PUBLIC ACCOUNTS

Hokitika Guardian, 23 February 1921, Page 4

PUBLIC ACCOUNTS

DEPARTMENTS TO PREPARE BALANCE-SHEETS. METHODS OF BOOK-KEEPING. State Departments' are arranging at the present time to show their accounts in a new form (states the “Dominion”). They have been directed by the Minister of Finance, in accordance with a decision of Cabinet, to prepare at the end of the current financial year, and annually thereafter, statements of receipts and expenditure accounts, and balance-sheets. These statements, the permanent heads of the Departments have been informed, are required for presentation to Parliament in the session following the close of each financial year. The Treasury has laid down the following principles for tile guidance of the Departments is the preparation of the accounts:—

“To prepare an annual profit and loss or income and expenditure account and balance-sheet it will he necessary to have assets valued, liabilities

ascertained, and both set out in a “statement of affairs” as the basis of entry on the first day of the financial year. The difference between the total of the assets and the total of t e liabilities may lie regarded as the capital of the Department fop the purpose of preparing its balance-sheet. “To produce an annual balance-sheet the hooks must be kept on the doubleentrv system, and capital and revenue itym'is 'classified. Real accounts will require to he opened for each asset, and nominal accounts for the purpose of recording under appropriate headings income and expenditure transactions. “A trading account profit and loss account or income and expenditure account should include all income accrued during the year, whether actually re-

ceived or not, and all expenditure in-

curred during the year, whether paid or not. A separate set of accounts will be required for each undertaking or trading venture.” The original circular on this subject

i,as issued late in December, after nearly nine months of the current finanoail year had elapsed, and the task that has been set the Departments will not he easy of accomplishment as fains the year ending on March 31st next is concerned. The accountants of the various Departments cannot make retrospective changes in their metneds of

book-keeping and it appears that in some of the Departments, at any rate, the accounts have not been kept in such

a way as to make the information required hv the Treasury at all easily available. The valuation of assets, for example, is a new demand involving

much detailed work. Other difficulties arise from the fact that it is not the practice for the Departments to keep copies of vouchers. The vouchers

are retained by the Treasury. One effect of the change in methods will he a demand for a workable method of assessing the services rendered by each Department to other Departments, Certain Departments can stand oil their own feet as self-contained commercial ventures, bill other Departments overlap and interlock to a great extent. The Police Department docs work for several other Departments, the Tourist.

Department incurs expenditure that benefits the Railway Department and so forth. The preparation of profit and loss accounts will necessitate allowance' being made for services of the kind indicated.

The general principle of placing the public accounts on a business footing is approved inside as well as outside the Government Departments. When the technical difficulties are overcome and the necessary adjustments made, the preparation of balance-shoots and of separate accounts for each business undertaking or trading venture will throw" new light on the operations of the Departments. The reform may assist the Government to effect economies by reducing the number of branches and Departments in the service.