Municipal Account Manual

Commissionerate of
Municipal Administration
Municipal
Accounting
Contents
Manual
TAMIL NADU URBAN DEVELOPMENT

PROJECT - III
C o m m i s s i o n e ra t e o f
Municipal
Ad m i n i s t ra t i o n
Contents
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TAMIL NADU
URBAN DEVELOPMENT
PROJECT - III
Municipal
Accounting
Manual
Preface
Under the Tamil Nadu Urban Development Project III, one of the initiatives is the updation
of the Municipal Accounting Manual (MAM). The assignment of updating the MAM, along
with the preparation of the Municipal Budget Manual (MBM) for the state of Tamil Nadu has
been undertaken by NCR Consultants Limited (NCRCL).
The MAM has been drafted based on the terms of reference made specifically for the
assignment and takes into consideration the existing municipal accounting systems, inputs
from the National Municipal Accounting Manual (NMAM) developed by the Ministry of
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Urban Development, Government of India and inputs from discussions held at different
levels so far. This Manual takes into account computerization of the Financial Accounting
System (FAS) of the ULBs across the State and addresses technology issues appropriately.
The accounting standards for Local Bodies being developed by Institute of Chartered
Accountants of India have been considered to the extent applicable and practicable.
Comments from the stakeholders were invited on the draft version of the MAM, followed by
a workshop where various issues were discussed before finalizing the MAM.
M U N I C I PA L A C C O U N T I N G M A N U A L
Commissionerate of Municipal Administration
Contents Chapter 4 - Chart of Accounts 47

4.1 Meaning of Chart of Accounts 48
4.2 Benefits of Chart of Accounts 48
4.3 Components of Chart of Accounts 48
Chapter 1 - Introduction 13
4.4 Procedure for addition of components of Chart of
1.1 Background 14 50
Accounts
1.2 Salient features of proposed Municipal Accounting System 15 4.5 Structure of Chart of Accounts 51
1.3 How to read this manual? 15 4.6 Coding Logic 53
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1.4 Basis of Preparation of the MAM 16 4.7 Usage of Chart of Accounts 55
Chapter 2 - Fundamentals of Double Entry Chapter 5 - Vouchers and Books of Account 57

Accrual Based Accounting System 21 5.1 Meaning of Vouchers 58
2.1 Basic Accounting Terms 22 5.2 Types of Vouchers 58
Distinction between Single Entry and Double Entry 5.3 Voucher numbering 59
2.2 24
Accounting System 5.4 Books of Account 59
2.3 Double Entry Accounting System 25
2.4 Types of Accounts 25
2.5 Golden Rules of Accounting 25 Chapter 6 - Income Accounting 63
2.6 Double Entry Accounting Process 27 6.1 Income of the ULBs 64
2.7 Accrual System of Accounting 27 6.2 Accruable and Non-accruable incomes 65
Distinction between revenue expenditure and capital 6.3 Accounting for Property and Other Taxes 66
2.8 29
expenditure
6.4 Accounting for components of Property Tax Collection 68
2.9 Accounting Concepts and Conventions 29
6.5 Registers and Documents for collection of Property Tax 69
6.6 Modes of Daily Collection of revenue 69
6.7 Accounting for Daily Collections 70
Chapter 3 - Significant Accounting Policies 33 6.8 Accounting for rental income 72
3.1 Meaning of Accounting Policy 34 6.9 Fees and User charges 72
Prescription of Accounting policies, change in accounting 6.10 Other Incomes 73
3.2 34
policies, disclosures 6.11 Refund of Incomes 73
3.3 Accounting Policies for ULBs 35 6.12 Provision for doubtful receivables 73
Chapter 9 - Accounting for Grants and Schemes 99

Chapter 7 - Expenditure Accounting 75
9.1 Grants received by the ULBs 100
7.1 Expenditure of the ULBs 76 9.2 Accounting for General Grants 101
7.2 General Procedures 77 9.3 Accounting for Specific Grants 101
7.3 Accounting for Monthly Salary Bills/ Supplemental Bills 78 9.4 Grants received by the ULBs as a Nodal Agency 103
7.4 Accounting for Pension 79 9.5 Deductions made at the time of release of grants 104
7.5 Accounting for Development Works 79 9.6 Grants received in kind 104
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7.6 Project Costing 81 9.7 Maintenance of Grant Registers 104
7.7 Accounting for Deposit Works 82
7.8 Execution of Projects by other agencies under pooled 82
finance arrangements
Chapter 10 - Other Transactions 107
7.9 Execution of Projects by other implementing 83
agencies as PIUs 10.1 Finance charges debited by the Bank 108
7.10 Capitalization of Interest on Specific Borrowings 85 10.2 Advances paid to employees and recovery of advances 108
7.11 Capitalization of Expenditure on Capital Works 85 10.3 Imprest Accounting (Permanent Advance) 109
7.12 Accounting for purchase of material/Stores Accounting 86 10.4 Loans received by ULBs 110
7.13 General Expenses 88 10.5 Investments made by ULB 111
7.14 Expenditure on BSUP 88 10.6 Sinking Fund 111
7.15 Provision for expenses 89 10.7 Grants in aid paid by ULB 112
10.8 Prepaid expenses 112
10.9 New Health Insurance for ULB employees 113
Chapter 8 - Fixed Assets and Depreciation 91 10.10 Inter fund transactions 113
10.11 Endowments 114
8.1 Basic Terms 92
8.2 Types of Fixed Assets 93
8.3 Creation of Fixed Assets 93
8.4 Accounting for Fixed Assets 93 Chapter 11 - Period End Procedures 117
8.5 Capitalization of Assets after project completion 95 11.1 Introduction 118
8.6 Impairment of Assets 95 11.2 Day-end Procedures 118
8.7 Accounting for assets under litigation 96 11.3 Month end Procedures 119
8.8 Maintenance of Asset Registers 96 11.4 Year end Procedures 122
8.9 Depreciation 96 11.5 Closure of books 124
Chapter 12 - Bank Reconciliation 127

12.1 Introduction 128
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12.2 Need for BRS 128
12.3 Reasons for differences between bank balance as per 129
bank book and bank statement
12.4 Steps in Bank Reconciliation 130
12.5 Proforma of Bank Reconciliation Statement 131
Appendix I - List of Functions 158
12.6 Important points about BRS 132
Appendix II - Chart of Accounts 161
Chapter 13 - Financial Statements 135 Appendix III - Accounting Entry Matrix 200
13.1 Meaning and need of Financial Statements 136 Income Accounting 200
13.2 Annual Financial Report 136 Expenditure Accounting 207
13.3 Brief description of various components of Annual 137 Fixed Assets Accounting 218
Financial Report Other Transactions Accounting 221
13.4 Consolidated Financial Statements 146 Loans Accounting 224
13.5 Trial Balance 146 Sinking Fund Accounting 225
13.6 Checklist for preparation of Financial Statements 147 Grants and Schemes Accounting 226
13.7 Addition/Merger of local bodies 148 Transfers and Inter Fund Transactions Accounting 230
Year End Entries Accounting 231
Chapter 14 - Financial Statement Audit 151

14.1 Introduction 152 Appendix IV - Formats 233
14.2 Audit Report on Financial Statements 152 Document Formats 233
14.3 Audit Report/Certificate 153 General Forms and Registers 235
14.4 Other Audit 154 Financial Statements Formats 283
List of Abbreviations/Acronyms
a/c Accounts I&E Income & Expenditure

ABAS Accrual Based Accounting i.e. That is
System IBRD International Bank for
ASLB Accounting Standards for Local Reconstruction and Development
Bodies ICAI Institute of Chartered
Accountants of India
B/S Balance Sheet
JV Journal Voucher
BPV Bank Payment Voucher
L.F Ledger Folio
BRS Bank Reconciliation Statement
LIC Life Insurance Corporation
BRV Bank Receipt Voucher
MAM Municipal Accounting Manual
BSUP Basic Services for Urban Poor
MAS Municipal Accounting System
CASLB Committee on Accounting
MBS Municipal Budgeting System
Standards for Local Bodies
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MCF Municipal Council Form
List of Tables CJV Contractor’s Journal Voucher
MIN Material Issue Note
CMA Commissioner of Municipal
Table 1 Comparison with CASLB standards 17 MIS Management Information
Administration
System
Table 2 Single entry and Double entry accounting system 24 Cr Credit MRN Material Receipt Note
Table 3 Golden Rules of Accounting 26 CWIP Capital Work in Progress NCRCL NCR Consultants Limited
Table 4 Accounting Concepts and Conventions 30 DA Dearness Allowance NMAM National Municipal Accounting
DCB Demand Collection Balance Manual
Table 5 Rates of Depreciation as per WDV method 41
DDs Demand Draft OHT Over Head Tank
Table 6 Project Costing 81
DEAS Double Entry Accounting System PF Provident Fund
Table 7 Month end reconciliation procedures 120 PIU Project Implementation Unit
DMA Directorate for Municipal
Table 8 Checklist for closure of books 124 Administration PJV Purchase Journal Voucher
Table 9 Format of Subsidy Report 139 Dr Debit PT Profession tax
EJV Expenses Journal Voucher R&P Receipts and Payments
Table 10 Financial Ratios 139
EMD Earnest money deposit R/P Receipts and Payments Account
Table 11 Checklist for preparation of financial statements 147 Account
EMI Equated Monthly Installment
TDS Tax deducted at source
FAS Financial Accounting System
TN Tamil Nadu
FD Fixed Deposit
TNUDP Tamil Nadu Urban Development
FIFO First In First Out
Project
List of Figures FJV Fixed Assets Journal Voucher
TV Transfer Voucher
FY Financial Year
Figure 1 Double Entry Accounting Process 27 ULB Urban Local Body
GJV General Journal Voucher
WDV Written Down Value
Figure 2 Structure of Chart of Accounts 52 GL General Ledger
WIP Work in Progress
Figure 3 Coding Logic 53 HRA House Rent Allowance
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Introduction
1.2 Salient features of proposed Municipal Accounting

System
The following are the salient features of the proposed accounting system dealt with
in this manual:
a. It is a double-entry accounting system;
b. Accrual of income and expenditure is done on a selective basis considering the

ground realities;
Introduction c. Accounting is done using a standard chart of accounts, which is uniform for all
Urban Local Bodies;
1.1 Background
d. Budget heads and codes are completely integrated with account heads and codes;
As a follow-up to the 74 Constitution (Amendment) Act, the Government of Tamil
th
e. The accounting and budgeting system consists of a series of accounting, and
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Nadu has introduced a number of reform measures to improve the Municipal
non-accounting forms and registers;
Administrative System (MAS) of Urban Local Bodies. Tamil Nadu was among
the first States in the country to adopt Accrual Based Accounting System (ABAS). f. At the end of the year, the accounts are summarized into a set of financial
Accrual based Accounting was first implemented in 10 Municipal Corporations and statements which reflect the performance of the Urban Local Bodies during the
Municipalities from 1999-2000. In all ULB’s it has been implemented from 2000-2001 year and its financial position as at the end of the year.
and has made considerable progress under the TNUDP – II, wherein the Urban Local
1.3 How to read this manual?
Bodies started preparing annual financial statements under accrual accounting
system. Computerised financial accounting modules were also rolled out. The Municipal Accounting Manual (MAM) covers the required accounting
policies, procedures, document formats, accounting entries, periodical statements,
It is proposed to update the Municipal Accounting Manual so as to switch over from
reconciliation procedures and so on. Concepts of double entry accounting have also
accrual based accounting system to an effective, transparent and modern financial
been included. The Manual is designed to include 14 chapters and 4 Appendices.
management system. For improvements in the accounting policies/accounting
systems, the Urban Local Bodies need to be supported with an updated Municipal The first chapter of the MAM gives an introduction and sets the context. The
Accounting Manual, improved Financial Accounting System (FAS), upgraded second chapter covers the fundamentals of double entry accrual based accounting.
software and capacity building. The third chapter covers the significant accounting policies. The fourth chapter
includes Chart of Accounts and the Codification Structure.
The system of accounting being followed in Tamil Nadu Urban Local Bodies is based
on double entry, accrual. However, the system suffers from many limitations partly The fifth chapter in the MAM is on Vouchers and Books of Account used in the
because Tamil Nadu was one of the earliest states to move into double entry, accrual accounting process. The sixth to thirteenth chapters are structured to cover
and no major improvements have been made to the accounting system since it was accounting processes like Income Accounting, Expenditure Accounting, Fixed Assets
originally implemented. and Depreciation, Accounting for Grants and Schemes and other transactions,
Period end procedures, Bank Reconciliation and Financial Statements.
Tamil Nadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 14 Tamil Nadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 15
The fourteenth chapter is on Financial Statement Audit. Table 1: Comparison with CASLB Standards
KEY REQUIREMENTS OF ASLB COVERAGE IN THIS MANUAL

Appendix I is the List of Functions. Appendix II is detailed Chart of Accounts.
ASLB 3: Revenue from exchange transactions
Appendix III includes the Accounting Entries Matrix - a list of all possible accounting Identification of exchange transactions Limited scope - though ULBs receive
entries across Income, Expenditure, Assets and Liabilities. consideration in exchange for rendering
services, sale of goods and use by
Formats of Vouchers, Books of Accounts, Financial Statements and documents are others of the ULBs assets, these cannot
included in Appendix IV. be called exchange transactions in the
Indian context since there is no direct
1.4 Basis of Preparation of the MAM relationship

Revenue to be measured at fair value Fair value concepts have been
The National Municipal Accounting Manual (NMAM) has been the governing of consideration received or receivable introduced in this manual
document for this manual. While the basic accounting policies and the structure of Recognition of revenue with reference Revenue is measured only at the
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chart of accounts have been adopted from the NMAM, the processes for day to day to the stage of completion of the completion of service and a claim is
accounting and basic records maintenance have been prescribed keeping in view rendering of service made. Claims can be made based on
the specific situation of the Tamil Nadu Urban Local Bodies. stages of completion also
Recognition of revenue on sale of Same accounting treatment maintained
Recognising the need to harmonise and improve accounting and financial reporting
goods on transfer of significant risks
among Local Bodies, the Institute of Chartered Accountants of India (ICAI), and rewards of ownership
constituted a full-fledged Committee on Accounting Standards for Local Bodies Recognition of interest on investments Interest is accrued as and when it
(CASLB) in March 2005. The main function of the CASLB is to formulate a single set on time proportion basis becomes due
of accounting standards applicable to Local Bodies Recognition of royalties when earned Not applicable
Recognition of dividends when right to Same accounting treatment maintained
So far the CASLB has published a Preface to the Accounting Standards for Local
receive is established
Bodies and four accounting standards namely:
ASLB 4: Borrowing Costs
• ASLB 3: Revenue from exchange transactions; Capitalization of specific borrowing Same accounting treatment maintained
costs
• ASLB 4: Borrowing costs
Suspension of capitalization when Not prescribed due to practical
• ASLB 5: Property, Plant & Equipment
active development is interrupted considerations
• ASLB 6: Events after the reporting date
Stopping of capitalization when part of Not prescribed due to practical
All the standards are recommendatory in nature at the time of preparation of this the asset is ready for use considerations
manual.
Table 1 below summarizes the key requirements of the four standards that have
been issued and how the same are dealt with in this manual
KEY REQUIREMENTS OF ASLB COVERAGE IN THIS MANUAL
ASLB 5: Property, Plant and Equipment
Recognition of property, plant and Same accounting treatment maintained.
equipment Property, plant and equipment are
referred to as fixed assets to suit the
Indian context
Assets taken at nil or nominal Same accounting treatment except for
consideration taken at fair value heritage assets which are accounted at
nominal value
Cost model and revaluation model as Cost model prescribed with entries for
alternatives revaluation explained. Revaluation at
fair value not prescribed
Treatment of revaluation surplus/ Same accounting treatment maintained
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deficit
Depreciation based on useful life Principles are same. However,
depreciation rates have been prescribed
for sake of uniformity
Depreciation method to reflect the Principles are same. However, WDV
asset usage method has been prescribed for sake of
uniformity
Compensation of impairment losses Same accounting treatment maintained
treated as income
Derecognising of asset Not prescribed since it has statutory
implications
ASLB 6: Events after reporting date
Amounts in financial statements Passing of entries for events occurring
to be adjusted for adjusting events after balance sheet date which require
occurring after reporting date adjustment is prescribed
Amounts in financial statements not to Disclosure of such items is prescribed
be adjusted for non-adjusting events
occurring after reporting date
Events affecting continuity as a going Not included since such cases might not
concern arise for ULBs
Tamil Nadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 18

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Fundamentals of
Double Entry Accrual Based
Accounting System
Casting: Totaling of amounts in the books of account
Credit: A credit is an entry that results in the decrease of an asset or increase in a

liability or Fund Balance. By convention a credit entry is written on the right side of
an account
Debit: A debit entry results in increase of an asset, or decrease in a liability or Fund

Balance. By convention, a debit entry is written on the left side of an account.
Fundamentals of Double Entry Expenditure: Expenditure refers to money spent, whether paid or due to be paid.
Expenditure may be capital in nature (example, purchase of a car, construction of
Accrual Based Accounting System a building), or revenue (example salary, repairs etc). Revenue expenditure is also
known as ‘expense’.
2.1 Basic Accounting Terms

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Fair Value: Fair value is the amount for which an asset could be exchanged between
The meanings of some of the basic accounting terms used in this manual are given knowledgeable, willing parties in an arm’s length transaction
below:
Incomes: Income refers to money earned, whether received or due to be received.
Accounting Year: Accounting Year is a period of 12 months for which accounts are Examples: Grants, fees, interest etc.
maintained, normally the financial year which runs from 1st of April to 31st March
Liabilities: Liabilities refers to amounts payable. Examples: Loans and advances,
Account: Summarized record of transactions pertaining to one person, asset, amount due to a contractor, unpaid salary etc.
liability, income or expense
Narration: A brief description written below an Accounting Entry. It is normally
Accounts Payable: Amount owed by an ULB on account of goods purchased, written in brackets and starts with the word “Being”. It explains as to why the entry
services received or in respect of contractual obligations. It is also termed as trade has been recorded and other related aspects of the entry
creditor or sundry creditor.
Accounts Receivable: Amounts that are due to ULB for taxes, charges and fees,
goods sold or services rendered or in respect of contractual obligations. It is also
termed as debtor, trade debtor or sundry debtor
Accrual: Recognition of revenues and costs as they are earned or incurred

irrespective of the actual receipts or payments
Asset: Properties of every description owned by ULB. Example: land and buildings,
furniture and fixtures etc. It also includes money paid in advance, or due to be
received. Example: Prepaid Expenses, advance paid to a contractor, taxes and fees
due to be received, deposits paid etc.
2.2 Distinction between Single Entry and Double Entry 2.3 Double Entry Accounting System
Accounting System Double-Entry Accounting System (DEAS) is a standard accounting method that
The distinction between Single Entry and Double Entry accounting system is recognizes the fundamental dual nature of transactions. In this system each account
summarized in Table 2. has two columns ‘Debit’ and ‘Credit’. For a financial transaction, an entry is made
on the debit side of the destination account, and simultaneously, another entry is
Table 2: Single entry and Double entry accounting system made on the credit side of the source account, thus completing the double entry.
Since each debit has one or more corresponding credit (and vice versa), ‘the total of
SINGLE ENTRY DOUBLE ENTRY
ACCOUNTING SYSTEM ACCOUNTING SYSTEM all debits = total of all credits’, and the system of double entry bookkeeping always
leads to a set of balanced ledger accounts.
Transactions are accounted only as Dual aspects of transactions are
cash receipts and payments. In other recognized. In the example of sale of
The following are the advantages of DEAS:
words, dual aspects of transactions are tender forms, Rs 500 is taken as a receipt
not recognized. For example, Rs 500 (debit) in cash book. Simultaneously, it • Easier detection of errors and frauds
received from sale of tender forms, is is accounted on the credit side of Sale
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just taken as a receipt of Rs 500 in the of Tender Forms Account in the General
• A more accurate calculation of income or loss
cash book Ledger. • Inclusion of assets and liabilities in books of accounts
The system does not provide a check The trial balance provides a check on • Preparation of financial statements directly from accounts
against clerical errors the arithmetical accuracy by using
the principle “Total debits = Total 2.4 Types of Accounts
Credits”. The system also provides for
reconciliation between the books of Double entry accounting system recognizes three types of accounts, namely:
account and subsidiary records such as
a. Personal Accounts (accounts of persons, organizations etc)
DCB Registers, Asset Registers, Advance
Register etc, which ensures that both the b. Real Accounts (accounts of tangible and intangible assets for example, assets
subsidiary records and books of account
like furniture, building, goodwill, patents etc)
are maintained properly
c. Nominal Accounts (accounts which represent expenses or losses and incomes or
Sufficient data may not be available The reports such as trial balance, income
to the Management for effectively & expenditure account and balance sheet gains)
planning and controlling the ULB’s provide useful information which helps
activities. the Management in planning and control Any account shall be one of the three types mentioned above.
of activities.
2.5 Golden Rules of Accounting
The Receipts and Payments Account The Income and Expenditure Account
provides information on the receipts provides information on the financial The Golden Rules of Accounting are the tools every accountant has to equip himself
and payments during a period. performance of the ULB (surplus/deficit) with, and apply to every transaction which he accounts. The golden rules are given
during the period, and the Balance Sheet
in Table 3.
reflects the assets and liabilities of the
ULB at the end of the period.
Table 3: Golden Rules of Accounting 2.6 Double Entry Accounting Process

ACCOUNT TYPE RULE FOR DEBIT RULE FOR CREDIT Accounting is a continuous process, which is carried out on daily basis. Vouchers are
Personal Account (Eg: Debit the receiver Credit the giver prepared for all financial transactions that take place during the day, and entered
Bank Accounts, Supplier’s in the books of account. The information in the books of account is compiled to give
Account)
monthly reports (Trial Balance and Receipts and Payments Account) and Annual
Real Account (Eg: Building Debit what comes in Credit what goes out
reports (Financial Statements). The accounting process under double entry system
Account, Machinery
Account, Inventory can be summarized as shown in Figure 1.
Account)
Figure 1: Double Entry Accounting Process
Nominal Account (Eg: Debit all expenses and Credit all incomes and
Repairs, Depreciation, losses gains
Provisions, Salaries) Recording
Preparation of
Identiﬁcation of transactions in
Another way of understanding the above rules is by noting the impact of debit and vouchers a book of prime
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credit on the elements of Financial Statements namely Income, Expenditure, Asset transactions
(On daily basis) (Passing of daily entry (On daily
and Liability. For various accounts the rules of debit and credit are summarized
entries) basis)
below.
Income: Increases on the credit side and decreases on the debit side. For example,
for interest received, (increase in income), Interest account is credited.
Preparation
Expenditure: Increases on the debit side and decreases on the credit side. For Preparation of Posting to
of Financial
example, for payment of salaries (increase in expenses), Salary account is debited. Trial Balance General Ledger
Statements
(On daily basis) (On daily basis)
Assets: Increases on the debit side and decreases on the credit side. For example, (Eng of the year)
when money is received by the bank, Bank Account is debited and when cash is
paid from the bank account, the Bank Account is credited.
2.7 Accrual System of Accounting
Liabilities: Increases on the credit side and decreases on the debit side. For example,
for loan repaid (decrease in liability), Loan account is debited. Accrual basis accounting recognizes income when earned and expenses when
incurred, as opposed to cash basis accounting, which recognizes income when
The above rules can be summarized as under: received and expenses when paid. Income that is earned but yet to be received
is shown as “Receivable (asset)”, and expenses that are incurred, but are yet to
TYPE OF ACCOUNT DEBIT CREDIT
be paid are shown as “Payable (liability)”. Though strictly speaking, accrual basis
Income Decrease Increase
Expenditure Increase Decrease accounting implies accounting of all incomes and expenses as and when the right to
Asset Increase Decrease receive or the obligation to pay arises, in practice, it is governed by the accounting
Liability Decrease Increase policies of each individual organization.
The following are the advantages of Accrual System of Accounting; 2.8 Distinction between revenue expenditure and
• The accrual basis accounting not only records the actual income during a capital expenditure
period, but also highlights the level and efficacy of revenue collection, thereby
Modern accounting system makes a clear distinction between “revenue expenditure”
assisting the authorities in taking financial decisions. For example, the Property
and “capital expenditure”. Revenue Expenditure is expenditure the benefit of
Tax demand for the year as well as the outstanding at the end of the year can be
which lasts only for a short term. Capital expenditure is the expenditure the benefit
ascertained from the accounts maintained on accrual basis.
of which is available to the organization for a considerably longer period. In other
• It recognizes actual expenses incurred during a period. Information on unpaid
words, capital expenditure is one which result in creation of a fixed asset or increase
bills, reflected as liabilities, helps the Management to plan its payments more
the capacity or useful life of a fixed asset that already exists. Revenue expenditure
efficiently. For example, the balance sheet at any point of time shows the amount
is one incurred to maintain or put these fixed assets into use in operations.
payable to contractors for works taken up and hence helps in budgeting for the
next period. Examples of revenue expenditure items: Salary, postage, telephone charges etc.
• Expenses are matched with the income earned in the same period. Thus, it
Examples of capital expenditure items: purchase of land, construction of building,
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provides a very effective basis to understand the true performance of the ULB
purchase of plant & machinery, furniture and fixtures, extension or renovation of
from the activities during a period. For example, the matching of revenues and
an existing building etc.
expenditure for the year helps in taking decisions on whether to approve new
works for the current year or to defer the same.
2.9 Accounting Concepts and Conventions
• The income and expenditure account correctly represents the surplus or deficit
for a period and the balance sheet represents a true picture of financial position Double entry accounting system uses certain concepts and conventions, so that
of the organization as on a particular date, generally the end of the year. the financial statements based on these concepts and conventions give the same
• One of the distinct advantages of adopting accrual accounting system is ease in meaning to everybody who reads them. In general parlance, “concept” means idea,
financial appraisals by the financial institutions. It also facilitates credit rating notion, thought or perception. “Convention” means practice. The terms “accounting
through approved Credit Rating Agencies, which is a pre-requisite for mobilizing concepts” and “accounting conventions” mean the notions and practices used for
funds in the financial markets through debt instruments. reading and interpreting the financial statements.
The accounting concepts and conventions commonly used are explained in the
Table 4.
Table 4: Accounting Concepts and Conventions

SL CONCEPTS/
EXPLANATION
NO. CONVENTIONS
SL CONCEPTS/
EXPLANATION It signifies that every transaction in accounting has
NO. CONVENTIONS 8 Dual Aspect
two aspects namely Debit and Credit.
This concept is the underlying assumption that
The materiality principle requires all relatively
the accountant makes when he prepares a set of
relevant information should be disclosed in the
accounts. The assumption is that, the ULB will
1 Going Concern 9 Materiality financial statements. Unimportant and immaterial
remain in existence for the foreseeable future.
information are either left out or merged with
Based on this assumption historical cost is used for
other items.
valuing assets.
Accounting data should be recorded over a
The convention of consistency refers to the
definable period of time, usually one year, called the
state of accounting rules, principles, practices
financial year beginning on 1st April and ending on
and conventions being observed and applied
10. Accounting Period 31st March. The last date of an accounting period
constantly, i.e., there should not be any change in
2 Consistency is referred to as the balance sheet date. It is on this
the accounting rules from one year to another. If
day that the accounting records are balanced and
consistency is there, the results and performance
accounting reports prepared.
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of one period can be compared easily and
Accounting statements should disclose fully
meaningfully with the other.
and completely all the significant information.
This principle emphasizes that the revenues are
Based on this, decisions can be taken by various
Prudence or to be recognized only when they are reasonably 11. Full Disclosure
3 interested parties. It involves proper classification
conservatism certain and the expenses are to be recognized as
and explanation of accounting information which
soon as they are reasonably possible.
are published in the financial statements.
This concept states as to when revenues should be
recorded in books of accounts. Revenue is said to
4 Realization have been realised when cash has been received
or the right to receive cash has been established on
the sale of goods or services or both.
The essence of the matching concept lies in the
view that all costs which are associated to a
5 Accrual Or Matching particular period should be compared with the
revenues associated to the same period to obtain
the net income of the business.
According to this concept, the transactions
are recorded in the books of account with the
respective amounts involved. For example, if an
6 Historical cost asset is purchased, it is entered in the accounting
records at the price paid to acquire the same and
that price is considered to be the base for all future
accounting.
As per money measurement concept, transactions
of the ULB which can be expressed in terms of
7 Money Measurement
money are the only transactions that are recorded
in the books of accounts.
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Significant
Accounting Policies
one year to another, for the purpose of comparability. In case there is a change
in accounting treatment of any transaction due to a change in the prescribed
accounting policies, the fact that there is a change and the impact of the change has
to be disclosed in the financial statements of the year in which the change is made.
The Government through the CMA may, as and when necessary, bring in changes
to the existing accounting policies, or may prescribe new accounting policies by
issuing notifications. Whenever such notifications are issued by the Government,
it shall have the effect of amending, or of making additions to or deletions from the
Significant Accounting Policies accounting policies prescribed here.
3.1 Meaning of Accounting Policy 3.3 Accounting Policies for ULBs

An Accounting policy is the method or practice adopted by an organization for
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a. Accounting for accruable income (Property tax and other taxes)
accounting a particular type of transaction and its treatment in the financial
statements. Examples of accounting policies are: Income of a recurring nature, the right to receive which devolves on the ULB in
regular periodicity and which can be quantified beforehand shall be considered
• Method of calculation of depreciation (straight line method or written down
as an “accruable income”. Accruable income shall be recognized as and when it
value)
becomes due, and treated as ‘receivable’.
• Method of accounting various types of income and expenditure (cash basis or
i. Property taxes shall be accrued at the beginning of each half year on 1st
accrual basis)
April and 1st October
• Method of inventory valuation (First-in-First out/Weighted Average) etc.
ii. In case of any new assessment or changes in assessments, it shall be accrued
From the above instances, it can be seen that the method chosen by a particular in the month in which the demand is served through a monthly list
organization out of a number of methods available for accounting a transaction is
iii. Wherever self assessment of taxes is prevalent, income can be accrued
called an accounting policy. The accounting policies differ from one organization to
based on records available with ULB when it becomes due. Further changes
another and each organization has to adopt a set of accounting policies appropriate
arising out of self assessment will be treated as ‘Change in Demand’ and
to its nature of activities and circumstances.
will be accounted accordingly
iv. Interest element and penalties, if any, pertaining to accrued income shall
3.2 Prescription of Accounting policies, change in
be accounted only on receipt as and when it is received
accounting policies, disclosures
b. Provision for demand outstanding in respect of Property Tax1
The Financial Statements of the Urban Local Bodies shall contain a Statement
of Significant Accounting Policies as notes to accounts in respect of important i. In respect of demand outstanding beyond 12 years, provision shall be
Accounting Policies adopted in preparing and presenting such information. An maintained at 100% of the amount outstanding
Accounting policy has to be consistently followed by the Urban Local Bodies from
1
Sec 345 of the TNDMA Act, 1920 empowers the Commissioner to collect dues to the Municipality even up to 12
years from the time it becomes due.
ii. Any additional provision for demand outstanding (net on overall basis) e. Accounting for non accruable income
required to be maintained as at the end of the year shall be recognized as
Income of a non recurring nature, the right to receive which does not devolve
expenditure and any excess provision written back during the year shall be
on the Urban Local Body in regular periodicity shall be considered as a “non
recognised as income of the ULB.
accruable income”. Such non accruable incomes are accounted as and when
iii. Refunds, remissions of taxes for current year shall be adjusted against the received.
income and if pertaining to previous years will be treated as prior period
f. Assigned Revenues
item
i. Assigned Revenues like Entertainment Tax, compensation for toll and
iv. Any subsequent collection or recovery of receivables for Property tax
magisterial fines shall be accounted during the year only upon actual
which were already written off shall be recognised as a ‘Prior period item’
receipt
c. Accounting for other taxes forming part of property tax ii. At the year end these shall be accrued only if sanction order is received and
i. Water supply and drainage tax and elementary education tax shall be the amount is ascertained
accrued along with property tax – general purpose every half year
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g. Other Sources of income
ii. In respect of demand outstanding beyond 12 years, provision shall be
i. Revenue in respect of Advertisement fees, tax and other accruable income
maintained to the extent of 100% of the amount outstanding
shall be accrued either based on demand or based on contract
iii. Any additional provision for demand outstanding (net on overall basis)
ii. Revenue in respect of Trade Licence Fees for new licences shall be accrued
required to be maintained as at the end of the year shall be recognised
in the year in which the licence is granted. Licence renewal fees is accrued
as expenditure and any excess provision written back shall be treated as
based on the annual demand
income of the ULB
iii. Revenues in respect of Profession Tax shall be accrued in the year to which
iv. Refunds, remissions of taxes for current year shall be adjusted against the
it pertains
income and if pertains to previous years will be treated as prior period
items iv. Revenues in respect of rents from municipal properties shall be accrued
based on terms of agreement
v. Any subsequent collection or recovery of receivables for water supply and
drainage tax and elementary education tax which was already written off v. Other Income, in respect of which demand is ascertainable and can be
shall be recognised as a ‘Prior period item’ raised in regular course of operations, shall be recognised in the period
in which they become due. Other Incomes which are of uncertain nature
d. Accounting for Library Cess shall be recognised on actual receipt
i. Collections of library cess to be made on behalf of the Local Library
vi. In respect of demand outstanding at the year end, provision shall be
Authority included in the Property tax demand shall be accounted together
maintained to the extent of 100% of the demand outstanding at the year end
with Property tax collection and credited to a liability account.
vii. Any additional provision for demand outstanding made during the year
ii. The liability towards Library Cess collected shall be reduced on remittance
shall be recognised as expenditure and any excess provision written back
to the concerned authorities
shall be treated as income of the ULB
viii. Refunds, remissions of such incomes for current year shall be adjusted value of the benefits and/or services arising in the current period even if
against the income and if pertains to previous years will be treated as prior the payment has been made in the previous period.
period items
j. Public Works
ix. Any subsequent collection or recovery of receivables which were already
i. Earnest money deposit (EMD), security deposit and retention amount
written off shall be recognised as a ‘Prior period item’.
received or recovered from contractor’s bills shall be recognized as a
liability on actual receipt/deduction. If deposits are forfeited or lapsed, they
h. Establishment expenses
shall be recognized as income in the year when they are forfeited or lapsed
i. Expenses on Salaries and other allowances shall be recognized as and
when they are due for payment (i.e. at the month end) except for March ii. Expenditure on capital work shall be recognised as “Capital Work-in-
which will be recognised on 1st of April Progress” until completion of work, and shall be “capitalized” on completion
of construction
ii. Statutory deductions from salaries including those for income tax, provident
iii. Expenditure on repair/maintenance work shall be recognized as an expense
fund contribution, etc., shall be recognized as liability in the same period in
as and when bills are admitted. When the time lag between the admission
which the corresponding salary is recognized as expense
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of the bill and its payment is not significant, the expenditure is accounted
iii. Pension shall be accrued when it becomes due (i.e. at the month end)
when the bill is paid
iv. Contribution towards Pension and other retirement benefit funds shall be
iv. Provisions shall be made at the year-end for all bills received up to a cut-off
recognized as an expense and a liability when they become due. date pertaining to the current financial year
i. Revenue expenditure k. Fixed Assets

i. Other Revenue Expenditure shall be treated as expenditure in the period i. The cost of fixed assets shall include cost incurred/money spent in acquiring
in which they are incurred. The expenditure is accrued when the bills are or installing or constructing fixed assets
admitted
ii. Fixed assets shall be reported at written down value (i.e. historical cost of
ii. When the time lag between the admission of the bill and its payment is not the asset less up-to-date depreciation) in financial statements
significant, the expenditure is accounted when the bill is paid
iii. Fixed assets acquired for a non-monetary consideration or free of cost by
iii. Purchases of stores are recognized when the goods are received and taken way of grants or as a gift or alienation or vested lands shall be accounted at
into stock their fair value
iv. Provisions shall be made at the year-end for all bills received up to a cut-off iv. Heritage assets shall be carried in the accounts at a nominal value of Re. 1
date pertaining to the current financial year
v. Expenditure under Capital Work in Progress (CWIP) is capitalized as and
v. Any expenditure for which the payment has been made in the current when the construction/acquisition is completed and available for use. The
period but the benefit and/or service is likely to arise in a future period capitalization is done under the appropriate fixed asset head
shall be classified as a current asset and treated as a expenditure in the vi. Any addition or improvement to the fixed asset that results in increasing
period in which its benefit arises and/or services are received the capacity or useful life of the asset shall be capitalized and included in
vi. The expenditure for the current period shall include the proportionate the cost of asset
vii. Expenditure incurred to maintain the asset and sustain its functioning Table 5: Rates of Depreciation as per WDV method
shall be charged off as revenue expenditure.
PERCENTAGE
SL ESTIMATED
DESCRIPTION OF ASSETS OF
l. Revaluation of Fixed Assets NO LIFE
DEPRECIATION
i. An increase in net book value arising on revaluation shall be credited to 1 Land - -
a reserve account under the respective fund as ‘Revaluation Reserve’. A 2 Buildings 50 years 05.80%
decrease in the net book value arising on revaluation of fixed assets shall 3 Subways & Causeways 15 years 18.10%
be charged to the ‘Revaluation Reserve’ to the extent that it represents an 4 Bridges & Flyovers 40 years 07.20%
5 Roads & Pavements 3 years 63.20%
increase in an earlier revaluation. Excess if any is charged to the Income
6 Strom Water Drains, open Drains and 15 years 18.10%
and Expenditure account as assets written off. Culverts
7 Heavy Vehicles 10 years 25.90%
ii. Depreciation on a revalued asset shall be calculated on the value after
8 Light vehicles 10 years 25.90%
revaluation, at rates necessary to charge off the asset over the remaining
9 Other vehicles 5 years 45.00%
useful life of the asset
10 Furniture Fixtures and office 10 years 25.90%
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Equipments
m. Impairment of Assets 11 Electrical Installations 10 years 25.90%
i. An asset is impaired when its carrying amount exceeds its recoverable 12 Tube Light Fittings 3 years 63.20%
amount 13 Plant & Machinery 10 years 25.90%
14 Computers 3 years 63.20%
ii. An impairment loss is the amount by which the carrying amount of an 15 Water transmission and distribution 40 years 07.20%
asset exceeds its recoverable amount systems
16 Water distribution systems – tanks, 5 years 45.00%
iii. The impairment loss is to be adjusted against revaluation reserve if any for pumps and fountains
that asset and any excess should be charged to the income and expenditure 17 Sewerage collection and transmission 30 years 09.50%
system
account.
18 Water supply plant and machinery 10 years 25.90%
n. Depreciation of Fixed Assets 19 Lab equipments 10 years 25.90%
Note: For the purposes of calculating the depreciation rate, the residual value of the asset has
i. Depreciation shall be charged by Written Down Value (WDV) method on all
been assumed to be 5% of the original cost.
fixed assets except land, which is not depreciable
iv. In respect of additions to fixed assets during the year, depreciation shall be
ii. Depreciation shall not be charged on heritage assets which are carried in
calculated in the following manner2 :
the books of account at a value of Re. 1
Assets purchased/constructed before October 1st of the accounting year Full rate
iii. The rates of depreciation for different types of fixed assets are given in
Assets purchased/constructed on/after October 1st of the accounting year Half rate
Table 5.
Assets disposed off before October 1st of the accounting year Half rate
Assets disposed off on/after October 1st of the accounting year Full rate
2
As prescribed in the Model National Municipal Asset Valuation Methodology Manual of the MoUD, Government
of India, January 2009
v. Fixed assets costing less than Rs. 1,000 shall be depreciated at 100% in the iii. The stock lying at the period end shall be valued at cost in accordance with
year of purchase itself. First in First Out (FIFO) Method
iv. Revenue in respect of disposal of material, if any shall be recognised on

o. Investments
actual receipt
Amounts invested either temporarily or otherwise if any, shall be accounted as
“Investments” q. Loans/Borrowings
i. Investment shall be recognized at cost of investment. The cost of investment i. Interest expenditure on loan received shall be accounted on accrual basis
shall include cost incurred in acquiring investment and other incidental as and when it becomes due
expenses incurred for its acquisition ii. Interest on borrowing directly attributable to acquisition or construction
ii. All long-term investments shall be accounted in the books of accounts at their of fixed assets up to date of completion/commissioning shall be capitalised
cost. However in the event of any permanent diminution in their value as on iii. Interest on general borrowings shall not be capitalized but charged to the
the date of balance sheet, provision shall be made for the decline in value income and expenditure account
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iii. Short-term investments shall be carried at their cost or market value (if iv. Borrowings under ‘Pool Finance’ or similar schemes wherein the lender
quoted) whichever is lower incurs the expenditure till the assets are handed over to the ULB shall be
iv. Interest on investments shall be recognized as and when due. At period- accounted as liability as and when the assets created are transferred to the
ends, interest shall be accrued proportionately ULB by the lender.
v. Dividends shall be recognized on actual receipt r. Loans and advances given
vi. Interest on investment of specific grants, scheme funds or sinking funds shall i. Loans given by a ULB to beneficiaries under any scheme shall be accounted
not be treated as income of the ULB but shall be credited to the respective as assets, and shall be reduced by repayments received or recovery made
Scheme Grant Account for that Cost Centre or sinking fund account towards repayment of such loans.
vii. Profit/Loss on sale of investments shall be recognized in the year when ii. Advances given by the ULBs to its employees, contractors, suppliers, or any
such sale takes place other persons shall be accounted as assets, and reduced by repayments
received or recovery made towards repayment of such advances.
viii. Profit/ Loss on sale of investment of specific grants, scheme funds or sinking
funds shall not be treated as income of the ULB but shall be credited or iii. Interest on loans and advances shall be recognized on accrual basis as and
debited to the respective Scheme Grant Account for that Cost Centre or when it becomes due.
sinking fund account
iv. Interest on loans to beneficiaries under a scheme, to the extent to be remitted
to the funding agency, shall be treated as a liability as and when collected
p. Stores
i. Expenditure in respect of materials, equipments, etc procured shall be s. Grants

accounted when the material is received and taken into stock
i. General Grants of revenue nature shall be recognised as income on actual
ii. Goods received and accepted but for which no bills are received as on the receipt. Year end accrual is made for general grants which are yet to be
cut off date shall be accounted based on purchase orders received based on government order
ii. Specific grants towards revenue expenditure received prior to the incurring Examples are expenses incurred due to unexpected natural disasters such
of expenditure shall be treated as liability till such time that expenditure is as earthquakes, flood. Income derived from winning a pending law suit etc.
incurred
iv. Extraordinary items should be shown separately in the statement of income
iii. Grants received and receivable in respect of specific revenue expenditure shall and expenditure
be recognised as income in the accounting period in which the corresponding
u. Events occurring subsequent to reporting date
revenue expenditure is charged to Income and Expenditure Account
i. Reporting date is the date upto which financial statements are prepared
iv. Specific Grants received towards capital expenditure shall be treated as
(i.e. 31st March). Certain events might occur after 31st March before the
a liability till such time that the fixed asset is constructed or acquired. On
financial statements are approved by the Council which affect the financial
construction or acquisition of assets, the extent of amount of liability shall
position as at 31st March or provide additional information with regard to
be treated as a capital receipt and shall be transferred from respective
the financial statements
Grant Account to the Capital Contribution
ii. With regard to events which affect the financial position as on 31st March,
v. Grants received as a nodal agency or as implementing agency for a specific
the necessary adjustments shall be made in the financial statements before
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purpose, which does not result in creation of assets with ownership rights
the financial statements are formally adopted
of ULB shall be treated as liability on initial receipt. Upon completion
of the scheme, the amount of expenditure shall be adjusted against the iii. With regard to events which do not affect the financial statements, but
accumulated expenditure and reduced from the liability created when the provide additional information, the same shall be disclosed in the financial
grant was originally received statements without adjusting the financial statements.
vi. Grants in the form of non-monetary assets (such as fixed assets given at v. Addition/Merger of local bodies
a concessional rate) shall be accounted for on the basis of the acquisition i. When new areas are added to existing ULBs, an opening balance sheet is
cost. In case a non-monetary asset is received free of cost, the amount of prepared for each of the added local bodies. The opening balance sheets are
grant will be the fair value of the asset received. The fair value may be then consolidated with the balance sheet of the parent ULB at the carrying
determined based on a valuation certificate from a certified valuer. amounts of the assets and liabilities.
t. Prior Period Items and Extraordinary items ii. When one or more ULBs are merged to form a single ULB, the financial
i. Prior period items are income or expenditure which arise in the current statements of the merging local bodies are consolidated at the cut off
period as a result of errors or omissions in the preparation of the financial date under the pooling of interest method. All assets, liabilities and fund
statements of one or more prior years balances are consolidated at their carrying amounts as on the cut off date.
ii. Expenditure/Incomes pertaining to previous years are booked in the iii. Where the accounting policies of the merging and merged entities are
current year separately under ‘Prior Period Items’ and disclosed by way of different, the financial statements of the merging entities must be recast
Notes to the Accounts as on the cut off date in line with the policies of the merged ULB before
consolidation. The fact of the recasting of financial statements and its
iii. Extraordinary items are income or expenditure that arise from events
impact shall be disclosed in the financial statements.
or transactions that are clearly distinct from the ordinary activities of
the ULB and therefore, are not expected to recur frequently or regularly.
4
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Chart of Accounts
Under the provisions contained in TNDM Act 1920 and the various Acts relating
to the municipal corporations, all moneys received by the municipal council shall
constitute a fund called as ‘Municipal Fund’ and shall be applied and disposed off,
subject to the provisions contained in the respective Acts. The policy laid down by
the Government over a period of time is that municipal accounts shall consist of
receipts and expenditure under the General fund, Elementary Education Fund,
Library Cess Fund, Water Supply and Drainage Fund and any other Fund started
for the accounting of receipts and expenditure relating to any specific scheme or
Chart of Accounts project. The receipts and expenditure under each fund were directed to be classified
under ‘Ordinary Account’ and ‘Capital Account’.
4.1 Meaning of Chart of Accounts The above guidelines of the Government are being continued after the introduction
of the double entry accounting system and the transactions shall be recorded under
A chart of accounts is a listing of all account heads. Each account is denoted by
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General Fund, Water Supply and Drainage Fund and Elementary Education Fund.
an account name and a reference number. The account name is known as the
“account head“, and the reference number is known as the “account code”. The The Library cess fund is not separately maintained. But the transactions relating to
chart of accounts varies from one organization to another depending on the nature Library cess shall be accounted under a liability account head namely ‘Library Cess
of activity of the organization. The chart of accounts groups accounts of a similar payable’ under the General Fund. Instead of ‘Ordinary Account’ and ‘Capital Account’
nature into groups and sub-groups at different levels (major heads, minor heads transactions are identified as ‘Revenue’ or ‘Capital’ in nature and accounted under
and detailed heads with accompanying codes). The number of levels and the length the relevant account heads. Transactions related to particular schemes are accounted
of the account codes depend on the requirements of the organization. in the respective funds by assigning a Scheme or Cost Centre code for each scheme.
Function: The activities of the Urban Local Bodies shall be grouped under various
4.2 Benefits of Chart of Accounts functions both obligatory and discretionary. Each function is represented by a two
The chart of accounts is of great help to the accountant in identifying the digit code. The activities of one or more functions will be controlled by different
appropriate account heads for passing an entry for a financial transaction. It also departments. The detailed list of the functions is given in Appendix 1.
provides uniformity of accounting and reporting financial transactions. A common
Functionary: Functionary represents a responsibility centre within the Function.
understanding and usage of the account heads facilitates not only a comparison
Functionary is represented by a two digit code and is optional. This level is used
over different time periods, but also comparison across different ULBs.
for detailed reporting and better internal control of the ULB. For example for the
function Hospital Services, functionary can be Dispensaries.
4.3 Components of Chart of Accounts
Fields: Field represents the way an ULB is administered geographically. Fields are
a. Fund: A fund is like a sub-entity within the ULB to meet specific objectives. The
represented by three digit codes. This level is again used for detailed reporting
Funds in MAM are classified as:
and better internal control of the ULB. For example, a corporation might have
i. General Fund - GF
geographical zones and wards for better administration. In such a case, the zones
ii. Water Supply and Drainage Fund - WS
or wards are Fields as discussed here.
iii Elementary Education Fund - EE
Account head: The account head represents the nature of the financial transaction. Cost centre/Project/Scheme: This is the component wherein the maximum number
The detailed account head is grouped under different levels of major and minor of requests for creation of new items is expected to arise. As and when new schemes
heads in line with the nature of the transaction the account head represents. The are started or new projects are taken up, the ULB shall request the creation of a new
account head is represented by a mandatory 7 digit code which is made up of Major cost centre to the CMA. The CMA shall examine the feasibility and create the new
Head code, Minor Head code and Detailed Head code. All the account heads are items as requested. The cost centre shall be the Project Code for all projects taken up.
classified under one of Income, Expenditure, Liability or Asset.
Whenever new items are added to a particular component of the chart of accounts
Cost centers (Project/Scheme): A further level of classification is prescribed to or an existing item is modified, the CMA shall officially communicate the creation/
represent specific schemes, projects or other cost centres within the ULB. This modification to the requesting ULB or to all ULBs depending on whether the change
is represented by a two digit code. This is of particular use for the allocation of affects only the particular ULB or all ULBs.
incomes and expenses to a particular Scheme. Cost centres can also be created for
internal projects/works undertaken by the ULB. 4.5 Structure of Chart of Accounts
The significance of the above classification is to aid better reporting. The Functions, The chart of accounts has a three tier structure with numeric codes. The three tiers are
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Functionaries and Field are key elements of the Budgeting process.
a. Major Head Code (3 digits)
b. Minor Head Code (2 digits)
4.4 Procedure for addition of components of Chart of c. Detailed Head Code (2 digits).
Accounts All the account heads are classified under one of Income, Expenditure, Liability or
Asset as shown in Figure 2.
Considering that all the ULBs will be using a common chart of accounts, the
authority to add, modify or remove different components vests with the CMA
office. Individual ULBs shall request the addition of new components as and when
required. The CMA office will examine the request and if found feasible authorize
the creation of the new component. The procedure for addition of items to different
components of the chart of accounts is given below:
Function: All the functions in a typical ULB are represented in the list given in
Appendix I. The list of functions in Appendix I is as prescribed in the NMAM. In case
of any requirement for addition at a later date, the same shall be made only with
the approval of the State Government.
Functionary: Functionaries can be added at the request of a particular ULB after

approval by the CMA.
Field: Fields are required to be added only when new geographical divisions are
introduced in existing ULBs for better administrative control. New fields shall be
created by the CMA office as and when the new geographical divisions are created.
Detailed heads represent the lowest level at which information is captured by the 4.6 Coding Logic
Urban Local Bodies.
The combination of major, minor and detailed head codes is shown in Figure 3. As
Figure 2: Structure of Chart of Accounts can be seen from the figure, the composite account code is a 7 digit combination of
the major, minor and detailed codes.
Figure 3: Coding Logic

Income Expenditure Assets Liabilities
1 2 3 4 5 6 7
MAJOR HEAD CODE MINOR HEAD CODE DETAILED HEAD CODE

Major Major Major Major
Heads Heads Heads Heads The coding logic is illustrated in the examples below;
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Major Head Codes: The Major Head code is made of 3 digits. The first digit shall
indicate the nature or type of account.
Minor Minor Minor Minor 1 denotes the account type Income

Heads Heads Heads Heads 2 denotes the account type Expenditure
3 denotes the account type Liability
4 denotes the account type Asset
The next 2 digits of the Major Head Code shall denote the Group Classification, for
Detailed Detailed Detailed Detailed instance:
Heads Heads Heads Heads
1 10 denotes Tax Revenue related accounts
2 40 denotes Interest and Finance Charges related accounts
The above classification structure is governed by the principles laid down in the
3 30 denotes Secured Loans related accounts
NMAM. If additional heads are required the CMA can add more Minor Heads.
4 12 denotes Capital Work in Progress related accounts
Detailed Heads can be added to cater to the requirements of specific ULBs. Addition
of Minor as well as Detailed Heads will be done by the CMA and communicated to Minor Head Codes: The Minor Head Code is made up of 2 digits. It provides details
all ULBs. of transactions with respect to Major Head Code it is associated with.
i. Under Major Head Code 110: Tax Revenue, the Minor Head Code 02 shall
denote Water Tax
ii. Under Major Head Code 220: Administrative expenses, Minor Head Code 11
denotes Office maintenance
iii. Under Major Head Code 330: Secured Loans, Minor Head Code 20 denotes Cost centres: This is of particular use for the allocation of incomes and expenses to
Loans from State Government a particular Scheme. This is represented by a two digit code.
iv. Under Major Head Code 450: Cash and Bank Balance, Minor Head Code 10
The detailed chart of accounts is given in Appendix II. In the chart of accounts, the
denotes Cash
detailed heads have been prescribed considering the chart of accounts presently in
Detailed Head Codes – The Detailed Head Code is made up of 2 digits. It provides use by the ULB.
further details of transactions with respect to Minor Head Code it is associated with.
i. Under Major Head Code 110: Tax Revenue, the Minor Head Code 01 shall 4.7 Usage of Chart of Accounts
denote Property Tax and Detailed Head Code 01 denotes Property Tax –
The voucher formats prescribed in ‘Chapter 5 – Vouchers and Books of Accounts’
General purpose - Residential
have columns for account codes, account heads and specific cost centre codes.
ii. Under Major Head Code 220: Administrative expenses, Minor Head Code While preparing the vouchers for passing entries, appropriate account codes/heads
11 denotes Office maintenance and Detailed Head Code 02 denotes Water shall be used from the Chart of Accounts. In the General Ledger, separate folios
charges are opened for relevant account heads listed in the Chart of Accounts. From the
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iii. Under Major Head Code 330: Secured Loans, Minor Head Code 20 denotes vouchers, the transactions are first accounted in the books of prime entry, and then
Loans from State Government and Detailed Head Code 01 denotes Loan posted to the debit or credit side of appropriate account heads in the general ledger.
from Government Note: When accounts are maintained in a computerized setup, the user has to only select the
proper account heads, cost centres, functions at the time of entering the voucher.
iv. Under Major Head Code 450: Cash and Bank Balance, Minor Head Code 10
denotes Cash and Detailed Head Code 01 represents Cash Account
In addition to the core accounting head discussed above there are other components
of Chart of Accounts namely Fund, Function, Functionary, Field and Cost Centre.
Fund: Every accounting transaction will belong to one of the three Funds namely
General Fund, Water Supply and Drainage Fund and Elementary Education Fund
classified under Revenue or Capital as the case may be.
Function: The activities of Urban Local Bodies shall be grouped under various
functions. For example: General administration, Planning & Regulation, Public
Works, Health and so on. Each Function is represented by a two digit code.
Functionary: Functionary is a responsibility centre within a function. For example

for the function Hospital Services, functionary can be Dispensaries. Functionary is
represented by a two digit code and is optional.
Field: Field represents the way an ULB is administered geographically. Fields are
represented by three digit codes.
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Vouchers and
Books of Account
vouchers. Some examples of Journal entries are accounting accrual of revenue

income due to be received, adjusting an item of expenditure against an advance
on receipt of bill, rectification of error of classification and so on.
Note: For the purpose of better tracking of specific transactions, different types of JVs are
prepared depending on the type of transaction they represent in the current system of
accounting. Different types of vouchers maintained and their purpose are:
• CJV – Contractor’s Journal Voucher - to record the value of work executed by the
contractors from time to time;
• FAJV – Fixed Assets Journal Voucher - to record the capitalisation of completed

Vouchers and Books of Account projects and purchase of capital goods;
• EJV – Expenditure Journal Voucher – to record all other expenditure bills;

5.1 Meaning of Vouchers • PJV – Purchase Journal Voucher – to record purchases of materials and
• GJV – General Journal Voucher – to record all other non-cash transactions

A Voucher is a document that serves as an evidence of, or authorization for a
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financial transaction. In double entry accounting system, accounting starts from While maintenance of separate JVs is not mandated by this accounting manual, for the sake
of smoother transition to the new system the practice of preparing separate JVs may be
preparation of a voucher. Transactions are first recorded in vouchers from basic
continued. The formats of the different JVs are given in this manual for ready reference. In
documents such as bills, receipts, etc. The duly authorized vouchers are then a computerized setup, these customized JVs will be generated as reports out of the system.
accounted in the books of account.
Formats of the Vouchers are given in Appendix IV – Formats.
5.2 Types of Vouchers

5.3 Voucher numbering
A voucher shall be prepared by the ULB for every financial transaction. The type of
voucher for a transaction depends on the nature of the transaction. Every voucher shall have a voucher number and date. Separate series of numbers
shall be used for different types of vouchers, for example:
a. Bank Receipt Voucher (MAM 03): Bank Receipt Voucher is a document prepared • BRV 1, 2, 3.. for bank receipt vouchers
for recording receipt entries in Bank Book. The Bank Receipt Voucher shall be
• BPV 1, 2, 3... for bank payment vouchers
prepared for receipts of cash, cheques, demand drafts, banker’s cheque etc. The
• JV 1, 2, 3... for journal vouchers or GJV/EJV/PJV/CJV/FAJV 1, 2, 3... when separate
bank receipt vouchers will be numbered serially.
JVs are maintained
b. Bank Payment Voucher (MAM 05): Bank Payment voucher is a document used • TV 1, 2, 3... for transfer vouchers
for accounting payment entries in the Bank Book through cheques.
The voucher numbers shall start afresh at the beginning of every financial year.
c. Transfer/Contra Voucher (MAM 06): All transactions involving ‘only cash and
bank/treasury accounts shall be accounted through ‘transfer vouchers’. They cover 5.4 Books of Account
transfer of amounts from one bank to another which affect bank accounts only.
After preparing the vouchers, they are entered in the books of account. The books of
d. Journal Voucher (MAM 20, MAM 21, MAM 22, MAM 23 & MAM 26) - All account where the vouchers are first recorded are called the “books of prime entry”.
transactions not involving either cash or bank are accounted through journal
The book where the entries are posted from the books of prime entry are called the the books of prime entry and the general ledger. All the accounts in the General
“books of final entry” or “Ledger” or the “General Ledger. Books of Accounts shall Ledger are totalled and balanced at the end of each month.
be maintained separately for each financial year for each fund as prescribed. Books Formats of all the Books of Accounts are given in Appendix IV – Formats.
shall be maintained separately for General Fund, Water Supply and Drainage Fund
and Elementary Education Fund. The following are the Books of Prime/Final Entry
to be maintained by ULBs:
a. Bank Book (MAM 04): Bank Book is a book of original entry for recording
transactions involving bank account. The Bank Book has two sides namely
‘Receipts’ and ‘Payments’. All collections on behalf of the ULB shall be recorded
on the ‘Receipts’ side and all payments shall be recorded on ‘Payments’ side.
Separate Bank Book shall be maintained in respect of each bank account. The
Bank book shall be closed every day, and the closing cash and bank balances
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shall be arrived at. The Bank Book is also popularly called as the Cash Book.
Note: Currently a separate cash book for Receipts and Payments are maintained (MCF 4
and MCF 6). However in the revised MAM a single Bank Book is prescribed (MAM 04). This
provides the balance of cash at a glance at any point of time.
b. Journal Book (MAM 28): The Journal book is a book of prime entry in which all
non-cash transactions are recorded. Separate Journal Book shall be maintained
for each type of JV. Entries in the journal book shall be made chronologically
on the basis of journal vouchers. The Journal Book has a ‘debit’ column and a
‘credit’ column. The debit entries in the journal vouchers shall be recorded on
the ‘debit’ column of the Journal book, and the credit entries are entered on the
“credit’ column. The totals of ‘debit’ and ‘credit’ columns shall always tally.
c. General Ledger (MAM 36): A General Ledger is a book of final entry where
entries from the books of prime entry are posted. Transactions entered in the
bank book and journal book are posted to the appropriate accounts in the ledger.
The amounts entered in the receipts side of bank book are posted to the credit
side of appropriate accounts. Similarly, the amounts entered in the payments
side of bank book are posted to the debit side of appropriate accounts. Entries
in the debit column of Journal Book are posted to the debit side of appropriate
accounts, and entries in the credit column of Journal Book are posted to the
credit side of appropriate accounts. The entries are posted in chronological
order, giving voucher numbers, and cross-references of folio numbers both in
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Income Accounting
Income from Investments: Interest on investments, dividends, profit on sale of

investments
Interest earned: Interest on loans and advances to employees, other interest
Other Income: Deposits forfeited, lapsed deposits, Insurance claim recovery,

recovery from employees etc
6.2 Accruable and Non-accruable incomes

Income Accounting
a. Accruable income
6.1 Income of the ULBs Income in respect of which the ULB’s right to receive arises in regular periodicity
Income or “revenue” is amount earned during an accounting period by exercising and for which DCB Registers (MAM 14) have to be maintained are the revenue
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the right to levy taxes and fees under applicable laws, or by carrying out obligatory items that have to be accounted on accrual basis. Some examples of accruable
or discretionary functions specified in the Act. Income of the ULB includes the incomes are:
following: • Property Tax
• Water Supply & Drainage Tax

Taxes: Property Tax – General Purpose, Water Supply and Drainage Tax, Lighting
• Elementary Education Tax
Tax, Scavenging Tax, Elementary Education Tax, Vehicle Tax, Advertisement Tax,
• Advertisement Tax
Profession Tax, Tax on Carriages and Animals, Tax on Carts, Servant Tax, Pilgrim
• Profession tax
Tax etc
• Tax on carriages and animals
Assigned Revenues and Compensation: Duty on transfer of property, • Tax on carts
Entertainment tax, Compensation for toll, magisterial fines • Trade Licence fees
• Licence fees under PFA Act

Rental Income: Rent from Civic amenities, Rent from Office buildings, Rent from • Metered/Tap Rate Water Charges, Drainage fees etc of WS&DF
Guest houses, Rent from lease of lands etc • UGD monthly charges
• Rent on lease of lands`

Fees & User Charges: Empanelment & Registration charges, Licensing fees, Fees for
• Rent on buildings
certificates and extracts, Development charges, Regularization fees, penalties and
• Rent on shopping complexes
fines etc.
• Rent on Bunk Stalls
Sale & Hire charges: Sale of forms and publications, stores & scrap, Hire charges • Market fees – Daily markets
on vehicles, equipments etc • Market fees – Weekly markets
• Advertisement fees
Revenue grants, contributions, subsidies: Devolution of State taxes and other • Fees for Bays and other receipts in the Bus Stand
grants • Fees for Slaughter Houses
• Cart Stand/Cycle Stand/Lorry Stand/Taxi Stand Fees Commissioner being the authorised officer to levy the tax approves the above
• Fees for fishery rights proposal and issues orders through special notices. This exercise is done every
• Parking fees month in respect of all wards within the Municipal limits.
• Fees on Pay & Use Toilets
• Income from Cinema Theatre The following time schedule shall be followed for changes in assessments.
Submission of monthly lists by the Revenue Assistant for 5th of next month
b. Non-accruable income a month
Inspection and proposal by the Revenue Officer 15th of next month
In cases where the amount of revenue is determinable only at the point of time
Formal orders through special notices on the tax assessed 30th of next month
it is actually received, such items are treated as non-accruable and the income to such new houses/buildings
is accounted on Cash basis.
After the formal orders are passed and the special notices are issued, all new
For example, in case of sale of tender forms, the ULB’s right to receive the assessments are accounted in the same way as explained in Para 6.3 A.
income arises only when the party approaches the ULB for issue of tender form
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c. Change in Assessment
and pays the cost of tender forms.
All changes due to enhancements, reductions and vacancy remission etc should
6.3 Accounting for Property and Other Taxes be intimated to the Accounts Department through serially numbered Property
Tax Adjustment Slips (MAM10) and Journal Vouchers. For instance under
a. Assessment of Property Tax on existing properties
Section 117-A of the Tamil Nadu District Municipalities Act, Property Tax can be
The property tax is assessed on the buildings and vacant lands within the levied retrospectively for six years.
municipal limits on half yearly basis. So the demand is raised twice in the
The entries to be passed for any enhancement of tax would be same as the
Financial Year in the Demand Collection and Balance Register (MAM 14)
entries explained in Para 6.3A.
i.e. in the months of April and October. The entry for raising the demand shall
be passed by debiting the Property tax receivables Account and crediting the The entry for reduction of current demand of tax shall be passed by debiting
respective Property Tax income account. Property tax account and crediting Property tax receivables account.
Subsequently on receipt of money in respect of such receivables, the amount To account for reduction of tax relating to previous year the Prior Year Income
received shall be accounted by debiting Cash or Bank Account and crediting account is debited and Property tax receivables account is credited.
Property tax receivables account depending on whether it is Current or Arrears The change in assessment might result in a refund if property tax had already
collection. been collected. The accounting treatment in cases where the change in
b. New Assessments of Property tax assessment results in a refund is explained later in this chapter.
The revenue assistants during their spot verification should report every month
through the monthly lists of houses/buildings, the construction of which was
completed or which were occupied. These monthly lists are scrutinised by
the Revenue Officer and tax receivable on such properties are assessed. The
6.4 Accounting for components of Property Tax The Library cess collected shall be remitted to the concerned authorities by debiting
the Library cess payable account and crediting the Bank Account in the General
Collection
Fund.
The Property tax collected includes the following taxes and cess
Detailed entries for the above accounting treatment are given in the Appendix III
a. Property Tax for general purposes
- Accounting Entry Matrix.
b. Water Supply and Drainage Tax
c. Elementary Education Tax
d. Library Cess
6.5 Registers and Documents for collection of
Property Tax
The demand for components of property tax is raised along with the property tax
demand on half yearly basis. Accrual entries for Water Supply and Drainage Tax The registers and documents maintained in respect of Property Taxes will be
and Elementary Education tax shall be passed in the Water Supply and Drainage
• Demand Collection and Balance Statement (MAM 14)
Fund and Elementary Education Fund respectively. While the demand notice issued
• Property Tax Challan Register (MAM 12a)
to the assessee indicates the amount of library cess to be paid, no demand is raised
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• Daily Collection Statement (MAM 08)
in accounts of the ULB for library cess as this is collected on behalf of the Local
• Daily Cheque Collection Statement (MAM 09)
Library Authority and remitted to the concerned department.
• Property Tax Adjustment Slip (MAM 10)
When the consolidated tax collection is made in cash, collection entries are made The formats are given in Appendix IV ‘Formats’.
for general purpose property tax, water supply and drainage tax and elementary
education tax crediting the respective receivable accounts in the respective funds. 6.6 Modes of Daily Collection of revenue
Liability is created for library cess collected in the General Fund since there is no
The following are the modes of daily collection of revenues
demand raised for library cess
a. Collection by revenue assistants: Collections may be in the form of cash,
For non-cash collections (cheque/DD/remittance) of consolidated tax, entries are cheques or DDs
made in the General fund for Property Tax and Library Cess as in the case of cash b. Collection by Zonal Office/Central Office: Collections may be in the form of
collections. cash, cheques or DDs
c. Collection by Collection Centres: Collections may be in the form of cash,

For the Water Supply and Drainage Tax, a liability is created in the General
cheques or DDs.
Fund towards amount payable to Water Supply and Drainage Fund. Similarly,
for Elementary Education Tax, a liability is created in the General Fund towards d. Direct remittance by assessees into the bank accounts: Remittance can be in
amount payable to Elementary Education Fund. Corresponding entries are passed cash, cheques and DDs
in the Water Supply and Drainage Fund and Elementary Education Fund treating e. Online collections: Credit cards, bank transfers
the collections as amounts receivable from the General Fund. f. Treasury Adjustment: For dues from Government departments primarily in
the case of assigned revenues
On actual transfer of money from General Fund to the Water Supply and Drainage
Fund and Elementary Education Fund inter fund transfer entries are passed as
payment entries in the General Fund and receipt entries in the respective funds.
6.7 Accounting for Daily Collections etc. are paid by various government departments by presenting bills in the
Government Treasury and adjusting to the credit of the Personal Deposit
a. Daily cash collections of accruable and non accruable Incomes: The daily Account of the ULB concerned, maintained in the respective Government
collections may consist of accruable incomes as well as non accruable incomes. Treasury. These credits should be accounted for by passing BRV as and when
In respect of accruable incomes, the recognition of income is done at the such transactions take place and watched at the time of reconciliation of the
beginning of the year, treating the amount as receivable. When there is any pass book and the Government Treasury account (monthly).
collection of such item, the amount shall be adjusted against the receivable. In
e. Receipt of arrears of taxes, fees or other income: Daily collection may
case of collection of a non accruable item, the amount received shall be credited
sometimes include arrears pertaining to earlier years. They shall be adjusted
to appropriate Income account.
against receivables of previous years in the same manner as receipt of current
The Property tax collected in cash by the revenue assistants shall be recorded in demand by debiting the collection bank account and crediting the receivable
Property Tax Challan Register (MAM 12a) and Water Charges in the Challan accounts, since the accrual entry in respect of such income would have been
Register (MAM 12b). Entries are passed on deposit of cash to bank at the end passed in the relevant previous year. .
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of the day debiting the bank account and crediting the respective receivable/
f. Advance collection of taxes, fees and other Income: Sometimes, the ULB
income accounts.
may receive tax, fees or other accruable income pertaining to a future period
Income from parking fees which is a non accruable income is accounted by in advance. This cannot be adjusted against receivables, since receivables
debiting the Bank Account and crediting the Parking fees account. comprise of only current demand and arrears. Such amount shall be treated as
‘income received in advance’, and the entry shall be passed by debiting Cash or
b. Direct remittances and Online collections: In case of direct remittance and
Bank Account and crediting advance collection of revenue account.
online remittances by the tax payers in the designated bank accounts, the
collection bank branches shall prepare a Daily Collection Statement (MAM The ‘Advance collection of revenue’ shall be treated as a liability, carried
08) and send it to the Link Bank. The Link Bank will it turn consolidate all the forward and transferred to income in the year in which it becomes actually
Daily Collection Statements and send them to the Municipal Head Office for due, by passing a journal entry debiting Advance collection of revenue account
accounting. Receipt entries are passed debiting the concerned bank account and crediting Receivables Account.
and crediting the income/receivable accounts based on the consolidated
g. Dishonour of cheques: The authorized person is required to monitor the
statement. The tax payer will use the Property Tax Remittance challan (MAM
realization of cheques deposited in bank. In case any cheque gets dishonoured,
01) prepared in triplicate for direct remittance into bank. One copy is retained
it is first entered in the Register of Dishonoured cheques (MAM 11) and an
by the bank, second copy is handed over to the concerned ULB and the third
entry shall be passed for reversing the entry passed earlier. The Receivable/
copy will be handed over to the Tax payer.
Income account credited earlier will be debited and Bank Account debited
c. Daily Cheque/DDs Collection: The cheques/DDs shall be deposited into the earlier will be credited.
collection bank after recording the details in the Daily Cheque Collection
Whenever cash or D.D is received in lieu of the dishonored cheque, fresh entry
Statement (MAM 09) and suitable receipt entries shall be passed.
for collection shall be passed. Any penalties collected for the dishonor of the
d. Collections by Treasury Adjustments: The amounts due to the ULB towards cheque will be credited to ‘Penalties and bank charges for dishonored cheques
surcharge on duty on transfer of property, entertainment tax, grants loans account.
h. Accounting for remission/write off/refund The incomes under fees and user charges which are accruable in nature are
accrued in the beginning of the year by debiting the Receivables Account and
Accounting for remission shall be done by preparing Journal Voucher by
crediting the Income account. On receipt of the Income the Bank account is debited
debiting Remission, refund – Property tax account and crediting Property tax –
and Receivables Account is credited. The Incomes which are accounted on actual
recoverable – current account.
receipt (non accrual items) are accounted by debiting Bank Account and crediting
If remission of Property tax happens after collection of taxes, it may give rise Income account.
to a refund. The entry for refund shall be passed by preparing a Bank Payment
Voucher, and debiting the appropriate Receivables Account. 6.10 Other Incomes
Refund of tax might happen without remission in cases of refund of excess collections. All other incomes which are not accrued are accounted on actual receipt by debiting
The entry for refund of tax in cases of excess collection shall be passed by debiting the Bank Account and crediting the respective income account.
the Property tax- Recoverable – current account and crediting the appropriate
Bank account. Entries for remission of tax are not required in such cases.
6.11 Refund of Incomes
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In cases where the refundable amount is not returned to the assessee and kept
Refunds, remissions of any Income for current year shall be adjusted against the
as an advance collection to be adjusted against subsequent year’s demand,
income and if pertains to previous years will be treated as prior period items.
entries are passed debiting the appropriate receivable account and crediting
the ‘Advance collection - Property Tax’ or ‘Advance collection – Other revenues’
accounts as the case may be.
6.12 Provision for doubtful receivables
Note: Similar entries are passed for accounting vacancy remission. Provision shall be maintained for all doubtful receivables as follows:
Detailed entries for the above accounting treatment are given in Appendix III- • For Property Tax at 100% of the outstanding amount after 12 years and
Accounting Entry Matrix. • For other taxes and other accruable income, 100% of the outstanding amount at
the end of the year
6.8 Accounting for rental income
The amount of provision required to be maintained is calculated at the year end
The accounting for accrual of rental income shall be done by raising demand based and entries are passed for creation of additional provision or write back of excess
on the Rent Agreement (monthly/quarterly/periodic as the case may be). The entries provision as the case may be. For example, the provision required at the end of
to be passed for raising demand and entries to be passed for subsequent collection the year for property tax may be calculated at Rs. 1.5 cr. The provision existing in
of rent are given in detail in Appendix III-Accounting Entry Matrix. the books of account at the end of the financial year may be Rs. 1.2 cr. In this case
entries are passed for creation of additional provision of Rs. 30 lakhs. On the other
6.9 Fees and User charges hand if the existing provision in books is Rs. 1.75 cr, entries are passed for writing
back the excess provision of Rs. 25 lakhs.
The fees and user charges include incomes from sources such as Empanelment and
Registration charges, Licensing fees, Fees for grant of permit, Fees for certificate or Detailed entries for all the above are given in Appendix III-Accounting Entry
extract, Development charges, Regularization fees, Penalties and fines, Entry fees, Matrix
Service and administration charges and so on.
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Expenditure Accounting
7.2 General Procedures
a. Preparation of Bill or voucher: Every payment of the Urban Local Body shall be
supported by a bill or voucher. The bill or the voucher shall have full particulars
of the claim, amount, period to which the claim relates etc.
In the case of supplies received or other purchases, it shall bear a certificate to

the effect that the material is received in good condition (Quality Certificate), and
that it is taken into stock (Quantity Certificate). The page number of the stock
Expenditure Accounting register in which entries pertaining to such material, shall also be recorded on
the bill.
7.1 Expenditure of the ULBs
b. Admission of the bill for payment: The bills, prepared in the prescribed
Expenditure is the amount spent during an accounting period for carrying out manner, shall be verified and passed by the authorized signatory, and sent for
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obligatory or discretionary functions specified in the Act. Expenditure of the ULB approval. On approval of the bill, it shall be admitted for payment. Every bill
generally includes the following: shall bear an order signed by the authorized officer.
c. Accrual of bills: As per the accounting policy on expenditure, all bills shall
a. Establishment expenses: Salaries, wages, bonus, benefits and allowances,
be accrued on their admission, by treating them as liabilities. Since accrual
pension and other terminal expenses
is a non-cash transaction, it shall be done by preparing of a journal voucher
b. Administrative expenses: Rent, rates and taxes, office maintenance, by debiting the appropriate expenditure account and crediting appropriate
communication expenses, Books and periodicals, printing & stationery, liability account.
travelling & conveyance, etc Note: Where subsidiary ledgers are maintained for liability accounts (for example,
subsidiary ledgers for individual party names) necessary entries need to be made in the
c. Operations & maintenance: Power & fuel, consumption of stores, hire charges, respective subsidiary ledger. In the case of computerized accounts, the subsidiary ledger
repairs and maintenance can be automatically generated once accounting entries are passed.
d. Interest & Finance charges: Interest on loans from central and State
d. Payment of Bill: For payment of an accrued bill, a bank payment voucher shall
Government, Interest on loans from International agencies, Bank charges etc.
be prepared. The entry is passed in the bank payment voucher by debiting
e. Programme expenses: Election expenses, own programmes, share of expenses the appropriate liability account and crediting the Bank account. A computer
in programmes conducted by others etc generated cheque shall be used for making any payments.
f. Grants, Contributions and subsidies For payment of a bill for which the liability has not been created, the concerned
expenditure account shall be directly debited in the bank payment voucher and
g. Miscellaneous expenses: loss on disposal of assets, decline in value of
Bank account shall be credited.
investments etc
h. Depreciation
7.3 Accounting for Monthly Salary Bills/ Supplemental is accounted by debiting the ‘Staff welfare’ account and crediting the bank account
out of which the payment is made.
Bills
The pay bills shall be prepared by respective departments and approved by the Head Detailed accounting entries are given in Appendix III-Accounting Entry Matrix.
of the Department. After the approval of the Salary/Supplementary Bill an abstract

(MAM 17) shall be prepared. The net salary of establishment shall be credited to the 7.4 Accounting for Pension
individual bank accounts of the employees. The salary for the month of March shall
Pension may be paid directly from the funds of the ULB to the pensioners or by way
be paid on the first working day of April. The salary of other months shall be paid
of contribution to the Municipal Employees Pension Fund. Expenditure on direct
on the last working day of the month. The pay bill shall be accounted by preparing a
pension payments is accounted as and when it becomes due i.e. monthly. The entry
Journal voucher. The entry for the same shall be passed by debiting the Pay account
shall be passed at the end of the month by debiting pension account and crediting
and crediting the statutory deductions and Salaries & wages payables account. pension payable account. When the pension is actually paid, the entry is passed by
debiting pension payable account and crediting Bank account.
A bank payment voucher shall be prepared for subsequent payment of salary.
The entry for the same will be passed by debiting the Salaries and wages payables
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Expenditure on contribution to pension fund is recognized as and when the
account and crediting the Bank Account with the amount of total salaries disbursed. contribution is made at regular intervals. The entry is passed by debiting Pension
contribution to municipal employees account and Bank account. Alternatively, the
The amounts deducted from the salary of employees, such as PF, LIC, etc shall
pension contribution may be adjusted out of devolution from State also. Since the
be remitted to the appropriate authorities before the due dates. Bank Payment
payment of pension from the Municipal Employees Pension Fund is made by the
Vouchers shall be prepared for these transactions. Director of Local Fund Audit to the pensioners, no accounting entries need to be
passed for such payments.
In respect of recoveries of advances made in the salary bill, the amount recovered
shall be adjusted against the advance outstanding. Contributory Pension Fund (CPF): Staff appointed on or after 1st April 2003 have
to contribute 10% of Pay plus DA towards CPF. An equal contribution amount shall
Note: In the case of Corporations or larger Municipalities, the salary bills may be processed in
the zones. In such cases the deductions from salaries are also made in the zones. However, the be contributed by the ULB concerned. For deduction in the salary the Pay account
remittance may be made centrally in the Head Office. The current accounting manual requires is debited and CPF Subscription Recoveries is credited along with other deductions.
the zones to pass JVs to adjust the deductions made to the Head Office and the Head Office For remittance of CPF to the concerned Government Authority the CPF Subscription
to pass JVs for recording such adjustments. This manual envisages a centralized accounting
Recoveries and CPF Management Contribution is debited and Payment Bank
system with one Trial Balance for the ULB as a whole. The entries may be passed by accountants
Account is credited.
spread across different offices. However, there is only one set of books of account and hence the
need to pass JVs for adjusting such deductions does not arise.
All the entries pertaining to monthly pension payment are entered in the Pension
Arrears of salary (on account of withheld salary, or on account of allowance or Payment Register (MAM19).
special pay sanctioned with retrospective effect) shall be drawn on a separate pay
bill. The arrears bill shall be accounted in the same manner as in the case of an 7.5 Accounting for Development Works
original pay bill.
Development works are those works related to development or maintenance
There may arise cases where the ULB is required to remit the difference in interest of drinking water facilities, roads, bridges and other means of communication,
on Provident Fund arising out of delayed remittance of PF deducted. Such interest buildings etc. Development works are of two kinds, namely:
a) Capital Works: Work resulting in the creation of a fixed asset or enhancing the All the details about the Development works will be maintained in the Projects
value of an existing fixed asset Ledger (MAM 34) and Project Expenditure Statement (MAM 38).
b) Revenue or Maintenance works: Work carried out to maintain an asset in a

good working condition. 7.6 Project Costing
Capital works are accounted by initially treating them as “Capital Work-in-Progress In case of capital projects, all direct expenses irrespective of whether they are
(CWIP)” till completion of work and then transferring them to appropriate fixed establishment expenses, administrative expenses or general expenses are debited
asset accounts. Maintenance works are directly debited to appropriate expenditure to the respective CWIP accounts and not to the expenditure accounts. Capitalization
accounts. of interest on specific borrowings is explained later in this manual.
Note: Where it is found necessary to track individual items of capital work in progress like civil
In the case of common expenses, the total cost is apportioned to individual projects
works, supervision charges, administrative charges etc., suitable subsidiary ledgers may be
created. In a computerized accounting scenario, the subsidiary ledgers can be generated out of
in the proportion of the cost of each individual project to the total cost of all projects.
the information entered during the voucher entry itself.
Illustration:
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Steps for accounting for Development Works: Consider a development work resulting in the formation of a new road with
1. Receipt of EMD along with tender: The Tender Inviting Authority shall receive estimated cost or Rs. 5 crores. The treatment in accounts and for the purposes of
EMD and prepare a receipt. The entry is passed by debiting Cash or Bank account project costing is shown in the Table 6:
and crediting Earnest money deposit account.
Table 6: Project Costing
2. Receipt of security deposit from the contractor at the time of commencement
NATURE OF EXPENSE ACCOUNTING TREATMENT PROJECT COSTING
of work: The contractor pays the necessary security deposit as per the terms of
Salary of supervisor Debited to the CWIP - Roads Rs. 15,000 included in
the contract. The entry for the same is passed by debiting Cash or Bank Account deputed on the project account the project cost
and crediting Security deposit account. (Rs. 15,000)
Expenditure on works Debited to the project CWIP Rs. 1,75,000 included in

3. Accrual of work bills: The work bill shall be accounted by preparing a Journal
(Rs. 1,75,000) – Roads account the project cost
Voucher, debiting the appropriate CWIP/expenditure account and crediting
Salary of departmental Debited to establishment Apportioned to the
amount payable to contractor and statutory and other deductions. executive engineer expenses – Rs. 90,000 project in the proportion
(Rs. 90,000 in total for of the project cost to the
4. Payment of work bill: The payment of work bill is accounted by debiting 3 months) supervising total project cost of all
Accounts payable – Contractors Account and crediting Bank Account. two other projects of 3 projects supervised by
crores each. the Executive Engineer
Note: In the case of capital works, the manner of accounting the bill remains the same,
except that appropriate ‘capital work-in-progress’ has to be debited instead of appropriate (Rs. 5 cr/ Rs. 11 cr) *
‘expenditure’ account. Rs. 90,000 = Rs. 40,910
which gets included in
5. Remittance of Statutory deductions: For remittance of deductions, bank the project cost.
payment vouchers are prepared by debiting recovery and crediting Bank Account. Detailed accounting entries are given in Appendix III - Accounting Entry Matrix
The entry is passed for remittance, for example of Income tax by debiting Income
tax deductions – Contractors Account and crediting Bank account.
7.7 Accounting for Deposit Works directly placed at the disposal of the executing agency, without first the loans/grants
being given to the ULB. The expenditure is incurred by the executing agency in such
Deposit works can be of two types: cases. However, the repayment obligation in the case of loans is on the ULB.
• Works executed on receipt of deposit from other agencies;

In such cases the expenditure on works (capital/revenue) is accounted when the
• Deposits paid to other agencies for certain works to be carried out
project or the assets created are formally transferred to the ULB by the executing
agency. The accounts under for money received and spent under the pooled finance
a) Deposit works executed for other agencies: In these cases the other agency
scheme will be rendered by the executing/implementing agency after completion of
like the TWAD Board makes a deposit with the ULB for certain works to be
the project. The entry is passed on such transfers by debiting concerned expenditure
carried out. The deposit received is treated as a liability and carried till the
or asset account and crediting Loan account and also recorded in the Register of
works are actually executed. The entry will be passed by debiting Bank account
Loans (MAM 43).
and crediting Deposit works – Civil Account.
When the work is actually executed and completed, the expenditure incurred
7.9 Execution of Projects by other implementing
shall be charged to the liability account and not to the expenditure account since
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agencies as PIUs
it does not form part of the expenditure of the ULB. The entry shall be passed by
debiting Deposit works – Civil and crediting Accounts payable – Contractors. There is another category of projects that are executed out of loans/grants received
from the Government by entrusting the work to other agencies like P.W.D. Highways,
b) Deposit works executed by other agencies on payment of deposit by the
TWAD Board and so on known as Project Implementation Units (PIU). In these
ULB: In these cases the ULB makes a deposit with the other agency for execution
cases, funds are transferred to the PIU by the local body at periodic intervals. All
of certain works on its behalf. The entry shall be passed by debiting Deposit
such transfers made are treated as an advance by debiting the relevant advance
works – Expenditure and crediting Bank account.
accounts under Deposit works.
On receipt of detailed statement of expenditure/completion report from the
The PIU utilizes these funds for incurring project expenditure. The PIU prepares
other agency on completion of work, the amount spent on the work by the other
a ‘Project Financial Statement’ for that particular project. The Project Financial
agency shall be accounted in the books of the ULB by debiting the respective
Statement’ shows details of sources of project funds (which includes amounts
expenditure/CWIP/Asset account and crediting the deposit account. This has the
transferred by the local body) and application of funds to various project
effect of charging off the deposit amount to expenditure.
components. The Project Financial Statement is an audited statement and serves as
All entries pertaining to Deposit Works are entered in Deposit Works Register the basis for the local body for booking the project expenditure. A sample Project
(MAM 41). Financial Statement is shown as follows:
7.8 Execution of Projects by other agencies under

pooled finance arrangements
There are projects that are executed out of loans/grants received from the Government
by entrusting the work to other agencies like P.W.D. Highways and TWAD Board.
In such cases, orders are issued to the effect that the loans/grants sanctioned are
Based on the ‘Project Financial Statement’ received from the PIU, entries are passed
debiting the relevant CWIP accounts and crediting the Advance account (to the
extent of advance adjustment), the relevant income account (to the extent of such
Project Financial Statement
income received, eg: grants received directly by PIU, interest on deposits) and the
Name of the Project Providing Underground Sewerage Scheme for Krishnaglri Municipality
Name of the ULB Krishnagiri Municipality relevant liability account. (to the extent of loans if any received directly by the PIU
Project Implementing Agency TWAD Board - Code 361
Name of Division Sewerage Division, Krishnagiri as explained earlier in this chapter).
On completion of the project and settling of advances, entries for capitalizing the
work in progress under relevant fixed assets are passed based on the final ‘Project
(Rs. In Lakhs)
Approved project cost As per Original AS As per Revised AS
Financial Statement’. Illustrative entries are given in Appendix III - Accounting
Loan from TNUDF 606.19 745 Entry Matrix.
Grant from Grant Fund - I 501 2,337.00
Public Deposit Contribution / ULB 562.8 650
Contribution Note: It is important to record the relevant Cost Centre/project in all entries related to such
Interest During Construction by Loan - - works so that information relating to a particular project on sources and application of funds
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Interest During Construction by ULB 29.87
can be easily generated.
Others - -
1,699.86 3,732.00
7.10 Capitalization of Interest on Specific Borrowings

Interest on specific borrowings for capital projects is capitalized till the project is
(Rs. In Lakhs) completed. At the end of each quarter, the interest accrued on specific borrowing is
Sources of Funds Upto Current during Upto
Opening Balance - Division - FY 2009-10 FY 2010-11 FY 2010-11
computed and capitalized by debiting the appropriate ‘Projects-in-progress’ account
Head Office - 104.77 - and crediting the respective Interest expenditure accounts.
Received from ULB 130 433 563
Others (Please specify) - - -
Total 130 433 563
Application of Funds 7.11 Capitalization of Expenditure on Capital Works
1) Payment to Contractors
I) Civil Works - Contractors Payment - 262.28 262.28 On completion of construction of the asset, the asset becomes ready for use. Thus,
I) Civil Works - Mobillsation Advance - 200 200
ii) Others (Third Party Inspection) - - - it becomes necessary to transfer the cost incurred for construction (which is
2) Transfer of Utilities
accounted in capital work-in-progress account) to the relevant asset account. This
3) Payment too ther departments
I) Road restoration - - - process is called capitalization.
Ii) Others (Southem Railways) - - -
4) Centage & SupervisIon 2.99 47.77 50.76
5) Others (Advertisement, Printing Charges 22.24 8.12 30.36 On the completion of work the expenditure shall be capitalized by transferring
and Traveiling Expenses)
Total . 25.23 518.17 543.4
the cost of the asset from CWIP Account to appropriate asset account by raising a
Closing Balance - Division - Journal Voucher. The entry shall be passed by debiting the concerned Asset account
Head Office 10477 1960 1960
and crediting the CWIP Account.
This is to certify that the expenditure reported is in agreement with the books of account & Incurred following procurement
procedures of the World Bank and all supporting documents are retained at Internal Audit Wing, CE’s Office, Vellore.
7.12 Accounting for purchase of material/ earlier debited when the materials was issued. Such materials shall be entered
in the Priced Stores Ledger (MAM 29). The entry for the same will be passed
Stores Accounting
by debiting Stores account and crediting the Expenditure or CWIP Account.
a. Purchase of stores
Stores can also be issued to contractors for undertaking works at a value arrived
The ULB may purchase and maintain stock of consumable and general items like at by adding a margin to the cost of the material. For such issues, entry is passed
office supplies, vehicle spares, street-lighting items like bulbs, poles, cleaning debiting the ‘Material Cost Recoverable a/c – Contractors’ for the full value of
material and so on. Stock items must be classified and coded maintaining the issue and crediting the appropriate stores account for the cost of the material
distinction between inventory and non-inventory items. Materials which are issued and ‘Other income’ account for the margin above cost. As and when the
used for asset creation are generally classified as Inventory items. Materials stores are utilized by the contractor, the corresponding amount is debited to the
which are used for maintenance purposes are classified as Non inventory items. concerned CWIP account and credited to the ‘Cost Recoverable a/c – Contractors’.
For any unused material returned by the contractor, entry is passed debiting the
The procedure for passing the bill and making payment is the same as in the case
appropriate stores account for the cost of the material and the ‘Other income’
of expenditure bills discussed earlier. Receipt of material is accounted when
account to the extent of the margin contained in the material returned and by
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the material is received and taken into stock. Receipt of material is recorded
crediting the ‘Cost Recoverable a/c – Contractors’ for the full value of the stores
in a Material Receipt Note (MAM 30). A journal voucher shall be prepared to
returned.
account the purchase. An entry shall be made in the Priced Stores Register
(MAM 29). The appropriate stores account shall be debited. And the ’Accounts c. Stores valuation
payable-Suppliers’ Account shall be credited. All the particulars of purchase are

Inventory shall be valued at cost or net realizable value whichever is lower
maintained in Purchase Book (MAM 40). The entry shall be passed by debiting
on First in First Out (FIFO) basis. Cost shall include the purchase cost and all
Appropriate Stores Account and crediting Accounts payable – Supplier’s account.
costs incurred to bring the stores to the present location and condition like
For payment to the Supplier, a bank payment voucher shall be passed by debiting transportation costs and other incidental costs. At the time of preparation of
Accounts payables – Supplier account and crediting Bank account. financial statements, the closing balance of inventories is valued. Any decline in
the value below cost is written off by preparing a Journal voucher debiting the
b. Issue of Stores
Stores written off account and crediting Stores account.
The material is periodically issued either to individual works (in case of
Periodical physical verification of the closing stock of various materials is
consumables related to works) or to the departments (in case of general stores).
undertaken and variances if any are investigated and appropriate entries are
As and when the material is issued, a Material Issue Note (MAM 31) is prepared.
made in accordance with the governing rules. Stores Adjustment Slip (MAM
A journal voucher is passed debiting the relevant expenditure/CWIP account
33) is prepared to record any variances found.
and crediting the Stores account:
d. Asphalt accounting
The Officer who receives materials from stores will utilize them in work. If, in
due course of time, he finds that some of the materials received are not required The procedure for accounting for asphalt is the same as that followed for other
for the work, he will arrange to return them in good condition to the stores stores. The value of stores is capitalized or charged to revenue on issue depending
by preparing the Stores Return Note (MAM 32) in triplicate in the prescribed on whether the asphalt was issued for capital work or maintenance work. The
form. It should be credited to the same expenditure/CWIP account which was scheme of entries is the same as followed for general stores accounting.
e. Petrol/diesel accounting prescribed in the BSUP guidelines. More detailed heads can be added for BSUP as
required in future. No BSUP heads have been created for non cash expenditure like
In the case of petrol/diesel/oil, there may arise differences between book stock
depreciation since the BSUP guidelines apply to the cash spending only including
and physical stock due to evaporation/shrinkage due to the intrinsic nature of
spending for capital purposes.
the material. In such cases, any abnormal loss shall be investigated as per the
governing rules. The entry for accounting such losses will be passed by debiting Whenever expenditure is incurred on BSUP, the relevant BSUP expenditure heads
the ‘Stores written off – evaporation loss’ account and crediting the respective shall be debited. In addition, to this, the relevant BSUP scheme (cost centre) code is
stock account. also suffixed so that the expenditure on specific BSUP schemes can also be tracked.
Detailed entries for stores accounting are given in Appendix III – Accounting
Entries for BSUP are given in Appendix III-Accounting Entry Matrix
Entry Matrix.
7.13 General Expenses 7.15 Provision for expenses

In addition to Establishment expenses and works expenditure, the ULB may Provision shall be made at the end of each quarter for expenses incurred but for
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incur other expenditure like travelling expenses, telephone, printing & stationery, which bills have not yet been received. The amount of provision shall be estimated
insurance and so on. based on past trends or other information. Similarly, provision shall be made for
expenses payable at the year end for bills which are received upto the 30th of
The procedure for passing entries for accruing the bills and for their payment in the April of that year or till the closure of books, whichever is earlier. The entry shall
case of above expenses shall be the same as explained under General Procedures be passed by debiting the expenditure account and crediting Accounts payable –
in Para 7.2. . The accounting entry will be passed for accounting the bill by debiting Expenses account.
Expenditure account and crediting Liability account. For payment of bill the
Liability account will be debited and Bank Account will be credited.
Bills Inward Register (MAM 15) is maintained in the main office departments and
zonal offices of the Corporations and in various wings. This register will serve as an
important record to provide for payments in the next financial year under liabilities.
A similar register is prescribed separately for the Accounts Cell as (MAM 16). This
will be periodically reviewed by the Commissioner.
7.14 Expenditure on BSUP

In accordance with the guidelines issued by the Government, all ULBs need to
earmark a minimum of 25% of their financial resources towards providing basic
services to the urban poor in their budget. This requires the tracking of expenditure
on Basic Services for Urban Poor separately. In order to facilitate this, separate
detailed heads have been provided in the Chart of Accounts (in Appendix II) as
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Fixed Assets and
Depreciation
8.2 Types of Fixed Assets

Fixed Assets can be broadly classified as;
Infrastructure Assets which include Roads and Bridges, Water works, Sewerage &
Drainage, Public lighting etc
Other Assets which include Land, Buildings, Furniture & fixtures, Vehicles etc
Fixed Assets and Depreciation 8.3 Creation of Fixed Assets

Creation of fixed assets may happen in the following ways:
8.1 Basic Terms
a. Works carried out either through contractors or through departmental execution.
Capital Work in Progress: Fixed Assets under construction
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b. Purchase of movable and immovable assets such as furniture and fittings, office
Capitalization: The process of transferring the total cost of a capital work-in- equipment, vehicles, plant & machinery,
progress to an appropriate fixed asset account on completion of work
c. The ULBs may receive fixed assets by way of grant or donation – for example
Depreciation: It is the amount at which a fixed asset is written off over its useful donation of land by a private company for road formation, donation of bus
life. It can also be considered as a non-cash expense that reduces the value of an shelters, buildings etc.
asset as a result of wear and tear, age or obsolescence.
Estimated Useful Life: Period over which a fixed asset is expected to be used
8.4 Accounting for Fixed Assets
Fixed Asset: Asset which is held for long term use by the ULB for providing services a. Accounting for purchase of Fixed Assets: When an asset is acquired for a
or for use in administrative function specific purpose and not as a part of a project, it is immediately capitalized upon
its purchase. The department which purchases the Fixed Asset shall prepare
Original Cost or Historical Cost: Total cost associated with the purchase of an a FAJV for the purchase and forward it to Accounts Department. The cost of
asset including expenditure incurred to bring the asset to its location and installing the fixed assets shall also include installation, duties, taxes and other incidental
it. Original cost includes the cost at which the asset is purchased, freight, insurance expenses for example transport charges, port dues, advertisement charges for
and installation expenses at the time of acquiring the asset tender notifications etc incurred towards acquisition of an asset. The fixed
asset shall be recorded at the gross value by debiting the respective fixed asset
Written down Value (WDV): It is the net value of the asset i.e. original cost of the
account and crediting the accounts payable – suppliers account.
asset minus up-to-date depreciation
b. Payment made for purchase of Fixed Asset: After obtaining approval of the
concerned authority, the Accounts Department shall prepare a Bank Payment
Voucher and draw a cheque. On payment, the Accounts payable – Supplier is
debited and Bank Account is credited.
Fixed assets acquired for a non-monetary consideration or free of cost by way is no revaluation reserve the entire amount of decrease is charged under the
of grants in kind or gifts, alienations or vested lands shall be accounted at fair ‘Assets writer off – Fixed Assets’ account. For recording increase of the value
value determined on the basis of a valuation by a certified valuer. Heritage of Fixed Assets the concerned Fixed Asset account is debited and Revaluation
assets transferred to the ULB shall be accounted at a nominal value of Re. One. reserve account is credited. For recording decrease in value of the asset
Revaluation reserve and Assets written off accounts are debited and concerned
c. Additions to existing fixed assets: Any addition or improvement to a Fixed
fixed asset is credited.
Asset that results in increasing the utility or useful life of the asset shall be
Detailed entries are in Appendix III-Accounting Entry Matrix.
capitalised and included in the cost of Fixed Asset. The entry shall be passed
by debiting fixed assets account and crediting Accounts payables – Suppliers
account. 8.5 Capitalization of Assets after project completion
d. Sale/Disposal of Fixed Assets: In respect of the Fixed Asset to be sold, the Assets under construction shall be shown as Capital Work-in-progress. On
Accounts Department shall compute the Written Down Value for that Fixed completion of construction of the asset, the asset becomes ready for use. Thus, it
Asset. Written Down Value of an asset is calculated as Cost of the Fixed Asset becomes necessary to transfer the cost incurred for construction (which is accounted
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minus Accumulated Depreciation provided till the previous year minus in capital work-in-progress account) to the relevant asset account. This process is
Provision for Depreciation made during the year till the month of disposal. If the called capitalization.
Assets are disposed at profit the Bank Account and Fixed Asset – Accumulated
On receipt of Contract Completion Certificate from the Engineering Department,
depreciation is debited and concerned Fixed Asset account and Profit on sale of
the Accounts Department shall capitalize the amount lying in the Capital Work-
asset account is credited. If Assets are disposed at loss the same entry is passed
in-Progress Account and convert the amount pertaining to the Capital into a Fixed
with an exception that the loss on sale of asset is debited.
Asset.
e. Transfer to Assets under disposal: Once a decision is taken to dispose the
Detailed entries with regard to Capitalization have been given in Appendix III-
Asset by a ULB, depreciation is no longer provided on that asset and asset is
Accounting Entry Matrix.
transferred to Assets under disposal Account. Once an asset is transferred to
‘Assets under disposal’, no depreciation is charged on that asset from that point
onwards. The entry shall be passed by debiting Asset under disposal account 8.6 Impairment of Assets
and crediting Fixed Asset account.
An asset is impaired when its carrying amount (i.e. the cost less accumulated
Note: The Assets are transferred to Assets under Disposal only when there is expected time
depreciation) exceeds its net realizable value. An impairment loss is the amount
lag between the decision to dispose and the actual disposal.
by which the carrying amount of an asset exceeds its net realizable value. The
f. Revaluation of Fixed Assets: Fixed assets may be revalued as and when it impairment loss shall be adjusted against revaluation reserve if any for that asset
is required or decided. An increase in net book value arising on revaluation and any excess should be charged to the income and expenditure account. The entry
shall be credited to a reserve account under the Municipal fund as ‘Revaluation passed shall be similar to the entry discussed above with regard to a reduction in
Reserve Account’. A decrease in net book value arising on revaluation of fixed value on revaluation.
assets is charged to the Revaluation reserve to the extent of an increase in value
on an earlier revaluation. Excess if any is charged to the Income and Expenditure
accounts under ‘Assets written off – Fixed Assets’ account. Similarly, when there
8.7 Accounting for assets under litigation
All the fixed assets accounted in the books of ULBs 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.
8.8 Maintenance of Asset Registers

The Asset Register (MAM 27) which will be maintained category wise and assets are
recorded at their original costs in case of bought out assets or the capitalized costs
in case of transfer from capital work in progress. The maintenance of this register
is the responsibility of the Engineering Department. The Municipal Engineer will
arrange for annual physical verification of all items of assets and take appropriate
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action wherever there is discrepancy. Separate Asset Register shall be maintained
by the Town Planning Officer for lands. The Asset register shall be maintained in a
computerised format.
8.9 Depreciation
At the end of the accounting year, depreciation shall be provided on each class
of Fixed Asset at the prescribed rates. The amount of depreciation to be provided
each year shall be computed by applying the depreciation rates to the written down
value of Fixed Asset as per the rates given in the accounting policy. The entry shall
be passed to record depreciation by debiting Depreciation on Fixed Asset account
and crediting Accumulated Depreciation – Fixed Asset account. No depreciation
shall be charged on heritage assets accounted at a nominal value of Re. One. Assets
costing less than Rs. 1,000 shall be fully depreciated in the year of purchase itself.
Depreciation Work Sheet (MAM 37) is maintained to calculate depreciation.
Note: In the existing manual ‘Accumulated Depreciation’ is shown as a liability in the Balance
Sheet, after debiting the depreciation due under the major head Depreciation. However in
the revised manual for better presentation of Financial Statements it is required to show
Accumulated Depreciation as a deduction from the Gross value of asset. Details for the same are
given in Accounting Policies on Fixed Assets. Hence in the Chart of Accounts also Accumulated
Depreciation is shown under the Major head Asset Code 411. This Group will have a Net Credit
Balance.

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Accounting for
Grants and Schemes
When a Specific Grant is received in advance, the ULB is required to submit an

‘Utilisation Certificate’ in the manner, prescribed in the Grant Sanction Order.
9.2 Accounting for General Grants

Receipt of General Grant: A General grant received for revenue purpose will
be treated as income. The entry for receipt of General Grant shall be passed by
debiting Bank Account for General Grant and crediting the respective Revenue
grant account.
Accounting for Grants and Schemes

9.3 Accounting for Specific Grants
9.1 Grants received by the ULBs Specific grants could be under a scheme or programme. Specific grants may also
be received though not under a particular scheme but to be utilized for a specific
Grants received by the ULB may be of a capital or revenue nature. A Capital Grant
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purpose.
is usually utilised for capital expenditure i.e. creation of a fixed asset (like purchase
of land, building, equipment, facilities, etc.). A Revenue Grant, on the other hand, is The concept of specific cost centres is explained in detail in Chapter 4 Chart of
generally utilised for meeting recurring expenditure, the benefits of which usually Accounts. Each scheme has a cost centre code against which income, expenditure,
expire within the accounting year in which it is incurred. assets and liabilities are accounted. Transactions related to specific schemes are
accounted against these cost centre heads to have proper information and control
Grants may be received for General Purpose or a Specific Purpose.
over such transactions. The cost centre code is suffixed along with the account head
a. General Purpose Grants: Grants received for general purposes are usually for such transactions. Non scheme specific grants may also be associated with a
in the form of a lump-sum payment from the State Government to facilitate particular cost centre for the purpose of tracking and reporting.
meeting certain expenditure (usually revenue in nature) relating to the Urban

Specific Grants could either be received in advance or as a reimbursement of the
Local Bodies activities. Examples of general grants could be grants received in
expenditure already incurred. These could be Revenue or Capital in nature, or a
compensation of toll or other revenue sources foregone by the ULB.
combination of both.
b. Specific Grants: The ULB also receive grants for carrying out specific projects/
Receipt of Specific Grant: The Grants received by an ULB under various Schemes
schemes or for meeting specific expenditures. These can be Revenue or Capital in
of the Central/State Government have to be used for the purposes for which the
nature based on the purpose for which they are received Certain Specific Grants
Schemes are drawn, based on approved action plan. The ULB is generally required
can have both, capital and revenue components, e.g., grant for construction of
to open a separate bank account for each such Scheme, and it shall maintain a
new roads and subsequent repairs and maintenance of roads. Specific Grants
separate bank book as per the terms and conditions of the Scheme. For the receipt
may either be received in advance or as a reimbursement of the expenditure
of Specific grant under a scheme the entry is passed by debiting Bank Account
incurred by the ULB.
pertaining to that Scheme and crediting Scheme account.
For the purposes of accounting treatment, SFC Devolutions shall be considered

Grants receivable: The ULB might have information about the sanction of a
as grants from the State Government and accounted accordingly.
particular grant. This may be based on a sanction order from the government.
The ULB may also incur certain expenditure in anticipation of the grant based Investments made out of specific grants received in advance: Investments made
on such sanction order. In such cases, entries are passed to record the receivable from Specific Grants received in advance shall be entered in a Grants Register
towards grants by debiting the ‘Specific Grant Receivable’ account and crediting the (MAM 42) to be maintained. Income from such investments are not treated as part
specific grant liability account. When the amount of grant is subsequently received, of the income of the ULB but as part of the specific grants received to be utilized
the entry is passed crediting the ‘Specific Grant Receivable’ account and debiting for the specific purpose. The accounting entries /procedures to be followed for
the respective bank account. investments of such moneys are
Revenue expenditure out of Specific Grants: Revenue expenditure out of scheme

a. For Investment out of Scheme Account the entry is passed by debiting Other
Funds/specific grants shall be debited to appropriate revenue expense account, with
Investments account pertaining to that Scheme cost centre and crediting General
separate cost centre code for the Scheme concerned, and credited to the Scheme
Bank account pertaining to that Scheme cost centre.
Bank Account.
b. For Receipt of Interest on Investment the entry passed by General Bank account
Transfer of funds at the year end: At the end of the year or at periodic intervals pertaining to that Scheme cost centre and crediting the Scheme account.
at the time of generation of financial statements, an amount equivalent to funds
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c. When Investments are disposed at a profit the entry is passed by debiting
utilized for revenue purpose, shall be transferred from Scheme Grant Liability
the Bank Account pertaining to that Scheme cost centre and crediting other
Account to Schemes Grant Income Account.
investments pertaining to the Scheme Cost centre of that Scheme and Scheme
Capital expenditure out of Specific Grants: Capital expenditure out of Scheme Grant Account.
funds/specific grants shall be debited to Scheme CWIP Fixed Assets account, and
Detailed entries are given in Appendix III-Accounting Entry Matrix
crediting Payables Account.
Capitalization on completion of the acquisition/construction: The funds utilised

9.4 Grants received by the ULBs as a Nodal Agency
for capital expenditure will be transferred to the respective fixed asset account by ULBs may receive grants as a nodal agency under certain schemes, wherein
debiting the Fixed Asset account and crediting the CWIP Account. the expenditure of the schemes are for a set of beneficiaries. In some cases, the
scheme expenditure is met by the ULB directly out of such receipts. In other cases
Transfer of amount to Capital Contribution: The portion utilized for capital
amounts are paid to the beneficiaries who upon spending will produce the relevant
expenditure shall be transferred to Capital Contribution, with separate cost centre
expenditure / utilisation statement. In both the cases, the expenditure incurred is
code for each scheme as and when the fixed asset is capitalized. The entry for
not part of the ULB expenditure and is treated as a current asset. At the end of the
the same is passed by debiting Scheme grant account and crediting the Capital
scheme, the current asset and grant liability accounts are set off to the extent of
contribution account. The balance in the Scheme Account at the end of the year
utilization. The accounting entries for the same shall be
represents the unutilized scheme balance.
Refund of unspent grant amount: Certain specific grants might contain a condition a. When the ULB receives a Grant as a Nodal Agency entry will be passed by
that any amount lying unspent at the end of the scheme shall be refunded to the debiting Bank account pertaining to the Scheme Grants and crediting the Grants
original donor. In such cases, on refund of such unspent amounts entry shall be for specific purpose liability account.
passed debiting the respective Scheme/Grant Liability Account and crediting the
Scheme Bank Account.
b. Liability on receipt of bill pertaining to expenditure out of the grants received
as a Nodal agency is accounted by debiting specific grant expenses account and
crediting the Income tax deductions, Royalty payable and Accounts payable
account as appropriate.
c. On payment the Accounts payable account is debited and Bank Account – Grants
credited.
d. For passing entry for transfer of scheme expenses on completion of Schemes

the Grants for specific purpose account is debited and Specific Grant expenses
credited.
Detailed entries are given in the Appendix III-Accounting Entry Matrix.
9.5 Deductions made at the time of release of grants

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At the time of release of grant, the State Government or donor agency may deduct
from grants the payments due by ULBs like Electricity charges, Interest on loans,
Loan instalments etc. In such a situation, grant is accounted at gross amount, and
the deduction is debited to appropriate expense or loan account. The net amount
received is debited to the appropriate ‘Grant Bank Account’.
9.6 Grants received in kind

Grants received in kind and gifts, alienations or vested lands shall be accounted at
the fair value of the asset received. The transaction will be accounted by debiting
the respective asset account and crediting the relevant grant/donation income
account.
9.7 Maintenance of Grant Registers

The Accounts Department shall maintain a Grants Register (MAM 42) with
separate registers for capital and revenue grants and separate pages for each grant
for recording details of receipt of grant and expenditures incurred from it.
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Other Transactions
The advance amount is normally recovered from the salary of the employee. When
the advance is recovered by cash or cheque, the cash or bank account is debited and
the loan or interest recoverable account is credited as explained below.
The recovery of advances is done in one of the following methods: a) Recovery of

full principal followed by recovery of interest or b) in equated monthly instalments
over the term of the advance.
In the case of a) above, the recoveries are first adjusted to the advance account and
Other Transactions on full recovery of principal, subsequent recoveries are adjusted to the ‘Interest on
staff advance- recoverable account’.
The previous Chapters explain in detail, accounting of income, expenditure,
fixed assets and depreciation, scheme accounting etc. This Chapter covers those In the case of b) above, the principal and interest components of each recovery
transactions which are not covered by the other Chapters. are identified separately and respectively adjusted to the advance account or the
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interest recoverable account.
10.1 Finance charges debited by the Bank Note: The entries for all types of employee advances listed in Chart of Accounts Major Head 460,
Minor Head 10 follow the same pattern as discussed above
Banks collect service charges for the various services rendered by them such as
issue of cheque books, issuing bank statements; pay orders, cheque dishonour All entries pertaining to employee loan advances are recorded in Register of Loan
penal charges etc. Such charges are collected by the banks normally by debiting the & Advances to employees (MAM 18A and 18B)
bank account of the customers. On obtaining the bank statement from the Bank,
the ULB shall scrutinize the statement for debit of any bank charges. After checking
10.3 Imprest Accounting (Permanent Advance)
the bank charges, entry shall be passed for accounting the expense by debiting the
Bank charges account and crediting Bank Account The Imprest amount is also known as Permanent Advance. The Advance will be
given to a specified class of Officers. The concerned officers will personally be
responsible to account for the imprest amount drawn by them. When the imprest is
10.2 Advances paid to employees and recovery of
paid to the concerned Officer, a BPV is passed by debiting General Imprest Account
advances and crediting the Bank Account. Subsequently when accounts are rendered for
The advances paid normally to employees of ULBs are festival advance, education the amount spent the expenses account is debited and General Imprest Account is
advance, tour advance, computer advance etc. Payment of advance shall be done credited. The accounts will be drawn on 31st March every year and the same will
preparing a bank payment voucher, by debiting Loans and advances to employees be verified and certified.
account and crediting Bank account.
Note: This is a departure from the existing system of accounting of expenditure out of Permanent
Advance directly against the expenditure heads.
In the case of interest-bearing advances such as vehicle advance, house-building
advance etc, entry for interest on advances shall be passed annually or whenever
it falls due as per the sanctioned terms by debiting Interest on staff advances –
Recoverable account and crediting Interest on staff advance.
10.4 Loans received by ULBs 10.5 Investments made by ULB

A ULB may avail loans from the Government, banks or financial institutions for The ULB may invest its surplus funds temporarily in interest-bearing investments.
its projects subject to powers of borrowing applicable under the respective Acts. Such investments may be in the form of term deposits in bank or in government
In the case of loans from banks or financial institutions, prior approval of the securities.
government is required. The ULB has to repay the loans in regular instalments
a. On making an investment say Fixed Deposit the Fixed Deposit Account is debited
and also pay interest according to the terms and conditions of the loan agreement.
and the Bank account is credited.
The loan is considered as a liability, and repayment of loan is adjusted against the
liability. Interest on loan for general purposes is considered as an expense. Interest b. On receipt of Interest say on Fixed Deposit, in case the interest is non cumulative
for the construction period on loan taken for creation of capital assets/projects then the Bank account is debited and Interest on investments/Fixed deposit
shall be capitalized against the respective asset/CWIP accounts. At the end of the account is credited. In case of cumulative interest, Interest accrued on fixed
year, interest payable, if any, shall be accrued, and treated as a liability. All entries deposit is debited and Interest on investments/fixed deposits is credited.
relating to loans are entered in Register of loans (MAM 43).

c. On maturity of Investment say Fixed Deposit the Bank account is debited and
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Fixed Deposit Account is credited.
a. For receipt of loan the ‘General Bank Account: Loans’ is debited with the loan
amount received and Loans from State Government/Other institutions account d. On disposal of investments for profit the Bank account is debited and Investment
is credited. Account and Profit on sale of investments is credited. If the investments are
disposed for a loss the Bank Account and Loss on sale of investments is debited
b. For receipt of loan from State Government through the Treasury, the ‘Personal
and Investments account is credited.
Deposit Account – Treasury’ account is debited with the loan amount received
and Loans from State Government/Other institutions is credited. On subsequent Note: The ULB may subject to necessary approvals also invest in money multiplier schemes
wherein units are allotted against the investment. In such cases, the income from investment
transfer from Treasury, the ‘General Bank Account – Loans’ is debited and the
is recognized only when the units are sold. Such income is recognized as a profit or loss on
‘Personal Deposit Account – Treasury’ account is credited by passing a Transfer sale of investments as explained earlier.
Voucher.
c. For payment of installment the Loan Account and Interest on Loans Account is 10.6 Sinking Fund
debited and General Bank Account – Loans is credited.
The sinking fund is created by transferring a portion of the general revenue to the
d. For creation of liability for outstanding interest at year end the Interest on Loans sinking fund. A sinking fund is generally created for repayment of loan. A separate
account is debited and the liability account, Interest payable is credited bank account is opened to operate the sinking fund. The amount transferred to
the sinking fund is invested in long term investments, and the interest on such
e. On subsequent payment of Interest the Interest payable account is debited and
investment is added to the sinking fund balance. The sinking fund shall be used only
General Bank Account – Loans is credited.
for the purpose for which it is created. For the purpose of monitoring, a separate
The ULB may also borrow under pooled finance schemes. In such cases, the cost centre may be opened for the Sinking Fund. A Sinking Fund Register (MAM
liability for repayment arises even though there is no money actually coming 39) shall be maintained to monitor the sinking fund.
in. The liability in such cases arises when the corresponding assets created out
of the pooled finance by other agencies are transferred to the ULB. Detailed
explanation and accounting for such loans is given in para 7.8 of this manual.
a. On creating a Sinking Fund the Transfer to Sinking Fund is debited and Sinking pertaining to subsequent years and crediting the expenditure account. In the next
Fund pertaining to the Cost centre is credited. On transfer of money into Sinking financial year entry is passed by debiting the expenditure account and crediting the
Fund Account the Sinking Fund Bank Account pertaining to that particular Cost prepaid expenses account to the extent it pertains to that year. Prepaid expenses
centre is debited and Bank Account is credited. are recognized only when the amount is significant.
b. On Investment of Sinking Fund Money in say Debentures and Bonds the Example for prepaid expenses is Insurance premium paid on 1st Jan 2011 for 12
Debentures and Bonds – Sinking Fund Investments pertaining to the Cost centre months. This amount has an element of prepaid expense to the extent of the Premium
is debited and Sinking Fund Bank Account pertaining to the Cost centre is
paid for 9 months (April to December) which relates to next financial year.
credited.
The same has been illustrated with entries in Appendix III-Accounting Entry
c. On sale of Investments for profit the Sinking Fund Bank account – Cost centre is
Matrix
debited and Debentures and Bonds – Sinking Fund Investments – Cost centre is
credited. The profit element is also credited to Sinking Fund pertaining to that
Cost centre. 10.9 New Health Insurance for ULB employees
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d. On repayment of loan out of Sinking Fund the respective Loan Account is debited Under the New Health Insurance Scheme the ULB remits the entire annual premium
and Sinking Fund Bank account pertaining to that Cost centre is credited. to the service provider in advance at the beginning of the year. The amount will
then be recovered every month from the employee’s salary as per rate applicable.
e. At year end utilised amount is transferred to General Reserve by debiting
The amount which remains unrecovered is adjusted against advance and treated
Sinking fund – Cost centre Account and crediting General reserve account.
as Municipal contribution. For advance payment of annual premium, entry is
Detailed entries are given in Appendix III-Accounting Entry Matrix. passed by debiting Advance recoverable – Expenses and crediting Bank Account.
For monthly salary adjustment Pay account is debited and advance recoverable
10.7 Grants in aid paid by ULB – Expenses is credited. For year end adjustment Health Insurance Local Body
contribution account is debited and Advance recoverable – Expenses is credited.
The ULB may incur expenditure payment of grants in aid to external agencies.
These grants in aid are given for purposes of Health and Education only as per the
existing provisions. All such grants in aid are accounted as and when paid. The 10.10 Inter fund transactions
entry is passed by debiting the Grants, contributions and subsidies account and
There might arise transactions involving transfer of amounts amongst Funds. For
crediting Bank account.
example, receipt of Water Supply and Drainage Tax is done in the General Fund
but pertains to the Water Supply and Drainage Fund. The relevant entries for such
10.8 Prepaid expenses transactions are given in the appropriate places in this manual. In the Chart of
Prepaid expenses are expenses for which payment is made in current year and the Accounts (see Appendix II) all inter fund receivable/payable accounts are grouped
benefit is likely to be received in the subsequent years. For accounting the prepaid under the same grouping i.e. 470-20. The purpose of creating the Receivables and
expenses paid in the current year, the concerned expenditure account is debited Payables Accounts for the Inter Fund Transfers is to reflect the net balance in each
and Bank Account is credited. To adjust the expense pertaining to subsequent years, fund at any given point of time.
entry is passed in the current year by debiting prepaid expenses with the amount
10.11 Endowments
The ULB may manage and superintendent any charitable endowment under the
provisions of the Tamilnadu Endowments and Escheats Regulations, 1817. An annual
report of the financial transactions of such endowment shall be prepared along
with a Statement of Receipts and Payments for the endowment. Such endowments
shall be kept outside the books of account of the ULB.
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11
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Period End Procedures
that all the receipt and payment entries have been passed for the day and the
postings to the General Ledger are completed. The bank book is initialed both
by the Cashier and the Manager. In the case of computerized accounts, the day
end procedures need to include the bank book closing (automatic or manual).
c. Filing of vouchers: As has been explained in the earlier chapters, every

accounting entry is supported by a voucher (BRV, BPV, TV, and JV). At the end of
the day all the vouchers pertaining to transactions for that day shall be filed in
the respective files. For example, all the bank payment vouchers for the day shall
Period End Procedures be filed in the bank payment vouchers file. In the case of computerized accounts
it shall be ensured that the system generated voucher number is mentioned on
11.1 Introduction the physical voucher before filing it.
Period-end processing involves activities that have to be performed on daily, 11.3 Month end procedures
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monthly or yearly basis, for closing of books for the day, month or year respectively.
In addition to the day end procedures, there are certain month end procedures
Period end procedures are essential to ensure correct and complete accounting. It
that have to be followed, before compiling the monthly accounts. The key activities
is also a prerequisite for generation of financial statements and various MIS reports
under month end procedures are:
for decision making. These procedures also ensure that the books of account of the
ULB are in consonance with the other records maintained. This Chapter discusses
a. Reconciliation Procedures: Reconciliation means the process of tallying the
the ‘day-end’, ‘month-end’, and ‘year-end’ procedures in detail
figures shown by the books of accounts with that shown by other subsidiary
records. In cases where the figures do not tally, a statement clearly showing the
11.2 Day-end Procedures cause of difference and the amounts needs to be prepared. The main items of
reconciliation are given in Table 7.
As part of double entry accounting, there are certain activities that have to be
performed at the end of each day. Performing these activities signifies that the
accounting for transactions is complete for that day. The main day end procedures
to be performed are:
a. Closing of Day Books: All the supporting day books which are the primary
records of receipts and payments shall be closed. When the day books are
maintained in a computerized form, the day end procedures need to be built
into the software. This will ensure that the day book for a particular day will not
be accessible for entries after its closure for the day.
b. Closing of Bank Book: The bank book shall be closed daily after checking and
closing all the day books. After the bank book is closed, there is no scope for
modification of any entry. Before closing the bank book, it shall be ensured
Table 7: Month end reconciliation procedures

SUBSIDIARY
ACCOUNTING REGISTER/ WHAT TO MANNER OF
SUBSIDIARY RECORD OTHER RECONCILE? RECONCILIATION
ACCOUNTING REGISTER/ WHAT TO MANNER OF RECORD
RECORD OTHER RECONCILE? RECONCILIATION
Loan accounts Register of Principal The entries of loan
RECORD
in the Ledger Loans (MAM and interest receipts and repayments
Bank Book Bank Closing bank Bank reconciliation 43) outstanding and balances outstanding
Statement balance as per procedure explained in in the Ledger are
bank book and Chapter 12 checked with those in the
as per bank Statement of account of
statement lending agencies.
Various Corresponding Total income The entries and balances Statutory Register for To check whether Remittances as per
‘Receivable’ DCB and other and outstanding in the Income and liability Statutory all recoveries challans and entries in
and ‘Income’ Registers receivables, if Receivables ledgers shall accounts such Deductions are remitted Ledger (debit entries)
accounts in the any, as per ledger be checked with the as TDS, Works to appropriate are checked against
Ledger (For and as per DCB entries and balances in Contract Tax, authorities on recoveries (credit entries).
example, tax Register the corresponding DCB employee, due dates, and
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on land and Registers. recoveries etc whether balances
buildings, rent are correct.
etc)
Various Payable Total of amounts Lists of all outstanding b. Recording of expenditure against imprest advance: The Head of the
‘Payable’ ledgers due to individual bills of different creditors
accounts in creditors shall be prepared, and the Department to whom imprest advance has been disbursed shall prepare and
the Ledger and balances totals checked with the submit a payment order for expenses incurred against the advance. Entries
(For example, outstanding in balances outstanding in
are passed for accounting the expenditure against the respective heads. The
Contractors, the Ledger. the Ledger.
Suppliers etc) outstanding advance in the ledger account is reconciled with the advance
Various grant Grants/ Grants received, The individual entries and registers on a monthly basis or as and when the advance is settled.
and Scheme Schemes and utilized the unutilized balances
accounts in the register under various in the ledger shall be c. Payment of statutory deductions to authorities: The Accounts department
Ledger heads, and checked with those in the
shall ensure that the statutory deductions like provident fund, TDS etc have
unutilized corresponding registers.
balances at the been paid on time to concerned authorities of the Government as per the due
month end dates specified in the respective Acts.
Various types of Register of Total of advances The total balances due
advances in the Advances outstanding in under different types d. Rectification entries: Reconciliation might throw up some omissions or errors
Ledger the Register of of advances as per the
in accounting which shall be rectified before closing accounts for the month.
Advances with Register of Advances shall
corresponding be arrived at, and checked For every such entry identified, a rectification voucher (BRV, BPV, TV or JV)
balances in the with balances in the as appropriate has to be prepared and entry shall be passed in the books of
Ledger. corresponding advance.
account. Such rectification entries are passed on the last day of the month. The
Accounts. In case of
discrepancies, individual principles for regular accounting as laid down in this manual will apply equally
entries for paying to the rectification entries also.
advance and recovery
shall be checked.
e. Scheme accounting: It has to be ensured that all income and expenditure records. However, as the year proceeds, there may be changes in demand, new
pertaining to specific schemes are accounted under the proper heads. Any inter demands arising, remission, write off, etc. The adjustment entries have to be
scheme adjustments have to be accounted for by passing entries. passed at the end of the year to take care of all such adjustments, so that the
Ledger and the DCB Registers show the same balances at the end of the year.
f. Preparation of Trial Balance: The form and content of Trial Balance, and the
manner of preparing the trial balance has been explained in Chapter 13 Financial c. Valuation of Stores: Physical stock of material lying in Stores, if any, shall be
Statements. The trial balance is prepared after completion of reconciliations taken, and checked with the Priced Stores Ledger (MAM 29). Discrepancies,
and all the rectification entries are passed. The total of the debit side and the if any, shall be reconciled. The value of stores shall be checked with the value
credit side of a trial balance must agree. In case they do not agree, the difference as reflected in the ledger, and difference, if any shall also be reconciled and
shall be found out by checking the posting of entries from the Bank Books and necessary entries passed. The entries shall be passed when the quantity as
Journal Register into the General Ledger. In the case of computerized accounts, per physical verification differs from the figures indicated in the Priced Stores
the question of trial balance not tallying does not arise. The monthly trial Ledger. Examples of such differences could be shortages due to evaporation/
balance needs to be signed by the accountant and filed for future reference. The shrinkage, handling losses, excesses etc. Entries for the same are given in
Trial Balance prepared annually is sent for Audit. Appendix III - Accounting Entry Matrix.
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g. Preparation of Receipts and Payment Statement: After the trial balance has d. Accounting of depreciation: Depreciation has to be charged on all fixed assets
been prepared, the R & P statement shall be prepared and reviewed by the ULB. other than land at the year end. The procedure for calculation of depreciation
The form and content of the R & P statement, and the manner of preparing it has and passing entries in explained in ‘Chapter 8 Fixed Assets and Depreciation’.
been discussed in detail in ‘Chapter 13 Financial Statements’
e. Preparation of trial balance: This is the first step towards preparation of
11.4 Year end Procedures financial statements. The procedure to be followed for preparation of trial
balance is explained in ‘Appendix IV - Formats’ as well as in the paragraph
Year-end processing involves activities to be performed for preparation of financial above on month-end processes.
statements and closing of books at the end of the year. Except for procedures
relating to closure of books, all other year-end procedures discussed in this Chapter f. Preparation of financial statements: Financial statements are the output of
also apply when financial statements are prepared for a period less than a year i.e. all the accounting entries passed during the year/ period. The way individual
half yearly, quarterly etc. transactions have been accounted will impact the financial statements. So before
preparation of financial statements it is important to check for completeness
The following are the important year-end procedures: and correctness of accounts maintained.
a. Month-end procedures: All the procedures explained above as monthly To begin with financial statements may be prepared annually. But over a period
procedures shall hold good for the year-end also, as these activities ensure that of time when the accounting system stabilizes it is advisable to prepare quarterly
the entries are properly passed, and the balances are correct. financial statements.
b. Year end adjustments in receivables accounts: Chapter 6 Income Accounting Year end entries are given in detail in Appendix III-Accounting Entry Matrix.
prescribes passing of accrual entry for all accruable items of revenue in the
beginning of the year. The amounts to be accrued for different types of revenues
are calculated based on DCB Registers, Assessment Lists and other relevant
11.5 Closure of books under income and expenditure Account Heads are not carried forward to the next
financial year since they represent only current year items. However, the balances
Closure of books is a process which closes the books of accounts for the financial of all asset and liability accounts are carried forward and they become the opening
year. After this, the books of account for the year are no longer open for passing any balances for the next financial year.
entries. Closure of books happens after the end of the financial year and after all the
Note: With computerization of the accounting system, most of the account closing and carry
transactions has been accounted. Table 8 gives a checklist for closure of books. It
forward of balances work will be automated. The ULB accountant has to only ensure that the
shall be ensured that all items of the checklist are complied with before closing the necessary procedures are followed and the checklist items are attended to.
books for the year.
Table 8: Checklist for closure of books
Sl. No. Checklist

1 Revenue
A Are accrual entries passed for all accruable revenue items?
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B Are all the collections accounted properly against the respective
receivable accounts?
C Are all adjustments against revenues properly accounted?
D Are all transactions pertaining to Schemes accounted properly, and
are unutilized Scheme balances correct?
2 Expenditure
A Ensure that no capital expenditure is accounted as revenue, or vice
versa.
B Are all bills remaining unpaid at the end of the year accounted as
expenditure for the current year?
3 Assets & Liabilities
A Are all statutory liabilities accounted properly?
B Is depreciation calculated and provided for on all fixed assets except
land?
C Are entries for capitalization passed in respect of all capital works
completed during the year?
D Are proper entries been passed for sale of assets, if any, including
profit/loss on sale?
4 Period end procedures
A Are balance confirmations obtained in all cases?
B Are there any pending rectification entries to be passed?
C Are all month end reconciliations done, and rectification entries
arising out of this passed in the accounts?
When the books for a particular year are closed, the closing balances for that year
are calculated for all the Account Heads including cash and bank accounts. Balances
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Bank Reconciliation
c. Basis for recording missing entries in Bank Book: It has been explained
earlier that the advices received from bank are the source documents for
making entries in the case of bank interest, bank charges, inter account transfers
etc. However certain entries may be missing for a number of reasons like non
receipt of advice, not accounting the advice etc. BRS helps in identifying such
missing entries which need to be passed
d. Wrong transaction recorded by Bank: Certain amounts may have been

credited / debited to the ULB bank account by the banker by mistake. BRS helps
Bank Reconciliation in identifying such entries
e. For Auditing: BRS is also a key statement for the auditors to verify the correctness
12.1 Introduction of the closing bank balances
A statement which is prepared to reconcile the closing balance of bank book (bank
f. Better working capital management: Preparation of BRS helps in identifying
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column) with the closing balance of pass book (or bank statement) is known as
unusual delays in realization of receipts and clearance of payments. The delays
Bank Reconciliation Statement (BRS).
can be investigated and rectified so that receipts are banked with minimum
The Bank Reconciliation shall be carried out on a monthly basis or such other shorter delay and payments are released on time. It also helps in identifying delays in
time intervals as the ULB may decide for each of the bank accounts maintained by depositing cash into bank account.
the ULB.
12.3 Reasons for differences between bank balance as
per bank book and bank statement
12.2 Need for BRS
The following points are the reasons for difference between bank balance as per
Bank Reconciliation is an integral part of any accounting system. BRS is prepared
bank book and bank statement.
to identify the differences between the closing balance of the bank account as
on a particular date and the closing balance as shown by the pass book (or bank a. Cheques issued to suppliers or contractors but not presented for payment.
statement). The following are the advantages of preparing BRS.
b. Cheques received from parties and remitted to bank but the bank has not
credited the amount to ULB account.
a. Identification of errors: Preparation of BRS enables identification of errors
in recording transactions. It also brings to light errors that may have occurred c. Direct remittances to bank by the parties - in the absence of intimation, such
while recording the transaction at the banker’s end remittance have not been recorded in the bank book.
b. Disclosure of fraud: By preparing BRS any fraud, embezzlement, or theft can d. Cheque received and entered in the bank book in the bank column but not sent
be identified to bank by oversight.
e. Cheques presented by the parties remitted to bank by debiting bank a/c in the
bank book, but returned dishonoured.
f. Interest on bank deposits credited by the bank but not entered in the bank book 12.5 Proforma of Bank Reconciliation Statement
for want of intimation.
a. Before passing rectification entries in bank book
g. Interest or bank charges charged by bank, but not entered in the bank book for
Bank Reconciliation Statement as on ___/___/______ for Bank A/c No. __________
want of intimation.
Amount Amount
Particulars
h. Grants from Government directly credited to bank a/c or treasury a/c of the ULB in Rs. in Rs.
by Government but not entered in the bank book of ULB for want of intimation. Bank balance as per bank book ****
Add:
12.4 Steps in Bank Reconciliation (i) Cheques issued but not presented ***
(ii) Direct remittances by parties but not recorded in the ***
Bank reconciliation shall be done for each bank account independently. It shall be
cash book
done before closing the bank book for the month so that missing entries if any can be
(iii) Interest on bank deposits credited by bank but not ***
passed. A BRS is always prepared as on a particular date. The steps for preparation
accounted in the cash book
of BRS are given below:
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(iv) Cheques remitted to bank but not recorded in the ***
a. Check whether all entries in the amount column of the bank book are reflected cash book
(v) Wrong credit in the bank pass book ***
in the bank statement
***
b. Identify all entries which appear either only in the bank book or only in the
bank statement ***
Total ****
c. For entries which are missing in the bank book obtain the necessary supporting Less:
documents from the bank and pass entries (i) Cheques deposited but not cleared ***
(ii) Cheques deposited but dishonoured ***
d. Correct any mistakes in the bank book (iii) Bank charges or commission directly charged by the ***
e. After all the missing entries and corrective entries are passed, calculate the bank
(iv) Collection charges debited to bank – but not ***
closing bank balance as per bank book
accounted in the bank book
f. Prepare a bank reconciliation statement. The format of the bank reconciliation (v) Cheques issued for payment but not recorded in the ***
statement is given later in this Chapter bank book
(vi) Wrong entry on debit side of the pass book ***
g. Follow up with the bank for any missing/erroneous entries in the bank statement
(vii) Payments directly made by the bank as per ***
and get them corrected
instruction of the Government
***
After preparation of the BRS, the pending items shall be followed up in the
***
subsequent months.
Balance as per pass book ***
b. After passing rectification entries in bank book (Final BRS)
Bank Reconciliation Statement as on __/__/____ for Bank A/c No. __________

Particulars Amount in Rs. Amount in Rs.
Bank balance as per bank book ****
Add:
(i) Cheques issued but not presented ***
(ii) Wrong credit in the bank pass book ***
***
Total ****
Less:
(i) Cheques deposited but not cleared ***
(ii) Wrong entry on debit side of the pass

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***
book
***
Balance as per pass book ***
12.6 Important points about BRS
a. BRS should be prepared on a monthly basis so that all errors are corrected with
minimum delay
b. Proper working sheets must be maintained since they will be useful for
reconciliation of subsequent months
c. Advices must be obtained from the bank for any entries passed by them without
the knowledge of the ULB
d. It should be ensured that cheques / D.D.s once entered into the bank book are
deposited with minimum delay
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Financial Statements
The AFR shall be published by the ULB in its website, put up on the notice board
and published in any other form as directed by the Government within one
month of receipt of the audit report and after consideration by the Council.3
13.3 Brief description of various components of Annual

Financial Report
The annual accounts of the ULB are prepared at the end of every financial year.
a. Financial Statements
Financial Statements i. Balance Sheet: The balance sheet is a statement of assets (what is owned)
and liabilities (what is owed) of the ULB as on a particular date. It also
13.1 Meaning and need of Financial Statements shows the net worth or the net result of operations of the ULB since its
Financial statements are statements that summarize the financial performance of a existence. It is always prepared as on a date i.e. as on the last date of a
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ULB during a period, normally a financial year. By reading the financial statements, year or a period for which an Income & Expenditure Account is prepared.
it is possible to know whether the ULB has generated sufficient earnings during The balance sheet is divided into two parts i.e. ‘assets’ and ‘liabilities’. The
the year to meet its developmental and other expenditure, the assets held by the assets are classified under the groups ‘fixed assets’, ‘current assets, ‘loans
ULB, and its obligations. Financial statements provide the ULB, the Government, and advances’. The liabilities are classified under the groups ‘Loans’ and
the funding agencies and the public valuable information that can be useful in ‘current liabilities’.
decision-making and in public interest. ii. Income & Expenditure Account: The Income and Expenditure (I & E)
Statement shows the income earned and expenses incurred by the ULB
13.2 Annual Financial Report during the period. It also shows the excess of income over expenditure
(Surplus) or excess of expenditure over income (Deficit). In brief it shows
An Annual Financial Report (AFR) shall be prepared by each ULB after the
the result of operations of the ULB for the period. The I & E is always
completion of audit. The AFR of the ULB shall include the following:
prepared for a year or a period.
a. Financial Statements comprising of iii. Statement of Cash Flows: All ULBs shall prepare the Statement of Cash
i. Balance sheet Flows apart from Income & Expenditure Account, Balance Sheet and
ii. Income and Expenditure Account Receipts & Payments Account. The cash flow statement shall report cash
iii. Statement of Cash flows flows during the period classified by operating, investing and financing
iv. Receipts and Payments Account activities. Classification by activity provides information that allows users
v. Notes to Account to assess the impact of those activities on the financial position of the
vi. Financial Performance Indicators enterprise and the amount of its cash and cash equivalents. The line items
of the income and expenditure account and balance sheet are classified as
b. Auditor’s Report
3
As prescribed in the Tamil Nadu Town Panchayats, Third Grade Municipalities, Municipalities and Municipal
c. Management Discussion and Analysis (Municipal Commissioner’s Report)
Corporations (Public Disclosure) Rules, 2009
given in the format of statement of cash flows and additions/deductions are • Street lighting.
made for any non cash transactions like provisions, depreciation and so on. • Hospitals;
After making the adjustments the net cash surplus/deficit is arrived at and • Schools.
tallied with the opening and closing bank balances.
The Subsidy Report may be prepared in the illustrative format
iv. Receipts and Payment Account: The Receipts and Payments (R & P) provided below in Table 9.
Statement is a summary of all cash inflows and outflows during a period. It
starts with the opening cash and bank balances and ends with the closing Table 9: Format of Subsidy Report
cash and bank balances. The receipts and payments are shown summarized Subsidy Report for the _________period from _________ to ____________
at the account head level. It follows the principle: Current Year Previous Year
Particulars
Opening Cash and Bank Balances + Total Receipts for the period = Amount (Rs) Amount (Rs)
Total Payments + Closing Balances Expenditure
Establishment expenses
For the purpose of preparing the R & P Statement, the receipts and payments
Administration expenses
sides of the bank book are summarized against individual ledger account
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Operations and Maintenance Expenses
and presented in the format given.
Interest on Loans and Financial charges
v. Notes to Accounts: The Notes to Accounts shall comprise of Statement Depreciation
of Significant Accounting Principles, Statement of Contingent liabilities, Other expenses
Subsidy Report and other disclosures. TOTAL EXPENDITURE (A)
INCOME
A. Statement of significant accounting policies: This statement states
Charges levied on rendering of services
important accounting policies followed by the ULB in respect of
Taxes levied
accounting for its transactions and in preparation and presentation
Other Income
of Financial Statements.
TOTAL INCOME (B)
B. Statement of Contingent Liabilities: They represent a claim Subsidy provided (A-B)
against the ULB which is contingent on the happening of a future
uncertain event, the financial implications of which may or may not An illustrative ‘Notes on accounts’ is given in Appendix IV – Formats.
be ascertainable at the end of an accounting period. The information
disclosed in this statement include amount of capital contracts vi. Financial Performance Indicators: This report provides important financial
remaining to be executed, Claims against ULBs, Amount of claims in information about the ULB to facilitate a better understanding of the ULB
respect of suits filed against the ULB for which the ULB may be liable. performance. The list of financial ratios to be presented is given in Table 10.
C. Subsidy Report: the ULB shall prepare a Subsidy Report on the Table 10: Financial Ratios
following services, which shall be annexed to the Annual Financial
Sr. Ratios Guidelines for Current Previous
Statements:
No. calculation Year Year
• Water supply and disposal of sewage; 1 Tax Revenue to Total The ratio of tax revenue
• Scavenging, transporting and disposal of wastes; Income Ratio... (%) (accrued) to total income
for the period
• Municipal transport;
Sr. Ratios Guidelines for Current Previous Sr. Ratios Guidelines for Current Previous
No. calculation Year Year No. calculation Year Year
2 Assigned Revenues & The ratio of assigned Efficiency Ratios
Compensations to Total revenue to total income for
13 Collection Efficiency Collections during the
Income Ratio... (%) the period
Ratio ... (%) year to total of arrears
3 Rental Income from As above outstanding at the
Municipal Properties beginning of the year and
to Total Income Ratio... current demand of all
(%) accruable income
4 Fees & User Charges to As above 14 Property Tax PT receivable including
Total Income Ratio... Receivable to Property current and arrears to
(%) Tax Income Ratio... (%) current year PT income
5 Revenue Grants, As above 15 Operations & Expenditure on O & M as
Contributions & Maintenance to Gross a percentage of the total
Subsidies to Total Fixed Assets Ratio... (%) gross fixed assets
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Income Ratio... (%) 16 Interest Expense to Interest expense for
6 Self generated Income All income other than Loans Ratio... (%) the period as a ratio of
to Total Income Ratio... grants and assigned the average of loans
(%) revenues to be treated as outstanding at the end
self generated income beginning and end of the
7 Self generated Income As above period
to Establishment Leverage Ratios
Expenses... (%)
17 Loans to Reserves Ratio Closing balance of loans
8 Establishment As above (times) outstanding as a ratio of
Expenses to Total the accumulated reserves
Income Ratio... (%) as on a particular date
9 Administrative As above 18 Interest Coverage Total annual outgo towards
Expenses to Total Ratio... (times) interest to the cash surplus
Income Ratio... (%) for the period
10 Operations & As above 19 Debt Service Coverage Total annual outgo towards
Maintenance to Total Ratio... (times) principal and interest to
Income Ratio... (%) the cash surplus for the
11 Interest Expense to As above period
Total Income Ratio...
Investment Ratios
(%)
20 Earmarked Fund The balance of the
Net Income Ratios
Investments to earmarked fund (scheme)
12 Cash Surplus / Deficit The surplus for the year Earmarked Funds investments to the balance
to Total Income Ratio... adjusted for non cash Ratio... (%) in the specific scheme
(%) items like depreciation and liability account
provisions as a percentage
of total income for the
period
other governing rules and regulations shall be specifically mentioned. The

Sr. Ratios Guidelines for Current Previous
No. calculation Year Year auditor’s report shall also comment on the extent to which applicable accounting
21 Interest on Investments Total interest earned to standards have been complied with. The auditor shall certify the correctness of
Ratio... (%) the average balance of the the financial statements and accounts.
investments held at the
beginning and end of the C. Management Discussion and Analysis (Municipal Commissioner’s Report)
period
22 Current Assets to Total current assets to the The municipal commissioner in his report shall comment upon the performance
Current Liabilities total current liabilities as of the ULB and the extent to which the outcome/performance budget has been
Ratio... (times) on a particular date
achieved. The Report shall state that the books of accounts are maintained in
Asset Ratios
the manner as required by the Municipal Act and the MAM and that proper
23 Fixed Assets to Total Total fixed assets to
accounting policies have been adopted and applied consistently while accounting
Assets Ratio... (%) the total assets as on a
particular date for transactions and preparation of Financial Statements. An illustrative
Performance Ratios municipal commissioner’s report is given below for better understanding.
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24 Income per Employee... Total income during
(Rs.) the period (accrued) to Municipal Commissioner’s Report (Illustrative)
the average number of ___________ Municipality
employees at the beginning
and end of the period
This report provides an overview of the financial performance of the Municipality
25 Expenditure per Total expenditure during
Employee... (Rs.) the period (accrued) to for the year 20xx-xx. This report forms part of the annual financial report of the
the average number of municipality.
employees at the beginning
and end of the period The books of accounts have been maintained in the manner as required by the
26 Income per Citizen... Total income during the TNDM Act, 1920/Corporation Act ______ and the Municipal Accounting Manual.
(Rs.) period (accrued) to the Proper accounting policies have been adopted and applied consistently while
population
accounting for transactions and preparation of Financial Statements.
27 Expenditure per Total expenditure during
Citizen... (Rs.) the period (accrued) to the
population
The financial statements shall be prepared for each of the funds separately as
well as for the ULB as a whole (consolidated financial statements). The format
of the consolidated financial statements will be the same as for the fund wise
financial statements.
b. Auditor’s Report
The auditor’s report shall contain the true and fair representation of the financial
statements and the notes forming part thereof. Non-compliance to statutes and
Financial position The summarized income and expenditure statement of the municipality is given
The summarized balance sheet of the municipality is shown below: below:
Amount in Rs. cr Amount in Rs. cr

Current Previous Previous Previous Previous Particulars Current Previous Previous Previous Previous
Particulars
year year 1 year 2 year 3 year 4 year year 1 year 2 year 3 year 4
ASSETS INCOME
Fixed Assets Tax revenues
Investments Non tax revenues
Current Assets Grants
Other assets Others
Total Total
LIABILITIES EXPENDITURE
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Fund Balance Establishment expenses
Reserves Operation and

maintenance
Specific
contributions Finance expenses
and grants Depreciation
Borrowings Other expenses
Current Total
liabilities Net surplus/(deficit)
Other liabilities for the year
Total
Income from own sources is increasing steadily for the last five years and stands at
The municipality has increased its assets by Rs. __ Cr during the year as against
__% of total income for the current year.
Rs. __ Cr in the previous year. The increase has been mainly on account of speeding
up of works on infrastructure projects. The unutilized grants balance has also The new scheme for advertisement taxes has resulted in a significant increase in
reduced drastically over the years indicating expenditure as per plans. the advertisement tax revenue from __cr to __cr.
During the year the municipality has taken a fresh loan of ___ cr towards construction The municipality has been able to draw the available grants fully due to good
of underpass at ____ circle. The municipality is confident of servicing this loan out of progress of works undertaken in the last two years.
internal accruals in the years to come.
The expenditure on establishment has increased significantly due to the impact of
The municipality undertook a special recovery drive to collect arrears of property the revision of pay scales during the year. Finance charges have increased due to
tax during the year. The drive has been extremely successful and the PT receivables payment of penal interest on delayed repayments which was due a temporary cash
have reduced by more than 40% at the end of the year. crunch during the quarter ended September 20xx.
A report on financial ratios has been separately included in this report. b. The debit balances shall be posted in debit column of the Trial Balance and
credit balances in the credit column of the Trial Balance
We are confident of continuing the good performance in the coming years. We would
like to thank the council representatives and all employees of the municipality for c. The Bank Books shall be closed and the balances shall be posted in Trial Balance
their efforts in bringing out a good performance year after year.

d. Both Debit and Credit column of the Trial Balance shall be totaled.
Formats of the Financial Statements are given in Appendix IV – Formats.

13.6 Checklist for preparation of Financial Statements
The municipal accountant has to perform a set of checks before the financial
13.4 Consolidated Financial Statements
statements can be generated. The basic checks are given in a checklist in Table 11.
The annual financial statements shall contain consolidated financial statements
in addition to fund wise financial statements. The format of presentation of the Table 11: Checklist for preparation of financial statements
consolidated financial statements shall be the same as the fundwise financial statements
1 Check whether all entries for the year and reconciliations like bank,
given in Appendix IV – Formats. A format showing individual fund columns along creditors, scheme accounts and so on are complete. Any pending entries
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with a total column showing the consolidated figures can also be adopted. must be passed before preparing financial statements
2 Tallying of closing stock in hand as per books with the physical stock
The consolidated financial statements shall show the consolidated figures against 3 Pass closing accrual entries for outstanding expenses if any
each account head in the chart of accounts. While presenting the consolidated 4 Calculate and pass entries for depreciation on fixed assets
financial statements it shall be ensured that all inter fund receivable/payable 5 Pass entries for recording provision for unrealized income as discussed in
accounts are set off against each other so that the assets and liabilities are not ‘Chapter 6 Income Accounting’
overstated. 6 Preparation of trial balance

7 Preparation of financial statements – With the trial balance as the base,
the financial statements can be prepared. In a computerized setup, the
13.5 Trial Balance financial statements will be general directly from the system.
8 Setting off of inter fund balances for the purpose of consolidation
The process of preparation of Financial Statements shall be preceded by preparation
9. Tallying of subsidiary registers maintained under the relevant provisions
of Trial Balance. The Trial Balance is a list of closing balances in all accounts in
with schedules to financial statements. The list of subsidiary registers is
the General Ledger and the Bank Books. The total of all debit balances should given below:
always tally with the total of all credit balances. Any difference between the two i. Property Tax Arrear Demand Register (except LC component)
indicates that there are one or more mistakes in the books of account which have ii. Property Tax Current Demand Register (except LC component)
to be located and corrected. Whenever such a difference arises, the entries, carried iii. Profession Tax Arrear Demand Register
forward opening balances, totals and ledger postings have to be checked to find out iv. Profession Tax Current Demand Register
v. Water Charges Arrear Demand Register
the reasons for the difference and to rectify them.
vi. Water Charges Current Demand Register
vii. Staff Advance Register
Steps for preparing Trial Balance are
viii. Other Advance Register
a. All ledger accounts should be closed at period end and debit or credit balances ix. Deposit Register
shall be calculated x. Project Ledger
xi. Contractors Ledger
13.7 Addition/Merger of local bodies • Any regrouping/rearranging of line items in the financial statements as a
result of the consolidation;
Addition/Merger of local bodies may happen in one of the following ways:
• The fact that previous year’s figures are not comparable due to the
consolidation;
a. Addition of new areas into existing ULBs which were earlier part of any local
body; • Any restatement of financial statements of merging entities due to different
accounting policies.
b. Merger of ULBs into a larger ULB
The formats for balance sheet and income and expenditure statements for the
In the case of addition of new areas into the jurisdiction of existing ULBs, the merging/merged entities are the same as for the normal financial statements
merging entities may or may not have a balance sheet of their own. Where they of an ULB. However, the financial statements shall clearly display the fact that
have independent balance sheets, a balance sheet is prepared as on one day the financial statements are a result of the consolidation of individual financial
prior to the cut-off date. This becomes the opening balance sheet of the merging statements in the first year of consolidation.
area for consolidation. Where the merging areas do not have separate accounts,
.
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the assets/liabilities values are compiled from the available accounts and an
opening balance sheet is prepared. In the case of merger of ULBs, for each
merging ULB, the balance sheet is prepared as on one day prior to the cut off
date. This becomes the opening balance sheet for the purpose of consolidation.
The assets and liabilities of each of the merging entities are accounted in the
books of the merged entity at their carrying amounts by debiting the respective
asset accounts and crediting the respective liability accounts. All inter ULB
assets/liabilities are set off against each other during the consolidation. The
fund balance is credited with the net value of the net assets minus liabilities
taken over. In each of the merging entities, the books of account are closed by
passing the necessary books closure entires. The merging entity ceases to be an
accounting entity from the cut off date.
After passing the necessary entries, the merged entity prepares a consolidated
balance sheet as on the cut off date which incorporates all the balance sheets
of the individual merging entities. The consolidated financial statements must
disclose:
• Name of the local bodies added/merged;
• Necessary authority for the addition/merger;
• Effective date (cut-off date) of the addition/merger;
• Principles adopted for consolidation;
14
CHAPTER
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Financial Statement Audit
c. whether appropriate internal controls have been adhered to;
d. whether all the payments have been made in accordance with the law;
e. whether any deficiency or loss appears to have been caused by the gross
negligence or misconduct of any person (if yes, the amount of loss should be
quantified);
f. whether any sum received for and on behalf of the ULB which ought to have
been brought into account of the ULB by any person has been so brought; and
Financial Statement Audit g. whether any material impropriety or irregularity, other than those mentioned
above, has been observed by him during the course of audit of accounts
14.1 Introduction
The Accounts of the ULBs as contained in the Financial Statements shall be 14.3 Audit Report/Certificate
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examined and audited by an Auditor appointed by the State Government. Presently At the end of each audit, the financial statements auditor shall furnish a certificate
the Director of Local Fund Audit has been appointed as auditor by the State
on the coverage to the Municipal Commissioner. The suggested format of the
Government. The financial statements audit discussed in this chapter is in addition
certificate can beis as follows:
to the regular audit by LFA. The Auditor so appointed shall upon completion of
audit, issue a report on the financial statements of the ULB. Audit Certificate
I have examined the Receipts and Payments account, Income and

14.2 Audit Report on Financial Statements
Expenditure account for the year ended 31-03- and the balance sheet as on
The Auditor’s Report on the Balance Sheet, Income and Expenditure Statement, _____________________________ of ________________________________.
Receipts and Payments Account and Cash Flow Statement shall be addressed to the
Council through Municipal Commissioner. I have obtained the information and explanation I required and subject to the
observations in the appended audit report. I certify, as a result of my audit, that
The Auditor in his report shall state the following;
in my opinion these accounts and Balance Sheet are properly drawn up so as to
a. whether he has obtained all the information and explanations which to the best exhibit true and fair view of the state of affairs according to the best of information
of his knowledge and belief were necessary for the purposes of his audit; and explanation given to me and as shown by the books of the organization.
Subject to the remarks furnished in Part-1 of the Audit Report for which necessary
b. whether, in his opinion, proper books of account as required by Authority (as
required by the relevant Act), the Accounts Manual, the Rules and any other rectification through JVS is to be done by the Commissioner in the closing balance
stipulations have been kept by the ULB so far as it appears from his examination sheet.
of those books;
For Director of Local Fund Audit
c. whether the ULB’s Balance Sheet, Income and Expenditure Statement, Receipts
and Payments statement and Cash Flow statement dealt with by the report are
in agreement with the books of accounts;
While furnishing periodical certificate/report, the financial statements auditor
shall at least verify the following:
a. Whether the postings for the entries in the books of original entry have been
correctly made in the respective ledger accounts;
b. Whether all the books of accounts and supplementary registers that are
prescribed in the Accounts Manual, other applicable regulations have been
properly maintained by the ULB
c. Whether the Quarterly Financial Statements have been compiled on the basis of
the actual entries in the books of accounts
d. Whether the period-end and reconciliation procedures prescribed have been

carried out
e. Whether the Bank Reconciliation statements have been prepared and are
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appropriate
f. Whether all grants from Government have been accounted at gross value with
proper entries to various accounts
14.4 Other Audit

In addition to the audit by the statutory auditor, the ULB may additionally get the
accounts of the ULBs audited under the following circumstances.
a. Internal Audit
b. Concurrent Audit
c. Special Audit (investigative or audit in depth)
d. Special Audits ordered by the State Government
e. Systems and Security audit
The state government can also define the guidelines under which these Audits are
to be undertaken.
These Special audits may be required to ensure that the accounts and financial
statements of the ULBs have been prepared in accordance with provisions of the
Accounts Manual and other relevant provisions of laws in force or for the objectives
under which the audits have been ordered by the State Governments.
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Appendix
Appendix I - List of Functions Function

Function Group Function
Group Function Description
Description Code
Function Code
Function Group Function
Group Function Description 30 Health
Description Code
Code 31 Public Health
00 General Administration 32 Epidemic Prevention/ Control
33 Family Planning
01 Municipal Body
34 Primary Health Care
02 Administration
35 Hospital Services
03 Finance, Accounts, Audit
36 Burial and Cremations
04 Election
37 Vital Statistics
05 Record Room
38 Prevention of Food Adulteration
06 Estate
39 Ambulance / Hearse Services
07 Stores & Purchase
08 Workshop 40 Sanitation & Solid Waste Management
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09 Census 41 Solid Waste Management
10 Planning & Regulation 42 Public Convenience
43 Veterinary Services
11 City & Town Planning
44 Cattle Pounding
12 Building Regulation
45 Slaughter Houses
13 Economic Planning
14 Encroachment Removal 50 Civic Amenities
15 Trade License / Regulation 51 Water Supply
20 Public Works 52 Sewerage
53 Fire Services
21 Roads and Pavement
54 Arts & Culture
22 Bridges and Fly overs
55 Community / Marriage Centers
23 Subways & Causeways
56 Amusement
24 Street Lighting
57 Museums
25 Storm water Drains
58 Municipal Markets
26 Traffic Signals
27 Guest Houses 60 Urban Forestry
61 Parks, Gardens
62 Play Grounds
63 Lakes and Ponds
64 Urban Forestry
65 Environment Conservation
66 Zoos
Function
Function Group Function Appendix II - Chart of Accounts with
Group Function Description
Code
Description Code
Codes
70 Urban Poverty Alleviation & Social Welfare
71 Welfare of Women Detailed
Major Major Minor
72 Welfare of Children Minor Head Head Detailed Head
Code Head Code
73 Welfare of Aged Code
74 Welfare of Handicapped COA Listing - Income
75 Welfare of SC/ST/OBC
110 Tax Revenue
76 Slum Improvements
01 Property Tax 01 Property Tax - Residential
77 Housing
02 Property Tax - Commercial
78 Urban Poverty Alleviation
03 Property Tax - Vacant Sites
79 Others
04 Property Tax - Others
80 Other Services
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02 Water Tax 01 Water Tax
81 Electricity
03 Sewerage Tax 01 Drainage Tax
82 Education
04 Conservancy Tax
83 Transportation
05 Lighting Tax
84 Facility for pilgrims
06 Education Tax 01 Education Tax
90 Revenue 07 Vehicle Tax
91 Property Taxes 08 Tax on Animals 01 Tax on Carriages and Animals
92 Octroi / Entry Cess 09 Electricity Tax
93 Advertisement Tax 10 Professional Tax 01 Professional Tax
94 Professional Tax 11 Advertisement Tax 01 Advertisement Tax
95 Tax on Animals 12 Pilgrimage Tax 01 Piligrim Tax
96 Tax on Vehicles 51 Octroi & Toll
97 Toll 52 Cess
98 Other Taxes 80 Others Taxes 01 Tax on Carts
02 Servant Tax
90 Tax Remission & 01 Remission, refund - Property
Refund tax
02 Remission, refund - Other
taxes
Detailed Detailed
Major Major Minor Major Major Minor
Minor Head Head Detailed Head Minor Head Head Detailed Head
Code Head Code Code Head Code
Code Code
120 Assigned Revenues & Compensations 90 Rent remission and 01 Remission, refund of rents
10 Taxes and Duties 01 Duty on Transfer of property refund
collected by others 140 Fees & User Charges
02 Entertainment Tax 10 Empanelment 01 Contractors/Suppliers/
20 Compensation 01 Compensation for Toll & Registration Licensed Surveyors/Plumbers/
in lieu of Taxes / Charges Others
duties 11 Licensing Fees 01 Trade Licence Fees
30 Compensations in 02 Licence Fees under PFA Act
lieu of Concessions 03 Building Licence Fees
130 Rental Income from Municipal Properties 04 Fees for Slaughter Houses
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12 Fees for Grant of 01 Fees for Fishery Rights
10 Rent from Civic 01 Rent from Shopping Complex/
Permit
Amenities Markets
02 Fees under Places of Public
02 Rent from Community Hall
03 Market Fees - Daily Market Resorts Act
04 Market Fees - Weekly Market 13 Fees for Certificate 01 Copy Application Fees
05 Private market fees or Extract
06 Fees for Bays in Bus Stand 02 Birth & Death Certificate Fees
07 Cart Stand/ Lorry Stand/ Taxi 03 Other Certificate Fees
Stand/ Cycle stand Fees 14 Development 01 Development Charges
08 Avenue receipts Charges
20 Rent from Office 01 Rent on Buildings - Staff 15 Regularization Fees 01 Encroachment Fees
Buildings quarters 02 Demolition charges for
30 Rent from Guest 01 Rent from Travellers unauthorised constructions
Houses Bungalows and Rest Houses and Building service charges
40 Rent from lease of 01 Rent on Lease of Lands 20 Penalties and Fines 01 Penalty and Bank charges for
lands Dishonoured Cheques
80 Other rents 01 Rent on bunk stalls 02 Magisterial fines
02 Cable TV rent 03 Liquidated damages
03 Parking fees 04 Other penalties
04 Income from Ferries 40 Other Fees 01 Advertisement Fees
05 Fees for pay and use Toilets 02 Survey Fees
06 Cinema Theatre - Income 03 Income from Fairs & Festivals
07 Track rent 04 Other Fees
Detailed Detailed
Code Code
50 User Charges 01 Receipts from Hospital and 80 Other Charges 01 Law charges and Court cost
Dispensaries Recoveries
02 UGD monthly charges 02 Pension and leave salary
03 Drainage fees from Building/ contributions
flat promoters 03 Miscellaneous Recoveries
04 Metered/ Tap rate water 90 Fees Remission and 01 Remission, refund - Fees
Charges Refund
05 Charges for Water supply 150 Sale & Hire Charges
through lorries 10 Sale of Products 01 Sale of Rubbish / Debris/ Silt
06 Septic tank cleaning charges 02 Sale of Compost/Manure/
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07 Burning/Burial ground Grass/Usufructs
charges 03 Sale of Products
08 Garbage/Debris collection 11 Sale of Forms & 01 Sale of tender forms/other
09 Other user charges Publications publications
60 Entry Fees 01 Garden / Parks Receipts 12 Sale of stores & 01 Sale of stock & stores
02 Amusement Fees 02 Sale of Scrap
scrap
03 Swimming pool receipts
30 Sale of Others
04 Library receipts
40 Hire Charges for 01 Hire Charges for Vehicles
70 Service / 01 Road cut-Restoration charges
Vehicles
Administrative 02 Initial Amount for New water
41 Hire Charges on 01 Hire Charges on Equipments
Charges supply Connections
Equipments
03 Initial Amount for Drainage
160 Revenue Grants, Contribution and Subsidies
Connections
10 Revenue Grant 01 Specific Maintenance Grant-
04 Water Supply conneciton
Contribution for Water
charges
05 Sewerage Connection Charges Supply and Drainage
06 Water Supply disconneciton 02 Grant for natural calamities

03 Grants from State
charges
07 Sewerage disconnection Government
04 Devolution Fund (including
Charges
08 Income from Road Margins State Finance Commission
09 Cartage charges Fund)

10 Other service / administrative 05 M.P.Fund
charges 06 M.L.A.Fund
Detailed Detailed
Code Code
07 Grants in kind 40 Recovery from
20 Re-imbursement of Employees
expenses 50 Unclaimed Refund 01 Stale cheques
30 Contribution 01 Scheme grants Payable/ Liabilities
towards schemes Written Back
170 Income from Investments 60 Excess Provisions 01 Excess Provisions written
10 Interest 01 Interest on Investments / written back back - Property Tax
Fixed Deposits 02 Excess Provisions written
20 Dividend 01 Dividend on shares back - Others
30 Income from 80 Miscellaneous 01 Other Income
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projects taken up Income
on commercial COA Listing-Expenditure
basis 210 Establishment Expenses
40 Profit in Sale of 01 Profit in Sale of Investments 10 Salaries, Wages 01 Pay
Investments and Bonus 02 Grade Pay
80 Others 03 Dearness Pay
171 Interest Earned 04 Dearness Allowance
10 Interest from Bank 01 Interest from Bank 05 House Rent Allowance
Accounts 06 City Comp. Allowance
20 Interest on Loans 01 Interest on staff advances 07 Medical Allowance

08 Other Allowance
and advances to
09 Wages - NMR
Employees
10 Wages - Others
30 Interest on loans to
11 Bonus
others 12 Exgratia
80 Other Interest 13 Performance Bonus
180 Other Income 14 Interim Relief
10 Deposits Forfeited 01 Deposits Forfeited 15 Survey Charges
11 Lapsed Deposits 01 Deposits Lapsed 20 Benefits and 01 Medical Reimbursement
20 Insurance Claim 01 Insurance claim amount Allowances 02 Leave Travel Concession
Recovery 03 Overtime Allowance
30 Profit on Disposal 01 Profit on Sale of Assets 04 Supply of uniforms
of Fixed assets 05 Hospital Stoppages
Detailed Detailed
Code Code
06 Training programme 220 Administrative Expenses
Expenses 10 Rent, Rates and 01 Rent for Buildings
07 Staff Welfare Expenses Taxes 02 Royalty
08 Other miscellaneous benefits 03 Excise Duty
09 Work men compensation 04 Motor Vehicle Tax
10 Health Insurance Local body 05 Water Cess
contribution 06 Stamp duty expenses
11 Labour Welfare fund 11 Office maintenance 01 Electricity consumption
contribution charges for office buildings
12 Reimbursement of tution fees 02 Water Charges
03 Security Charges
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(All India Service)
13 Special Provident Fund cum 04 Fire Protection & Control
Gratuity scheme 12 Communication 01 Telephone charges
14 Group Insurance scheme - Expenses 02 Internet charges

03 Postage and Telegram and Fax
Management contribution
15 CPF Management Charges
20 Books & Periodicals 01 Books and Periodicals and
Contribution
16 _________ Allowance Magazines
17 _________ Allowance 21 Printing and 01 Stationery and Printing
30 Pension 01 Pensions Stationery

02 Family pension 30 Travelling & 01 Travel Expenses
03 Adhoc pension Conveyance 02 Conveyance Charges
04 Commuted Value of pension 03 Transfer Travel Expenses
05 Pensions contribution to 40 Insurance 01 Vehicle insurance
Municipal Employees 02 Machinery, Tools and
06 Pension Contributions - Equipment Insurance
Deputationists 03 Stores & Stocks Insurance
40 Other Terminal 01 Leave encashment 50 Audit Fees 01 Statutory Audit Fees
02 Death-Cum-Retirement 02 Internal Audit Fees

& Retirement
51 Legal Expenses 01 Retainer Fees
Benefits Gratuity
02 Court Fees
03 Leave salary contributions
03 Arbitrator Fees
04 Pensioner’s Medical Aids
04 Legal & Arbitration Expenses
05 Execution of Court Orders
Detailed Detailed
Code Code
52 Professional and 01 Architect Charges 06 Fodder (Animal Feed)
other Fees 02 Engineering Consultancy 40 Hire Charges 01 Hire charges for supply of
03 Other Professional Charges Water through Private Lorries
60 Advertisement and 01 Advertisement charges / Tankers
Publicity 02 Expenses on Hospitality / 02 Hire charges for Machineries/
Entertainment Equipments
03 Exhibitions 50 Repairs & 01 Repairs and maintenance -
04 Organization of Festivals,
maintenance - Road & Pavements - Concrete
functions 02 Repairs and maintenance -
Infrastructure
61 Membership & 01 Chamber of Municipal
Assets Road & Pavements - Black
subscriptions Chairmen
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Topping and Asphalt
02 All india council of Mayors
03 Repairs and Maintenance -
03 Membership & subscriptions
Subways and Causeways
80 Others 01 Cash Awards & Prizes
04 Repairs and Maintenance -
02 Enquiry Expenses
03 Other Expenese Bridges and Flyovers
04 Sitting Fees/ honorarium for 05 Repairs and Maintenance -
the councillors and meeting Storm Water Drains, Open
expenses Drains and Culverts

05 E-governance Expenses 06 Maintenance charges for
230 Operations & Maintenance Railways Crossings / Over
10 Power & Fuel 01 Power charges for Sewerage Bridges

07 Maintenance Expenses for
system/ Pumping Stations
02 Power Charges for Water Street Lights
08 Improvement to compost
Head Works / Pumping
yard/ transfer stations
Stations / Booster Stations
09 Maintenance Expenses -
03 Power Charges for Street
Water Supply
Lights
10 Maintenance Expenses -
20 Bulk Purchases
30 Consumption of 01 Petrol Sewerage works
02 Diesel 11 Maintenance Charges to
Stores
03 Oil / Lubricants TWAD Board/ Metro Water
04 Medicines & Hospital Needs Board
05 Sanitary Materials 12 Water cess to TNPCB
Detailed Detailed
Code Code
13 Restoration of Road Cuts 02 Heavy Vehicles - Maintenance
51 Repairs & 01 Maintenance of Gardens / 03 Other Vehicles - Maintenance
maintenance - Civic Parks / Swimming Pools 59 Repairs & 01 Repairs and maintenance of
Amenities 02 Maintenance of Playgrounds maintenance - office Furniture etc.

03 Plants, Manure, Implements Others 02 Repairs and Maintenance
etc., - Instruments , Plant &
04 Sanitary / Conservancy Machinery
Expenses 03 Repairs and Maintenance -
05 Zoological Garden Electrical Fittings
Maintenance 04 Repairs and Maintenance -
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06 Maintenance of Kalayana Office Equipments
Mandapams, Community Hall, 05 Repairs and Maintenance -
Town Hall, Kalai Arangam Other Equipments
07 Maintenance of Nutritious 06 Repairs and Maintenance -
Meal Centres Computers
08 Maintenance of Hospitals, 80 Other operating 01 Expenses on food sampling
Dispensaries & maintenance 02 Maintenance for
09 Maintenance expenses - expenses improvements to Slum Areas
Schools 03 Removal of Debris
10 Maintenance of Burial 04 Fairs and Festivals
Grounds, Crematoria 05 Hospital expenses
52 Repairs & 01 Office Building - Maintenance 06 Exhibition expenses
02 Repairs and Maintenance - 07 Expenses on Opening

maintenance -
Buildings Ceremonies
Buildings
03 Maintenance of Lodging 08 Running of Libraries /
Houses, Rest Houses, TB, IB Reading Rooms
04 Cinema Theatre Maintenance 09 Garbage Clearance
05 Maintenance of markets & 10 Running of Slaughter Houses

11 Running expenses of schools
shopping complexes
12 Running expenses of
06 Maintenance of Staff Quarters
53 Repairs & 01 Light Vehciles - Maintenance Crematoria
13 Animal Birth Control
maintenance -
14 Natural Calamities
Vehicles
15 Testing & Inspection Charges
Detailed Detailed
Code Code
16 Lapsed Deposit Refund 250 Programme Expenses
240 Interest & Finance Charges 10 Election Expenses 01 Election Expenses
10 Interest on Loans 01 Interest on JNNURM Loans - 20 Own Programme 01 Own Programme
from Central GOI share 30 Share in 01 Family welfare programme
Government 02 Interest on Loans from programme of 02 Mass immunisation
Central Government others programme

20 Interest on 01 Interest on JNNURM Loans- 03 Aids control programme
Loans from State State share 260 Grants, Contribution and Subsidies
Government 02 Interest on Loans from State 10 Grants 01 Family welfare programme

Government -Grant
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30 Interest on Loans 01 Interest on Loans from 02 PTMGR Noon Meal scheme -
from Government TNUFIDCO Grant
Bodies & 02 Interest on Loans from MUDF 20 Contributions 01 Family welfare programme
03 Interest on Loans from 02 CMDA
associations
TNUIFSL 03 LPA
04 Interest on Loans from 04 TNIUS
05 Railways
HUDCO
06 Municipal Contribution
40 Interest on Loans 01 Interest on Loans from World
30 Subsidies
from International Bank
270 Provisions and Write off
Agencies 02 Interest on Loans from ADB
03 Interest on Loans from IBRD 10 Provisions 01 Provision for Doubtful
04 Interest on Loans from for Doubtful Collection of Revenue items -
International Agencies receivables Taxes

50 Interest on Loans 01 Interest Charged by the Bank 02 Provision for Doubtful
from Banks & Collection of Revenue items -
Other Financial Other revenues
Institutions 20 Provision for other 01 Stores
60 Other Interest 01 Interest on Loans/ Ways & Assets 02 Fixed Assets

03 Investments
Means Advance/ Overdraft
30 Revenues written 01 Irrecoverable Revenue Items
70 Bank Charges 01 Bank charges
80 Other Finance 01 Commitment charges off Written off - Taxes
02 Irrecoverable Revenue Items
Expenses
Written off - Other revenues
Detailed Detailed
Code Code
40 Assets written off 01 Stores - written off 80 Other Fixed Assets 01 Depreciation - Other Fixed
02 Assets written off - Fixed Assets
Assets 280 Prior Period Item
03 Stores written off - Income
Evaporation loss 10 Taxes
04 Investments 20 Other - Revenues
50 Miscellaneous 30 Recovery of
Expense written off revenues written
271 Miscellaneous Expenses off
10 Loss on disposal of 01 Loss on sales of assets 40 Other Income 01 Prior Year Income
Contents
Contents
Assets
20 Loss on disposal of 01 Loss on sale of investments Expenses
Investments 50 Refund of Taxes
30 Decline in Value of 60 Refund of Other -
Investments Revenues
80 Other Expenses 01 Prior year Expenses
272 Depreciation
290 Transfer to Reserve Funds
20 Buildings 01 Depreciation - Buildings
30 Roads & Bridges 01 Depreciation - Roads & 10 Transfer to Reserve 01 Special development fund
Funds 02 Contribution to capital fund
Bridges
03 Transfer to sinking fund
31 Sewerage and 01 Depreciation - Sewerage and
04 Transfer to Deforestation
Drainage Drainage
fund
32 Waterways 01 Depreciation - Waterways
05 Contribution to Regular
33 Public Lighting 01 Depreciation - Public Lighting
40 Plant & machinery 01 Depreciation - Plant & pension fund
06 Contribution to pension fund
machinery
07 Contribution to gratuity fund
50 Vehicles 01 Depreciation - Vehicles
COA Listing-Liabilities
60 Office & Other 01 Depreciation - Office & Other
Equipments Equipments 310 Municipal (General) Fund
70 Furniture, 01 Depreciation - Furniture, 10 Municipal Fund 01 Municipal Fund
Fixtures, Fittings Fixtures, Fittings and 90 Excess of Income 01 Accumulated Surplus / Deficit
and Expenditure 02 Income and Expenditure
and Electrical Electrical Appliances
Account
Appliances
Detailed Detailed
Code Code
311 Earmarked Funds 320 Grants, Contribution for specific purposes
10 Special Funds 01 Contribution from Municipal 10 Central
(Specify each Fund Fund Government
name) 20 State Government 01 I.P.P. - V Grant
02 Special development fund 02 Scheme Grants -
03 Capital fund <<Scheme(Cost Centre)
04 Deforestation Fund Code>>
05 Regular Pension Fund 30 Other Government 01 Contributions from the
06 Pension Fund Agencies Government
07 Gratuity Fund 02 Grants from the Government
50 Sinking Funds 01 Sinking fund - <<Cost
Contents
Contents
40 Financial
(Specify each Fund Centre>> Institutions
Name) 50 Welfare Bodies
70 Trust or Agency 60 International 01 Grants for specific purpose
Funds (Specify Organizations
each Fund Name) 80 Others 01 Contributions from the
312 Reserves Private Parties
10 Capital 01 Capital Contribution 02 M.P.Fund
Contribution 03 M.L.A.Fund
11 Capital Reserve 01 Capital reserve 330 Secured Loans
20 Borrowing 10 Loans from Central 01 Loans from Central
Redemption Government Government
reserve (if no 20 Loans from State 01 Loans from State Government
sinking fund is Government
created) 30 Loans from 01 Loan from HUDCO
30 Special Funds Government Bodies 02 Loan from TUFIDCO
& Association 03 Loan from MUDF

(Utilised)
04 Loan from TNUIFSL
40 Statutory Reserve 01 Statutory Reserve
40 Loans from 01 Loans from World Bank
50 General Reserve 01 General Reserve
International 02 Loans from ADB
60 Revaluation 01 Revaluation Reserve
Agencies 03 Loans from IBRD
Reserve
04 Loans from International
Agencies
Detailed Detailed
Code Code
50 Loans from Banks 01 Loan from ____.. Bank 20 Deposits – 01 Security Deposit - Revenue
& Other Financial Revenues (Leases, Auction, / Bids/
Institutions Savings etc.)
60 Other Term Loans 30 From Staff 01 Security Deposit - Staff
70 Bonds & 80 From Others 01 Deposits - Others
Debentures 341 Deposit works
80 Other Loans 01 Overdraft from ____.. Bank 10 Civil works 01 Road Cut Restoration Deposit -
331 Unsecured Loans Telephone Department
10 Loans from Central 02 Road Cut Restoration Deposit
Government - Others
Contents
Contents
20 Loans from State 20 Electrical works
Government 80 Others
30 Loans from 350 Other Liabilities
Government Bodies 10 Creditors 01 Power charges - Payable -
& Association Street Lights
40 Loans from 02 Survey charges - Payable
International 03 Accounts Payable -
Agencies Contractors
50 Loans from Banks 01 Loans from Banks & Other 04 Accounts Payable - Suppliers
05 Accounts Payable - Expenses
& Other Financial Financial Institutions
06 Deputationist Recoveries
Institutions
07 Personnel Claims
60 Other Term Loans
08 Others Payable
70 Bonds &
09 Wate supply Maintenance
Debentures
- Payable to TWAD Board /
80 Other Loans
Metro Water Board
340 Deposits Received
10 Water Cess Payable to TN
10 From Contractors / 01 Tender Deposit- Contractors
Pollution Control Board
Suppliers (EMD)
11 Audit fees payable
02 Tender Deposit- Suppliers
11 Employee liabilities 01 Salaries & Wages Payable
03 Security Deposit - Contractors
02 Pension payable
04 Retention Amount
03 Pension & Leave salary
contributions payable.
Detailed Detailed
Code Code
04 Group Insurance Scheme - 18 Handloom Advance
Management Contribution Recovered - Payable to Co-
Payable optex
12 Interest Accrued 01 Interest Payable 19 Khadi Advance Recovered -
and due Payable to Khadi Board
20 Recoveries payable 01 Provident Fund Recoveries 20 ENTYCE Advance Recovered -
02 Co-operative Society Loan Payable
Recoveries 21 CPF Subscription Recoveries
03 RD Recoveries 30 Government Dues 01 Recoveries - Payable to other
04 L.I.C. Polices Premium payable Municipalities
Contents
Contents
Recoveries 02 Library Cess - Payables
05 Special Provident Fund-Cum- 03 Water supply and Drainage
Gratuity Scheme - Recoveries Tax - Payable Current /
06 F.B.F. / Group Insurance Arrears
Scheme Recoveries 04 Education Tax - Payable
07 External Housing Recoveries Current / Arrears
including H.B.A. sanctioned 05 Maintenance charges for
by the C.M.A. Railway level crossings / Over
08 Deputationist Recoveries Bridges - Payable
09 Income Tax Deduction at 40 Refunds payable
Source from employees - TDS 41 Advance Collection 01 Advance Collection of
10 Recoveries towards Loans of Revenues Property Tax
from Banks 02 Advance Collection - other
11 Court Recoveries revenues
12 H.B.A.Special F.B.F. 80 Others
Subscription 90 Sale Proceeds
13 Income Tax Deductions - 360 Provisions
Contractors 10 Provisions for
14 Other Recoveries Expenses
15 VAT - Payable 20 Provision for
16 Royalty Payable
Interest
17 Service Tax Payable
30 Provision for Other 01 Provision for Doubtful
Assets collection of Revenue items
Detailed Detailed
Code Code
COA Listing-Assets 04 Sullage Water Removal
410 Fixed Assets Tankers - GROSS BLOCK
10 Land 01 Land -GROSS BLOCK 50 Vehicles 01 Heavy Vehicles - GROSS
20 Buildings 01 Buildings - GROSS BLOCK BLOCK

30 Roads & Bridges 01 Subways and Cause Ways - 02 Light Vehicles - GROSS BLOCK
GROSS BLOCK 03 Other Vehicles - GROSS
02 Bridges and Flyovers - GROSS BLOCK
BLOCK 60 Office & Other 01 Office equipments - GROSS
03 Roads & Pavements - Concrete Equipments BLOCK
- GROSS BLOCK 02 Other equipments - GROSS

Contents
Contents
04 Roads & Pavements - Black BLOCK
Topped - GROSS BLOCK 70 Furniture, 01 Furniture Fixtures and
05 Roads & Pavements - Others - Fixtures, Fittings Fittings - GROSS BLOCK
GROSS BLOCK and Electrical 02 Electrical Installations -
31 Sewerage and 01 Strom Water Drains, Open Appliances Lamps / Tube Light Fittings
Drainage drains and Culverts - GROSS - GROSS BLOCK
BLOCK 03 Electrical Installations -Others
02 Drainage and Sewerage pipes - GROSS BLOCK
, Conduits, Channels etc. - 80 Other Fixed Assets 01 Public Fountains - GROSS
GROSS BLOCK BLOCK
32 Waterways 01 Water Supply - Head Works, 90 Assets under 01 Assets under Disposal
OHT etc. and Water Supply Disposal

411 Accumulated Depreciation
Mains - GROSS BLOCK
02 Ground Water Wells/ Deep 20 Buildings 01 Buildings - Accumulated
Bore Wells - GROSS BLOCK Depreciation

03 Reservoirs - GROSS BLOCK 30 Roads & Bridges 01 Subways and causeways -
33 Public Lighting 01 Public Lighting Accumulated Depreciation
40 Plant & Machinery 01 Plant and Machineries - 02 Bridges and Flyovers -
GROSS BLOCK Accumulated Depreciation
02 Tools & Plant - GROSS BLOCK 03 Roads & Pavements - Concrete
03 Hand Pumps - Indian Mark II - Accumulated Depreciation
- GROSS BLOCK
Detailed Detailed
Code Code
04 Roads & Pavements - Black 02 Light vehicles - Accumulated
Topped - Accumulated Depreciation
Depreciation 03 Other vehicles - Accumulated
05 Roads & Pavements - Others - Depreciation
Accumulated Depreciation 60 Office & Other 01 Office & Other Equipments -
31 Sewerage and 01 Storm Water Drains, open Equipments Accumulated Depreciation
Drainage Drains and Culverts - 70 Furniture, 01 Furniture, Fixtures & Fittings
Accumulated Depreciation Fixtures, Fittings - Accumulated Depreciations

02 Drainage Sewerage Pipes, and Electrical
Conduits etc. - Accumalated Appliances
Contents
Contents
Depreciation 02 Electircal Installations -
32 Waterways 01 Head Works, OHT etc. Water Lamps & Tube Lights Fittings
supply Mains - Accumalated - Accumulated Depreciation
Depreciaition 03 Electircal Installations
02 Ground Water Wells/ Deep - Others - Accumulated
Bore Wells - Accumalted Depreciation
Depreciation 80 Other Fixed Assets 01 Public Fountains - Accumlated
03 Reservoirs - Accumulated depreciation
Depreciation 412 Capital Work - in - progress
33 Public Lighting 01 Public Lighting - Accumulated 10 Specific Grants 01 Projects - in - progress
Depreciation Account
40 Plant & machinery 01 Plant & Machinery - 20 Special funds 01 Projects - in - progress
Accumulated Depreciation Account
02 Tools & Plant - Accumulated 30 Specific Schemes 01 Projects - in - progress
depreciation Account
03 Hand Pumps - India Mark (II) 420 Investments - General Fund
- Accumulated Depreciation 10 Central
04 Sullage Water Removal Government
Tankers - Accumulated Securities
Depreciation 20 State Government
50 Vehicles 01 Heavy vehicles - Accumulated Securities
Depreciation
Detailed Detailed
Code Code
30 Debentures and 431 Sundry Debtors (Receivables)
Bonds Receivables
40 Preference Shares 10 Receivables for 01 Property Tax - Recoverable -
50 Equity Shares Property Taxes Residential - Current
60 Units of Mutual 02 Property Tax - Recoverable -
Funds Commercial - Current
80 Other Investments 01 Fixed Deposit 03 Property Tax - Recoverable -
90 Accumulated 01 Accumulated Depreciation
Vacant sites - Current
Provision Fund - Investment 04 Property Tax - Recoverable -
421 Investments - Other Funds Others - Current
Contents
Contents
10 Central 01 Investments - Central 05 Property Tax - Recoverable -
Government Government Securities Residential - Arrears
Securities 06 Property Tax - Recoverable -
20 State Government Commercial - Arrears
Securities 07 Property Tax - Recoverable -
30 Debentures and 01 Sinking Fund Investments - Vacant sites - Arrears
Bonds <<Cost Centre>> 08 Property Tax - Recoverable -
40 Preference Shares Others - Arrears
50 Equity Shares 19 Receivable for 01 Advertisement Tax -
60 Units of Mutual Other Taxes Recoverable - Current
Funds 02 Advertisement Tax -
80 Other Investments 01 Other investments - <<Cost Recoverable - Arrears
Centre>> 03 Profession Tax - Recoverable
90 Accumulated - Current
Provision 04 Profession Tax - Recoverable
430 Stock - in- hand - Arrears
10 Stores 01 Stores - Engineering 05 Other Taxes - Recoverable -
02 Stores - Public Health Current
03 Stores - Medical 06 Other Taxes - Recoverable -
04 Stores - Water Supply
Arrears
05 Stores - Fuel
07 Water Supply Tax - Receivable
06 Stores - <<________>>
- Current
20 Loose Tools
80 Others
Detailed Detailed
Code Code
08 Water Supply Tax Receivable 40 Receivable from 01 Lease Amount - Recoverable -
- Arrears other sources Current
09 Education Tax - Receivable - 02 Lease Amount - Recoverable -
Current Arrears
10 Education Tax - Receivable - 03 Rent on buildings recoverable
Arrears - Current
11 Drainage Tax - Receivable - 04 Rent on buildings recoverable
Current - Arrears
12 Drainage Tax Receivable - 05 Rent from Shopping
Arrears Complexes/Markets - Current
Contents
Contents
13 Tax on Carts - Receivable - 06 Rent from Shopping
Current Complexes/Markets - Arrears
14 Tax on Carts - Receivable - 07 Market Fees - Daily Market
Arrears recoverable - Current
15 Servant Tax - Receivable - 08 Market Fees - Daily Market
Current recoverable - Arrears
16 Servant Tax - Receivable - 09 Market Fees - Weekly Market
Arrears recoverable - Current
20 Receivables for 10 Market Fees - Weekly Market
Cess recoverable - Arrears
30 Receivable for Fees 01 Licence Fees and other fees - 11 Private market fees
& User Charges Recoverable - Current recoverable - Current
02 Licence Fees and other fees - 12 Private market fees
Recoverable - Arrears recoverable - Arrears
03 Water Charges Recoverable - 13 Fees for Bays in Bus Stand
Current recoverable - Current
04 Water Charges Recoverable - 14 Fees for Bays in Bus Stand
Arrears recoverable - Arrears
05 UGD Monthy charges 15 Cart Stand/ Lorry Stand/
Recoverable - Current Taxi Stand/ Cycle Stand Fees
06 UGD Monthy charges recoverable - Current
Recoverable - Arrears
Detailed Detailed
Code Code
16 Cart Stand/ Lorry Stand/ 32 Survey Fees Receivable
Taxi Stand/ Cycle Stand Fees 33 Interest Accrued on Fixed
recoverable - Arrears Deposit/ Divedend due on

17 Avenue receipts recoverable - shares
Current 34 Road Cut Restoration -
18 Avenue receipts recoverable - Telephone Department
Arrears -Recoverable
19 Cable TV Rent recoverable - 35 Road Cut Restoration - Others
Current -Recoverable
20 Cable TV Rent recoverable - 36 Interest on staff Advances -
Contents
Contents
Arrears Recoverable Account
21 Track Rent recoverable - 37 Materials Cost Recoverable
Current A/c - Contractors
22 Track Rent recoverable - 38 Advance Recoverable -
Arrears Expenses
23 Parking fees recoverable - 39 Pension and Leave Salary
Current Contributions Receivable
24 Parking fees recoverable - 40 Miscellaneous Recoveries
Arrears Receivable
25 Income from Ferries 41 Fishery rights recoverable -
recoverable - Current Current
26 Income from Ferries 42 Fishery rights recoverable -
recoverable - Arrears Arrears
27 Fees for pay and use Toilets 50 Receivable from 01 Specific grant - Receivable
recoverable - Current Government
28 Fees for pay and use Toilets 80 Receivables control
recoverable - Arrears accounts
29 Cinema Theatre - Income State Govt Cesses/
recoverable - Current levies in Taxes -
30 Cinema Theatre - Income Control accounts
recoverable - Arrears
31 Accounts Receivable - sale of
properties
Detailed Detailed
Code Code
91 State Govt Cesses/ State Govt. Cesses/
levies in Property levies in Taxes -
Taxes - Control Provision accounts
account 91 State Govt Cesses/
92 State Govt Cesses/ levies in Property
levies in Water Taxes - Provision
Taxes - Control account
99 State Govt Cesses/ levies in Water
levies in Other Taxes - Provision
Contents
Contents
Taxes - Control account
432 Accumulated Provisions against Debtors (Receivables) levies in Other
10 Provision for 01 Provision for outstanding Taxes - Provision
outstanding Property Taxes account
Property Taxes 440 Pre-paid Expenses
11 Provision for 10 Establishment 01 Prepaid Expenses
outstanding Water 20 Administration
Taxes 30 Operations &
12 Provision for Maintenance
outstanding Other 450 Cash and Bank balance
Taxes 10 Cash 01 Cash Account

20 Provision for Balance with Bank
outstanding Cess - Municipal Fund

30 Provision for 21 Nationalised Banks 01 Collection Account ---- Bank
02 Collection Account ---- Bank
outstanding Fees &
User Charges
40 Provision for
05 Devolution Fund Account ---
outstanding other
Bank
receivable
06 Personal Deposit Account -
TREASURY
07 Payment Account - Bank
Detailed Detailed
Code Code
08 Payment Account - ____ Bank 43 Scheduled Co-
09 Old Bank Account - ____ Bank operative Banks
10 Capital Fund ____ Bank 44 Post Office
11 Capital Fund ____ Bank Balance with Bank
12 Water Supply & Drainage - Grant Funds
Fund ____ Bank 61 Nationalised Banks
13 Water Supply & Drainage 62 Other Scheduled
Fund ____ Bank Banks
14 Drainage Fees from Building 63 Scheduled Co-
Flat Promoters ____ Bank operative Banks
15 Under Ground Drainage
Contents
Contents
64 Post Office
Scheme initial deposits ____ 460 Loans, Advances and Deposits
Bank 10 Loans and 01 Festival Advance
16 General Bank Account - advances to 02 Education Advance
Grants employees 03 Tour Advance
17 General Bank Account - 04 Advance of pay and T.A. on
Scheme Grants Transfer
18 General Bank Account - Loans 05 Computer Advance
19 Sinking Fund Bank Account - 06 Bicycle Advance
<<Cost Centre>> 07 Motorcycle Advance
20 Elementary Education Fund 08 Car Advance
09 Marriage Advance
____ Bank
10 House Building Advance
22 Other Scheduled
20 Employee
Banks
Provident Fund
23 Scheduled Co-
Loans
operative Banks
30 Loans to Others
24 Post Office
40 Advance to 01 Advance to Suppliers
Balance with Bank
Suppliers and 02 Advance to Contractors
- Special Funds
contractors 03 Advance to PWD / Highways/
41 Nationalised Banks 01 SJSRY / NRY Bank Accounts
T.N. Construction Corpn. Ltd.,
02 _______ Scheme bank account
42 Other Scheduled etc.,
50 Advance to others 01 Handloom Advance
Banks
02 Khadi Advance
Detailed Detailed
Code Code
03 Flood Advance 06 Receivable from General fund
04 Immediate Relief - Advance 30 Interest Control
05 Advance for solar Cookers Payable
06 Tansi Advance 480 Miscellaneous Expenditure to be written off
07 Advance of T.A. to the family
10 Loan Issue
of the Deceased Employee
Expenses
08 Warm Clothing Advance
20 Discount on Issue
09 Calculator Advance
of loans
10 Advance Recoverable -
30 Others 01 Defered Revenue Expenditure
Expenses
11 General Imprest Account
Contents
Contents
60 Deposits with 01 Deposits - Recoverable:
external Agencies
80 Other current 01 TDS On Interest on CCD by
assets Tneb - receivables
02 TDS on Interest
03 TDS - Others
04 Specific grant expenses
461 Accumulated Provisions against Loans, Advances and Deposits
10 Loans to Others
20 Advances
30 Deposits
470 Other Assets
10 Deposit Works - 01 Advance to TWAD Board/
Expenditure Metro Water Board
20 Inter Unit Accounts 01 Payable to Water Supply and
Drinage Fund
02 Payable to Elementary
Education Fund
03 Payable to General fund
04 Receivable from Water Supply
fund
05 Receivable from Elementary
Education fund
Contents
Appendix III Accounting Entry Matrix
The Accounting Entry Matrix is a table which makes the day to day accounting entry job simple and makes the accounting exercise
very objective. The entries listed are classified under Revenue, Expenditure, Assets and Liabilities categories. All the entries under
these categories are to the extent possible covered. The matrix details the Accounts to be debited and credited along with details like
vouchers to be prepared, supporting documents to prepare the vouchers and the Books of Account of prime entry. In a computerized
setup, once the entries are made, posting to the respective books of account happens automatically.
Income Accounting
Tamilnadu Urban Development Project - III

Debit Credit
Voucher to
Sl Supporting Books of
Transactions Type Account Account be
No documents account
Account head Account head prepared
code code
I Accrual of Income
Accrual of Property Property Tax –
Tax (Residential) on 1st Property Tax –
General purpose Journal
1 April and 1st October 4311001 1100101 General purpose - GJV DCB
- Recoverable – GL
Residential
(General Fund) Residential - Current
Accrual of Water
supply tax along with Water Supply and
property tax Water Supply and Journal
2 4311907 Drainage Tax - 1100201 GJV DCB
Drainage Tax GL
(Water Supply & Receivable - Current
Drainage Fund)
Accrual of Education
MUNICIPAL ACCOUNTING MANUAL

Tax along with Elementary Education
property tax Elementary Journal
3 4311909 Tax – Receivable – 1100601 GJV DCB
Education Tax GL
(Elementary Current
Education Fund)
200
Debit Credit
Voucher to
code code
Accrual of Advertisement Tax - Journal

4 4311901 1101101 Advertisement tax GJV DCB
Advertisement Tax Recoverable - Current GL
Rent from Shopping
Accrual of Rent from Rent from Shopping Rent Journal
5 4314005 Complexes/Markets - 1301001 GJV
Shopping Complex Complex/Markets Agreement GL
Current
Rent
Market Fees - Daily
Accrual of Daily Market Market Fees - Daily Agreement, Journal
6 4314007 Market recoverable - 1301003 GJV
fees Market Allotment GL
Current
order
House
Accrual of Water Water charges Metered/ Tap rate service Journal
7 4313003 1405004 GJV
Charges - Current recoverable – Current water Charges connection GL
readings
Accrual of UGD UGD monthly charges Allotment Journal
8 4313005 1405002 UGD monthly charges GJV
monthly charges Recoverable - Current orders GL
Note: Similar accrual entries are passed for other heads of Income for which the Receivables Accounts are created
II Daily Collection of Property Tax along with the other components – Cash Collection
Property Tax –
General purpose
Collection of property 4311001 Bank Cash
- Recoverable -
1 tax (Current) 4501001 Cash Account Receipt Receipt book
Residential - Current
[General Fund] Voucher GL
Library Cess -
3503002
Payables
Collection of Water
Supply & Drainage Tax
along with Property Water Supply and Bank Cash

2 Tax 4501001 Cash Account 4311907 Drainage Tax - Receipt Receipt book
Receivable - Current Voucher GL
[Water Supply and
Drainage Fund]
201
Contents
Contents
Debit Credit
Voucher to
code code
Collection of Education
Tax along with Elementary Bank Cash
3 Property Tax 4501001 Cash Account 4311909 Education Tax - Receipt Receipt book
[Elementary Receivable - Current Voucher GL
Education Fund]
Note: Transfer vouchers shall be used for depositing the collected cash into bank.
III Daily Collection of Property Tax along with the other components – Cheque/DD/Direct remittance
Property Tax –

General purpose
4311001
- Recoverable -
Receipt of Consolidated Payable to Water
Bank
Property Tax. (Entry Collection Account 4702001 Supply and Drainage
1 4502101 BRV Receipt Book
passed in General Fund ---- Bank Fund
GL
for every entry) Payable to
4702002 Elementary
Education Fund
Library Cess -
3503002
Payables
Entry passed in the
Water Supply and
Water Supply and Receivable from Journal
2 4702006 4311907 Drainage Tax - GJV DCB
Drainage Fund (daily General Fund GL
Receivable - Current
summary)
Entry passed in the Elementary
Receivable from Journal
3 Elementary Education 4702006 4311909 Education Tax - GJV DCB

General Fund GL
Fund (daily total) Receivable - Current
202
Debit Credit
Voucher to
code code
IV Change in Assessment
Property Tax –
Property Tax – Monthly List,
Enhancement of General purpose Journal
1 4311001 1100101 General purpose - GJV Adjustment
property tax -Recoverable – GL
Residential slip
Property Tax – Appeal
Property Tax –
Reduction of current General purpose Order, Journal
2 1100101 General purpose - 4311001 GJV
demand of tax - Recoverable – Adjustment GL
Residential
Residential - Current slip

Property Tax –
Reduction in property Orders,
General purpose Journal
3 tax relating to previous 2804001 Prior Year Income 4311001 GJV Adjustment
- Recoverable – GL
year slip,
V Collection of Other Accruable Incomes
Bank
Collection of Collection Account Advertisement Tax -
1 4502101 4311901 BRV Receipt book
Advertisement tax ---- Bank Recoverable - Current
GL
Bank
Collection of Water Collection Account Water Charges
charges ---- Bank Recoverable - Current
GL
Receivables – Rent Bank
Collection of Rent from Collection Account
3 4502101 4314005 from Shopping BRV Receipt book
Shopping Complex ---- Bank
Complexes - Current GL
Bank
Collection of UGD Collection Account UGD monthly charges

monthly charges ---- Bank Recoverable - Current
GL
Note: Similar entries are passed for collection of other accruable incomes
203
Contents
Contents
Debit Credit
Voucher to
code code
VI Collection of Other Incomes

Bank
Collection of copy Collection Account
1 4502101 1401301 Copy Application Fees BRV Receipt book
application fees ---- Bank
GL
Bank
Collection of Parking Collection Account
2 4502101 1308003 Parking fees BRV Receipt book
fees ---- Bank
GL
Bank

Income from Fairs and Collection Account Income from Fairs &
Festivals ---- Bank Festivals
GL
Bank
Collection of duty on Collection Account Duty on transfer of
transfer of property ---- Bank property
GL
Bank
Collection of Collection Account
5 4502101 1201002 Entertainment Tax BRV Receipt book
Entertainment tax ---- Bank
GL
Bank
Collection of Collection Account
6 4502101 1401501 Encroachment Fees BRV Receipt book
Encroachment fees ---- Bank
GL
Note: Similar entries are passed for all other Incomes which are accrued and collected on daily basis
VII Treasury Adjustments
Receipt of
Sanction
Entertainment tax Bank
Personal Deposit Proceedings/
1 from Government 4502106 1201002 Entertainment Tax BRV book
Account - TREASURY Treasury
department by GL

Adjustment
Treasury adjustment
204
Debit Credit
Voucher to
code code
VIII Receipt of arrears of taxes, fees and other income

Bank
Receipt of previous Collection Account Property Tax -
year’s property tax ---- Bank Recoverable - Arrears
GL
Receipt of Bank
Collection Account Advertisement Tax -
2 Advertisement tax of 4502101 4311902 BRV Receipt book
---- Bank Recoverable - Arrears
previous year GL
IX Receipt of accruable income in advance
Bank
Property tax received Collection Account Advance Collection of
in advance ---- Bank Property tax
GL
Adjustment of property Property Tax –
tax received in advance Advance Collection of General purpose Commission- Journal
2 3504101 4311001 GJV
in the year in which it Property tax - Recoverable - er’s Orders GL
is due Residential - Current
X Dishonour of cheques
Dishonour of BPV
Advertisement Tax - Collection Account Bank Journal
1 cheque received for 4311901 4502101 (not
Recoverable - Current ---- Bank Statement GL
Advertisement Tax payable)
XI Remission of Property Tax (before/after collection)
Property Tax –
Remission of Property Remission, refund - General purpose Remission Journal
1 1109001 4311001 GJV
tax Property tax - Recoverable - Order GL

205
Contents
Contents
Debit Credit
Voucher to
code code
XII Refund of tax (because of remission or excess collection)

Note: Entry for remission of property tax shall be passed as explained above before passing entry for refund in cases of refund arising due to
remission
Property Tax -
Proceedings Bank
General purpose - Collection Account
1 Refund of Property Tax 4311001 4502101 BPV of Book
Recoverable - ---- Bank
Authorities GL
Adjustment of Property Tax - General

Advance collection – Adjustment Journal
2 refundable amount as 4311001 purpose - Recoverable 3504101 GJV
Property Tax statement GL
advance collection - Residential – Current
XIII Provision for unrealized receivables (additional provision required for the year)
Creation of provision Provision for doubtful Provision for
Supporting Journal
1 for unrealized Property 2701001 collection of Revenue 4321001 outstanding Property GJV
statement GL
Tax items –Taxes Taxes
Provision for doubtful Provision for
Creation of provision Supporting Journal
2 2701002 collection of Revenue 4324001 outstanding – other GJV
for unrealized rent statement GL
items –Other revenues revenues
XIV Provision for unrealized receivables (writeback of excess provision)
Writeback of excess
Provision for Excess provision
provision for Supporting Journal
1 4321001 outstanding Property 1806001 written back – GJV
unrealized Property statement GL
Taxes Property Tax
Tax
Writeback of excess Provision for
Excess provision Supporting Journal
2 provision for 4324001 outstanding – other 1800602 GJV
written back – Others statement GL

unrealized rent revenues
206
Expenditure Accounting
Debit Credit Voucher
Sl Transactions Supporting Books of
Account to be
No Type Account head Account code Account head documents account
code prepared
I Accounting of establishment expenses

1 Accrual of 2101001 to Pay & 3502001 Provident Fund EJV Salary Journal
monthly 2101007 Allowances Recoveries statement GL
salary bill 3502004 L.I.C. Polices Premium
Recoveries
3502021 CPF Subscription
Recoveries
4314038 Advance recoverable –
Expenses (New Health
Insurance recovery)
3501101 Salaries & Wages
Payable
Note: Components of pay and recoveries are shown for illustration purpose only. The actual recoveries may be more based on the actual scenario.
2 Payment of Salary 3501101 Salaries & Wages 4502107 Payment Account - ... BPV EJV GL, Bank
Payable Bank book
3 Remittance 3502001 Provident Fund 4502107 Payment Account - ... BPV EJV GL, Bank
of Statutory Recoveries Bank book
deductions 3502004 L.I.C. Polices
Premium
Recoveries
4 Payment of 2102010 Staff Welfare 4502107 Payment Account - ... BPV Demand from GL, Bank
difference of Expenses Bank the PF authority book
interest on PF

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Account to be
code prepared
5 Remittance of 3502021 CPF 4502107 Payment Account - ... BPV EJV GL, Bank
CPF recoveries Subscription Bank book
and management Recoveries
contribution 2102018 CPF
Management
Contribution
II Accounting for payment of wages
1 Payment of wages 2101010 Wages - Others 4502107 Payment Account - ... BPV Wage Bill GL, Bank
Bank book

III Accounting for payment of Administrative expenses
1 Payment of 2201101 Electricity 4502107 Payment Account - ... BPV Electricity bill GL, Bank
Electricity consumption Bank book
charges for office charges for
buildings office buildings
2 Payment for 2202001 Books and 4502107 Payment Account - ... BPV Purchase Bill GL, Bank
Books and Periodicals and Bank book
Periodicals Magazines
3 Payment of Legal 2205102 Court Fees 4502107 Payment Account - ... BPV Court order GL, Bank
expenses say Bank book
Court fees
IV Accounting for payment of Programme expenses
1 Medical expenses 2502001 Own 4502107 Payment Account - ... BPV Bills GL, Bank
for small pox Programmes - Bank book
eradication <<Cost Centre>>

208
Account to be
code prepared
2 Payment of local 2503003 Aids control 4502107 Payment Account - ... BPV MoU, Expense GL, Bank
body share of programme Bank statement book
expenses under
AIDS Control
programme of an
NGO
V Accounting for payment of Revenue Grants, Contributions and Subsidies
1 Payment of 2601001 Family welfare 4502116 General Bank Account - BPV Bills GL, Bank
Family welfare programme Grants book
programme -Grant
expenses
VI Accounting for direct pension payment
1 For accrual 2103001 Pensions 3501102 Pension payable EJV Pension Journal
of pension Statement GL
expenditure
2 For subsequent 3501102 Pension payable 4502107 Payment Account - ... BPV Payment GL, Bank
payment of Bank Voucher book
pension
VII Accounting for Pension Contribution
1 Annual 2103005 Pensions 4502107 Payment Account - ... BPV Approved GL, Bank
contribution to contribution Bank statement book
Pension fund to Municipal
Employees
VIII Accounting for Work Bills
1 Receipt of EMD 4502101 Collection 3401001 Tender Deposit- BRV Works contract GL, Bank
Account -------- Contractors (EMD) book

Bank
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Account to be
code prepared
2 Refund of EMD 3401001 Tender Deposit- 4502101 Collection Account ------ BPV Works Bill GL, Bank
Contractors --Bank book
(EMD)
3 Receipt of 4502101 Collection 3401003 Security Deposit - BRV Works Contract GL, Bank
Security Deposit Account -------- Contractors book
Bank
4 Payment of 4604002 Advance to 4502107 Payment Account-------- BPV Contractor’s Bill GL, Bank
advance to Contractors Bank book
contractor

5 Accounting for 4122001 Projects in 3502013 Income Tax Deductions - CJV Works Bill Journal
a passed bill of progress account Contractors GL
capital works (Cost Centre - 4604002 Advance to contractors
(E.g. Water ________________) 3401004 Retention amount
supply)
3501003 Accounts Payable –
Contractors
6 Roads 2305001 Repairs & 3502013 Income Tax Deductions - CJV Contractor bill Journal
maintenance Maintenance Contractors GL
work bill – Roads & 4604002 Advance to contractors
admitted but not Pavements - 3401004 Retention amount
paid Concrete
3501003 Accounts payable –
Contractors
7 Payment to 3501003 Accounts 4502107 Payment account - _____ BPV Payment GL, Bank
contractor payable - Bank voucher book
Contractors
8 Payment of 3502013 Income Tax 4502107 Payment account - _____ BPV Deductions GL, Bank

Income Tax Deductions - Bank Register book
Deductions Contractors
to concerned
Authority
210
Account to be
code prepared
9 Release of 3401004 Retention 1402004 Other penalties BPV Release order GL, Bank
Retention amount Amount Payment account - _____ book
4502107
after Defect Bank
Liability Period
after recovery of
penalties, if any
10 Capitalization 4123001 Projects - in 2402002 Interest on loans from GJV Interest GL, Bank
of interest - progress State Government demand notice book
on specific Account
borrowing from (Cost Centre -

State Government ________________)
11 Capitalization 4103201 Waterways - 4122001 Projects - in - progress EJV Completion Journal
on completion of Water Supply Account (Cost Centre - Report GL
work - Head Works, ________________)
OHT etc. and
Water Supply
Mains – GROSS
BLOCK
Note: Similar series of entries are passed in respect of all Work bills
IX Deposit Works - Works executed on receipt of deposit from other agencies
1 On receipt of 4502101 Collection 3411001 Road Cut Restoration BRV Communication GL
deposit from Account -------- Deposit - Telephone Bank
agency say Bank Department book
Telephone
Department
2 On completion of 3411001 Road Cut 3501003 Accounts Payable - CJV Completion Journal
work Restoration Contractors Report GL

Deposit -
Telephone
Department
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Account to be
code prepared
X Deposit Works – Works executed by other agencies

1 On payment of 4701001 Advance to 4502107 Payment account - _____ BPV Work Order GL
deposit to other TWAD Board/ Bank Bank
agencies say Metro Water book
TWAD Board Board
2 On receipt of 4103205 Reservoirs – 4701001 Advance to TWAD Board EJV Completion Journal
intimation from GROSS BLOCK Report GL
TWAD Board on
completion of

work
XI Execution of Projects by other Agencies under Pooled Finance arrangement
1 Transfer of new 4103003 Roads & 3302001 Loans from State EJV Communication Journal
road constructed Pavements Government GL
by PWD out of - Concrete -
loan funds under GROSS BLOCK
Pool Finance
Scheme
XII Accounting for projects executed by external PIUs
1 Transfer of funds 4701001 Advance to 4502112 Water Supply & BPV Orders GL,
to PIU (say TWAD TWAD Board Drainage Fund ..... Bank Bank
Board) (Cost centre Book
________)
2 On receipt of 4122001 Projects - in 4701001 Advance to TWAD Board GJV Project GL
periodic ‘Project - progress (Cost centre ________) Financial
Financial Account Statement

Statement’ from (Cost Centre -
PIU (TWAD ________________)
board)
212
Account to be
code prepared
1701001 Interest on Investments

/ Fixed Deposits (Cost
centre ________)
3303004 Loan from TNUIFSL
(Cost centre ________)
3 On receipt of final 4122001 Projects - in 4701001 Advance to TWAD Board GJV Audited Project GL
‘Project Financial - progress (Cost centre ________) Financial
Statement’ from Account Statement
PIU (TWAD (Cost Centre -
board) ________________)
4 Capitalization of 4103201 Water Supply 4122001 Projects - in - progress FAJV Project GL
CWIP - Head Works, Account (Cost Centre - completion
OHT etc. and ________________) report
Water Supply
Mains - GROSS
BLOCK
XIII Accounting for Departmental Works
1 Purchase of tube 4301001 Stores – 3501004 Accounts Payable - PJV Engineer Journal
lights and bulbs Engineering Suppliers certificate, GL
for street lights storekeeper
certificate
2 Payment to 3501004 Accounts 4502107 Payment account - _____ BPV Purchase Bill, GL
Supplier Payable Bank Department Bank
Suppliers officer book
certificate
3 Issue of stores 2305007 Maintenance 4301001 Stores – Engineering PJV Engineer Journal
for street light Expenses for certificate GL

maintenance Street Lights
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Account to be
code prepared
4 Accounting 2305903 Repairs and 3501101 Salaries & Wages EJV Wages Journal
for wage bill Maintenance Payable statement GL
for street light - Electrical
maintenance Fittings – (Street
Lights)
5 Payment of wage 3501101 Salaries & Wages 4502106 Payment account - _____ BPV Wages GL
bill Payable Bank statement Bank
book
6 Accounting 2308010 Garbage 3502013 Income Tax Deductions - EJV Contract Bill Journal

for Garbage Clearance Contractors GL
clearance under 3501003 Accounts Payable -
privatization Contractors
7 Payment 3501003 Accounts 4502107 Payment account - _____ BPV Contract Bill GL
of Garbage Payable - Bank Bank
Collection/ Contractors book
Removal
Bills (Under
privatization
contract)
XIV Stores Accounting
1 On purchase of 4301001 Stores - 3501004 Accounts Payable - GJV Purchase Bill Journal
consumables say Engineering Suppliers GL
street lights
2 Payment to 3501004 Accounts 4502107 Payment account - _____ BPV Purchase Bill GL
supplier for Payable - Bank Bank
consumables Suppliers book

purchased
3 On issue of street 2305007 Maintenance 4301001 Stores - Engineering GJV Issue Slip Journal
light bulbs for Expenses for GL
maintenance Street Lights
214
Account to be
code prepared
4 On return of 4301001 Stores - 2305007 Maintenance Expenses GJV Stores Return Journal
excess materials Engineering for Street Lights Slip GL
issued for
maintenance
5 For issue of 4314037 Materials Cost 4301001 Stores - Engineering CJV Issue slip Journal
Engineering Recoverable A/c 1808001 Other Income (Margin GL
stores to - Contractors amount)
Contractors for
undertaking
works
6 On utilization 4122001 Projects - in 4314037 Materials Cost CJV Running bill Journal
of stores by - progress Recoverable A/c – GL
Contractors Account Contractors (To the
(Cost Centre - extent of materials
________________) utilized)
7 For any unused 4301001 Stores - 4314037 Materials Cost CJV Stores return Journal
materials Engineering Recoverable A/c – note/Inventory GL
returned by 1808001 Other Income Contractors (To the material receipt
Contractors (Margin extent unutilized) note
amount)
8 Accounting 2704003 Stores written 4301005 Stores - Fuel GJV Stock Journal
for differences off - Evaporation Verification GL
between book loss Report
stock and
physical stock due
to evaporation/
shrinkage of
Petrol
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Account to be
code prepared
9 For writing off 2704001 Stores - written 4301003 Stores - Medical GJV Order Journal
any decline in the off GL
value of stores
below carrying
cost say medical
stores
XV Accounting for other expenses
1 Purchase of 2202101 Stationery and 3501004 Accounts Payable EJV Bills Journal
stationery Printing Suppliers GL

2 Accounting of 2201201 Telephone 3501005 Accounts Payable – EJV Bill Journal
Telephone bill charges Expenses GL
3 Payment of 3501005 Accounts 4502108 Payment account - _____ BPV Payment Bank
Telephone Bill Payable - Bank voucher Book
Expenses GL
XVI BSUP Accounting
1 Wages paid for 2305105 Sanitary / 4502121 BSUP Bank Account BPV Wage Bill Bank
waste collection Conservancy Book
expenses –in Expenses – BSUP GL
urban slums - <<scheme
code>>
2 Wages paid for 2305008 Maintenance 3501101 Salaries & Wages EJV Wages Journal
maintenance of Expenses for Payable statement GL
street lights in Street Lights –
slums BSUP - <<scheme
code>>

3 Payment of wages 3501101 Salaries & Wages 4502121 BSUP Bank Account BPV Wage Bill Bank
Payable Book
GL
216
Account to be
code prepared
4 Skill development 2102007 Training 4502121 BSUP Bank Account BPV Bills Bank
training Programme Book
programme Expenses – BSUP GL
expenses for - <<scheme
urban poor code>>
5 Construction of 4102002 Buildings - 4502121 BSUP Bank Account BPV Bills Bank
community toilet GROSS BLOCK Book
and bathroom – BSUP - GL
<<scheme
code>>
6 Purchase 4106003 Other 3501004 Accounts Payable - PJV Bills Journal
of medical equipments - Suppliers GL
equipments for GROSS BLOCK –
preventive health BSUP - <<scheme
care in slums on code>>
credit
7 Payment of 3501004 Accounts 4502121 BSUP Bank Account BPV Bills Bank
purchase bills Payable - Book
Suppliers GL

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Fixed Assets Accounting
Transactions Type Account Account to be
No Account head Account head documents account
code code prepared
I Purchase of Fixed Asset (Cash Purchase)

1 Purchase of car by 4105002 Light vehicles – GROSS 3501004 Accounts Payable - FJV Invoice Journal
down payment BLOCK Suppliers GL
2 Purchase of Office 4106001 Office equipments - 3501004 Accounts Payable - FJV Invoice Journal
equipments and im- GROSS BLOCK Suppliers GL
mediate payment

3 Purchase of Office 4107001 Furniture Fixtures and 3501004 Accounts Payable - FJV Invoice Journal
furniture Fittings - GROSS BLOCK Suppliers GL
4 For payment made 3501004 Accounts Payable - Sup- 4502108 Payment account - BPV Payment GL,
to supplier of fixed pliers _____ Bank voucher Bank book
assets above
II Purchase of Fixed Assets on credit
1 Purchase of Xerox 4106001 Office equipments - 3501004 Accounts Payable - FJV Invoice Journal
machine on credit GROSS BLOCK Suppliers GL
2 Purchase of machin- 4104001 Plant and Machineries - 3501004 Accounts Payable - FJV Invoice Journal
ery on credit GROSS BLOCK Suppliers GL
3 Accrual of installa- 4104001 Plant and Machineries 3501004 Accounts Payable - FJV Invoice Journal
tion charges - GROSS BLOCK (Installa- Suppliers GL
tion charges)
4 Payment of ma- 3501004 Accounts Payable - Sup- 4502108 Payment account - BPV Invoice Bank Book
chinery cost and pliers _____ Bank GL
Installation charges
on equipments pur-

chased
218
code code prepared
III Additions to Fixed Assets

1 Purchase of Motor 4105002 Light vehicles – GROSS 3501004 Accounts Payable - FJV Invoice Journal
Car Block Supplier GL
IV Depreciation
1 Depreciation on Plant 2724001 Depreciation – Plant & 4114001 Plant & Machinery - GJV Deprecia- Journal
and Machinery Machinery Accumulated Depre- tion State- GL
ciation ment
2 Depreciation on Mo- 2725001 Depreciation - Vehicles 4115002 Light vehicles - Accu- GJV Deprecia- Journal
tor car mulated Depreciation tion State- GL

ment
3 Depreciation on 2723101 Depreciation - Sewerage 4113101 Storm Water Drains, GJV Deprecia- Journal
Storm Water Drains and Drainage Open drains and Cul- tion State- GL
verts - Accumulated ment
Depreciation
V Revaluation of Fixed Assets for recording increase in the value of the asset
1 For recording the 4101001 Land - GROSS BLOCK 3126001 Revaluation Reserve GJV Revaluation Journal
increase in value of Report GL
land
VI Revaluation of Fixed Assets for recording decrease in the value of the asset
1 For recording the de- 3126001 Revaluation Reserve 4104001 Plant and Machiner- GJV Revaluation Journal
crease in the value of (to the extent of earlier ies - GROSS BLOCK Report GL
Plant and machinery increase)
2704002 Assets written off – Fixed
Assets (Excess of decline
in value)

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code code prepared
2 For recording the 3126001 Revaluation Reserve 4105002 Light Vehicles - GJV Revaluation Journal
decrease in the value 2704002 Assets written off – Fixed GROSS BLOCK Report GL
of Vehicles Assets (Excess of decline
in value)
VII Disposal of Assets
1 Disposal of Fixed 4502104 Collection Account ---- 4102001 Buildings – GROSS GJV Invoice Journal
Assets say building Bank BLOCK GL
for profit 4112001 Buildings – Accumulated 1803001 Profit on sale of

Depreciation assets
2 Disposal of Fixed 4502104 Collection Account ---- 4104001 Plant and Machiner- GJV Invoice Journal
Assets say machinery Bank ies - GROSS BLOCK GL
for loss 4115002 Light vehicles - Accumu-
lated Depreciation
2711001 Loss on sales of assets
VIII Transfer to Assets under Disposal
1 Transfer of Fixed 4109001 Assets under Disposal 4102001 Buildings - GROSS GJV Order for Journal
Assets say Buildings BLOCK disposal GL
when there is expect-
ed time lag between
decision to dispose
and actual disposal
Note: On actual disposal entries for disposal of assets explained above are passed by using the ‘Assets under Disposal’ account instead of the Fixed
Asset Account

220
Other Transactions Accounting
Sl Supporting doc- Books of
No Account head Account head uments account
code code prepared
I Accounting for Investments

1 Investment in Central 4211001 Investments 4502107 Payment BPV Investment GL Bank
Government Securities – Central Account - ... Register book
Government Bank
Securities
2 Interest received on 4502107 Payment Account 1701001 Interest on BRV Bank Statement Bank
investment after deduction - ... Bank Investments / book GL

of TDS 4608002 TDS on Interest Fixed Deposits
3 Reinvestment of Interest 4208001 Fixed Deposit 1701001 Interest on GJV Bank Statement Journal
received on FD Investments / GL
Fixed Deposits
4 Sale of Investments for a 4502107 Payment Account 4211001 Investments BRV Bank instruction Bank
profit - ... Bank – Central book GL
Government
Securities
1704001 Profit on sale
of Investments
5 Sale of Investments at a 4502107 Payment Account 4211001 Investments BRV Bank instruction Bank
loss - ... Bank – Central book GL
2712001 Loss on sale of Government
Investments Securities
II Accounting for Advance paid to employees

1 Computer advance paid to 4601005 Computer 4502107 Payment BPV Sanction Order Bank
employees Advance Account - ... book GL
Bank
221
Contents
Contents
code code prepared
2 Monthly accrual of Interest 4314036 Interest on 1712001 Interest on GJV Sanction Order Journal
Staff Advances staff advances GL
- Recoverable
Account
Method 1:Recovery of full principal followed by recovery of interest
3 Repayment of principal by 4502101 Collection 4601005 Computer BRV Sanction Order Bank
employee in cash Account-----Bank Advance book GL
Account
4 Interest recovery from 2101001 Pay (including 4314036 Interest on EJV Sanction Order Journal

salary (after full principal grade pay/ Staff Advances GL
is repaid) personal pay) - Recoverable
Account
Method 2: Recovery of advance from salary in equated monthly installments (EMI) over the term of the advance
5 Recovery of EMI from 2101001 Pay (including 4601005 Computer EJV Sanction order Journal
salary of employees grade pay/ Advance (for GL
personal pay) the principal
component)
4314036 Interest on
staff Advances
- Recoverable
Account (for
the interest
component)
III Accounting for Prepaid Expenses
1 Insurance Premium paid 2204001 Vehicle Insurance 4502107 Payment BPV Insurance Policy Bank

in January for a period of Account - ... book GL
12 months Bank
2 Prepaid Insurance 4401001 Prepaid expenses 2204001 Vehicle GJV Insurance Policy Journal
expenses – (Insurance) Insurance GL
222
code code prepared
3 Transfer from Prepaid 2204001 Vehicle Insurance 4401001 Prepaid GJV Accounting Journal
expenses to Expenditure Expenses – policy GL
Account (Next Financial (Insurance)
Year for 9 months)
4 Advance payment of New 4314038 Advance 4502107 Payment BPV Computation GL, Bank
Health Insurance premium Recoverable – Account - ... sheet Book
Expenses Bank
IV Imprest Accounting
1 On payment of the Imprest 4605002 General Imprest 4502107 Payment BPV Bank
Amount Account Account - ... book GL

Bank
2 On receiving accounts 2202101 Stationery and 4605002 General GJV Imprest Journal
for amount spent say Printing Imprest statement GL
stationery and Postage and 2201203 Postage and Account
Telegram Telegram and Fax
Charges

223
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Loans Accounting
Debit Credit
Voucher
Sl Ac- Supporting Books of
Transactions Type Account to be
No count Account head Account head documents account
code prepared
code
I Accounting for Loans borrowed

1 Loan received from 4502118 General Bank 3315001 Loans from Banks BRV Sanction letter GL Bank book
Bank for general Account - Loans & Other Financial
purpose Institutions
2 Loan received from 4502106 Personal Deposit 3502001 Loans from State BRV Sanction order GL Bank Book

State Government in PD Account – Treasury Government
Account with Treasury
3 Drawal of loan amount 4502118 General Bank 4502106 Personal Deposit TV Transfer Bank Book
from Treasury Account - Loans Account – instruction
Treasury
4 Interest accrued on loan 2405001 Interest charged by 3501201 Interest payable GJV Advice from Journal GL
the Bank lender
5 Repayment of loan taken 3315001 Loans from Banks 4502118 General Bank BPV Payment GL Bank book
from bank for general & Other Financial Account - Loans voucher
purpose Institutions
6 Payment of Interest on 3501201 Interest payable 4502118 General Bank BPV Payment GL Bank book
loan taken for general Account - Loans voucher
purpose
7 Interest accrued on 4123001 Projects - in - 3501201 Interest payable GJV Advice from Journal GL
loan taken for specific progress Account lender
purpose say construction
of buildings

224
Sinking Fund Accounting
Debit Credit Voucher to
code code prepared
1 Creation of Sinking 2901003 Transfer to 3115001 Sinking fund - GJV Order Journal GL
Fund Sinking Fund <<Cost Centre>>
(___ loan)
2 Transfer of money into 4502119 Sinking Fund Bank 4502107 Payment Account - TV Order Bank Book GL
Sinking Fund Account Account - <<Cost ... Bank
Centre>> (___ loan)
3 Investment of Sinking 4213001 Sinking Fund 4502119 Sinking Fund Bank BPV Bank Bank Book GL
Fund Money in Investments - Account - <<Cost instruction

Debentures and Bonds <<Cost Centre>> Centre>> (___ loan)
(___ loan)
4 On sale of Investments 4502119 Sinking Fund Bank 4213001 Sinking Fund BRV Bank Bank Book GL
for profit Account - <<Cost Investments - instruction
Centre>> (___ loan) <<Cost Centre>>
(___ loan)
3115001 Sinking fund -
<<Cost Centre>>
(Profit) (___ loan)
5 Repayment of loan out 3302001 Loans from State 4502119 Sinking Fund Bank BPV Demand Bank Book GL
of Sinking Fund Government Account - <<Cost notice
Centre>> (___ loan)
6 Transfer of utilized 3115001 Sinking fund - 3125001 General Reserve GJV Accounting Journal GL
amount to General <<Cost Centre>> policy
Reserve – year end (___ loan)

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Grants and Schemes Accounting
code code prepared
I Receipt of General Grant

1 Receipt of General 4502116 General Bank 1601003 Revenue Grant – BRV Grant Register GL Bank book
Grant Account - Grants Grants from State
Government
2 Deductions in respect 2402002 Interest on 1601003 Revenue Grants – BRV Government Bank book GL
of interest, electricity Loans from State Grants from State order

charges made by State Government Government
Government at the time 2201101 Electricity
of release consumption
charges for office
buildings
4502116 General Bank
Account - Grants
II Receipt of Specific Grants
1 Receipt of grant under a 4502117 General Bank 3202001 Scheme - Grant - BRV Government GL Bank book
scheme Account - <<Scheme (Cost Order
<<Scheme (Cost Centre) Code>>
Centre) Code>>
2 Accounting for grant 4315001 Specific grant 3202001 Scheme - Grant - GJV Government Journal GL
receivable receivable <<Scheme (Cost Order
Centre) Code>>
3 On actual receipt of 4502117 General Bank 4315001 Specific grant BRV Receipt GL Bank book
grant Account - receivable

<<Scheme (Cost
Centre) Code>>
226
code code prepared
III Revenue Expenditure out of Specific Grants

1 Revenue expenditure 2202101 Stationery 4502117 General Bank BPV Bill GL Bank book
out of scheme funds e.g. & Printing - Account - Scheme
Printing and Stationery <<Scheme (Cost Grants - <<Scheme
Centre) Code>> (Cost Centre)
Code>>
2 Transfer of amount 3202001 State Government 1603001 Scheme grants - GJV Grant Register Journal GL
equivalent to revenue Grants - Scheme - <<Scheme (Cost
expenditure to income Grant - <<Scheme Centre) Code>>
at the end of the year (Cost Centre)

Code>>
IV Capital Expenditure out of Specific Grants
1 Receipt of bill for 4123001 Projects - in - 3501003 Accounts payable - BPV Contractor bill GL
capital WIP for works progress Account Contractors
executed under - <<Scheme (Cost
Schemes Centre) Code>>
2 Payment to contractor 3501003 Accounts payable - 4502117 General Bank BPV Payment GL Bank book
Contractors Account - Scheme voucher
Grants
3 Capitalization of Capital 4102001 Buildings – Gross 4123001 Projects - in - GJV Capitalization Journal GL
WIP say buildings Block progress Account statement
- <<Scheme (Cost
Centre) Code>>
V Refund of Funds
1 Refund of specific 3202001 Scheme - Grant - 4502117 General Bank BPV Bill Bank book GL
scheme funds in excess <<Scheme (Cost Account - Scheme

of expenditures Centre) >> Grants - Scheme
(Cost Centre)
227
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code code prepared
2 Transfer of amount 3202001 Scheme - Grant - 3121001 Capital GJV Statement Journal GL
equivalent to capital <<Scheme (Cost contribution
expenditure to Capital Centre) >>
Contribution at the end
of the year
VI Investments made out of Specific Grants
1 Investments made out 4218001 Other Investments 4502117 General Bank BPV Payment GL Bank book
of Scheme amount - <<Scheme (Cost Account - Scheme voucher
Centre) >> Grants - Scheme

(Cost Centre)
2 Interest received on 4502117 General Bank 3202001 Scheme - Grant - BRV Bank Statement GL Bank book
Investment Account - Scheme <<Scheme (Cost
Grants - Scheme Centre) >>
(Cost Centre)
3 Disposal of Investment 4502117 General Bank 4218001 Other Investments BRV Investment GL Bank book
at profit Account - Scheme - <<Scheme (Cost Register
Grants - Scheme Centre) >>
(Cost Centre) 3202001 Scheme - Grant -
<<Scheme (Cost
Centre) >>
VII Grant Received as Nodal Agency
1 Grant received as a 4502117 General Bank 3206001 Grants for BRV Order Bank book GL
Nodal/Implementing Account - Scheme specific purpose –
Agency Grants - Scheme (received as Nodal
(Cost Centre) Agency)

228
code code prepared
2 Liability on receipt of 4608004 Specific Grant 3502013 Income Tax GJV Bill Journal GL
bill expenses Deductions -
Contractors
3502016 Royalty payable
3501003 Accounts payable -
Contractors
3 Contractor payment 3501003 Accounts payable - 4502117 General Bank BPV Bill Bank book GL
Contractors Account - Scheme
Grants
4 Transfer of Scheme 3206001 Grants for 4608004 Specific Grant GJV Statement Journal GL
expenses on completion specific purpose – expenses
of the scheme (received as Nodal
Agency)
VIII Receipt Grants in kind (fixed asset)
1 Computers donated to 4106001 Office equipments 1601005 Grants in kind FAJV Supporting Journal GL
the ULB by a corporate – GROSS BLOCK document
body (at fair value)
2 Town hall (heritage 4102001 Buildings – GROSS 1601005 Grants in kind FAJV Government Journal GL
asset) transferred BLOCK Order
to ULB from State
Government (nominal
value of Re. 1)

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Transfers and Inter Fund Transactions Accounting
code code prepared
1 Interbank Transfers 4502101 Collection Account 4502102 Collection TV Inter fund Bank Book GL
---- Bank Account ---- Bank transfer slip,
Instruction
2 Withdrawal of amount 4502101 Collection Account 4502106 Personal Deposit TV Orders Bank Book GL
from Government ---- Bank Account -
Treasury TREASURY
3 Inter Fund Transfer - 4702001/ Payable to water 4502102 Collection BPV Approval Bank Book GL

General Fund to Water supply and Account ---- Bank
Supply and Drainage drainage fund/
Fund Receivable from
(General Fund) 4702004 water supply fund
4 Inter Fund Transfer - 4502112 Water supply & 4702003/ Payable to BRV Approval Bank Book GL
General Fund to Water drainage fund General Fund/
Supply and Drainage _____ Bank Receivable from
Fund General Fund
(Water Supply and 4702006
Drainage Fund)

230
Year End Entries Accounting
code code prepared
I Transfer of Current Receivables to Arrears

1 Transfer of uncollected 4311005 Property Tax 4311001 Property Tax – GJV DCB Journal GL
Property tax of the - Recoverable – General purpose
current year to Arrears Arrears - Recoverable -
2 Transfer of uncollected 4311902 Advertisement 4311901 Advertisement GJV DCB Journal GL
Advertisement tax of the Tax - Recoverable – Tax - Recoverable –

current year to Arrears Arrears Current
II Provision for expenses for which bills are not yet received
1 Provision for Telephone 2201201 Telephone charges 3501005 Accounts Payable - EJV Supporting Journal GL
charges of March for Expenses Statement
which bill is not yet
received
III Municipal contribution in respect of New Health Insurance Scheme
1 Year end accounting for 2102013 Health Insurance 4314038 Advance GJV Supporting Journal GL
municipal contribution Local Body Recoverable – Statement
to New Health Insurance Contribution Expenses
scheme in excess of
salary recoveries/short
recoveries due to death/
dismissal
IV Transfer to Reserve Funds
1 Transfer to Capital Fund 2901002 Contribution to 3111003 Capital Fund GJV Policy Journal GL
capital fund
2 Transfer to gratuity fund 2901007 Contribution to 3111007 Gratuity Fund GJV Policy Journal GL
gratuity fund
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code code prepared
V Capitalization of Surplus/Deficit for the year

1 Capitalization of Surplus 3109002 Income and 3109001 Accumulated GJV Accounting Journal GL
for the year Expenditure Account Surplus / Deficit policy
2 Capitalization of Deficit 3109001 Accumulated Surplus 3109002 Income and GJV Accounting Journal GL
for the year / Deficit Expenditure Account policy

232
Appendix IV - Formats
Document Formats
Index
Sl. Document/ Document/Register Name Existing Document/
No Register Code Register Number
1 MAM 01 Property Tax Remittance Challan MCF1
2 MAM 02 Remittance Challan MCF2
3 MAM 03 Bank Receipt Voucher MCF3

4 MAM 04 Bank Book MCF4 and MCF6
5 MAM 05 Bank Payment Voucher MCF5
6 MAM 06 Transfer Voucher Newly introduced
7 MAM 07 Bank Transfer Book MCF8
8 MAM 08 Daily Collection Statement by bank MCF9
9 MAM 09 Daily Cheque Collection Statement MCF10
10 MAM 10 Property Tax Adjustment Slip MCF11
11 MAM 11 Register of Dishonoured cheques MCF12
12 MAM 12a Property Tax Challan Register MCF13a
13 MAM 12b Profession tax/Water Charges Challan Register MCF13b
14 MAM 13 General Fund – Chitta and Water Supply and Drainage Fund Chitta MCF14
15 MAM 14 Demand Collection and Balance Register Newly introduced
16 MAM 15 Bills Inward Register (Departments) MCF15A
17 MAM 16 Bills Inward Register (Accounts Cell) MCF 15B
18 MAM 17 Abstract of salary Bill/Supplemental Bill MCF16

19 MAM 18 Register of Employee Loans & Advances Newly introduced
20 MAM 19 Pension payment Register Newly introduced
21 MAM 20 General Journal Voucher MCF17
233
Contents
Contents
Sl. Document/ Document/Register Name Existing Document/
No Register Code Register Number
22 MAM 21 Expenses Journal Voucher MCF18
23 MAM 22 Purchase Journal Voucher MCF19
24 MAM 23 Contractor’s Journal Voucher MCF20
25 MAM 24 Contract Bill MCF21
26 MAM 25 Continuation Sheet of Contract Bill MCF22
27 MAM 26 Fixed Assets Journal Voucher MCF23
28 MAM 27 Asset Register MCF24
29 MAM 28 Journal Book MCF25
30 MAM 29 Priced Stores Ledger MCF26

31 MAM 30 Inventory Materials Receipt Note MCF27
32 MAM 31 Inventory Material Issue Note MCF28
33 MAM 32 Stores Return Note MCF30
34 MAM 33 Stores Adjustment Slip MCF31
35 MAM 34 Project Ledger MCF32
36 MAM 35 Unserviceable Stock Register MCF33
37 MAM 36 General Ledger MCF34
38 MAM 37 Depreciation Work Sheet MCF35
39 MAM 38 Project Expenditure Statement MCF36
40 MAM 39 Sinking Fund Register Newly introduced
41 MAM 40 Purchase Book Newly introduced
42 MAM 41 Deposit Works Register Newly introduced
43 MAM 42 Grants Register Newly introduced
44 MAM 43 Register of loans Newly introduced
45 MAM 44 Receipts & Payments Account Newly introduced
46 MAM 45 Statement of Cash Flows Newly introduced

47 MAM 46 Income & Expenditure Statement Newly introduced
48 MAM 47 Balance Sheet Newly introduced
234
General Forms and Registers
MAM 01 PROPERTY TAX REMITTANCE CHALLAN - BANK (MCF1)
Property Tax Remittance Challan Date:
Bank copy/Municipal copy/Tax payer’s copy

.............................................Municipality/Corporation
Property Tax Remittance Challan Challan No.
No. Section Division/Ward Assessment No.
Assessee’s Name:
Address of the Property:
Sl. No. Period PT (Rs) Total
Arrears Current Arrears Current
TOTAL
Rupees in words:
Paid by Cash/Cheque no. ____________________ dated _____________ drawn on ________________________________________________________________ bank

Remitter’s signature
Signature & Bank seal

235
N.B.: This receipt is valid subject to realisation of cheque
Contents
Contents
MAM 02 REMITTANCE CHALLAN MUNICIPAL TREASURY (MCF2)
Treasury copy/Departmental copy/Remitter’s copy

____________________________ Municipality/Corporation
Name of the Remitter: Challan No.
Address of the Property:

Code No. Account Head Amount
TOTAL
Rupees in words
Total
Date: Verified by:

Remmitter’s signature

Authorized signatory with designation seal:
236
MAM 03 BANK RECEIPT VOUCHER (MCF3)
Bank Receipt Voucher

____________________________ Municipality/Corporation
____________________________ Bank
Amount in Rs.
Fund: Functionary:
Function: Field:
Voucher No: Date :
Cost Centre Account

Account Head Debit Credit
Code Code
1 2 3 4 5
Total
Narration:
Prepared by Approved by
237
Contents
Contents
MAM 04 BANK BOOK (MCF4 AND MCF6)
Bank Book
Amount is Rs
Receipt Payment
Voucher Voucher
Bank Bank
Date Type, & Particulars L.F Bank Date Type, & Particulars L.F Bank
date Date
No. No.

1 2 3 5 6 7 8 9 11 12
Total Total

238
MAM 05 BANK PAYMENT VOUCHER (MCF5)
Bank Payment Voucher

___________________________ Municipality/Corporation
___________________________ Bank
Amount in Rs
Fund: Functionary:
Function: Field:
Voucher No: Date :
Cost
Account
Centre Account Head Debit Credit
Code
Code
1 2 3 4 5
Total
JV Ref:
Narration:
239
Contents
Contents
MAM 06 TRANSFER VOUCHER (NEWLY INTRODUCED)
Transfer Voucher
___________________________ Municipality/Corporation
Amount in Rs
Transfer from <Bank A/c No> Transfer to <Bank A/c No>
Fundt

Voucher No: Date :
Account
Account Head Debit Credit
Code
1 2 3 4
Total

Cheque no. and date:
Narration:
240
MAM 07 BANK TRANSFER BOOK (MCF8)
Bank Transfer Book

_________________________Municipality/Corporation
Debit Credit
Purpose of Initials of
Date Cheque No.
Transfer Bank Book Amount Bank Book Amount Commissioner
Bank Code Bank Code
Folio (Rs.) Folio (Rs.)
1 2 3 4 5 6 7 8 9 10

241
Contents
Contents
MAM 08 DAILY COLLECTION STATEMENT BY BANK (MCF9)
Daily Collection Statement by Bank

Amount in Rs.
From To
The Manager The Manager
_______________________________________ (Collection Bank) _______________________________________ (Lead Bank)
_______________________________________ _______________________________________

Sir,
We have collected this day __________________________ (Date of collection) Rs__________________________ in our Branch towards Property Tax. The
details of the bills/challans are given below.
Sl.No. Ward No. & Name Assessment Number Challan Number Amount (Rs)
1 2 3 4 5
Total
Encl: Receipted challans

Yours faithfully,
Manager (Collection branch)

Verified and given credit
Forwarded to the Commissioner
Manager (Link Branch)
242
MAM 09 DAILY CHEQUE COLLECTION STATEMENTS (MCF10)
Daily Cheque Collection Statement
Bank Code: __________________
Amount in Rs
Sl.No. in Bank
Account
Sl. the Register Name of the Assessment Cheque Challan Ledger
Particulars Code Drawn on Amount
No of Cheques party No. No. & date No. and Folio No.
No.
received Date
1 2 3 4 5 6 7 8 9 10 11
Total
Cashier: Manager/Administrative Officer:

243
Contents
Contents
MAM 10 PROPERTY TAX ADJUSTMENT SLIP (MCF11)
Property Tax Adjustment Slip

Amount in Rs.
_______________________________ Municipality/Corporation
Property Tax Adjustment Slip No. _____________
Name of the Assessees: Zone No: Ward No: Assessment No.

Address: Date of Final Assessment:
Reference Number:
Enhancement/Reduction/New Assessment/Vacancy Remission
Particulars Amount Amount
Existing Proposed Change (+) Change (-)
Annual Value
Property Tax - General purpose
Water supply and Drainage Tax
Elementary Education Tax
Library Cess
Total
Total Amount to be realised/adjusted No. of half years affected

Increase in Amount of property tax: Decrease in amount of property tax:
Reason:
Remission Amount
244
MAM 11 REGISTER OF DISHONOURED CHEQUES (MCF12)
Register of Dishonoured Cheques

Amount in Rs
Folio
Mode & Date of num-
Sl. No in
Date of Date of collec- ber of
Cheque Bank on Ac- the Reg- Initials
Sl. return Reason for Assess- collection of demand
No. and which Amount count ister of of the
No. from Dishonour ment No. tion Penalty ledger
Date drawn Code cheques Manager
Bank subse- and for

received
quently amount reverse
entry
1 2 3 4 5 6 7 8 9 10 11 12 13

245
Contents
Contents
MAM 12A PROPERTY TAX CHALLAN REGISTER (MCF13A)
Property Tax Challan Register (Direct collection)

Amount in Rs
Excess
Sl.
Assessment No. Collection for Half year Amount collection Receipt No.
No
if any
Arrear period Current period Arrear period Current period

Total

Prepared by: Verified by:
Approved by:
246
MAM 12B PROFESSION TAX/WATER CHARGES CHALLAN REGISTER (MCF13B)
Profession Tax/Water Charges Challan Register

Amount in Rs
Excess
Sl.
Assessment No. Collection for Half year Amount collection Receipt No.
No
if any
Arrear period Current period Arrear period Current period

Total
Prepared by: Verified by:
Approved by:
247
Contents
Contents
MAM 13 GENERAL FUND – CHITTA AND WATER SUPPLY AND DRAINAGE FUND CHITTA (MCF14)
a. General Fund Chitta

Amount in Rs
Sl.No. Challan No. Name of the Party Account Code Amount

b. Water Supply and Drainage Fund Chitta
Amount in Rs
Sl.No. Challan No. Name of the Party Account Code Amount

248
MAM 14 DEMAND COLLECTION AND BALANCE REGISTER (NEWLY INTRODUCED)
Nature of Revenue
Register of demand, collection and balance for the year ______
Collections (current
Assessment Demand Arrears Collections
demand)
No./ Name
Sl.
of the
No Reference No./ No/
Assesee Arrear Current Total Amount Total
No. Period Date of Period Date of Amount Total
Demand demand demand (Rs) (Rs)
receipt receipt
Cumulative Total of Balance

collections
Arrears+Current Period Arrears Current Total
Remission/Refund/Write Off Net Balance

Arrears Current
Period Order No. Amount Period Total Remarks
Demand demand
Note: 1) Depending upon the nature of the revenue, the columns may be modified suitably.
249
Contents
Contents
MAM 15 BILLS INWARD REGISTER (DEPARTMENTS) (MCF15A)
Bills Inward Register (Departments)
Municipality/ Corporation: ___________________________________________________

Department Name/ Code: Month: Year:
Current Types Initials of

Bill/ BPV
Date of Sl. Number in Received Gross Deduc- Net of JVs Depart-
Particulars Invoice Date No. and

Receipt No. Personal from Amount tions Amount no. and mental
No. Date
Register Date Officer
1 2 3 4 5 6 7 8 9 10 11 12 13

250
MAM 16 BILLS INWARD REGISTER (ACCOUNTS CELL) (MCF 15B)
Bills Inward Register (Accounts Cell)
Municipality/ Corporation: ___________________________________________________

Amount in Rs
Month: Year:
Sl.No. in Received
BPV
Date of Sl. the Depart- from Bill Partic- Gross Deduc- Net Initials of Depart-
Date No. and
Receipt No. mental Bill which No. ulars Amount tions Amount mental Officer
Date
Register Dept
1 2 3 4 5 6 7 8 9 10 11 12

251
Contents
Contents
MAM 17 ABSTRACT OF SALARY BILL/ SUPPLEMENTAL BILL (MCF16)
Abstract of Salary Bill/ Supplemental Bill

Department/Section: BPV No. & Date:
Name: EJV No. & Date:
Designation:
Period of claim:
Nature of claim:
Deductions

Account Account Account
Salaries Details Rs. Account Head Rs. Account Head Rs.
Code No. Code No. Code No.
Payable Adjustment
Basic Pay P.F. Subscription Advances:
Interest free
Special Pay P.F.Advance recoveries Festival
DA CPF Recoveries
Interim Relief Co-op Society Loan Recovery Handloom
HRA RD / CTD Khadi
CCA LIC Premium Education
Cash Allowance SPFGS Flood
Conveyance Allowance FBF / GIS Interest Bearing
Medical allowance External Housing Loan Warm clothing
Other Allowances Deputationist Recoveries Calculator
Exgratia / Bonus IT Deductions at Source Computer

Loan from Bank Bi-Cycle
Court Recoveries Motor Cycle
HBA / Special. FBF Car
Health fund Marriage
252
Deductions
Account Account Account

Salaries Details Rs. Account Head Rs. Account Head Rs.
Code No. Code No. Code No.
Payable Adjustment
Recoveries to other House Building
Municipalities
Other Recoveries Prior Year Income
Handloom Advance Recovered Profession Tax
Khadi Advance Recovered Rent on Buildings
Miscellaneous
Recoveries - Receivable
Interest on Staff
Advances – Receivable
Total Rs.
Pay Order
Gross Rs.
Deductions Rs.
(i) For remittance
(ii) For adjustments
Total
Net Amount
Drawing Office with Designation
Accounts Cell
(Passed for Rs. ____________________ Rupees in words ________________________________________________________________________________________________
Accountant / A.O. Manager / Ad.O. Commr. / Asst. Commr.( )
Note: The earnings and deduction heads are indicative only. Actual account codes and heads shall be used when preparing the pay bill.
253
Contents
Contents
MAM 18A REGISTER OF EMPLOYEE LOANS AND ADVANCES (NEWLY INTRODUCED)
MAM18A: Register of loans/advances for employees

Separate Register for each Loan /advance
Separate folio for each employee
Amount in Rs
Name of the loan/advance

Name of Employee: Employee Code Principal recovered first
Designation :
Amount of Total number of Total no of Instalments

Recovery to start from Rate of interest
Loan Instalments for principal for interest
Voucher
2011-2012 Instalments 2013-14 Instalments
Month Voucher
Principal Interest Principal Interest Principal Interest Principal
March
April
May
June
July
August
September
October
November

December
January
February
254
MAM 18B LOAN RECOVERED UNDER EMI
MAM 18B: Loan recovered under EMI

Amount in Rs.
Name of the Loan
Name of the Employee Designation Employee Code
Amount of
Number of Instalment EMI Recovery to start from Rate of Interest
Loan
2011-12 2011-12
Month EMI Principal Interest Instalment Voucher EMI Principal Interest Instalment Voucher
March
April
May
June
July
August
September
October
November
December
January
February
TOTAL
255
Contents
Contents
MAM 19 PENSION PAYMENT REGISTER (NEWLY INTRODUCED)
Pension Payment Register

W.e.f W.e.f W.e.f W.e.f
Name of the Pensioner: Gross Pension:
Date of retirement: Commuted Pension:
Date of restoration of commuted pension: Net Pension:
2011-12 2012-13

Initials
Pen- Gross Health Vr Gross Health Vr. Initials of
Month D.A F.B.F NET of PP Pension D.A F.B.F Net
sion Total Fund No Total Fund no PP officer
officer
March
April
May
June
July
August
September
October
November
December

January
February
TOTAL
256
Date Amount W.e.f W.e.f
Name of the Family Pensioner: Family Pension authorised:
Relationship to the deceased pensioner:
Date of death of the pensioner:
Age of the family pensioner: Family Pension payable upto which date:

257
Contents
Contents
MAM 20 GENERAL JOURNAL VOUCHER (MCF17)
General Journal Voucher

Amount in Rs
_________________________________________ Municipality/Corporation
Fund: Functionary:

Function: Field:
Voucher No: Date :
Cost Centre Code Account Code Account Head Debit Credit
1 2 3 4 5

Total
Narration:
258
MAM 21 EXPENSES JOURNAL VOUCHER (MCF18)
Expenses Journal Voucher

Amount in Rs
________________________ Municipality/Corporation
Fund: Functionary:
Function: Field:
Voucher No: Date :
Name of the party:
1 2 3 4 5
Total
Narration:
259
Contents
Contents
MAM 22 PURCHASE JOURNAL VOUCHER (MCF19)
Purchase Journal Voucher

Amount in Rs
Fund: Functionary:
Function: Field:

Voucher No: Date :
Name of the Supplier: Supplier’s Bill No: Advance BPV No., if any
Page No. Of stock register:
1 2 3 4 5

Total
Narration:
260
MAM 23 CONTRACTORS’ JOURNAL VOUCHER (MCF20)
Contractors’ Journal Voucher

Amount in Rs
Fund: Functionary:
Function: Field:
Voucher No: Date :
Name of the Contractor: Supplier’s Bill No: Advance BPV No., if any
MB Ref:
1 2 3 4 5
Total
Narration:
261
Contents
Contents
MAM 24 CONTRACT BILL (MCF21)
Contract Bill
Name of the Contractor: Bills Inward Register No./Date Part/Final Bill M Book No.(Pages)
From To
Work commenced on Work Completed on Estimate No.
Appropriation No. and Date:
Estimated Amount
Name of the Work:

Part - I
Item Description of Quantity executed or Per

Rate Amount Remarks
No. work supplied Unit
1 2 3 4 5 6 7
Up to date Since last bill Up to date Since last bill
Prepared by: Checked by: Approved by:

J.E/A.E.E Municipal Engineer/City Engineer

262
PART – II
Details of payment
Value of Work done Details of Recoveries Part Bill previously Net payment (Rs.)
paid (Rs.)
Already recovered Now to be recovered
1 2 3 4 5 6
Previous
Present
Total
Passed for Rs_______________ in words CJV No. and Date
______________
By Cheque (Rs) BPV No. and Date
By Adjustment (Rs)
JE/AEE Engineer Total (Rs) Accountant/AO Commissioner


263
Contents
Contents
MAM 25 CONTINUATION SHEET OF CONTRACT BILL (MCF22)
Continuation sheet of Contract Bill

Department: Estimate No. Estimate amount
Name of Work: Appropriation No. Project Code
Work
Sl .No. Quantity supplied Rate Per Unit Amount Remarks
Description

To date Since last bill Up to date Since last bill
1 2 3 4 5 6 7 8 9

Prepared By: Checked by: Approved by:
JE AEE Municipal/Corporation Engineer
264
MAM 26 FIXED ASSET JOURNAL VOUCHER (MCF23)
Fixed Assets Journal Voucher

Amount in Rs
Fund: Functionary:
Function: Field:
Voucher No: Date :

Completion Certificate Project Code:
Name of the Supplier/ Contractor:
Number & date: Asset description:
1 2 3 4 5
Total
Narration:
265
Contents
Contents
MAM 27 ASSET REGISTER (MCF24)
Asset Register
Amount in Rs.
Location: Class: Sub Class: Unit of measurement:
Date of con- Area mea- Improve- Dele- Measure- Initials

Original Addition Balance
Date JV No. Description struction/ surement ment tion ment of Engi-
Cost Cost Cost
Purchase No. Cost Cost Book No. neer

266
MAM 28 JOURNAL BOOK (MCF25)
Journal Book
Amount in Rs
Voucher type
Date Account Code Particulars L.F. No Debit Credit Remarks
and no.
1 2 3 4 5 6 7 8

267
Contents
Contents
MAM 29 PRICED STORES LEDGER (MCF26)
Priced Stores Ledger

Amount in Rs
Purchase Order File No.: Description Item Code: Unit
Maximum limit of stock: Minimum Reorder level:
Receipts Issues Balance

Name SRN
MRN
of the No. Cost To whom MIN No. Cost Cost Re- Initials of the
Date No./ Units Rate Units Units
sup- and Price issued & Date Price Price marks store keeper
Date
plier Date

Issue price per unit
w.e.f
Price
268
MAM 30 INVENTORY MATERIAL RECEIPT NOTE (MCF27)
Inventory Material Receipt Note

IMRN No. ________ Date _________
Sl. No. Amount in Rs
Purchase Order File No. Supplier Date
Reference
Description Value of
Quantity Invoice No. Folio in
Sl. No. of Items with Units Rate per unit materials Remarks
received and date stores ledger
Item Code received
1 2 3 4 5 6 7 (4*6)
Total
Prepared by
Checked by
Approved by
269
Contents
Contents
MAM 31 INVENTORY MATERIAL ISSUE NOTE (MCF28)
Material Issue Note

Amount in Rs
IMIN No. ______________ Date____________
Date:--------------------------
Name
Item Name of the Departmental Material description Qty Account Qty Issue
of the Unit Value
No. work Officer with Code required code issued price
contractor

1 2 3 4 5 6 7 8 9 10 11
Indenting Official’s signature & date Store keeper’s signature with Approved by: Acknowledgement
date for receipt of goods

Signature
270
MAM 32 STORES RETURN NOTE (MCF30)
Stores Return Note

Municipality/Corporation ___________________________________
Amount in Rs
SRN No._____________
Date________________
Returned by: <Department> Contractor
Value Reference to
Account MIN Qty Quantity
Sl No. Material description Stores Ledger
Code No. returned accepted Cost
Incidentals Total Folio
price

271
Contents
Contents
MAM 33 STORES ADJUSTMENT SLIP (MCF31)
Stores Adjustment Slip

Municipality/Corporation ____________________________
Sl. No.:
Department:
Date:
Quantity as per Stores Ledger Amount in Rs.

Sl. Material Account
Units Balance before Quantity
No. description Code Reasons Rate (+) (-)
adjustment
(+) (-)

Stores Section Accounts Cell
Prepared by Checked and approved by Checked & Approved by Posted by
272
MAM 34 PROJECTS LEDGER (MCF32)
Projects Ledger
Sanction Ref No. & Date: Amount in Rs
Executing Department: Project description: Sources of financing:
Project Code: Asset Code No.: Folio in Asset Register:
Projects in Progress Code No.: Estimate No. And Date: Amount of Estimate:
Date of
Project Initials
Date of Date of com- CJV/ Details Inter-
Sl Direct Cost JV No. of En-
Date work or- commence- pletion PJV of Indi- Amount est on Total
No. Cost capital- & Date gineer/
der issued ment or pur- No. rect Cost Capital
ised AO
chase

273
Contents
Contents
MAM 35 UNSERVICEABLE STOCK REGISTER (MCF33)
Unserviceable Stock Register

Ref to
Order in
Folio No. Dated
Material descrip- which
Sl. Book in Stores Reference Value of initials of
Date tion with Item treated as Quantity Remarks
No. value Ledger/ to Auction sales the
Code Unservice-
Asset Reg- Engineer
able
ister

1 2 3 4 5 6 7 8 9 10 11

274
MAM 36 GENERAL LEDGER (MCF34)
General Ledger
Amount in Rs
Account Code: Account Head: Department:
Bank book Bank book
Voucher Voucher
Date Particulars /Journal Debit Date Particulars /Journal Credit
type & No. type & No.
Book folio Book folio
1 2 3 4 5 6 7 8 9 10

275
Contents
Contents
MAM 37 DEPRECIATION WORK SHEET (MCF35)
Depreciation Work Sheet

Amount in Rs.
Open-
ing Additions during the
Deletions during the year Depreciation Amount
Bal- year
Class Assets ance Rate of
Sl.
of As- Code Depre- Less
No.

sets No. Period Period ciation
Date of Date of Open- Depre-
of De- of De- Addi-
Value com- Value dele- Value ing ciation Net
precia- precia- tion
pletion tion value on de-
tion tion
letion
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Prepared by: Checked by:
Approved by: JV No. and Date:
276
MAM 38 PROJECT EXPENDITURE STATEMENT (MCF36)
Project Expenditure Statement for the month of __________________

Amount in Rs
Expen-
Com- Expen-
Exe- Estimat- Expect- diture Pro-
Project mence- Expect- diture
Sl cuting Estimat- ed time Asset ed date upto gressive
Project Code Descrip- ment ed over- during
No. Depart- ed Cost of com- Code of com- pre- expendi-
tion month / run the
ment pletion pletion vious ture
year month
month
1 2 3 4 5 6 7 8 9 10 11 12 13
Note: To be prepared in triplicate for use in Engineering branch/Accounts cell/Review meetings

277
Contents
Contents
MAM 39 SINKING FUND REGISTER (NEWLY INTRODUCED)
Sinking Fund Register

Amount in Rs
Name of the
Purpose ` Order no. and date
Sinking Fund
Sinking Fund Bank
Bank Branch
Account no.
Particulars of the loan

Nature of loan Sanction date Amount of loan Period of loan
Rate of interest Principal due on Interest due on
Particulars of the Sinking Fund
Transfers Other inflows Amount utilized Balance in the sinking fund

Year Particulars Opening Balance
during the year during the year during the year Bank Investments
Particulars of investment
Profit/Loss
Type of Opening Interest Withdrawals, Closing
Date of deposit on disposal of Remarks
investment balance earned (Rs.) if any balance
investments

278
MAM 40 PURCHASE BOOK (NEWLY INTRODUCED)
Purchase Book
Amount in Rs
Partic-
Name In- Page
Date ulars of Quan-
and voice MRN Cost Taxes Instal- To- No. Of
Sl. of items tity of Unit Insur- Re-
address No. No. & of ma- & du- Freight lation tal Stock
No. pur- ordered mate- cost ance marks
of the and Date terial ties charges Cost Regis-
chase with item rials
supplier date ter
code
1 2 3 4 5 6 7 8 9(6*8) 10 11 12 13 14 15 16

279
Contents
Contents
MAM 41 DEPOSIT WORKS REGISTER (NEWLY INTRODUCED)
Deposit Works Register

Amount in Rs
Period for Money received

Sl. Total
Name of the Deposit Works Order No. Nature of work execution Total
No. Amount Date Amount
of work amount

Expenditure incurred on Works Unutilised amount Refund
Nature of Date of at the completion of

Date Voucher No. Amount work Date Amount
payments payment

280
MAM 42 GRANTS REGISTER (NEWLY INTRODUCED)
Grants Register
Amount in Rs
Interest on
Name of the Nature of Period of the Sanctioned Grant received in advance
Sl. No. Order No. investment
Grant Grant Grant Amount
Date Amount Amount
Expenditure incurred on Specific Grants Refund of unutilised Grant

Unutilised
Nature of Date of Grant
Date Voucher No. Amount Date Amount
expenditure payment

281
Contents
Contents
MAM 43 REGISTER OF LOANS (NEWLY INTRODUCED)
Register of loans
1. Department from which loan is received 5. Rate of Interest
2. Purpose of loan 6. No. Of instalments Principal: Interest:
3. No. & Date of resolution/orders sanctioning the loan 7. Amount of each instalment Principal: Interest:
4. Amount of loan sanctioned 8. Moratorium Period:
9. Other terms of repayment
Receipt of

Amount due for repayment Amount Repaid Balance
loan
Total Ini- Re-

Due Date
Amount Amount Amount tials marks
Total date of of Principal Principal Inter-
Date of princi- of inter- due for of the Interest Total Total
Amount repay- repay- Amount Amount est
pal est repay- Offi-
ment ment
ment cer

282
Financial Statements Formats
MAM 44 RECEIPTS & PAYMENTS ACCOUNT
Name of the ULB ________________________
Consolidated/General Fund/Water Supply and Drainage Fund/Elementary Education Fund
Receipts & Payments Account for the period from ____________________ to ____________________
Code Current Previous Code Current Previous

Particulars Particulars
No. Period (Rs) Year (Rs) No. Period (Rs) Year (Rs)
Opening Balances
a. Cash Balancesw
b. Bank Balances
Sub total
Operating Receipts Operating Payments
110 Tax Revenue 210 Establishment expenses
120 Assigned Revenues and 220 Administrative expenses

Compensations
130 230 Operations & Maintenance
Rental Incomes from Municipal
140 240 Interest & Finance charges
Properties
150 250 Programme expenses
Fees and User charges
160 260 Grants, Contributions and
Sale and Hire charges
Subsidies
170 430
Revenue Grants Contributions and
Stock in hand
171 Subsidies
180
Income from investments
Interest earned
Other income
283
Sub total Sub total
Contents
Contents
Code Current Previous Code Current Previous

Particulars Particulars
No. Period (Rs) Year (Rs) No. Period (Rs) Year (Rs)
Non operating Receipts Non operating Payments
330 Secured loans 350 Other payables
331 Unsecured loans 350 Refunds payable
340 Deposits 330 Repayment of secured and

,331 unsecured loans
320 Grants & Contributions for specific
purposes 340 Deposits received
341

Deposit works 410 Purchase of Fixed Assets
350
Advance collection of revenues 412 Capital Work in Progress
460
Loans and advances to employees 470 Deposit works
330,
331 Other loans and advances 420 Investments – General Fund
410 Sale proceeds from assets 421 Investments – Other Funds
420 Realisation of Investments 460 Loans, Advances and Deposits
440 Prepaid Expenses
460 Deposits with external agencies

Sub Total Sub Total
Closing Balances
a. Cash Balances
b. Bank Balances
GRAND TOTAL GRAND TOTAL
Note: The same format is used for consolidated as well as individual funds

284
MAM 45 STATEMENT OF CASH FLOWS
Name of the ULB _____________________________
Statement of Cash Flows for the period _______________
Amount in Rs
Current Year Previous Year

A. Cash flows from operating activities Gross Surplus/(deficit) over expenditure

Add:
Depreciation
Interest and finance charges
Less:
Profit on disposal of assets
Dividend Income
Investment income
Adjusted income over expenditure before effecting changes in current assets and
current liabilities and extraordinary items
Changes in Current assets and Current liabilities
(Increase) / decrease in Sundry debtors
(Increase) / decrease in Stock in hand
(Increase) / decrease in prepaid expenses
(Increase) / decrease in other current assets
(Decrease) / increase in Deposits received
(Decrease) / increase in Deposits works

(Decrease) / increase in other current liabilities
(Decrease) / increase in provisions
285
Extra ordinary items (Specify)
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Amount in Rs

(Decrease) / increase in Deposits received
(Decrease) / increase in Deposits works
(Decrease) / increase in other current liabilities
Net cash generated from/ (used in) operating activities (a)
B. Cash flows from investing activities
(Purchase) of fixed assets & CWIP
(Increase) / Decrease in Special funds/grants

(Increase) / Decrease in Earmarked funds
(Purchase) of Investments
Add:
Proceeds from disposal of assets
Proceeds from disposal of investments
Investment income received
Interest income received
Net cash generated from/ (used in) investing activities (b)
C. Cash flows from financing activities
Add:
Loans from banks/others received
Less:
Loans repaid during the period
Loans & advances to employees
Loans to others

Finance expenses
Net cash generated from (used in) financing activities (c)
286
Net increase/ (decrease) in cash and cash equivalents (a + b + c)
Amount in Rs

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Total

287
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MAM 46 INCOME & EXPENDITURE STATEMENT

Name of the ULB ___________________________________

Income & Expenditure Statement for the period from ____________________ to ____________________
Amount in Rs
Code No. Head of Accounts Schedule No. Current Year Amount Previous Year Amount
1 2 3 4 5

110 Tax Revenue I-1
120 Assigned Revenues and Compensations I-2
130 Rental Income from Municipal Properties I-3
140 Fees & User charges I-4
150 Sale & Hire charges I-5
160 Revenue Grants, Contributions and Subsidies I-6
170 Income from Investments I-7
171 Interest earned I-8
180 Other Income I-9
A Total - Income
210 Establishment expenses I-10
220 Administrative expenses I-11
230 Operations & Maintenance I-12
240 Interest & Finance Expenses I-13
250 Programme Expenses I-14

260 Revenue Grants, Contributions & subsidies I-15
270 Provisions & Write Off I-16
271 Miscellaneous Expenses I-17
288
Amount in Rs
Code No. Head of Accounts Schedule No. Current Year Amount Previous Year Amount
1 2 3 4 5
272 Depreciation
B Total – Expenditure
Gross Surplus/(Deficit) of Income over Expenditure

A-B
before Prior Period Items
280 Add: Prior Period Items I-18
Gross Surplus/(Deficit) of Income over Expenditure
after Prior Period Items

290 Less: Transfer to Reserve Funds
Net Balance being Surplus/Deficit carried over
Note: 1) The same format is used for consolidated as well as individual funds

289
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MAM 47 BALANCE SHEET

Name of the ULB _______________________

Balance Sheet as on _______________________
Amount in Rs.
Code No. Description of Items Schedule No. Current Year Amount Previous Year Amount
Liabilities

Reserves & Surplus
310 Municipal Fund B-1
311 Earmarked Funds B-2
312 Reserves B-3
Total Reserves & Surplus
320 Grants , Contribution for specific purposes B-4
Loans
330 Secured Loans B-5
331 Unsecured Loans B-6
Total Loans
Current Liabilities and Provisions
340 Deposits received B-7
341 Deposit works B-8
350 Other Liabilities B-9
360 Provisions B-10
Total Current Liabilities and Provisions

Total Liabilities
Assets
Fixed Assets B-11
290
410 Fixed Assets - Gross Block
Amount in Rs.
Code No. Description of Items Schedule No. Current Year Amount Previous Year Amount
Net Block
412 Capital Work-in-Progress
Total Fixed Assets
Investments
420 Investments – General Fund B-12
421 Investments – Other Funds B-13
Total Investments
Current Assets, Loans and Advances

430 Stock-in-hand (Inventories) B-14
431 Sundry Debtors (Receivables) – Gross amount outstanding B-15
432 Less: Accumulated Provisions outstanding against Debtors
Net amount outstanding
440 Prepaid expenses B-16
450 Cash & Bank Balances B-17
460 Loans, Advances and Deposits B-18
461 Less: Accumulated Provisions against Loans, Advances and
Deposits
Net amount outstanding
Total Current Assets, Loans and Advances
470 Other Assets B-19
480 Miscellaneous Expenditure to be written off B-20
Total Assets
291
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Schedules to Income & Expenditure Account
Schedule I-1: Tax Revenue [Major Code: 110]
Amount in Rs.
Minor Code No. Particulars Current Year Previous Year
110-01 Property Tax
110-02 Water Tax
110-03 Sewerage Tax

110-04 Elementary Education Tax
110-05 Vehicle Tax
110-06 Tax on Animals
110-07 Electricity Tax
110-08 Profession tax
110-09 Advertisement Tax
110-10 Pilgrimage Tax
110-51 Octroi & Toll
110-52 Cess
110-80 Others Taxes
Sub-Total
110-90 Less: Tax Remission & Refund
Sub Total
Total

292
Schedule I-2: Assigned Revenues & Compensations [Major Code: 120]
Amount in Rs.
120-10 Taxes and Duties collected by others
120-20 Compensation in lieu of Taxes / duties
120-30 Compensations in lieu of Concessions
Total
Schedule I-3: Rental Income from Municipal Properties [Major Code: 130]
Amount in Rs.
130-10 Rent from Civic Amenities
130-20 Rent from Office Buildings
130-30 Rent from Guest Houses
130-40 Rent from lease of lands
130-80 Other rents
130-90 Rent remission and refund
Total

293
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Schedule I-4: Fees & User Charges [Major Code: 140]

Amount in Rs.
140-10 Empanelment & Registration Charges
140-11 Licensing Fees
140-12 Fees for Grant of Permit
140-13 Fees for Certificate or Extract
140-14 Development Charges

140-15 Regularization Fees
140-20 Penalties and Fines
140-40 Other Fees
140-50 User Charges
140-60 Entry Fees
140-70 Service / Administrative Charges
140-80 Other Charges
140-90 Fees Remission and Refund
Total

294
Schedule I-5: Sale & Hire Charges [Major Code: 150]
Amount in Rs.
150-10 Sale of Products
150-11 Sale of Forms & Publications
150-12 Sale of stores & scrap
150-30 Sale of Others
150-40 Hire Charges for Vehicles
150-41 Hire Charges on Equipments

Total
Schedule I-6: Revenue Grants, Contribution and Subsidies [Major Code: 160]
Amount in Rs.
160-10 Revenue Grant
160-20 Re-imbursement of expenses
160-30 Contribution towards schemes
Total

295
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Schedule I-7: Income from Investments [Major Code: 170]

Amount in Rs.
170-10 Interest
170-20 Dividend
170-30 Income from projects taken up on commercial basis
170-40 Profit in Sale of Investments
170-80 Others

Total
Schedule I-8: Interest Earned [Major Code: 171]

Amount in Rs.
171-10 Interest from Bank Accounts
171-20 Interest on Loans and advances to Employees
171-30 Interest on loans to others
171-80 Other Interest
Total

296
Schedule I-9: Other Income [Major Code: 180]
Amount in Rs.
180-10 Deposits Forfeited
180-11 Lapsed Deposits
180-20 Insurance Claim Recovery
180-30 Profit on Disposal of Fixed assets
180-40 Recovery from Employees
180-50 Unclaimed Refund Payable/ Liabilities Written Back

180-60 Excess Provisions written back
180-80 Miscellaneous Income
Total
Schedule I-10: Establishment expenses [Major Code: 210]

Amount in Rs.
210-10 Salaries, Wages and Bonus
210-20 Benefits and Allowances
210-30 Pension
210-40 Other Terminal & Retirement Benefits
Total

297
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Schedule I-11: Administrative Expenses [Major Code: 220]

Amount in Rs.
220-10 Rent, Rates and Taxes
220-11 Office maintenance
220-12 Communication Expenses
220-20 Books & Periodicals
220-21 Printing and Stationery

220-30 Travelling & Conveyance
220-40 Insurance
220-50 Audit Fees
220-51 Legal Expenses
220-52 Professional and other Fees
220-60 Advertisement and Publicity
220-61 Membership & subscriptions
220-80 Others
Total

298
Schedule I-12: Operations & Maintenance [Major Code: 230]
Amount in Rs.
230-10 Power & Fuel
230-20 Bulk Purchases
230-30 Consumption of Stores
230-40 Hire Charges
230-50 Repairs & maintenance - Infrastructure Assets
230-51 Repairs & maintenance - Civic Amenities

230-52 Repairs & maintenance - Buildings
230-53 Repairs & maintenance - Vehicles
230-59 Repairs & maintenance - Others
230-80 Other operating & maintenance expenses
Total

299
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Schedule I-13: Interest & Finance Charges [Major Code: 240]

Amount in Rs.
240-10 Interest on Loans from Central Government
240-20 Interest on Loans from State Government
240-30 Interest on Loans from Government Bodies & associations
240-40 Interest on Loans from International Agencies
240-50 Interest on Loans from Banks & Other Financial Institutions

240-60 Other Interest
230-70 Bank Charges
230-80 Other Finance Expenses
Total
Schedule I-14: Programme Expenses [Major Code: 250]

Amount in Rs.
250-10 Election Expenses
250-20 Own Programme
250-30 Share in programme of others
Total

300
Schedule I-15: Grants, Contribution and Subsidies [Major Code: 260]
Amount in Rs.
260-10 Grants
260-20 Contributions
260-30 Subsidies
Total
Schedule I-16: Provisions and Write off [Major Code: 270]

Amount in Rs.
270-10 Provisions for Doubtful receivables
270-20 Provision for other Assets
270-30 Revenues written off
270-40 Assets written off
270-50 Miscellaneous Expense written off
Total

301
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Schedule I-17: Miscellaneous Expenses [Major Code: 271]

Amount in Rs.
271-10 Loss on disposal of Assets
271-20 Loss on disposal of Investments
271-30 Decline in Value of Investments
Total

Schedule I-18: Prior Period Items (Net) [Major Code: 280]
Amount in Rs.
Income
280-10 Taxes
280-20 Other - Revenues
280-30 Recovery of revenues written off
280-40 Other Income
Sub-Total Income (a)
Expenses
280-50 Refund of Taxes
280-60 Refund of Other - Revenues
280-80 Other Expenses
Sub-Total Income (b)

Total
302
Schedules to Balance Sheet
Schedule B-1: Municipal General Fund [Code No. 310]
Amount in Rs
Additions Deductions Balance at
Opening
Code No. Particulars during the Total during the the end of the
Balance
year year current year
1 2 3 4 5(3+4) 6 7 (5-6)
310-10 Municipal Fund
310-90 Excess of Income and Expenditure
Total

303
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Schedule B-2: Earmarked Funds [Major Code No. 311]

Special Special Special Special Pension General
Particulars
Fund 1 Fund 2 Fund 3 Fund 4 Fund Provident fund
(a) Payments out of Funds
(b) Additions to the Special Fund
Transfer from Municipal Fund
Interest/Dividend earned on Special Fund Investments
Profit on disposal of Special Fund Investments

Appreciation in value of Special Fund Investments
Other additions
Total (b)
Total (a+b)
(c) Payments out of Funds
i) Capital expenditure on Fixed Assets
Others
Sub total
ii) Revenue expenditure on Salary, Wages, allowances etc
Others
Sub-total
iii) Other expenditures
Loss on disposal of Special Funds Investments
Diminution in value of Special Fund Investments
Transferred to Municipal Fund

Sub total
Total (i+ii+iii) (c)
Net Balance at the year end (a+b)-(c)
Grand Total of Special Funds
304
Schedule B-3: Reserves [Major Code No. 312]
Amount in Rs
Balance at
Code Opening Additions Deductions during the end of the
Particulars Total
No. Balance during the year the year (Rs) current year
(Rs)
1 2 3 4 5(3+4) 6 7 (5-6)
312-10 Capital Contribution
312-11 Capital Reserve

312-20 Borrowing Redemption reserve
312-30 Special Funds (Utilised)
312-40 Statutory Reserve
312-50 General Reserve
312-60 Revaluation Reserve
Total

305
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Schedule B-4: Grants, Contribution for specific purposes [Major Code No. 320]
Amount in Rs
Grants Grants
Grants from Grants Grants from Grants from
from Other from
Particulars Central from State Financial International Others
Government Welfare
Government Government Institutions Organisations
Agencies Bodies
(a) Opening Balance
(b) Additions to the Grants

Grants received during the year
Interest/Dividend earned on
Grant Investments
Profit on disposal of Grant
Investments
Appreciation in value of Grant
Investments
Other additions
Total (b)
Total (a+b)
(c) Payments out of Funds
1) Capital expenditure on Fixed
Assets
Others
Sub total
2) Revenue expenditure on

Salary, Wages, allowances
etc
Others
Sub-total
306
Amount in Rs
Grants Grants
Grants from Grants Grants from Grants from
from Other from
Particulars Central from State Financial International Others
Government Welfare
Government Government Institutions Organisations
Agencies Bodies
3) Other expenditures
Loss on disposal of Grant
Investments
Diminution in value of Grants
Investments
Grant Refunded
Sub total
Total (1+2+3) (c)
Net Balance at the year end
(a+b)-(c)
Grand Total of Grants &
Contributions for Specific
Purposes

307
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Schedule B-5: Secured Loans [Major Code No. 330]

Amount in Rs.
Minor Code No. Particulars Current Year Amount Previous Year Amount
330-10 Loans from Central Government
330-20 Loans from State Government
330-30 Loans from Government Bodies & Associations
330-40 Loans from International Agencies
330-50 Loans from Banks & Other Financial Institutions

330-60 Other Term Loans
330-70 Bonds & Debentures
330-80 Other Loans
Total
Notes:
1. The nature of the Security shall be specified in each of these categories
2. Particulars of any guarantees given shall be disclosed
3. Terms of redemption (if any) of bonds/debentures issued shall be stated, together with the earliest date of redemption
4. Rate of Interest and Original Amount of loan and outstanding can be provided for every Loan under each of these categories separately;
5. For loans disbursed directly to an Executing Agency, please specify the name of the Project for which such loan is raised

308
Schedule B-6: Unsecured Loans [Major Code No. 331]
Amount in Rs.
331-10 Loans from Central Government
331-20 Loans from State Government
331-30 Loans from Government Bodies & Associations
331-40 Loans from International Agencies
331-50 Loans from Banks & Other Financial Institutions
331-60 Other Term Loans

331-70 Bonds & Debentures
331-80 Other Loans
Total
Schedule B-7: Deposits Received [Major Code No. 340]

Amount in Rs.
340-10 From Contractors / Suppliers
340-20 Deposits – Revenues
340-30 From Staff
340-80 From Others
Total

309
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Schedule B-8: Deposit Works [Major Code No. 341]

Amount in Rs
Code No. Particulars Opening Balance Additions during the Utilisation Balance Outstanding
Amount year expenditure Amount at the end of the
year
1 2 3 4 5 6
341-10 Civil works
341-20 Electrical works

341-80 Others
Total
Note:
1. The amount received from the department on whose behalf the deposit works have been undertaken would appear in col. 4
2. Expenditure incurred including percentage (departments) charges would appear in Col 5
3. Balance as in Col. 6 would appear in the balance sheet as a liability

310
Schedule B-9: Other Liabilities [Major Code No. 350]
Amount in Rs.
350-10 Creditors
350-11 Employee liabilities
350-12 Interest Accrued and due
350-20 Recoveries payable
350-30 Government Dues payable
350-40 Refunds payable

350-41 Advance Collection of Revenues
350-80 Others
350-90 Sale Proceeds
Total
Schedule B-10: Provisions [Major Code No. 360]

Amount in Rs.
360-10 Provisions for Expenses
360-20 Provision for Interest
360-30 Provision for Other Assets
Total

311
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Schedule B-11: Fixed Assets [Major Code No. 410 & 411]
Amount in Rs
Gross Block Accumulated Depreciation Net Block
Addi- Deduc- Addi- Deduc- Balance

Code Cost at Open- At the At the
Particulars tions tions tions tions at the
No. Opening the end ing end of end of
during during during during end
Balance of the Bal- current previous
the the the peri- the of the
year ance year year
period period od period year

410-10 Land
410-20 Buildings
410-30 Roads & Bridges
410-31 Sewerage and Drainage
410-32 Waterways
410-33 Public lighting
410-40 Plant & Machinery
410-50 Vehicles
410-60 Office & Other Equipments
Furniture, Fixtures, Fittings
410-70
and Electrical Appliances
410-80 Other Fixed Assets
Total
Additional disclosures to the Schedule
1. Value of fixed assets under dispute or litigation shall be provided. The status of the legal case as at the reporting date of the financial

statements shall also be mentioned.
2. The details & value of assets, which are not yet physically identified/ traced, shall be disclosed separately.
3. Details and value of assets under leases and hire purchase needs to be disclosed as a note
312
Schedule B-12: Investments – General Fund [Major Code No. 420]
Amount in Rs
Code Particulars With whom invested Face value Current Year Previous year
No. carrying cost carrying cost
1 2 3 4 5 6
420-10 Central Government Securities
420-20 State Government Securities
420-30 Debentures and Bonds
420-40 Preference Shares

420-50 Equity Shares
420-60 Units of Mutual Funds
420-80 Other Investments
Total

313
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Schedule B-13: Investments – Other Funds [Major Code No. 421]

Amount in Rs
Code Particulars With whom invested Face value Current Year Previous year
No. carrying cost carrying cost
1 2 3 4 5 6
420-10 Central Government Securities
420-20 State Government Securities
420-30 Debentures and Bonds

420-40 Preference Shares
420-50 Equity Shares
420-60 Units of Mutual Funds
420-80 Other Investments
Total
Schedule B-14: Stock-in-hand (Inventories) [Major Code No. 430]

Amount in Rs.
1 2 3 4
430-10 Stores
430-20 Loose Tools
430-80 Others
Total

314
Schedule B-15: Sundry Debtors (Receivables) [Major Code No. 431 and 432]
Code Particulars Gross Amount Accumulated Provision Net Amount Previous Year
No. against Debtors Net Amount
431-10 Receivables for Property Taxes
Less than 5 years
More than 5 years
Sub total
431-91 Less: State Govt Cesses/ levies in Property Taxes -
Control account
Net Recoverable Property Taxes
431-19 Receivable for Other Taxes
Less than 5 years
More than 5 years
Sub total
431-99 State Govt Cesses/ levies in Other Taxes - Control
account
Net Recoverable Other Taxes
431-20 Receivables for Cess
Less than 3 years
More than 3 years
Sub total
431-30 Receivable for Fees & User Charges
Less than 3 years
More than 3 years
Sub total
315
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Code Particulars Gross Amount Accumulated Provision Net Amount Previous Year
No. against Debtors Net Amount
431-40 Receivable from other sources
Less than 3 years
More than 3 years
Sub total

431-50 Receivable from Government
TOTAL
Schedule B-16: Prepaid Expenses [Major Code No. 440]

Amount in Rs.
Code No. Particulars Current Year Amount (Rs) Previous year Amount (Rs)
1 2 3 4
440-10 Establishment
440-20 Administration
440-30 Operations & Maintenance
TOTAL

316
Schedule B-17: Cash & Bank Balances [Major Code No. 450]
Amount in Rs.
Code No. Particulars Current Year Amount Previous Year Amount
1 2 3 4
450-10 Cash
Balance with Bank – Municipal Funds
450-21 Nationalised Banks
450-22 Other Scheduled Banks
450-23 Scheduled Co- operative Banks

450-24 Post Office
Sub total
Balance with Bank - Special Funds
450-44 Post Office
Sub total
Balance with Bank - Grant Funds
450-64 Post Office
Sub total
Total Cash and Bank Balances

Total
317
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Schedule B-18: Loans, Advances and Deposits [Major Code No. 460 and 461]
Amount in Rs
Code Particulars Opening Balance Paid during the Recovered Balance outstanding
No. Amount current year during the year at the end of the year
460-10 Loans and advances to employees
460-20 Employee Provident Fund Loans
460-30 Loans to Others
460-40 Advance to Suppliers and contractors

460-50 Advance to others
460-60 Deposits with external Agencies
460-80 Other current assets
Sub Total
461 Less: Accumulated Provision
461-10 Loans to Others
461-20 Advances
461-30 Deposits
Total

318
Schedule B-19: Other Assets [Major Code No. 470]
Amount in Rs.
1 2 3 4
470-10 Deposit Works - Expenditure
470-20 Inter Unit Accounts
Total
Schedule B-20: Miscellaneous Expenditure to be written off [Major Code No. 480]
Amount in Rs.
1 2 3 4
480-10 Loan Issue Expenses
480-20 Discount on Issue of loans
480-30 Others
Total

319
Contents
Notes on Accounts (Illustrative)

Significant Accounting policies
Credit (Rs) i. Basis of Accounting

Consolidated/General Fund/Water Supply & Drainage Fund/
The financial statements have been prepared on a going concern basis under the
double entry, accrual basis of accounting. Previous year’s figures have been regrouped
Trial Balance for the period from _________________________ to _________________________
and reclassified wherever found necessary.
ii. Recognition of revenue
Income in respect of which demands are raised by the ULB are accounted on accrual
Elementary Education Fund
Name of the ULB_______________________________
Debit (Rs)
basis as and when they become due. Property tax is accrued at the beginning of the
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year. Rental income is accrued as and when it becomes due as per the terms of the
rental agreement. Interest and penalties on late collection of dues are accounted on
cash basis.
During the year, rental income from _____ market has been accounted on cash basis
due to uncertainty on the amount to be demanded because of an ongoing litigation on
Total
the rental agreement.
Provision has been maintained for doubtful receivables to the extent considered
Particulars
necessary as per the accounting policy consistently applied from year to year. Excess
provision amounting to Rs. _____ (previous year _____) has been written back to the
income and expenditure account.
iii. Recognition of expenditure
Establishment expenses have been recognized on accrual basis at the end of each
month. Outgo towards contributory pension fund has been accounted as and when
the salary expenditure is accrued.
Account Code No.
Interest on long term loans has been accounted on quarterly basis as per the terms of
the loan agreement. During the year an amount of Rs. ____ (previous year ______) has
been paid and accounted as penal interest due to late repayment of installments.
Tamilnadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 320 Tamilnadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 321
Expenditure on works has been accounted on receipt and admission of running bills
after certification of the work. The expenditure has been accounted under maintenance
or capital work in progress depending on the nature of work undertaken.
iv. Fixed assets and depreciation
Fixed assets are shown at cost less accumulated depreciation. Cost of fixed assets
includes all expenses incurred in connection with purchase and installation of the
fixed asset. Capital works in progress are transferred to the respective fixed asset
accounts as and when the works are completed.
During the year, a community hall donated by a Trust has been accounted at a nominal
value of Re. 1.
Depreciation is charged on fixed assets on Written Down Value method at the rates
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prescribed in the accounting policy of the Municipality.
No revaluation of fixed assets has been undertaken during the year.
v. Interest on borrowings
Interest on borrowings specifically identified with fixed assets is capitalized under

the respective fixed asset accounts. Interest on general borrowings is charged to the
income and expenditure account.
vi. Grants
The municipality has not received any general grants during the year (previous year
Rs. _____).
Specific grants towards revenue expenditure received prior to the incurring of

expenditure shall be treated as liability till such time that expenditure is incurred.
Grants received and receivable in respect of specific revenue expenditure shall be

recognised as income in the accounting period in which the corresponding revenue
expenditure is charged to Income and Expenditure Account.
Specific Grants received towards capital expenditure shall be treated as a liability till
such time that the fixed asset is constructed or acquired. On construction or acquisition
of assets, the extent of amount of liability shall be treated as a capital receipt and shall
be transferred from respective Grant Account to the Capital Contribution.
Tamilnadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 322

Contents
TAMIL NADU URBAN DEVELOPMENT

PROJECT - III
Municipal
Accounting
Manual
Commissionerate of
Municipal Administration
DESIGN & PRINT - MASTER WORKS MEDIA +91 98800 91468

Municipal Account Manual

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TAMIL NADU URBAN DEVELOPMENT

been undertaken by NCR Consultants Limited (NCRCL).

Contents Chapter 4 - Chart of Accounts 47

Chapter 2 - Fundamentals of Double Entry Chapter 5 - Vouchers and Books of Account 57

Chapter 9 - Accounting for Grants and Schemes 99

Chapter 12 - Bank Reconciliation 127

Chapter 14 - Financial Statement Audit 151

a/c Accounts I&E Income & Expenditure

1.2 Salient features of proposed Municipal Accounting

a. It is a double-entry accounting system;

b. Accrual of income and expenditure is done on a selective basis considering the

KEY REQUIREMENTS OF ASLB COVERAGE IN THIS MANUAL

1.4 Basis of Preparation of the MAM relationship

Tamil Nadu Urban Development Project - III MUNICIPAL ACCOUNTING MANUAL 18

Double Entry Accrual Based

Casting: Totaling of amounts in the books of account

Credit: A credit is an entry that results in the decrease of an asset or increase in a

Debit: A debit entry results in increase of an asset, or decrease in a liability or Fund

2.1 Basic Accounting Terms

Accrual: Recognition of revenues and costs as they are earned or incurred

cash book Ledger. • Inclusion of assets and liabilities in books of accounts

Table 3: Golden Rules of Accounting 2.6 Double Entry Accounting Process

Table 4: Accounting Concepts and Conventions

3.1 Meaning of Accounting Policy 3.3 Accounting Policies for ULBs

i. Revenue expenditure k. Fixed Assets

iv. Revenue in respect of disposal of material, if any shall be recognised on

ends, interest shall be accrued proportionately ULB by the lender.

v. Dividends shall be recognized on actual receipt r. Loans and advances given

i. Expenditure in respect of materials, equipments, etc procured shall be s. Grants

Functionary: Functionaries can be added at the request of a particular ULB after

Figure 3: Coding Logic

MAJOR HEAD CODE MINOR HEAD CODE DETAILED HEAD CODE

Minor Minor Minor Minor 1 denotes the account type Income

Functionary: Functionary is a responsibility centre within a function. For example

vouchers. Some examples of Journal entries are accounting accrual of revenue

• FAJV – Fixed Assets Journal Voucher - to record the capitalisation of completed

• EJV – Expenditure Journal Voucher – to record all other expenditure bills;

• GJV – General Journal Voucher – to record all other non-cash transactions

5.2 Types of Vouchers

Income from Investments: Interest on investments, dividends, profit on sale of

Interest earned: Interest on loans and advances to employees, other interest

Other Income: Deposits forfeited, lapsed deposits, Insurance claim recovery,

6.2 Accruable and Non-accruable incomes

following: • Property Tax

• Water Supply & Drainage Tax

Assigned Revenues and Compensation: Duty on transfer of property, • Tax on carts

• Licence fees under PFA Act

• Rent on lease of lands`

on vehicles, equipments etc • Market fees – Weekly markets

• Fees on Pay & Use Toilets

c. Collection by Collection Centres: Collections may be in the form of cash,

7.2 General Procedures

In the case of supplies received or other purchases, it shall bear a certificate to

of the Department. After the approval of the Salary/Supplementary Bill an abstract

b) Revenue or Maintenance works: Work carried out to maintain an asset in a

Expenditure on works Debited to the project CWIP Rs. 1,75,000 included in

• Works executed on receipt of deposit from other agencies;

7.8 Execution of Projects by other agencies under

7.10 Capitalization of Interest on Specific Borrowings

payable-Suppliers’ Account shall be credited. All the particulars of purchase are

7.13 General Expenses 7.15 Provision for expenses

Bank Reconciliation Statement as on // for Bank A/c No. ______