Chapter 15: Agencies Involved in Government Accounting System of Nepal

15.1 Overview of Institutions Involved in Nepal’s Government Accounting System

The operation, treasury control, budget release, accounting standardization, internal audit, and constitutional final audit of public funds in Nepal are carried out by a coordinated network of statutory and constitutional institutions:

1. Ministry of Finance (MoF)
2. Financial Comptroller General Office (FCGO)
3. District Treasury Comptroller Office (DTCO)
4. Province Treasury Comptroller Office (PTCO)
5. Office of the Auditor General (OAG)

15.2 Ministry of Finance (MoF)

Introduction

The Ministry of Finance, established in 2008 B.S. (1951 A.D.), is the apex central executive ministry of the Government of Nepal responsible for public finance, national budget formulation, fiscal policy, revenue administration, foreign aid mobilization, and overall economic stability of the country.

Major Functions of the Ministry of Finance

1. Formulation and Presentation of the Annual National Budget: Prepares the annual estimate of revenue and expenditure (Budget Speech on Jestha 15 every year as per Article 119 of the Constitution) and monitors its implementation.
2. Formulation of Fiscal, Tax, and Revenue Policies: Formulates policies relating to Direct Tax (Income Tax) and Indirect Tax (VAT, Customs, Excise) through the Inland Revenue Department and Department of Customs.
3. Mobilization of Foreign Aid, Grants, and Public Debt: Negotiates bilateral and multilateral grants and loans (World Bank, ADB, IMF) and manages internal and external public debt.
4. Supervision of Financial Comptroller General Office and Public Enterprises: Oversees the treasury management system (FCGO), coordinates with Nepal Rastra Bank on monetary policy, and monitors state-owned enterprises.
5. Inter-Governmental Fiscal Transfers: Manages fiscal equalization, conditional, complementary, and special grants to Provincial and Local Governments in coordination with the National Natural Resources and Fiscal Commission (NNRFC).

15.3 Financial Comptroller General Office (FCGO)

Introduction

The Financial Comptroller General Office (FCGO) is the main department-level central agency under the Ministry of Finance responsible for operating and administering the Government Accounting System and Treasury Management of Nepal.

• Historical Background: Initially established as the Accountant General Office in 2008 Ashwin 6 B.S., it was upgraded and renamed the Financial Comptroller General Office (FCGO) from 2032 Shrawan 1 B.S. (1975 A.D.). It is headed by the Financial Comptroller General, a Special Class (Secretary-level) officer of the Government of Nepal.

Major Functions, Duties, and Rights of FCGO

1. Implementation and Reform of Government Accounting Forms: Implements the AGF accounting forms approved by the Office of the Auditor General across all government offices and provides technical training to accounting personnel.
2. Management of the Consolidated Fund and Treasury Single Account: Operates and maintains the central accounts of the Federal Consolidated Fund, Contingent Fund, and Divisible Funds, and prepares the Annual Consolidated Financial Statement of the Government of Nepal.
3. Supervision of DTCOs and Internal Audit: Directs and supervises all 77 District Treasury Comptroller Offices (DTCOs) to ensure timely budget release, payment processing, and Internal Audit of all federal offices.
4. Operation of Public Financial Management (PFM) IT Systems: Develops and operates national financial software systems including TSA, CGAS, SuTRA, RMIS, PAMS, and EFT.
5. Management of Pension, Gratuity, and Public Debt Records: Administers civil, police, and teacher pensions (via the Pension Management Office / Nivrittibharan Vyavasthapan Karyalaya) and tracks government investments and loans.

15.4 District Treasury Comptroller Office (DTCO)

Introduction

The District Treasury Comptroller Office (DTCO) is the district-level operating arm of the FCGO established in all 77 districts of Nepal (first started in 2038 B.S. and expanded nationwide by 2042 B.S.).

Major Functions of DTCO

1. Operation of Single Treasury Account (TSA) & Budget Release/Payment: Executes payment orders (AGF 204 / EFT) submitted by district-level government offices within approved budget ceilings.
2. Internal Audit of Government Offices: Conducts regular internal audits of revenue, appropriation (expenditure), store, and retention accounts of all federal offices in the district.
3. Collection and Consolidation of Monthly Financial Statements: Receives monthly statements (AGF 109, AGF 210, AGF 604) from all operating offices within the district (within 7 days of month-end) and submits a consolidated district report to FCGO.
4. Physical Inspection and Technical Guidance: Verifies store inspection reports, cash/bank reconciliations, and advises district offices on financial rules and accounting procedures.

15.5 Province Treasury Comptroller Office (PTCO)

Established in each of the 7 Provinces of Nepal under the Provincial Ministry of Economic Affairs and Planning, the Province Treasury Comptroller Office (PTCO) manages the Provincial Consolidated Fund, operates the provincial TSA system, releases budget to provincial offices, and conducts the Internal Audit of all provincial government offices.

15.6 Office of the Auditor General (OAG)

Constitutional Status and Introduction

The Office of the Auditor General (OAG) is the supreme constitutional auditing body of Nepal.

• Establishment: First established on 2016 Ashadh 15 B.S. (1959 June 29 A.D.) under the Constitution of the Kingdom of Nepal, 2015.
• Current Constitutional Provision: Governed by Part 22, Articles 240 and 241 of the Constitution of Nepal (2072) and the Audit Act, 2075.
• Appointment and Tenure: The Auditor General is appointed by the President of Nepal on the recommendation of the Constitutional Council for a single term of 6 (six) years from the date of appointment.

Functions, Duties, and Powers of the Auditor General (Article 241 of the Constitution)

1. Final Constitutional Audit of All Public Accounts: Conducts the final audit of the accounts of the Office of the President/Vice-President, Supreme Court, Federal Parliament, Provincial Assemblies, Provincial Governments, Local Levels (753 Rural/Urban Municipalities), Constitutional Bodies, Nepal Army, Nepal Police, Armed Police Force, and all Federal/Provincial government offices—with due consideration to Regularity, Economy, Efficiency, Effectiveness, and Propriety.
2. Audit and Consultation of Corporate Bodies: Audits corporate bodies in which the government owns more than 50% of the shares or assets and is consulted when appointing auditors for corporate bodies where the government holds shares.
3. Approval of Government Accounting Forms (AGF): Prescribes and approves all accounting forms, ledgers, and reporting formats used across Federal, Provincial, and Local levels.
4. Right to Access All Books, Documents, and Explanations: Has the constitutional power to inspect any accounting book, voucher, or store record at any time and demand explanations from any chief or official.
5. Submission of Annual Audit Report: Submits an Annual Report to the President of Nepal, who causes it to be laid before the Federal Parliament for deliberation by the Public Accounts Committee.

15.7 Comparison Between FCGO and OAG

15.8 CDC Textbook Exercises & SEE Practice Questions

Group A: Very Short Answer Questions (1 Mark Each)

1. Which is the apex (supreme) auditing body in Nepal?
2. When was the Office of the Auditor General established in Nepal?
3. Who appoints the Auditor General in Nepal and what is their tenure?
4. Define Province Treasury Comptroller Office (PTCO).

Group B & C: Short and Long Answer Questions (5 & 8 Marks)

1. Write any five major functions of the Ministry of Finance. (5 Marks)
2. Introduce the Financial Comptroller General Office (FCGO) and explain its major functions. (5 Marks)
3. Explain the functions, duties, and powers of the Office of the Auditor General (OAG) under the Constitution of Nepal. (8 Marks)

Worked answers to these exercises are in Chapter 15 Solutions.