Revenue Accounting

The revenue accounting system of the government is the system of recording, classifying and reporting the revenue (taxes, customs, fees, fines and other non-tax receipts) collected by revenue offices. The collected amounts are deposited in the bank account of the Government and credited to the Consolidated Fund, and the accounts are kept in the prescribed AGF forms.

The Statement of Revenue (Revenue Statement) is prepared under A.G.F. No. 110 of revenue accounting. It shows the revenue collected head-wise during the period.

Divisible fund: The divisible fund is the pool of revenue collected by the federal government (value added tax and internal excise duty, and royalty from natural resources) that is shared among the federal, provincial and local governments under the Constitution and the Intergovernmental Fiscal Arrangement Act, 2074. For example, VAT and internal excise duty are shared 70% to the federal, 15% to the provincial and 15% to the local level.

Importance of revenue distribution:

1. Fiscal balance: It reduces the gap between the revenue sources and the spending responsibilities of the three levels.
2. Support for lower levels: Provinces and local governments get funds to deliver services such as education, health and roads.
3. Equitable development: Sharing reduces regional disparities and helps backward areas.
4. Strengthens federalism: It makes the levels financially less dependent and accountable for their own spending.

Any two forms used in government revenue accounting are:

1. Revenue deposit (bank) voucher, recording the revenue collected and deposited into the government bank account.
2. Revenue statement (revenue cash book/register), recording the revenue collected head-wise.

Any two uses of revenue accounting are:

1. It shows how much revenue has been collected under each revenue head, so actual collection can be compared with the target.
2. It supports control and audit, because every receipt and its deposit into the government account can be traced.

Two examples of Hasbali revenue (revenue collected by an office in the course of its work, other than its regular main tax) are:

1. Money from the sale of tender or bid documents.
2. Fines and penalties collected by the office.

A revenue collecting office must submit its yearly report of revenue collection to the concerned authority within 35 days after the close of the fiscal year.

In the government economic classification, non-tax revenue falls under the 14000 series (other revenue). Two codes of this series are 14100 (property income, such as interest, dividend and rent) and 14200 (sale of goods and services, such as fees and charges).

The head of the revenue collecting office (the office chief) is responsible for seeing that all revenue is recorded properly and that the accounts are presented for audit. The accountant keeps the records on the office chief's behalf.