This PPT delivered in conference organised by Institute of Chartered Accountants of India at Delhi outlines what has succeeded and what needs to be done to create conducive climate for implementing municipal accounting reforms.

1. Local Bodies – creating climate for
Reforms, Institutional Arrangements and
legislative framework
Dr Ravikant Joshi
NATIONAL SUMMIT ON TRANSPARENCY AND ACCOUNTABILITY
IN GOVERNMENT FINANCIAL MANAGEMENT
Organized by Committee on Public Finance & Accounting
Standards for Local Bodies, The Institute of Chartered
Accountants of India
11-12 October 2019 - The Leela Ambience Convention Hotel,
Surajmal Vihar, Delhi

2. Local Bodies –
creating
climate for
Reforms,
Institutional
Arrangements
and legislative
framework
• Even Individuals and micro enterprises maintain proper accounts
and comply with legal stipulations
• But with respect to municipal bodies forget about double entry
accrual accounting system even simple single entry cash base
accounts are not maintained properly, not completed in time, not
shared and discussed publicly
• Its been more than 25 years we are seriously talking about
Municipal Accounting Reforms and still less than 10 % municipal
bodies have attempted these reforms with varying degree of
progress.
• Why Municipal Accounting Reforms have not progressed the way
they should have?
• For creating right climate we need to understand why municipal
accounting reform is not happening or progressing? What are real
problems?
• There exist several problems on both demand and supply of
municipal accounting reforms.

3. Demand side
issues of
Municipal
Accounting
Reforms
• No legislative compulsion – like companies act Municipal Acts do
not stipulate manner and time to prepare and to submit annual
accounts to public at large. Even if time prescribed not penalty for
default is prescribed
• No legislative backing to Local Bodies Accounting Standards
• No designated national regulatory body and no compulsion on MB
to adhere to Standards, Systems, professional practices etc.
• Inadequate or no monitoring by State Government about whether
municipal body prepared and published its annual accounts in time
and in proper manner or not? or whether it has complied with Audit
Objections or not? Whether it is doing financial progress or not?
• Delayed Auditing of Accounts, absence of robust internal audit
system
• Municipal Decision makers do not demand timely accounting and
financial information for decision making as they are not trained to
understand and use accounts
• Residual or very low status to accounting function – due to lack of
financial resources, autonomy and performance accountability
account and finance function lack importance
• No demand for accountability and transparency from civil society,
academic – professional institutes, markets or people at large

4. Supply side
issues of
Municipal
Accounting
Reforms
• Inadequate professionally qualified staff to
manage account and finance function in
municipal bodies
• Archaic Recruitment rules, lack of specialised
cadre of municipal accountants
• Inadequate capacity building efforts at all levels
• Lack of specialised – customised training
courses for in service people and for young
aspirants and accounting professionals
• Lack of research, information analysis and
dissemination

5. Municipal
Accounting
Reforms -
Creating
Climate,
Institutional
Arrangements
and Legislative
Framework
• Need to solve both Demand and Supply Side issues of
reform
• Legislative amendments to prescribe Formats, Time
limits, Accounting Standards/Financial Reporting,
stringent penalty for defaults
• Decision about Apex Regulatory Agency - CAG
• Continuous monitoring of accounting work by the
concerned departments of State
• Timely Audit, introduction of 100% pre audit system
• Creation of municipal accountants cadre and
recruitment of adequate numbers professionally
qualified staff
• Creation of specialised body of literature about
Municipal Accounting and designing various kind of
• Capacity building of all stakeholders to understand and
to use accounts for improved decision making
• Creation of public demand for municipal accounts
disclosure, transparency

6. Municipal
Accounting
Reforms -
Creating
Climate,
Institutional
Arrangements
and Legislative
Framework
• Need to solve both Demand and Supply Side issues
of reform
• Legislative amendments to prescribe Formats, Time
limits, Accounting Standards/Financial Reporting,
stringent penalty for defaults
• Decision about Apex Regulatory Agency - CAG
• Continuous monitoring of accounting work by the
concerned departments of State
• Timely Audit, introduction of 100% pre audit system
• Creation of municipal accountants cadre and
recruitment of adequate numbers professionally
qualified staff
• Creation of specialised body of literature about
Municipal Accounting and designing various kind of
• Capacity building of all stakeholders to understand
and to use accounts for improved decision making
• Creation of public demand for municipal accounts
disclosure, transparency

7. Local Bodies – creating climate for
Reforms, Institutional Arrangements
and legislative framework
Thank You