Page 1
REPORT
OF THE
COMMITTEE OF EXPERTS
ON
UNIFORM FORMAT OF ACCOUNTS
FOR
CENTRAL AUTONOMOUS BODIES
NOVEMBER
2000

Page 2
CONTENTS
INTRODUCTION
COMPOSITION OF THE COMFOITEE
TERMS OF REFERENCE
UNIFORM FORMAT OF ACCOUNTS
COMMENTS OF CENTRAL AUTONOMOUS BODIES
OBSERVATIONS OF THE COMMITTEE
RECOWENDATIONS
Pages
16
26

Page 3
INTRODUCTION
Parliamentary Committee on Papers in its Sixtieth Report which was laid on the Table of Rajya Sabha on 27th March, 1998, observe
that there has not been any set standards of presentation of accounts of the institutions/organizations receiving grants-in—aid from the
Government. The method of presentation of accounts of statutory boards/corporations/ organizations is totally dismal and is not in
keeping with the requirement of transparency and exposure of professional skill of these organizations. They do not give a lucid
presentation of their accounts and large number of items of accounts of all such organizations generally remain incomplete,
unscrutinised and in arrears for several years. In view of the above observations the Committee feels that there is an urgent need of
reviewing the methods of presentation of accounts of the Central Autonomous organizations who usually take pretext of not having a
set standard of accounts as prescribed by the Companies Act 1956 in respect of the Companies incorporated under the Act. The
committee, therefore, impresses upon the Government to set up-a committee of experts including the representatives of the Institute of
Chartered Accountants, Institute of Cost & Works Accountants and the C&AG to work out a format prescribing standard norms of
accounts for all central autonomous organizations/ institutes to bring similarity and transparency in the presentation of their accounts.
The committee of experts, as reconnnended by the Parliamentary Committee on Papers, was constituted with the approval of the
Hon’ble Finance Minister on 12th May, 1999.

Page 4
COMPOSITION OF THE COMMITTEE
The notification constituting the committee of experts was issued on 26th May, 1999. Composition of the committee was as follows :-
Controller General of Accounts Chairman
Representative of Comptroller & Auditor General of India Member
Representative of Institute of Chartered Accountants Member
Representative of Institute of Cost 8r. Works Accountants Member
Representative of Indian Banks Association Member
Joint Controller General of Accounts Member-Secretary
Subsequentiy, in view of the specific provisions in the Acts of autonomous bodies which stipulate consultation with C&AG, office of
the C&AG felt that it would not be appropriate to associate themselves in the committee. Accordingly, nomination of the
representative of C&AG was withdrawn. In its place the Chief Adviser (Cost) of Indian Cost Accounts Department was inducted as
Member in the committee with the approval of Secretary (Exp), in February, 2000. Finally the composition of the committee was :
Controller General of Accounts Chairman
Chief Adviser (Cost) Member
Representative of Institute of Chartered Accountants Member
Representative of Institute of Cost 8-: Works ACcountants Member
Representative of Indian Banks Association Member
Joint Controller General of Accounts Member—Secretary

Page 5
TERMS OF REFERENCE
In accordance with the views and recommendations of the Parliamentary Conunittee on Papers the terms of reference of committee of
experts were as follows :
i. to prescribe a standard or model format of accounts and accounting reports which could be adopted by Central Autonomous
organizations.
ii. To suggest measures to enable clarity, transparency and simplicity in the presentation of accounts of such organizations.
iii. To suggest measures to enable evaluation through the accounts to the extent of achievement of socio-economic objectives of
the organization, especially with regard to grants released by the Government.
iv. Any other matters or measures which. would enhance analytical and effective presentation of accounts of autonomous
organizations.

Page 6
UNIFORM FORNIAT OF ACCOUNTS
It was decided that the Ministry of Surface Transport would take necessary action as far as the Ports are concerned and the Department
of Banking will take action for the Nationalised Banks. The committee deliberated on various issues on the subject in seven meetings.
Initially, in view of the limited availability of manpower the proposals were invited from the Indian Institutes of Management,
Ahmedabad and Bangalore and the Institute of Public Auditors of India, New Delhi. While Indian Institute of Management, Bangalore
expressed their inability due to preoccupation, other two proposals were discussed in the rneeting of the Committee on 14th January,
2000. Finally Shri M.M. Khanna, Member of the Committee (representative from the Institute of Chartered Accountants) who is also
the Chairman of the Accounting Standards Board, offered to prepare the first basic draft format. To assist in understanding of the ~-
existing financial reporting systems and enable the preparation of better and uniform financial statements, latest annual reports of the
following organizations were perused by the corrnnittee I I
a) Karnataka Regional Engineering College,
b) National Bal Bhawan, New Delhi,
0) Regional Engineering College, Tintchirapally,
d) Institute of Applied Man—Power Research, New Delhi,

Page 7
e) The Rubber Board,
f) The Coir Board,
g) Tea Board of India,
11) Khadi & Village Industries Commission,
i) Indian Council of Social Science Research,
j) Central Board for Workers Education,
k) Employees State Insurance Corporation,
1) V.V.Giri National Labour institute,
rn) National Productivity Council
The objective being to bring about uniformity in approach towards preparation and presentation of financial statements of the Central
autonomous organizations and encourage comparability, it was felt that it would not serve the purpose by bringing out different
formats for different class of organizations. The Committee was of the view that a common format be attempted to cover the
transactions and events of common nature, as a benchmark, providing some flexibility for exceptions. In the light of this, when
reviewed it was observed that in the existing financial statements all the organizations, under the existing guidelines of the

Page 8
Government, that are receiving assistance from the Government in the form of grants or loan, compile the following three sets of
accounts :
3* Receipt & Payment Accounts,
3* income & Expenditure Account, and
3» Balance Sheet.
Shri M.M.Khanna was of the opinion that objectives of the Committee would be better accomplished if not only are the formats of
financial statements drawn up on a uniform basis, providing transparency of financial information was also imperative. It was also
pointed out by him that it would help those who prepare the financial statements if the instructions and accounting principles on which
these are prepared, be also developed and exposed. If necessary the Notes on Accounts and Illustrative Schedules are also prepared, so
that the approach to financial reporting systems is common in all organizations. If this is done, the users, and particularly the analysts,
will be in a better position to understand the state of affairs and the operating results of each organization. Shri M.M.Khanna was
requested to prepare the basic draft accordingly. After the draft format of the financial reporting system, was made available by Shri
M.M. Khanna, the committee decided to form a sub—group consisting of the Joint C.G.A. and representative from the Chief Adviser
(Cost). The sub-group incorporated various requirements of the Government particularly with reference to accounting of the

Page 9
Government assistance received by these organizations. Accordingly, the format of Financial Statements and other accompanying
schedules were finalised, which are placed as Annexures :
A. Balance-Sheet (Annexure - A)
B. Income & Expenditure Account (Annexure - B)
C. Schedules to the above Financial Statements (Annexure - C)
D. Instructions & Accounting Principles (Annexure - D)
E. Notes & Instructions for the Schedule (Annexure - E)
F. Statement of Receipts & Payments (Annexure - F)
It would be observed that in the Financial Statements, i.e., Balance Sheet and Income & Expenditure Account the heads/sub-heads of
accounts are more or less in line with those in the other non-profit organizations. In the Schedules, against each item, the manner of
presentation along with ail necessary details has been given. Further, in the Notes and Instructions for the schedules, explanatory notes
and necessary instructions have also been prescribed. These notes and instructions can be used by the autonomous bodies as guidelines
while preparing their accounts. In addition, the Instructions and Accounting principles are given separately which will also be of
immense help for the organization while adopting the format. Reference may be made , in particular, to the illustrative ‘Significant

Page 10
Accounting Policies” and ‘Contingent Liabilities and Notes on Accounts” (Schedules 24 and 25 respectively) which deal with the off-
balance sheet disclosures.
While finalizing the draft format, two main objectives of the committee were to provide all necessary guidelines on one hand and on
the other hand to facilitate the autonomous organizations in bringing out all the disclosures and their respective accounting policies.
With this, the committee expects that the necessary transparency, uniformity and clarity would emerge both for the autonomous
organizations and the Government.
To avoid any rigidity in approach to preparation of the financial statements the committee has taken care in prescribing that the
suggested formats shall be adhered to subject to any special features applicable to certain specialized entities, and the statements can
be prepared in the formats, or as near thereto as possible.
The formats need not, therefore, be viewed as rigid in that there is some degree of flexibility in their adoption. This format does intend
to give an overall structure in which the autonomous organizations are expected'to generate necessary information for management,
the Government and other users of the financial information.
10

Page 11
COMMENTS OF CENTRAL AUTONOMOUS BODIES
From the audit reports of 1996-97 on the Central Autonomous bodies, which were relevant for 60th Report of the Parliamentary
Committee, it appeared, 201 organizations are audited by C&AG under Sections 19(2) & 20(1) of the CAG’s Act, 1971 and 123
organizations under sections 14(1) & (2). In the report of that year it was mentioned that out of total 324 organizations the
accounts/information from as many as 99 were not received by CA&G in time. During 1996-97 for the remaining225 organizations,
total grants given by the Government was for Rs.3,435 crs. and loan for Rs.418 crs. (approx).
The Committee has gone through the latest C&AG report No. 4 of 2000 for the year ending March 1999, wherein it appears that the
C&AG audit 216 organizations under Sections 19(2) & 20(1) of the CAG‘s Aet, 1971 and 221 organizations under sections 14(1) &
(2). In the report of this year it is mentioned that out of total 437 organizations the aecounts/ information from as many as 269 were
not received by CAG in time. During the year 1998-99 in respect of the remaining organizations i.e.228, total grants given by the
Government was for Rs.4,478 crs. and loan for Rs.660 crs. (approx).
11

Page 12
To not only involve the autonomous bodies in the exercise by eliciting their views on the financial reporting system envisaged, as also
to acclimatize them with the new requirements, the committee deemed it appropriate to circulate the basic draft of the formats and
instructions —- another objective also being. to gauge the level of acceptability by those who prepare the accounts in the autonomous
organizations. The draft format (Annexure A to F) were circulated to 362 Central autonomous bodies for their comments. These were
also circulated to the Secretaries, Financial Advisers, Chief Controllers/Controllers of Accounts of various Ministries/Departments. I.
Altogether the comniittee received 120 responses which include around 10 replies from the Ministries / Departments. The committee
was encouraged in its endeavours to recommend the adoption of the formats, as there were no major adverse comments thereon.
Out of 120 responses received, 40 organizations are ready to adopt the format and many of them have welcomed effort of the
Committee to bring out a common format that is long overdue. 7 organizations have tested their preceding year‘s accounts with the
format. 5 of them have found no problem and recommended these for adoption, while the other two have made certain observations. 8
organizations have mentioned that their comments would be communicated later and 9 have not offered any comments. The
committee considered the observations on major issues/aspects which are summarized below, from around 60 organizations, which
have been kept in view in finalising the formats :
12

Page 13
Maior issues
1)
2)
3)
4)
5)
6)
In most of the cases accounts are maintained on cash basis and not on accrual basis.
Fixed Assets are not depreciated in case of some entities.
For income-tax exemption, certain accounting treatments will be required.
(Taxation is considered only incidental and secondary in importance and the accounting principles have been kept in view by the
committee.)
Amendments in the societies Act, Trust Act, (including Bombay Public Trust Act) and Companies Act etc. may be required.
(This can be considered only at the Government level, and if required, may be done. However this is not within the purview of the
committee.)
University Grants Commission appointed a committee to bring uniformity in accounts of all the universities. The committee
submitted its report to UGC in September 1982, which is yet to be finalized by UGC.
National Council for Hotel Management & Catering Technology, New Delhi has proposed a common format of accounts for all
the institutes of Hotel Management.
13

Page 14
7) While introducing the new accounting system, there should be proper training, and if possible, ready-made computer software may
also be made available.
Other Points
a) Atmany places additions/deletions have been suggested in the items of Balance Sheet and Income & Expenditure Account.
b) Some organizations feel that the draft formats could be applicable only for commercial use and not for Government autonomous
bodies.
c) Income/expenditure should be recorded with the break-up of ‘Plan’ & ‘Non-Plan’.
d) Provisions are to be made for General provident Fund, Gratuity, Pension etc.
e) Format may be concise and not too long like the proposed
t) SEBI feels that their formats are more informative.
(The committee feels that there is no bar giving additional information.)
g) Implementation of the new accounting system may cost additional expenditure for the organization, which may include necessary
changes in the computer software also.
14

Page 15
h) The Energy Management Centre mentions that as per CAG’s instructions the assets are not to be shown on depreciated value. On
the other hand, in case of Nagaland University the audit raises objection for not providing depreciation and maintenance of
accounts on cash basis.
In general, it is observed that despite very short time (2-3 weeks) made available to these bodies for their comrrients and testing the
format, many of them expressed interest and willingness in the draft accounts format. All these autonomous organizations have
enabled the committee to have a closer look at the working of various types of autonomous organizations and to firm up its views and
recommendations.
15

Page 16
OB§ERVATIONS OF THE COMMITTEE _
The committee observes that the Central autonomous bodies are not homogeneous and are of different nature and types. Some may be
engaged in education & cultural activities, whereas other may be engaged in promoting various social sectors. In particular, there are
two types wherein the number of autonomous bodies is large -~ one is educational institutions including central Universities and other
is District Rural Development Agencies. Within the framework of common format, some adjustmcntsfmodifications may be made by
the“ administrative Ministries/Departments centrally in order to suit the requirements of these particular bodies. After going through the
above issues, the committee would like to summarize its observations in the following paragraphs :
l) The committee has observed that the most of these organizations’ accounts are prepared on cash basis and not on accrual basis.
The major disadvantages under the cash based system are that it does not provide adequate distinction betvveen capital and revenue
and- its recording of assets and liabilities remain incomplete. In fact these autonomous bodies are neither strictly following a cash
based accounting system that is prevalent in Government of India, nor they are following the accrual system of accounting like
other non-profit organizations in the country. As a result, uniformity, camper-ability and nansparency are missing in the accounting
information system, having effect also on the accountability in their management infonnation system. In place of Cash-based
16

Page 17
2)
3)
accounting, the Government is also likely to move towards adoption of Accrual System of accounting in the near future. Thus,
while bringing uniformity in the accounts of the Central autonomous organizations, the committee suggests introduction of
Accrual Accounting system only. In any case, under the existing Government guidelines, autonomous organizations are supposed
to prepare the Balance Sheet and Income & Expenditure Account.
In accrual accounting, Fixed Assets are to be shown net of depreciation— such depreciation being spread over their useful life; and
the annual amount of depreciation is added to the operative cost as a cost for that year. The operating results are net of
depreciation. Without the provision for depreciation the “True and Fair View” of financial position of the organization cannot be
established. It is not correct to say that only the profit making organizations need to bring the ‘True and Fair View“ and
transparency in their financial statements.
In order to avail income-tax exemption, the NGOs are to keep investible funds in the prescribed mode and they are refrained from
lending money to other bodies. The income tax also provides provision for depreciation 'to be made by following ‘Written Down
Value” (WDV) method. In the recommended format the provision for depreciation has been stated on straight-line method only as
an ‘illustrative’ policy and not a suggested one. As mentioned earlier, the common formats give the basic structure and its rigid
17

Page 18
4)
5)
application is not envisaged. In order to meet the requirements of the Income Tax Act or any other Act, the autonomous
organization should not face any problem with the common format of accounts and can opt to provide depreciation on ‘Written
Down Value” method.
The autonomous organizations are registered under various Acts like Societies Act, Trust Act, or they are constituted under some _
specific Act of Parliament. In these Acts, the accounting procedure to be followed by the organisation is prescribed. In order to
bring a uniform format of accounting for the Central autonomous organizations, a separate Act may be required, which will
override the accounting provisions in the other existing Acts.
The committee could not go through the UGC committee report. It is understood that the UGC report contains provisions for cash
based accounting. Similarly, the committee also could not look into the proposed format of accounts for the institutes of Hotel
Management. The committee observes that after the introduction of the common accounting forrnat, the respective
Ministries/Departments may make necessary changes/modifications for any such class of organizations where the number is large
or where reporting for specialized items may warrant a change.
13

Page 19
6)
7)
8)
Some organizations have raised the issue for the need for training and availability of common computer software. These
suggestions may be considered by the autonomous bodies and/or the Government and appropriate training courses may be
arranged by the concerned Ministries/Departments or through the Institute of Chartered Accountants of India. Since the accrual
concept of accounting is very common in the non-Government sector and also in the public sector organizations, the training
sources will also be available.
Among the minor issues the organisations have mostly felt the need for various provisions like break-up of Plan and non-Plan,
provision for retirement benefits etc. These are iii-built in the formats not warranting any special considerations. Even otherwise
suitable additions and deletions within the basic structure of the format are permitted.
The socioeconomic activities of the Central autonomous organisations, as translated into financial terms by way of income and
expenditure for each activity/project is also in-built in the common formats (particular reference may be made to the Schedule 3
which deals with the “Earmarked Fund’). The formats through its various schedules also cover the Plan & Non-plan funds released
by the Government by way of Grants.
19

Page 20
RECOMMENDATIONS
The Committee makes the following recommendations to the Government :
1) All the autonomous organizations should follow one common format for its accounting and presentation of accounting
information.
2) Within the common format of accounts, further additional information may be givenlprescribed for the Central
Universities 8.: other Educational Institutions and for the District Rural Development Agencies.
3) The Financial Statements and its Schedules will provide full disclosure of the organisation and all the accounting
information.
4) The Accounting will be based on the principle of Accrual System of Accounting and the-concept of ‘Going Concern” will
have to be maintained.
20