Need for meeting current expenditures from tax revenue stressed

The Controller General of Accounts, Masud Muzaffar (Retd), has emphasised the need for meeting current expenditures from the tax revenue rather than utilising internal and external borrowings for the purpose and said the spending of borrowings should be restricted to development projects only.
While talking to Business Recorder on Wednesday, Masud Muzaffar said the consolidation process of the reforms would start after completion of the Project to Improve Financial Reporting and Auditing (PIFRA-II). The project that was launched on January 1, 2006 is expected to be completed by the end of this financial year, he said.
He further said that as a part of financial reforms, the federal government in conformity with the overall reform process had introduced the Project to Improve Financial Reporting and Auditing with the financial and technical support of the World Bank in 1996. The first phase of the project was completed on December 31, 2005, he added.
Prior to formal launching of the project, a diagnostic study to assess the then prevalent system was carried out in collaboration with the World Bank during 1993-96, he maintained. The public sector accounting, being an important aspect of the overall financial management of an organisation aims to provide financial information for sound decision-making on continuous basis on one side and serves as an important instrument of accountability of those entrusted with public resources on the other, he said.
Masud Muzaffar further said the budget preparation and execution is a crucial element of the financial management system. The Project to Improve Financial Reporting fully caters for preparation of budget and its execution through the system. It provides for funds availability check which does not allow any payment is excess of the available budget and hence is a very effective tools for expenditure controls, he maintained.
The accounting system must produce sufficient, reliable, consistent, relevant and understandable information for the adequate control of public finances and to be incorporated in financial reports for useful decision making so that basic objectives could be achieved, he said.
He said that the country inherited the previous accounting system that was manually based and had been basically designed by the British to suit the colonial interests of a foreign power, thus the tradition system had become inadequate to produce comprehensive and meaningful financial reports, he said. The old system was unable to produce comprehensive reports in a reasonable time, as it was lack of conformity with international Generally Accepted Accounting Principles. Besides, it was lack of information between budgetary and accounting data for financial reporting and finally a failure to provide financial analysis in the reports and resultant lack of meaningful information, he maintained.
The reforms process has introduced the New Accounting Model (NAM) whose countrywide adoption will ensure common standards and uniformity of accounting information. A fully computerised accounting network has been established in the office of Controller General of Accounts, Provincial Accountants General, Federal and Provincial Finance Departments and most of the District Accounts offices.