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TMI BlogIndian Government Accounting Standard 2 - 'Accounting and Classification of Grants-in-aid'.X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Preface to Indian Government Accounting Standards . The Indian Government Accounting Standards are not intended to apply to immaterial items. Introduction 1. Grants-in-aid are payments in the nature of assistance, donations or contributions made by one government to another government, body, institution or individual. Grants-in-aid are given for specified purpose of supporting an institution including construction of assets. The general principle of grants-in-aid is that it can be given to a person or a public body or an institution having a legal status of its own. Such grants-in-aid could be given in cash or in kind used by the recipient agencies towards meeting their operating as well as capital expenditure requirement. 2. Grants-in-aid are given by the Union Government to State Governments and by the State Governments to the Local Bodies discharging functions of local government under the Constitution. This is based on the system of governance in India, which follows three-tier pattern with the Union Government at the apex, the States in the middle and the Local Bodies (LBs) consisting of the Panchayati Raj Institutions (PRIs) and the Urb Local Bodies (ULBs) at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying with this Standard unless they comply with all the requirements contained therein. This Standard encompasses cases of Pass-Through Grants mentioned in paragraph 2 above. Definitions 6. The following terms are used in this Standard with meaning specified, unless the context otherwise requires: Accounting Authority is the authority which prepares the Financial Statements of the Government. Financial statements mean the Annual Finance Accounts of the Governments. Grants-in-aid are payments, transfers of funds, in cash or in kind, in the nature of donations or contributions by one government (grantor) to another government, body, institution or individual (grantee). Government means all departments and ministries of a Government taken together; whet her of the Union Government or State Government or Union Territory Government with Legislature. Local Bodies include Panchayati Raj Institutions and Urban Local Bodies under the provisions of Article 243 and Schedule 12 of the Constitution. Pass-Through Grants means grants-in-aid given by the Union Government to the State Governments for transfer to an ultimate grantee. Recognition 7. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me age, condition and purpose. 13. Expenditure on Grants-in-aid for the purpose of creating assets shall not except in cases specifically authorized by the President on the advice of the Comptroller . Auditor General of India, be debited to a capital head of account in the Financial Statements of the Government. 14. Grants-in are classified and accounted for as revenue expenditure in the Financial Statements of the grantor irrespective of its ultimate application by the grantee. This position holds true even in those cases where Grants-in-aid are utilized by the grantee for the purpose of creation of assets. Receipts of grants-in-aid are also required to be treated as revenue receipts in the Financial Statements of grantee Government. 15. Grants-in-aid are also received in kind by various grantees in the form of permanent assets like land. Normally, such grants-in-kind should be valued at current market prices. However, in case of non-availability of market prices, cost incurred by grantor may be used as the basis of valuation. 16. The Pass-Through Grants are normally given through an intermediate grantee for transfer to ultimate grantee. Such Grants-in-aid are also account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital assets b the grantee during the financial year, in the form of an Appendix to the Financial Statements in the format pre5cribed in paragraph 25. This will enhance transparency and lead to improved disclosure of information in the Financial Statements of the grantor. Such disclosures shall also enable the users of Financial Statements to assess the quantum of future capital formation activity to be undertaken by different grantees supported by funds from the Government. Effective Date 24. This Indian Government Accounting Standard becomes effective for the Financial Statements covering periods beginning from 1.4.2011. Format for Disclosure 25. Suggested format is given below: Statement Containing Details (1) of Total Funds Released During the Year as Grants-in-aid and Funds Allocated for Creation of Assets (Rs. in lakhs) Name/Category of the Grantee Total Funds Released as Grants-in-aid Funds Allocated for Creation of Capital Assets out of Total Funds Released Under Column No. (2) (1) (2) (3) Plan Non-Plan Total Plan No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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