Accounting Policies and Procedures Manual General Accounting

16 General
Accounting

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Table of Contents

16.1 Introduction 16.3

16.2 Retention of Accounting Records 16.4

16.2.1 Responsibility of accounts 16.4
16.2.2 Accounting records 16.4
16.2.3 Need to keep financial records 16.4
16.2.4 Media of storage 16.5

16.3 Maintenance of Accounting Records 16.6

16.3.1 General policies 16.6
16.3.2 Accounting records kept by the DAO/AG/AGPR 16.6
16.3.3 Accounting records kept by the DDO 16.7

16.4 Use of Suspense Account 16.8

16.4.1 General policies 16.8
16.4.2 Clearance of suspense accounts 16.8
16.4.3 Clearing accounts 16.8

16.5 Control of Official Forms and Chequebooks 16.9

16.5.1 Official forms and accounting records 16.9
16.5.2 Chequebooks 16.9

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16.1 Introduction

16.1.1.1 This chapter covers policies in relation to retention and

maintenance of accounting records, use of suspense accounts and
control of official forms and chequebooks.

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16.2 Retention of Accounting Records

16.2.1 Responsibility of accounts

16.2.1.1 The Audit and Accounts Order lays down that “… the Auditor-
General shall be responsible for the keeping of the accounts of the
Federation and of each Province”.The Controller General of
Accounts (Appointment, Functions and Powers) Ordinance 2001
lays down that the Controller General of Accounts shall be
responsible for the preparation and maintenance of the accounts
of the Federation, of each Province and of each District
Government.

16.2.2 Accounting records

16.2.2.1 The accounting records refers to books of account upon which

transactions are recorded or any other document issued or used in
the preparation and processing of the transactions.

16.2.2.2 The accounting records covers not only accounting records

such as cash book, vouchers, authorities, schedules and computer
records, but also consolidated reports and policy papers
supporting and justifying financial transactions.

16.2.3 Need to keep financial records

16.2.3.1 All accounting records will be retained in their original form

for at least a period of ten years. Also refer to the Manual of
Standing Orders for retention of permanent records such as
Establishment Records, Pension Records etc.

16.2.3.2 Departments / entities may retain records longer than

prescribed period and should determine the period themselves
based on the following considerations, their administrative needs
and the cost of storage. Departments / entities should keep their
retention practices under review.

16.2.3.3 Considerations that apply to the retention period of particular

records are:
 Statutory requirements - Various statutes prescribe
minimum retention periods for certain classes of records.
Departments/entities should consult MoF or the Accountant
General if they need guidance on the statutory requirements
applicable to the various records they hold.
 Administrative needs - Departments will need to consider
whether records that do not need to be preserved permanently
should be retained for administrative purposes longer than the
minimum time required and by any relevant statutory
requirement. Internal Audit Officer and other consultancy,

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inspection and review services may also make use of such

records in the course of their reviews and should therefore be
consulted about their requirements. Longer retention may be
necessary to enable departments to handle late claims, settle
disputes or for the satisfactory conduct of departmental
business including departments own and their internal auditors'
need to monitor past decisions and actions.
 Requirements of external audit - Records supporting
transactions including vouchers, schedules and other
authorities will be retained until the completion of the audit
although the Auditor-General Office may be prepared to
consider special arrangements where there are major storage
problems. The Auditor-General’s Office normally expect
departments / entities to retain main records for ten years. The
timetable for the destruction of main ledgers and of records
supporting transactions is in the Manual of Standing Orders.

16.2.4 Media of storage

16.2.4.1 The Auditor-General’s Office requires to see the original

documents when conducting audits. Originals of documents such
as contracts, agreements, guarantees and titles to property may be
required for other purposes, including presentation as evidence to
the Courts.

16.2.4.2 Departments/entities should consult the MoF or the Accountant

General if they have doubts about the need for records that have
to be retained in their original form.

16.2.4.3 Where records are kept for administrative purposes which do

not have to be kept in their original form, departments/entities
may wish to consider the costs and benefits of transferring them
on to micro-film or converting them into computer data or other
electronic formats so that originals may be destroyed.

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16.3 Maintenance of Accounting Records

16.3.1 General policies

16.3.1.1 The following policies shall be applicable to all accounting

records:
 accounting records are not to be maintained in loose-leaf form
 in the preparation and processing of transactions, and in all
accounting and related entries, pencil is not to be used
 erasures (including the use of correction fluids or chemicals)
are not permitted in any accounting record
 under no circumstances are pages to be removed from an
accounting record
 where corrections are necessary the word or figure to be
removed shall be ruled through and the correction initialled by
the officer making it. The correct entry will then be inserted
above the correction
 in a manual system, where corrections are made in the Sub
Ledger / General Ledger effecting the double entry
transaction, any amendment shall be carried out through a
journal entry
 where corrections are necessary in a computerised accounting
system, the original entry shall be reversed and the correct
entry shall be made through a journal entry.

16.3.2 Accounting records kept by the DAO/AG/AGPR

16.3.2.1 The accounting records (manual or computerised) which need

to be kept by the DAO/AG/AGPR include the following:
 monthly accounts
 sub-ledger
 General Ledger
 budget head register
 claim register
 certification and authorisation register
 cheque register
 various abstracts
 physical assets account
 liability register
 bank reconciliation statement

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 all permanent records (e.g. establishment records, GP fund

ledgers)
 subsidiary registers (e.g. contingent register, receipts register)
 supporting vouchers and schedules.

16.3.3 Accounting records kept by the DDO

16.3.3.1 The accounting records (manual or computerised) which need

to be kept by the Drawing and Disbursing Officer include the
following:
 cash book (or equivalent)
 petty cash book (or equivalent)
 contingent payment register
 commitment register
 payroll/establishment register
 receipt register
 financial asset register
 budget head register.

16.3.3.2 In addition to above primary accounting records, the DDO may

also maintain such other records as are necessary to manage its
own resources. Refer to chapter 9 of this Manual for such
records, which may be maintained by self-accounting entities.

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16.4 Use of Suspense Account

16.4.1 General policies

16.4.1.1 Suspense and other clearing accounts will only be used in the
following situations:
 if there are insufficient details at the time of transaction, to
indicate the appropriate head to be debited or credited, then the
amount should be taken to the appropriate suspense head
 if there is doubt as to whether the General Ledger are properly
due to or from the Government then the suspense head should
also be used

16.4.1.2 Suspense accounts shall not be used for transactions relating to

contingent expenditures. Such expenditures shall only be
certified and authorised if the correct budget head is mentioned
on the claim voucher, as set out in chapter 4 of this Manual.

16.4.2 Clearance of suspense accounts

16.4.2.1 Where a suspense account is used, the delegated officer in the

DAO/AG/AGPR shall identify the correct transaction head to be
used and clear the above suspense account on a monthly basis.

16.4.2.2 The Accountant General is responsible to make sure that

suspense accounts are cleared on a monthly basis and any
outstanding item is investigated.

16.4.3 Clearing accounts

16.4.3.1 Clearing accounts are special purpose accounts which are part
of the double entry system, such as cheque clearing account,
inter-entity clearing account. They should not be used for
suspense transactions.

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16.5 Control of Official Forms and Chequebooks

16.5.1 Official forms and accounting records

16.5.1.1 Only those official forms and accounting records shall be used
which are mentioned in this Manual and prescribed by the
Auditor General/Controller General of Accounts from time to
time.

16.5.1.2 Authorised official forms and accounting records shall be

obtained only from the authorised government printing and
stationery centres.

16.5.1.3 Official forms and accounting records, relevant to a chapter,

can be found at the end of each chapter of this Manual.

16.5.1.4 The purchasing officer in the department / entity shall follow

the policies and guidelines as set out in chapter 13 of this Manual
in relation to procurement and should ensure that:
 requisitions are prepared on the relevant form
 the quantity ordered is not in excess of his/her requirements
 the officer shall check that stock is sufficient enough to meet
the requirement of his/her department / entity
 all forms or records received should be recorded immediately
in the Accountable Forms & Books Register (or equivalent).

16.5.2 Chequebooks

16.5.2.1 Requisitions for chequebooks shall be directly placed, by the

authorised officer, with the AG/AGPR. The exception to this is
for the assignment account and defence’s cheque books where the
requisitions are directly placed with the branch of the NBP / SBP
where the cheque account is maintained.

16.5.2.2 To obtain the initial supply of chequebook, the requisition form

supplied by the bank must be completed and submitted to the
relevant bank branch.

16.5.2.3 For subsequent chequebook supplies, the special requisition

form inserted in the chequebook should be completed and
forwarded to the branch.

16.5.2.4 Chequebooks will be forwarded directly to the authorised

officer by the bank and any queries relating to the non-arrival of
supplies, etc., should be directed to the branch of the bank where
the account is maintained.

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16.5.2.5 Chequebooks received should be recorded immediately in the

Cheque Register and kept in a secure place. Every time a cheque
book is finished, it should also be noted in the cheque register.

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