Page 294 - CA Inter Audit PARAM

CA Ravi Taori

Audit of Local Bodies-Financial Old Course -- (P16M/N20E)
QNO Administration
GA.55
Bhaskar CNO - GA.300
Describe the salient features of Financial Administration of Local Bodies.
Answer ➢ Salient Features of Financial Administration of Local Bodies:
Budgetary Procedure:
The objective of local bodies budgetary procedure are financial accountability, control of
expenditure, and to ensure that funds are raised, and moneys are spent by the executive
departments in accordance with the rules and regulations and within the limits of sanction
and authorization by the legislature or Council. Different aspects covered in budgeting are
determining the level of taxation, fees, rates, and laying down the ceiling on expenditure,
under revenue and capital heads.

Expenditure Control:
At the State and Central level, there is a clear demarcation between the legislature and
executive. In the local body, legislative powers are vested in the Council whereas executive
powers are delegated to the officers, e.g., Commissioners. All matters of regular revenue and
expenditures are generally delegated to the executive wing. For special situations like,
reduction in property taxes, refund of security deposits, etc., sanction from the legislative
wing is necessary.

Accounting System:
Municipal Accounting System has been conventionally prepared under the cash system. In
the recent past however, it is being changed to the accrual system of accounting. The
accounting system is characterized by
• subsidiary and statistical registers for taxes, assets, cheques etc.,
• separate vouchers for each type of transaction
• compulsory monthly bank reconciliation, (submission of summary reports on
periodical basis to different authorities at regional and state level.

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