Settlement of accounts in arrears

It may sound queer but astonishing, especially to those having even elementary knowledge about Book Keeping and Accounts that in Jammu and Kashmir, there are several Public Sector Undertakings, Autonomous Bodies, Societies and Companies believed to be functioning “normally” in the absence of finalisation of their annual accounts. Such a position of unsettled accounts is not in respect of one or two years but for years together. It is wondered as to how it is presumed that all is well in respect of such accounts and that no fraud or scam or any other irregularity is anywhere hidden and undetected in any of such PSUs etc . It is equally interesting to know whether any mention of unsettled accounts and the total volume of expected money transactions of vast number of defaulting PSUs was being made in the annual erstwhile state Budgets and any provision thereof made or provided for, since the thumb rule is that every Rupee sanctioned as grants, funds or invested has to be accounted for which verily leaves behind no scope or space for keeping accounts unsettled in the concerned PSUs.
The rut about the system and the mockery of the observance of accounting principles do not stop just at here, the Government taking ‘soft’ stock of the situation asked the defaulting entities to clear all their arrears by a fixed timeline but several of them have failed in complying with those directions even. The state of affairs of taking such a sensitive issue quite non -seriously and trivialising it just in casual way too can be seen in the reconstituted Boards not having convened meetings flouting the directions of the Finance Department. Not settling, or in technical words, not closing accounts books on yearly basis, did not merely constitute financial indiscipline as that denotes minor departures from some procedures or exercising financial powers in excess of the delegated limits etc but striking at the roots of properly recording income and expenditure on the basic principles of double -entry book -keeping system . Most of these Public Sector Undertakings, Companies and Societies are dealing in money transactions more than in other activities and technically speaking, are dealing between persons involving exchange of value, for example those dealing with industries, power development, handicrafts, tourism etc hence the importance of updating accounts religiously.
The Chief Secretary, in this regard, has rightly observed that financial discipline could not be held hostage to the slackness of the concerned officers and has stressed upon holding of (statutory) Annual General Meetings (AGMs) . He has said it primarily to bring home to the officers concerned of defaulting PSUs etc that in AGMs, presenting the previous year’s Balance Sheet , Income Expenditure, Profit and Loss Account, Staff Expenses, Depreciation on Assets, list of Debtors and Creditors etc is an important rather the most vital constituent and the purpose of convening such annual meetings. The question, however, is as to why has there been no improvement on the ground despite so much concern shown by the Finance Department. Why are the concerned officers not held responsible for keeping accounts unsettled for so long and now not clearly directed to work overtime even burning midnight oil in tallying , balancing and finalising annual accounts in arrears for years together? Why are targets along with time schedule not fixed and allotted to these officers and thereafter followed up vigorously ? What is the use of merely issuing circulars and instructions ?
From such state of affairs, it can safely be deduced that perhaps these PSUs etc have not been subjected to annual mandatory audits as well. Since accounts were not finalised, audits too must have not been conducted. How can it be safely believed that in all the defaulting PSUs, no fraud, irregularity or embezzlement etc have taken place? We would, therefore, suggest to have the task of finalisation and completion of accounts of these PSUs etc entrusted to private Chartered Accountants and Audit Companies who would do it in a short period of time and thereafter once regularised, there would be no problem in keeping accounts up to date. However, the cost of such auditing could be recovered from the salaries of the concerned officers as a future deterrent.

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