Bank Reconciliation

Government of BangladeshFinancial Management Reform Programme

Funded by DFID and RNE

Baseline Report on Bank Reconciliation within Government of Bangladesh

Milestone Reference: D12

March 2004

CNTR 012269

FMRP Management Office:BTMC Building (7th Level)7-9 Kawran Bazaar, Dhaka-1215

Tel: 8110134-7 Fax: 880-2-8117968E-mail: [email protected]

Web: www.fmrp.org

Atos KPMG Consulting Limited

This report contains 84 pages

Annex A - E contain 33 pages

Executive Summary

Major findings

Historically and to date, there have been major weaknesses in the area of bank reconciliation. These weaknesses range from organisation and ownership control issues through to procedural guidance control issues. However, to counter these findings, there now appears to be strong support for improving the current situation, particularly arising from the increased interest by senior CGA officers in this area as well as from the Ministry of Finance. The findings and recommendations of this report have been discussed with CGA officers and as a result, the CGA officers have requested that the recommendations be taken forward in FMRP Component 4 year 2 work plans.

Bank reconciliation in Bangladesh, as in other countries is clearly a complex issue. There are many parties and interfaces involved, with many areas of potential weakness in the reconciliation process.

In brief, the major findings of this exercise are:

We found no evidence of an effective reconciliation between bank accounts and government accounting records, other than total cash inflows and outflows at local treasury accounting offices.

We found no evidence of delegated responsibility for ensuring effective bank reconciliation or anyone who felt responsible for this exercise.

We were unable to find any procedural guidance relating to bank reconciliation. We were unable to find any evidence of a bank reconciliation in relation to the

Railways bank account. Although senior CGA officers appreciate the value of bank reconciliation, there

appears to be a wider lack of awareness about the importance of bank reconciliation with respect to ensuring the quality and integrity of accounting data.

Data used to assist in bank reconciliation (e.g. bank statements) is often inaccurate and untimely, as well as being presented in a format which is not user friendly. Clearly this further hinders efforts in bank reconciliation.

The current chart of accounts is designed in such a way as to significantly hinder any attempts to reconcile anything other than total cash movement.

The major recommendations made in light of this are, in the shorter term:

Clarify the responsibility for bank reconciliation. The CGA office should carry out a full investigation into the Railways accounts

preparation and bank reconciliation procedures. Action must be taken on the findings of this investigation.

The basic reconciliation of monthly overall cash movement and floating debt movement should be accurately and fully carried out. It is recommended that an adequately staffed and trained Central Reconciliation Unit take this responsibility.

Establish a team that takes responsibility for validating and accounting for bank data received from Bangladesh Bank to provide data that can be more easily used by the CRU.

Baseline report on bank reconciliation

In the medium term, the recommendations are:

To further strengthen the Ministry focus for accounts data and, building on the increased responsibility for CAO offices, to route all transactions directly through Ministry-facing bank accounts.

To separately identify on the face of the bank statement the current liability for domestic floating debt.

To functionalise all transactions (including Public Account) to the specific Ministry responsible and through this measure, to clearly allocate transactions on a cash or non-cash basis.

To amend the current accounting practices at local treasury offices to enable accounts to be prepared on an individual Ministry basis.

These measures, in conjunction with the other recommendations detailed in the report, support the government’s strategy of strengthening financial management along Ministry lines and should enable sustainable and improved quality of accounts through increased control and ownership over bank account reconciliation.

It is the opinion of this report that the attainment of a fully reconciled annual account is achievable, through the implementation of the recommendations made. This reconciliation will be achievable on both a national and local treasury office level for each individual Ministry or Department and therefore also for government as a whole.

The reconciliation will enable the movement from gross expenditure or revenue through to cash movement to be clearly identified and agreed with the individual bank account movement as reported by Bangladesh Bank.

It is believed that these recommendations are achievable if ownership is taken by CGA, with Ministry of Finance providing overall sponsorship and FMRP providing guidance and assistance to CGA in supporting these aims. These recommendations, if implemented, should also support government in addressing some of the recommendations made in the ROSC report.

Importance of bank reconciliation to quality accounting data

Effective bank reconciliation is the cornerstone of any accounting system where there is movement of cash. It is required not only to ensure the successful guardianship of the Public Funds, but it also provides a solid basis upon which the quality of accounting information may be assessed - bank reconciliation is a key feature in ensuring the integrity of financial accounting data by providing an external reference for government accounting data.

Current situation

During the course of this study, no evidence has been found of an effective reconciliation between the government’s main bank account and the government accounting records. Attempts have been made by the CGA office, but without the guidance and understanding required for complete and accurate reconciliation. This lack of reconciliation presents a serious risk to the integrity and quality of accounting records and reports –this in turn results in lack of confidence, by users of the accounts, in government accounting reports.

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Since Independence in 1971, the government cash balances held at Bangladesh Bank have not matched the reported cash balances in the government accounts, and hence the government financial statements. Similarly, the balances of outstanding claims against the government used to finance the government overdraft position have been inconsistently reported when compared to figures reported by Bangladesh Bank.

Primary responsibility for the government’s financial statements of accounts lies with the CGA. However, historically, the position with respect to the lack of reconciliation to the bank account appears to have been unchallenged within CGA. This has resulted in a lack of responsibility, and accountability, with respect to bank account reconciliation in CGA. This can also be applied to other sources of data that should be reconciled, and thereby increase the integrity of, the government accounts, e.g. National Board of Revenues, Foreign Aid projects etc.

The lack of reconciliation, to bank data or other sources, leads to a lack of confidence that users have in CGA accounts. Clearly, where possible, accounts should be reconciled with external sources of data to provide additional confidence – CGA are now demonstrating their commitment to improve this situation and such areas are under increasing review from both the Ministry of Finance and senior CGA officers.

Historically, in addition to the lack of overall responsibility taken for bank account reconciliation, there has been an apparent general lack of understanding as to the purpose, importance or techniques required for effective bank reconciliation. There also has been no clear delegation of responsibility or written procedures for bank reconciliation.

It is clear that the bank statements from Bangladesh Bank cause increased difficulty in undertaking the reconciliation with CGA records of account. Bangladesh Bank reports often contain balance and transaction errors, present inconsistent balances, are often delayed, and present bank data in a format that is not user-friendly. These types of errors further hinder bank reconciliation for government accounts.

It should also be noted that the Report on the Observance of Standards and Codes (ROSC) prepared by the International Monetary Fund in June 2003 contains the following recommended measures:

“A statement of reconciliation between CGA accounts and Bangladesh Bank / Commercial Bank balances – including as soon as possible, reconciliation of ADP foreign financing flows.”

“The CGA should provide a statement of assurance that debt records are complete and consistent with transaction records.”

“The C&AG, in certifying the annual accounts of government, should comment specifically on government’s compliance with the standards of data quality and timeliness. It should also comment on adequacy and consistency of the debt records maintained by the CGA.”

This will require a considerable change in focus for the CGA accounting officers, but the CGA, with the assistance of FMRP, is now in a position to initiate these essential measures. Through this activity, CGA officers are now keen to improve the historic

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situation with regard to bank reconciliation and are committed to taking these recommendations forward.

In conclusion, these problems identified in relation to bank reconciliation are certainly not insurmountable and it is believed that the government balances should be able to be reconciled on a sustainable and accurate basis, given the support and sponsorship from the highest levels of government. FMRP is hopeful that it may play a significant role in this development by providing guidance and assistance to the CGA officers and by establishing a culture of belief in the attainment of reconciled balances within government.

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Table of Contents

1 INTRODUCTION.....................................................................................................8

1.1 OBJECTIVE.........................................................................................................81.2 BACKGROUND....................................................................................................81.3 APPROACH.......................................................................................................10

2 BANGLADESH BANK AND SONALI BANK..................................................14

2.1 BACKGROUND..................................................................................................142.2 OBSERVATIONS................................................................................................18

3 LOCAL TREASURY ACCOUNTING OFFICES.............................................26


4 CHIEF ACCOUNTS OFFICERS........................................................................34

4.1 BACKGROUND..................................................................................................344.2 PRESIDENCY ACCOUNTING REGION – CENTRAL RECONCILIATION UNIT........344.3 OBSERVATIONS................................................................................................35

5 FOREIGN AID......................................................................................................39

5.1 OVERVIEW.......................................................................................................395.2 OBSERVATIONS................................................................................................41

6 DISTRICT ACCOUNTS OFFICE DHAKA......................................................42


7 NATIONAL BOARD OF REVENUE.................................................................43


8 CGA RECONCILIATION PROCEDURES......................................................50

8.1 BACKGROUND..................................................................................................508.2 CURRENT RECONCILIATION PROCESS...............................................................518.3 OBSERVATIONS................................................................................................53

9 MINISTRY WISE BANK ACCOUNTS.............................................................59

9.1 OBSERVATIONS................................................................................................599.2 PROPOSALS FOR MOVING FORWARD WITH MINISTRY ACCOUNTS...................65

10 FUTURE DEVELOPMENTS..........................................................................71

10.1 BANGLADESH BANK........................................................................................7110.2 SONALI BANK..................................................................................................7210.3 NATIONAL BOARD OF REVENUE......................................................................7210.4 CONTROLLER GENERAL OF ACCOUNTS...........................................................73

11 RECOMMENDATIONS..................................................................................74

11.1 SHORT TERM RECOMMENDATIONS..................................................................7411.2 Medium Term Recommendations...................................................................82

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List of Abbreviations

Abbreviation Meaning

C&AG Comptroller and Auditor GeneralCAO Chief Accounts OfficerCGA Controller General of AccountsCGDF Controller General Defence FinanceCRU Central Reconciliation UnitDAO District Accounts OfficerDCA Divisional Controller of AccountsDDO Drawing and Disbursement OfficerDfID Department for International DevelopmentDPA Direct Project AidERD Economic Relations DivisionFMRP Financial Management Reform ProjectGAD Government Accounts DepartmentGoB Government of BangladeshGPF General Provident FundIFAC The International Federation of Accountants LTU Large Taxpayer UnitMoF Ministry of FinancePAD Public Accounts DepartmentPPA Pre-financed Project AidRIBEC Reforms In Budget and Expenditure ControlRNE Royal Netherlands EmbassyROSC Report on the Observance of Standards and CodesRPA Reimbursable Project AidSD Supplementary Duty

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1 Introduction

1.1 Objective

As part of the Financial Management Reform Programme (FMRP), the following report has been produced to provide a baseline assessment of bank reconciliation within the finances of the Government of Bangladesh. Bank reconciliation must be seen as the fundamental control mechanism under which the preparation of quality accounting information is carried out within the Government of Bangladesh. The International Federation of Accountants (IFAC) states in their 2003 IFAC Handbook of International Public Sector Accounting Pronouncements “ When the cash basis of accounting underlies the preparation of financial statements, the principal financial statement is the cash flow statement.” This is simply not possible without effective bank reconciliation processes.

While it is generally accepted that there are serious concerns in relation to the completeness and accuracy of bank reconciliation, there is not currently a coherent plan to address this issue. This report is therefore intended to provide a starting point upon which Government may more clearly identify areas of concern and take the required remedial action where available.

It follows therefore that the report is designed as an initial diagnostic tool with the emphasis placed on identification of strengths and weaknesses, rather than providing definitive and detailed solutions to all of the problems in the current system. It is accepted that successfully addressing all of the weaknesses surrounding bank reconciliation at this stage would require a much larger resource allocation than is currently available through year 1 of the FMRP project. However, where appropriate, the issues and recommendations identified should be incorporated into future work plans of the FMRP project to assist in the FMRP Component 4 aim of improving the quality of accounts and to further underpin the overall aim of FMRP, being to improve the financial management capability within government.

1.2 Background

When Bangladesh gained independence, the opening bank balance in the government accounts was restated as nil as at 16th December 1971. However, at the same time, Bangladesh Bank recorded a negative balance of approximately 7 crore 44 lakh Taka ( or 7,44,00,000 Taka). This difference has never been amended and over subsequent years has been extended to the point that the difference stated (on 21st January 2004) for closing balances in June 2003 by the Controller General of Accounts (CGA) and Bangladesh Bank stood at approximately 130 Crore 73 lakh taka. As may be seen in the following diagrams, this difference fluctuates greatly, even over successive months. Given the pressures both internally within Government and from outside agencies, a principal aim of the CGA should therefore be to reduce or eliminate this fluctuation and eventually get to the position where it is appropriate to eliminate the remaining differences altogether.

The accounts of Bangladesh are designed in such a way that the reported cash balances from the CGA office should exactly match those reported by Bangladesh Bank. The

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current lack of bank reconciliation and therefore cash management in government is a cause of major concern for the government generally, the Ministry of Finance and International Development partners. It is the aim of this report to provide an initial framework upon which the required remedial action may be agreed, designed and implemented resulting in significant improvements in overall reconciliation and control.

( Source: CGA Accounts Consolidation System and Bangladesh Bank Monthly Statements)

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( Source: CGA Accounts Consolidation System and Bangladesh Bank Monthly Statements)

1.3 Approach

The approach taken in the preparation of this report has been fourfold: To assess the wider processes and controls currently in place To carry out a detailed study on the financial data available for a specified

month To obtain feedback from a wide variety of stakeholders to gain a clearer

understanding of the particular issues identified at each stage of the reconciliation process. A comprehensive list of the stakeholders assisting in the preparation of this report is included as annex A.

To attempt reconciliation at various stages of the CGA process to assess the feasibility of successful reconciliation under current systems

The month identified for detailed examination in the preparation of this report was March 2003. As explained more fully later in the report, the principal reason for choosing March 2003 was that this was the last month that the CGA office had attempted to carry out a detailed reconciliation, prior to FMRP commencing the preparation of this report in December 2003. Given the time delays identified within the flows of financial data from Bangladesh Bank, delays in compilation and reconciliation and the slow pace of procedural change within government it was considered appropriate to examine data relating to a period eight months previous.

1.3.1 Overview of Responsibilities

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There are several parties that play significant roles in the bank reconciliation process. For this reason, detailed analysis has been carried out on each of the following:

Bangladeh Bank / Sonali Bank Local Treasury Accounting Offices Chief Accounts Officers National Board of Revenue Controller General of Accounts

The flows of both cash and reporting information in relation to the current banking systems are very complex. The following diagram provides a simplified overview of the current flows and areas identified for potential improvements in reconciliation between inter-related organizations.

The highlighted bodies are those where attention has been most closely focused for the purposes of this report.

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Overview of current cash flows, reporting and potential for reconciliation

Foreign Aid

CGA

NBR

CAO

DAO Dhaka

Payee

Depositor

Potential reconciliation

Sonali Bank

Bangladesh Bank Head Office

Sonali Bank Head Office


CRU

Paid Presidency cheques

Debit & credit scrolls and supporting papers

Monthly statements

Revenue challans

Pre-audit cheques

Revenue challansConsolidated

data

Daily and monthly cash movements

Monthly accounts

data

Consolidated data

MoF

Daily statement

sPre-audit cheques issued

Dhaka – Presidency Region

Monthly accounts data

Sonali Bank

branches

UAODAO

DCA Departmental Officers

Ministries


Daily statements

& supporting documents

Daily and monthly cash movements


Accounts offices outside Dhaka

Bangladesh Bank

branches

PAD GAD

Daily and monthly cash movement

Copies of

challans

International Donors

Commercial Banks

Funds

Funds

Bank transfers

Project Directors

Expenditure data Expenditure data

Monthly accounts

data


1.3.2 Report structure

The report details the current responsibilities and actual findings for each of these areas. Additional details are provided in relation to the current treatment of foreign aid as well as a brief assessment of the implications presented as a result of the well-documented issues at what was previously, District Accounts Office, Dhaka. The report then summarises possible future developments that may impact on the bank reconciliation processes and then concludes with detailed recommendations addressing both the short and medium terms.

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2 Bangladesh Bank and Sonali Bank

2.1 Background

Bangladesh Bank is the Central Bank of Bangladesh and as such acts as custodian of the Government’s monies, (not including those held in commercial bank accounts). The legal framework for this arrangement is contained in the Bangladesh Bank Order 1972, which may be summarised for the purpose of this report as follows:

Article 1. To carry on and transact the banking business of the Government – payments, receipts, collection and remittance.

Article 2. To hold the cash balances of the Government as it’s sole Banker in Bangladesh.

Article 3. To manage Public Debt and the issuance of new loans by the Government.

Article 6. To make Ways and Means advances to the Government and automatic payment thereof at intervals not exceeding three months from the date of making the advances.

Article 8. To maintain the currency chests of the Bank’s Issue Department at such places as the Government may prescribe with sufficient notes and coins to provide currency for the transactions of the Government.

Bangladesh Bank currently has 9 branches that deal with Government accounts as treasury banks. To enable it to successfully carry out its duties as outlined above, Bangladesh Bank has contracted an agreement with Sonali Bank. Sonali Bank has 561 branches, which carry out duties in relation to Government transactions. Of these, 101 branches collect receipts only and report directly to Bangladesh Bank. The remaining 460 branches of Sonali Bank act as treasury banks transacting receipts and payments on behalf of Government and report to Sonali Bank Head Office. As detailed below, these flows are subsequently reported to Bangladesh Bank.

There are currently plans for Sonali Bank to take over all responsibilities for accepting receipts from members of the public. However, Secretary of Finance has raised concerns over the ability of Sonali Bank to manage this increase in turnover in such a short period of time. Therefore, a committee has been established, under the Chairmanship of Controller General of Accounts to investigate this issue and report to the Secretary of Finance. Until this committee returns their recommendations, Bangladesh Bank will be instructed to continue their current receipting duties.

The main balances of Government held at Bangladesh Bank are made up of 78 individual accounts. The number of accounts has increased dramatically over recent years, from 5 accounts in 1971 to 29 by 1983 and then 78 by September 2002. This was due largely to the Ministry of Finance order number FM/FD/B-1/Misc(28)/2002/1/1818 dated 01/09/02 that each Ministry was to have a separate account, which could then be controlled by the respective Chief Accounts Officer. The principal reason for creating these additional 51 accounts was to provide increased confidence and clarity in relation to the receipts and expenditure of each Ministry or Department. Given the Ministry of

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Finance’s lack of confidence in the centrally prepared monthly and annual accounts produced by CGA, it was felt at that time that greater reliance could be placed on the receipt and expenditure figures for each Ministry or Department provided by Bangladesh Bank.

The main accounts of Government held at Bangladesh Bank are listed in full in annex B, but may be summarised as follows:

Type of account Number of accounts

General account 1CAO Offices 51NBR Fiscal Reporting 4Debt Management 5Foreign Aid incl. Food Aid 9Food Operation 1Public Account Others 1Railway 1Telephone & Telegraph 1Postal 1Pension 1National Savings Scheme 1General Provident Fund 1

Total 78

In addition to the above main accounts, there are balances held in Commercial Banks relating to Foreign Aided projects. These accounts are operated by the respective Project Directors and the balances are currently held outside of the Government’s cash balances in the accounts. The reconciliation and control procedures in relation to these accounts are detailed in the Project Accounting Manual. Due to the significant value of balances in these accounts, the compliance with reconciliation procedures has been included in the scope of this report.

Drawing and Disbursement Officers currently maintain individual Imprest Accounts. The balances maintained in these accounts are not considered material in comparison to the 78 main accounts and Commercial Bank accounts and so will remain outside of the scope of this diagnostic report. The correct reconciliation and control of these Imprest Accounts should be appropriately catered for however in the current audit procedures.

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Outside the standard accounting network of UAO, DAO, DCA and CAO Offices, the following transactions take place and are reported on a daily basis to the Accounts and Budgeting Department of Bangladesh Bank through other Departments of Bangladesh Bank:

1. Forex Reserve and Treasury Management Department (FxTM) of Bangladesh Bank

Sale and retirement of US Dollar Investment Bonds transacted through non-treasury commercial banks.

Foreign Aid received in foreign exchange and then remitted to the concerned project directors in local currency. (SAFE Account)

Subscriptions to International Agencies in foreign exchange. Debt servicing of foreign loans on the authority of Director of Foreign

Aid & Budget Branch of Economic Relations Division (ERD). Remittance to Bangladesh Foreign Missions to fund their operations,

such as Embassy related expenses.

2. Department of Currency Management and Payment –Issue Administration

Value of smuggled gold bar confiscated by the Customs Department.

3. Agricultural Loan & Special Program Division

Debt servicing of subsidiary loan agreements between Government of Bangladesh and Commercial Banks. This relates mainly to IDA and ADB loans channelled through the Commercial Banks without reference to ERD.

4. Transactions in Accounts and Budgeting Department of Bangladesh Bank

Interest payment to the commercial banks for holding treasury bills.

These transactions are informed to the CGA by the Accounts and Budgeting Department of Bangladesh Bank and entered onto the CDPU system directly from the Bangladesh Bank Clearance Memorandum. There is no effective reconciliation of the individual balances reported.

As the Government of Bangladesh has been financing its operations through issuing floating debt for many years, it is logical that there should never be a significant cash balance left in its bank account while this debt remains outstanding. The initial access to overdraft is met by Ways and Means Advance (current limit Tk 64 Crore), which is regularized by a simple pre-printed Promissory Note signed by the Joint Secretary Budget.

If the overdraft goes beyond the limit of Tk 64 Crores, Bangladesh bank is authorized to issue Special Treasury Bills as per Finance Ministry’s authorization letter No 6 of dated 17.01.1974. Initially Bangladesh Bank absorbs all treasury bills and then offloads them to the commercial banks at a weekly auction. CGA in its accounts does not take

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account of the spilt in the holding of treasury bills between Bangladesh Bank (Monetary Authority) and Commercial Banks (Deposit Money Banks).

Every day, Government Accounts Branch of the Accounts and Budgeting Department of Bangladesh Bank calculates the effects of transactions in the banking treasuries and information received from the various Departments of Bangladesh Bank. It then works out one single cash balance and adjust the overall cash deficit or surplus by the issue or purchase of Treasury Bills or Ways and Means Advances. As Treasury Bills are rounded to Tk 1 Crore, a nominal cash balance will always remain in the account of Government.

Reporting Requirements

The currently prescribed procedures, detailed in the Account Code Volume I (updated version of C&AG September 9, 1996) Articles 9 & 10 may be summarised as follows:

1. Daily Reporting:

Statement of cash transactions undertaken by Bangladesh Bank on behalf of the Government together with the supporting vouchers etc. are transmitted by each office and branch of Bangladesh Bank daily to the respective District Accounts office, Chief Accounts office and Controller General of Accounts office, as the case may be. Similarly each branch of Sonali Bank transacting Government business as an agent of Bangladesh Bank forwards a daily statement of transactions to the local Upazilla or District Accounts office along with all supporting vouchers. The totals of such transactions are also reported by Sonali Bank at the close of each day to the Public Account Department of Bangladesh Bank through the head office of Sonali Bank at Dhaka.

2. Monthly Reporting:

All transactions regarding Public Accounts taking place in the offices and branches of Bangladesh Bank and designated branches of Sonali Bank are consolidated in the Government Accounts Department of Bangladesh Bank. At the close of the accounts of each month, a statement of closing balances of the Government on the books of the Bank after taking into account all cash transactions in all of the offices, branches and agencies of the Bank and the adjusting transactions in it’s own books is forwarded by the Head Office of Bangladesh Bank to the Controller General of Accounts.

Under articles 3 and 6 of the Bangladesh Bank Order 1972, three copies of the daily, 78 account-wise closing balances are prepared by the Government Accounts Branch of the Accounts and Budgeting Department of Bangladesh Bank. These are sent to the Finance Division for the attention of the Secretary, Joint Secretary and Deputy Secretary respectively.

The daily figures for sales and retirement of treasury bills and issued and retired Ways and Means Advances is noted underneath the daily balance figure. This is the financing that Bangladesh Bank has arranged to fund the movement in Government deficit. The

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overall outstanding claims on the Government in respect of Treasury Bills and Ways and Means Advances are stated at the bottom of the daily statement.

Given the limited confidence that some stakeholders have in the accounts data produced by the CGA, this daily statement is often seen as the most accurate representation of actual bank balances that is available.

The current banking arrangement between Bangladesh Bank and Sonali Bank is that Sonali Bank Head Office should receive the daily transaction statements from all branches acting as agents for Bangladesh Bank and send these to Bangladesh bank within 16 days of the day in question. This information should then be consolidated with Bangladesh Bank branch information and communicated to Government. Government has now ordered that Sonali Bank issue the daily transaction statements within 7 days.

At year-end, the 78 account-wise closing balances are reported to the Finance Secretary and a copy is also sent to the Controller General of Accounts.

2.2 Observations

The activities undertaken during the course of this work highlighted the following weaknesses in the processes undertaken to prepare bank statements from Bangladesh Bank and Sonali Bank and in the use of these statements.

1. Copies of the daily, 78 account-wise closing balance statement prepared by the Government Accounts Branch of the Accounts and Budgeting Department of Bangladesh Bank are sent to the Finance Division for the attention of the Secretary, Joint Secretary and Deputy Secretary but not to the CGA. We understand that the CGA office, as it found no use for the daily statement, has unofficially requested that it not be issued to the CGA office.

2. The daily, 78 account-wise closing balance statement issued by GAD includes the following:

a) A statement showing the cumulative balance of each account for the current year to date. This includes the movement of Treasury Bills and Ways & Means advances on date specified.

b) A statement showing the daily movement in each account for the date specified. The movement in financing of that day is based on the total net movement on the daily statement. There is no detail given on the daily movement statement to inform users as to which bank branches have been incorporated into the account or for days the individual returns relate to.

3. There is a widespread misunderstanding over the usefulness of the daily statement. This includes a lack of clarity in terms of what the information provided by Bangladesh Bank actually represents. Statements are issued by Bangladesh Bank stating balances for a specific date, which implies that it

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reports the actual cash balances on the date stated. This is not however actually found to be the case.

It was found that the balance shown on the Daily Cumulative Balance statement relates to an approximation of the balance two weeks earlier than the date on the statement, but the financing information is the actual movement on the date recorded on the daily statement. Any daily figures received by Sonali Bank from its branches on a given day are compiled together and sent to Bangladesh Bank for reimbursement. This will therefore include transactions from a number of different days and will not necessarily be a comprehensive collection from all branches.

It is only after several months that Bangladesh Bank reports the actual 78 account wise monthly opening balance, receipts during the month, payments during the month and closing balance at the end of the month. This statement is supported by the monthly cash inflow and outflow of all banking treasuries.

There are two different figures appearing in statements of closing balances for one date tested, both signed by Bangladesh Bank.

Bangladesh Bank had not explained the reason for the variation in its statements to CGA. It should be noted that CGA had not requested an explanation.

The delay between Bangladesh Bank adjusting the financing of the Governments overdraft and reporting these movements to Government is not readily understandable.

Using the example of the daily statement received by Finance Division for 30 th

June 2003, the timing of information flows and subsequent confusion caused becomes apparent.

30th June Bangladesh Bank creates Ways & Means Advance of Tk 64 Crore and issues Treasury Bills of Tk 51 Crore.

21st July: “Daily Cumulative Balance of 30th June” statement is signed by Bangladesh Bank stating a positive Government balance on 30th June of Tk 1.27 Crore. Financing on 30th June is reported as Tk 64 Crore Ways & Means and Tk 51 Crore, which clearly accommodated a net daily movement of 113.73. However, the daily movement statement that accompanied the cumulative balance statement reported the net daily movement as Tk 115.22 Crore.

28th July: “Clearance Memorandum” is issued by Bangladesh Bank requesting Promissory Note for Ways and Means Advances of Tk 64 Crore and Treasury Bills issued of Tk 51 Crore which were issued on 30th June. The net daily movement at 30th June however is now stated as Tk 113.73 Crore. It may be assumed that Bangladesh Bank was aware of the initial misreporting on the daily movement statement above as they were reporting the balance of Tk 1.27 Crore which was calculated on the net movement of Tk 113.73 Crore.

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4th September: “Monthly Closing Statement” is issued by Bangladesh Bank stating a

negative balance of Tk 434.64 Crore on 30th June 2003. Only this final statement produced some two months after the date in question represents the actual cash balances on the date in question.

17th November: CGA record Ways and Means and Treasury Bills issued on 30th June into the June accounts.

4. As part of the month-end reporting process, the Government Accounts and Budgeting Department of Bangladesh Bank receives a detailed monthly breakdown of Sonali Bank receipts and payments by branch and individual bank account. A copy of this breakdown is later supplied to CGA. Individual Bangladesh Bank branch data is then added, after which the monthly statement for the 78 individual accounts is sent to the CGA office. The statement is addressed to Controller General of Accounts (TF-1 Branch). Following the establishment of the CDPU, the CGA was reorganised, abolishing the Treasury Function (TF) and creating a new section, Accounts and CDPU. Knowledge of this restructuring is not evident in the address used by Bangladesh Bank and may indicate a breakdown in communication between the CGA office and Bangladesh Bank.

The relevant sections of the monthly statement are then copied to the following 20 recipients:

Secretary, Ministry of Finance – Budget Department CAO Food Division CAO Book and Budget Bangladesh Railway, Chittagong Assistant Director (Finance 2) Head Office, Bangladesh T & T Board Secretary, Jumana Bridge Authority USAID C&AG, Audit House 13 Original CAO Offices

This list is outdated, especially as there are now a total of 51 CAO offices that should receive a copy of the monthly statement. The General Manager of the Accounts and Budgeting Department stated that the statement was still only being sent to the original CAOs, further evidencing the acute lack of communication.

5. The monthly statement identifies the total receipts and payments for each Sonali Bank branch and also further reports these into receipts and payments for each individual bank account. The opening balance, total monthly movement and closing balance are then reported for each individual account.

This monthly statement does not include single figures for receipts and payments for the 9 branches of Bangladesh Bank. Rather, the receipts and payments are detailed according to the 78 individual accounts. This causes difficulty in

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identifying the movement reported by each bank branch and increases the possibility of errors being introduced at the CGA office.

6. During the analysis of data relating to March 2003, it became clear that there are some errors in the financial information provided by Bangladesh Bank, due to the manual reporting in operation.

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The following example was found in the Bank statement for account no. 153 – Civil Aviation.

Bangladesh Bank statement extract

Account 153 – Civil Aviation March 2003

Opening Balance 143790295

Bangladesh Bank Branches Receipt Payment Movement

Dhaka 1171431 641414 530017Sadarghat 21850 21850Chittagong 225250 225250Khulna 15122 15122Bogra 15900 15900Rajshahi 500 500Sylhet 238450 238450Barisal 450 450Rangpur 500 500

Bangladesh Bank branch movement 1689453 641414 1048039

Sonali Bank (Total) 906021 2131208 -1225187

Total for Month 2595474 2772622 -177148

It is clear from the above that the following misreporting occurred on the bank statement

Calculation as per:Correct

calculationBangladesh

BankError in reporting

Opening Balance 143790295 143790295Movement - BB 1048039 1048039Movement - SB -1225187 -1225187Closing balance 143613147 146063522 -2450375

This calculation error by Bangladesh Bank in manually preparing the monthly statement was not identified by the CGA Office. No action was therefore requested of Bangladesh Bank to amend their monthly figures. Bangladesh Bank had themselves adjusted the opening balance in the subsequent April 2003

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bank statement to the correct figure, yet no mention was made of the adjustment on the statement or any supporting documentation.

7. Bangladesh Bank recognises that the manual nature of their accounts preparation process and the increased number of individual accounts has increased the possibility of errors being made in their reporting. In recognising the potential for errors during the manual compilation of statements, it is noteworthy that all Bangladesh Bank monthly account statements contain the following wording:

“We are informing you of the month-end closing balance of this account for March and you are requested to inform us of its correctness.”

This implies a transfer of additional responsibility onto CGA, to inform the bank of any errors that are detected. No testing is currently carried out by the CGA Office to identify misreporting by Bangladesh Bank and this will remain to be the case until an effective and sustainable reconciliation process is in place.

The practice of accepting any figures reported by Bangladesh Bank as the definitive movement in cash is clearly shown to be unwise. The need for a strong and independent bank reconciliation process at CGA is further underlined in light of such findings.

8. It was not possible to obtain a copy of the year-end bank statement that Bangladesh Bank send to the CGA office. However, the annual accounts include the identical figures that appear on the books of Bangladesh Bank. This is despite significant errors being made in monthly calculations at CGA, or in some cases, no monthly calculations being carried out at all, as detailed later in the report. It therefore appears that the statement has been used in some manner within the CGA Office during the preparation of the annual accounts.

9. Articles 33 & 34 of Account Code Volume IV state that CGA is required to maintain a register of daily receipts and payments reported by Bangladesh Bank. This has not been found to be workable within CGA and therefore the procedure of recording daily cash flow has lapsed.

10. The CGA office does not record the (belated) reporting of Treasury Bills and Ways and Means Advances movements on a daily basis. Rather, it waits for a monthly bundle to be sent from Bangladesh Bank and simply makes one monthly journal entry. As stated above, the recording in the June accounts of financing movements was not carried out until mid November. This will result in the reported figures of both bank balances and government liability being significantly misreported during the year.

11. There is no reconciliation of Treasury Bills or Ways and Means Advances as stated by the Government Accounts with the respective figures of Bangladesh Bank.

The following table indicates that no reconciliation is carried out at CGA between the information recorded under claims against the Government (Treasury Bills issued) and that reported by Bangladesh Bank. This is a simple,

23


yet fundamental reconciliation process that is central to the reporting of liabilities of the government. The information flow is provided directly from Bangladesh Bank, which further implies that accurate reconciliation should be easily achievable.

Comparison of Treasury Bills Closing balances.(Taka in Crore)

CGA Accounts Bangladesh Bank Report

Opening Balance 1.7.02 20069.00 20069.00

Net Increase (+) / Decrease (-) during FY 2002-03

-79.48 -192.00

Closing balance 30.06.03 19989.52 19877.00

12. In the Governments books of account, most revenue and expenditure balances in the Consolidated Fund, except for some loans and advances balances, are “Closed to Government” at the end of the financial year. Other balances, termed as “Closed to Balances” are carried over from one financial year to the next.

Bangladesh Bank, under instruction of MoF carries over balances of some of the 78 individual accounts into the following year. At the end of each financial year, most account balances are reduced to zero and the balances transferred to the general account number 100. The accounts that are carried over from one year to the next are shown below as at July 2003, with the corresponding balances that appeared in the Governments Accounts.

Balances of Accounts carried over in Bangladesh Bank compared to CGA reported balances.

(Taka in Crore)

A/c No.

Account NameBalance as per CGA ( Finance

Accounts )

Balance as per Bangladesh

BankDifference

100 General -50585.12 1882.89 -52468.01201 Food -12803.85 -7318.76 -5485.09203 P.L. 480 Title 3 -76.79 0.18 -76.97205 EEC Food Grant 0.01 273.68 -273.67207 Japanese K.R. Grant Not available 246.17 Not available208 Japanese K.R. 2 Not available -0.01 Not available209 Japanese Debt Relief Grant Not available 1595.08 Not available210 SAFE Not available 99.93 Not available213 General Provident Fund 5142.15 464.88 4677.27215 Public Accounts Others 4015.43 209.54 3805.89217 Bond, Treasury Bills and Ways

& Means24013.23 357.94

23655.29219 National Savings Scheme 30598.06 1753.81 28844.25

24


It is clear, possibly due to the abrupt changes in bank accounts, that there is no correlation between the figures held in the Governments books of account and those that appear every month on the Bangladesh Bank statement. Due to some conditionality imposed on loan agreements, some accounts, included in the above table, were required to be shown independently on the bank statement. The Bank was in effect to operate as both banker and accountant. There are however no separate cash balances held in Bangladesh Bank for these accounts and given the large discrepancies identified above, it is not only incorrect for the bank statement to show them, but also highly misleading. The role and purpose of the monthly bank statement must be agreed and amendments made accordingly.

25


3 Local Treasury Accounting Offices

3.1 Background

There appears to be a widespread lack of understanding of the detailed book keeping procedures carried out in local accounting offices. The following pages therefore provide a brief overview of accounting procedures that have been prescribed under the RIBEC project to improve the quality of reconciliation carried out by DAOs. Similar procedures apply to the smaller Upazilla Offices, with one basic difference, in that Upazilla offices are not authorised to issue pre-audit cheques. Instead, passed bills are taken to the local bank and cash payments made based on the information contained on these bills. To avoid repetition, for the purposes of this report, a brief overview of the accounting procedures relating to only DAO offices has been provided.

The local bank should send a hand written daily bank statement to the concerned DAO, detailing all of the debit and credit transactions that have been recorded by the bank for that DAO on that particular day. Each of the transactions should be correctly recorded by the bank under the appropriate 13-digit government code. Additionally, the statement shows the total for receipts and payments in each of the individual 78 bank accounts for the day in question. A copy of all supporting challans, vouchers and cheques are to be sent with the daily statement.

When the accounting office receives the daily bank scrolls, the total receipts and payments for the day are to be entered into register DAO 1 – Register of Cash Flow.

This register is used to record the total of credit scrolls in respect of receipts and debit scrolls in respect of payments as received from the bank, to work out cash flow during the month under the code “Bangladesh bank deposit”.

Layout of DAO 1 - Register of Cash Flow

Name of the Office ________________

Month__________________________ Year________________________Date Payments Receipts Initial of

Designated Officer

Remarks

(Taka) ps (Taka) ps

Monthly total

Signature of DAO_________________________________

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At the end of the month the total receipts and payments recorded for the month are to be compared to the monthly statement received from the local bank branch. Any difference is to be identified, amendments made where appropriate to accounts office data or the local bank informed of its error.

Register DAO 2 is used to summarise daily receipts on the basis of economic codes under the relevant functional codes. The information source for these entries is the challans received from the local bank and bank scrolls. Each day, the daily total is to be compared to the corresponding credit entry in DAO 1. Any difference identified is to be amended immediately.

Layout of DAO 2 – Register of Receipts

Month___________________________ Year_____________________Consolidated Fund/Public Account

Function code

Economic code

DateTota

l

Transfer from DCA 5

Refund of

revenue from DCA 3

Monthly total

Previous month

progressive total

Progressive total

1.1.2003

2.1.2003

< >

31.1.03

Daily total

Initial of DCA

All payments, including refunds of revenue are recorded on a daily basis from the debit scroll received from the local bank on register DAO 3. As may be seen below, this facilitates the daily reconciliation of payments that will be recorded in the summarised accounts to the total payments recorded on the bank scroll. At month end the monthly totals are to be transferred to registers DAO 2 and DAO 4 as appropriate.

Layout of DAO 3 – Register of Summarised Bank Payments

Month__________________________Year______________________Consolidated Fund/Public AccountFunction code

Economic code

Date Monthly total

1.1.2002

2.2.2002

< >

< >

< >

< >

< >

< >

31.1.2002

0921-0000

6301

63414824

1051-0000

9101

Daily total

27


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When bills are passed in a DAO office resulting in the issuance of a pre-audit cheque, the expenditure information is to be recorded on the register DAO 4.

Layout of DAO 4

Name of the Office_________________________Month____________________ Year___________

Legal & Functional Code

Token No &

date

Name of

Payee

Date of

payment

Admissible claims with economic codes

Gross payme

ntsDr.

Deductions/recoveries with economic codes

Total deductions and Recove

ries

Net payment/

cheque

Total

Cr.

Pay

of

Off

icer

4501

Pay

of

Est

t 4

601

Hou

se r

ent

4705

.

Med

ical

4717

Fur

nitu

re68

21

AG

PF

8101

B.F

8241

G.I

.82

46

HB

adv

ance

3901

Inte

rest

on

loan

VA

T

BC

(A—B)

8616

D(B+C)

Monthly

total

Previous monthProgressive

This register records the amount that is to be debited against each individual economic code for the bill in question. The DAO 4 register also records the net amount of the bill, after all deductions have been made, and this is recorded under economic code 8616, Cheques and Bills. The credit recorded against Cheques and Bills is the figure taken for outstanding cheques. All of the information on DAO 4 will be consolidated at month end to enable the preparation of consolidated monthly schedules.

When each individual cheque is prepared and issued, the particulars are to be recorded on register DAO 15 - Cheque delivery Register.

Layout of DAO 15 – Cheque Delivery Register

Name of the Office _________________________________Month________________________Year____________

29


Sl No

Token No

Name of Payee Cheque No

Amount (To be written both in figure

& word)

Tick Mark

(Taka) ps

Dail

y

Total

At the end of each day, the total number of cheques issued that day and the Taka value of these cheques is to be recorded in register DAO 16 – Pre-Audit Cheques Reconciliation Register, columns 4 & 5 below. A carbon copy of DAO 15 is then to be sent to the local bank as a control measure, which may be consulted when cheques are presented for payment.

Layout of DAO 16 – Pre-Audit Cheque Reconciliation Register

Name of the Office______________________________Month_________________________Year___________

Opening Balance of outstanding

cheques

Date

Cheques issued Total Cheques paid

Cheques outstanding

(Closing balance)

Daily total

Number.

Daily total

Amount

(Taka)

No. Taka

Daily total

Number.

Daily total

Amount

(Taka)

Daily total Daily total Number Amount (Ta

ka)1 2 3 4 5 6

(1+4)

7 (2+5

)

8 9 10 (6-8)

11 (7-9)

Total number.

Total Taka

Total

An internal control measure has been prescribed in District offices to ensure that misclassification and under posting of vouchers does not take place. At the end of each day, all vouchers passed are to be compiled and sorted according to the 8-digit function code. The total net amount of vouchers and therefore the value of cheques that should have been issued for each function code is to be entered in register DAO 15A, (see below), in the correct function code row, under the appropriate date.

30


The daily total is to be reconciled with the daily total of cheques issued recorded in register DAO 15. Any difference is to be amended immediately.

31


Layout of DAO 15A – Functional Code wise Summary Register for Pre-audit cheques delivered

Name of the DCA Office_____________________________________Month___________________________________Year_____________

SL No

Functional Code ( 8 digits )

Date

1 2 19 20 3031

Monthly Total

Taka

Taka

Taka

Taka

Taka

Taka

123

Daily total

At month-end, the monthly total for each function code is to be reconciled with the net amounts of cheques issued as per register DAO 5 - Register of Consolidation of Deductions and Recoveries, (see below). This register is used to reconcile the total monthly deductions, recoveries, and gross and net payments transferred from form DCA 4 on the basis of economic code under the relevant functional code. The consolidated deductions data from DAO 5 will be transferred to register DAO 2 - Register of Receipts, as above.

It is the responsibility of the DAO office to reconcile the supporting documentation to the daily bank statement and agree any required amendments with the bank manager.

The number of cheques paid on each day and the total value of these cheques is to be recorded in the DAO 16 register, in columns 8 & 9 above.

The DAO office is also to identify each individual cheque paid against the individual entries in the current DAO 15 registers. If the details for a particular cheque are correct, the accounts officer should enter a tick mark against the corresponding entry in DAO 15 to indicate that the cheque is no longer outstanding.

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Where a cheque has been paid which was issued during a pervious month, the same process of entering a tick mark should be carried out on register DAO 17 – Register of Outstanding Cheques.

Layout of DAO 17 – Register of Outstanding Cheques

Serial

No.

Date of

DeliveryCheque No.

Amount

( Taka )Tick mark

Total

Whereas the DAO 15 register is used to record all cheques issued during the current month, the DAO 17 register is used to record all cheques outstanding from previous months. It is therefore the responsibility of the accounts office, at month end to transfer any unticked, and therefore uncashed entries on the DAO 17 register to a fresh DAO 17 register. Then, any unticked and therefore uncashed entries from the current months DAO 15 registers are to be transferred to the fresh DAO 17 register.

The number of cheques outstanding and their total value is then to be reconciled against the completed DAO 16 register. Any difference identified is to be adjusted.

At the end of the month, the local bank will send a handwritten monthly statement, which is to be signed by both the bank manager and the corresponding DAO or UAO. This statement summarises all of the transactions under the Governments 13-digit code. It is therefore the responsibility of the respective DAO/UAO to ensure that the monthly statement corresponds with the sum of the daily statements reflected in the accounts office monthly accounting records. This statement is to be included with the consolidated monthly accounts forwarded to the Divisional Controller of Accounts (DCA) office. Any discrepancy between the monthly statement and the consolidated monthly accounts should prevent the data from being entered onto the CGA’s consolidated accounts system. These differences are to be amended immediately.

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3.2 Observations

As the nature of District and Upazilla accounting is by its very nature cash based and the source data is tied directly to the daily bank statement, it is generally understood to be of limited risk in terms of bank reconciliation. However, several issues have been identified which should be of concern to the CGA office in its attempts to reconcile the bank.

1. Larger accounts offices are often unable to comprehensively reconcile the supporting documentation to the daily statement. This is due to staffing constraints, the large number of daily transactions and supporting documentation which is often not provided in an ordered manner corresponding directly with the information on the daily statement. It is therefore felt that this results, in some cases, in daily accounts being prepared directly from the information reported by the local bank and not the individual transactions. This lack of control and reconciliation is a major concern.

2. The daily total cash movement recorded in the accounts is compared to the DAO 1 register. However, the movement in individual bank accounts is not reconciled.

3. The local banks often compile daily statements and send many days worth of scrolls and supporting documentation at the same time to the accounting offices, or send daily information after significant dealy. When interviewed, DAO Narsandi stated that they had not received a daily statement for 14 days. The manual nature of the local banking system is the principal reason given for this delay. This delay inevitably causes backlogs and therefore places too large a workload on local accounting offices if they are required to reconcile all individual transactions back to the daily statements at the same time as preparing monthly accounts within the 10 day period after month end stipulated by CGA.

4. Although a record is maintained of banks that are late in reporting daily and monthly transactions, the local accounting offices are limited in their ability to influence the banks. Influence should be applied from a higher, more central position to encourage the reporting to be carried out in a timely manner.

5. The procedures outlined earlier in this chapter are not appropriately designed to facilitate an easy reconciliation between bank accounts and the respective Ministry. Public Account transactions are currently coded under generic function codes, for example under C&AG, rather than being associated to the actual Ministry to whom the transaction relates. This inevitably records the gross expenditure under Ministry and Net Cash Movement is lost. The movement and balances of individual bank accounts are therefore not being utilised to provide any reconciliation function at Ministry level.

6. Many local banks appear to be aware of the limitations in, or even lack of, reconciliation taking place in District and to a lesser degree Upazilla accounting offices. The lack of local and central reconciliation discussed later in the report indicates that this opens the possibility of bank officials intentionally manipulating daily and monthly returns. No evidence has been found in the

34


preparation of this report of this taking place, a risk exists for such actions to take place.

7. Local banks are regularly making classification errors when reporting daily receipts transactions. The current responsibility to allocate transactions according to the Government coding structure is generally felt to be unrealistic. Both Bangladesh Bank and Sonali Bank are primarily concerned with accurately recording banking transactions. Therefore their principal concern is not, and should not be expected to be, providing accurate information to Government using the Governments internal coding structure.

8. Many accounts officials feel that many receipt transactions relating to the same 4-digit economic codes are being grouped together under single functional codes on the daily bank statement. This means that the statement does not allocate the receipts to the concerned Ministry or Department. Unless this is identified and corrected by all accounts offices every month, the individual bank account balance of each concerned Ministry or Department can never be used to reconcile the receipts recorded in the accounts.

9. Members of the public are often required to write both the 13-digit Government accounting code and bank account number manually on challans when making lodgements to the Government accounts. Neither bank officials nor members of the public are sufficiently trained to correctly identify and enter this information and often are not given clear advice as to the correct codes to enter. The impact that this miscoding has on the accounts could be easily avoided if the required information were to be provided by the issuing authority at source.

35


4 Chief Accounts Officers

4.1 Background

Chief Accounts Officers (CAOs) are operating under the control of the CGA. Each CAO has been placed facing a specific Line Ministry and in that respect is to act as Financial Advisor to the concerned Ministry. CAOs are also charged with the function of issuing pre-audit cheques within the Presidency region of Dhaka for the concerned Ministry and preparing accounts for this region in relation to the transactions processed.

Each CAO is to prepare their monthly accounts based on Presidency transactions carried out within the CAO office, Foreign Aid projects operated under the jurisdiction of that Ministry and provide an overall reconciliation and control facility for the Ministry as a whole. CAOs that operate within departmental Ministries are given the additional responsibilities of incorporating initial accounts submitted by divisions and of reconciling remittance codes for the Ministry.

The monthly reconciliation is to take place by means of a comparison of Ministry wide data obtained from the CDPU and that received from the Ministry’s internal reporting structure. Any differences identified are to be reconciled and agreement obtained from both parties.

4.2 Presidency Accounting Region – Central Reconciliation Unit

As stated, CAOs issue pre-audit cheques for their respective Ministry for expenditure transactions within the Presidency region of Dhaka. In the financial year 2002-2003, pre-audit cheques issued by the 51 CAO offices accounted for approximately 28% of cash outflow from the main 78 bank accounts during the year. A cash control measure has been introduced to monitor these payments through the establishment of the Central Reconciliation Unit (CRU) within the CGA building in Dhaka. This unit was originally designed to reconcile both payments and receipts, yet to date has only been operated for pre-audit cheques issued by CAO offices within Dhaka. The operation on the CRU is described briefly below.

On a daily basis, when CAOs prepare pre-audit cheques, these cheques are not to be signed and issued until the relevant details (name of payee, date of cheque, amount of cheque and cheque number) have been entered onto the CRU system.

If the information printed off from the CRU system is in agreement with the passed bill data and cheques prepared, only then may the cheques be signed and issued.

A daily advice is issued sent to Bangladesh Bank for all cheques of value greater than Tk25000/-

At month end, the cheques issued data is transferred to the central CRU database.

Bangladesh Bank electronically send the relevant details of all cheques actually cashed in the Presidency region on a monthly basis and the CRU system matches the two data sources and identifies cases of data mismatch.

36


Cashed cheques and the corresponding debit scroll are issued by Bangladesh Bank to the issuing CAO to be matched against the information sent to the CRU.

The following reports are produced centrally by the CRU and issued to the concerned CAO offices, where mismatches are to be clearly corrected by the CAO and the reports returned to the CRU where any required amendments may be made. The current Government Order states that these reports eare to be produced within one week of the month end.

Reports produced by CRU and issued to CAO offices:

Amount Mismatch ReportDate mismatch ReportDate and Amount Mismatch ReportUnmatched Cheques from Bangladesh Bank ReportComparison of Cheques and Bills Amount ReportTime-Barred Outstanding Cheques ReportList of Outstanding Cheques Report

The treasury office responsible for recording transactions within the Presidency region is DCA Dhaka, which incorporates what was DAO Dhaka. All CAO pre-audit cheques, when cashed, are recorded by DCA Dhaka, not through the individual CAO office. The system is so designed that when a CAO issues a cheque, the code for ‘Cheque and Bills’ is credited, which will be offset by the debit entry recorded by DCA Dhaka when the cheque is cashed.

4.3 Observations

1. It appears that the CRU is not seen as a high profile unit that operates with the required monitoring, support or authority of the CGA. This is indicated by the following findings relating to the four-month period July 2003 to October 2003, as reported by the CRU on 19th January

CAO Office Observation

Civil Aviation and Tourism No data entered for any of the four months.Finance No data entered for three months.Internal Resources Division No data entered for one month.Rural Development & Cooperative No data entered for two months.

Of the 204 individual months data that should have been recorded by all CAOs for the four month period, 10 months, or approximately 5% showed no data entry at all.

37


The following tables clearly demonstrate the limited success that CRU is experiencing in receiving amended reports from the concerned CAOs.

Unmatched Report analysis

Month No. of CAOs required to amend unmatched reports

Number of CAOs that have not amended

reports by 24th

January 2004

% of CAOs that have as yet not amended CRU

reports

July 2003 20 8 40%August 2003 9 6 67%September 2003 7 5 71%October 2003 9 9 100%

Mis-Matched report analysis

Month No. of CAOs required to amend mis-match reports

Number of CAOs that have not amended

reports by 24th

January 2004

% of CAOs that have as yet not amended CRU

reports

July 2003 50 14 28%August 2003 44 12 27%September 2003 45 20 44%October 2003 42 27 64%

The following table indicates the overall position between Cheques and Bills recorded on the CDPU system for each individual CAO office and the corresponding amounts entered onto the CRU system by the same CAOs.

(Crore Taka)

MonthCAO-Cheque

IssuedDifference

from CDPUCAO-Cheque Cashed

Difference from CDPU

Accounts-CDPU-8611

CRU Cheque Issued

Accounts-CDPU-9611

CRU Cheque Cashed

March 03

727.25 727.91 0.66 733.77 751.58 17.81

June 03-Pre

3064.21 2959.72 104.49 2271.86 2307.55 35.69

July 03 408.77 407.99 0.78 975.91 981.66 5.75

2. The improved and standardised CAO Accounting Procedures Manual, prepared in December 2003 has directed that monthly accounts data should not be entered onto the CDPU system until it is noted that the Cheques and Bills figure reported equals the total cheques issued for the concerned CAO on the CRU system. This measure should dramatically improve the accuracy of the CRU

38


and CDPU data, as errors must now be corrected at source before the data is compiled.

3. It is found that many CAO offices are unable to enter the CRU data before issuing cheques. This is due to a combination of lack of staff with sufficient IT skills, pressure to issue cheques to payees and lack of respect for the CRU function. It is therefore common for a list to be maintained of cheques issued and for the CRU system to be updated on a weekly basis. This may lead to data entry errors or data being omitted from the CRU system.

4. The Government Order that CRU reports are to be issued within one week of the end of the month is not considered to be realistic. There are major delays in Bangladesh Bank sending the electronic data for cashed cheques to the CRU. As at the 24th January 2004, data had only been received for the month of November 2003. Similar delays are noted in the process of CAO offices receiving the actual cashed cheques from Bangladesh Bank. In this regard, CAOs report that a delay of approximately two months is considered standard.

5. The CGA office is unable to reconcile the Cheques and Bills figures for individual CAO offices. The unique accounting procedures currently in place at DCA Dhaka are causing confusion and lack of clarity in a crucial area of reconciliation. When DCA Dhaka receives debit scrolls from Bangladesh Bank relating to cashed CAO pre-audit cheques, the officers entering the data into the monthly accounts are unable to differentiate in the accounts between different CAO offices. The Cheques and Bills figure reported, for cashed cheques is restricted under one generic Public Account code - 9611. As the data for all CAOs cashed cheques is entered in DCA Dhaka and therefore under one location source code, only the total movement in Cheques and Bills may currently be monitored. There is therefore no role for the CRU to play in monitoring and inspecting the monthly Cheques and Bills data forwarded from individual CAO offices with their monthly returns.

6. Departmental CAOs are currently not taking responsibility for reconciling Remittance data for their respective Ministry. CAOs interview stated that they lacked the resources and skills needed to carry out this reconciliation. It is viewed that the large number of cheques issued for each Department is too large for a manual reconciliation procedure to be carried out in a CAO office.

7. The composition of balances stated as Remittance for each Departmental Ministry are not clearly understood. While the balance contains the value of outstanding departmental cheques, this is complicated by the inclusion in the same code of departmental receipts.

8. Inability to reconcile and general confusion surrounding the correct operation of Remittance, has resulted in a Public Account code where many transactions may be effectively ‘lost’. This is a major concern in terms of the safekeeping of Public monies. The following table shows the balances under Remittance as reported by the Finance Accounts, incorporating 2002/03 movements from CDPU for the period ending June 2003.

39


Reported Remittance Balances and Movement, period ending June 2003

(figures in thousands of taka)

HeadOpening Balance

July 2002Movement

2002/03

Closing Balance June

2003

Balance Reconciled

Yes/NoPost Office 12141232 -263408 11877824 NoT & T 15749699 -3686276 12063423 NoPublic Works -3034370 483715 -2550655 NoHousing & Settlement 824805 -110111 714694 NoRoads & Highways 1902348 -395121 1507227 NoPublic Health Engineering 1522389 -163529 1358860 NoForest 398888 190740 589628 NoCustoms 18778 -226864 -208086 NoGPF Transfer 328345 323383 651728 NoOthers -1215215 -725171 -1940386 NoTotal 28636899 -4572642 24064257

It is clear from the above table that there are significant balances reported in the government’s books of accounts that are not being controlled or reconciled. This will inevitably have wider implications on the correctness of the Appropriation Accounts and Finance Accounts.

The requirement for a code ‘Others’ is unclear and may cause confusion at a local level. It is noteworthy that the opening balance, movement during the year and closing balance are debit balances. This is unusual for outstanding cheques, which should be the major element of a remittance code. This issue is addressed in more detail on page 65.

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5 Foreign Aid

5.1 Overview

There appears to be widespread confusion surrounding Foreign Aid. The RIBEC project produced a comprehensive instruction manual, entitled the Project Accounting Manual, yet none of the CAOs or Projects interviewed were following this manual, with some being unaware of its existence. Extensive training in the Project Accounting Manual is currently underway to improve this situation, yet it remains the case that Foreign Aid is misunderstood by a large proportion of accounting officers within Government.

To this end, a comprehensive overview of Foreign Aid and detailed accounting instructions have been included in the Improved and Standardised Accounting Procedures Manual for CAO offices, produced under the FMRP project. For information purposes, the relevant chapter is included as annex C.

Foreign Aid may be summarised for the purposes of this report into Food Aid, Commodity Aid and Project Aid. Despite the creation of four separate bank accounts for Food Aid and one for Commodity Aid, there was no evidence found of reconciliation of these accounts.

Project Aid may be summarised into three main categories:

1. Reimbursable Project Aid2. Pre-financed Project Aid3. Direct Project Aid

1. Reimbursable Project Aid (RPA)

The Project Director submits bills to the local accounting office as per the standard pre-audit system. On a periodical basis, an expenditure statement is issued to the Development Partner and whole or partial reimbursement is made directly into the main GoB bank account.

2. Pre-financed Project Aid (PPA)

The donor credits special project bank accounts with an imprest amount. When the imprest balance has been expended by the project, the PD will submit a reimbursement application to the donor. Upon approval of the expenditure statement provided, the account will be replenished.

There are four types of account operated under Pre-financed Project Aid:

A. Special Account in Foreign Exchange (SAFE)

As per Government Order MF/DD/Dev Wing16/93/234 dated 5th August 1993, Bangladesh Bank is to send a monthly report concerning the SAFE account to the concerned CAO and Project Director. The Project Director is to send the Account Statement of Project’s Special Account to the concerned CAO office to incorporate the

41


expenditure into the government accounts. The CAO office should reconcile the two statements and ensure that the expenditure entering the accounts matches the banks figures.

B. Convertible Taka Special Account (CONTASA)

As per Government Order MF/FD/DRS/3/91/444(20) dated 4th May 1992, the commercial bank concerned is to send a monthly report concerning the CONTASA account to the concerned CAO and Project Director. The Project Director is to send the Account Statement of Project’s Special Account to the concerned CAO office to incorporate the expenditure into the government accounts. The CAO office should reconcile the two statements and ensure that the expenditure entering the accounts matches the banks figures.

C. Dollar Special Account (DOSA)

As per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director is to send the Account Statement of Project’s Special Account to the concerned CAO office to incorporate the expenditure into the government accounts. The CAO should request a monthly bank statement to be sent by Bangladesh Bank, detailing any activity on the DOSA account. This statement should then be reconciled with the Account Statement of Project’s Special Account.

D. Imprest Account

As per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director is then to send the Account Statement of Project’s Special Account to the concerned CAO office to incorporate the expenditure into the government accounts. The CAO should request a monthly bank statement to be sent by the Commercial Banks, detailing any activity on the relevant Imprest accounts. These statements should then be reconciled with the Account Statement of Project’s Special Account.

3. Direct Project Aid (DPA)

Expenditure is incurred directly by the Development Partner and rarely communicated to the Project Director, even though there is a budget allocation in the annual development budget for DPA. Direct Project Aid has no direct impact on the current report into bank reconciliation and is included for completeness of information.

As per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director is to send the Statement of Direct Project Aid to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. This places the responsibility for gathering the relevant information onto the Project Director. The CAO offices should therefore request the Project Director to supply this information on a monthly basis, in line with the RPA and PPA accounting procedures.

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5.2 Observations

1. It is clear from the above, summarised instructions that monitoring, reconciliation and control of expenditure on Foreign Aided projects is unmistakably a responsibility of the concerned Chief Accounts Officer. However, despite this, only one of the CAOs interviewed for this report considered this to be a key responsibility of a Chief Accounts Officer.

2. Due to the use of commercial bank accounts and the lack of pre-audit procedures, the main concern in relation to foreign aid for bank reconciliation is PPA projects. It is required that expenditure statements for these projects be accompanied with the corresponding bank statement to allow the concerned CAO to reconcile with the cash movement.

A sample of CAO offices were assessed to measure the degree of compliance with this requirement and the findings were as follows:

CAO Office assessedTotal

Projects

Total Foreign

Aid Projects

Number of PPA Projects

Findings

CAO Primary and Mass Education

25 14 10CAO receives expenditure statements but no bank statements for any PPA projects.

CAO Water Resources

87 18 11CAO receives expenditure statements but no bank statements for any PPA projects.

CAO Land 8 2 1CAO receives expenditure statement and bank statement for PPA project.

CAO Electricity 69 31 2CAO receives expenditure statements but no bank statements for any PPA projects.

As shown in the table above, of four CAO offices sampled, only 1 out of 24 PPA projects provided a bank statement in support of the expenditure statements. This degree of non-compliance with prescribed procedures, and consequent lack of reconciliation, presents a risk to the integrity of government accounts and is seen as a significant control weakness.

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6 District Accounts Office Dhaka

6.1 Background

Operating under the guidance of DCA Dhaka, the office that was previously DAO Dhaka records all receipts for Dhaka from information received from Bangladesh Bank on daily debit and credit scrolls. (This office is still often referred to in government as DAO Dhaka and this distinction shall be made for the purposes of this report.) DAO Dhaka is also responsible for processing approximately 10,000 pension bills per month as well as P.L. Account transactions.

6.2 Observations

1. In the financial year ending June 2003, DAO Dhaka was responsible for accounting for approximately 34% of total Government receipts. However, there are currently only 23 officers and staff posted to DAO Dhaka. This is in sharp contract to approximately 200 employees at the Government Accounts branch in Bangladesh Bank, which prepares the daily debit and credit scrolls which are sent to DAO Dhaka.

2. The number of challans attached to the daily debit scrolls sent to DAO Dhaka varies between 2,000 and 8,000 per day. Due to these high volumes, it is not possible for the staff at DAO Dhaka to assess the accuracy of the Bangladesh Bank debit scrolls in respect of either value or coding as compared to the supporting documentation.

3. For various reasons, the focus of attention at DAO Dhaka is currently placed on passing pension bills as opposed to preparing quality accounting information.

4. Working conditions at DAO Dhaka are very difficult and are not conducive to the governments focus on producing quality accounting data. For example, daily bank scrolls are to be maintained at the office for three years, as per Government Order. However, it was found that they are currently being stored for fifteen years, as there is a general fear of destroying any documentation. These bank scrolls are found in almost every office, with no possibility of identifying specific documentation that may be required.

Senior officers from the CGA office produced an internal report within the last year clearly identifying the staffing and accommodation problems at DAO Dhaka. This report has not been acted upon to date.

5. The District Accounts Officer in DAO Dhaka acknowledges that the office is unable to produce quality accounting information, given the limitations identified above. Information is being taken directly from the bank scrolls and entered into the Government Accounts, without any reconciliation or controls being exercised.

6. Morale at DAO Dhaka is understandably low and again, this has a major impact on the quality of accounts that are produced. DAO Dhaka concerns have not been addressed, despite the importance it holds in terms of transaction value.

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7 National Board of Revenue

7.1 Background

The National Board of Revenue (NBR) is the Government body entrusted with the assessment, collection and reconciliation of Income Tax, Customs and VAT. Approximately 85% of Government revenue is credited through the NBR, of which approximately 70% comes from Customs. The ability to reconcile between NBR, CGA and Bangladesh Bank data is therefore crucially important when the Government is aiming to produce quality accounting information.

Customs

Approximately 95% of Customs trade passes through the four main Customs Houses at Dhaka Airport, the Inland Container Depot (ICD), Chittagong Port and Benapole Border. These Customs Houses are all on-line with the Asycuda system, for which a simple process is followed:

The Customs Agent, acting on behalf of the concerned Importer lodges a ‘Bill of Entry’, describing the goods imported and this is entered onto the Asycuda system.

The system automatically calculates the various duties and charges due and these are printed onto the ‘Assessment Notice’.

If there is uplift in the reported value following a Customs assessment, the Asycuda system will recalculate the amounts due and hold the amended figures in its database.

When the Customs Agent presents the Assessment Notice to the Sonali Bank branch associated with the Customs House and pays the total amount due, the Assessment Notice is stamped and the payment challan given to the Agent.

Once payment is made in full to Sonali Bank, the goods in question may be released.

A daily printout of the Customs ‘Cash Day Book’ is sent to Treasury, the Customs Supervisor and Sonali Bank.

Sonali Bank compares the printout to their receipts figure and then signs and it, indicating agreement of the figures.

The remaining 5% of Customs revenue, obtained at many small border-crossing points, is entered onto the NBR books at Regional Income Tax offices.

Income Tax

Due to the high degree of tax evasion encountered, it has been necessary for the Government to deduct Income Tax at source for several types of transactions. These include deducting between 1% and 10% from various claims from contractors and suppliers to Government or public sector agencies, deducting Income Tax on imports

45


and interest earned on savings. Overall, more than 70% of Income Tax is collected at source by commercial banks and Government agencies other than NBR, with no involvement of the Income Tax Department.

The Research and Statistics Directorate of NBR is responsible for collecting income tax data for 18 income tax zones, each of which is headed by an Income Tax Commissioner. Each Commissioner is responsible for collecting data from the Deputy Commissioner of Taxes offices that report to them. There are 393 Deputy Commissioner of Taxes offices, each of which is responsible for an individual income tax circle. VAT is accounted for by NBR by means of 7 VAT Commissioners, using a similar process.

Income Tax receipts, which impact most strongly on CGA bank reconciliation, are treated in the following manner by NBR:

For all income tax collections for Dhaka, NBR officers from Tax Zone 1 initially collect the challans from DAO Dhaka approximately twice a week.

The challans are compared on an individual basis to the computer generated credit scrolls supplied by both Sonali Bank and Bangladesh Bank to the NBR.

The challans are then segregated according to zone and all zones except Zone 2 and Survey Zone are recorded on three computers, using a foxpro database, designed in 1995. The two zones excluded from data entry are done so on the basis of the large number of challans received.

After data entry has taken place, the number of challans for each zone and the date are recorded in individual registers for each zone. The same information is then recorded on the bundles of challans before the concerned officers of each zone collect them.

Each tax zone then distributes the challans to the concerned tax circle under their jurisdiction, where the details of each individual challan are recorded in Register Five.

At the end of each month, the tax circles report the monthly and cumulative totals for Register Five to the concerned Tax Commissioner who in turn reports the combined total to the NBR.

The same computer unit in Zone 1, which records challans, also receive statements from Bangladesh Bank for Interest on Securities. A separate Microsoft Access Database is maintained for this data.

Other income tax receipts, not recorded directly from challans are incorporated at the Tax Commissioners Office

The NBR is required to reconcile its monthly revenue figures with those recorded by the CGA in the Government accounts, the source documents of which are the challans received by DAO Daka.

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7.2 Observations

1. Eight months after the 2002–03 year-end, NBR is only able to provide a provisional figure for annual tax revenue. This figure of Taka 4372 Crore is Taka 510 Crore higher than the figures reported by CGA for the same period.

2. No action has been instigated by either the CGA office or NBR to address the discrepancies in reported figures. NBR officials state that they do reconcile their monthly figures with the CGA. This consists of both parties presenting their figures for the month in question, calculating the difference and stating that the figures are now reconciled. This does not form the basis of a reconciliation and should not be perceived as such.

3. Detailed information for the four main Customs Houses is readily available on the NBR Asycuda system. This includes the Monthly Cash Report, which details the 13-digit codes that Sonail Bank has coded the relevant receipts to for each location. This information could be invaluable to the CGA office in reconciling a significant proportion of the total revenue of Government in relation to the bank receipts, government accounts and NBR reported information.

The central Asycuda system is located in the building adjacent to the CGA office. It is assumed therefore that CGA officers, with appropriate management support if required, could easily obtain this detailed 13-digit code wise information and thereby develop the reconciliation at the concerned District offices and Sonali Bank branches.

4. Customs and Sonali Bank are not aware of the correct 13-digit codes required for each type of revenue received. This matter could have been easily resolved through improved communications between Customs, Sonali Bank and the CGA office. However, this lack of communication may have resulted in serious miscoding by Sonali Bank over recent years.

5. The CGA office does not appear to have been proactive in attempting a reconciliation between the Customs, Treasury and CGA data.

6. There appears to be no communication between DAO Dhaka officers and the NBR officer that collects challans from DAO Dhaka. This means that no agreement is reached as to the number or value of challans taken.

7. Reconciliation at the field level between NBR offices and local accounting offices is made difficult due to the different geographical areas covered by each. There is no correlation between tax zones and circles and the District and Upazilla regions as the income offices are located according to the demographics of the taxpayers. This is noticeable in the fact that DAO Dhaka accounts for taxes relating to 10 income tax zones and approximately 200 income tax circles. At the same time however, four circles reporting to Zone 3 alone lodge their receipts at district offices other than DAO Dhaka. This means that Zone 3 figures cannot be directly compared to DAO Dhaka.

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8. There is an urgent need to update and expand the computerisation at Zone 1. The current level of computerisation is not capable of recording all challans received from DAO Dhaka. The opportunity is therefore lost to carryout the fundamental reconciliation between the total figures on the accompanying daily bank scrolls and the challans recorded in the NBR system.

9. It is claimed that software limitations currently mean that the daily monetary total of challans being recorded on the NBR system for each zone cannot be calculated. This results in only the number of challans sent to each zone being recorded, which is of limited use to either party.

10. The tax zones do not appear to record the value of challans distributed to each circle. When the monthly information is transmitted back from the Register Five for each circle, this therefore is not compared to the sum of the batches distributed. There is a very high degree of reliance placed on the accuracy of information recorded in the tax circles. This reliance has led to a feeling that reconciliation of data is not required.

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The following table compares the data recorded on the NBR computer system (at tax zone 1) for tax zone 3 for the month of February 2004, against the information reported by each circle from Register Five for the same month.

(Circles where the collection is lodged outside of Dhaka and therefore are not entered onto the computer have been removed to allow a more realistic comparison.)

Zone 3 Circle Name Computer Data Recorded

(by Zone 1)

Zone 3 Reported via circle Register 5

Difference % Difference

Circle 23 38,123 490,339 -452,216 -1,186Circle 24 290,885 400,487 -109,602 -38Circle 25 446,483 446,472 11 0Circle 26 2,848,964 5,020,000 -2,171,036 -76Circle 27 29,310 31,530 -2,220 -8Circle 28 233,365 635,211 -401,846 -172Circle 30 109,608 506,476 -396,868 -362Circle 31 138,123 93,080 45,043 33Circle 32 394,133 38,670 355,463 90Circle 33 182,212 182,972 -760 0Circle 34 66,386 67,586 -1,200 -2Companies 07 2,226,213 10,453,426 -8,227,213 -370Companies 08 2,111,257 2,099,057 12,200 1Companies 09 7,404,730 8,306,300 -901,570 -12Contractor 05 2,595,203 2,504,071 91,132 4Contractor 06 3,145,350 3,146,335 -985 0Salaries 05 8,489,110 9,352,811 -863,701 -10Salaries 06 3,322,701 4,217,115 -894,414 -27

Total 34,072,156 47,991,938 -13,919,782 -41

Total monthly figures for Circles within Dhaka for Zone 3 may be compared for the period July 2003 – February 2004, from data supplied by Zones 1 & 3 as follows:

Month Computer Data Recorded

(by Zone 1)

Zone 3 Reported for

Dhaka Circles


July 26,655,483 25,367,454 1,288,029 5August 42,699,504 50,920,905 -8,221,401 -19September 108,957,077 116,151,415 -7,194,338 -7October 238,433,561 99,870,370 138,563,191 58November 57,648,043 85,088,659 -27,440,616 -48December 69,219,712 104,812,167 -35,592,455 -51January 53,995,172 50,195,077 3,800,095 7February 34,072,156 48,339,973 -14,267,817 -42

Total 631,680,708 580,746,020 50,934,688 8

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It may be seen that there are some very large variations between the figures reported by the Zone 3 Commissioner for each circle and those recorded on the Zone 1 computer system during the month of February 2004.

Similarly, the monthly total variations are very large, especially when considering that both sets of data are primarily from the same source documents, namely income tax challans received during the month.

It is clear therefore that the computer data maintained at Zone 1 is not being utilised for reconciliation processes and other basic reconciliation procedures are similarly not being carried out within the income sections.

One interesting point to note however is that for the cumulative figure from July 2003 to February 2004, the amount reported by the Commissioner of Taxes as per all Dhaka circles register 5s, is only 92% of the total amount recorded in the Zone 1 computer system for same period.

Contrary to the opinions of some officers in the CGA, that income tax data is often opaque, exaggerated and unreliable, the Commissioner of Taxes interviewed during the course of this work, was very open and transparent when information was requested. The source of all information requested was clearly explained and documentary evidence provided.

11. The current practice of setting strict monthly and annual tax collection targets for the NBR and individual zones and circles may be adding to the lack of trust in reported income tax figures. It is seen that where targets are not met, the target is often adjusted downwards, resulting in the reporting that targets are consistently attained or very nearly attained. There is clearly manipulation of figures between months to smooth the reported collections and to avoid targets being increased inappropriately, however no evidence was found while preparing this report that total figures are not sincerely reported. Manipulation of figures would however have a detrimental effect on any bank reconciliation efforts that incorporate the reported figures.

We were assured by the Tax Commissioner that monthly discrepancies do not affect the annual figures reported at the year end in June. It is not clear at this time what actions are taken to enable this assurance to be given.

12. There is a duplication of challan recording at both the Sonali and Bangladesh Banks and the NBR. It should be investigated whether the information recorded at the banks could be expanded to include the additional fields of tax zone and TIN number. If this were possible, a simple data transfer system would remove the current problems of data limitations at NBR and dramatically improve the possibility of reconciling receipts recorded through the bank and the corresponding data held at NBR.

13. There still remains a certain degree of discretion and potential manipulation of tax assessments received from NBR. Frequent adjustment of assessments may seriously undermine any future attempts to reconcile receipts through the bank to a database of assessments received from NBR.

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14. Challans used for payment of income tax assessments are, in many cases, completed by the members of the public themselves. It is therefore highly likely that incorrect bank account and 13-digit codes will be entered, limiting the CGA’s ability to reconcile data with the NBR.

15. There are many instances where the incorrect bank account has been credited by the local bank for tax receipts, as shown in Chapter 9 Ministry Wise BankAccounts, on page 62. Until there is an effective bridge table produced between Ministry codes and individual bank accounts, these mistakes will persist, limiting the CGA’s ability to reconcile its data to the specific bank account movements.

16. There is an individual bank account established for IRD, which is often confused with NBR revenue by local banks and members of the public. Bank account number 189 – NBR, is made up of specific bank accounts for each revenue type, yet the cumulative account is not blocked in all bank branches. The additional accounts, created for Income Tax, VAT and Import Duty etc, have not to date, been officially numbered. The resulting misclassification is found in most monthly accounts bundles examined.

17. There is clearly a dual system of classification currently operating between NBR and CGA that needs to be addressed before detailed reconciliation of revenues may be considered. An example of this may be seen when considering Supplementary Duty, which may be collected from either imports or domestic products. NBR classifies SD from import as a sub item under import duty and SD from local products under VAT. The CGA offices however have subdivisions of SD for import and local.

18. Tax deducted at source as a book adjustment through the CGA accounting network is currently not distinguishable in the accounts from tax collected through the bank. All tax is currently recorded under the function code of IRD and this has a serious impact on the CGA office’s ability to reconcile its reported tax revenue figures with those reported by Bangladesh Bank. This in turn reduces the confidence with which the MoF views the CGA data when comparing it to that of the NBR.

There is no standard approach for dealing with tax deducted at source by Government bodies. It is seen that some that lodge a cheque directly to the concerned revenue bank account, some send a cheque to the Income Tax authority causing a delay before lodgement while others simple deduct the amount at source and make no transfer to the NBR.

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8 CGA Reconciliation Procedures

8.1 Background

The Account Code provides no guidance on the correct procedures to be followed by the CGA when reconciling the Government accounts with the actual cash movement in Bangladesh Bank. The CGA Officer responsible for the Central Data Processing Unit (CDPU) has attempted to reconcile the movement in cash for each of the 469 accounting offices with the individual bank branch movement as reported by Bangladesh Bank up to the month of March 2003. The reconciliation has not been attempted since March 2003.

This reconciliation provides a basic control measure that should be achievable every month by CGA Officers. The local accounting offices record movement in the economic codes 8901 and 9901 for cash only upon receipts of debit or credit scrolls from the local bank. As shown in the diagram below, the source of financial information that feeds into the CGA accounts is the same that forms the foundation of the Bangladesh Bank monthly statement.

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DAO DAO DAO

Local Sonali Bank

Local Sonali Bank

Local Bangladesh Bank


CGA

Bangladesh Bank Head Office

Monthly movement reconciliation

Daily and Monthly Statements

Daily and Monthly Statements

Flow 1

Flow 2


8.2 Current reconciliation process

The basic layout of the monthly summary reconciliation certificate (as printed on 21/01/04 for this report) is shown below.

Certificate

This is to certify that the attached abstract of Accounts of the Government of Bangladesh for the month of March and year 2002-03 has been compiled in my office and signed by me on 21/01/04

General statement of accounts is given below:

Opening Balance: 7,37,06Bangladesh Bank deposit 7293,09,79Bangladesh Bank Deposit (Railway) -7285,72,72

7,37,07

Receipts of the current month:1. Consolidated Fund 3823,63,902. Public Accounts 4086,76,18TOTAL 7917,77,14

Expenditure of the current month:1. Consolidated Fund 4113,32,132. Public Accounts 3833,63,20

Closing Balance: -29,18,20Bangladesh Bank Deposit 7261,84,80Bangladesh Bank Deposit (Railway) -7291,02,99

-29,18,20

TOTAL 7917,77,14

It is certified that the closing balance of deposit in Bangladesh Bank as shown in the list of balances furnished by the Manager, Bangladesh Bank, Central Branch, Dhaka of Tk. 328188 has been reconciled.

The explanation of the difference of the amount, Tk. 620008 has been shown in the enclosure.

Balance as per Bangladesh Bank Cash Report

A/c No. 100 and other than 201 Tk. 7284,04,83A/c No. 201 Tk. -7251,22,95

Total - Tk. 32,81,88

Controller General of Accounts

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The March 2003 reconciliation spreadsheet prepared within CGA was analysed in detail and the following observations were made.

The layout of the spreadsheet is shown below.

Office of the Controller General of Accounts

Explanation of difference between cash balance of Bangladesh Bank and CGAYear: 2002-03 Month:

March

As per accounts Office As per Bangladesh Bank Status of difference of cash balance

Sl No.

Source

Code of

Acc. Off.

Name of District/Upaz

illa

Receipt

Payment

Difference

Receipt

Payment

Difference

Excess

debit /

Short credi

t

Short debit

/ Exce

ss credi

t1 2 3 4(2-30 5 6 7(5-6) 8(4-

7)9(4-7)

The column totals as per Accounts Office and Bangladesh Bank that appear on the final page, page 21 are as follows:

As per: Receipt Payment Movement

Accounts Office 35,92,44,13,079 36,26,93,38,696 -34,49,25,617Bangladesh Bank 14,53,93,32,213 22,42,68,72,699 -7,88,75,40,486

The column totals for the Status of difference of cash balances are as follows:

Excess debit / Short credit

Short debit / Excess credit

Total 9,04,53,72,723 1,50,27,57,854Difference of cash balance in current month 7,54,26,14,869

9,04,53,72,723 9,04,53,72,723

Other Balance 14,80,01,89,738

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Beneath these column total figures, appears the following ‘reconciliation’.

Opening Balance of difference of Cash balance (Debit): -6,92,93,86,869Difference of cash balance in current month (Debit): 7,25,75,74,869Closing Balance of difference of Cash balance (Debit): 32,81,88,000

8.3 Observations

1. The CGA office has not attempted bank reconciliation since March 2003. No action has been taken to date to address this critical lack of control.

2. The Government bank account has not, since Independence in 1971, been effectively reconciled. This has resulted in a generally accepted feeling that bank reconciliation will only be achievable by the introduction of wide scale computerisation. As a result, no serious and concerted effort has been made to do this.

Rather, the overall reconciliation attempt has been prepared as more of a procedural exercise, where the aim appears to be to show that any figures quoted can be balanced against each other, rather that an attempt to reconcile actual cash movement. The initial indication from interviewing key stakeholders involved in this process is that there is little belief that the bank can actually be reconciled under the current processes and therefore the required importance is not attached to the reconciliation attempt.

3. There is a serious misunderstanding of the figures reported on the spreadsheet. This is especially true for the ‘reconciliation’ figures at the end of the spreadsheet, which are incorrectly named and inconsistently calculated.

4. No satisfactory explanation could be provided for the introduction of a balancing item ‘Other Balance’ or to describe what it represents.

5. Within several lines of the column totals, two different figures are both stated as ‘Difference of cash balance in current month’, Tk 7,54,26,14,869 (000) and Tk 7,25,75,74,869 (000). No explanation is provided on the report for this change.

6. ‘Opening balance of difference of Cash balance’ is not correctly named. The actual opening balance of difference of cash balance is calculated by identifying the difference between the cash balances of the previous month as reported by CGA and Bangladesh Bank respectively. The correct figure for the month in question is actually Tk 61,32,29 (000). However, the figure stated on the report is the cumulative residual errors made in preparing previous months reconciliation spreadsheets and is of no benefit to the current months reconciliation.

7. ‘Closing balance of difference of cash balances’ is actually closing cash balance as reported by Bangladesh Bank.

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8. Movement as per Bangladesh Bank is not directly compared to the actual movement shown on the monthly bank statement. This has a major impact in light of observations 10 and 14.

9. All figures are in thousands of Taka, yet this is not stated anywhere on the report.

10. The cash inflows and outflows as per the accounts are generated directly from the CDPU system. The inflows and outflows for Sonali Bank branches are entered using the summary information on the monthly bank statement.

The 9 Bangladesh Bank branches are more difficult to calculate. The monthly statement received by the CGA Office does not summarise the overall cash inflow and outflow for each branch. Instead, a data input operator at the CDPU is required to calculate these figures by adding 156 figures for each branch, being receipts and payments for each of the 78 individual bank accounts. This amounts to 1404 individual entries that are clearly prone to error. Bangladesh Bank should be instructed with immediate effect to provide the receipt and payment figures for the nine branches as part of the standard statement.

Further difficulties arose in preparing the Bangladesh Bank branch figures for March 2003, as there was some confusion over whether the amounts appearing on the statement were net or gross figures.

11. Of the 469 offices assessed, there were significant differences in the figures for 26 offices and the Railway account as shown in the tables below.

Sonali Bank branch

Movement as per CDPU

Movement of Sonali Bank as

per CGA spreadsheet

Difference% Difference

Taka Taka TakaLohajang -3,902,792 -5,002,792 1,100,000 -28.18Singair -3,880,362 -3,920,367 40,005 -1.03Daulatpur -5,017,051 -5,037,771 20,720 -0.41Shariatpur Dist -24,763,570 -24,663,570 100,000 -0.40Noria -4,674,387 -4,695,584 21,197 -0.45Basail -4,546,568 -4,561,778 15,210 -0.33Netrokona Dist -45,017,153 -44,839,741 177,412 -0.39Nikli -1,548,058 -1,538,058 10,000 -0.65Naniarchar -3,595,900 -3,580,140 15,760 -0.44Panchhari -6,363,798 -6,343,975 19,823 -0.31Manikchhari -4,668,467 -4,539,353 129,114 -2.77Gurudaspur -4,123,391 -4,149,012 25,621 -0.62Dinajpur Dist -83,281,936 -82,781,936 500,000 -0.60Goinghat -3,305,758 -3,099,152 206,606 -6.25Boralekha -2,897,513 -2,837,137 60,376 -2.08Lohagora -9,531,997 -9,463,950 68,047 -0.71Chhattak 2,768,688 2,738,689 29,999 1.08Doarabazar -3,153,812 -3,138,309 15,503 -0.49

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Bangladesh Bank branch

Movement as per CDPU

Movement of Bangladesh Bank as per

CGA spreadsheet


Taka Taka TakaDhaka District 650,256,646 1,380,808,208 730,551,562 112.35Chittagong District 8,975,420,742 161,569,984 8,813,850,758 98.20Rajshahi District -245,191,804 71,672,004 316,863,808 -129.23Bogra District -251,278,474 -38,877,229 212,401,245 -84.53Rangpur District -34,070,890 95,108,147 129,179,037 -379.15Khulna District 137,380,197 162,504,459 25,124,262 18.29Barisal District -21,763,266 63,908,604 85,671,870 -393.65Sylhet District 254,793,857 93,226,781 161,567,076 63.41

Railway – FA & CAO -53,026,617 -120,072,425 67,045,808 -126.44

12. After the reconciliation report was produced identifying the above differences between the CGA accounts and Bangladesh Bank, CGA Officers took no further action.

13. Before the CGA became computerised, a similar report was produced manually at the CGA Office. Due to the limitations of operating a manual system, it was the accepted procedure to identify the differences between movement shown in the CGA accounts and Bangladesh Bank statement for the first ten or twelve accounts offices. After this small number of differences had been calculated, the remaining difference between total cash movement was simply identified as Other Balances. It was assumed at the time that if the same procedure had been carried out on all of the accounting offices, the total of the differences would equal the total difference between the two sources.

The introduction of computerisation now allows a complete analysis to be carried out on all 469 offices, and therefore the difference for each office to be calculated. It can be seen however on the extract of the March 2003 reconciliation spreadsheet, that the same policy of identifying Other Balances is still in operation. The entry of Other Balances indicates that the data entered onto the reconciliation spreadsheet has been entered incorrectly. The principal reason offered by the CGA Officers for the inclusion of Other Balances was that it is a residue from the difference in stated balances at Independence in 1971. This demonstrates a need for training at the CGA Office into the rudimentary principles of bank reconciliation.

14. Total movement in the Bangladesh Bank statement for the month of March 2003 was a reduction in cash of Taka 35,87,47 (thousand)

Total movement in the bank as per the reconciliation statement for March 2003 was a reduction in cash of Taka 7,88,75,40 (thousand)

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If these two figures had been compared directly on the final page of the reconciliation spreadsheet, errors relating to data input would have been more easily identifiable. The current template however does not compare these figures and therefore the errors in the spreadsheet itself were assumed to relate to the actual difference between the CGA accounts data and the Bangladesh Bank monthly statement.

15. The differences identified in the movement for accounts offices serviced by Bangladesh Bank branches has been explained above with the complexity of the receipts and payments figures supplied by Bangladesh Bank. The differences relating to Sonali Bank branches however required further investigation. An examination was made of the movement shown on the monthly bank statements sent from the local bank branches to the respective accounting offices, compared to the movement reported by each accounts office. For all offices examined, it was observed that the local accounts office correctly entered the cash movement according to the original monthly statement. This is in line with the CGA order that monthly accounts data should not be entered onto the CDPU system if it is inconsistent with the attached monthly bank statement.

For those branches sampled, Sonali bank was reporting a different figure for cash movement during the month on two separate bank statements.

Government Accounts branch of Sonali Bank was visited to obtain an explanation for the difference between the actual cash movement and the amount of cash that Sonali Bank received from Bangladesh Bank for UAO Panchari. After some investigation, it was found that Sonali Bank received an amended bank statement report, signed by both bank manager and UAO in May 2003. The subsequent adjustment of balance notification was received from Bangladesh Bank in December 2003.

16. While it is reassuring that Sonali Bank did adjust their figures under their own initiative, it is of concern that the local UAO office recorded the correct information within 15 days of month end, yet it took one and a half months for Sonali Bank to identify the required correction and eight months for Bangladesh bank to amend the balances.

17. The UAO was aware of the misreporting by Sonali Bank, yet CGA was not informed of it. Therefore, given the inability of CGA to reconcile the movement reported in each local office, no action was taken and Bangladesh Bank was also not informed.

18. A weakness exists due to the lack of reconciliation carried out between the cash disbursed by Sonali Bank (as reported by local accounting offices) and the amount reimbursed by Bangladesh Bank. While no evidence has been found in preparing this report that Sonali Bank have received any amounts for which disbursement was not made, it is possible that this may have happened.

CGA is the office that is ideally placed to carryout this reconciliation and immediate action should be taken to ensure that Public Funds are appropriately safeguarded.

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19. No evidence was found during this study to show that any reconciliation is carried out with Bangladesh Bank data during the preparation or data entry of Railway monthly accounts. The CGA office must carry out a full investigation into this issue.

20. The Central Reconciliation Unit has been compiling figures for cheques and bills for every District Office since December 2002. This information is compiled by the respective Divisional Controller of Accounts office and summary information sent to the CRU. To date, nothing has been done with this information and no comparison of the reported figures has been made with the data held by the CDPU.

When analysed, the information held for DCA Chittagong as at December 2003 presented the following findings.

Closing net balances of cheques and bills as at December 2003 were given by the DCA Chittagong office and CDPU (calculated as total movement from September 1999 – December 2003) as follows:

DistrictBalances as per CDPU

Balances as per DCA

ChittagongDifference

% Difference

Chittagong District -551,939,866 35,681,444 587,621,310 1,646.85Coxs Bazar District -28,843,556 2,021,041 30,864,597 1,527.16Rangamati District 89,373,544 3,440,070 -85,933,474 -2,498.02Bandarban District 14,839,688 1,521,042 -13,318,646 -875.63Khagrachori District -6,503,773 684,245 7,188,018 1,050.50Comilla District -104,589,148 11,962,395 116,551,543 974.32Chandpur District -37,104,645 4,563,985 41,668,630 912.99Brahmanbaria District 48,274,393 7,655,516 -40,618,877 -530.58Noakhali District -879,183 6,636,493 7,515,676 113.25Feni District -152,975,693 2,126,272 155,101,965 7,294.55Lakshmipur District 32,358,593 1,356,428 -31,002,165 -2,285.57

This table indicates a major discrepancy between the CDPU data, which is used in the preparation of the government’s accounts, and the actual value of outstanding cheques at any given time.

It is noteworthy that 7 out of 11 offices showed negative balances on the CDPU system. All outstanding cheques at year-end should have been cleared by September 1999, the date from which cumulative data was collected for the above analysis. Furthermore, as budget distribution delays payments for the initial months of any year, this highlights the potential for significant error in CDPU data.

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Monthly movements in Cheques and Bills for each District office in the month of December 2003 as given by DCA Chittagong and CDPU is as follows:

(Amounts in Taka)

DistrictCheques

issued as per CDPU

Cheques paid as per

CDPU

Cheques issued as per

DCA Chittagong

Cheques paid as per DCA Chittagong

Difference

Chittagong District 147,641,275 160,745,394 147,641,274 160,745,394 1Cox's Bazar District 44,784,820 47,940,558 44,784,820 47,940,558 0Rangamati District 37,496,506 36,030,591 37,496,507 36,030,591 -1Bandarban District 15,293,616 0 15,293,616 15,346,649 15,346,649Khagrachori District 25,100,867 26,969,461 25,100,867 26,969,461 0Comilla District 157,819,716 165,885,200 157,819,716 165,885,200 0Chandpur District 38,868,875 40,759,217 38,868,875 40,759,217 0Brahmanbaria District 45,685,358 40,678,786 45,685,358 40,678,786 0Noakhali District 43,510,632 42,539,906 43,510,631 42,539,906 1Feni District 34,559,816 35,827,360 34,559,815 35,827,360 1Lakshmipur District 23,311,559 24,873,241 23,311,559 24,873,241 0

21. It is not clear whether the DCA office obtained confirmation of the movements and balances from the District offices or simply based their return to the CRU on the monthly accounts data sent. No check has been carried out by the CRU into the reliability of the DCA office returns.

22. The simple comparison carried out in the preparation of this report, where only eleven offices were sampled for one month has identified an obvious example of miscoding. Again this is highlights the potential for miscoding within the CGA accounts data.

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9 Ministry Wise Bank Accounts

9.1 Observations

It is the intention of MoF to increase the financial management responsibility of line ministries over time. It is beneficial therefore that Bangladesh Bank and Sonali Bank currently maintains separate accounts for each Ministry. While it is the intention of MoF that eventually, each Ministry should be responsible for the control and reconciliation of their respective bank account, no CAOs interviewed were aware of this intention. CAOs currently do not take responsibility for the control, reconciliation or maintenance of their respective bank account and do not consider that they have the resources, skills or information required to do so.

It was found that Bangladesh bank is currently sending monthly statements to only a limited number of CAO offices. This may explain why many CAOs are not willing to be held responsible for the activities taking place in their individual bank accounts, particularly as they are actually controlled and operated by others. The monthly statement produced by Bangladesh Bank contains the names of all offices that are to receive a copy of the statement. Only the original 21 CAO offices are listed and therefore it is clear that the source information is simply not available for the newly created 30 CAOs. No member of staff at CGA or any CAO has addressed this issue and the resulting lack of responsibility has, to date, not been seen as a key issue at CGA.

The CGA Office in Dhaka is also currently unable to reconcile these individual accounts to the transactions reported through the accounting offices for each Ministry. No such reconciliation has been attempted to date by any Government unit.

The original premise upon which these additional bank accounts were introduced was that the cash movement reported by Bangladesh Bank for each Ministry would give a more accurate reflection of the actual receipts and expenditure for each Ministry than the CGA accounts data. The evidence collected in the preparation of this report suggests that this is not currently the case.

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An examination of a small sample of consolidated monthly accounts bundles from District and Upazilla accounts offices for the month of March 2003 identified the following errors.

Accounting Office Findings

DAO Kishoreganj Income Tax and VAT had been wrongly allocated by the local Sonali Bank to Bank Account No. 137 – Local Government Division

UAO Naria All receipts and revenues have been allocated by the local Sonali Bank to Bank Account No. 215 – Public Account Others.

UAO Panchari The local Sonali Bank included internal sub-divisions of Bank Accounts that are not recognised by Bangladesh Bank, namely Bank Account Nos. 186, 187, 188. This is an internal coding system used within Sonali Bank. The district officials have never questioned the inclusion of these additional accounts.

DAO Dinapur The local bank allocated Income Tax and VAT together to Bank Account No. 189 – NBR, despite the separate columns identifying each type of revenue on the statement. The confusion surrounding revenue coding is exacerbated by some revenue receipts being coded to Bank Account No. 111 – IRD.

DAO Dhaka The spreadsheet included as annex D clearly shows that the District Accounts Office in Dhaka does not consider the Bank Account allocation when receiving, reconciling or recording daily or monthly receipts information from Bangladesh Bank. Payments cannot be reconciled as CAO offices record the expenditure in their accounts and DAO Dhaka can only record these cheque payments under the generic Public Account code ‘Cheques and Bills’. The District Accounts Officer has written to the CGA stating that the DAO Dhaka office is currently unable to provide an effective accounting function. The severe limitations under which DAO Dhaka is operating are resulting in highly significant lack of controls or reconciliation at one of the key government accounts offices. Given that DAO Dhaka is the office responsible for coding and reconciling the receipts for the Presidency region of Dhaka, which accounts for approximately 34% of all receipts, this will inevitably significantly undermine the ability of the CGA office to reconcile monthly or annual accounts back to the individual bank accounts, or even individual function codes.

It was found to be the case that every bundle examined showed misallocation between individual bank accounts.

This indicates that training is urgently required for bank officials operating in connection with Government accounts.

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An in-depth examination of the 78 bank accounts maintained at DAO Dhaka was also carried out to assess the practicality of reconciling these balances in an individual accounts office against the unreconciled balances taken from the monthly accounts. With the introduction of many new bank accounts in September 2002, combined with procedural weaknesses, the reconciliation between CGA Ministry accounts data and individual bank accounts for the financial year 2002-03 has not been achieved.

The same study was carried out for the single month of March 2003. As can be seen in annex D, the reconciliation was not achieved, but did provide a general approximation between the movement in CGA accounts and individual bank accounts.

There are several key reasons that give rise to the difficulty in reconciliation, even at a local accounts office level:

A. Misallocation by bank officials

The degree of misallocation on bank statements is highlighted above where every monthly accounts bundle examined showed cases of misallocation. In many cases, the misallocation involved inevitable codes that should have been used, or unusual codes where the inclusion of data would be considered noteworthy. Accounts officials should have identified these instances during the preparation of monthly accounts.

B. Accounting for Ministry Expenditure Gross

The accounting function at CGA accounts offices is more focused on fund management against budget allocation than cash management. As detailed in the local accounting office section (page 26), District and Upazilla accounts offices record vouchers on registers DAO 4 or UAO 4 respectively.

When a specific Ministry voucher is passed, the gross amount is charged against the expense codes under that Ministry’s functional code. Any deductions or recoveries are then charged against non-Ministry specific functional codes such as GPF, Loans and Advances etc. The net value, being gross expenses adjusted for deductions or recoveries is then charged to economic code 8616 – Cheques and Bills. This is the amount that the resulting cheque will be prepared for, which is different than the amount charged to the respective Ministry functional code. This severely complicates any attempt to reconcile between the charge against a specific function code and the movement in the respective Ministry bank account.

C. Cheques and Bills

Register DAO 4 is used in District accounts offices to prepare accounts on an accruals basis for vouchers passed by individual Ministries. In Upazilla accounts offices the accounting entry is only made when passed bills have been actually been paid by the local bank.

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The accounting entry at a District Office is as follows:

Debit: Relevant expenditure codes Credit: Cheques and Bills

The entry against the expenditure codes can be linked directly to the respective Ministry by means of the functional code used. The movement in cheques and bills is indicative of outstanding cheques not yet cashed, but is a non-Ministry specific functional code.

When the payment is reported to District Accounts Offices by means of the bank debit scroll, the office records the transaction by the following entry:

Debit: Cheques and BillsCredit: Cash

These entries cannot be tagged to specific Ministries as they are entered under common functional codes in the Public Account.

When an analysis is carried out to reconcile functional code expenditure to movement in a specific Ministry bank account, cheques issued during the previous two months will pass through the bank, yet be coded to Cheques and Bills.

As neither the opening balance nor movement during the month of outstanding cheques can be disaggregated into specific Ministries, it is not possible to reconcile cheques cashed for individual Ministries. It should however be possible to carry out this reconciliation if we consider total movement in all bank accounts.

D. Departmental Ministries

As examined on page 39, Departmental Ministries have the authority to issue their own cheques outside of the CGA pre-audit structure. These payments are only accounted for at District offices when the daily debit scroll is received from the local bank. The Drawing and Disbursement Officers concerned report their expenditure to the concerned CAO who will account for the expenditure in the following manner:

Debit: Expenditure codeCredit: Remittance

When the cheque is paid and the District Accounts Office receives the debit scroll, the DAO Officers make the following entry in the accounts:

Debit: RemittanceCredit: Cash

Receipts lodged by the Drawing and Disbursement Officers are similarly accounted for through the above remittance procedure.

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The CAO will record receipts by:

Debit: RemittanceCredit: Income

Upon receipt of the credit scroll, the DAO Officers will record:

Debit: CashCredit: Remittance

Unlike Cheques and Bills, Remittance codes are specific to the respective Ministries. The opportunity therefore should exist to reconcile the Departmental Ministry remittance codes. However, the following was found to be the case when two Departmental CAOs were interviewed.

i. CAO Ministry of Communications

The CAO Office is carrying out no reconciliation. It was found that supporting documentation (paid cheques and challans) supplied by the local accounting offices through the CGA was returned as it was not considered to possible for the CAO office to carry out the reconciliation.

ii. CAO Public Works

Primary steps have been taken by the CAO office to reconcile the monthly movement in Remittance. This reconciliation was undertaken on the initiative of CAO Officers, not under Government Order.

There are prescribed orders from the CGA for CAO Offices in relation to the reconciliation of Remittance. However, there are no instructions on procedures to be followed or on feedback required. This lack of reconciliation of Remittance codes is widely known and is therefore seen as a significant weakness. Given the access to bank funds that Drawing and Disbursement Officers currently have, it is essential that a thorough reconciliation be carried out between the accounts submitted to the respective CAO and the actual cash movement in the bank.

The Remittance codes are clearly vulnerable to abuse, which may facilitate inappropriate actions or defalcation of Government money.

When the above four reasons are considered together, it is clear that reconciling individual Ministry bank accounts is currently not achievable.

It is generally viewed as unrealistic to expect the CGA or CAOs based in Dhaka to monitor and take responsibility for an account that is perforated by Upazilla Accounts Offices, District Accounts Offices, Divisional Controller of Accounts Offices, the CGA Office, Drawing and Disbursement Officers (DDO) and members of the General Public.

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Before this would be considered appropriate, there are wider reconciliation procedures that need to be implemented and proven to be sustainable.

Monthly reconciliation between DDOs and the local treasury accounting office is a fundamental reconciliation that is currently not undertaken. The amounts for expenditure made or revenue received for each Ministry are not currently reconciled, in most cases, to the accounting records generated at DAO and UAO offices. Until this takes place in a complete and timely manner, it is not appropriate to consider attempting to reconcile the Ministry bank account receipts and payments for each accounting office to the details recorded by the local banks.

The FMRP project is currently attempting to implement such a reconciliation procedure between DDOs and DAO and UAO offices. This is to be achieved by designing and monitoring a communication channel between DAO/UAO, CGA, CAO and the Ministry itself. Once the CGA office is confident that the accounting records being compiled throughout its DAO and UAO offices conform with the individual Ministries data, it will then be in a position to examine the relationship between the accounts data and individual bank account balances as reported by Bangladesh Bank.

The proposed reconciliation system is outlined in the following diagram:

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District / Upazilla Office

DDO 1

DDO 3

Monthly reconciliation

Record maintained of defaulting DDOs

Divisional Controller of Accounts

Forwarded with accounts on a quarterly basis

Consolidated on system and information sent to

respective CAO via CGA

Chief Accounts Office

Concerned Ministry

Defaulting DDO names communicated to DG

Instruction to reconcile to be issued

DDO 1


Step 1. Drawing and Disbursement Officers are to reconcile their accounts with the gross and net figures appearing in the DAO 4 register and register DAO 15A. The DDO net figures can be obtained from the accumulated Bill Extracts for the month in question.

Step 2. District and Upazilla Officers maintain a record of DDOs that have not reconciled during the quarter. This is forwarded to the Divisional Controller of Accounts Office.

Step 3. The DCA office will record the data on a database and forward it to the CGA where it will be compiled and distributed to the concerned CAOs.

Step 4. Each CAO will communicate this information to the Ministry, which will have responsibility for ensuring that any defaulting DDOs reconcile their accounts with the local accounting offices.

The success and sustainability of this reconciliation procedure will largely determine the feasibility for reconciling the individual bank accounts maintained for each Ministry. If this is not found to be achievable, the current system of maintaining individual bank accounts for each Ministry may need to be re-examined.

9.2 Proposals for moving forward with Ministry accounts

Assuming MoF maintain the current Ministry wise focus and determine that the reconciliation of each individual Ministry is required, incorporating Ministry, CGA and Bangladesh Bank data, some changes will be required. These are briefly outlined below:

The bank accounts recording Ministry and Divisions transactions, maintained by Bangladesh Bank must be rationalised into Ministry and Division facing accounts only, removing any accounts where multi-ministry cash flow is allocated. This will result in all cash movements being directly attributable to a specific Ministry or Division, in line with the current functional coding structure in the chart of accounts. The required 52 accounts are listed as annex E. Therefore, single figures for net cash inflow and outflow will be easily identifiable for each Ministry or Division without the confusion introduced by function related accounts such as pensions or GPF.

The problem of misallocation by bank officials must be overcome. This may be achieved by introducing a comprehensive bridge table to clearly instruct bank officials as to the correct bank account to be used for every 13-digit Government code. This should not be a complex or time-consuming exercise, but should dramatically reduce the instances of misallocation. Unless bank officials receive sufficient training to improve the current high levels of misallocation, the complications introduced by rectifying identified cases of misallocation could have a seriously detrimental effect

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on even the basic reconciliation of total cash inflow and outflow currently achieved at accounting offices.

The responsibility on local accounting offices to reconcile the detailed information for each daily transaction accurately to the supporting documentation must be increased. All receipts and payments must be checked to ensure that the correct function code, bank account and amount are reported. Furthermore, remedial action must be instigated immediately to rectify any instances of misallocation.

Only after these have been successful introduced is it possible to move towards a more detailed reconciliation to accounting records. Two proposals for doing so are detailed below:

9.2.1 Manual reconciliation with minor amendment to CGA coding

The current system of accounting for the expenditure of each Ministry through the use of the DAO 4 register should be amended only slightly. When preparing the monthly payment schedules each month, a manual record should be taken of the total monthly non-cash deductions, recoveries and book adjustments recorded under each function code. The total gross expenditure is then to be amended to incorporate this figure and the resulting net expenditure agreed with the respective DDO. This agreed figure would then be recorded manually as the value of cheques issued for each Ministry.

Cheques and Bills must be able to be tagged to specific Ministries or Divisions. This proposal may cause additional difficulties for local accounting offices, as it will introduce a manual system of recording outstanding cheques for each Ministry or Division using the DAO 15, DAO 16 and DAO 17 model. Register DAO 15A should be amended slightly to incorporate the recording of paid cheques for each Ministry or Division in line with the current ticking procedure on DAO 15 and DAO 17. In this way, a record will be available of opening balance of outstanding cheques, cheques issued, cheques cashed and closing balance of outstanding cheques for each Ministry or Division. This will increase the amount of paperwork that accounting offices are required to carryout but should provide the required information in an easily reconcilable manner. This could also incorporate the utilisation of currently available function codes for the Cheques and Bills of each Ministry or Division.

Remittance codes for every Departmental Ministry must be comprehensively reconciled every month and signed agreement of the figures obtained from the respective DDOs. The current balances in Remittance accounts should therefore be reconciled, under or over stated balances transferred to suspense pending further investigation and very strict monitoring of monthly movement maintained centrally at the CGA office.

The current economic code for remittance should be separated into two distinguishable codes, one solely for Departmental Cheques and the other for Departmental Receipts. This measure will remove a great deal of confusion that

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currently surrounds the remittance balances and will enable these codes to be more easily reconciled.

When all of these issues have been successfully addressed, only then can the proposed reconciliation between DDOs and local accounting offices be expanded. When the gross, net and outstanding cheques information, gained manually, is fed through to the concerned CAO office, the CAO will be in a position to reconcile these figures with the Ministry or Division internal data flow from DDOs. Thereafter, this information should be directly compared and reconciled to the individual bank accounts operated at each bank branch. Differences identified should be investigated and amended.

The figures that could be agreed for each Ministry or Division at either a local or national level would be:

Gross Expenditure AAA (From CDPU data)Less Deductions BBB (Manually recorded)Book adjustments CCC (Manually recorded)Net Cash Payments XXX

As per Bangladesh Bank XXX (From bank statements)

Gross Revenue DDD (From CDPU data)Less Recoveries EEE (Manually recorded)Book Adjustments FFF (Manually recorded)Net Cash Receipts YYY

As per Bangladesh Bank YYY (From bank statements)

This proposal would be the least disruptive way to achieve this reconciliation within the CGA office. However, it is based on the manual recording and communication of information for deductions, outstanding cheques etc and is therefore prone to errors. It would be confusing for accounting staff to operate and the information provided may not carry the confidence of the users of the accounts. Furthermore, it depends on a concerted and co-ordinated effort from all personnel involved and may therefore not be the ideal approach to be taken at this time.

9.2.2 Comprehensive reconciliation through more significant CGA coding changes

If the MoF and CGA are prepared to develop the manual idea in 9.2.1 above further, this may lead to a more realistic and sustainable way forward. Where the current chart of accounts is unable to provide the information required and the bank accounts maintained do not lend themselves to reconciling all transactions on a Ministry or Division basis, it is appropriate to consider amendments that enable the CDPU data held to be directly reconciled against the bank statements.

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It is found that further benefits would be available if all transactions, including all Public Account transactions were to be functionalised to the relevant Ministry or Division. This would mean that all deductions and recoveries and Bangladesh Bank deposit transactions and balances could be directly allocated to the concerned Ministry or Division by means of the data held in the CDPU. These transactions are effectively ‘lost’ under the current system of generic functional coding. The responsibility for each function will remain unchanged, however, the accounting information available will be more detailed and valuable.

In line with this measure, the bank accounts held with Bangladesh Bank could be restructured to ensure that all transactions could be allocated to specific Ministries or Divisions, rather than separating the cash movements between Ministry or Division specific and generic accounts. If this were to take place, the reconciliation of individual bank account movements with the CGA data for each office would be attainable.

The use of register DAO 4 means that the current accounting procedures allocate the gross expenditure for a transaction to the Ministry or Division concerned. This function code is entered at the top of the register. The fields used to record gross on the register DAO 4 are filled below.

Legal & Functional Code

Token No &

date

Name of

Payee

Date of

payment


Gross payme

ntsDr.



ries

Net payment/

cheque

Total

Cr.

Pay

of

Off

icer

4501

Pay

of

Est

t 4

601

Hou

se r

ent

4705

.

Med

ical

4717

Fur

nitu

re68

21

A

GP

F81

01

B.F

8241

G.I

.82

46

HB

adv

ance

3901

Inte

rest

on

loan

VA

T

BC

(A—B)

8616

D(B+C)

Monthly

total


However, when non-cash deductions are made, these are recorded under separate columns, the totals of which are coded to a single function code that is different than that of the gross expenditure, as filled below.

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Token No &

date

Name of

Payee

Date of

payment


Gross payme

ntsDr.



ries

Net payment/

cheque

Total

Cr.

Pay

of

Off

icer

4501

Pay

of

Est

t 4

601

Hou

se r

ent

4705

.

Med

ical

4717

Fur

nitu

re68

21

A

GP

F81

01

B.F

8241

G.I

.82

46

HB

adv

ance

3901

Inte

rest

on

loan

VA

T

BC

(A—B)

8616

D(B+C)

Monthly

total


If all non-cash deductions or recoveries were simply coded to the same function code as the original transaction, this would provide a traceable Ministry or Division wise connection between the gross expenditure, deductions or recoveries and net cheques issued. This will simplify the work carried out at month end as the office will no longer be required to separate the deductions into distinct function codes, but can instead simply complete the month-end schedules directly from the DAO 4 register.

In turn, it should be possible for the local treasury accounting office to agree with the concerned DDO, by means of DAO 4, the gross and net expenditure for the month. The resulting figure will represent the amount of cheques issued during the month for the concerned Ministry or Division, as indicated by the newly functionalised cheques and bills code.

Confusion may arise when it is considered that currently, the same economic codes are used for cash and non-cash transactions such as GPF or Income Tax, where there are deductions at source and cash lodgements. To resolve this issue, offices could be instructed that any non-cash deductions are to be coded in line with the functional code of the original transaction, i.e. the function code at the top of the DAO 4 register. However, cash lodgements should be coded to the Ministry or Division that is responsible for the operation of that particular role and lodged into that office’s bank account, i.e. to IRD for income tax lodgements.

The different treatment to be used for these transactions is explained below:

a. Where a Ministry of Health employee submits a pay bill where there is a non-cash deduction made for GPF.

In this case, the local treasury accounting office should complete the DAO 4 register and code both the gross pay and deduction to the function code of the Ministry of Health. When the cheque is cashed through the local bank, this should be allocated to the bank account of the Ministry of Health.

b. Where a Ministry of Health employee lodges cash into the bank to supplement their GPF balance.

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In this case, the bank should initially allocate the lodgement to the bank account of the C&AG. When the local treasury accounting office receives bank debit scroll, they should code the lodgement under the function code of the C&AG, as this office is responsible for the overall operation of the GPF.

Accounting at local treasury accounting offices should be carried out on a Ministry or Division wise basis. Separate registers should be maintained for each Ministry and Division and monthly accounts should be prepared on this basis. There should only be a minor increase in work for the officers at the accounting office as the functionalised Public Account codes are easily recorded directly from the DAO 4 register.

Accounting on a daily basis must be enforced, with the individual bank account movements recorded on a re-designed DAO 1 register and reconciled with the supporting documentation provided by the bank. It is at this stage that the accounting officers must ensure that the supporting documentation allocated by the bank against a specific Ministry or Division account does relate to the Ministry or Division stated and that any errors identified be amended by the bank immediately.

At month end, the office should reconcile the monthly bank statement against the totals recorded on the DAO 1 registers maintained for each Ministry or Division. This should ensure that the individual movements reported for each bank account are accurately reported on the monthly statement.

A separate monthly account should be prepared for each Ministry and Division, accompanied by a legal code summary sheet which should be supported by the appropriate schedules for Consolidated Fund and Public Account receipts and payments and may be reconciled with the appropriate bank account movement stated on the monthly bank statement

The end result of these measures should be that the following reconciliation is achievable, directly from the accounts data, for all Ministries and Divisions at both a local and national level.

Gross Expenditure Gross ReceiptsLess Deductions at source Less Deductions at sourceLess Movement in Departmental cheques Less Movement in Departmental ReceiptsLess Movement in DAO cheques . .Equals Net cash outflow Equals Net cash inflowCash outflow as per bank Cash inflow as per bank

If Departmental Ministries are provided with a computerised reconciliation system to enable outstanding departmental cheques to be reconciled, the data held at the CDPU will be valuable for another reconciliation. The value of departmental cheques issued, as recorded by the CAO may be compared to the value of departmental cheques cashed, as reported by the local treasury accounting offices. The movement in the balance of departmental cheques outstanding may then be reconciled with the list of outstanding cheques maintained by the CAO office.

The calculation of non-cash transactions may be achieved through either the identification of individual economic codes or alternatively through the introduction of

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separate legal codes. The optimal procedure should be clearly identified during piloting exercises to be carried out within the FMRP project.

The measures highlighted above show that it is a realistic aim of the CGA to tie together the Ministry and Division accounts, CGA accounts and Bangladesh Bank statements. This will not be achieved instantly, but should in time clearly demonstrate that the accounts produced by the CGA may be relied on with more confidence than has previously been the case.

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10 Future Developments

The systems and procedures found throughout Government and private enterprise in Bangladesh have been developing and changing at a dramatic pace over recent years. This trend will inevitably continue with a resulting impact on the bank reconciliation processes within the CGA office. The following issues may be seen at this time to be the most influential in this regard and to this end a brief description and impact assessment of each follows:

10.1 Bangladesh Bank

The World Bank has approved a significant project entitled the Central Bank Strengthening Project. A World Bank press release on June 19th 2003 stated that,

“ US$ 37 million was approved for a Central Bank Strengthening Project which will help the Bangladesh Bank more effectively perform its essential role of regulator and supervisor for the country’s banks, as well as the conduct of Bangladesh’s monetary policy.Recognizing the need to help stem the continuing and significant problem of poor governance, which is perpetuating a “default culture” within Bangladesh’s banking system, the Government requested the World Bank to assist in the reform and restructuring of Bangladesh Bank. Bangladesh Bank worked closely with the World Bank on design and will also implement the project which will focus on its functional reorganization, automation and modernization. It will undertake human resource development, strengthening of the legal framework, and building capacity for more effective regulation, supervision and research. It is envisaged that, at the end of the project period, a strong and modern Bangladesh Bank would not only be able to monitor and supervise all financial institutions more effectively, but would also lead the design and implementation of a medium to long-term reform program for achieving a sound and efficient financial system in Bangladesh. The total project cost is US$ 46.13 million of which IDA will provide US$37 million and the Government will provide US$9.13 million.”

The impact of this project for CGA bank reconciliation is not seen as significant. The recording of accurate and timely financing information may improve, however as stated previously, the information required by Government is currently available, although not actively sought after by Government.

The computerisation of the main Bangladesh Bank branches will also have a limited impact on the current processes. Bangladesh Bank, like Sonali Bank currently prepares a separate credit scroll for all NBR receipt challans and prepares an electronic listing of cashed cheques information for the CRU. Although the speed of information provision may improve as a result of this project, it is unlikely to lead to any dramatic change of proposed reconciliation processes.

The most significant improvement expected at the end of this project from the Governments reconciliation perspective is the move away from manual record keeping at Bangladesh Bank to a fully computerised one. This should improve the quality of information provided to the CGA office, but any controls introduced by CGA under the current manual system will still be required in future.

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10.2 Sonali Bank

Sonali Bank is currently in the process of computerising 62 Principal and Regional branches, including all of their Dhaka branches, with the target date of April 2004. In addition, over the coming three years this roll out should be continued to result in approximately 300 branches in total. While Sonali Bank has over 1,100 branches throughout the country, there are currently no plans to extend this programme in the near future to incorporate all branches.

Where there are computerised and non-computerised Sonali Bank branches serving a District Accounts Office, the incomplete information provided will be of little use in any reconciliation processes. Furthermore, it is unclear whether the realistic aim of Sonali Bank in the short term is that detailed or only consolidated Government Account wise receipt and payment data from each District will be sent to the Head Office. The desired detailed information offering the opportunity to reconcile actual cheques cashed, as is the case in Dhaka, or challans received is therefore not seen as a possibility in the near future.

As with Bangladesh Bank, there may be useful developments resulting from this initiative in coming years and as such, the CGA office should regularly discuss the developments and opportunities with each bank.

10.3 National Board of Revenue

There is currently a project in the Large Taxpayer Unit (LTU) of NBR funded by the Department for International Development (DfID). The aim of this project is to pilot an improved and computerised income tax collection, monitoring and reconciliation unit. There have been several attempts previously to computerise the assessment and receipts of income tax and these have, to date, proved difficult to implement successfully. It is the considered opinion of this report that the CGA office should not consider amending any reconciliation procedures in anticipation of developments arising out of this project. This does not in any way assume that the pilot will not be successful, but is a realistic assessment of the time and resources required to ensure confidence in the figures produced over coming years and that the LTU accounts for approximately 1/3 of income tax not collected at source.

There appear to be no other plans to further computerise any other areas of NBR operations in the short term. This means that while CGA may be able to exert some influence in implementing some improvements and expansion of the current Zone 1 data collection systems, there is likely to be little significant impact on bank reconciliation arising from new developments in NBR in the coming years. As stated previously, there are currently significant opportunities for reconciliation through the customs projects within NBR that should be utilised by the CGA office immediately.

The CGA office should closely monitor and discuss any future developments in NBR to identify possibilities presented for improved reconciliation.

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10.4 Controller General of Accounts

Following the success of the RIBEC project in introducing a computerised consolidation system at CGA and improved and standardised accounting procedures throughout many accounting offices, the FMRP project is aiming to take this progress to the next logical level. The most significant impact on bank reconciliation will inevitably come from the planned systems developments in both the medium and longer terms.

The piloting, implementation and roll out of Transaction Accounting through local accounting offices should dramatically improve the quality and detail of information relating to bank movement for each individual office where the system is introduced. This will in turn lead to major improvements in the quality of bank reconciliation that may be carried out, including the possibility of system operated bank reconciliation at a local level.

The longer-term aim of introducing an Integrated Financial Management Information System throughout Government will totally revolutionise the bank reconciliation procedures at CGA. This will prove to be immensely beneficial in the long term, but until basic manual reconciliation is achieved, it will be difficult to position the financial operations of Government in such a way to accommodate the improved systems. It is essential therefore that Government address the current reconciliation problems immediately, so that any future systems adopted are given the opportunity to succeed.

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11 Recommendations

The following recommendations have been considered with both a short and medium-term perspective. These should be considered by key stakeholders and agreement reached as to the most appropriate recommendations to be adopted. Recommendations will be followed up in future years of FMRP to assess progress and review outcomes.

11.1 Short Term Recommendations

1. The MoF and CGA offices should ensure that all documents received from Bangladesh Bank clearly explain the information actually contained within them. The title of ‘Bank Statement’ or ‘Bank Balance’ must be prudently restricted to those documents that represent actual cash balances on a stated date.

2. The CGA office should establish a high level working group incorporating MoF and CGA Officers on the Government side and Bangladesh Bank and Sonali Bank representatives. This working group must establish the information requirements of Government and detail the status and suitability of all information currently provided.

3. Training should be provided to Ministry of Finance and Controller General of Accounts Officers and Staff into the contents and implications of the various documents currently received from Bangladesh Bank.

4. An independent Banking Unit should be established within the CGA and should be totally outside of the control of the CDPU. This unit should establish a communication channel with the Government Accounts Department at Bangladesh Bank. All daily information received from GAD relating to financial data not reported through UAO, DAO or DCA offices, except that relating to Treasury Bills and Ways & Means should be recorded in a register and distributed to the concerned CAOs. Information relating to the movement in Treasury Bills and Ways & Means Advances should be recorded directly by the Banking Unit.

5. The Banking Unit should reconcile its monthly figures with Bangladesh Bank and ensure that these are accurately entered onto the CDPU system within a few days of month end.

6. The CRU should be upgraded to become a fully independent Central Reconciliation Unit, not limited to the current CRU operations. This unit must be given sufficient resources, authority and support from the CGA to enable it to carry out all central reconciliation procedures required. The Central Reconciliation Unit Officers should be trained in the specific reconciliation procedures required and given general accountancy training to enable them to fully understand the importance, consequence and general principles of bank reconciliation.

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7. A sustainable and comprehensive reconciliation should be carried out by the CRU for total monthly cash movement at each of the 469 treasury accounting offices and direct transactions from GAD. The same reconciliation spreadsheet, which was used for previous attempts, should be slightly amended to clearly show the cash movement as per the actual bank statement as a separate figure that may be compared on the spreadsheet to the calculated movement. The following table provides a simple format for the required calculation. The reconciliation of differences relating to individual accounting offices should only proceed once:

a) The total net cash movement as per Bangladesh Bank calculated on the spreadsheet equals that taken from the bank statement.

b) The total net cash movement as per CGA calculated on the spreadsheet equals that taken from the table below.

c) The total difference in net movement between CGA data and Bangladesh Bank data calculated on the reconciliation spreadsheet (currently titled as ‘Difference of cash balance in current month’) equals the difference calculated in the table.

Opening Balance

Receipts Payments Net Movement

Closing Balance

As per Bangladesh Bank Statement (a)As per CGA data (b)

Difference (c)

The current confusion surrounding the reconciliation terminology on the spreadsheet, which is resulting in inappropriate figures being incorporated in to the reconciliation, should be removed and more easily understood wording used instead.

FMRP should assist in this reconciliation by providing guidance and training to the officers responsible.

The reconciliation of cash movement in individual bank accounts is addressed in recommendation 21.

8. The CGA should sign all monthly accounts prepared only upon the accurate completion of a genuine bank reconciliation. This would ensure that all CGA employees saw the bank reconciliation as a fundamental control mechanism and this would greatly improve the prospects for future reconciliations.

9. The CGA office should carry out a full investigation into the Railways accounts preparation and bank reconciliation procedures. Action must be taken on the findings of this investigation.

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10. The CRU should be adequately supported by the CGA in carrying out the current operation of CAO outstanding cheques reconciliation. CAOs must be compelled by the CGA to co-operate with amending mismatches identified in the monthly reports and with complying with the procedural requirements of balancing outstanding cheques and Cheques and Bills as per the monthly accounts.

11. The duties and responsibilities of the Central Data Processing Unit should be strictly confined to the consolidation of monthly data. Other than to correct data input errors, this unit should not make any amendments to data or journal entries into the accounts without the authorisation of a senior officer responsible for the affected source data. Any journals entered centrally must be recorded on the prescribed journal forms and maintained for inspection at a later date.

12. The CGA office should contact both Bangladesh Bank and Sonali Bank to ensure that all bank branches reporting to local accounting offices do so within the required time and to the required standard. This means that daily scrolls are received on a daily basis, with sufficient time to prepare quality monthly accounts and that supporting documentation is accurately recorded and provided in the optimal order to assist the local accounting office to fulfil its reconciliation obligations. This should be monitored by accounting offices and persistently late submissions escalated through the CGA hierarchy.

13. When there is confidence in the total cash and financing information entering the Governments accounts by accurate reconciliation of monthly movements, the actual balances for cash held and Treasury Bills and Ways & Means outstanding claims should be calculated. The differences between stated balances in the accounts and actual balances should be written off, either directly to the Consolidated Fund, or in the short-term to suspense in the Governments Accounts, awaiting a possible retrospective reconciliation. The CGA office should be given a definite time period of one year after the creation of this suspense account balance to carry out the retrospective reconciliation and agree changes with Bangladesh Bank. Any remaining balance at the end of this period must then be authorised appropriately and written of to the Consolidated Fund. While this measure may not be seen as optimal, it is the necessary course of action to ensure that accounts presented by government are seen to provide quality information in the coming months and years. Once this recommendation is acted upon, it is essential that CGA ensure 100% monthly reconciliation for cash and financing movements.

14. As a short-term measure, pending a final decision from the Ministry of Finance on its future, DAO Dhaka should be instructed and trained to carry out sample inspections on the daily bank scrolls and supporting documentation received from Bangladesh Bank. This limited control measure should examine the cash movement against challans received and sample checks of the accuracy of Bangladesh Bank coding should be carried out. Bangladesh Bank should be officially informed of all errors identified and amendments made to the bank statements.

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15. A study should be carried out to ascertain whether DAO Dhaka and the NBR could, on a sustainable basis, compare the cash receipt figures reported on the computer generated credit scrolls that accompany the NBR challans taken to Zone 1 with the relevant figures reported in the accounts by DAO Dhaka. Any differences identified may then be reconciled and agreed by both parties. If successful, the total cash generated figures reported by NBR through the Register 5s of each circle may be able to be reconciled with the CGA accounts data.

16. All Government agencies interacting with members of the public or banks for receipts or payments should provide the accurate 13-digit code and relevant bank account number for any receipts or payments to be made.

17. The CGA office should instruct Bangladesh Bank to provide the monthly cash flow statement in a layout that is more tailored to the needs of the CGA office.

As may be seen below, the figures appearing in each of these proposed statements may be directly compared to the information in the other statements. In this way, any errors in reporting by Bangladesh Bank will be immediately identified by the CGA office and amendments ordered.

If these statements are provided to the CGA office, it should dramatically improve the ability of the CGA office to carry out bank accurate and reliable reconciliation procedures.

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This new information provided to the CGA should include the following four statements:

i. Total Opening Balance, Receipts, Payments, Net Movement and Closing Balance of the Government. This summary cover page should provide succinct and easily understandable information for all users of the actual movements and resultant balances during the month in question.

The summary page should take the following format:

Bangladesh Bank Government Account (A/c 100-219) Month_______Year________

Opening Balance A

Net movement per Bangladesh Bank branches B

Net movement per Sonali Bank branches C

Net movement as per GAD D

Net Movement E

Closing Balance F

ii. Total Opening Balance, Receipts, Payments, Net Movement and Closing Balance for each of the 78 accounts.

This report should take the following format:

AccountOpening Balance

Bangladesh Bank Net

Movement

Sonali Bank Net

Movement

GAD Net Movement

Closing Balance

100 – Generalxxxxxxxxxxxx

Total A B C D F

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iii. Receipts, Payments and Net Movement for each bank branch reporting to local accounting offices


Bank BranchTotal

ReceiptTotal

Payment

Net Movement for Month

Total Net Movement per Bank

Bangladesh Bankxxxx G1 G2 G3xxxxxxxxxxxx

Total Net Movement per Bangladesh Bank BSonali Bankxxxxxxxxxxxx

Total Net Movement per Sonali Bank CGAD Movement D

Total E E

iv. Receipts, Payments and Net Movement for each bank branch, detailed by individual bank account.


Bank Account Total Receipt Total PaymentNet Movement

for Month

100 – Generalxxxxxxxxxxxx

Total G1 G2 G3

The detailed account wise information for each local accounting office should be made available in an electronic format to assist the CGA in its reconciliation process.

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18. A comprehensive bridge table should be prepared and distributed detailing the correct bank account in which to post each type of revenue or expenditure. This should be distributed to all bank branches, Government agencies and local accounting offices. If all banks are instructed to consult the bridge table to confirm the appropriateness of coding and bank account for all receipts and payments processed, this should greatly improve the accuracy of bank coding and reporting. This recommendation will not only improve reporting in the short-term, but should be considered in the light of the long-term recommendations made and the inevitable consequence that this improvement will have on the success of future bank reconciliation developments.

19. All bank personnel should be thoroughly trained, not only in the correct use of the bridge table, but in any other issues identified in the operation of the Government account.

20. Each local accounting office should be instructed to compare the individual account wise movements reported on the daily bank statement to the accounts information produced. Where differences are observed, any errors made by either the local bank or the accounting office are to be identified and reconciled between the Bank Manager and Accounts Officers and relevant amendments made. The cumulative total of daily figures should be reconciled against the individual movements identified on the monthly bank statement. Recommendations made in this report for the longer-term will greatly simplify this reconciliation and prove the long-term benefits of this detailed daily reconciliation.

21. A database should be designed and implemented at all Divisional Controller of Accounts offices. The receipts and payments for each individual bank account of each reporting office, as stated on the monthly bank statement, should be entered and this data may later be utilised by the CRU. If Bangladesh Bank provide the above statement showing detailed account wise information for each local accounting office in an electronic format, the computer may then identify discrepancies in reporting of individual bank accounts by Bangladesh Bank. This database will also provide a valuable data source for the DCA, CGA or concerned CAO to monitor and investigate unusual movements in individual bank accounts.

22. The MoF should ensure that all Drawing and Disbursement Officers comply with the currently prescribed requirement to reconcile data with the concerned District or Upazilla office. The degree of compliance should be monitored by the CGA office (and DCA office) and corrective action taken where required.

23. All departmental CAOs should be given responsibility for, and assistance in reconciling the movement in Public Account codes for their respective Ministry. This should reduce the detrimental impact of codes that are viewed by many as ‘black holes’ in the accounts. In the absence of any detailed bank reconciliation procedures, these uncontrolled balances are a serious concern for the Government. The degree of compliance with this recommendation should be monitored by the CGA office.

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24. Remittance codes should be replaced with individual codes for Departmental Cheques, Departmental Receipts and if required, other specific codes. This will provide clarity as to the items that should be coded and provide the opportunity to more easily reconcile the balances each month.

25. A computerised reconciliation program based on the current CRU cheque reconciliation system should be implemented at all Departmental CAO offices to reconcile outstanding departmental cheques.

26. Training needs at Accounting Offices and centrally within the CGA office need to be continually assessed and subsequent training in bank reconciliation at both a local and national level provided.

27. Responsibility for accounting, monitoring and reconciling Foreign Aid projects should be clearly placed on Chief Accounts Officers.

28. The detailed instructions to be contained in the final CAO Accounts Procedures Manual should be discussed, agreed by key stakeholders and implemented as soon as possible. This should ensure that all CAO personnel are fully aware of and trained in the correct and required accounting procedures for Foreign Aid projects. Reconciliation of Foreign Aid cash balances are an integral part of this process.

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11.2 Medium Term Recommendations

1. The individual bank accounts maintained at Bangladesh Bank and Sonali Bank should be brought in line with the Governments long-term aim of decentralisation along a Line Ministries axis. It is therefore recommended that:

Each Ministry and Division should maintain one bank account, with sub-accounts if required, feeding into the total balance of the main account. The individual Ministry and Division bank accounts should be numbered in line with the current Government coding structure to assist in the accurate allocation of cash. The first two digits of the account number should be the 2-digit ministry or division code, with any sub-accounts required taking the final digit i.e. Ministry of Commerce is Ministry code 17. The main bank account should therefore be 170, with sub-accounts, if required, being accounts 171, 172 etc.

In addition to these 52 main Ministry and Division accounts, there should be one account maintained solely for Governments Floating Debt. This account should record the daily movements in outstanding claims against the Government as a result of Treasury Bills and Ways & Means adjustments.

The final account recommended should enable the annual transfer of all Ministry balances at year-end into one single balance brought forward representing cumulative cash surplus or cash deficit resulting from all non-floating debt Government transactions. This will act in the same way as the current account number ‘100 – General’ was initially designed. The only other balance that should roll forward into the following year should be the Government Floating Debt account. The balance reported in this account should be regularly reconciled to ensure that it accurately reflects the outstanding claims against the Government that generated the balance. Ideally, both of these accounts rolled forward should offset each other, with only a minimal credit balance remaining on the account. Any excess financing should then be easily identifiable from the year-end bank statement.

Historically, legal requirements from certain donor organisations have made it necessary to maintain certain balances on the bank statement. The benefits of the revised bank statement and reconciliation procedures should be discussed with these donor organisations and where possible, these balances should be removed from the bank statement. It is important that the bank statement reflects actual movement in cash balances held, rather than attempt to act as both banker and accountant for the Government.

2. It is recommended that all transactions, for both Consolidated Fund and Public Account should be directly attributable to a specific Ministry or Division. Ministry and Division wise function codes should therefore be implemented for all deductions at source, cheques and bills balances and any other balances currently coded under generic codes. (A detailed examination of the issues addressed is available in chapter 9, Ministry WiseBank Accounts.)

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All DDOs should prepare accounts using the DAO 4 register format to allow an effective reconciliation between Ministry or Division data at a local level, with the respective District or Upazilla office.

Where non-cash deductions at source or recoveries are recorded for a particular Ministry or Division on register DAO 4, these should simply be coded using the same Ministry or Division function code as the gross expenditure or receipt. However, where a cash lodgement or payment is made for an economic code relating to deductions or recoveries, these should be coded to the function code relating to the Ministry responsible for the overall operation of that code.

Accounting at local accounting offices should be carried out on a Ministry and Division wise basis. Separate registers should be maintained for each Ministry and Division and monthly accounts should be prepared on this basis. A separate legal code summary sheet for each Ministry or Division should be supported by the appropriate schedules for Consolidated Fund and Public Account receipts and payments and may be reconciled with the appropriate bank account movement stated on the monthly bank statement. One total legal code summary sheet should also be prepared which may reconciled with the total movement on the monthly bank statement.

Cash outflow under economic code 8901 and inflow under economic code 9901 may now be reconciled for each Ministry and Division with the movement recorded on the bank statement at both a local and national level. Discrepancies could be immediately identified and traced to the concerned accounting office by means of the detailed information held under short-term recommendations 16 & 19.

Accounting on a daily basis must be enforced, with the individual bank account movements recorded on a re-designed DAO 1 register and reconciled with the supporting documentation provided by the bank. It is at this stage that the accounting officers must ensure that the supporting documentation allocated by the bank against a specific Ministry or Division does relate to the Ministry or Division stated and that any errors identified be amended by the bank immediately. If these entries are assessed and recorded on a daily basis, the individual bank account movements reported on the monthly bank statement may be directly compared to the totals recorded on the DAO 1 Register.

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The end result of these measures should be that the following reconciliation is achievable, directly from the accounts data, for all Ministries and Divisions at both a local and national level and for government as a whole.

Gross Expenditure Gross ReceiptsLess Deductions at source Less Deductions at sourceLess Movement in Departmental cheques Less Movement in Departmental ReceiptsLess Movement in DAO cheques . .Equals Net cash outflow Equals Net cash inflowCash outflow as per bank Cash inflow as per bank

If these changes are agreed, piloted and successfully introduced, this should allow a much more robust comparison of CGA data with that of each individual Ministry and Division, where the CGA data will be considered significantly more reliable than previously thought. Although this will necessarily require some changes to the working practices at local accounting offices, it will produce benefits that far outweigh the extra efforts required.

This development would greatly enhance the credibility of the Government of Bangladesh financial reporting and should have an inevitable impact on the considerations of International Development Agencies.

3. Improving the quality of Government accounts is a fundamental aim of the Ministry of Finance and to this end a decision must be made as to the future of what was previously DAO Dhaka. This report is not appropriately placed to provide the definitive answer to this issue, as a detailed study of DCA Dhaka is required, given the major consequences of such a decision. This detailed assessment will be carried out by the FMRP project at a later date and appropriate recommendations made at that time to assist in the decision making process.

4. A comprehensive monitoring system should be implemented to ensure that all cash balances, including Foreign Aid held outside of the Governments Accounts and Imprest balances held by Departments or other agencies are fully controlled and reconciled. This should be undertaken by the strengthened CRU under the jurisdiction of the CGA.

5. A unit within CGA should establish procedures to monitor that all Foreign Aid projects are accurately accounted for, that all required reconciliations are carried out and that all supporting documentation required by CAOs is provided. Figures generated by this unit should be reconciled with the relevant data held by the Economic Relations Department (ERD).

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Annex A

List of Stakeholders interviewed.

Mr. Abu Naser Deputy CAO Foreign AffairsMr. Shamiran Kumar Dutta Accounts Officer, CAO Foreign AffairsMr. Anwar Hussain Superintendent, CAO Foreign AffairsMr. Uttam Kumar CAO Ministry of CommunicationMr. Monwar Hossain AAO CAO Ministry of CommunicationsMr. Salahuddin CAO Ministry of Public Works and HousingMS Shaheda Khanam CAO Women and Children AffairsMr. Anisur Rahman CAO Prime Minister’s OfficeMr. Matiur Rahman CAO Primary & Mass EducationMr.Shafiqur Rahman CAO LandMr. Chayan Kumar Das CAO Postal & T&TMrs Shireen Sultana CAO Forest and EnvironmentMr. Abdus Samad CAO IRDMrs Monwara Habib. CAO FoodMr. Rezai Rabbani AAO (Former DAO Dhaka), DCA DhakaMr. Zahidul Haque Joint CGDFMr. Moqsood Ali Chowdhury AAO CGDFMr. Mafuzur Rashid General Manager, GAD, Bangladesh BankMr. K.A. Majed General Manager, PAD, Bangladesh BankMr. Osman Ghani Assistant Director, Bangladesh BankMr. Mokhtar Hossain General Manager, Accounts, Sonali BankMr. Abdus Salam General Manager, Government Accounts, Sonali BankMr.Md. Zahiurul Haq Munshi Deputy General Manager, Sonali BankMr. Zaher Mohammed Member Taxes, NBRMr. Kazi Aslam Hussain Income Tax Commissioner, Zone 1 & Zone 3, NBRMr. Mahbubur Rahman Additional Commissioner of Income Tax, Zone 1, NBRMr. Shafiqur Rahman Senior System Analyst, NBRMr. MA Rashid Deputy CGAMr. Shabbir Ahmed Khan AAO, CGA OfficeMr. Neaz Mohammed Khan AAO, CGA OfficeMr Nurul Islam Talukdar Project Director, Development of food in secured poor women,

Ministry of Women AffairsMr Mahmud Hossain Alamgir Project Director, Adarsha Gram (Ideal Village), Ministry of

Land

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Annex B

Government Accounts with Bangladesh Bank

Account Number Account Name

100 Bangladesh Bank- General101 Office of the President102 Parliament103 Prime Minister's Office104 Cabinet Division106 Election Commission107 Ministry of Establishment108 Public Service Commission109 Finance Division - Except C&AG

Banking Division (merged with Finance Division)193 Pension196 Interest on domestic debt217 T.B, W&M, Dom Debt110 Comptroller & Auditor General111 Internal Resources Division 219 National Savings Scheme189 National Board of Revenue (Blocked)

VAT (merged with NBR)Income Tax (merged with NBR)Import Duty (merged with NBR)NBR- Other (merged with NBR)

113 ERD194 DSL- Foreign-Principal195 DSL- Foreign-Interest197 Foreign Aid Grants198 Foreign Aid -Grants199 Project Aid203 Pl 480- Title 3205 EEC- Food Aid207 Japan- KR208 Japan KR-2209 Japan Debt Relief Grant210 SAFE114 Planning Division

Statistics Division (merged with Planning Division)115 IMED117 Ministry of Commerce118 Ministry of Foreign Affairs119 Ministry of Defence

Armed Forces Division (merged with Ministry of Defence)

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121 Ministry of Law and Justice122 Ministry of Home Affairs124 PMED125 Ministry of Education126 Ministry of Science & Technology127 Ministry of Health and FW129 Ministry of Social Welfare130 Ministry of Women and Children131 Ministry of Labour and Manpower132 Ministry of Housing and Public Works133 Ministry of Information134 Ministry of Cultural Affairs135 Ministry of Religious Affairs136 Ministry of Youth and Sports137 Local Government Division138 Rural Development and Co-operation139 Ministry of Industries140 Ministry of Jute141 Ministry of Textiles142 Ministry of Energy and Mineral R143 Ministry of Agriculture144 Ministry of Fisheries & Livestock145 Ministry of Environment& Forest146 Ministry of Land147 Ministry of Water Resources148 Ministry of Food201 Food Operation149 Ministry of Disaster Management & Relief150 Ministry of Communication192 Railway (5031)152 Ministry of Shipping153 Ministry of Civil Aviation and Tour154 Ministry of Post and Telecom190 T&T Board (5441)191 Postal Department155 Ministry of Chittagong Hill Tracts156 Energy Division161 Supreme court163 Ministry of Liberation War Affair165 Expatriates Welfare & Overseas employment213 Public Account - GPF215 Public Account - Other

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Annex C

FOREIGN AID

The following chapter is intended to provide both an in depth understanding of Foreign Aid and detailed instructions for CAO offices concerned.

Background

The development budget in Bangladesh is based on the Annual Development Program (ADP). The aims of the ADP are poverty alleviation, employment generation and developing health, education and physical infrastructure.

There are currently a considerable number of development projects being undertaken. The two main sources of funding for these projects are:

Domestic resources – Revenue Surplus and Domestic Debt External Resources - Foreign Aid Grants and Loans

These foreign aid grants and loans are provided by development partner organisations that share the common objective of global prosperity.

Development projects that are funded by domestic resources all pass through the normal pre-audit system. The project costs are therefore recorded in the accounting records of the local accounting office concerned and thereby enter the information stream of the Government accounts.

However, only a limited number of foreign aid projects are recorded in this way. For other projects, the expenditure will remain outside of the Governments accounts, unless the Project Director specifically informs the CAO about project expenditure.

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Foreign Aid Categories

There are three main categories of Foreign Aid that fall under the general terms of either Grants or Loans:

A. Food AidB. Commodity AidC. Project Aid

Food Aid

Food aid is principally provided in the form of grants, however it may also be a loan. It provides food under programmes such as “Food for Works”, “Food for Education”, “Test Relief” and “Vulnerable Group Development”, “Vulnerable Group Feeding” etc. The office of the Director General of Food initially receives the food donated. With the exception of “Test Relief”, donated food is sold in either:

Sold on the Open Market Sold on the Statutory Rationing System Sold on the Modified Rationing System; or Proceeds from Government Departments such as Defence or Police who receive

the food at a subsidised rate.

The funds generated from the sale are then utilised to meet the costs of projects as agreed with the development partners.

Various Chief Accounts Offices are directly involved in accounting for Food Aid.

CAO Food CAO Relief Other offices such as CAO Local Government & Rural Development

CAO Food

A. Receipt of Food

Upon receipt of the donated food, the Ministry of Food issues an adjustment order in favour of CAO Food. The order is for the value of the food donated. The Ministry of Food orders that the adjustment is carried out as follows:

Debit: Ministry of Food – Procurement 3-4821-0001-6400Credit: Development Partner Grant 1-1321/1322-xxxx-3700

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B. Sale of Food

When donated food is sold, the cash is deposited into the bank. Upon receipt of the credit memo from the bank, the District and Upazilla accounts offices make the following accounting adjustment:

Debit: CashCredit:1-4823-0020-(3001-3007)

C. Relief Ministry

When the Relief Officer takes delivery of the food from the food stores of the Food Department, The Food department should inform the District and Upazilla accounts offices which will then make the following accounting adjustment:

Debit: Expense Code of Relief Ministry 3-4903-xxxx-xxxxCredit: Ministry of Food – Distribution 1-4823-0030-(3051 – 3073)

D. Subsidy

The subsidiary is calculated as the difference between the imported value, inclusive of the distribution costs and the issue price. Based on actual distribution of food grain at subsidised rates, the subsidy is calculated by the Ministry of Food. CAO Food should ensure that the Government Order in this respect is issued by the Finance Division before the June closing.

When the Ministry of Finance issues a Government Order in favour of CAO Food for the subsidy to the Ministry of Food, the CAO Food will request the CGA office to send an advice to Bangladesh Bank. Bangladesh Bank then sends a debit and credit memo to the CGA office, where the following accounting adjustment is made:

Debit: Expense Code of concerned Ministry – Subsidy 3-xxxx-xxxx-5801Credit: Ministry of Food – Subsidy 1-4823-0030-3080

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E. American Express Bank

As per agreement of the development partner, an amount of cash is to be transferred to American Express Bank as a short-term investment. Upon receipt of the debit memo from Bangladesh Bank, the CGA office will make the following accounting adjustment:

Debit: 7-1051-0000-9460 Short-term investment Amex *Credit: Cash

When the invested amount is returned from American Express Bank, Bangladesh Bank will send a credit memo to the CGA office, where the following accounting adjustment will be made:

Debit: CashCredit: 6-1051-0000-8460 Short-term investment Amex

* Note: A new Economic Code is to be opened for Short-term investment Amex under the Public Account of the Republic to accommodate this entry.

CAO Relief

As stated above, when Relief Officers take delivery of food from the stores of the Food Department, this is accounted for by the local District or Upazilla accounts offices. It will therefore be seen that the CAO Relief has no accounting function in relation to Test Relief, but should monitor the progress of expenditure in relation to release orders issued to unit offices.

Other Ministries

Other Ministries, such as Local Government & Rural Development execute many projects that are funded through the proceeds of the sale of donated food. The sale proceeds form part of the general cash balance of Government. Therefore, funds utilised by these Ministries will be accounted or by the CAO, DAO or UAO offices in the following manner:

Debit: Expense Code of the MinistryCredit: Cash

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Overview of Food Aid distribution

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Food Aid

Non-moneterised

Vulnerable Group

Feeding

Food for Education

Other Projects as per budget

provisions from food aid

Test Relief

Moneterised

Vulnerable Group

Development

Food for Works

American Express Bank – Short-term

Investment


Commodity Aid

Commodity Aid (which also includes program credit) may also take the form of a grant or loan. Under Commodity Aid, the development partners provide a certain commodity to be imported by public or private bodies. The importer then deposits the value of the commodity in taka into Bangladesh Bank. A portion of this is then referred to as a counterpart fund. This fund is generally utilised for executing specific development projects.

Bangladesh Bank sends a credit memo in relation to Commodity Aid to the concerned District Accounts Office where the accounting entries are to be made. For this reason, Commodity Aid does not form part of the duties of the CAO office.

Project Aid

Project Aid is provided for development programmes that cover a wide range of areas. As above, Project Aid may be in the form of a loan or grant.

There are three main categories of Project Aid:

Reimbursable Project Aid (RPA) Pre-financed Project Aid (PPA) Direct Project Aid (DPA)

Reimbursable Project Aid (RPA)

Reimbursable Project Aid is explained simply as a commitment from the development partner organisation to reimburse the Government of Bangladesh for expenditure that has been incurred by the Government in the act of carrying out certain development projects. This is dependant on certain conditions being met and certain requirements being fulfilled.

These RPA projects are directly channelled through local accounting offices by means of the normal pre-audit procedures. This means that the Project Director submits bills to the local CAO, DAO or UAO office. The accounts officers will then examine that there is a budget provision for the expenditure and authority from the concerned CAO before the bills will be passed for payment. The local accounting office will therefore record the expenditure and so incorporate the project in the overall Government Accounts.

The Project Director will present a Statement of Expenditure to the concerned development partner and thereby claim for reimbursement. After the development partner has examined the Statement of Expenditure, with reference to the Development Credit Agreement, they will deposit into Bangladesh Bank either the full claim or in case of some inadmissible items the reimbursement could be partial.

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Pre-financed Project Aid (PPA)

There are four types of account operated under Pre-financed Project Aid:

A. Special Account in Foreign Exchange (SAFE)B. Convertible Taka Special Account (CONTASA)C. Dollar Special Account (DOSA)D. Imprest Account

A. Special Account in Foreign Exchange (SAFE)

This account has been operated through Bangladesh Bank since 1985. To operate the account the development partner deposits an initial advance. Subsequent deposits are made on the basis of claims for replenishment by the Project Directors. The amounts deposited by the development partner are credited to the SAFE account and the Project Director opens an account for the project in a commercial bank. The Ministry of Finance issues an authorisation letter to Bangladesh Bank based on the budget provision for the relevant project. This letter instructs Bangladesh Bank to transfer the appropriate amount into the project’s bank account. Bangladesh Bank sends debit and credit memos to the office of the CGA to allow these transactions to be incorporated into the government accounts.

As per Government Order MF/DD/Dev Wing16/93/234 dated 5th August 1993, the Bangladesh Bank is to send a monthly report concerning the SAFE account to the concerned CAO and Project Director. The Project Director is then to send the Account Statement of Project’s Special Account, as attached, to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. The CAO office should reconcile the two statements and ensure that the expenditure entering the accounts matches the banks figures.

The specific accounting adjustment entry to be made by the CAO upon receipt of the Statement of Expenditure is as follows:

Dr 5-xxxx-xxxx-xxxx Cr 6-1051-0000-8746

(xxxx-xxxx-xxx) is dependant on the specific expenditure details

98


Overview of accounting for SAFE receipts and expenditure

99

CGACash

CGADevelopment Partner

Money received by Bangladesh

Bank

Development Partner

Organisation

Money transferred to commercial bank account

STEP 1

Debit Credit

XXX

Debit Credit

XXX

CGACash

CGAForeign Aid Suspense

STEP 2

Debit Credit

XXX

Debit Credit

XXX

CAOForeign Aid Suspense

Debit Credit

XXX

Debit Credit

XXX

CAOExpenditure

Account Statement of Project’s Special Account received by

CAOSTEP 3b

Statement of Expenditure

issued to allow replenishment

STEP 3a


B. Convertible Taka Special Account (CONTASA)

These accounts were opened to implement International Development Association (IDA) aided projects. Upon receipt of approval from Finance Division, the project-executing agency opens a CONTASA account with a commercial bank. When the IDA deposits foreign currency with Bangladesh Bank, the taka equivalent is immediately transferred into the commercial bank account.

Finance Division issues a letter of authorisation to the bank showing the budget allocation against the project and the Project Director can then incur expenditure. A Statement of Expenditure is sent to the IDA for subsequent replenishment of the account.

As per Government Order MF/FD/DRS/3/91/444(20) dated 4th May 1992, the commercial bank is to send a monthly report concerning the CONTASA account to the concerned CAO and Project Director. The Project Director is then to send the Account Statement of Project’s Special Account to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. The CAO office should reconcile the two statements and ensure that the expenditure entering the accounts matches the banks figures.

The specific accounting adjustment entry to be made by the CAO upon receipt of the Account Statement of Project’s Special Account is as follows:

Dr 5-xxxx-xxxx-xxxx Cr 1-1321-xxxx-xxxx

(xxxx-xxxx-xxx) is dependant on the specific expenditure details(xxxx-xxxx) is dependent on the specific development partner details

100


Overview of accounting for CONTASA receipts and expenditure

101

STEP 1



Foreign currency deposited into Bangladesh Bank

International Development Association

(IDA)

Taka equivalent transferred to commercial

bank account

CAODevelopment Partner

Debit Credit

XXX

Debit Credit

XXX

CAOExpenditure

Account Statement of Project’s Special

Account received by CAO


C. Dollar Special Account (DOSA)

The Dollar Special Account (DOSA) is an account opened in Bangladesh Bank in US Dollars under a loan from the International Development Associaion (IDA). The purpose of the account is principally to support the provision of technical assistance projects. The initial deposit is made as an advance with subsequent deposits being made following claims for replenishment from the Executing Agencies.

After the Economic Relataions Division (ERD) issues an allocation of expenditure to the Executive Ministry, the Ministry of Finance issues a letter of authorisation to allow expenditure to be incurred. The Executing Agency will then submit bills to the Project Director, who will examine the bill and present them to Bangladesh Bank for payment.

As per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director is then to send the Account Statement of Project’s Special Account to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. The CAO should request a monthly bank statement to be sent by Bangladesh Bank, detailing any activity on the DOSA account. This statement should then be reconciled with the Account Statement of Project’s Special Account.




102


Overview of accounting for DOSA receipts and expenditure

103

STEP 1



US Dollars deposited into Bangladesh Bank

International Development Association

(IDA)

Project Director presents bills to Bangladesh Bank


Debit Credit

XXX

Debit Credit

XXX

CAOExpenditure




D. Imprest Account

To facilitate the receipt of Asian Development Bank (ADB) aided projects, the Government of Bangladesh opens imprest accounts with commercial banks. The Executing Agencies submit a Withdrawal Application and Estimate of Expenditure Sheet for the initial advance to the ADB. At the beginning of each financial year, the Ministry of Finance issues an advice to the commercial bank to inform them of the Annual Development Program allocation for the project with the imprest account. This will authorise the release of funds from the imprest account to the Executing Agency. It is the responsibility of the Executing Agency to ensure that they do not apply to the ADB for withdrawals that exceed the current years ADP allocation.

The Executing Agency can make all local payments and foreign exchange payments directly up to a limit of US$ 50,000 equivalent per payment without going through commitment letter procedures. The Executing Agency will submit a withdrawal application along with a bank statement for the imprest account on a monthly basis to the ADB to facilitate replenishment of the account.

As per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director is then to send the Account Statement of Project’s Special Account to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. The CAO should request a monthly bank statement to be sent by the Commercial Banks, detailing any activity on the relevant Imprest accounts. These statements should then be reconciled with the Account Statement of Project’s Special Account.




104


Overview of accounting for Imprest receipts and expenditure

105

STEP 1



Funds deposited into Commercial Bank

Asian Development Bank (ADB)

Project Director presents bills to Bangladesh Bank


Debit Credit

XXX

Debit Credit

XXX

CAOExpenditure




Direct Project Aid (DPA)

Direct Project Aid is supplied is such a manner that the development partner has direct control over expenditure. This may be incurred either outside or outside Bangladesh. Previously therefore, the transactions were very rarely incorporated into the Government Accounts, as the source data was not directly available to the concerned Chief Accounts Offices. However, as per Order of the CGA, CGA/Accounts Compilation Section/18(2nd Part/1/51) dated 2nd July 2003 the Project Director to send the Statement of Direct Project Aid to the concerned Chief Accounts Office to incorporate the expenditure into the government accounts. This places the responsibility for gathering the relevant information onto the Project Director. The CAO offices should therefore request the Project Director to supply this information on a monthly basis, in line with RPA accounting procedures.

The specific accounting adjustment entry to be made by the CAO upon receipt of the Statement of Direct Aid Project is as follows:



106


Overview of Foreign Aid

107

LOAN

REIMBURSABLE PROJECT AID - RPA

DIRECT PROJECT AID - DPA

GRANT

FOOD AID COMMODITY AID FOOD AIDPROJECT AID

COMMODITY AID

S.A.F.E. C.O.N.T.A.S.A. D.O.S.A. IMPREST

FOREIGN AID

THROUGH GOVERNMENT OF

BANGLADESHPRE-FINANCED PROJECT

AID - PPA

PROJECT AID

REIMBURSABLE PROJECT AID - RPA

THROUGH GOVERNMENT

OF BANGLADESH

DIRECT PROJECT AID - DPA


CAO Office Initial Responsibilities

The first duty of the CAO office is to consult the Budget to identify the number of projects that relate to the particular Ministry or Division. This information is then to be recorded and prepared in the following manner:

Step Procedure

1.Identify all projects relating to the concerned Ministry or Division under Development Projects in the Budget

2.Enter all of the project codes into the “Log Sheet of Adjustments of PPA and DPA in the Monthly Accounts”. These project codes are to be found in the Budget.

3.Identify the Project Directors for every project listed above. A close working relationship is to be established with the Project Directors.

4.For every project listed on the above Log Sheet, prepare an individual “Register of Adjustment of PPA and DPA in the Monthly Accounts”.

5.The following information is to be obtained from every Project Director and entered onto the individual Registers as per the attached Register: Source of Fund, Type of Aid, Loan Agreement No., Address and Telephone No.

6.The following information is to be obtained from the Budget and entered onto every individual Register as per the attached Register: Project Code, Name of Project, Financial Year, Budget/Revised Budget, GoB, Foreign Aid and Total.

7.

The Accounts officer should ensure that all relevant projects in the Budget appear on the Log Sheet of Adjustments of PPA and DPA in the Monthly Accounts. The officer should then ensure that a completed Register of Adjustment supports every project on the Log Sheet.

108


Example of layout of Development Projects as per Budget

The total budget for the year 2003-04 of the above project amounts to Tk 414200 (thousand) (a). Out of this, the Government of Bangladesh amount is Tk 14200 (thousand) (b) and the Foreign Aid amount is 400000 (thousand) (c). The Foreign Aid may be broken down into Reimbursable Project Aid (RPA) or Pre-financed Project Aid (PPA) of Tk 260000 (thousand) (d), being the figure shown in brackets, with the remaining Tk 140000 (thousand) (c-d) being Direct Project Aid (DPA).

109

588800(380000)

3810014200 (b)518100629800414200 (a)

491300(284500)

2000 400000(260000)

1200384500493300401200

97500(95500)

3610001300013360013360013000Export diversification project & market development, project co-operation & development support component

73511701

Budget2003-04

Budget2002-03

Revised Budget2002-03

Budget2003-04

DescriptionProject Code

Supplementary Agency

TakaProject Aid

(Disbursable)

Revenue

Capital

Total 400000 (c)(260000) (d)

B C D E F G H

Project Aid(Disbursable)

Revised Budget2002-03

Taka

J KIA


Log sheet of Adjustments of PPA and DPA in the Monthly Accounts

Sl No. Project Code

MonthsRemarks

July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June

Dat

e of

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ntry

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e of

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ntry

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Rec

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Dat

e of

Dat

a E

ntry

1.2.3.4.5.6.7.8.9.10.

Accounts Officer_____________________________________

110

Log sheet of Adjustments of PPA and DPA in the Monthly Accounts


Register of Adjustment of PPA and DPA in the Monthly Accounts

Register of Adjustment of PPA and DPA in the Monthly Accounts Serial No. Of Log Sheet

Project Code……………(Budget column B).. Name of Project……………(Budget column C)……………………….Source of Fund…………(Project Director )... Type of Aid…(Project Director)…………. Loan Agreement No…(Project Director)…..Address…………………( Project Director ).. Budget / Revised Budget…………(Budget column E)……….…….………………………………………………… GoB…………………………………(Budget column H)…………………Telephone No…………..(Project Director).… Foreign Aid…………………………(Budget column I)…………….……Financial Year………….(Budget column E)… Total:………………………………..(Budget column E)…………………

Amount AdjustedPeriod Budget of PPA

& DPAPPA DPA Total PPA & DPA % of Adjustment Initial of Data

Entry OperatorRemarks

1 2 3 4 5 6 7(3+5) 8(4+6) 9 10 11

Current Month

Year to Date

Current Month

Year to Date

Current Month

Year to Date

JulyAugustSeptemberOctoberNovemberDecemberJanuaryFebruaryMarchApril

May

June (Pre)

June (Final)

(Information Source shown in brackets) Accounts Officer_____________________________________

111


CAO office Monthly Procedures

The CAO office should record all the relevant Foreign Aid information on a monthly basis and incorporate the information into the monthly accounts in the following way:

Step Procedure

1.

The CAO should request all Project Directors to send the Account Statement of Project’s Special Account (as per ) or the Statement of Direct Project Aid (as per ) to the CAO office every month. The Accounts Officer is to enter the date that the above statements are received, on the Log sheet of Adjustments of PPA and DPA in the Monthly Accounts (as per ). A nil statement is to be sent where no expenditure has been incurred in relation to PPA or DPA during the month,

2.

Where the CAO office has not received the Account Statement of Project’s Special Account, the Statement of Direct Project Aid or the Nil Statement within 10 days of the end of the month/quarter in question, the CAO should contact the Project Director and request the information to be issued. The CAO should inform the Secretary of all Project Directors that have failed to supply the required information within the above timeframe.

3.Where any Project Director fails to supply the information by the end of the following month, the CAO should again inform the Secretary.

4.The Accounts Officer is to enter the economic code level information obtained from the above statements onto the CAO 6 Register, Register of Book Adjustment for each individual project.

5.

When the Accounts Officer has entered the information into CAO 6, the relevant Register of Adjustment of PPA and DPA in the Monthly Accounts (as per ) should be updated to incorporate the information obtained on the Account Statement of Project’s Special Account or the Statement of Direct Project Aid.

6.The Accounts Officer is to record the date that CAO 6 has been updated for each project on the Log Sheet of Adjustments of PPA and DPA in the Monthly Accounts.

7.

Where the Log Sheet of Adjustments of PPA and DPA in the Monthly Accounts shows any project where the CAO office has received the required information but not yet entered it onto CAO 6, the Accounts Officer should investigate whether CAO 6 has actually been updated. If CAO 6 has not been updated, this should be done. If CAO 6 had been updated, the date that the entry was made should be entered onto the Log Sheet of Adjustments of PPA and DPA in the Monthly Accounts

On a quarterly basis, the CAO office should send a copy of the Register of Adjustment of PPA and DPA in the Monthly Accounts to the concerned Project Director.

The CAO should request the Project Director to agree or reconcile the information contained on the Register of Adjustment of PPA and DPA in the Monthly Accounts with the Project Director’s own data.

Any differences should be reconciled and amended at the CAO office by means of journals.

It is the responsibility of every Chief Accounts Officer to ensure that all Foreign Aid projects operated under the jurisdiction of their concerned Ministry are incorporated completely and accurately in the Government Accounts. The CAO should also work closely with the concerned Project Directors to ensure that there is no double accounting for any foreign aid receipts and expenditure.

112


Account Statement of Project’s Special Account(As prescribed in Project Accounting Manual)

Account Statement of Project’s Special Account(SAFE/CONTASA/DOSA/Imprest/Others)

Month……………………………..……………… Year………………..Ministry and Implementing Agency Code No. and Name………………………………………… Code No. & Name of the Project…………………………….…………….…….Source and type of Project aid…………………………………………………………………………………………………………………………………………………….……..Total estimated expenditure…………………………………………..Local currency……………………………………Foreign exchange……………………………..……….….Current year Budget………………………………………..Project Aid………………………………………………….Taka Portion………………………………………….……Period of Project Implementation…………………………………………………………………………………………..Extended Time (if any)…………………………………...Name & telephone No. of Project Director………………………………………………………………………………..Accounts (in Taka)…………………………………………

Receipt ExpenditureBank Economic

CodeAmount Economic

CodeDescription Current Financial Year

BudgetProject Aid (Taka Portion)

MonthlyExpenditure

Cumulative

(A) Revenue Expenditure5900 Subsidies and current transfers6600 Block allocations

(A) Total Revenue Expenditure(B) Capital Expenditure

6800 Acquisition of Assets6900 Acquisition of Land7000 Construction and Works7100 Investment in Shares and Equity7200 Capital Grants7300 Lending and Advances7900-7979 CD/VAT7980-7998 Miscellaneous

(B) Total Capital ExpenditureGrant Total

4500 – 7998 Detail economic code Closing Balance Cash in hand ………………………….to be shown Cash at Bank ………………………….

Total …………………………. Name & Seal of the officer

113


Statement of Direct Aid Project (Cash/non-cash)(As prescribed in Project Accounting Manual)

Statement of Direct Project Aid (Cash/non-cash)

Month……………………………..……………… Year………………..

Ministry and Implementing Agency Code No. and Name………………………………………… Code No. & Name of the Project…………………………….…………….…….

Source and type of Project aid…………………………………………………………………………………………………………………………………………………….……..

Total estimated expenditure…………………………………………..Local currency……………………………………Foreign exchange……………………………..……….….

Current year Budget………………………………………..Project Aid………………………………………………….Taka Portion………………………………………….……

Period of Project Implementation…………………………………………………………………………………………..Extended Time (if any)…………………………………...

Name & telephone No. of Project Director………………………………………………………………………………..Accounts (in Taka)…………………………………………

Receipt Repayment/ExpenditureEconomicCode No.

Description MonthTaka

CumulativeTaka

EconomicCode No.

Description MonthTaka

CumulativeTaka

*3700 (1) Foreign Aid-Grants (1)*4200 (2) Foreign Aid-Loans (2)

(3)(4)Total:-

Total:-

Relevant Detailed economic code to be given

Signature & Seal of the officer

114


Economic Relations Division

CAO offices are required to complete the following Foreign Aid Loan Reconciliation Sheet on a quarterly basis for every project that is funded by means of a loan.

This sheet is to be sent electronically to the office of the CGA within one month of the end of the quarter.

The CGA office will then be in a position to consolidate this information and provide a complete analysis to the Economic Relations Division (ERD) to allow a comprehensive reconciliation to take place between the expenditure that is being incorporated in the Government Accounts and the amount of capital provided for each loan

Foreign Aid Loan Reconciliation Sheet procedures

Step Procedure

1.Identify all projects that relate to the concerned CAO office that are funded by means of loan.

2. Enter the name of the CAO Office3. Enter the quarter number, e.g. Quarter 1, Quarter 2 etc4. Enter the financial year

5.Obtain the Loan Agreement Number for each and enter these numbers in the Loan Agreement column.

6.Total the expenditure under each project on the Foreign Aid Loan Reconciliation Sheet for the three months of the quarter and enter these amounts against the appropriate Loan Agreement Number.

7.Calculate the progressive total to date for the current financial year for each project and enter against the appropriate Loan Agreement Number.

8.

Where any Project Director has not provided the complete three months data for a relevant loan funded project, the Accounts Officer is to contact the Project Director and request the information to be sent urgently. The Accounts Officer is also to contact the Secretary and detail the information required and the Project Directors defaulting. An “N” should be entered in the Complete Data Y/N column. If the three months data is provided, enter a “Y”.

9.

Once all of the loan-funded projects have been entered on the Foreign Aid Loan Reconciliation Sheet, the sheet is to be sent electronically to the office of the CGA. The CAO is to undertake to provide this information in a complete manner to the CGA office within one month of the end of the quarter.

115


Foreign Aid Loan Reconciliation Sheet

CAO Office:Quarter:Financial Year:

Loan Agreement NumberComplete

Data Y/N

Amount (Taka)

This Quarter Progressive to date

Accounts Officer____________________________ Date________________

116


Annex D

DAO Dhaka bank account analysis

DAO DHAKA - MARCH 2003 (All amounts in thousand Taka)

Bank Acct

Function Code

Receipts PaymentsTotal

DifferenceCDPU Bank Difference CDPU Bank Difference

CONSOLIDATED FUND100 Bangladesh Bank General101 Office of the President 01 0 0 0 0 1491 -1,491 1491102 Parliament 02 19 0 19 0 18752 -18,752 18771103 Prime Minister's Office 03 3 674 -671 0 39628 -39,628 38957104 Cabinet Division 04 1 11 -10 0 20928 -20,928 20918106 Election Commission 06 11 28 -17 0 3467 -3,467 3450107 Ministry of Establishment 07 3021 4020 -999 0 134205 -134,205 133206108 Public Service Commission 08 1052 462 590 0 2315 -2,315 2905109 Finance Div - Except C&AG 09 1518771 1186648 332123 963,940 69909 894,031 -561908193 Pension 0 0 326510 -326,510 326510196 Interest on domestic debt 2841 -2841 932250 -932,250 929409217 T.B, W&M, Dom Debt 516236 -516236 282868 -282,868 -233368110 Comptroller & Auditor General 10 0 168 -168 0 23752 -23,752 23584111 Internal Resources Division 11 6797942 119755 6678187 2,812 746300 -743,488 7421675189 National Board of Revenue 0 0 0 0 0

VAT 1960059 -1960059 0 0 -1960059Income Tax 2130541 -2130541 0 0 -2130541Import Duty 597545 -597545 0 0 -597545NBR- Other 2218093 -2218093 282706 -282,706 -1935387Banking Division 0 0 0 0 0

113 ERD 13 640061 0 640061 0 3412 -3,412 643473194 DSL- Foreign-Principal 0 0 0 0 0195 DSL- Foreign-Interest 0 0 0 0 0197 Foreign Aid Grants 450788 -450788 0 0 -450788198 Foreign Aid -Grants 0 0 320280 -320,280 320280

117


199 Project Aid 106 -106 0 0 -106203 Pl 480- Title 3 0 0 0 0 0205 EEC- Food Aid 0 0 0 0 0207 Japan- KR 0 0 0 0 0208 Japan KR-2 0 0 0 0 0209 Japan Debt Relief Grant 150263 -150263 0 0 -150263210 SAFE 0 0 0 0 0114 Planning Division 14 63 81 -18 0 36071 -36,071 36053115 IMED 15 0 0 0 0 2004 -2,004 2004

Statistics Division 16 8 0 8 0 0 0 8117 Ministry of Commerce 17 41038 39467 1571 176 8962 -8,786 10357118 Ministry of Foreign Affairs 18 132 139 -7 0 100552 -100,552 100545119 Ministry of Defence 19 1 61210 -61209 0 1047685 -1,047,685 986476

Armed Forces Division 0 0 0 0 0121 Ministry of Law and Justice 21 42214 30829 11385 0 8081 -8,081 19466122 Ministry of Home Affairs 22 285066 262183 22883 33,768 269025 -235,257 258140124 PMED 24 17064 12045 5019 0 494838 -494,838 499857125 Ministry of Education 25 3878 3985 -107 437 1729099 -1,728,662 1728555126 Ministry of Science & Tech 26 12100 12510 -410 0 87570 -87,570 87160127 Ministry of Health and FW 27 7090 21859 -14769 6,169 309239 -303,070 288301129 Ministry of Social Welfare 29 23 2286 -2263 0 4577 -4,577 2314130 Ministry of Women and Children 30 244 283 -39 0 16841 -16,841 16802131 Ministry of Labour and Manpower 31 60 121 -61 0 5956 -5,956 5895132 Ministry of Housing and Public Works 32 22327 8984 13343 0 285844 -285,844 299187133 Ministry of Information 33 70556 77488 -6932 2,517 54042 -51,525 44593134 Ministry of Cultural Affairs 34 463 177 286 0 39068 -39,068 39354135 Ministry of Religious Affairs 35 0 451 -451 0 45161 -45,161 44710136 Ministry of Youth and Sports 36 19 80 -61 0 8804 -8,804 8743137 Local Government Division 37 89 1932 -1843 0 493635 -493,635 491792138 Rural Development and Co-operation 38 452 18 434 1901 5085 -3,184 3618139 Ministry of Industries 39 1901 79209 -77308 946 3227 -2,281 -75027140 Ministry of Jute 40 153 605 -452 0 1309 -1,309 857141 Ministry of Textiles 41 62 15811 -15749 0 1586 -1,586 -14163142 Ministry of Energy and Mineral R 42 103226 103507 -281 0 3434 -3,434 3153143 Ministry of Agriculture 43 8 659 -651 0 150131 -150,131 149480144 Ministry of Fisheries & Livestock 44 3226 3714 -488 0 58413 -58,413 57925145 Ministry of Environment& Forest 45 715 1481 -766 0 9145 -9,145 8379146 Ministry of Land 46 7131 7266 -135 0 9272 -9,272 9137147 Ministry of Water Resources 47 1641 1647 -6 0 124861 -124,861 124855148 Ministry of Food 6370 1768 4602 1246 2378 -1,132 5734201 Food Operation 2874 -2874 60158 -60,158 57284149 Ministry of Disaster Management & Relief 0 12 -12 0 7474 -7,474 7462

118


150 Ministry of Communication 4483 16084 -11601 0 568579 -568,579 556978192 Railway (5031) 0 0 0 150846 -150,846 150846152 Ministry of Shipping 6971 11036 -4065 0 57988 -57,988 53923153 Ministry of Civil Aviation and Tour 848 1193 -345 0 641 -641 296154 Ministry of Post and Telecom 385 -385 0 515 -515 130190 T&T Board (5441) 589323 -589323 0 603296 -603,296 13973191 Postal Department 5017 -5017 0 150325 -150,325 145308155 Ministry of Chittagong Hill Tracts 351 -351 0 394 -394 43156 Energy Division 250,000 -250000 0 1231041 -1,231,041 981041161 Supreme court 5 0 5 0 10996 -10,996 11001163 Ministry of Liberation War Affair 9 0 9 0 1171 -1,171 1180165 Expatriates Welfare & Overseas employment 1 -1 6581 -6,581 6580

9600517 10966309 -1365792 1013912 11474673 -10,460,761 9094969

PUBLIC ACCOUNTC&AG 14231271 14231271 23662878 23,662,878 -9431607Less : Adjustment Bangladesh Bank deposit -12963671 -12963671 -13613928 -13,613,928 650257

213 GPF 2814 -2814 89183 -89,183 86369215 Other 625321 -625321 219919 -219,919 -405402219 Savings Scheme 2464264 2019479 444785 1619265 1337038 282,227 162558

3731864 2647614 1084250 11668215 1646140 10,022,075 -893782513332381 13613923 -281542 12682127 13120813 -438,686 157144

119


Annex E

Ministries and Divisions under separate function codes within current Chart of Accounts structure

Ministry / Division

CodeDescription

1 Office of the President2 Parliament3 Prime Minister's Office4 Cabinet Division6 Election Commission7 Ministry of Establishment8 Public Service Commission9 Finance Division10 Finance Division - Comptroller & Auditor General11 Internal Resources Division (IRD)13 Economic Relations Division (ERD)14 Planning Division15 Implementation, Monitoring and Evaluation Division (IMED)17 Ministry of Commerce18 Ministry of Foreign Affairs19 Ministry of Defence21 Ministry of Law, Justice and Parliamentary Affairs22 Ministry of Home Affairs24 Ministry of Primary and Mass Education25 Ministry of Education26 Ministry of Science and Information & Communication Technology27 Ministry of Health and Family Welfare29 Ministry of Social Welfare30 Ministry of Women and Children's Affairs31 Ministry of Labour and Employment32 Ministry of Housing and Public Works33 Ministry of Information34 Ministry of Cultural Affairs35 Ministry of Religious Affairs36 Ministry of Youth and Sports37 Local Government Division38 Rural Development and Co-operatives Division39 Ministry of Industries40 Ministry of Jute41 Ministry of Textiles

120


42 Petroleum and Mineral Resources Division43 Ministry of Agriculture44 Ministry of Fisheries and Livestock45 Ministry of Environment and Forest46 Ministry of Land47 Ministry of Water Resources48 Ministry of Food49 Ministry of Disaster Management and Relief50 Ministry of Communication52 Ministry of Shipping53 Ministry of Civil Aviation and Tourism54 Ministry of Post and Telecommunications55 Ministry of Chittagong Hill Tracts Affairs56 Energy Division61 Supreme Court63 Ministry of Liberation Affairs65 Ministry of Expatriates' Welfare and Overseas Employment

121

Bank Reconciliation

Documents

Transcript of Bank Reconciliation