Chart of Accounts

Preface:

1. In December 2000, the New Accounting Model (NAM), which includes the New Chart of
Accounts (CoA) was prescribed by the Auditor General of Pakistan, with the approval of the
President of Pakistan, under Article 170 of the Constitution of the Islamic Republic of
Pakistan. This had become necessary because the previous Chart of Classification (CoC)
notified in 1981 had become inadequate.
2. The new CoA provides ready information about entities, programs, projects and geographical
distribution of resources etc. With the introduction of a uniform new CoA, it is expected that
timely, accurate, comprehensive and reliable information will be available to the decision
makers and for enforcing effective accountability and better financial governance. Increased
financial reporting requirements of the NAM will also be met through timely and reliable
information for better:
o Budgetary Management
o Financial Control
o Cash Forecasting and Trend Analysis
o Fiscal Administration and Debt Management
3. The new CoA is expected to also provide a uniform basis for classification of Receipts,
Expenditure, Assets, Liabilities and Equity (Residual Value) through elements such as:
o Entity
o Function
o Object
o Fund
o Project
4. By providing accurate and timely information to the finance managers at the Federal,
Provincial and District levels the CoA will facilitate and accelerate the complete
computerization of the entire accounting system.
5. The undersigned will greatly appreciate if any error or omission that may come to notice, or
suggestions for further improvement are sent to Deputy Auditor General (amp;)
6. Chart of Accounts

 Component-1
Component-1

Preface:

All financial activities starting with planning, preparation and execution of budget, accounting of
all resultant transactions, evaluation and audit of accounts and ultimately financial reporting to
serve as the basis for future planning and budgeting. The financial management system is
embodiment of macro economic management which effects all internal and external
stakeholders. In turn the macro economic indicators such as rate of inflation, changes in current
and capital account, rate of growth, GNP etc. are all based on this financial management system.

Authorities Responsible:
Sponsoring
World Bank, Government of Pakistan.
Agency:
Implementing Pakistan Audit Department (Comprising AGP &
Agency: CGA), Planning Division, Ministry of Finance.

Credit: 2921-PAK

Component I:

Government Accounting and Financial Reporting:

Development of accounting standards, reporting systems and financial

procedures conforming to international accepted principles and
computer based financial system based on complacent to
internationally recognized standards.

System would enable the uniform application of prescribed controls

for these transactions and support information retrieval needs for
government finance managers at the centre and in the provinces.
a. Core Accounting and Reporting System:

To provide integrated government-wide accounting, encompassing

the functional requirements for budget preparation and budget
execution, covering appropriation, commitment, funds allocation and
payment processes.

System would be comprehensive in terms of coverage and would

provide acredible source of reliable and timely data.
Core Accounting System would be fully automated, interfacing with
external data sources, i.e. SBP/NBP on periodic basis.

Would enable expenditures and revenues to be recorded at a detailed

level and to relate these to specific programs and projects.

System Usage by:

CGA (including its AG and DAOs) to perform the basic accounting

functions.

The Federal Ministry of Finance and Provincial Finance Departments

to perform the process associated with budget compilation, monitoring
and control and implement cash limits as may be required.
The Federal Planning Division and Provincial Planning Departments
to obtain the status of actual expenditures on ongoing programs and
projects.
 b. Payroll and Pension System

Need for an automated payroll and pension system was evident in

view of the increasing volume of transactions.

System to perform the full range of the payroll functions and the
expenditures processed would automatically update the core
accounting and reporting system.
GP Fund:

Automated GP fund ledgers, balance sheets, interest calculations, adjustments of loans and
advances etc…

Cash Flow Forecasting and Financial Analysis System:

To establish a system for forecasting likely flows of payments and

receipts, and the consequent impact on cash balances and issue of debt
instruments with the help of cash flow and financial analysis system.

This would provide a powerful facility for retrieving current and

historical data from the accounting system…allowing end-users to
manipulate the data for forecasting and analysis purposes.

 Component-2
focus on audit systems improvement and systems development including.

1. Audit Standards and Techniques: Consultant services to

 Prepare guidelines for the introduction of international auditing

standards.

Introduce modern auditing techniques and concepts.
 Review PAD’s audit policies, processes and procedures, output,
workload, efficiency and quality assurance for the audit functions.
 Advise on methodology to enhance PAD’s communication with
stakeholders, for internal audit of PAD’s systems under development.
 To assist in the use of automated audit tools and standard audit
programs wherever appropriate.
 Improve communication of audit results and to develop quality
assurance programs.
2. Administrative tool: Provision of hardware and audit software for audit planning, sampling
and documentation as well as for audit of automated accounting systems.
 3. Capicity Development : consultancy to support revised human resource management
procedures through international training in a modern financial system environment and through
arranging attachments with other Supreme Audit Institutions.

4. Use of Private Sector Firms: Assistance with developing modality for utilizing private sector
firms and finance for private audit firm’s fees.

 Component-3
1. Involves organization and systems development.
2. To reflects needs for increased professionalism and specialization.
3. PAD would implement revised HRM policies relating to the career paths of accountants
and auditors, defining standard job descriptions, enhancing the effectiveness of training
developing a transparent and quantifiable system of evaluation and manpower planning.
4. Consultant Assistance.
5. Managing the process for change..
6. Preparation of job descriptions and performance standards.
7. installing an MIS system for HRM planning and monitoring.

Component-4
Training:


Moving towards professional-level training.
 Providing retraining associated with the change introduced by the
project.
 Strengthening the quality of training and training facilities.


Expanding the circle of beneficiaries.

Component-5
Component V:

Administration

1. MIS Wing: to provide;

 Software development centre.

 Selected posts to be staffed by contract professional.
 Local training for PAD staff in systems development.
 Recurrent cost for system maintenance.

Project management: strengthening the Project Directorate through;

 Provision of staff.
 Facilities.
 Hardware and software.
 Trainers.
 Consultants.

Output by Components:

Component II: Government Auditing

Subcomponents:

i) Completion of the Financial Audit Manual, Supervision Instruments, Working Paper

Kits and Specific Guidelines

 First development of general financial audit manual……later supervision instruments and

working paper kits with audit guidelines for 16 were finalised.
 These instruments give tailored audit guidelines for specific audit areas on how to use the
Supervision Instrument and Working Paper in their scenario.
 Guidelines used for the audit of:
1. Federal Government
2. Provincial Governments
3. District Governments
4. Procurement
5. Foreign-aided projects
6. Customs and Sales Tax
7. Income Tax
8. Civil Works
9. Railways
10. Water and Power Development Authority (WAPDA)
11. Commercial Enterprises
12. Defense Services
13. Zakat Collection
14. Privatization
15. Environment
16. Foreign Mission

ii) Procurement of Hardware and Software: used for the test implementation field audit
were

 ADM Plus for Audit Management purpose.

 ACL for CAATs.

iii) Test Implementation of the Audit Manual: DAGP identified seven audit teams and
assigned audit objectives….

 Deral Audit Team – audit a portion of Repayment of Domestic Debt (a significant component
of the federal appropriation account).
 Provincial Audit Team – audit a portion of Interdepartmental and Judicial Deposits ( a
significant portion of the Financial Statement of Public Accounts).
 District Audit – audit a portion of payroll data from the SAP/R3 accounting system pertaining
to the District of Abbottabad (to enable use of CAATs software tool against payroll which is
a significant component of District expenditures).
 Railways Audit Team – audit consumption of fuel (a significant element of Railways
expense).
 WAPDA Audit Team – audit of Civil works (a major activity of WAPDA).
 Work Audit – audit of Pak PWD (a major activity).
 Revenue Audit – audit of customs receipts pertaining to Vehicle Imports (an important
Revenue activity).

iv) Training of Core Group of Auditors:

 Completion of audit training material using new audit manual.

 On-job-training provided through pilot testing activity.
 Strong source of expertise via DAGP master trainer counterparts and local consultants.

Internal Audit deliverables include:

 Internal audit plan.

 Internal audit manual.
 Draft internal audit legislation.