3.3 Chart of Accounts, Treasury Single Account (TSA), and Revenue Management Information System (RMIS)

Chart of Accounts, Treasury Single Account, and Revenue Management in Nepal

Chart of Accounts (CoA)

The Chart of Accounts (CoA) is a structured list of codes used to identify, record, report, and analyze financial transactions consistently across government entities. It covers revenue, expenditure, foreign aid, loans, assets, liabilities, and financial arrangements, ensuring uniformity and transparency.

Key Features:

Standardized codes for federal, provincial, and local levels, including district and spending unit codes.
Aligned with the Integrated Financial Code, Classification, and Explanation, 2074 BS (2017), approved by the Auditor General on 2074/07/01 and revised on 2076/02/15.
Implemented at local and provincial levels from FY 2074/75 and federal level from FY 2075/76.
Based on constitutional provisions, separate consolidated funds for each government level, and the Intergovernmental Fiscal Arrangement Act, 2074 BS.
Aligned with the International Monetary Fund’s Government Finance Statistics Manual (GFSM) 2014.
Includes provisions for assets and liabilities, moving toward accrual-based accounting.
Provides codes for budget heads, donor agencies, revenue sources, and financial reporting.
Reserves space for future revenue and expenditure heads.

Basis of the CoA (2074):

Separate consolidated funds for federal, provincial, and local governments.
Standardized accounting formats approved by the Auditor General.
Responsibility of the Office of the Financial Comptroller General (OFCG) to prepare consolidated financial statements.
Defined roles and responsibilities for all government tiers.
Compliance with GFSM 2014 for international comparability.

Code Structure:

Code Type	Description	Example
Base Head	Ends with three zeros	100000
Main Head	Ends with two zeros	110000
Head	Ends with one zero	111110
Sub-Head	Ends with non-zero digits	111111

Code Usage:

Revenue codes start with 1 (e.g., 111111).
Recurrent expenditure codes start with 2 (e.g., 211111).
Capital expenditure, assets, and liabilities start with 3 (Capital: 31, Assets: 32, Liabilities: 33).
Asset and liability balances start with 6.
Only sub-heads can record revenue or expenditure; base, main, and head codes are for consolidation.

Code Classifications:

Federal, provincial, and local government budget and office codes.
Expenditure nature codes.
Donor agency and funding source codes.
Payment/receipt method codes.
Service and functional classification codes.
Revenue, recurrent expenditure, capital expenditure, assets, liabilities, and financial arrangement codes.

Importance of CoA:

Ensures internationally comparable reporting.
Facilitates transaction identification and measurement.
Ensures accurate recording in designated accounts.
Enables comparative analysis and transparency.
Supports revenue and expenditure forecasting.
Provides structured financial data for stakeholders.
Enhances fiscal accountability and decision-making.

Treasury Single Account (TSA)

The Treasury Single Account (TSA) is a unified banking arrangement designed to streamline government financial and cash management, reduce fiscal risks, and align with international standards. It consolidates all government transactions into a single account managed by the Treasury and Comptroller Office in government-approved banks.

Objectives of TSA:

Provide real-time information on consolidated fund status.
Enhance cash management efficiency.
Reduce bank commissions (previously ~12,000 accounts across 4,000 payment centers).
Limit the number of bank accounts.
Simplify bank reconciliation.
Strengthen financial information systems.
Facilitate reporting of revenue, expenditure, and balances.
Maximize utilization of government funds.
Activate idle funds across accounts.
Ensure transparency through post-audit systems.
Promote cost-effective fund operations.

Payment Order Process:

Offices prepare journal vouchers for expenditure and send payment orders to the Treasury and Comptroller Office.
The Treasury verifies budget authority and issues checks or direct bank transfers.
Checks are delivered to authorized office representatives or paid directly to recipients.
Offices record payments based on issued checks.
The Treasury coordinates daily with Nepal Rastra Bank for account reconciliation.

Deposit Procedures:

Deposits are maintained in a dedicated account (Group B-3) under the Treasury’s name.
Offices record deposits based on the second copy of vouchers, while the Treasury reconciles with bank statements.
For refunds or forfeitures, offices issue payment orders, and the Treasury verifies balances before issuing checks.

Operational and Miscellaneous Accounts:

Non-budgetary funds (e.g., checks, drafts, special funds) are managed in a single account (Group B-6) under the Treasury, except where specified by the OFCG.
Offices prepare vouchers and payment orders for expenditure, with accounting, auditing, and reporting responsibilities.

Financial Arrangements:

Expenditure follows appropriation procedures; receipts follow financial arrangement protocols.
Offices submit monthly budget allocations, payment orders, and expenditure reports within 7 days of month-end.
Authorized representatives handle check issuance and receipt.

Office Responsibilities Under TSA:

Submit monthly budget allocations and expenditure limits.
Provide signature cards for authorized officers.
Prepare and submit payment orders.
Ensure accountability through signed orders.
Submit monthly expenditure reports.
Appoint representatives for check collection.
Manage deposits, miscellaneous accounts, and year-end balance transfers.
Maintain records, report, and facilitate audits.

Treasury Responsibilities Under TSA:

Open and manage accounts.
Establish monthly expenditure limits.
Issue payments within limits.
Maintain payment commitment records.
Verify signatures and issue checks.
Reconcile accounts and report balances.
Notify offices of non-issuable payments (e.g., insufficient budget, incomplete documentation).
Manage deposits and miscellaneous accounts.

Challenges in TSA Implementation:

Dependence on internet connectivity and cybersecurity risks.
Server overload causing payment delays.
Weak internet access in remote districts.
Limited banking access requiring travel to district headquarters.
Insufficient staff and infrastructure at Treasury offices.
Lack of adequate training for staff.
Shortage of skilled personnel for system maintenance.
Time and cost burdens for small transactions.
Challenges in cash management during revenue/expenditure fluctuations.

Revenue Management Information System (RMIS)

The Revenue Management Information System (RMIS) is an online software platform introduced in FY 2071/72 (2014/15) to digitize revenue collection, deposit, reconciliation, and accounting in Nepal. Starting in three Kathmandu Valley districts, it is now implemented nationwide.

Key Features:

Banks enter revenue data, which offices and the Treasury use for accounting and reporting.
Only banks can modify revenue entries; others perform administrative tasks.
User roles (Administrative, Infinite, Super, Normal) define access levels.
Treasury offices manage user accounts, passwords, and resets.
Access options include Bank, Paying Office, and District Treasury Controller Office.
Guided by the RMIS Operation Manual, 2075 BS.

Objectives of RMIS:

Digitize revenue collection and payment processes.
Simplify revenue submission for taxpayers, reducing hassles.
Provide real-time revenue data to stakeholders.
Integrate revenue collection with banking systems.
Enhance monitoring and control to reduce fraud and leakage.
Streamline revenue accounting and reporting.
Promote technology-friendly, taxpayer-oriented revenue management.
Strengthen governance and transparency.

Infrastructure Requirements:

Computer with I3 processor, 2 GB RAM, Windows XP or higher.
256 kbps internet connectivity.
Nepali Unicode font for compatibility.

Revenue Procedures:

Revenue is deposited into non-operative revenue accounts under the Treasury’s name.
Banks provide daily statements and monthly reports via RMIS, considered official records.
Offices reconcile revenue based on bank statements and vouchers.

Example: A taxpayer deposits NPR 50,000 in taxes via a bank. The bank enters the data into RMIS, and the office records it as revenue under code 111111, reconciling with the bank’s statement.

Conclusion

Nepal’s Chart of Accounts, TSA, and RMIS are pivotal in modernizing public financial management. By aligning with international standards like GFSM 2014 and leveraging digital tools, these systems enhance transparency, efficiency, and accountability. Addressing challenges like connectivity and capacity will further strengthen their impact.

Recommendations for Improvement

Enhance internet infrastructure in remote areas.
Provide regular training for staff on TSA and RMIS.
Develop robust cybersecurity measures for digital systems.
Simplify processes for small transactions to reduce travel burdens.
Integrate AI analytics for real-time financial monitoring.
Expand banking access in rural areas for efficient cash management.

References

Integrated Financial Code, Classification, and Explanation, 2074 BS (2017).
Intergovernmental Fiscal Arrangement Act, 2074 BS (2017).
Government Finance Statistics Manual (GFSM) 2014, IMF.
RMIS Operation Manual, 2075 BS (2018).
Office of the Financial Comptroller General, Nepal.