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TMI BlogIndian Government Accounting Standards (IGAS)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 ..... in bold italic type, should be read in the context of the explanatory paragraphs in this Standard, which are in plain type and in the context 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the State Governments in accounting and classification of Grants-in-aid received or given by them. The Financial Statements should not be described as complying 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, whether 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be used, ( d ) Market value would be the value prevailing in the market and in the absence thereof the replacement cost of the same or similar assets of same 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 and Auditor General of India, be debited to a capital head of account in the Financial Statements of the Government. 14. Grants-in-aid 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 us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rantee for the purpose of creation of capital assets, the Financial Statements of the grantor shall disclose the details of total funds released as Grants-in-aid and funds allocated for creation of capital assets by the grantee during the financial year, in the form of an Appendix to the Financial Statements in the format prescribed 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 Allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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