Financial Daily from THE HINDU group of publications
Thursday, Mar 21, 2002
Financial Daily from THE HINDU group of publications Thursday, Mar 21, 2002 |
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Corporate
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Accountancy MCD to switch over to double-entry system -- Signs MoU with ICAI-ARF; project to cost Rs 4.5 cr Our Bureau
NEW DELHI, March 20 THE Institute of Chartered Accountants of India-Accounting Research Foundation (ICAI-ARF) has signed into a memorandum of understanding (MoU) with the Municipal Corporation of Delhi (MCD) for conversion of the latter's accounting system to a mercantile system (double-entry system). "We are planning to bid goodbye to a practice (the single-entry system) that had been adopted for the last 140 years. The conversion of our accounting system into a double-entry system, i.e., maintaining books on an accrual basis, would help us in better management of civic affairs," Mr S.P. Agrawal, Commissioner, MCD, told newspersons on Wednesday. He also said that the move to change the accounting system of MCD did not come out of any legal compulsions. "We are going in for a double-entry system because we think it is desirable to do so,'' he said. After signing the MoU, the ICAI President, Mr Ashok Chandak, said that the project - the first research-oriented project undertaken by ICAI-ARF - would be completed in three phases. "The project cost is Rs 4.5 crore. The first phase involves conversion of the accounts at headquarters of the MCD to accrual system and simultaneous computerisation of the accounting system. "The first phase will be completed by March 31,2003 and help MCD take out their first balance sheet for that date.'' The gross annual receipts of MCD stood at about Rs 2,200 crore. This includes Rs 1,600 crore of receipts arising from various sources of income and about Rs 600 crore of Plan allocation. The Union Territory of Delhi has a total area of 1,489 sq. km and 1,402 sq. km of this comes under the purview of MCD. A large number of municipal bodies in the country continue to adopt the single-entry system of accounting. On December 13, 2001 the Supreme Court had passed an order requiring the Union to amend the relevant rules to pave the way for MCD to adopt a proper accounting system at least with effect from April 1, 2002. A double-entry accounting system is also expected to help municipal bodies such as MCD in obtaining private funding as well as bilateral/multilateral funding for their civic services.
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