Panchayat:Repo18/vol2-page0736

736 GOVERNAMENT ORDERS


g. In the case of building/construction of an asset by an external Government controlled agency out of Government grants with the pre-condition that the asset thus built/constructed would be immediately handed over to the Panchayat, the whole of the capital cost of the asset as well as the grant shall be shown in the books of accounts of the said Panchayat on transfer of the asset.

h. Capital Grants received as a nodal agency or as implementing agency for an intended purpose, which does not, result in creation of assets with ownership rights for the Panchayat shall be treated as a liability till such time it is used for the intended purpose. Upon utilisation for the intended purpose, the extent of liability shall stand reduced with the value of such utilisation and no further treatment, as a capital receipt shall be required.

i. Grants in the form of non-monetary assets (such as fixed assets given at a Concessional rate) shall be accounted for on the basis of the acquisition cost. In case a non-monetary asset is received free of cost, it shall be recorded at a nominal value (e.g. Rupee One).

j. Income on investments made from 'Specific Grant and Funds received in advance' shall be recognised and credited to the Specific Grant, whenever accrued. Profit/loss, if any, arising on disposal of investments made from the Specific Grant received in advance' shall also be recognised and credited/debited to the Specific Grant.

Borrowings

a. Interest expenditure on loan shall be recognised on accrual basis.

b. Intereston borrowings directly attributable to acquisition or construction of qualifying fixed assets up to the date of Commissioning of the assets shall be capitalised.

c. A provision shall be made for the interest accrued between the date of last payment of interest and the date of financial statements and shall be charged to the current period's income and Expenditure Statement.

d. The expenditures incurred while issuing debentures or bonds (issue Expenditures) shall be deferred and amortised in equal installments over a period of 5 years or the tenure of the loan whichever is earlier. In case, the debentures and bonds are prematurely redeemed, the amount of issue expenditures outstanding during the year shall be written-off and charged to the Income and Expenditure Statement as expenditure of the year when this happens. However, all other expenditures in respect of raising loans other than those considered, as issue expenditures shall be expensed off in the year in which they are incurred.

Special Funds

a. Special Funds shall be treated as a liability on their creation.

b. Income on investments made from Special Fund shall be recognised and credited to Special Fund, whenever accrued. Profit/loss, if any, arising on disposal of investments made from the Special Fund shall be recognised and credited/debited to Special Fund Account.

C. Any expenditure of a revenue nature, which is incurred specifically on scheme/project for which a Special Fund has been created, shall be charged to that Special Fund. d. On Completion of the construction of a fixed asset and/or on acquisition of a fixed asset out of a Special Fund, the amount equivalent to the cost of such fixed asset shall be transferred from the respective Special Fund to the Special Fund (Utilised).

Investments

a. Investment shall be recognised at Cost of investment. The cost of investment is to include cost incurred in acquiring investment and other incidental expenditures incurred for its acquisition.

b. All long-term investments shall be carried/stated in the books of accounts at their cost. However in the event of any permanent diminution in their value as on the date of Balance Sheet, these shall be provided for.

c. Short-term investments shall be carried at their cost or market value (if quoted), whichever is lower. d. Interest on investments shall be recognised as and when due. At period-ends, interest shall be accrued proportionately

e. Dividend on investments shall be recognised on actual receipt.

f. Profit/loss, if any, arising on disposal of investment (net of selling expenditure such as commission, . . brokerage, etc) from the Panchayat Fund shall be recognised in the year when such disposal takes place.

g. Income on investments made from Special Fund and Grants under specific Scheme shall be recognised and credited to Special Fund and Grants under Specific Scheme respectively, whenever accrued. Profit/loss,