Introduction – The financial management of any organization must have a prudent financial system backed by sound and effective accounting procedures and internal controls. A well-designed and well managed accounting system helps ensure proper control over funds.
Accounting policies and procedures are designed to compile accounts fulfilling legal/procedural requirements that govern financial control. Accounts are an integral part of financial management of activities. On the basis of accounts, the Government determines the shape of its monetary and fiscal policies.
Private vs Public Sector Accounting
Difference between private sector system of accounting and governmental accounting arises mainly because of the environment of the accounting system. In the government environment, public sector entities have differing goals, as opposed to the private sector entities’ one main goal of gaining profit.
In a government accounting environment, the entity has the responsibility of fiscal accountability which is demonstration of compliance in the use of resources in a budgetary context. In the private sector, the budget is a tool in financial planning and it isn’t mandatory to comply with it.
A field of accounting that specifically finds application in the public sector or government can be categorized as Government Accounting. A special field of accounting exists because of the objectives to which accounting reports to differ significantly from that for which generally accepted accounting practice has been developed for in the private (business) sector and also the usage of the results of accounting processes of government differs significantly from the use thereof in the private sector.Online GST Certification Course by TaxGuru & MSME- Click here to Join
ORGANIZATIONAL STRUCTURE OF GOVERNMENT OF INDIA
The Government of India Act, 1935 brought several changes in the system of governance in the country. It provided for the
• Establishment of an All-Indian Federation and a new system of government wherein the provinces were given more autonomy.
• The Central Legislature was to comprise two Houses – the Upper House or the Council of States and the Lower House or the Central Legislative Assembly.
• The ‗Diarachy‘ which was earlier established in the Provinces was abolished bu was introduced in the Centre.
• The executive authority of the Centre was vested in the Governor General (on behalf of the Crown) who had absolute power over defence, external affairs (Reserved Subjects).
• On other matters the Governor General was to act on the advice of a ‗Council of Ministers‘.
The Act stipulated that no Finance Bill could be placed in the Central Legislature without the consent of the Governor General. The Act further provided for three Lists Federal, Provincial and Concurrent – for division of legislative functions between the Centre and the Provinces.
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