It is common knowledge that accountancy is one of the most creative art forms that man had stumbled on. And, it becomes all the more artistic when you are dealing with someone else’s money. Now imagine what will be the case when a bunch of underpaid bureaucrats account for ‘social expenditure’ made by dishonest public representatives from the tax payer’s money. Indeed one will be bound to witness the ingenuity of human intellect and imagination displayed through a cleverly camouflaged maze of numbers. This is the primer that guides most of our public accounting processes.
In my current study I am attempting to understand the trends of Social Service expenditure made by certain states in India. To my amazement, I was able to make some headway in obtaining relevant accounts to study the patterns. However, the quagmire does not lie in the access to public documents (as in case of many superfluously ‘open-economies’ that I have had an opportunity to live in) but in what comes next – i.e. cracking them.
The beauty of public accounting is that you don’t know what you are accounting (public good or private good)? , why you are accounting (to record or to report)? , for whom are you accounting (for public or public officials)? , and for heaven’s sake, who is actually accounting?. This ambiguity inspires even the rather docile of public accountants to prove their mettle.
While I was trying to identify expenditure made by some state governments on Social Services, I was happy to locate a complete segment on the social services in the state expenditure statements. It has a very professional touch to it. Thanks to the efforts of RBI, I was also able to trace a uniform/standard expenditure statement published for different state governments. Now, one may wonder what I am complaining about. Let me give you a quick example which elucidates and highlights my plight.
The Government of Tamil Nadu rode to power on the promise of free color televisions for families living below the poverty line. Quite steadfastly, the government kept its promise of delivering the televisions (albeit the quality of the delivery is can be questionable). However, the real catch to this expenditure came when it was to be accounted. Thanks to the doctrines of public finance, there are some underlying principles which direct public expenditure accounting practice to describe the impact of ‘public expenditure’ on social wellbeing in a comprehensible manner. However, the principles are only persuasive or directive and not affirmative or confirmative. Hence this allows the government accountants and their political mentors have a field day. Encouraged by this haziness in the interpretation of the principles of public accounting, the Government of Tamil Nadu argued that the expenditure on Color TVs (which is essentially a consumption expenditure if not an economic decoy in the election manifesto) as a ‘Social Investment Expenditure’. It persuaded the C&AG to agree to this classification by further enlightening that the expenditure made on color televisions will contribute towards improving the access to public welfare information of BPL families. I wonder what the serials and cinema addicted beneficiaries of the scheme have to say. So what am I to believe and use for my study? This politically inspired idiosyncratic definition of social investment, offered by a state government, ruins the very composition of my study database. And to remain ‘academic’ enough and test my study empirically I have no other option but to disregard my faculties and believe the published reports. Well this is only one of the excesses caused by an inept public accounting system, which I may reasonably believe are beyond my comprehension.
I believe that the problem of public accounting is more applied than conceptual. One needs binding principles and not loose-ended ones to compel unscrupulous public officials to classify disbursements from the public coffers in a meaningful way. Moreover, a public sponsored body which prescribes and administers standards in public accounting (as in case of India) is an agency nightmare. It is high time that the government reinvents its public accounting system by actively collaborating with professional bodies. This will prove fruitful not only to the minuscule academia but also to the vast majority who are clueless as to how exactly their hard-earned tax money in being churned around for their own welfare.
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