPF deduction and recoveries against GPF advances from Salaries have been covered in the Subject Code: 8.01. The withdrawal of GPF balance by the employee on full and final settlement is covered in the Subject Code: 8.06 However the accounting procedures relating to deduction and deposition (including employers‟ contribution) of provident funds for the employees who come under the purview of the Employees Provident Fund And Miscellaneous Provisions Act, 1952, shall be based on the relevant provisions and rules & regulations as laid down under this Act. Similarly the accounting procedures relating to deduction and deposition (including employers‟ contribution) of insurance for the employees who come under the purview of the Employees' State Insurance Act, 1948, shall be based on the relevant provisions and rules & regulations as laid down under this Act In context of the above, this subject is covered under the following heads:

GPF advance – approval for advance

GPF advance – payment of advance

Interest on GPF

Reconciliation of GPF balances

Procedure:

Sl. No.

Person / Section

Responsible


GPF advance – approval for advance

1. Establishment Section

Receive application from the employee for advance against GPF Balance, check eligibility, decide amount of installment, number of installments and get it approved from the Designated Authority

As and when

2. Accounts Section

Receive the approved application for advance against GPF Balance

Pass the application for payment, affix the „passed for payment stamp‟ on application and specify the amount to be paid

Forward the application to cashier for payment

Same day of receipt of application

GPF advance – payment of advance

3. Cashier Receive the approved application for the amount of advance to be given.


Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger, General Provident Fund Broad Sheet,



Page | 154

Sl. No.

Person / Section

Responsible


General Provident Fund Register

After making the payment forward the copy of the application marked „paid‟ to Establishment Section for updation of GPF records


Receive copy of approved application marked as „Paid‟.

Record the recovery schedule in the General Provident Fund Broad Sheet and General Provident Fund Register for the payment made


Interest on GPF


As per the Policies prescribed by UPJN, calculate interest on outstanding amount of GPF as per General Provident Fund Register

Prepare a list of interest credited to employees‟ GPF Account, get it approved from the Designated Authority and forward the list to Account Section for accounting purpose

At the year end/ As per UPJN‟s Policies

6. Accounts Section

Receive the approved list of GPF interest and compare it with General Provident Fund Broad Sheet

Prepare JV to account for the GPF Interest and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger, General Provident Fund Broad Sheet and General Provident Fund Register

As and when

Reconciliation of GPF balance

7. Accounts Section

At month end, compare the balance in GPF account in the books of account with that of the General Provident Fund Broad Sheet

Identify discrepancies if any

Prepare JV to account for differences, if any, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger, General Provident Fund Broad Sheet and General Provident Fund Register

At month end

Formats

Format Ref.



PA/R04 General Provident Fund Broad Sheet

O As and when Accounts Section/ Establishment Section

---

PA/R03 General Provident Fund Register

I/O As and when Accounts Section/ Establishment Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents

Accounting Entries Person / Section Responsible

1.

Payment for GPF advance

BPV Application for GPF advance

Debit General Provident Fund (GPF) Account Credit

Cashier


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Sl. No.

Event Voucher type

Source documents


Bank Account

2. Interest on GPF

JV General Provident Fund Register

Debit Interest on General Provident Fund (GPF) Account Credit General Provident Fund (GPF) Account

Accounts Section

3. Deduction of Employees‟ Contribution to Provident Fund and Employees State Insurance Corporation from Employees‟ Salary

JV Paybill Debit Relevant Salaries Account Credit Employees‟ Contribution to Provident Fund Payable Account Employees‟ Contribution to ESIC Payable Account

Accounts Section

4. Employer‟s contribution to Provident fund

JV Paybill Debit Employer‟s Contribution to Provident Fund Account Employer‟s Contribution to Pension Fund Account Employer‟s Contribution to Deposit Linked Insurance Scheme Account Provident Fund Administration Charges Account Deposit linked Insurance Scheme Administration Charges Account Credit Employer‟s Contribution to Provident Fund Payable Account Employer‟s Contribution to Pension Fund Payable Account Employer‟s Contribution to Deposit Linked Insurance Scheme Payable Account Provident Fund Administration Charges Payable Account Deposit linked Insurance Scheme Administration Charges Payable Account

Accounts Section

5. Employer‟s Contribution to ESIC

JV Pay bill Debit Employer‟s contribution to ESIC Account Credit Employer‟s contribution to ESIC

Accounts Section


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Sl. No.

Event Voucher type

Source documents


Payable Account

6. Payment of Provident Fund dues

BPV Pay bill Debit Employees‟ Contribution to Provident Fund Payable Account Employer‟s Contribution to Provident Fund Payable Account Employer‟s Contribution to Pension Fund Account Payable Account Employer‟s Contribution to Deposit Linked Insurance Scheme Payable Account Provident Fund Administration Charges Payable Account Deposit linked Insurance Scheme Administration Charges Payable Account Credit Bank Account

Accounts Section

7. Payment of ESIC dues

BPV Pay bill Debit Employees‟ Contribution to ESIC Payable Account Employer‟s Contribution to ESIC Payable Account Credit Bank Account

Accounts Section


Page | 157


Subject: Group Insurance Scheme (GIS) Transactions

Subject Code: 8.03

Subject Background: This subject covers the accounting procedure to be followed in relation to GIS transactions. Deduction of Insurance premium (hereinafter referred as „GIS‟) is made from employees‟ monthly salary. As per the current practice, amount deducted from the employees‟ salaries are deposited with the Insurance Company (currently - Life Insurance Corporation of India) and claims are raised on Insurance Company as and when required. The GIS deductions are decentralised at UPJN‟s Units; however the payment to Insurance Company and processing for employees‟ claim is centralised at Head Office (HO). Accounting for GIS deduction from Salaries has been covered in the Subject Code: 8.01 In context of the above, this subject is covered under the following heads:

Transfer of GIS deduction to GIS Section-HO

Payment of GIS deductions to Insurance Company

Receipt of GIS claim from Insurance Company

Transfer of GIS claim to respective Unit

Receipt of GIS claim at Unit from GIS Section, HO

Procedure:

Sl. No.

Person / Section

Responsible


Transfer of GIS deduction to GIS Section-HO

1. Accounts Section - Unit

Determine and transfer the deduction of GIS amount to GIS Section HO.

Prepare JV and obtain approval from Designated Authority and raise ATD on the GIS Section - HO to transfer the deduction of GIS amount (Refer Subject Code: 8.03) Refer Subject Code: 10.01 for procedure relating to raising ATD.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger

At the end of every month

2. GIS Section - HO

Receive and review the ATD. Forward the perforated copy to the Accounts Section – Unit. Refer Subject Code: 10.02 for procedure relating to accepting ATD.


Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and Group Insurance Scheme Register and Group Insurance Scheme (Summary) Register

As and when

Payment of GIS deductions to Insurance Company

3. GIS Section - HO

Determine the amount to be deposited with Insurance Company towards GIS deducted during the month based on the number of employees, designation and date of retirement and Group Insurance Scheme Register and Group Insurance Scheme (Summary) Register

Prepare a note for payment to be made to Insurance Company. Affix the stamp „passed for payment‟ for the

At the end of every month/ as per the Policies prescribed by UPJN


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Sl. No.

Person / Section

Responsible


payment to be made

Forward the note to Cashier to make payment

4. GIS Section - HO (Cashier)

Receive the note for making the payment of GIS

To process payment, adopt the procedure for bank payment as provided in Subject Code: 9.04

Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Group Insurance Scheme Register


Receipt of GIS claim from Insurance Company

5. GIS Section – HO (Cashier)

Receive the request (approved by the Head of the Unit) for processing claim for the employee/ nominee of the employee from the respective Unit

Prepare the request for the claim to be raised on Insurance Company and undertake the process to submit claim as required

Receive claim from Insurance Company

To process receipt, adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare Bank Receipt Voucher (BRV)

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and Group Insurance Scheme Claim Register

As and when Same day As and when Same day

Transfer of GIS claim to respective Unit

6. GIS Section – HO (Cashier)

Prepare the cheque for the claim amount (as received from Insurance Company) and forward to the concerned Unit where the employee is located.

Adopt the procedure for bank payments as provided in Subject Code: 9.04

Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Group Insurance Scheme Claim Register

Same day of receipt of claim

Receipt of GIS Claim at Unit from GIS Section, HO


On receipt of cheque for the claim amount from HO, handover the cheque to the employee/ nominee of the employee. Obtain acknowledgement from employee/ nominee of the employee.

Mark about the same in Group Insurance Scheme Register.

Same day of receipt


Page | 159

Formats

Format Ref.



IUT/F01 ATD I On transfer of GIS deduction to GIS Section –HO

Accounts Section

Own Copy

GIS Section - HO

PA/R05 Group Insurance Scheme Register (maintained at Units and GIS Section - HO)

O As and when Establishment Section and Accounts Section

---

PA/R06 Group Insurance Scheme (Summary) Register (maintained at GIS Section - HO)

O As and when GIS Section - HO

__

PA/R07 Group Insurance Scheme Claim Register

O As and when claims are made, receipt against claim and payment against claim

GIS Section - HO

--

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Transfer of GIS deduction to GIS Section-HO

JV Pay bill Debit Group Insurance Scheme (GIS) Deduction Account Credit IUT – Others Account

Accounts Section – Unit

2. Accounting of GIS deduction on transfer from Units

JV ATD Debit IUT – Others Account Credit Group Insurance Scheme (GIS) Deduction Account

GIS Section – HO

3.

GIS Payment to Insurance Company against deduction from Salaries

BPV Group Insurance Scheme Register

Debit Group Insurance Scheme (GIS) Deposit Account Credit

GIS Section – HO (Cashier)


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Sl. No.

Event Voucher type

Source documents


Responsible

Bank Account

4. Receipt of GIS claim at HO

BRV Claim Receipt

Debit Bank Account Credit Group Insurance Scheme (GIS) Claim Account


5. Transfer of claim to respective Unit

BPV GIS claim received

Debit Group Insurance Scheme (GIS) Claim Account Credit Bank Account



Page | 161


Subject: Employee Loans and Advances Subject Code: 8.04

Subject Background: This subject covers the accounting procedure to be followed in relation to loans and advances to employees The loans and advances provided to the employees are generally in the nature of House Building Advance, Vehicle Advance for cycle, two wheeler and four wheeler vehicles. The process of approving the loan shall be centralised at the Advance Section – HO. However to ensure controls on timely recovery and limit the number of records handled by one Unit, the process of disbursing and recovery of loan shall be decentralised at the Unit where the employee is located. The Units shall maintain all the records for each employee relating to the loans disbursed. The loans and advances to employees are provided:

By UPJN or

Through Financial Institutions/ Banks In case where loans are provided by UPJN, directly, recoveries made against the loans and advances are adjusted against the loans provided. In case where loans and advances are provided to employees through financial institutions/ banks, the recoveries made against the loans and advances are deposited with the financial institutions/ banks. In both the above cases, recovery of loans and advances are done from the employees‟ salaries by way of deduction from the monthly salary. The installment amounts to be deducted from the monthly salary include both principal and the interest amount. Loans and advances are provided by financial institutions/ banks to the employees at a lower interest rate. The difference of interest amount based on the interest rate provided to the employee and the interest rate charged by the financial institution is borne and accounted for as interest subsidy by UPJN. Guarantee given by UPJN on behalf of its employees to financial institution/ bankers for repayment of loans/ advances (in case of any default in repayment of loans/ advances taken by employees of UPJN e.g. house building advance) shall be disclosed as contingent liabilities in the financial statement for outstanding loan amount or for the amount for which guarantee has been given by UPJN. Sanction, disbursement, recovery, etc. in relation to the employees loans and advances shall be done based on Policies prescribed by UPJN and/ or terms and conditions of the respective financial institutions/ banks. In context of the above, this subject is covered under the following heads:

Receipt of loans and advances application from employee

Disbursement of employee loans and advances

Recovery of loans and advances – through salary

Repayment of loans and advances to Financial Institution / Bankers


Page | 162

Procedure:

Sl. No.

Person / Section

Responsible


Receipt of loans and advances application from employee

1. Establishment Section - Unit

Receive the loans and advance application form from employee.

Check the eligibility and other criteria and get the approval from the Designated Authority.

Forward the loans and advance application to Advance Section – HO.

As and when

Disbursement of employee loans and advances

2. Advance Section - HO

Receive and process the loans and advance application.

Obtain approval/ Disbursement Order for loan and advances from the Designated Authority for loan amount, interest rate, recovery mechanism, number of installments, etc.

Forward Disbursement Order for loan and advances to the respective Units where the employee is located



Receive Disbursement Order for loan and advances.

In cases where disbursement of loan and advances is to be made by UPJN, forward it to the cashier for making payment.

In cases where disbursement of loan and advances is to be made through financial institution/ bankers, write a letter to the respective banker with a copy of the order for disbursement to the employee for loan disbursement directly.

Obtain the disbursement letter from the respective financial institution/ bankers.

Forward a copy of disbursement letter as received from the respective financial institution/ bankers to the Establishment Section for recovery thereof from employee‟s salaries.

As and when Same day As and when Same day

4. Cashier Receive the Disbursement Order for loan and advances

To process the payment, adopt the procedure for bank payments as provided in Subject Code: 9.04

Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger

Forward copy of the Disbursement Order for loan and advances marked as „paid‟ to the Establishment Section.



Receive Disbursement Order for loan and advances / disbursement letter as received from the respective financial institution/ bankers / Receive the Disbursement Order for loan and advances marked as „paid‟ from the Cashier

Post the loan details and schedule of recovery including principal and interest in the Employee Advance/ Loan Register.


Recovery of loans and advances – through salary


Update Employee Advance/ Loan Register based on the recoveries made against loans and advances from

After finalising the pay bill


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Sl. No.

Person / Section

Responsible


the monthly salaries.

Repayment of loans and advances to Financial Institution / Bankers

7. Accounts Section

Based on pay bill received from the Establishment Section, prepare a list of employee wise amount to be repaid (including the interest subsidy component) to the respective financial institution/ bankers.

Obtain the approval for payment of the same to the respective financial institution/ bankers and forward the same to cashier for payment.

Prepare JV for the amount of interest subsidy payable by UPJN and obtain approval from Designated Authority


At the month end/ As per the terms with the Financial Institutions

8. Cashier Receive the list for the amount to be repaid to the respective financial institution/ bankers.


Prepare BPV

Based on BPV, update Bank Book, Subsidiary Ledger, General Ledger

As and when Same day/ On or before the due date of making the payment

9. Accounts Section

Obtain balance confirmation from the respective financial institution/ bankers for the payment made

In case of any difference, follow up with the respective financial institution/ bankers and take the necessary action

After making the repayment of loans and advances

Formats

Format Ref.



PA/R08 Employee Advance/ Loan Register

O As and when

Establishment Section

---

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Disbursement of loan and advance to employee

BPV Disbursement Order

Debit Relevant Advance Account Credit Bank Account

Cashier

2. Interest Subsidy Payable

JV Pay bill Debit Interest Subsidy Account Credit Interest Subsidy Payable Account

Accounts Section


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Sl. No.

Event Voucher type

Source documents


Responsible

3. Repayment to Financial Institutions

BPV Employee Advance/ Loan Register

Debit Payable to Financial Institutions towards Employee‟s HBA Account Interest Subsidy Payable Account Credit Bank Account

Cashier


Page | 165


Subject: Reimbursement of Expenses to Employees

Subject Code: 8.05

Subject Background: This subject covers the accounting procedure to be followed in relation to reimbursement of expenses (Leave Travel Allowance, Medical, Conveyance, Travel Allowance, Telephone Expenses, etc.) to employees. Reimbursements of the above expenses shall be made as per the Policies prescribed by UPJN. Though the Policies for the reimbursement of above expenses would be, separate, the accounting procedures for them shall be similar. Thus the process of accounting for all type of reimbursement of expenses has been described as „reimbursement of expenses‟ in this subject. In context of the above, this subject is covered under the following heads:

Passing of claim for reimbursement of expenses

Payment of claim for reimbursement of expenses

Procedure:

Sl. No.

Person / Section

Responsible


Passing of claim for reimbursement of expenses


Receive expenses reimbursement claim along with the bills/ voucher/ supporting from the employee along with the requisition for payment

Pass the expenses reimbursement claim in accordance with the Policies prescribed by UPJN

Obtain approval for payment of above by the Designated Authority

Affix the stamp „passed for payment‟ and specify the amount to be paid on expenses reimbursement claim documents

Forward the approved claim along with bills/ voucher/ supporting to Accounts Section.


2. Accounts Section

Receive approved claim along with bills/ voucher/ supporting for reimbursement of expenses.

Prepare JV for the amount payable and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger and Reimbursement Register

Forward the approved claim along with bills/ voucher/ supporting to cashier for payment


Payment of claim for reimbursement of expenses

3. Cashier Receive the approved claim along with bills/ voucher/ supporting


Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Reimbursement Register



Page | 166

Formats

Format Ref.



PA/R09 Reimbursement Register

O As and When

Establishment Section/ Accounts Section

___

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Bill Passing of Expenses Reimbursable to employees

JV Bills and supporting

Debit Relevant Expense Reimbursement Account Credit Relevant Expense Reimbursement payable Account

Accounts Section

2. Reimbursement of Expenses to employees

BPV JV Debit Relevant Expense Reimbursement payable Account Credit Bank Account

Cashier


Page | 167


Subject: Full and Final Settlement Subject Code: 8.06

Subject Background: This subject covers the accounting procedure to be followed in relation to full and final settlement of employees by way of resignation, termination, expiration or retirement. The Establishment Section and the Accounts Section shall be jointly responsible for processing the full and final settlement of the employee including processing of the terminal/retirement benefits (such as gratuity, pension), adjustments and recoveries, payment of the balances of GPF, processing and payment of claim of GIS etc. Intimation regarding the resignation, termination, expiration or retirement of the employee (hereinafter referred to as cessation of services) shall be received by the employee and Accounts Section where the employee is located from the Establishment Section. In case of retirement, the intimation shall be sent by the Establishment Section 6 months prior to the date of retirement. In cases of termination or resignation, the intimation shall be sent immediately on receiving the approved resignation or termination letter. In context of the above, this subject is covered under the following heads:

Intimation to employee and Accounts Section

Preparation of full and final settlement

Processing and payment of full and final settlement

Procedure:

Sl. No.

Person / Section

Responsible


Intimation to employee and Accounts Section


Send intimation to employee and Accounts Section at the cessation of services of employee giving details of the process to be initiated by both the employee and Accounts Section

Six months before date of retirement/ at the earliest in other cases

Preparation of full and final settlement

2. Employee* Obtain No Objection Certificates from all offices where served

Fill the forms as required for the retirement/terminal benefits (such as forms for pension, gratuity, leave encashment, withdrawal of GPF, and claim for GIS etc.)

Obtain approvals on forms as required from the Designated Authority(ies)

Forward the No Objection Certificates and forms duly filled to the Establishment Section

As per the Policies prescribed by UPJN


Receive the No Objection Certificates and forms from the employee

Scrutinise the records maintained for the dues payable to/ amounts recoverable from the employee

Obtain information from the Accounts Section for the amounts payable to/ amounts recoverable from the employee

Take necessary action to pay/recover the amounts

Before cessation of services/ as per the Policies prescribed by UPJN


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Sl. No.

Person / Section

Responsible


determined as above, from the employees‟ salaries/ directly.

In case of direct payments/recoveries to be made from the employee forward the details to Accounts Section settlement of the same

4. Accounts Section

Receive the details of the amount payable/recoverable from the employee directly

Scrutinise the related accounts of the employee for the records maintained at Accounts Section for recoveries to be made from the employee directly (for e.g. settlement of PI/TI, miscellaneous recoverable from the employee, etc.)

Inform the employee of the amount payable/recoverable

Prepare BPV/CPV on payment of the amount payable /BRV/ CRV on receipt of the amount recoverable as the case may be

To process payment, adopt the process of bank/cash payments as provided in Subject Code: 9.04 / 9.05

To process receipt, adopt the process of bank/cash receipts as provided in Subject Code: 9.04 / 9.05

Prepare BPV/CPV/BRV/CRV

Based on BPV/BRV, update Bank Book, CPV/CRV in Cash Book, General Ledger, Subsidiary Ledger and relevant Register(s)

Forward the details of settlement to the Establishment Section



Scrutinise and complete the forms received from the employee in all respects

Determine the amount of retirement/terminal benefits to be paid on full and final settlement to the employee (including the amounts payable towards Gratuity, Pension, Leave Encashment, GPF, GIS etc.)

Prepare the Forms as required (Gratuity Payment Order, Pension Payment Order, Last Pay Certificate, etc.) and obtain approvals for settlement of the same from the Designated Authority

Forward the copy of forms/details, LPC, Service book etc. to the Accounts Section to account for the amounts payable and process the payment


Processing and payment of full and final settlement

6. Accounts Section

Receive the copy of forms/details, LPC, Service book etc.

Ensure taking over of all the physical assets of UPJN in custody with the employee and the documents, records, registers being maintained by the employee. The employee taking over the physical assets and the document, records, registers shall certify the receipt of the same.

Based on the documents received from the Establishment Section, prepare JV, to account for amounts payable, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger,

As per the Policies prescribed by UPJN


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Sl. No.

Person / Section

Responsible


Subsidiary Ledger, relevant Register(s)

Forward the JV along with the supporting documents to the Cashier for Payment

7. Cashier Receive the JV along with the supporting documents


Prepare BPV

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s)

Inform the Establishment Section of the payments made


*In case of expiration, nominee of the employee shall complete the required processes to the extent possible and the remaining processes shall be completed by the Establishment Section Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Accounting for the Leave Encashment, Pension and Gratuity Payable on Full and Final Settlement

JV LPC and Relevant Forms/documents

Debit Leave Encashment Account Pension Expense Account Gratuity Expense Account Credit Leave Encashment payable Account Pension Payable Account Gratuity Payable Account

Accounts Section

2. Payment of Leave encashment, Pension and Gratuity

BPV JV as above Debit Leave Encashment payable Account Pension Payable Account Gratuity Payable Account Credit Bank Account

Cashier

3. GPF Withdrawal on Full and Final Settlement

BPV General Provident Fund Register and Form for withdrawal

Debit General Provident Fund (GPF) Account Credit Bank Account

Cashier


Page | 170


Subject: Permanent/ Temporary Imprest Subject Code: 8.07

Subject Background: This subject covers the accounting procedure to be followed in relation to Permanent and Temporary Imprest given to employees and its settlement. Transactions relating to Permanent Imprest (PI) and Temporary Imprest (TI) shall be carried out as per the Policies prescribed by UPJN in this regard. Permanent Imprest (PI) is a fixed sum of amount given as advance to the employee to meet out the official expenses (as per the Policies prescribed by UPJN). PI amount is paid once during the year and recouped as and when it is utilised to keep the PI amount at the defined level. At the end of the reporting period, the PI Account shall be made nil and the balance amount shall be recovered/ paid, subject to the Policies prescribed by UPJN. Temporary Imprest (TI) is sanctioned on “need basis” to the employee to meet out the official expenses (as per the Policies prescribed by UPJN). TI may be availed in cases where the PI amount is expected to fall short. TI is required to be sanctioned before the expenses are incurred. The accounting procedure for both i.e. PI and TI shall be similar. This subject is covered under the following heads

Imprest advance

Settlement of imprest

Period end process

Procedure:

Sl. No.

Person / Section

Responsible


Imprest advance

1. Accounts Section

Receive the approved Permanent / Temporary Imprest Application

Scrutinise the application for PI in accordance with the entitlement for the year and affix the stamp „passed for payment‟ specifying the amount to be paid

In case of TI, verify the supporting documents submitted with the TI request and affix the stamp „passed for payment‟ specifying the amount to be paid

Forward the Permanent/ Temporary Imprest Application along with supporting documents to Cashier for Payment

Same day of receipt of application

2. Cashier Receive the Permanent/ Temporary Imprest Application along with supporting documents

Process the payment, adopt the procedure for bank/ cash payments as provided in Subject Code: 9.04 / 9.05

Prepare BPV/ CPV

Based on BPV/CPV, update Bank Book/ Cash Book, General Ledger, Subsidiary Ledger and Permanent/ Temporary Imprest Register


Settlement of imprest

3. Accounts Section

Receive Expenses Statement against imprest (duly approved by Designated Authority) along with vouchers/

Same day of receiving the


Page | 171

Sl. No.

Person / Section

Responsible


supporting documents and money receipt, if any, for the cash deposited by the employee with cashier.

Check the following key aspects to determine the amount of expenses and amount recoverable/ payable to the employee: o The vouchers/ supporting shall be in original and for

the period for which Expenses Statement is submitted. (Previous period expenses shall have specific approvals of the Designated Authority)

o Totals of vouchers/ supporting submitted should tally to the Expenses Statement

o The expenses incurred against PI shall be in accordance with the eligibility of nature of expenses as per the Policies prescribed by UPJN

o The expenses incurred against TI shall be in accordance with the approvals taken while availing TI advance and as per the Policies prescribed by UPJN.

o The employee shall clearly mention the expenses/ Works project to which the expenses shall be debited. The same shall be approved by the Designated Authority

In case of discrepancy if any, forward the Expenses Statement to the Designated Authority with details about the discrepancies (The revised / re-authorised Expenses Statement along with amount payable to UPJN if any, is to be submitted by the employee following the same process as mentioned above)

Account for the expenses incurred by debit to the account heads as per the expense details mentioned in the Expenses Statement.


Based on JV, update JV Book, General Ledger, Subsidiary Ledger and Permanent/ Temporary Imprest Register

Forward the Expenses Statement to Cashier to settle the PI/TI balance

Expenses Statement

4. Cashier Receive the approved Expenses Statement.

Settle the PI/TI balance by making further payment/ recovering the amount from employee as the case may be *

Verify the outstanding balance of PI/ TI of the employee from the Permanent/ Temporary Imprest Register to the Expenses Statement

Process the payment/ receipt

To process payment, adopt the procedure for bank/ cash payments as provided in Subject Code: 9.04 / 9.05.

To process receipt adopt the procedure for bank/ cash receipts as provided in Subject Code: 9.04 / 9.05

Prepare BPV/ CPV/ BRV/ CRV

Based on BPV/BRV, update Bank Book/ CPV/ CRV in Cash Book, General Ledger, Subsidiary Ledger and Permanent/ Temporary Imprest Register


Period end process


Page | 172

Sl. No.

Person / Section

Responsible


5. Accounts Section

At the end of the year, scrutinise the Permanent/ Temporary Imprest Register of each employee.

Settle the account to ensure that the employee balances for PI/TI at the end of the year are Nil

Ensure that the balance as per Permanent/ Temporary Imprest Register and the balance in books of account is same

At year end

Formats

Format Ref.



PA/F02 Permanent/ Temporary Imprest Application

I/O As and When

employee Accounts Section

PA/F01 Expenses Statement I As and When

employee Accounts Section

PA/R10 Permanent Imprest/ Temporary Imprest Register

I/O As and When

Accounts Section

___

Accounting Entries:

Sl. No.

Event Voucher type

Source documents

Accounting entries Person/ Section

Responsible

1.

Imprest advance

BPV Permanent/ Temporary Imprest Application

Debit Permanent Imprest Account/ Temporary Imprest Account Credit Bank Account/ Cash Account

Cashier

2. Receipt on submission of Expenses Statement by employee

BRV / CRV

Expenses Statement

Debit Bank Account/ Cash Account Credit Permanent Imprest Account/ Temporary Imprest Account

Cashier

3. Accounting of Expenses through PI/ TI

JV Expenses Statement

Debit Expense Account/ Relevant WIP Account Credit Permanent Imprest Account/ Temporary Imprest Account

Accounts Section

4. Payment of shortfall of PI/ TI

BPV / CPV

Expenses Statement

Debit Permanent Imprest Account/ Temporary Imprest Account Credit

Cashier


Page | 173

Sl. No.

Event Voucher type

Source documents


Responsible

Bank Account/ Cash Account

5. Recovery of excess of PI/TI

BRV / CRV

Expenses Statement

Debit Bank Account/ Cash Account Credit Permanent Imprest Account/ Temporary Imprest Account

Accounts Section


Page | 174


Subject: Accounting on Transfer of Employees

Subject Code: 8.08

Subject Background: This subject covers the accounting procedure to be followed in relation to transfer of an employee from one Unit to another within UPJN. An employee shall be transferred only through an Office Order approved by the Designated Authority for transfer. The order for transfer of employee shall be received at the Unit from which employee is being transferred (hereinafter referred to as Transferor Unit), Unit where the employee is being transferred to (hereinafter referred to as Transferee Unit) and the Accounts Section HO. Before transfer of an employee, all the related outstanding balances (recoverable/ payable), appearing in the books of accounts of the Transferor Unit shall first be adjusted to the extent possible. Remaining outstanding balances, if any, shall be transferred to the Transferee Unit by way of Advice of Transfer Debit (ATD) / Advice of Transfer Credit (ATC). The Accounts Section of the Transferee Unit shall ensure accounting of balances as transferred by the Transferor Unit immediately on transfer of employee. The detailed process for both Transferor Unit and Transferee Unit is provided below. In context of the above, this subject is covered under the following heads:

Identification of balances of employee

Preparation of Last Pay Certificate

Transfer of balances of employee

Procedure:

Sl. No.

Person / Section

Responsible


Identification of balances of employee

1. Accounts Section of the Transferor Unit

Receive orders for transfer of employee from the Designated Authority

As and When


Scrutinise all the related accounts of the employee to determine the amount recoverable from the employee, including : o Permanent / Temporary Imprest with employee o Rent Receivable from employee for use of UPJN‟s

assets o Recoverable against loans/ advances given to

employee o Claims receivables from employee o Any other amount recoverable from employee

Scrutinise all the related accounts of the employee to determine the amount payable to the employee, including: o Salary Payable o Leave Salary Payable o Bonus/ Ex-Gratia Payable o Unpaid Salary Payable/ Unpaid Bonus-Ex-Gratia

Payable o Reimbursement Payable o Balances of GPF o Any other amount payable to the employee

Before processing the last Salary of the employee at the Unit


Page | 175

Sl. No.

Person / Section

Responsible


o In case an employee who has control/ looks after materials (e.g. JE/ AE/ Store Keeper) is transferred ensure the following additional controls: Physical verification of the material lying in the

custody of the employee and reconcile with the employee‟s Daily Transaction Register (DTR) and Store Ledger maintained by Accounts Section.

The shortage in material, if any, is recovered from the employee

Obtain a certificate from the employee who is taking over charge in place of transferred employee regarding the material items lying with transferring employee.


List out all the balance recoverable/ payables of the employee being transferred

Ensure adjustments/ settlement of the amount recoverable/ payable to the employee as determined above, in the last salary of the employee at the Transferor Unit or pay to/ recover from the employee, directly.

Forward the list of the balance recoverable/ payables to the Establishment Section for confirmation/ checking/ additions in respect of the outstanding balances for which the records are being maintained by it.

On processing the last salary of the employee

Preparation of Last Pay Certificate

4. Establishment Section of the Transferor Unit

Receive the list of the recoverable/ payables, for confirmation/ checking/ additions in respect of the outstanding balances for which the records are being maintained by the Establishment Section.

Prepare the Last Pay Certificate of the employee in accordance with the Policies prescribed by UPJN and mention all the recoverable/ payables in it. Obtain approval on the Last Pay Certificate from the Designated Authority.

Forward the Last Pay Certificate to Accounts Section

As and when

Transfer of balances of employee


Receive the Last Pay Certificate along with the list of all recoverable/ payables

Transfer all recoverable/ payables from/ to the employee to the Transferee Unit

Prepare JV and obtain approval from Designated Authority for the transfer and raise ATD/ATC as the case may be on the Transferee Unit. Refer Subject Code: 10.01 for procedure relating to raising ATD.

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and relevant Register(s)

Forward the ATD / ATC, LPC and Service Book to the Accounts Section of the Transferee Unit

On the last date of service of the employee at the Unit

6. Accounts Section of the Transferee Unit

Receive orders for transfer of employee from the Designated Authority

Receive and review the ATD/ ATC, Last Pay Certificate, Service Book, etc. Forward the perforated copy of the ATD/ ATC to the Transferor Unit. Refer Subject Code:

As and when On the same day of receipt of document


Page | 176

Sl. No.

Person / Section

Responsible


10.02 for procedure relating to accepting ATD

Scrutinise the ATD/ ATC to determine the recoverables/ payables transferred to the Unit

Prepare JV to account for the transfer of balances of the employee and obtain approval from Designated Authority


Open required folios/accounts in the books of accounts and registers such as General Provident Fund Broad Sheet, General Provident Fund Register, Employee Advance/ Loan Register, etc. for the employee

Forward Last Pay Certificate, Service Book, etc. and copy of ATD/ ATC to the Establishment Section for necessary actions in this regards.

Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD/ ATC I/O On transfer of employee balances


Own Copy


Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Transfer of recoverable from / payable to employee

JV LPC Debit IUT – Personnel Account / Relevant Employee Payable Account Credit Relevant Employee Recoverable Account / IUT – Personnel Account


2. Accounting of recoverable from / payable to employee – Entry at the Transferee Unit

JV ATD/ATC Debit Relevant Employee Recoverable Accounts/ IUT – Personnel Account Credit IUT – Personnel Account / Relevant Employee Payable Account



Page | 177


Subject: Recoveries/ Reimbursement - Staff on Deputation

Subject Code: 8.09

Subject Background: This subject covers the accounting procedure to be followed in relation to recoveries and reimbursement of expenses relating to staff on deputation from/ to UPJN. As per the current policies, only contribution towards leave encashment and pensions are recovered and reimbursed. Salaries relating to deputed staff are borne by the respective organisation where the employees are deputed. The above reimbursements shall be subject to the statutory deductions/ other recoveries, if any. The periodicity of raising the demand by UPJN and the periodicity of payment of demand raised by outside agency/ body shall be as per the Policies prescribed by UPJN and the terms agreed with the outside agency/ body. The detailed process of transactions for recoveries/ reimbursement of expenses on deputation of staff is provided below. The same process is to be followed for other such reimbursable expenses. In context of the above, this subject is covered under the following heads:

Demand on outside Agencies/ Bodies

Demand from outside Agencies/ Bodies

Procedure:

Sl. No.

Person / Section

Responsible

Activity / action Frequency / Timing

Demand on outside Agencies/ Bodies


Determine the amount to be recovered from the agency/body

Prepare the Demand for amount to be recovered and obtain approvals

Forward approved Demand to Accounts Section for accounting

Periodically as per terms with outside agency/ body

2. Accounts Section

Receive approved Demand

Prepare JV to account for the receivable and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledger and Demand Register (Staff deputed outside UPJN)

Forward the approved Demand to the concerned agency/ body and cashier

As and when

3. Cashier Receive approved Demand from Accounts Section

Receive amount from outside agency/body against demand raised

To process receipt, adopt the procedure for bank receipts as provided in Subject Code:9.04

Prepare BRV

Based on BRV, update Bank Book, General Ledger and the Demand Register (Staff deputed outside UPJN)


Demand from outside Agencies/ Bodies

4. Establishment Receive Demand from the Outside Agency/ Body for As and when


Page | 178

Sl. No.

Person / Section

Responsible

Activity / action Frequency / Timing

Section their staff deputed at UPJN

Verify the Demand for correctness in accordance with terms of deputation and the period of deputation

Obtain approvals for payment of the same

Forward approved Demand to Accounts Section

Same day

5. Accounts Section

Receive approved Demand

Prepare JV to account for the amount payable and obtain approval from Designated Authority

Based on JV, update JV Book, General Ledger and Demand Register (Staff deputed at UPJN)

Forward the Demand to the Cashier for payment

As and when

6. Cashier Receive the Demand from Accounts Section


Prepare BPV

Based on BPV, update Bank Book, General Ledger and Demand Register (Staff deputed at UPJN)


Formats

Format Ref.



PA/R11 Demand Register (Staff deputed outside UPJN)

I/O On receiving the Demand making the payment

Accounts Section

___

PA/R12 Demand Register (Staff deputed at UPJN)

I/O On raising the Demand and receiving the amount

Accounts Section

___

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Raising the Demand on Outside Agencies/ Bodies for staff deputed outside UPJN

JV Demand raised by UPJN

Debit Leave encashment of Staff Deputed Outside UPJN Recoverable Account Pension Contribution of Staff Deputed Outside UPJN Recoverable Account Credit Leave Encashment Account Pension Expense Account

Accounts Section

2. On receipt of amount against the

BRV Demand raised by UPJN

Debit Bank Account

Cashier


Page | 179

Sl. No.

Event Voucher type

Source documents


Responsible

Demand raised on Outside Agencies/ Bodies

Credit Leave Encashment of Staff Deputed Outside UPJN Recoverable Account Pension contribution of Staff Deputed Outside UPJN Recoverable Account

3. Demand raised by Outside Agencies /Bodies

JV Demand Raised on UPJN by outside Agencies / Bodies

Debit Leave Encashment Account Pension Expense Account Credit Leave Encashment of Outside Staff Deputed at UPJN Payable Account Pension Contribution of Outside Staff Deputed at UPJN Payable Account

Accounts Section

4. On payment of amount against the Demand raised by Outside Agencies /Bodies

BPV Demand Raised on UPJN outside Agencies / Bodies

Debit Leave Encashment of Outside Staff Deputed at UPJN Payable Account Pension Contribution of Outside Staff Deputed at UPJN Payable Account Credit Bank Account

Cashier


Page | 180


Subject: Allocation of Personnel Expenses to Works/ Fixed Assets

Subject Code: 8.10

Subject Background: This subject covers the accounting procedure to be followed in relation to allocating the expenses incurred on employees to works expenditure/ fixed assets. The employees‟ cost shall initially be accounted for under the expense account heads. The reclassification (between capital expenditure and revenue expenses) of these costs to the 'capital works' or „works expenditure‟ shall be done subsequently by credit to the relevant expense heads.

Procedure:

Sl. No.

Person / Section

Responsible



Identify the employees whose costs can be directly attributable to Works Expenditure/ Capital Work in Progress – Fixed Assets

Determine the period for which the employee‟s costs are to be loaded to the WIP Cost of the Works project / Capital WIP– Fixed Assets

Identify the works project / Asset under Construction (Capital Work in Progress) to which the employees‟ costs are to be loaded

Provide instructions along with the above details to the Accounts Section to determine the cost to be loaded to the WIP cost of Works project / Capital WIP – Fixed Assets

By the 5th

of each month

2. Accounts Section

Receive the instructions and details duly approved by EE.

Identify the Salary costs (the Salary costs will include basic pay and related allowances) of these employees for a month from the Pay bill

Determine the proportionate cost based on the period specified in the details received

Prepare JV to load the costs and obtain approval from Designated Authority. Attach the detailed working to the JV

Based on JV, update Journal Book, General Ledger and Subsidiary Ledger (The detailed process of works expenditure and capital work in progress – fixed assets have been covered in Section 3.00 Works Expenditure and Section 5.00 Fixed Assets respectively)

On the same day of receipt of instructions

Accounting Entries:

Sl. No.

Event Voucher type

Source documents

Accounting Entries

Person/ Section

Responsible

1.

Loading of employee costs to Works Expenditure/ Capital Work in Progress – Fixed Assets

JV Pay Bill Debit Relevant Capital WIP Account / Relevant WIP Cost Others Account Credit Relevant Salaries Account

Accounts Section


Page | 181

9.00 Section: Cash and Bank Section Background: 9.01 This Section covers the Cash and Bank transactions accounting and related procedures. 9.02 In UPJN, cash / bank receipts and payments are decentralised. Hence, each Unit of UPJN is required to maintain its independent bank accounts. Maintenance of Bank Accounts 9.03 To ensure monitoring and control of funds and for effective financial management and discipline, each Accounting Unit shall maintain their bank accounts, independently. The type of bank accounts to be maintained and transactions to be made with those bank accounts shall depend on the Policies prescribed by UPJN from time to time. 9.04 The relevant details in respect of every new bank account (e.g. purpose, name of the bank, branch, address and account code, etc.) opened at the Unit level shall be intimated to the Chief Accounts Officer at Head Office (HO). Custody of Financial Instruments, Cheques, etc.

9.05 The financial instruments shall be kept with the Accounts Section for safekeeping. The Cashier shall be the custodian of all the relevant financial instruments. These financial instruments would include bank guarantees received as security deposit, fixed deposit receipts, earnest money in the form of fixed deposit received from suppliers / bidders, post dated cheques, cheque books, pass books, balance confirmations certificates, bank statements, revenue stamps, etc.

9.06 Detailed records for the receipt and issue of the above mentioned financial instruments shall be maintained by the concerned Cashier. 9.07 The Head of the Accounts Section and/ or the Designated Authority shall conduct surprise checks (at least once in a quarter) to ensure that the above mentioned financial instruments are recorded and held as required. Any discrepancies found during the surprise checks shall be addressed on an immediate basis. Accounting Policies 9.08 The main accounting policies that shall be followed relating to cash and bank transactions accounting are provided in the subsequent paragraphs: a.) Bank charges / interest income shall be accounted for in the same period in which debited /

credited by the bank.

b.) The accounting of cash and bank transactions shall be done on the same day of making the payment/ getting the receipt.


Page | 182


Sl. No.


1. Fund Remittance – HO to Units 9.01

2. Fund Remittance – Units to HO 9.02

3. Transactions through Personal Ledger Account 9.03

4. Transactions through Bank 9.04

5. Transactions in Cash 9.05

6. Physical Verification of Cash 9.06

7. Bank Reconciliation Statement 9.07

8. Deposit of Statutory Dues 9.08


Page | 183

Section: Cash and Bank Section Code: 9.00

Subject: Fund Remittance – HO to Units Subject Code: 9.01

Subject Background: This subject covers the accounting procedure to be followed in relation to transfer of funds from HO to Units for meeting out various type of expenditure including expenditure for works, revenue and establishment costs, acquisition of fixed assets, etc. Fund Requisition Statement A Fund Requisition Statement shall be prepared by the Units to request for funds from HO and sent to the respective Zonal Office (ZO). The Fund Requisition Statements of all Units shall be scrutinised for appropriateness and compared with the budgeted estimates for various type of expenditure for the Unit. Thereafter these Fund Requisition Statements shall be consolidated (including that of ZO) and forwarded to HO. Similarly at HO level, the Fund Requisition Statements shall be scrutinised for appropriateness and compared with the budgeted estimates for various type of expenditure for the Units. The funds as considered appropriate, shall be transferred to the ZO which in-turn shall transfer the funds to the Units. The process of transfer of funds, its frequency, time lines, mode of transfer of funds (i.e. through bank transfers, cheques, etc) and the channel of flow of funds (e.g. directly from HO to Unit or through ZO) shall be as per the Policies prescribed by UPJN. In context of the above, this subject is covered under the following heads:

Transfer of funds from HO

Receipt of funds at ZO

Transfer of funds from ZO

Receipt of funds at Units

Procedure:

Sl. No.

Person / Section

Responsible


Transfer of funds from HO

1. Cashier – HO Receive the approved intimation from the Chief Accounts Officer for amount of funds to be transferred to the Units via ZO

To process payment, adopt the procedure for bank payments as provided in Subject Code: 9.04.

Prepare Bank Payment Voucher (BPV) and raise Advice of Transfer Debit (ATD) on the ZO for fund transfer. Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on Bank Payment Voucher (BPV), update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s)

Transfer the funds to the ZOs as per approval

Forward the statement of funds approved for each Unit to the respective ZO with intimation of transfer of funds


Receipt of funds at ZO

2. Cashier – ZO Receive and review ATD and the statement for the funds As and when


Page | 184

Sl. No.

Person / Section

Responsible


transferred. Forward the perforated copy to the Accounts Section – HO. Refer Subject Code: 10.02 for procedure relating to accepting ATD

On receipt of funds, adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare Bank Receipt Voucher (BRV)

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s)

Same day

Transfer of funds from ZO

3. Cashier – ZO Receive from HO the statement of funds approved for each Unit with intimation of transfer of funds

Obtain approvals for transfer of funds to the Units


Prepare BPV and raise ATD on the Unit for fund transfer. Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and Funds Requisition Register

Transfer the funds to the Units as per approval

Forward the statement of funds approved to the respective Unit with intimation of transfer of funds

Within 1 day of receipt of funds Same day

Receipt of funds at Units

4. Cashier – Unit Receive and review ATD and the statement for funds transferred. Forward the perforated copy to the Accounts Section – ZO. Refer Subject Code: 10.02 for procedure relating to accepting ATD


Prepare BRV



Formats

Format Ref.

Document Title

Document Type



Accounts Section – HO, ZO

Own Copy

To the other Unit

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Fund remitted from HO to ZO

BPV Approved Fund Requisition Statement

Debit Relevant Funds Remittance between Units Account Credit Bank Account

Cashier – HO


Page | 185

Sl. No.

Event Voucher type

Source documents


Responsible

2. Funds Received at ZO from HO

BRV ATD & Statement of Funds received from HO

Debit Bank Account Credit Relevant Funds Remittance between Units Account

Cashier – ZO

3. Funds remitted from ZO to Units

BPV Statement of Funds from HO

Debit Relevant Funds Remittance between Units Account Credit Bank Account

Cashier – ZO

4. Funds Received at Units from ZO

BRV ATD & Statement of Funds from ZO

Debit Bank Account Credit Relevant Funds Remittance between Units Account

Cashier – Unit


Page | 186


Subject: Fund Remittance – Units to HO Subject Code: 9.02

Subject Background: This subject covers the accounting procedure to be followed in relation to fund remittance from Units and receipt of funds at HO. In accordance with the Policies prescribed by UPJN, funds received (revenue in nature) or income earned at the Units, may be required to be transferred to HO. The process of transfer of funds, its frequency, timelines, mode of transfer of funds (i.e. through bank transfers, cheques, etc) and the channel of flow of funds (e.g. directly from Unit to HO or through ZO) shall be as per the Policies prescribed by UPJN. In context of the above, this subject is covered under the following heads:

Transfer of funds from Units

Receipt of funds at HO

Procedure:

Sl. No.

Person / Section

Responsible


Transfer of funds from Units

1. Cashier – Unit

Scrutinise books of account for the remittances to be made (as per the Policies prescribed by UPJN), and prepare details of the same

Obtain approvals from Designated Authority for transfer of funds as per the details prepared


Prepare BPV and raise ATD on the HO for fund transfer Refer Subject Code: 10.01 for procedure relating to raising ATD


Forward the cheque, details of receipt at the Unit and the remittance being made including mention of the account head under which the receipts are accounted for, to the HO. (As per the current Policies, the cheque issued by the Unit shall be drawn on the HO)

As per the Policies prescribed by UPJN Same day

Receipt of funds at HO

2. Cashier – HO

Receive and review ATD and the details of funds transferred. Forward the perforated copy to the Accounts Section – Unit. Refer Subject Code: 10.02 for procedure relating to accepting ATD


Prepare BRV




Page | 187

Formats

Format Ref.

Document Title

Document Type



Accounts Section - Unit

Own copy

To the other Unit

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Fund remitted from Unit to HO

BPV --- Debit Relevant Funds Remittance between Units Account Credit Bank Account

Cashier – Unit

2. Funds Received at HO from Unit

BRV ATD Debit Bank Account Credit Relevant Funds Remittance between Units Account

Cashier – HO


Page | 188


Subject: Transactions through Personal Ledger Account

Subject Code: 9.03

Subject Background: This subject covers the accounting procedure to be followed in relation to transactions through Personal Ledger Account (PLA). UPJN maintains a PLA with Government Treasury in which Government releases funds for deposits / grant for Works project, etc. The funds released in PLA are transferred in the Bank Account for utilisation. PLA shall be reconciled with treasury at least on a quarterly basis. This PLA shall be maintained and accounted for at Head Office level only. In context of the above, this subject is covered under the following heads:

Deposit of Fund in PLA

Withdrawal of Fund from PLA

Reconciliation of PLA

Procedure:

Sl. No.

Person / Section

Responsible



1. Accounts Section

Receive the Government Order (GO) for transfer of funds to the PLA

Check the PLA with the Treasury to confirm transfer of funds


Prepare JV, for the funds transferred to the PLA, and obtain approval from Designated Authority


As and when

Withdrawal of Fund from PLA

2. Cashier The funds from PLA to Bank Account of UPJN shall be transferred based on approval of Designated Authority.

For transfer of funds, adopt the procedure for bank receipts as provided in Subject Code: 9.04

Prepare BRV for withdrawal of funds from PLA and transfer to Bank Account

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s).

As per the terms of Government Order

3. Accounts Section

Prepare JV, to account for Loan, Grant, Deposit, etc. against which funds were transferred from PLA to Bank Account, and obtain approval from Designated Authority.

Obtain approvals on JV as required

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger and relevant Register(s).

On the same day of transfer of funds


Page | 189

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.


JV Government Order

Debit PLA Account

Credit PLA Government Account

Accounts Section

2. Transfer of funds to Bank Account

BRV Government Order

Debit Bank Account

Credit PLA Account

Cashier

3. Accounting for Loan/ Grant/ Deposit

JV BRV Debit PLA Government Account

Credit Relevant Deposit (Loan/ Grant/ Deposit) Account

Accounts Section


Page | 190


Subject: Transactions through Bank Subject Code: 9.04

Subject Background: This subject covers the accounting procedure to be followed in relation to transactions through bank. The detailed process of transactions through Bank is provided below. Bank Payments The process of bank payments covers all payments to various outside parties/ agencies/ bodies, employees etc. by way of a bank instrument. Procedural and accounting aspects relating to the passing and accounting the following types of expenditure/ expenses for payment have been covered under relevant Sections of this Accounting Manual:

Capital expenditure – Refer Section Code: 5.00 - Fixed Assets

Works project expenditure – Refer Section Code: 3.00 - Works Expenditure

Revenue expenses other than employee related expenses – Refer Section Code: 7.00 - Revenue Expenses

Employee related expenses and benefits – Refer Section Code: 8.00 - Personnel

Purchase of Materials and material related expenditure – Refer Section Code: 2.00 - Stores

Interest expenses – Refer Section Code: 4.00 - Loan, Deposits, Grant and Investment

Payment on account of transfers between Units (Covered in this Section) (the above list is illustrative)

Every payment to be made shall have bills / vouchers and other supporting documents based on which payment shall be passed, expense/ account payable shall be accounted for and subsequently paid. Bills / vouchers and other supporting documents for expense/ account payable shall be attached with the voucher through which expense/ account payable shall be accounted for. The payment voucher shall have the reference of the voucher through which expense/ account payable are accounted. Bank Receipts

This process covers the procedure for accounting of receipts by way of cheque/ demand draft/direct transfers to Bank. The receipt may be on account of various transactions. Procedural and accounting aspects relating to the accounting of accrual of income/ accounts receivables/ transfer of funds for the following receipts have been covered under separate Sections of this Accounting Manual:

Sale of materials – Refer Section Code: 2.00 - Stores

Receipt of water supply charges – Refer Section Code: 3.00 - Works Expenditure

Receipt of loan, deposits, grants, income on investments, receipt on sale of investments, recovery of loans advanced – Refer Section Code: 4.00 - Loans, Deposits, Grant and Investment

Sale of fixed assets and project asset – Refer Section Code: 5.00 - Fixed Assets

Sale of tenders – Refer Section Code: 6.00 - Revenue and Collection

Receipt for/ from employees – Refer Section Code: 8.00 - Personnel

Receipt on account of transfers between Units (Covered in this Section) (the above list is illustrative) Most receipts shall have bills / vouchers and other supporting documents based on which income/ account receivable shall be accounted for, and subsequently received. Bills / vouchers and other


Page | 191

supporting documents for income/ account receivable shall be attached with the voucher through which income/ account receivable shall be accounted for. The receipt voucher shall have the reference of the voucher through which income/ account receivable is accounted. Withdrawal of Cash from Bank This process covers the procedure for withdrawal of cash from bank. Approvals of Designated Authority shall be taken prior to withdrawal of cash from bank. Though to the extent possible cash payments shall be avoided, however, it may be required for certain payments to

be made in cash. The Designated Authority shall fix the cash drawing limit and the maximum cash balance that can be maintained at any point of time. These limits shall be reviewed periodically. Amount of cash to be withdrawn from bank shall be in accordance with these limits. Deposit of Cash with Bank

This process covers the procedure for deposit of cash with bank. Approvals of Designated Authority shall be taken prior to deposit of cash with bank. Though to the extent possible cash receipts shall be avoided, however, certain receipts may be in cash; whole or part of which may be deposited with bank The Designated Authority shall fix the maximum cash balance that can be maintained at any point of time. These limits shall be reviewed periodically. Amount of excess cash balance shall be deposited in the Bank Account in accordance with these limits. Inter-bank transfer This process covers the procedure to be followed for inter-bank transfer of funds. Though inter-bank transfers shall be restricted to maintain track of funds, transfers of funds may however be required for optimum utilisation of funds. However, in cases where the bank balances reflect funds specific to a purpose (e.g. specific Works project/ funds for revenue or establishment expenses / acquisition of fixed assets), transfer of such funds shall be restricted. The inter-bank transfer shall take place only on authorisation of the Designated Authority. Cancellation of cheques issued by UPJN Cheques issued by UPJN to outside parties/ employees shall be required to be cancelled in the following cases :

There is a mistake in filling the details of the cheque such as the amount in words and figures do not tally or any other mistake

The cheque has been dishonoured by the Bank due to any reason

(the process for the cheques that have become time barred i.e. stale cheques has been covered below under the sub-subject treatment of stale cheques)

The cheque shall be returned by the party giving the advice received from the bank stating the reason or along with an application in case the cheque has a mistake. Treatment of Dishonour of cheque received by UPJN Dishonour of cheque takes place when a cheque deposited in bank, received by UPJN is not credited by the bank to the Bank Account. On receipt of intimation from bank about dishonour of a cheque, the concerned employee/party account shall be debited immediately for the amount of cheque (except in case where cheque has been dishonoured with the remarks „present again‟) and the employee/ party


Page | 192

shall be immediately informed about the same. The charges levied by bank on UPJN for dishonor of cheque may also be debited to the concerned employee/party account Treatment of Stale Cheque issued by UPJN

The cheque issued/ received are valid for encashment up to a particular period from the date of cheque in accordance with the relevant Statute. Therefore any cheque issued by UPJN and not presented for payment for any reason within that period from the date of its issue shall become time barred/ stale. A track of the stale cheque shall be kept through the monthly Bank Reconciliation Statement prepared. The stale cheque shall be accounted for by debiting the Bank Account and crediting to a separate account head named „Stale Cheque Account‟. Treatment of Lost Cheques issued by UPJN

This process covers the procedure for accounting of lost cheques. i.e. cheques issued to parties/ employees and lost by them. In context of the above, This subject is covered under the following heads:

Bank payments

Bank receipts

Withdrawal of cash from bank

Deposit of cash with bank

Interbank transfer

Cancellation of cheques issued by UJPN

Treatment of dishonor of cheques received by UPJN

Treatment of lost cheques issued by UPJN

Treatment of stale cheques issued by UPJN

Bank charges Procedure:

Sl. No.

Person / Section

Responsible


Bank Payments

1. Cashier Receive the approved JV from the approving Authority based on which payment is required to be made

In case where the amount payable has not been accounted for in the books of account by way of JV and the payment is required to be made based on the bills / vouchers and other supporting documents, receive the duly approved bills / vouchers and other supporting documents from the concerned Sections/ officials passed for payment.

Ensure that stamp for “passed for payment” is affixed and the amount to be paid is specified on the JV/ bills / vouchers and other supporting documents

As and when

2. Cashier Prepare Bank Payment Voucher (BPV) and Account Payee Cheque for the net amount payable

Enter the JV number on BPV/ attach the approved bills / vouchers and other supporting documents to BPV (as the case may be).

As and when for the approved JV/ bills / vouchers


Page | 193

Sl. No.

Person / Section

Responsible


Ensure that amount payable and the payee are as per the JV/ bills / vouchers and other supporting documents attached.

Ensure correctness and completeness of all details recorded in BPV

Forward BPV and cheque to the Designated Authority


Verify and authorise BPV and sign the cheque (in case two authorised signatories are required, then the cheque shall be signed by both the signatories)

Within 1 day of receipt of cheque

4. Cashier Based on BPV, update Bank Book, General Ledger and Subsidiary Ledger

Affix the stamp „Paid‟ on JV / bills / vouchers and other supporting documents by writing cheque no., date and amount.

File the vouchers in serial order in the Bank Payment Voucher file

Hand over the cheque along with details of payment (such as party‟s Invoice no. and Invoice date etc.) to the party and obtain acknowledgement on BPV.

In case the cheque is to be sent by post, hand over the sealed envelope to the Dispatch Section and obtain an acknowledgement of the Dispatch official for the receipt of cheque.

On the same day of signing of cheque

5. Dispatch Section

Dispatch the cheques to the parties

Update Dispatch Register with the document reference and date of dispatch

On the day of receipt of cheque

6. Cashier Review the Dispatch Register to ensure timely dispatch of cheques. In case of delays, follow-up with the Dispatch Section.

Weekly

Bank Receipts

7. Cashier Receive the cheque/ demand drafts from the party/employee. Ensure the following: o Cheques are complete, current and valid o Amount in words and figures tally o Cheques are crossed, signed and are drawn in

favor of UPJN - Cross the cheques if not already crossed

o Cheques/drafts from parties are accompanied by authorisation of the concerned Section / Department

In case of receipt by way of direct transfer to the Bank Account, obtain the intimation from the party paying and/or obtain details from the credits made in the Bank Statement

As and when

8. Cashier Prepare Money Receipt for the cheque/ demand draft in duplicate and issue original Money Receipt to the party/employee

Identify and specify the details, on the Money Receipt, of the JV / bills / vouchers and other supporting documents against which cheque/ demand draft is received

Immediately on receipt

9. Cashier Prepare a Bank Receipt Voucher (BRV) for each money receipt raised during the day

Enter the JV number on the BRV/ attach the approved bills / vouchers and other supporting documents to the

Same day of issuing money receipt


Page | 194

Sl. No.

Person / Section

Responsible


BRV (as the case may be)

Ensure that all the cheques/ demand drafts are deposited with the bank either on the same day of its receipt or at the beginning of the next day.

Send the BRV along with the Money Receipt to the Designated Authority for authorisation.

On receipt of the authorised BRV, update Bank Book, General Ledger and Subsidiary Ledger.

File the vouchers in serial order in the Bank Receipt Voucher file

As and when

Withdrawal of Cash from Bank

10. Cashier Determine the amount of cash to be withdrawn from bank and obtain approvals of Designated Authority

Prepare cheque and forward it to the authorised Designated Authority

As and when Immediately on receipt of approval


Verify and sign the cheque (in case two authorised signatories are required, then the cheque shall be signed by the both signatories)

Same day of receipt of cheque

12. Cashier Withdraw cash from bank on the same day of receipt of signed cheque

Upon withdrawal of cash from bank, prepare Contra Voucher (CV) and obtain approvals

Based on Contra Voucher update Bank Book and Cash Book

File the vouchers in serial order in the Contra Voucher file

Same day Immediately on withdrawal of cash

Deposit of Cash with Bank

13. Cashier Ascertain the amount of cash to be deposited with the bank and obtain approvals of Designated Authority

Deposit the cash with bank

Prepare CV for amount of cash deposited with bank and obtain approvals

Based on CV update Bank Book and Cash Book



Inter-bank transfer

14. Cashier Determine the amount and bank accounts between which funds are to be transferred

Obtain approvals of Designated Authority for inter-bank transfer of funds

Upon approval for inter-bank transfer of funds, prepare CV and cheque for the amount of funds to be transferred

Attach the approval to the CV

Forward the CV and cheque to the authorised Designated Authority



Verify and authorise the CV and sign the cheque (in case two authorised signatories are required, then the cheque shall be signed by the both signatories)

Same day of receipt of cheque

16. Cashier Ensure that all the cheques are deposited with the bank either on the same day of its receipt or at the beginning of the next day

Immediately on authorisation of CV and signing


Page | 195

Sl. No.

Person / Section

Responsible


Based on CV, update Bank Book of both the bank accounts


of cheque.

Cancellation of cheques issued by UPJN

17. Cashier Receive the cheque from the bank / party/ employee along with the advice from the bank/ application from the party

Obtain approval of Designated Authority to accept the cheque for cancellation.

As and when Immediately on Receipt

18. Cashier On receipt of approval, accept the cheque and put a stamp of „Cheque Cancelled‟ on it.

To process receipt, adopt the procedure for bank receipts as provided in this subject

Prepare a BRV to record the receipt of cancelled cheque

Based on BRV, update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s).

Same day

19. Cashier When making payment against cancelled cheque, prepare BPV and cheque.

To process payment, adopt the procedure for bank payments as provided in this subject

Mention the following details on the BPV: o Details of cheque cancelled o Details of new cheque being issued in lieu of the

above mentioned cancelled cheque

Based on BPV, update Bank Book, General Ledger and Subsidiary Ledger and relevant Register(s).

As and when

Treatment of Dishonour of cheque received by UPJN

20. Cashier Receive advice stating reasons of dishonour of cheque from the bank along with the cheque.

As and when

21. Cashier Head of Accounts Section

In case cheque has been dishonoured with the remarks „present again‟, re-deposit the cheque into the bank with the necessary correction sought by bank.

In case dishonour is for any other reason, prepare a Bank Payment Voucher to adjust the account of the employee/ party from whom cheque was earlier received.

Adopt the procedure for bank payments as provided in this subject


Enter the dishonoured cheque particulars in the Cheque Dishonour Register.

In cases where the original cheque (dishonoured cheque) was received by any Section other than Accounts Section, intimate the concerned Section to take action for recovery against the dishonoured cheque.

In case where the original cheque (dishonoured cheque) was received directly by the Accounts Section, intimate the employee/ party that the cheque has been dishonored and that a payment for the amount payable

Within 1 day of receipt of cheque


Page | 196

Sl. No.

Person / Section

Responsible


plus bank charges and surcharges, if any, for late payment shall be sent immediately.

22. Cashier Receive the cheque/ demand draft/ cash from the employee/ party

Prepare BRV/ CRV to account for the cheque/ demand draft/ cash received.

Adopt the procedure for bank receipts as provided in this subject and cash receipts as provided in Subject Code: 9.05

Based on BRV/ CRV, update Bank Book/ Cash Book, General Ledger, Subsidiary Ledger and relevant Register(s).

Dispatch the dishonored cheque to the employee/ party only after receipt of the payment in lieu of cheque

Update the Cheque Dishonour Register

As and when

Treatment of Lost Cheques issued by UPJN

23. Head of Accounts Section

Receive the intimation of loss of cheque from the employee/ party

Ensure the following: o Instruct the party to give an affidavit for the lost

cheque o Instruct the bank to stop payment against the lost

cheque

On receipt of affidavit from the employee/ party, forward the intimation and affidavit to Designated Authority and obtain approvals to initiate the process of accounting for the lost cheque in the books of account

On receipt of approval from Designated Authority, forward the intimation, approval and affidavit with instructions to account for the lost cheque to the Cashier

As and when Immediately on receipt of intimation As and when Immediately on approval

24. Cashier On receipt of intimation, approval and affidavit, process receipt.

Adopt the procedure for bank receipts as provided in this subject

Prepare a BRV to record the lost cheque.


As and when

25. Cashier When making payment in lieu of the lost cheque, prepare BPV and cheque.

Process payment, adopt the procedure for bank payments as provided in this subject

Mention the following details on the BPV: o Details of lost cheque o New cheque being issued in lieu of the above

mentioned lost cheque


Within 1-2 days of receipt of intimation

Treatment of Stale Cheque issued by UPJN

26. Cashier Refer Bank Reconciliation Statements.

Identify and prepare a list of cheques issued by UPJN and has become stale.

Obtain approvals from Designated Authority for transfer

Monthly


Page | 197

Sl. No.

Person / Section

Responsible


of stale cheques to the Stale Cheque Account.

On receipt of approval, prepare a BRV to record the stale cheque and for transfer of all such cheques to „Stale Cheque‟ Account.

Adopt the procedure for bank receipts as provided in this subject


Enter the stale cheque details in the Stale Cheque Register

Immediately on receipt of approval

27. Head of Accounts Section

Receive the application from the employee/ party for the revalidation/ issuance of new cheque along with the stale cheque.

Ensure that the concerned employee‟s/ party‟s cheque is lying in the Stale Cheque Account.

Get the approval (on the application) from the Designated Authority to revalidate the cheque / issue a new cheque.

To process payment, adopt the procedure for bank payments as provided in this subject.

Prepare BPV. In case of revalidation of stale cheque, forward the stale cheque to Designated Authority for revalidation.

Mention the following details on the BPV: o Details of stale cheque o Details of new cheque, if any, being issued in lieu of

the above mentioned stale cheque

Based on BPV, update Bank Book and General Ledger

Cancel the stale cheque, in case new cheque being issued and file it in a separate file.

Update the Stale Cheque Register for the cheque issued.

As and when Within 1 day of receipt of application

Bank Charges

28. Cashier Upon receipt of advice from bank mentioning amount, account for the same in books of account.

Prepare BPV for the amount of bank charges


As and when

29. Cashier If bank does not send advices, scrutinise bank pass book/ statements to see if such charges have been made.

Check for the correctness of the charges levied.

Enquire with the bank in case the bank charges levied by the bank are found to be incorrect. Apply for rectification of charges levied, if required.

In cases, where bank charges are levied correctly, prepare BPV for amount of bank charges

Process payment, adopt the procedure for bank payments as provided in this subject


In case where the bank charges are to be recovered from/ loaded to a Works project/ party/ fixed asset etc., forward a copy of BPV to the Accounts Section

Once a month Immediately on identifying


Receive the BPV As and when Same day


Page | 198

Sl. No.

Person / Section

Responsible


Prepare JV, by debiting the relevant account head in case where the bank charges are to be recovered from/ loaded to a Works project/ party/ fixed asset etc, and obtain approval from Designated Authority.

Based on JV, update General Ledger and Subsidiary Ledger

Formats

Format Ref. Document Title

Document Type


CB/F01 Money Receipt

I/O On receipt of cheque / demand draft

Cashier Payer

Own Copy

CB/R01 Cheque Dishonour Register

O As and when Cashier ___

CB/R02 Stale Cheque Register

O As and when Cashier ___

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Payment from Bank

BPV JV/ bills / vouchers and other supporting documents

Debit Relevant Account (Payable Account/ Expense Account) Credit Bank Account

Cashier

2. Bank Receipt

BRV Money Receipt and bills/ vouchers / supporting

Debit Bank Account Credit Relevant Account

Cashier

3. Withdrawal of Cash from Bank

Contra Voucher

___ Debit Cash Account Credit Bank Account

Cashier

4. Deposit of Cash in Bank

Contra Voucher

___ Debit Bank Account Credit Cash Account

Cashier


Page | 199

Sl. No.

Event Voucher type

Source documents


Responsible

5. Inter Bank Transfer

Contra Voucher

___ Debit Respective Bank Account Credit Respective Bank Account

Cashier

6. Cancellation of cheque issued

BRV Cheque cancelled

Debit Respective Bank Account Credit Relevant Account head (As debited on issue of cheque)

Cashier

7. Issue of cheque in lieu of cancellation of cheque

BPV BRV and cheque cancelled

Debit Relevant Account Head (As Credited on cancellation of cheque) Credit Respective Bank Account

Cashier

8. Dishonour of Cheque deposited in Bank by UPJN

BPV Bank advice along with dishonoured cheque

Debit Relevant Party/ Employee Account (As credited on receipt of relevant cheque) Credit Bank Account

Cashier

9. Receipt in lieu of dishonor of cheque

BRV/ CRV

Money Receipt

Debit Bank Account/ Cash Account Credit Relevant Account (As debited on dishonour of cheque)

Cashier

10. Cancellation of lost cheque (issued by UPJN)

BRV Intimation and Affidavit from employee/ party

Debit Bank Account Credit Relevant Account (As debited on issue of relevant cheque)

Cashier

11. Cheque issued in lieu of lost cheque cancelled

BPV Intimation and Affidavit from employee/ party and BRV

Debit Relevant Account (As credited on cancellation of lost cheque) Credit

Cashier


Page | 200

Sl. No.

Event Voucher type

Source documents


Responsible

Bank Account

12. Accounting of Stale Cheque

BRV Bank Reconciliation Statement

Debit Bank Account Credit Stale Cheque Account

Cashier

13. Issue of Cheque in lieu of stale cheque

BPV Stale Cheque Register

Debit Stale Cheque Account Credit Bank Account

Cashier

14. Bank Charges

BPV Bank Advice/ Bank Pass Book/ Bank Statement

Debit Bank Charges Account Credit Bank Account

Cashier

15. Bank charges recovered from/ loaded to a Works project/ party/ fixed asset, etc.

JV Bank Statement and BPV for Bank Charges

Debit Relevant Account Head (Bank charges recovered from/ loaded to) Credit Bank Charges Account

Cashier


Page | 201


Subject: Transactions in Cash Subject Code: 9.05

Subject Background: This subject covers the accounting procedure to be followed in relation to transactions through cash. Cash payments and receipts shall be given as per the Policies prescribed by UPJN. Advances in cash shall be limited to the purposes as stated in the Policies prescribed by UPJN and in case if the cash payment is not as per the Policies prescribed by UPJN, a prior approval shall be obtained from the Designated Authority. Cash Payment

The process of cash payments covers all payments to various outside parties/ agencies/ bodies, employees etc. by way of cash. Policies shall be prescribed laying down the limit for cash payments and the type of expenses for which payments can be made in cash by the Units As in case of Bank Payments, procedural and accounting aspects relating to the passing and accounting the following types of expenses for payment have been covered under relevant Sections of this Accounting Manual. For e.g.

Revenue expenses – Refer Section Code: 7.00 - Revenue Expenses

Employee related expenses and benefits – Refer Section Code: 8.00 - Personnel Every payment to be made shall have bills / vouchers and other supporting documents based on which payment shall be passed, expense/ account payable shall be accounted for and subsequently paid. Bills / vouchers and other supporting documents for expense/ account payable shall be attached with the voucher through which expense/ account payable shall be accounted for. The payment voucher shall have the reference of the voucher through which expense/ account payable are accounted. Cash Receipt

All cash receipts shall be received by Cashier against the issue of Money receipt; however the concerned Section shall indicate the amount of cash to be received. The receipt may be on account of various transactions. Procedural and accounting aspects relating to the accounting of accrual of income/ accounts receivables for the following receipts have been covered under separate Sections of this Accounting Manual. For e.g.:

Receipt of water supply charges – Refer Section Code: 3.00 - Works Expenditure

Sale of tenders – Refer Section Code: 6.00 - Revenue and Collection

Receipt for/ from employees – Refer Section Code: 8.00 - Personnel Most receipts shall have bills / vouchers and other supporting documents based on which income/ account receivable shall be accounted for, and subsequently received. Bills / vouchers and other supporting documents for income/ account receivable shall be attached with the voucher through which income/ account receivable shall be accounted for. The receipt voucher shall have the reference of the voucher through which income/ account receivable is accounted. In context of the above, this subject is covered under the following heads:

Cash Payment

Cash Receipt


Page | 202

Procedure:

Sl. No.

Person / Section

Responsible


Cash Payment

1. Cashier Receive the approved JV from the approving Authority based on which payment is required to be made

In case where the amount payable has not been accounted for in the books of account by way of JV and the payment is required to be made based on the bills / vouchers and other supporting documents, receive the duly approved bills / vouchers and other supporting documents from the concerned Sections/ officials passed for payment.

Ensure that stamp for “passed for payment” is affixed and the amount to be paid is specified on the JV/ bills / vouchers and other supporting documents

As and when

2. Cashier Prepare Cash Payment Voucher (CPV) for amount of cash to be paid

Enter the JV number on the CPV/ attach the approved bills / vouchers and other supporting documents to the CPV (as the case may be).

Obtain approval of the Designated Authority on the CPV

Within one day of receipt of the approved JV/ bills

3. Cashier Disburse cash and obtain the signature of the payee on the CPV as acknowledgement of the cash received.

In case the payment is made to the person other than the payee mentioned on CPV the payment shall be released only on the receipt of letter of authorisation from the payee and approval from the Designated Authority.

Attach the letter of authorisation along with CPV and obtain the signature of the payee

As and when

4. Cashier Based on CPV, update Cash Book, General Ledger and Subsidiary Ledger.

Affix the stamp „Paid‟ on JV / bills / vouchers and other supporting documents after entry in Cash Book

File the CPV in serial order in the Cash Payment Voucher file

As and when

Cash Receipt

5. Cashier Receive the duly authorised documents from the concerned Section specifying the amount to be collected (e.g. tender form for sale of tender)

Receive the cash and prepare Money Receipt in duplicate. Issue original of Money Receipt to the employee/party.

Identify and specify the details of the JV / bills / vouchers and other supporting documents against which cash is received on the Money receipt

As and When

6. Cashier Prepare Cash Receipt Voucher (CRV) for each money receipt issued during the day.

Enter the JV number on the CRV/ attach the approved bills / vouchers and other supporting documents to the CRV (as the case may be).

Send the CRV along with the Money receipt to the Designated Authority for authorisation.

On receipt of the authorised CRV, update Cash book, General Ledger and Subsidiary Ledger.

Same day


Page | 203

Sl. No.

Person / Section

Responsible


File the CRV in serial order in the Cash Receipt Voucher file

Formats

Format Ref.

Document Title

Document Type


CB/F01 Money Receipt I/O On receipt of cash

Cashier

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Cash Payment

CPV JV/ bills / vouchers and other supporting documents

Debit Relevant Account Credit Cash Account

Cashier

2. Cash Receipt

CRV Money Receipt

Debit Cash Account Credit Relevant Account

Cashier


Page | 204


Subject: Physical Verification of Cash Subject Code: 9.06

Subject Background: This subject covers the accounting procedure to be followed in relation to physical verification of cash and adjustment for cash shortage and its write off. The custodian of cash shall be the Cashier at the Unit. The cash shall be physically verified and tallied with the books of account by the Accounts Section on a daily basis. The Head of the Accounts Section and/ or the Designated Authority shall conduct random checks periodically (at least once in a month) of the physical cash balance to ensure that the physical cash balance and the balance as per books of account reconcile. Any discrepancies found during the surprise checks shall be addressed on an immediate basis. In context of the above, this subject is covered under the following heads:

Physical Verification of Cash in Hand

Identification and Adjustment for Cash Shortage/ Surplus

Procedure:

Sl. No.

Person / Section

Responsible


Physical Verification of Cash in Hand

1. Cashier Check and ensure that all CPV, CRV and CV have been entered in the Cash Book

Enter the balance as per the cash book in the Physical Cash Verification Register

Count the physical cash balance available and write down the balances denomination wise in the aforesaid Register

Sign the Physical Cash Verification Register and Cash Book.

At the end of each day

2. Head of the Accounts Section and/ or the Designated Authority

Undertake surprise cash count and verify the same with „Cash Book‟ and initial the Cash Book after verification and Physical Cash Verification Register

Once a month

Identification and Adjustment for Cash Shortage/ Surplus

3. Cashier Compare the physical cash balance recorded in the Physical Cash Verification Register with the cash balance recorded from the cash book and check for discrepancy

In case of discrepancy between physical cash balance and cash balance as per books of account, mention the reason for differences and take necessary action.

In cases, where the discrepancy is not traceable, intimate the same to the Head of the Accounts Section and/ or the Designated Authority.

Immediately on physical verification of cash in hand

4. Head of the Accounts Section and/ or the

On receipt of intimation of cash shortage/ surplus, scrutinise the discrepancy and give instructions for accounting of the same

Immediately on receipt of intimation


Page | 205


5. Cashier In case of non-traceable shortage / surplus of cash, as long as the cause of shortage/ surplus is not known, prepare a CPV / CRV for the shortage/ surplus amount by debiting/ crediting the Account head „Cash shortage/ surplus pending investigation‟

Adopt the procedure for cash payments/ cash receipts as provided in Subject Code: 9.05

Based on CPV / CRV, update Cash Book, General Ledger and Physical Cash Verification Register

Immediately on receipt of instructions

6. Accounts Section

On ascertaining the cause of shortage/ surplus of cash, prepare JV, to adjust the „Cash shortage/ surplus pending investigation account‟ and obtain approval from Designated Authority.

In case of shortage debit the following: o relevant account head in case there is some mistake in

any voucher o recoverable from employee - relevant employee

account (i.e. cashier) in case found to be responsible o cash losses written off in case decision taken to write

off the loss

In case of surplus credit the following: o relevant account head in case there is some mistake in

any voucher o payable to employee - relevant employee account (i.e.

cashier) in case found payable to the employee o miscellaneous income in case decision taken to

account for as income

Obtain approvals on JV as required. Based on JV, update JV Book, General Ledger, Subsidiary Ledger and Physical Cash Verification Register

As and when cause of shortage is established

7. Cashier Prepare the Cash Certificate, certifying that the cash balance as appearing in books of account has been physically verified by the cashier and/ or the Designated Authority.

At the month end

Formats

Format Ref.

Document Title Document Type Frequency Responsibility Distribution to

CB/R03 Physical Cash Verification Register

O Daily Cashier ___

CB/F02 Cash Certificate O Monthly Cashier Own Copy

HO

ZO


Page | 206

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Accounting of cash shortage on physical verification

CPV Physical Cash Verification Register

Debit Cash shortage/ surplus pending investigation account Credit Cash Account

Cashier

2. Accounting of cash surplus on physical verification

CRV Physical Cash Verification Register

Debit Cash Account Credit Cash shortage/ surplus pending investigation account

Cashier

3. On decision taken on shortage by Designated Authority – rectification of voucher

JV Physical Cash Verification Register

Debit Relevant Account Credit Cash shortage/ surplus pending investigation account

Accounts Section

4. On decision taken on shortage by Designated Authority – recovery from person responsible


Debit Relevant Recoverable Account Credit Cash shortage/ surplus pending investigation account

Accounts Section

5. On decision taken on shortage by Designated Authority – write off of cash losses


Debit Cash losses written off Account Credit Cash shortage/ surplus pending investigation account

Accounts Section

6. On decision taken on surplus by Designated Authority – rectification of voucher


Debit Cash shortage/ surplus pending investigation account

Accounts Section


Page | 207

Sl. No.

Event Voucher type

Source documents


Responsible

Credit Relevant Account

7. On decision taken on surplus by Designated Authority – payable to person


Debit Cash shortage/ surplus pending investigation account Credit Relevant Payable Account

Accounts Section

8. On decision taken on surplus by Designated Authority – account as miscellaneous income


Debit Cash shortage/ surplus pending investigation account Credit Miscellaneous Income Account

Accounts Section


Page | 208


Subject: Bank Reconciliation Statement Subject Code: 9.07

Subject Background: This subject covers the accounting procedure to be followed in relation to Bank Reconciliation Statement (BRS). BRS shall be prepared on a monthly basis for each bank account. The BRS shall be reviewed by the 7th of the following month by the Designated Authority. The BRS shall be constantly reviewed for the old/ outstanding items, bank charges levied not recorded, cheques deposited not cleared, stale cheques etc. and regular follow up shall be taken with the respective employees/ parties/ bank/ concerned Sections of UPJN as required, to ensure that the items as outstanding in the BRS settled in due course. The process of scrutiny of BRS with regards to identifying and accounting for stale cheques has been covered under Subject Code: 9.04

Procedure:

Sl. No.

Person / Section

Responsible


Preparation of Bank Reconciliation Statement

1. Cashier Ensure that all bank payment vouchers, bank receipt vouchers and contra vouchers are Posted in the Bank Book

Obtain bank statement from the bank for the month

Prepare the BRS

Submit the Bank Reconciliation Statement for each bank to the Designated Authority for verification and approval.

By the 3rd

of the next month


Review and verify the BRS. Instruct the Cashier to pass the necessary accounting entries/ initiate the follow up action for the reconciliation items which are outstanding for the long time and can be adjusted.

Within 1 day of receipt of BRS

Accounting based on Bank Reconciliation Statement

3. Cashier Take appropriate action to clear the outstanding transactions in the BRS.

Follow the respective process as mentioned in this Accounting Manual for the following: o Items directly debited by Bank, refer to the process

of bank payment as provided in Subject Code: 9.04

o Items directly credited by Bank, refer to the process of bank receipts as provided in Subject Code: 9.04

o Stale cheques, refer to the process of stale cheques as provided in Subject Code: 9.04

o Bank charges levied not accounted for, refer to the process of bank charges as provided in Subject Code: 9.04

On the same day of receipt of the approved BRS


Page | 209

Formats

Format Ref.


CB/F03 Bank Reconciliation Statement

I/O Monthly Cashier ___

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Items directly debited by Bank

BPV Bank Statement, Bank Advice

Debit Relevant Account (e.g. bank charges) Credit Bank Account

Cashier

2. Items directly credited by Bank

BRV Bank Statement, Bank Advice

Debit Bank Account Credit Relevant Account (e.g. interest income, party account)

Cashier


Page | 210


Subject: Deposit of Statutory Dues Subject Code: 9.08

Subject Background: This subject covers the accounting procedure to be followed in relation to deposit of Statutory Dues. The statutory taxes/ duties/ deductions/ contributions shall be deducted as per the provisions of the relevant Statute and accounted for accordingly. These statutory dues shall be deposited with the relevant authorities on or before the due dates. A Statutory Dues Register shall be maintained to record details in respect of the following:

Relevant Statute and Section as per the provisions of which deductions made

Details of deduction

Details of deposit with the relevant authorities The register shall be updated at the time of deduction of taxes and deposit thereof with the relevant authorities. In context of the above, the detailed process to be followed by the Accounts Section for deposit of Statutory Dues is provided below.

Procedure:

Sl. No.

Person / Section

Responsible


Deposit of Statutory Dues

1. Accounts Section

Enter the following key details of tax deducted in the Statutory Dues Register maintained for the purpose. Separate folio shall be maintained for deductions under different Statute. o Date of deduction of tax o Name of Assessee o Particulars of payment/credit. o Amount on which tax is deducted o Rate at which tax is deducted o Reference of certificate, if no tax is deducted or

deducted at lower rate than the applicable tax rate. o Amount of tax

The relevant General Ledger shall be updated on accounting for the statutory taxes/ duties/ deductions/ contributions as mentioned in the respective Sections of this Accounting Manual

At the time of the statutory taxes/ duties/ deductions/ contributions as per provisions of the relevant Statute

2. Head of the Accounts Section

Scrutinise the General Ledgers and the register maintained for the taxes deducted to determine the liability of statutory dues payable

In cases of requirement of the relevant Statute, compile payee wise summary of taxes deducted under each head/ Section as per the relevant Statute.

Calculate total tax to be deposited under each Section to the relevant Authority.

Prepare challan as required by relevant acts and obtain authorisation as required. Forward it to Cashier for payment.

As per the time lines mentioned in the relevant Statute to deposit the statutory taxes/ duties/ deductions/ contributions


Page | 211

Sl. No.

Person / Section

Responsible


3. Cashier Receive challan

To process payment, adopt the procedure for bank payments as provided Subject Code: 9.04

Prepare BPV for the amount of the challan.

Based on BPV, update Bank Book, General Ledger, Subsidiary Ledger and relevant Register(s).

Deposit the challan and the cheque with the bank within the time lines as per the relevant Statute.

Obtain the receipted copy of the challan deposited from the bank

Enter reference of payment detail in Register maintained.


4. Head of the Accounts Section

Prepare the monthly/ quarterly/ annual returns based on the books of account and the register maintained.

Obtain approvals from Designated Authority on the monthly/ quarterly/ annual returns

Submit the monthly/ quarterly/ annual returns as per the time lines mentioned in the relevant Acts.

As per the time lines mentioned in the relevant Statute to deposit the statutory taxes/ duties/ deductions/ contributions

Formats

Format Ref.


CB/R04 Statutory Dues Register

I/O As and when

Accounts Section

___

Accounting Entries:

Sl. No.

Event Voucher type

Source documents


Responsible

1.

Payment of Statutory Dues

BPV Challan Debit Relevant statutory taxes/ duties/ deductions/ contributions account ( e.g. Tax Deducted at Source Account) Credit Bank Account

Cashier


Page | 212

10.00 Section: Inter Unit Transaction (IUTs)

Section Background: 10.01 This Section covers the Inter Unit Transactions - IUT (occurred between two Units including HO) accounting and related procedures. Inter Unit Transactions (IUTs) 10.02 For the purpose of carrying out the IUTs, categories of Inter Unit Transactions (IUTs), nature of IUTs and corresponding account heads to be used are as under:

Categories of Inter Unit Transactions

Nature of Transactions Account Heads to be used

Inter Unit Transaction (IUT) – Funds Remittance between Units

Remittance/ Receipt of Revenue Funds among Units

Funds Remittance between Units – Revenue

Remittance/ receipt of funds among Units to meet out capital expenditure (building, furniture & Fixture, vehicle, etc) of the Units

Funds Remittance between Units – Capital Expenditure

Remittance/ Receipt of Grant Funds among Units

Funds Remittance between Units - Grant

Remittance/ Receipt of Deposit Funds among Units

Funds Remittance between Units - Deposit

Remittance/ Receipt of Loan Funds among Units

Funds Remittance between Units - Loan

Inter Unit Transaction (IUT) – Works in Progress

Transfer/ Receipt of Works in Progress to Units

IUT – Works in Progress

Inter Unit Transaction (IUT) – Completed Works Projects

Transfer/ Receipt of Completed Works projects to HO/ Units

IUT – Completed Works Projects

Inter Unit Transaction (IUT) – Materials

Receipt/ Issue of Materials among Units IUT – Materials

Inter Unit Transaction (IUT) – Fixed Assets/ Project Asset

Receipt/ Issue of Fixed Assets/ Project Asset among Units

IUT – Fixed Assets/ Project Asset

Inter Unit Transaction (IUT) – Personnel

IUTs pertaining to Salaries, GPF balance, employees advance balance, etc.

IUT - Personnel

Inter Unit Transaction (IUT) – Others

Remaining IUTs – other expenses, etc. IUT – Others

Subsidiary Ledger (SL) 10.03 For the purpose of maintaining the Unit wise and transaction category wise inter-unit account and also to facilitate reconciliation, each of the above Inter-unit Account head shall have the Subsidiary Ledger (SL). 10.04 SL for IUTs shall be the name/ code of the Unit. For this purpose, every Unit shall be allotted a unique code. Accounting Units 10.05 By virtue of the origin of the IUTs, accounting Units have been classified as under:


Page | 213

Originating Unit - means the accounting Unit, in which the IUT occurs and which raises the document for IUTs, called Advice of Transfer - Debit/ Credit (ATD/ ATC) to the Responding Unit.

Responding Unit - means the accounting Unit, on which the Originating Unit raises the ATD/ ATC.

10.06 A uniform system to account for IUTs is laid down in this Section. Accounting Policies 10.07 The main accounting policies that shall be followed relating to IUT accounting are provided in the subsequent paragraphs: a.) Inter-unit transactions shall be made on cost/ book value basis (or the rate/ value decided by the

Designated Authority) and no mark-up shall be included in inter-unit transfers. b.) No IUT shall be recorded in books of account until the ATD/ ATC has been raised on the

concerned Unit. c.) Respective Zonal Office (ZO) shall be responsible for the reconciliation for IUTs closing balance

between respective Units and between Head Office (HO) and respective Unit. Coverage of this Section 10.08 This Section covers the following Subjects:

Sl. No.


1. Raising Advice of Transfer - Debit/ Credit (ATD/ ATC) 10.01

2. Accepting Advice of Transfer - Debit/ Credit (ATD/ ATC) 10.02

3. Reconciliation of Inter Unit Transaction (IUT) accounts 10.03


Page | 214

Section: Inter Unit Transactions (IUTs) Section Code: 10.00

Subject: Raising Advice of Transfer - Debit/ Credit (ATD/ ATC)

Subject Code: 10.01

Subject Background: This subject covers the accounting procedure to be followed, by originating Unit, in relation to raising Advice of Transfer- Debit/ Credit (ATD/ ATC). For each IUT a separate document titled Advice of Transfer - Debit/ Credit (ATD/ ATC) shall be prepared by the originating Unit to raise inter-unit debit / credit advices (as the case may be) on the Responding Unit. In context of the above, this subject is covered under the following heads:

Preparation of ATD/ ATC

Entry of ATD/ ATC in Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR)

Dispatch of ATD/ ATC

Receipt of the acceptance against ATD/ ATC.

Modification/Cancellation of ATD/ ATC after its non-acceptance

Schedule of Inter Unit Transactions (IUTs)

Procedure:

Sl. No.

Person / Section

Responsible


Preparation of ATD/ ATC

1. Accounts Section - Originating Unit

Identify whether the transaction occurred with the other Unit is IUT.

Prepare 2 copies of the ATD/ ATC along with the relevant voucher for the inter-unit transaction.

As and when


Get the ATD/ ATC and the voucher along with the supporting documents verified/ authorised by the Designated Authority.

Same day

Entry of ATD/ ATC in Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR)

3. Head of Accounts Section - Originating Unit

Maintain an Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR) to record the ATD/ ATC raised.

Keep separate folio for each Unit.


Enter the details of every ATD/ ATC raised, in the ATDCAR and inter-alia, derive the closing balance (after entry of each ATD/ ATC) with responding Unit.

Enter the closing balance in the ATD/ ATC, after taking into account that particular ATD/ ATC (which is being sent to responding Unit).

Same day


Check and approve the ATD/ ATC and copy of all supporting documents

Same day

6. Accounts Pass the accounting entry of ATD/ ATC in Journal Book. Same day


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Sl. No.

Person / Section

Responsible


Section - Originating Unit

File the copy of the ATD/ ATC serially, Unit wise in a separate file. (Files shall be maintained separately for each accounting Unit for each period).

Despatch of ATD/ ATC


Forward ATD/ ATC and copies of supporting documents along with a covering letter to the Responding Unit.

Same day


Review the ATDCAR every week to check that all the ATD/ ATC have been entered in it and despatched timely.

Follow up with the Responding Unit for the acceptance of the ATD/ ATC.

At the week end

9. Head of Accounts Section -Originating Unit

Ensure that acceptances have been received from other Units for all the ATD/ ATC raised during the previous month.

At the month end

Receipt of the 'acceptance' against ATD/ ATC

10. Accounts Section -Originating Unit

Receive the acceptance (Part - II of ATD/ ATC) from responding Unit.

After the receipt of acceptance put the date of receipt of the acceptance on it and enter the detail in ATDCAR.

In case of any difference between the closing balance as reported by the responding Unit and closing balance as appearing in the ATDCAR, follow up with the originating Unit to reconcile the difference as per procedure prescribed in Subject Code 10.03: Reconciliation of Inter Unit Transaction (IUT) accounts

As and when Same time

Modification/Cancellation of ATD/ ATC after its non-acceptance


In case of non-unacceptance of ATD/ ATC from the responding Unit, analyse the reasons mentioned in the ATD/ ATC by the responding Unit and supporting attached (if any, as justified by the responding Unit for the non-acceptance).

Forward unaccepted ATD/ ATC to head of Accounts Section.



If the reasons mentioned and supporting attached with the ATD/ ATC are justifiable and results in cancellation of ATD/ ATC then mark that particular ATD/ ATC as 'cancelled' (on both the i.e. original and copy) and instruct accordingly to the concerned dealing assistant.

In case the unaccepted ATD/ ATC results in a modification, instruct the concerned dealing assistant to cancel the ATD/ATC issued and raise a fresh ATD/ATC.

On analysis of unaccepted ATD/ ATC, if it appears that IUT has been credited/ debited under the wrong account head or ATD/ ATC has been raised to the Unit other than the Unit to which it was supposed to be raised, instruct to the concerned dealing assistant to cancel the same and issue fresh ATD/ATC correctly.

Same day

13. Accounts Section -Originating

In case of cancellation of ATD/ ATC, prepare the relevant JV for cancellation of ATD/ ATC, attach the cancelled ATD/ ATC (only original, received from responding Unit)

Same day


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Sl. No.

Person / Section

Responsible


Unit. with it and get the voucher verified/ authorised by the Designated Authority.

In case of non-acceptance, no accounting entry is to be passed by responding Unit.


Pass the entry in ATDCAR, for the cancelled ATD/ ATC with proper narration.

Same time


In case where the unaccepted ATD/ ATC results in the modification:

Cancel the unaccepted ATD/ ATC by following the steps enumerated above.

Issue a fresh ATD/ATC by following the procedures mentioned above for Preparation of ATD/ ATC and Despatch of ATD/ ATC.

Same day



Prepare 3 copies of Schedule of Inter Unit Transactions (IUTs) at the month end and get it verified / authorised by the Designated Authority.

Send original of the Schedule of Inter Unit Transactions (IUTs) along with first copy to the concerned dealing assistant, involved in preparation of final accounts and file second copy in a separate file.

However the Schedule of Inter Unit Transactions (IUTs) for last month of accounting period, shall be prepared based on the Joint inter-unit reconciliation statement received from the Zonal Office (ZO)/ Head Office (HO). Refer Subject Code 10.03 for reconciliation of Inter Unit Transaction (IUT) accounts.

At the month-end

Formats

Format Ref.



IUT/F01 Advice of Transfer - Debit/ Credit (ATD/ ATC)

I As and when

Accounts Section

Own copy

Responding Unit


O/I As and when

Accounts Section

-

IUT/F03 Schedule of Inter Unit Transactions (IUTs)

O As and when

Accounts Section

To be attached with the set of Monthly Final Accounts


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Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Accounting for IUT

JV ATD/ ATC and Supporting documents

Debit Relevant IUT Account / Relevant Account head Credit Relevant Account head / Relevant IUT Account

Accounts Section

2. Receipt of the 'acceptance' against ATD/ ATC

-- Part - II of ATD/ ATC

No accounting entry

Accounts Section

3. Cancellation of IUT after its non-acceptance

JV ATD/ ATC returned back from responding Unit and supporting document explaining the reason for non -acceptance


Accounts Section

Additional internal controls:

ATDs/ ATCs shall be raised by the originating Unit on responding Unit in a manner that responding Unit can account for it in totality. In other words a single ATD/ ATC shall be raised for a single transaction or a group of/ related transactions.

ATD/ ATC shall have the running pre-printed serial number.


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Subject: Accepting Advice of Transfer - Debit/ Credit (ATD/ ATC)

Subject Code: 10.02

Subject Background: This subject covers the accounting procedure to be followed, by the responding Unit, in relation to accepting Advice of Transfer - Debit/ Credit (ATD/ ATC) sent by the originating Unit. This subject has been described under the following heads:

Acceptance of ATD/ ATC

Entry of acceptance of ATD/ ATC in Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR)

Non-acceptance of ATD/ ATC

Dispatch of acceptance/ non-acceptance


Procedure:

Sl. No.

Person / Section

Responsible


Acceptance of ATD/ ATC

1. Accounts Section of responding Unit

Receive the ATD/ ATC raised by the originating Unit.

As and when


Check and forward the ATD/ ATC received from originating Unit to the Designated Authority.

Same day

3. Head of the Accounts Section of responding Unit.

Verify the ATD/ATC and mark the ATD/ATC as accepted/ not accepted. Forward the same to the concerned dealing assistant.

Same day


Get the ATD/ ATC along with the supporting documents verified / authorised by the Designated Authority. In case of Acceptance of ATD/ATC

Prepare relevant voucher and attach part - I of ATD/ ATC and supporting with voucher.

Get the voucher verified / authorised by the Designated Authority.

Same day

Entry of acceptance of ATD/ ATC in Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR)

5. Head of Accounts Section of responding Unit

Maintain an 'Advice of Transfer Debit/ Credit (ATD/ATC)/ Acceptance Register (ATDCAR) to record the ATD/ ATC raised. Keep separate folio for each Unit.

6. Accounts Section of responding

Enter the details of every 'acceptance' of ATD/ ATC, in the ATDCAR and inter alia, derive the closing balance (after entry of acceptance of ATD/ ATC) with originating Unit.

Same day


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Sl. No.

Person / Section

Responsible


Unit


Check the closing balance mentioned in ATD/ ATC with the books of account and ATDCAR. It should tally with the balance mentioned in the ATD/ ATC raised by originating Unit. (after combining all the IUT account heads for originating Unit)

In case of any difference, mention it in the column of 'comment' of the part - II of ATD/ ATC ('acceptance') and reconcile it with the originating Unit.

Other comment (if any) related to ATD/ ATC shall be mentioned in the column of 'comments' only.

Adopt the procedure for Reconciliation of Inter Unit Transaction (IUT) accounts as provided in Subject Code: 10.03

Same time

Non-acceptance of ATD/ ATC


In case of non-acceptance of ATD/ ATC, mention reasons and attach supporting for the non-acceptance of ATD/ ATC.

Ensure that in case of non-acceptance of ATD/ ATC, both the part of ATD/ ATC shall be returned back to the originating Unit.

Same day

Despatch of 'Acceptance/ Non-acceptance'


Forward acceptance/ non-acceptance of ATD/ ATC to the Originating Unit along with a covering letter.

Same day

10. Head of Accounts Section of responding Unit

Review the ATDCAR every week to check that all the acceptance of ATD/ ATC have been despatched timely.

Weekly

11. Head of Accounts Section of originating Unit.

Ensure that acceptances have been issued to other Units for all the ATD/ ATC received during the previous month.

At the month end


12. Accounts section - Responding Unit

Prepare 3 copies of Schedule of Inter Unit Transactions (IUTs) at the month end and get it verified / authorised by the Designated Authority.

Send original of the Schedule of Inter Unit Transactions (IUTs) along with first copy to the concerned dealing assistant, involved in preparation of final accounts and file second copy in a separate file.

However the Schedule of Inter Unit Transactions (IUTs), for last month of accounting period, shall be prepared based on the Joint inter-unit reconciliation statement received from the Zonal Office (ZO)/ Head Office (HO). Refer Subject Code 10.03 for reconciliation of Inter Unit Transaction (IUT) accounts.

At the month-end


Page | 220

Formats

Format Ref.



IUT/F01 Advice of Transfer - Debit/ Credit (ATD/ ATC)

I As and when

Accounts Section

Responding Unit

IUT/F01 Perforated copy of ATD/ ATC

I As and when

Accounts Section

Originating Unit


O/I As and when

Accounts Section

-

IUT/F03 Schedule of Inter Unit Transactions (IUTs)

O As and when

Accounts Section

To be attached with the set of Monthly Final Accounts

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1 Accounting for IUT after Acceptance of ATD/ ATC

JV ATD/ ATC raised by originating Unit and Supporting documents


Accounts Section

2 Non-acceptance of ATD/ ATC

--- Part - II of ATD/ ATC

No accounting entry

Accounts Section

Additional internal controls: Acceptance' of ATD/ATC

Responding Unit shall confirm its acceptance /non-acceptance on the ATDs/ATCs received from the originating Unit at the earliest to facilitate the reconciliation of the IUT accounts.

No ATD/ ATC shall remain pending for response (i.e. for acceptance or non-acceptance) by responding Unit in any circumstance.

ATDs/ ATCs shall be accepted in totality. ATD/ ATC shall not be accepted in part. If any ATD/ ATC is not acceptable in its totality, it shall be sent back to the originating Unit along with the reasons (to be stated on the ATD/ ATC) and the supporting documents for the non-acceptance of ATD/ ATC.

In case the ATD/ATC is acceptable to the responding Unit, Part II of ATD/ ATC shall be sent by the responding Unit to the originating Unit as Acceptance of ATD/ ATC. For that purpose no separate ATD/ ATC shall be prepared by the responding Unit.


Page | 221


Subject: Reconciliation of Inter Unit Transaction (IUT) accounts

Subject Code: 10.03

Subject Background: This subject covers the accounting procedure to be followed, by both originating and responding Unit, in relation to for carrying out the reconciliation of Inter Unit Transaction (IUTs) accounts. This subject is covered under the following heads

Inter-unit reconciliation (Monthly)

Settlement of disputed IUTs at Zonal Office (ZO)

Preparation of Joint Inter-unit Reconciliation Statement (Quarterly)

Inter Unit Transaction Balance Confirmation Certificate (IUTBCC) To carry out the inter-unit reconciliation, balance under different IUT account heads for each Unit shall be combined by every Unit to arrive at the net balance with that Unit. Reconciliation of the inter-unit accounts is to be carried out on a monthly basis with all the Units to facilitate a smooth and timely updation and closing of the books of account. After reconciliation, at the period-end, there shall be a nil balance in the inter-unit account heads in the consolidated accounts for the UPJN as a whole.

Procedure:

Sl. No.

Person / Section

Responsible


Inter-unit reconciliation (Monthly)

1. Accounts Section

Ensure that combined closing balance under all the IUT account heads in books of account is tallied with the balance appearing in the ATDCAR.

Make a copy of the ATDCAR for all the Units for the respective periods, get it verified / authorised by the Designated Authority

Forward the above statements to the other Units for carrying out the reconciliation

Within 1 weeks of the end of the month

2. Accounts Section

Receive a copy of the ATDCAR from the other Units.

Compare the above with the ATDCAR maintained in the Unit and prepare an Inter-unit Reconciliation Statement in 3 copies for all the Units. If there is any difference, find out the reason for the same and take necessary action.

In case of unreconciled balances, follow up with the concerned Unit to pass necessary accounting entries.

Forward original of the Inter-unit reconciliation statement to the respective Units and copy to the Zonal Office (ZO)/ Head Office (HO), as the case may be. Retain copy of the Inter-unit Reconciliation Statement in a separate file.

In case of any disputed IUTs, refer the matter to the ZO/ HO (as the case may be) to resolve the matter.

As and when Next week

3. Accounts Section

Receive copy of the Inter-unit reconciliation Statements from the Units and file in separate files (Unit wise).

As and when


Page | 222

Sl. No.

Person / Section

Responsible


Settlement of disputed IUTs at Zonal Office (ZO)/ Head Office (HO)

4. Accounts Section of the ZO/ HO

Receive copy of the Inter-unit Reconciliation Statements from the Units and file in separate files (Unit wise).

In case of any disputed IUTs, follow up with the Units to settle the transaction.

As and when

5. Designated authority of ZO/ HO

If required, organise a joint meeting of the Units to resolve the matters pertaining with the disputed IUTs and instruct accordingly to pass the accounting entries.

Quarterly

Preparation of Joint inter-unit reconciliation statement

6. ZO/ HO Prepare Joint inter-unit Reconciliation Statement (for all the concerned Units) in 4 copies; get it signed from the designated authorities of both the Units and Designated Authority of ZO/ HO.

Forward copies of Joint Inter-unit Reconciliation Statement to both the Units

Retain original in file of Unit wise IUT reconciliation.

Quarterly

7. Accounts Section of concerned Unit

Pass the adjustment accounting entries (if any) based on the Joint Inter-unit Reconciliation Statement.

Immediately after receiving the Joint inter-unit reconciliation statement

8. Accounts Section of concerned Unit

Issue/ obtain Inter Unit Transaction Balance Confirmation Certificate (IUTBCC).

Immediately after receiving the Joint inter-unit reconciliation statement

Formats

Format Ref.



IUT/F04 Inter-unit Reconciliation Statement

I/O Monthly Every Unit Other Unit

IUT/F05 Joint Inter-unit Reconciliation Statement

I/O Quarterly Every Unit Other Unit

IUT/F02 Inter Unit Transaction Balance Confirmation Certificate (IUTBCC)

O Quarterly Every Unit Other Unit


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11.00 Section: Preparation of Accounts

Section Background: 11.01 This Section covers the Preparation of Accounts and related procedures. 11.02 Transactions in the books of account shall be made in accordance with the respective Accounting Policies as laid down in this Accounting Manual. Coverage of this Section 11.03 This Section covers the following Subjects:

Sl. No.


1. Maintenance of Books of account and Documents Control 11.01

2. Preparation of Monthly Accounts and consolidation thereof 11.02

3. Preparation of Final Accounts and consolidation thereof 11.03

4. Merger and Demerger of Accounting Unit 11.04


Page | 224

Section: Preparation of Accounts Section Code: 11.00

Subject: Maintenance of Books of Account and Documents Control

Subject Code: 11.01

Subject Background: This subject is covered under the following heads:

Maintenance of Books of Account

Maintenance of Subsidiary Records/ Registers

Maintenance of Forms

Monthly / Final Accounts

Documents Control

Custody and Disposal of Records

Maintenance of Books of Account Every Accounting Unit of UPJN shall compulsorily maintain all the Books of Account as provided as Appendix IIA to this Accounting Manual. Maintenance of Subsidiary Records/ Registers In addition to the above books of account, every Accounting Unit shall also maintain certain subsidiary records. Maintenance of subsidiary records shall facilitate:

Additional checks/ controls

Tracking of related transactions/ group of transactions at one place

Analysis of certain related transactions/ group of transactions for a desired purpose A list of Subsidiary Records / Registers that shall be maintained by each of the Accounting Unit of UPJN is provided as Appendix IB to this Accounting Manual Maintenance of Forms To record/account for the various transactions, in books of account/ subsidiary records/ registers, various forms shall be used by different users. A list of forms as referred to in this Accounting Manual is provided as Appendix IIC to this Accounting Manual Monthly / Final Accounts Every accounting unit of UPJN shall prepare the following statements as part of their Monthly / Final Accounts. A list of statements as referred to in this Accounting Manual is provided as Appendix III to this Accounting Manual. Documents Control The documents (books/ registers/ forms, etc.), while in use shall be in custody of the person/ section responsible for its maintenance and updation. The used documents shall be submitted to the Head of the Office. The Head of the Office shall in accordance with the Policies prescribed by UPJN instruct on the storage and maintenance of the documents. New/ blank documents shall be kept at the respective office (Division, Circle, Zone, Head Office, etc.). As per the requirements of the concerned users, a written request shall be submitted to the Head of the respective office and Head of the respective Accounts Section. The Head of the respective Accounts Section shall ensure that all the used documents have been submitted to the Accounts Section and the relevant transactions recorded therein have been accounted for in the books of account. Based on the approval, the documents shall be issued to the concerned user.


Page | 225

All the used forms shall be filed separately to know their status e.g. whether all the forms of a particular forms‟ book have duly been received back by the Accounts Section or not after their use. Before issuing any new forms‟ book, this status shall also be taken into consideration. At any point of time, two parallel forms book shall not be used by any single user. For the above purpose, Accounts Section of every Unit shall maintain a Document Control Register (having separate folio for each type of document) to record receipt of new documents, issue of new documents to users and receipt of used documents from the user. Before issuing any new forms‟ book, it shall be ensured that every form of that book is serially numbered. In addition, every forms‟ book shall be allotted a unique serial number to have a track on it. Custody and Disposal of Records All the records (i.e. books of account, subsidiary records/ registers, used forms) for the current financial year shall be kept under the safe custody of respective officials of the Accounts Section for any future reference purpose. These records shall be inspected from time to time by the Head of the Accounts Section. However the above records for the previous financial years shall be kept under the safe custody of

Head of the Accounts Section for any future reference purpose. These records shall not be disposed

off until a period of 16 years relevant to the financial year to which they pertain or until the period as

prescribed by UPJN in this regard.


Page | 226


Subject: Preparation of Monthly Accounts and consolidation thereof

Subject Code: 11.02

Subject Background: This subject covers the accounting procedure to be followed in relation to preparation of monthly accounts at Units and consolidation thereof at Zonal Office (ZO) level for the Zone and subsequently at Head Office (HO) level for UPJN as a whole. Each Unit shall prepare its monthly accounts, individually, and submit to ZO and Head Office for their consolidation. A checklist shall be filled by each Unit preparing the monthly accounts to ensure that all the procedures relating to preparation of monthly accounts have been complied with and attached along with the monthly accounts. The Accounts Section of the respective Office (ZO or HO, as the case may be) shall supervise the monthly closing of books of account of its respective Units or ZO, as the case may be, to ensure timely closure of accounts as per the procedure laid down in this Section. Before consolidation, monthly accounts/ consolidated monthly accounts shall be compared (with that of previous months) and scrutinised for accuracy and completeness. Before preparation of monthly accounts, each Unit shall ensure the updation/ completion of books of account and other relevant subsidiary records. Relevant accounting entries shall be passed in accordance with the accounting procedures as mentioned in the respective sections of this Accounting Manual. In context of the above, this subject is covered under the following heads:

Completion of Books of Account and Subsidiary Records

Preparation of Month End Closing Entries

Ledger Scrutiny

Reconciliations and Balance Confirmation

Preparation of Trial Balance, Income and Expenditure Account and Balance Sheet

Consolidation of Monthly Accounts at Zone for Units

Consolidation of Monthly Accounts at HO

Procedure: Sl. No.

Person / Section

Responsible

Activity / Action Frequency / Timing*

Completion of Books of Account and Subsidiary Records


For preparation of monthly accounts, the aspects including the following shall be ensured: o Vouchers: Posting of all the vouchers in their

respective books o Source Documents: Receipt, recording and

accounting of all the source documents for materials such as Goods Receipt Note (GRN), Materials Transfer Note (MTN), Self Consumption Note (SCN), Materials Consumption Note (MCN), Materials Adjustment Note (MAN), etc.

o Expense/ bills: Passing and accounting of all the bills (suppliers, contractors)/ supporting documents for other expenditure received during the month

By the month end


Page | 227

Sl. No.

Person / Section

Responsible


o Revenue Items: Accounting of all revenue items e.g. interest, centage, etc.

o Capitalisation: Capitalisation of fixed assets (including out of respective Capital Work in Progress Accounts) based on the completion certificates, etc.

o Inter Unit Transactions: Responding of all ATDs/ ATCs received during the period from the originating Unit(s)

o Books of account: Updation of all books of account such as Bank Book, Cash Book, Journal Book, General ledgers and Subsidiary ledgers based on the vouchers / source documents

o Records & Registers: Recording and updation of all records and registers maintained

Preparation of Month End Closing Entries


Identify the journal entries required to be passed specific to month closing to reflect the correct position of liabilities, assets, income and expense up to the month closing. These would include: o Depreciation on fixed assets o Provision for expenses bills received but not passed for

payment o Provisions for expenses incurred but bill not received o Any other provisional entry keeping in view the

materiality concept o Interest expense accrued till the end of accounting

period but not accounted for in the books of account o Income accrued from investments in respect of all

interest bearing investments but not accounted for in the books of account

Prepare Journal Voucher (JV) and and obtain approval from Designated Authority. The amount of the JV shall be the difference between the amount to be accounted up to the period and the amount already accounted for up to the previous month

Based on JV, update Journal Book, General Ledgers, Subsidiary Ledgers, relevant Record(s) and register(s)

By the month end

Ledger Scrutiny

3. Head of the Accounts Section - Unit

Scrutinise the Books of Account, General Ledgers, Subsidiary Ledgers and other relevant records and registers and ensure the following key aspects: Scrutiny of Income Accounts: o Centage income on Works project for the period has

been recognised as required o Debit entries have not been accounted for in the income

accounts; if accounted for, verify such transactions Scrutiny of Expense Accounts: o All expenses for the period have been accounted for in

the books of account o Extra ordinary expenses have been identified

separately o Capital expenses have not been recorded in expenses

accounts. Scrutiny of Asset Accounts: o Expenditure booked to WIP Cost, Materials, Centage,

By the 1st of

the next month


Page | 228

Sl. No.

Person / Section

Responsible


Others, etc. are under the correct Works project o Works projects on which work has been completed

have been transferred to Completed Works projects o Payments made to contractors, suppliers have been

adjusted for the balances in the respective advance accounts

o Inter Unit transactions are accounted for in the correct account heads

o Investments made/ redeemed/ sold have been accounted accurately and the interest accrued and due on the same are accounted for

o Fixed Assets / Intangible Assets capitalised during the period have been updated in the Fixed Asset / Intangible Assets Register

Scrutiny of Liability Accounts: o Works project related funds (deposits/ grants/ loans)

and other funds received by UPJN in nature of liability are accounted for in the correct account heads and appropriate registers

o Interest payable on loans is calculated and correctly accounted for

Clearance of Unclaimed/ Non-Recoverable/ Old Balances o Identify balances in party ledgers, employees ledger

and receivable/payable accounts for very old, small balances, etc. for the purpose of writing them off/ writing them back based on the following key aspects: Where there is no transaction for a long period in

the relevant account and no transaction is expected to take place in future.

If the debtor has become insolvent and there is no possibility of recovery from it.

If there is credit balance in a receivable/debtor‟s account, however no value is payable by UPJN.

If there is debit balance in a payable/creditor‟s account, however no value is recoverable by UPJN.

Where any recovery has become time barred under the relevant law.

o Review the balances as identified above for justification and reasonableness of provision/ write off/write back.

o Obtain approvals from Designated Authority for provisions against the above balances / write off/ write back.

o Above cases shall be reported to the respective ZO / HO, as the case may be as a separate annexure

4. Accounts Section – Unit

Based on the Ledger Scrutiny, prepare JV to account for the provision/ write off/ write back/ rectifications, as the case may be, and obtain approval from Designated Authority. JV to be passed in the month for which accounts are being prepared.


By the 1st of

the next month

Reconciliations and Balance Confirmation

5. Head of Accounts Section -

Reconciliations between Books of Account and Subsidiary Records/ Registers o Verify the balances of the Subsidiary ledgers with the

By the 2nd

of the next month


Page | 229

Sl. No.

Person / Section

Responsible


Unit Accounts Section - Unit

balance in the respective General Ledger and ensure that they are reconciled

o Verify the balances of Subsidiary Records/Registers (for e.g. Loan Register, Deposit Register, GPF Register, Work Register, Unpaid Salary Register, Employee Advance Register, Temporary / Permanent Imprest Register, Fixed Assets Register, Centage Register, etc) with the respective General Ledger & Subsidiary Ledgers and ensure that they reconcile

Balance Confirmations o Write to the respective Units and parties (based on the

criteria as decided by UPJN, such as age and value of receivables/ payables) for sending the corresponding Account Statement and/ or the Balance Confirmation Certificate. (These would include UPJN‟s other Units, banks, financial institutions, contractors, suppliers, service providers, etc.)

o Obtain the Account Statement and/ or the Balance Confirmation Certificate; identify discrepancies, if any and the reason for the same.

o File the Balance Confirmations Statements in a separate file and attach copies with monthly accounts

Based on the reconciliations, identify the accounting entries to be passed for the discrepancies.

Prepare JV to account for the rectifications/ adjustments, and obtain approval from Designated Authority. JV to be passed on the last day of the month for which accounts are being prepared


Preparation of Trial Balance, Income and Expenditure Account and Balance Sheet

6. Head of the Accounts Section – Unit

On completion of all the above processes, prepare the Trial Balances (classifying into Schedules, Group Heads, General Ledgers and Subsidiary Ledgers), in the prescribed formats, showing opening balances (as on date), net debit/ credit for the year and closing balances (as on date).

Prepare Income and Expenditure Account and Balance Sheet in the prescribed formats, obtain approvals of Designated Authority and forward the approved Trial Balances, Income and Expenditure Account, Balance Sheet along with the following annexure to the ZO / HO: o Checklist showing compliances o Copies of Account Statement and/or balance

confirmations for the period o Confirmation for compliance of Accounting Policies and

in case of any deviation, details thereof with financial impact

o Notes to Accounts relating to the accounting transactions passed during the period

o Cash certificate & Bank Reconciliation Statement o MIRs

Summary of Works Register Works project completed but not closed for

accounting

File a copy of the above set of monthly accounts in a

By the 5th of

the next month


Page | 230

Sl. No.

Person / Section

Responsible


separate file

7. Head of the Accounts Section – Unit

In case of any comments from ZO / HO which require any change in the monthly accounts already submitted, revise the monthly accounts and forward to ZO / HO.

Within a day of receiving the comments

Consolidation of Monthly Accounts at Zone for Units

8. Head of the Accounts Section - Zone

Receive the set of monthly accounts from each Unit (includes Divisions, ZO, etc.), reconcile the opening balance of the Trial Balance of the Unit with the closing balance of the previous Trial Balance

Review and scrutinise the monthly accounts for unusual balances

Obtain clarifications/ rectified accounts in case of discrepancies

By the 7th of

the next month

9. Head of the Accounts Section - Zone

Prepare comparisons with the previous monthly Income and Expenditure Account and Balance Sheet to determine the major discrepancies. Obtain clarifications from Units as required and prepare reasons/ notes for the same.

Consolidate the monthly accounts received to prepare the consolidated monthly accounts for the ZO and attach the following annexure: o Checklist showing compliances o Copies of Account Statement and/or balance

confirmations for the period (those received from Units and obtained at Zones for parties at ZO level)

o Confirmation for compliance of Accounting Policies and in case of any deviation, details thereof with financial impact

o Notes to Accounts relating to the accounting transactions passed during the period (including that of every Unit)



accounting

Forward the consolidated monthly accounts for the Zone to the HO. In case of any change in the monthly accounts of any Unit (subsequent to their submission to ZO / HO), the revised monthly accounts shall also be attached with the above consolidated monthly accounts.

File a copy of the consolidated monthly accounts in a separate file

By the 10th

of the next month

Consolidation of Monthly Accounts at HO

10. Accounts Section – HO

Receive monthly accounts from all the Units, scrutinise the same and suggest respective Unit and ZO for necessary correction/ rectification, if any.

By the 7th of

the next month


On receipt of consolidated monthly accounts from all ZOs (consolidated for Zones and independent for Units) and Accounting Units of HO, scrutinise the same and obtain clarifications required if any, and ensure that: o All annexure required for monthly accounts have been

By the 15th

of the next month


Page | 231

Sl. No.

Person / Section

Responsible


submitted by each ZO and are tallied and reconciled.

No balances appear in Account Codes retained for use exclusively at HO, in the Trial Balance of the Units/ ZOs


Consolidate the monthly accounts received to prepare the monthly accounts for UPJN and attach the following annexures: o Checklist showing compliances o Copies of Account Statement and/or balance

confirmations for the period (those received from ZOs and obtained at HO for parties at HO level)

o Confirmation for compliance of Accounting Policies and in case of any deviation, details thereof with financial impact

o Notes to Accounts relating to the accounting transactions passed during the period (including that of every Unit)



accounting

Ensure that the inter Unit balances are reconciled post consolidation.

Obtain approvals as required on the monthly accounts prepared

File a copy of the monthly accounts in a separate file

By the 21st

of the next month

* Note: The frequency/ timings as mentioned are applicable in cases where accounts are being prepared under manual environment. In computerised environment, the monthly financial statements can be generated at any level for all the transactions authorised at any given point of time after completion of the month. Hence the timelines mentioned above shall vary accordingly. Formats

Format Ref.

Document Title

Document Type


POA/F01 Check-list for Preparation of Monthly / Final Accounts

O Monthly Accounts Section – Unit

Own Copy

Accounts Section – ZO/ HO

CB/F02 Cash Certificate


Own Copy


CB/F03 Bank Reconciliation Statement


Own Copy


POA/F02 Balance Confirmation


Own Copy


BA/13 TO BA/16

Trial Balance I/O Monthly Accounts Section - Unit

Own Copy


Accounts Section – ZO

Own Copy

Accounts Section – HO


Page | 232

Format Ref.

Document Title

Document Type


POA/02 Income and Expenditure Account

I/O Monthly Accounts Section – Unit

Own Copy



Own Copy


POA/01 Balance Sheet O Monthly Accounts Section – Unit

Own Copy



Own Copy



Page | 233


Subject: Preparation of Final Accounts and consolidation thereof

Subject Code: 11.03

Subject Background: This subject covers the accounting procedure to be followed in relation to preparation of final accounts at Units and consolidation thereof at ZO level for the Zone and subsequently at the Head Office level for UPJN as a whole. The process of preparation of Final Accounts shall require compliance to all procedures of the monthly accounts as mentioned in Subject Code: 11.02. The additional controls, processes and accounting aspects are covered in this subject. The Accounts Section of the respective Office (ZO or HO , as the case may be) shall supervise the yearly closing of books of account of its respective Units or ZOs, as the case may be, to ensure correctness and completeness of accounts along with meeting the time lines as per the procedure laid down in this Section. This subject covers the process up to preparation of Final Accounts at the Unit level and its consolidation at the ZO and HO to generate the Financial Statements of UPJN. For the purposes of providing time lines, financial year has been considered as April to March. This subject is covered under the following heads:

Identification of Expenses/ Revenue for Allocation/ Apportionment to Units

Issuance of Accounts Closure Guidelines by Head Office and Zone Office

Year End Procedures at Units – Obtaining information from concerned sections/ employees

Year End Procedures at Units – Year end accounting entries

Preparation of Final Accounts at Units

Consolidation of Final Accounts at Zone

Consolidation & Preparation of Final Accounts at HO

Procedure:

Sl. No.

Person / Section

Responsible


Identification of Expenses/ Revenue for Allocation/ Apportionment to Units

1. Accounts Section - HO

Identify the accounting entries/ items which have been accounted for at Head Office but are required to be allocated/ apportioned (based on certain pre-determined basis/ norms/ estimation) to Units. This would include: o Accounting for Provision for Retirement benefits of

employees such as Gratuity, Pension, Leave encashment

o Accounting for Interest expenses o Any other expenses incurred/ revenue earned and

accounted for at Head Office

Prepare a statement for the above with the name of Unit and amount to allocated/ apportioned. Prepare JV and obtain approval from Designated Authority. Raise ATD/ATC on the Units. Refer Subject Code: 10.01 for procedure relating to raising ATD/ATC Based on JV, update Journal Book, General Ledger,

Before the year end/ as and when


Page | 234

Sl. No.

Person / Section

Responsible


Subsidiary Ledger, relevant Register(s)


Receive and review the ATD/ATC raised by Accounts Section – HO and forward the perforated copy to the Accounts Section HO. Refer Subject Code: 10.02 for procedure relating to accepting ATD/ATC

Scrutinise the ATD/ATC to determine the balances transferred

Prepare JV, to account for the balances transferred and obtain approvals, and obtain approval from Designated Authority



Issuance of Accounts Closure Guidelines by Head Office and Zone Office

3. Accounts Section - HO

Prepare guidelines/ instructions specific to the closing of account to inform the Units to prepare accounts in certain manner, if any.

The guidelines would include: o Timelines – task/ activity wise o Year end closing transactions to be accounted for at

Unit / ZO o Revised format for final accounts, in case of any

change o Specific information that may be required at Head

Office for analyses o Contingent liabilities with their nature – based on

particular transactions o Any other matter/ clarification which may be required

to be reported

Obtain approvals of Designated Authority for the guidelines and issue them to the respective Units (specifying separate guidelines/ instructions for ZO).

By the end of February

4. Accounts Section – ZO

In addition to the Guidelines issued by Head Office, prepare guidelines/ instructions specific to the closing of account to inform the Units to prepare accounts in certain manner, if any.

The guidelines would include: o Accounting for Centage o Closure of Works Projects o Specific information that may be required at ZO / HO

for analyses o Any other matter/ clarification which may be required

to be reported

Obtain approvals of Designated Authority for the guidelines and issue them to the respective Units.

By first week of March

Year End Procedures at Units – Obtaining information from concerned sections/ employees

5. Head of Accounts Section – Unit

Obtain information on all pending transactions which impact the financial positions of the Unit from the concerned sections/ employees of the Unit

An indicative list of such transactions is: o Pending contractors bills for works done o Pending submission of source documents for

materials to the Accounts Section o Services availed and bills received/ not received (not

sent to Accounts Section)

By 1st week of April


Page | 235

Sl. No.

Person / Section

Responsible


o Details of contingent liabilities, if any o Works project physically closed during the year, but

not reflected in books of account o Details of any extraordinary items, though not

impacting the current financial statements, but bearing materiality with regards to reporting

Obtain the report on Physical verification of materials and adopt the process as referred to in Subject Code: 2.07.

Year End Procedures at Units – Year end accounting entries


Receive the details received from other sections/ employees and guidelines issued from HO / ZO.

Identify the year end accounting entries including: o Accounting for materials in transit o Accounting for materials received in store but

pending finalisation of GRN o Accounting for completed Works projects o Accounting for provision for expenses for bills

received but not passed o Accounting for provision for expenses of bills not

received, however services/ goods received o Accounting for provision in diminution in value of

investments, revaluation of fixed assets, employee related liabilities

o Accounting for prepaid expenses

Prepare JV, for the above, and obtain approval from Designated Authority

Based on JV, update Journal Book, General Ledgers, Subsidiary Ledgers, relevant register(s)

By 2nd week of April

Preparation of Final Accounts at Units

7. Head of Accounts Section – Unit

Prepare the Final Accounts for the year as per the following procedures of preparation on monthly accounts as provided in the Subject Code: 11.02: o Completion of Books of Account and Subsidiary

Records o Preparation of Month End Closing Entries o Ledger Scrutiny o Reconciliations and Balance Confirmation o Preparation of Trial Balance, Income and

Expenditure Account and Balance Sheet

By the 3rd

week of April

Consolidation of Final Accounts at Zone

8. Accounts Section – Zone

On receipt of Final accounts of each Unit, adopt the procedure of „consolidation of Monthly Accounts at Zone for Unit‟ as provided in the Subject Code:11.02

By the 4th

week of April

Consolidation & Preparation of Final Accounts at HO

9. Head of Accounts Section – HO

Determine the amount for the transactions, including the following, if required: o Transfer to Reserves o Transfer to Depreciation Reserve o Provisions for Expenses o Provisions for Losses o Tax Liability

Prepare JV, to account for the above, and obtain approval from Designated Authority.

By the end of April


Page | 236

Sl. No.

Person / Section

Responsible




On receipt of Consolidated Final Accounts of the Zone and each Unit, adopt the procedure of „consolidation of Monthly Accounts at HO‟ as provided in the Subject Code: 11.02

By the 1st week

of May


Prepare the Final Trial Balances, Income and Expenditure Account and Balance Sheet (including Schedules) and attach the following: o A complete set of Accounting Policies (including after

considering the deviation reported by Units) o Notes to Accounts (as reported by Units) o Cash Flow Statement

Obtain approvals as required on the final accounts prepared

By the 2nd

week of May

* Note: The frequency/ timings as mentioned are applicable in cases where accounts are being prepared under manual environment. In computerised environment, the financial statements for the year (final accounts) can be generated at any level for all the transactions authorised at any given point of time. Hence the timelines mentioned above shall vary accordingly. Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD/ ATC I/O As and when


Own Copy


BA/13 TO BA/16

Trial Balance I/O Yearly Accounts Section –Unit

Own Copy


POA/02 Income and Expenditure Account

I/O Yearly Accounts Section – Unit

Own Copy



Own Copy

Accounts Section –HO

POA/01 Balance Sheet

O Yearly Accounts Section – Unit

Own Copy



Own Copy


POA/04 Cash Flow Statement

O Yearly Accounts Section – Unit

Own Copy



Own Copy



Page | 237

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Allocation/ Apportionment of Expenses/Revenue

JV --- Debit Relevant Income Account IUT – Others Account Credit IUT – Others Account Relevant Expense Account


2. Accounting of Expense/ Revenue Allocated/ Apportioned from HO

JV ATD/ ATC Debit IUT – Others Account Relevant Expense Account Credit Relevant Income Account IUT – Others Account


3. Appropriation of excess of income over expenditure (Transfer to Reserves)

JV Income and Expenditure Account

Debit Income and Expenditure Account Credit Transfer to Depreciation Reserve / Transfer to Other capital reserves Account / Transfer to General reserves Account / Transfer to Other Reserve Funds Account

Head of Accounts Section – HO

4. Provision for Tax Liability

JV Computation of Income

Debit Income and Expenditure Account Credit Amount Provided for Income Tax Account

Head of Accounts Section – HO


Page | 238


Subject: Merger and Demerger of Accounting Unit

Subject Code: 11.04

Subject Background: This subject covers the accounting procedure to be followed in relation to merger and demerger of accounting. Merger refers to the transfer of an entire Accounting Unit to another existing Accounting Unit. Demerger refers to separating a part of an existing Accounting Unit to form a new Accounting Unit or merging with another existing Accounting Unit. Thus retaining the identity of the existing Accounting Unit from which the portion is getting de-merged. The procedure does not provide criteria for evaluation of this decision, but only provides the procedure to be followed on merger and demerger of an Accounting Unit. This subject covers the following related sub-process:

Merger of Accounting Unit

Demerger of Accounting Unit

The Designated Authority at UPJN shall issue an office order for the merger/ demerger of the Accounting Unit. The order shall specify the following:

Name and code of the Accounting Unit with which the Unit is being merged in case of merger/ new Accounting Unit in case of demerger.

Name and location codes of all the Units which will report to the new Accounting Unit in case of merger/ demerger of a Zone

Name and location code of the Zone under which the Unit will fall in case of demerger of a Unit

Date on which it would commence its operations

Details of functions which would be carried out by the new Accounting Unit

The organisational structure of the new Accounting Unit (including the designations and functions of the employees of Unit being merged/ demerged)

In case of demerger, the office order shall specify the basis of transferring the assets (including the schemes), liabilities, expenses and income to the Unit in which the demerged Unit shall be merged / new Accounting Unit being formed

For ease of merger and demerger process, to the extent possible, the effective date for merger/ demerger shall be last date of the month. The Head of the Accounts Section at the Zone and the Head of the Zonal Office of both the merging Units and the demerging Units shall in concurrence, prepare a work plan in accordance with the office order along with time lines and closely monitor the process of merger/ demerger to ensure all the required procedures and accounting are effectively accomplished. The work plan shall include the cut off dates of recording of transactions for the Unit being merged/ demerged and shall be circulated to the respective Units. Accounting of entries post the cutoff date shall be made in the Units formed post merger/ demerger


Page | 239

Procedure:

Sl. No.

Person / Section

Responsible


Merger of Accounting Unit


Forward the office order for merger of the Accounting Unit to the following: o Accounting Unit which is getting merged (1

st Unit)

o Accounting Unit in which the 1st Unit is getting merged

(2nd

Unit) o Respective Zones of the 1

st and 2

nd Unit in case

different o Accounts Section at HO

Forward the copy of the office order to all Accounting Units to ensure that all further communications are made accordingly

As and When order is passed

2. Accounts Section (1

st

Unit)

Receive the office order for the merger into another Unit

Receive the work plan from the respective Zonal Office

As and When


st

Unit)

Transfer of Bank Balances: The bank balances of the 1

st Unit shall be required to be transferred to the 2

nd Unit

as the 1st Unit may lose its identity post merger.

Obtain requisite approvals for transfer of bank balances to the 2

nd Unit.

Adopt the procedure for bank payments as provided in Subject Code:9.04

Prepare BPV and raise ATD on the 2nd

Unit Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on BPV, update Bank Book, General Ledger and Subsidiary Ledger

As per the cut-off date for accounting in 1

st Unit as

mentioned in the office order/ work plan


nd

Unit)

Receive and review the ATD raised by the 1st Unit and

forward the perforated copy to the 2nd

Unit. Refer Subject Code: 10.02 for procedure relating to accepting ATD


On receipt of funds, prepare BRV to account for the balances transferred and obtain approvals as required

Adopt the procedure for bank receipts as provided in Subject Code: 9.04

Based on BRV, update Bank Book, General Ledger and Subsidiary Ledger



st

Unit)

Physical Verification: To close the books of account at the Unit and transfer of physical balances to 2

nd Unit,

carry out physical verification of the following as on the day end of cut-off date for accounting: o Cash Balance: Follow the procedure on physical

verification of Cash balance. Refer Subject Code:9.06 o Materials: Follow the procedure on physical

verification of Materials. Refer Subject Code: 2.07 o Fixed Assets: Follow the procedure on physical

verification of Fixed Assets and Project Asset. Refer Subject Code: 5.08.


st Unit as



st

Unit)

Closure of Books of Account: Based on the office order and work plan, prepare the complete set of accounts for the Unit.

As per the cut-off date for accounting in


Page | 240

Sl. No.

Person / Section

Responsible


Adopt the procedure of „preparation of final accounts at Unit‟ as provided in the Subject Code:11.03

1st Unit as



st

Unit)

Transfer of Account Balances to the 2nd

Unit: Based on the Trial Balance, prepare JV, to transfer all the account balances to the 2

nd Unit, and obtain approval

from Designated Authority. Debit all liability and income account head and credit all assets and expense account heads with the balances as per Trial Balance

Obtain approvals of Designated Authority on the JV

Based on JV, update Journal Book, General Ledger, Subsidiary Ledger, relevant Register(s). Ensure that the balances in all the books of account, General Ledger, Subsidiary Ledger are „NIL‟ after accounting for the JV

(No further accounting entries shall be made in the Books of Account of the 1

st Unit)

Forward the copy of the Trial Balance and JV prepared to the 2

nd Unit


st Unit as



st

Unit)

Handing over assets (cash, materials, fixed assets, etc.)/ records/ documents, etc., on handing over, ensure the following key aspects: o Concerned officials along (from the concerned

section, (e.g. cashier for cash, JE for materials/ fixed assets, Accounts Section for books of account, JE/ Accounts Section for MTN, GRN, etc.) with the Designated Authorities of both Units shall conduct physical verification of the items handed over by the 1

st Unit and both shall sign on the Physical Verification

Report for the items received and retain a copy each. o Based on the Physical Verification Reports (as per

above), document the balances to be handed over o Document the serial numbers of the records/

documents e.g. vouchers, books, records and registers; currently in use, not in use (blank) and, used up (past records) and being handed over to the 2nd Unit. The last used page/folio of each of these shall be signed by the Designated Authority mentioning the cut-off date until which accounting transactions have been updated

o Hand over the physical assets and documents to the 2nd Unit


st Unit as



nd

Unit)

Receive the physical assets (cash, materials & fixed assets), documents, records, registers etc. and verify them with the statement giving details as submitted by the 1

st Unit.

As and when


nd

Unit)

Receive the Trial Balance and JV prepared as above from the 1

st Unit

As and when


nd

Unit)

Prepare JV, and obtain approval from Designated Authority, to incorporate the balances of 1

st Unit by

passing a reverse JV of the JV passed at the 1st Unit. i.e.

Same day


Page | 241

Sl. No.

Person / Section

Responsible


credit all liabilities and income and debit all assets and expenditure account heads with the balances as per JV.

Obtain approvals

JV shall be prepared on the 1st day of merger as per the

office order


Update the relevant Register(s) based on the JV and documents transferred


nd

Unit)

Identify the Inter Unit Balances of the 1st Unit and 2

nd Unit

that can be set off/ adjusted

Prepare JV, and obtain approval from Designated Authority, to set off the Inter Unit Balances and obtain approvals


Same day

13. Head of Unit (2

nd Unit)

Inform the following by way of a letter/ statement about the completion of process of merger: o Issuing authority of the office order for merger o Head of the Accounts Section at the Zone o Head of the Zonal Office o Accounts Section at HO

Inform the Accounts Section of all Units, Zones and the outside parties (suppliers/ contractors/ bankers/ financial institutions etc.) associated with the 1st Unit regarding details of further correspondence

Within 2-3 days of completion of merger

De-Merger of Accounting Unit


Forward the office order for de-merger of the Accounting Unit to the following: o Accounting Unit which is getting de-merged (1st Unit) o In case the 1st Unit is getting merged to another

existing Unit, the Accounting Unit in which it is getting merged (2nd Unit).

o Respective Zones of the 1st and 2nd Unit in case different

o Accounts Section at HO

Forward the copy of the office order to all Accounting Units to ensure that all further communications are made accordingly

As and When order is passed


st

Unit)

Receive the office order for the de-merger into another Unit

Receive the work plan from the respective Zonal Office

As and When


st

Unit)

Identify the balances of liabilities, assets, incomes and expenses required to be transferred on the demerger as per the office order

In case the office order is silent about the same, the liabilities, assets, incomes and expenses required to be transferred on demerger shall be identified. An illustrative way of identifying is provided below: o Identify the Works project that are to be transferred.

The account heads relating directly to those identified schemes shall be transferred

o Identify the employees which are getting transferred. All amounts pertaining to those employees shall be


st Unit as



Page | 242

Sl. No.

Person / Section

Responsible


transferred o Identify the fixed assets being transferred to the new

Unit. All amounts pertaining to those fixed assets shall be transferred

Prepare the list of the liabilities, assets, incomes and expenses identified for transfer

Obtain approval on the list prepared


st

Unit)

Prepare JV, and obtain approval from Designated Authority, for transfer of amounts for the account heads identified as per the approved list to the new Accounting Unit/ existing Unit as the case may be and raise ATD/ ATC as case may be on the 2

nd Unit and obtain approvals

as required. Refer Subject Code: 10.01 for procedure relating to raising ATD

Based on JV, update Journal Book, General Ledgers, Subsidiary Ledgers, relevant Register(s)

Same day


nd

Unit)

Receive the office order from the Designated Authority As and when order is passed


nd

Unit)

Receive and review the ATD/ ATC raised by the 1st Unit

and forward the perforated copy to the 1st Unit. Refer

Subject Code: 10.02 for procedure relating to accepting ATD


Prepare JV, to account for the balances transferred and obtain approvals as required

Based on JV, update Journal Book, General Ledgers, Subsidiary Ledgers, relevant Register(s)

On the date of de-merger/ setting up of new Unit as per order


nd

Unit)

Identify the account heads of Inter Unit Transactions between the 1

st Unit and 2

nd Unit which can be set off

against each other (not applicable in case of new Unit being formed)

Obtain approvals to set off the balances of inter Unit transaction between the 2 Units

On receiving the approvals, prepare JV to set off the Inter Unit Balances

JV shall be prepared on the 1st date of merging into 2

nd

Unit/ establishing the new Unit

Obtain approvals of Designated Authority on the JV

Based on JV, update Journal Book, General Ledgers and Subsidiary Ledgers

On the date of de-merger/ setting up of new Unit as per order


nd

Unit)

Inform the following by way of a letter/ statement about the completion of process of de-merger: o Issuing authority of the office order for de-merger o Head of the Accounts Section at the ZO o Head of the Zonal Office o Accounts Section at HO o Accounts Section of all Units and ZOs

Inform Accounts Section of all Units, ZOs and the outside parties (suppliers/ contractors/ bankers/ financial institutions etc.) associated with the 1st Unit regarding details of further correspondence

Within 2-3 days of de-merger/ setting up of new Unit as per order


Page | 243

Formats

Format Ref.

Document Title

Document Type


IUT/F01 ATD I/O On transfer of Bank Balances on merger and transfer of balances as per books on de-merger

Accounts Section (1

st

Unit)

Own copy

Accounts Section (2

nd

Unit)

Accounting Entries

Sl. No.

Event Voucher type

Source documents


Responsible

1. Transfer of Bank Balances on Merger

BPV --- Debit Relevant Fund Remittance between Units Account Credit Bank Account

Accounting Unit getting merged (1

st

Unit)

2. Receipt of Bank Balances on Merger

BRV ATD Debit Bank Account Credit Relevant Fund Remittance between Units Account

Accounting Unit in which the 1

st Unit is

getting merged (2

nd

Unit)

3. Transfer of all account heads on Merger of Accounting Unit

JV Trial Balance of 1

st Unit

Debit All Liability Accounts* All Income Accounts* Credit All Asset Accounts* All Expense Accounts* (* Relevant Account Heads)

Accounting Unit getting merged (1

st

Unit)

4. Transfer of all account heads on Merger of Accounting Unit

JV Trial Balance and JV from 1

st

Unit

Debit All Asset Accounts* All Expense Accounts* Credit All Liability Accounts* All Income Accounts* (* Relevant Account Heads)


st Unit is

getting merged (2

nd

Unit)


Page | 244

Sl. No.

Event Voucher type

Source documents


Responsible

5. Setting off of Inter Unit Transactions on Merger

JV Trial Balance and JV from 1

st

Unit

Debit* Relevant Fund Remittance between Units Account Relevant IUT Accounts Credit* Relevant Fund Remittance between Units Account Relevant IUT Accounts * (The accounts to be debited and credited shall depend on the balances as shown in Trial Balance post merger, however the Subsidiary ledgers will be that of 1

st

and 2nd

Unit)


st Unit is

getting merged (2

nd

Unit)

6. Transfer of accounts on De-merger of Unit

JV Office Order & Books of Account

Debit * Liability Accounts Income Accounts Relevant IUT Accounts Credit* Asset Accounts Expense Accounts Relevant IUT Accounts (* Relevant Account Heads)

Accounting Unit getting de-merged (1

st Unit)

7. Accounting for merging of accounts of de-merged Unit

JV ATD/ ATC Received

Debit* Asset Accounts Expense Accounts Relevant IUT Accounts Credit* Liability Accounts Income Accounts Relevant IUT Accounts (* Relevant Account Heads)

Accounting Unit in which de-merged Unit is merged/ new Accounting Unit (2

nd Unit)


Page | 245

Sl. No.

Event Voucher type

Source documents


Responsible

8. Setting off of Inter Unit Transactions on Merger (not applicable in case of new Unit being formed)

JV ATD/ATC from 1

st

Unit

Debit* Funds Transfer between Units (relevant Accounts) Relevant IUT Accounts Credit* Funds Transfer between Units (relevant Accounts) Relevant IUT Accounts * (The accounts to be debited and credited shall depend on the balances as shown in Trial Balance post merger, however the Subsidiary ledgers will be that of 1

st

and 2nd

Unit)


st Unit is

getting merged (2

nd

Unit)

UTTAR PRADESH JAL NIGAM - upjn.inSIS/Accounting Manual/Accounting Manual.pdfAcronym Full Form AE...

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