Page 57 - Quick Insights Book 2022

13 Local Bodies

Another area in which the services of the Chartered
Accountants can be gainfully utilised is the audit of local bodies.
During the last one decade or so, the Union Government as
well as the State Governments has been placing an increasing
emphasis on utilising the Nagar Palika / Parishad, gram
panchayats and panchayat / parishad samities as the basic
agencies for local development.

The Accounting Reforms are underway in the local bodies.
Accrual based financial statements are also one of the
requirement of raising funds from capital market through
issuance of municipal bonds. The opportunities to the Chartered
Accountants in this emerging area are as under:
CONVERSION OF ACCOUNTS TO ACCRUAL BASED
DOUBLE ENTRY ACCOUNTING SYSTEM

 Assessment of existing system and requirements
including review of legislative framework with reference
to existing laws for smooth transition into Double Entry
Accounting System.

 Review of existing State Municipal Accounts Manual/
support in preparation of State Municipal Accounts
Manual for Local Bodies.

 Business process re-engineering with reference to
implementation of accrual system of Accounting.

 Preparing of accounting policies, formats of financial
statements and voucher format under accrual accounting
system.
 Categorisation, grouping and sub-grouping of assets and
liabilities.
 Design of Chart of Accounts with Accounting Codes.
 Determination and valuation of fixed assets including Local Bodies
infrastructure assets, current assets, investments, long-
term liabilities, current liabilities and net worth as on
opening balance sheet date.
 Preparations of Fixed Assets register including fixed
assets tagging & numbering.
 Preparation of opening balance sheet and financial
statements for the transition period.
 Design and implementation of Double Entry Accrual
Accounting System for Local Bodies.
 Migration of Manual Records into General Ledgers
Codes Accounts System.

 Handholding Support for better functioning of Double
Entry Accrual Accounting System for Local Bodies

44 Quick Insights on Professional Opportunities for Chartered Accountants