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
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.
The committee said the accounting standards should
enable the society, student and citizen to define
transparently the revenue earned through various
sources – tuition fees and other charges, income
from consultancy or from intellectual property owned
by the institution (for higher educational