First government accounting was introduced in Nepal in the Lichchhavi period.
Revenue and expenditures of the government was recorded in that period.
The government revenues and taxes were received from trusts, property taxes (Jinsi Kar) and voluntary labour (Shramdan).
Revenue and taxes were utilized to make various expenditures.
Such as war, construction and renovation of temples and religious rites (Yagyas) etc.
When trade and industry were developed in the Malla period, the source of government revenue increased.
Revenue was collected as custom duty from businessmen.
Government offices used to keep account in a systematic way even in the 18th century.
The first step towards systemizing the accounting was taken during the Shah Period.
In this period:
The book ‘Laldhadda’ was invented to record revenue and administrative expenses in 1871 BS.
The book ‘Modhdhadda’ was introduced for recording details about land and land revenues in 1879 BS.
‘Kitab Khana’ was established in 1925 BS.
It was responsible for maintaining a record of government employees and the salaries paid to them. Government offices were known as ‘Bhardari Adda’.
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Basic Journal Entries in Nepali
Basic Journal Entries
Journal Entry and Ledger
Trial Balance & Adjusted Trial Balance
Bank Reconciliation Statement (BRS)
Final Accounts: Class 11
Adjustment in Final Accounts
Capital and Revenue
Single Entry System
Goswara Voucher (Journal Voucher)
Types of Accounting System Used in Nepal
Before introducing New Accounting System, the following accounting systems were used in Nepal:
(1) Wasil Banki Shresta Pranali
(2) Syaha Shresta Pranali
(3) Faram Shresta Pranali
(4) Bhuktani Shresta Pranali
Wasil Banki Shresta Pranali was similar to single column cashbook.
It was based on single entry system.
Revenues are recorded in left hand side.
Expenditures are recorded in right hand side.
It was suitable for small numbers of transactions.
This account used to close at the end of accounting year or completion of work.
Here, Syaha means journal entry.
Syaha Sresta Pranali was developed and introduced by Khardar Gunabanta in 1936 BS.
It was a real picture of government revenues and expenditures.
It was advanced form of recording the transactions than previous period.
It was introduced to record the revenue especially in Tarai area of the kingdom of Nepal.
It had adopted following three main types of account:
Syaha Shresta Pranali
Syaha स्याहा (journal entry)
Awarje अवार्जे (ledger)
Dhapot ढपोट (balance sheet)
Cashbook (नगदी स्याहा)
Income ledger (आमदानी अवार्जे)
Job ending (कार्य अन्त)
Property (जिन्सी स्याहा)
Expenses ledger (विन्जालिक अवार्जे)
Month ending (महिनाको अन्त)
Security (धरौटी स्याहा)
Year ending (वर्षको अन्त)
Syaha was the similar to journal entry.
It was original entry of financial transactions.
It was prepared in ‘T’ shape and divided into two sided; they left hand side and right hand side.
Revenues were recorded in left hand side.
Expenditures were recorded in right hand side.
At the end of the day, both sides of syaha were totaled; that was known as Terij.
The last transaction of previous date was added with Terij; that was known as Berij.
Berij was the grand total upto the date.
Advance and Uncleared advance was known as suspense.
Syaha was closed either at the end of the month or year.
There were three types of Syaha; they were:
Nagadi Syaha (Cashbook)
All financial transactions related to cash were recorded in nagadi syaha.
Jinsi Syaha (property account)
All financial transactions related to assets were recorded in jinsi syaha.
Dharauti Syaha (security deposit account)
All financial transactions related to security deposited by the public were recorded in jinsi syaha.
Awarje was another important book maintained under Syaha Sresta Pranali.
It was similar to ledger account under double entry system.
Posting on Awarje was made on the basis of Syaha.
It was the book of final entry under Syaha Sresta Pranali.
In Awarje, all the transactions were classified as Aamdani Awarje and Vinjalik Awarje.
Aamdani Awarje (income ledger)
It was prepared to record and classify regular and irregular income.
Vinjalik Awarje (income ledger)
It was prepared to record and classify the expenditure.
Dhapot was final statement under Syaha Shresta Pranali.
It was similar to the final accounts of modern accounting system.
It presented summary of government financial position of a certain period.
Accountant had to report at the end of each job, month or year at ‘Kumari Chowk’ (Kathmandu).
It was prepared by revenue collecting units showing accrual revenue.
Dhapot was prepared by showing the total amount released, net expenditure and remaining balance for transfer to next period.
There were three types of Dhapot; they were:
Job end Dhapot
It was prepared at the end of a job or after the completion of project work.
Month end Dhapot
It was prepared at the end of each month.
It was prepared at the end of each fiscal year.
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Here, faram shresta means form system.
Due to increase in the number of financial transactions, the job of accounting became huge and complicated.
To make easy work, Form Sresta Pranali was brought into use in 1968 BS.
It was introduced to meet the need of city and terrain (tarai) areas where the volume of transactions increased.
Actually the implementation of Form Sresta Pranali is not the replacement of Syaha Shresta Pranali.
Under Faram Shresta Pranali, different forms were used to record different transactions.
Out of them, some common faram (forms) were as under:
Ten days report
Fifteen days report
Monthly pay sheet
Outstanding revenue record
Statement of land tax etc.
Here, Buktani Shresta Pranali means payment system.
After the establishment of democracy in 2007 BS, Nepal government became more responsible towards maintaining books of accounts.
As a result, the budget system was started in 2008 BS.
“Procedure Rule for Government Fund Expenditure 2016” was passed and enacted in 2016 BS.
Then, in Baishakh 2017 BS, Bhuktani Sresta Parnali was introduced.
It was based on the principle of double entry system of book-keeping.
Bhuktani Shresta Pranali was also ineffective and unsuitable for new model.
In 2017 BS, an Account Committee was formed to study and make suggestion for an appropriate and scientific accounting system.
After detailed study for 288 days, the Account Committee presented a draft to finance secretary.
It was recognized from the Auditor General on 20th Magh 2018 BS.
It was finally approved by King Mahendra on 2nd Chaitra 2018.
It is the most systematic and scientific system of book-keeping.
It has been followed by Government Offices of Nepal since the fiscal year 2019/20 BS till now.
Under this system, the government offices were classified into two categories.
They are central level office and operating level office.
The financial procedural rules 2016 defined the duties and responsibilities of the following governmental bodies:
Function of Ministry of Finance regarding the budget release.
Duties and responsibilities toward the financial administration of different ministries.
Financial procedure to be followed by operating level offices.
Duties and responsibilities regarding financial administration of controller general
Duties and rights of Auditor General regarding the audit of government financial transactions etc.
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