COMMON ACCOUNTING SYSTEM INTRODUCTION 1. Most of the State Cooperative Societies Acts have provisions regarding preparation and submission of financial statements such as Balance Sheet, Profit and Loss Account and Trading Account of PACS. However, the formats for financial statements of PACS have not been prescribed in many States. The existing formats have evolved over a period of time on the basis of instructions from the RCS, Director of Audit, etc., There is no uniformity and transparency in the formats adopted by PACS within the States 2. The Task Force on Revival of Short-Term Cooperative Credit Structure observed that PACS, in many states, do not follow standard accounting systems and do not make adequate provisions against NPAs and follow proper income recognition norms. While PACS, in some States, make provisions for bad and doubtful debts as per the guidelines issued by the erstwhile Agriculture Credit Department (ACD) of Reserve Bank of India, PACS in other States like Andhra Pradesh, Uttarakhand and Kerala follow Income Recognition and Asset Classification (IRAC) norms as applicable to DCCBs/SCBs as prescribed by the Registrar of Cooperative Societies of the State concerned. A large number of PACS in many States continue to adopt single entry system of accounting, even though a number of PACS in these States have adopted double entry system of book-keeping. 3. The introduction of a Uniform Accounting System for the PACS would depend upon a number of factors like adoption of Common Financial Statements by PACS, exhaustive list of General Ledger Heads of Accounts, applicability of various accounting principles like following double entry, netting concepts, introduction of prudential norms (IRAC), viz., Income Recognition, Asset Classification and Capital Adequacy Norms. As indicated in the Revival Package, implementing States will have to adopt prudential norms for PACS in consultation with NABARD, while recapitalization assistance would provide for cleansing of the balance sheet of the PACS as on 31 March 2004, recomputing the accumulated losses based on such norms, and separate assistance for raising their capital adequacy to the level of 7% CRAR. 4. As envisaged under the Revival Package of GoI, NABARD in collaboration with GTZ devised a Simplified, Standard and Common Accounting System for PACS. While designing the Common Accounting System for PACS, the existing systems and practices of accounting of the PACS in a number of states have been studied both under manual and computerised systems having regard to the nature and scale of business, prudential norms and best practices in accounting and their relevance to computerization and discussions held with various stakeholders such as State Cooperative Banks, District Central Cooperative Banks, Dept of Cooperative Audit, Registrar of Cooperative Societies and the Training Institutes of Cooperatives. The major components of CAS are : (i) Applicability of universally accepted basic concepts and principles in the maintenance of accounts by the PACS. (ii) Adoption of standard financial statements, viz., Balance Sheet, P&L A/c. and Trading A/c. (iii) List of a common set of General Ledger Heads of Account compatible with financial statements; and (iv) Maintenance of minimum essential and Standard Books of Accounts. 5. Uniformity in financial statements, viz., Balance Sheet, Profit and Loss Account, Trading Account coupled with adoption of certain basic accounting principles are regarded as an essential part, while the exhaustive list of GL A/c. heads and minimum
standard set of books as suggested may be taken as best practices/measures under the CAS. 6. Computerisation
As discussed in the NIMC, the financial statements comprising the output of the CAS and a separate MIS will constitute the focus of computerisation at the PACS level under the Package. As computerisation in PACS in different parts of the country may be timetaking, CAS may be introduced in...
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