Pifra Guidelines Pakistan

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Handbook of Accounting

Handbook of Accounting Guidelines

Issued: 13-Feb-99

Page: 1

hbook1.doc

Handbook of Accounting

Table of Contents
1 INTRODUCTION 2 OVERVIEW 3 THE LEGISLATIVE FRAMEWORK
3.1 The Constitution of Pakistan 3.2 Audit and Accounts Order

4 5 7
7 8

4 THE BUDGET
4.1 Introduction 4.2 General budget classification 4.3 Budgetary Procedure

9
9 9 10

5 THE ACCOUNTING FRAMEWORK
5.1 Introduction 5.2 Manual of Accounting Principles 5.3 Basis of Accounting 5.4 Features of modified cash accounting 5.5 Financial Reporting Manual 5.6 Chart of Accounts 5.7 Classification of Funds 5.8 Overview of Administrative Arrangements

12
12 13 13 17 20 22 23 24

6 ACCOUNTING RECORDS AND SYSTEMS
6.1 Introduction 6.2 General Ledger 6.3 Journal entries 6.4 Subsidiary Ledgers and Registers 6.5 Permanent Accounting Records

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28 29 29 29 29

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Page: 2

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Handbook of Accounting
6.6 Maintenance of Accounting Records 6.7 Computerised Accounting Systems 30 30

7 CORE ACCOUNTING PROCESSES AND CONTROLS
7.1 Accounting Policies and Procedures Manual 7.2 Internal Control 7.3 Receipts 7.4 Expenditures 7.5 Inter-entity Transactions and Other Adjustments 7.6 Project Accounting 7.7 Bank Reconciliation

31
31 31 32 32 35 36 37

8 OTHER FINANCIAL MANAGEMENT PROCESSES
8.1 Introduction 8.2 Cashflow Forecasting and Analysis 8.3 Purchasing 8.4 Asset Management 8.5 Liabilities

40
40 40 42 42 44

9 APPENDIX A - TABLE OF ACCOUNTING ENTRIES

46

Issued: 13-Feb-99

Page: 3

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Handbook of Accounting

1

Introduction
1.1.1 This handbook provides an introduction to the accounting systems and processes of the Government of Pakistan. It is intended as a general introduction to the subject for use by Government employees or anyone interested in understanding the legal and accounting framework under which the Government of Pakistan operates. The first three chapters describe the legal provisions relating to Government financial management, including discussion of key Constitutional provisions and the budgeting process. The remaining chapters provide information on the accounting framework, including policies, procedures, roles and responsibilities. It should be noted that this handbook itself does not constitute actual policy or procedure issued under the authority of the Auditor-General. It is intended to be a summary of the Government accounting and financial management environment, with detailed policies and procedures obtained from a more comprehensive set of manuals. • • • Manual of Accounting Principles Accounting Policies and Procedures Manual Financial Reporting Manual

1.1.2

1.1.3

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Handbook of Accounting

2

Overview
2.1.1 The Government of Pakistan plays a central role in the economic and social well being of the nation. As a result, members the general public, as taxpayers and users of public services, have a right to know of the financial implications of policies and other actions of Government that affect them. The National and Provincial Assemblies, as representatives of the public, expect and demand that taxpayer’s money be spent for the intended purposes, in accordance with legislative requirements. Within Government, managers are established with the responsibility for delivering services and other policy outcomes, in accordance with legislative requirements. These managers should expect to be held accountable for their performance in delivering these outcomes. Other financial management responsibilities of Government are: • to protect the public purse - to protect against the loss, theft or misuse of public money; to handle collections and disbursements of money prudently and maintain safe custody of cash to be accountable to the public - to provide financial information that explains how funds have been allocated and employed in social, economic and other programs. to...
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