GOVERNMENT ACCOUNTING STANDARDS ADVISORY BOARD

[Mr. M. GOVINDARAJAN]

GASAB

Comptroller and Auditor General of India (C&AG) constituted Government Accounting Standards Advisory Board (‘GASAB’ for short) for the union and the States under Article 150 of the Constitution of India to formulate Government Accounting Standards in addition to other pronouncements and Guidance Notes, through a notification dated 12th August, 2002. These accounting standards will be formulated in conformity with the provisions of the Constitution, our laws and international norms, promoting best practices on the basis of Generally Accepted Accounting Principles (GAAP)..

Mission

The mission of the GASAB is to formulate and recommend Indian Government Accounting Services for cash system of accounting and Indian Government Financial Reporting Standards for accrual system of accounting with a view to improving standards of Government accounting and financial reporting which will enhance the quality of decision-making and public accountability.

Members of GASAB

The GASAB has high level representation from the important accounting heads in Government, Ministry of Finance, Department of Post, Railways, Defence, Finance Secretaries of states, RBI, ICAI etc.

GASAB consists of the following members-

• Deputy Comptroller and Auditor General (Accounts) as Chairperson;
• Controller General of Accounts;
• Financial Commissioner, Railways;
• Controller General of Defence Accounts;
• Member (Finance) Telecom Commission, Department of Telecom;
• Additional / Joint Secretary (Budget),Ministry of finance, Govt. of India;
• Secretary , Department of Post;
• Deputy Governor, Reserve Bank of India or his nominee;
• Director General, National Council of Applied Economic Research(NCAER), New Delhi;
• President, Institute of Chartered Accountants of India (ICAI) or his nominee;
• President, Institute of Cost and Works Accountants of India or his nominee;
• Principal Secretary (Finance) of four States by rotation;
• Principal Director in GASAB as Member secretary.

Technical Advisors

Each Member of the GASAB shall nominate his/her Technical Advisor (TA) of sufficient seniority who shall be knowledgeable in the accounting aspects. The TA shall assist the Member during the GASAB meetings. The TA shall also be involved during the formulation of an Accounting Standard as an expert, in presenting the views of his/her organization.  The TA shall also act as the Nodal Officer for interacting with Members of the GASAB Secretariat and other TAs.  The Member Secretary, GASAB, shall chair the TAs’ meetings.  Members of GASAB shall regularly update the names of their Technical Advisers under intimation to GASAB Secretariat.

Responsibilities of the GASAB

The responsibilities of the GASAB are the following-

• To establish and improve standards of governmental accounting and financial reporting in order to enhance accountability mechanisms;
• To formulate and propose standards that improve the usefulness of financial reports based on the needs of the financial report users;
• To keep the standards current and reflect changes in the governmental environment;
• To provide guidance on implementation of standards;
• To consider significant areas of accounting and financial reporting that can be improved through the standard setting process; and
• To improve the common understanding of the nature and purpose of information contained in financial reports.

GASAB endeavors and is contributing to a fuller understanding of economic, political and social consequences of resource allocation decisions of the government, disclose debt and other liabilities of entities, address the direct correlation of accounts with financial management, improve the understanding of the accurate financial position of a Government and promote best practices on the basis of generally accepted principles of Government Accounting and steer a gradual course in reforming our accounting system.

Accrual system of Accounting

The 12^th Finance Commission recommended that while the Central government should gradually move towards accrual basis of accounting, as interim measures, subsidies, salaries, pensions, committed liabilities, salary and non-salary portions, liabilities on outstanding debts should be appended to the present system of cash accounting. The 13^th Finance Commission recommended a ‘bubble up’ approach to facilitate the switch over to accrual accounting system in government and stressed the need for improving transparency in government accounts.

The Government accepted the recommendation in principle and, accordingly, the GASAB framed the roadmap for transition from cash to accrual accounting system and work on the framework and development of Accounting Standards on cash as well as accrual based Standards for a better disclosure, providing relevant information to the stakeholders in a uniform and standardized reporting structure. In India the accounting policies followed by all Government entities following cash based system of accounting, are embedded in the General Financial Rules (GFR) and the Government Accounting Rules (GAR). These lay down the guidelines to be followed by the government entities in their accounting for any receipt or expense.

Procedure

The working procedure of GASAB is as below-

• Identification and Issue Paper: The GASAB Secretariat deliberates, duly considering all important suggestions proposals received from various stakeholders and identifies areas for formulation of pronouncements and places them before the GASAB for approval as part of the Strategic Development Plan.
• GASAB may engage a Consultative Group comprising observers, representatives of appropriate accounting organizations and academia possessing subject specific expertise. The members may form Task Based Groups (sub committees) from amongst themselves too.
• The GASAB Secretariat thereafter prepares the discussion paper on the identified issues for consideration of the GASAB with a comprehensive overview of the issue. While doing so, the Secretariat studies the existing rules, codes and principles as internal sources, and documents/pronouncements/Standards issued by other national and international Standard setting and regulatory bodies followed by a comprehensive deliberation and a broader consensus among the TAs. The Discussion Paper will then be circulated to GASAB members as an agenda item and discussed during the board meeting. It is then reviewed and revised in consideration of the responses of the Board members with research support from officers from GASAB Secretariat and the TBG.
• The Modified Discussion paper and the comments received with input thereon, are again taken up in GASAB and taken forward as Exposure Draft for hosting at the website of GASAB i.e. the Board may take a view to approve it for public exposure as an Exposure Draft for a minimum period of 90 days for inviting comments from all stakeholders.
• Based on the comments received on the Exposure Draft, the Standards are finalized by the GASAB and then forwarded to the Government for notification in accordance with the provisions under Article 150 of the Constitution of India.
• The GASAB may meet as often as is deemed necessary but generally not less than four times in a financial year. Special meeting may be convened by the Chair to address an emergent issue. The decisions of the GASAB may preferably be by general consensus. In case differences persist, the decision shall be on the basis of voting favoring the recommendation. The dissenting views should also be forwarded to the Government along with the recommendations. The quorum for GASAB meetings requires the presence, in person or by simultaneous telecommunications link, of at least seven members.
• The meetings are normally chaired by the Chairperson. In unforeseen circumstances when Chairperson is unable to attend, the senior-most member from the Central Government will chair the meeting. The C&AG of India will be kept informed of the important developments in the meetings of GASAB.

Recent activities of the GASAB

• The Indian Government Accounting Standards formulated by the GASAB and notified by the Ministry of finance, Government of India-

• Guarantees given by Governments – Disclosure requirements (IGAS – 1);
• Accounting and Classification of Grants-in-aid (IGAS – 2);
• Loans and advances made by Governments (IGAS – 3).

• The Indian Government Accounting Standards (IGAS) approved by the GASAB and under consideration of Government of India are-

• IGAS  7 – Presentation of Financial Statements;
• IGAS  9 – Government Investments in Equity;
• IGAS 10 – Public Debt and Other Liabilities of Governments – Disclosures requirement.

• Accrual based Accounting Standards, i.e, Indian Government Financial Reporting Standards (IGFRS) approved by the GASAB under consideration of Government of India-

• IGFRS 1 – Presentation of Financial Statements;
• IGFRS 2 – Property, Plant & Equipment;
• IGFRS 3 – Revenue from Government Exchange Transactions;
• IGFRS 4 – Inventories;
• IGFRS 5 – Contingent Liabilities (other than guarantees) and Contingent Assets – Disclosure Requirements.

Concept paper

The GASAB released a concept paper on Natural Resource Accounting (NRA) in India during July 2020.  NRA, an accounting framework to compile data relating to natural resources, is a way to prepare India to achieve Sustainable Development Goals (SDG) 2030. NRA would help in taking decisions not only about further usage of natural resources but also for ascertaining sustainability of these resources for future generation. NRA can also play important role in assessing environmental aspects of the projects being undertaken, be it by the Government, private or through public-private partnership models.

This paper prepared by GASAB covers in detail what are natural resources, what is NRA, valuation of resources, progress so far in India with regard to NRA, role of NRA in SDG and the initiatives in other countries, issues and challenges in NRA, participation of private sector in NRA, way forward for implementation of NRA in India, etc. It also provides detailed guidance about preparation of asset accounts in respect of various natural resources such as mineral, energy, water, forestry, wildlife, land along with disclosure on receipts and expenditure related to NRA.

New ideas for GASAB

GASAB invites suggestions/views to develop new standards/modifying existing standards/simplifications of accounting systems to enhance Fiscal Transparency. In this regard, a new tab ‘New Ideas for GASAB’ is meant to flag the concepts/areas (in the given format) which require better/detailed disclosure for inclusion in the accounts through formulation of a Standard.

The stakeholders could send their concepts/areas to the e-mail address gasab-newideas@cag.gov.in strictly in the following prescribed manner-

• Concepts/Areas which require better accounting/disclosure-

•  Background behind the suggested concept/area;
• Relevance/benefits/objectives of the enhanced accounting/disclosure and the related organizations;
•  Probable sources for obtaining information on the concept/area.

• Name of the suggestion maker/proposer-

• Organization and designation,
• Valid Email ID and Contact Numbers.

Reference:

1. www.gasab.gov.in.
2. https://cag.gov.in/uploads/journal/journal_journal_journal_August_2018/gasab-narrative.html.