From Sanjiv Dube
NEW DELHI : In a landmark move to counter higher education blues, the Ministry of Human Resource Development (MHRD) has, in principle, agreed to the accounting system suggested by the Institute of Chartered Accountants of India (ICAI).

The ICAI proposal, suggested by a committee of the ICAI, will pave way for a uniform accounting system in educational institutions, the HRD ministry sources said on January 19.

MHRD sources said that the recommendations will be placed before the next state education ministers' conference to evolve a consensus on the issue and then go in for a massive drive to seek opinion from various higher education institutions in the country. The suggestions would stand good for the school system as well.

The accounting standards would be made applicable to all Central educational institutions, universities under the regulatory ambit of UGC or receiving grants from UGC, technical institutions under regulatory ambit of AICTE, teacher education institutions under the regulatory ambit of NCTE and schools affiliated to CBSE.

The panel, while stating that educational institutions need an accounting system that presents a true and correct picture, said all educational
institutions should be mandated to apply accrual basis of accounting.
The committee said accounting standards issued by the ICAI should be made mandatory to educational institutions.

Fund-based accounting may be introduced for earmarked/ designated funds, all educational institutions should follow a common format for presentation of its general purpose financial statements to ensure proper accountability, financial discipline, end-use of funds and to meet the needs of stakeholders. These recommendations would make accounting in educational standards more transparent and accountable.

Though the new system is less intrusive it would help in more effective regulation of the education sector as well as help in preventing malpractices that plague the sector.

Now, the accounting and financial reporting practices of educational institutions in India are oriented towards meeting the needs of the governing bodies running them and educational institutions follow not only diverse accounting practices, but also different basis of accounting.