GOVERNMENT OF PAKISTANFINANCE DIVISION(Budget Wing) No.F.2(1)-BR-II)/2007-909. Islamabad, June, 30, 2010 OFFICE MEMORANDUM Subject: Revised Accounting Procedure for Revolving Fund Accounts (Foreign Currency Assignment Account). The undersigned is directed to refer to this Division’s O.M. No.F.2(1)-BR-II/2007-538, dated 28th April, 2010 on the subject cited above and to state that the following amendments/corrections may please made in the Revised Foreign Aid Assignment Accounts Procedure for donors share of financing circulated vide this Division’s O.M. referred above:- 2. Revised Accounting Procedure for Revolving Fund Accounts (Foreign Currency Assignment Account), after making the above amendments/corrections is enclosed herewith. It is also clarified that the Revolving Fund Accounts (Foreign Currency Assignment Account) is also applicable on the existing accounts. 3. Kindly acknowledge receipt, at the earliest. Deputy Secretary (BR-II) REVISED ACCOUNTING PROCEDURE FOR REVOLVING FUND ACCOUNTS (FOREIGN CURRENCY ASSIGNMENT ACCOUNT) Debit: G01-Cheque Clearing Account – Foreign Aid Assignment Account. Credit: F01-Central Government Account-I – (Non-Food). I) under the appropriate Debt or Grant head. The Chief Manager will, in turn, and at maximum by the next business day, authorize amount in Pak Rupee credit into the relevant Revolving Fund Account of the project. a. In the books of FTO/AGPR: Debit: F01-Central Government Account-I(Non Food) Credit: E03301-Permanent Debt (Foreign) – Direct or Credit: C036-Foreign Grants (under relevant detailed head). 1. In the Books of Federal Government: a. In the books of AGPR: (i) On receipt of funds from donor: Debit: F01-Central Government Account-I (Non-Food) Credit: E03301-Permanent Debt (Foreign)- Direct or Credit: C036-Foreign Grants (ii) On transfer of funds to Provincial Government: Debit: Demand No. & Function – A08-Loans and Advances to Provinces (under the relevant detailed head of account) or Debit: A052- Grants Domestic (under the relevant detailed head of account) Credit: F01-Central Government Account-I (Non-Food) 2. In the Books of Provincial Government AG: Debit: F01-Provincial Government Account-I(Non-Food) Credit: E03302-Permanent Debt (Foreign) – received from Federal Government or Credit: C036-Foreign Grants. 3. On issue of payment/cheque following entry shall be made (Govt. Department only): Debit: Demand No. & Function Code- A-Expenditures (under the relevant detailed head of account). Credit: G01-Cheque Clearing Account – Foreign Aid Assignment Account. (XI) All payments from the Revolving Fund Accounts shall be effected through NBP Cheques/Authorizations issued by at least two persons authorized to sign. The payments into the account in respect of donor funds shall be initiated through withdrawal applications signed by such persons as may be nominated by the project management with the approval of the administrative Ministry/Division/Department. Each project management shall submit, through its appropriate administrative Ministry/Division/ Department, its budget for the following year as required for all budgets that will be included in the ‘Schedule of Authorized Expenditure’ and such budgets shall be prepared and submitted with the information including Grant/Loan No. (Project ID), Project Name/Description, Fund Code, Cost Center, Sub-detailed Function, Detailed Object, consistent with the Government Chart of Accounts and within the Government’s budget calendar. (XII) Each project shall prepare its own annual financial statements comprising expenditure from Revolving Fund Account and Direct Payments (showing in three separate columns for RF Account, GOP Assignment Account and Third Party payments) and submit the same to Donor/Lender as well as to external audit as required under the loan/credit/grant agreements. Nevertheless, the project accounts, being sub-accounts of receipts and expenditures under the consolidated fund of the government(s) will be subject to certification as part of the consolidated government financial statements by the Auditor General of Pakistan. (XIII) After the internal agreements containing provision for the opening of Revolving Fund Accounts have been signed, the concerned Ministries/Divisions/Departments and the project implementing agencies will arrange immediate opening of the Assignment Accounts at a branch of the NBP and special instructions for operation of the Accounts, if any, shall be provided to all parties concerned. NBP will, however, open the account after obtaining necessary permission from Exchange Policy Department of SBP Karachi, and 7 will provide a monthly statement of accounts to the project management by the end of first week of the succeeding month. It shall be mandatory for the NBP, in all cases, to mention clearly the name and Account No. of the payee on the Monthly Bank Statement. NBP shall send copy of the Bank Statement on 5th of the following month to SBP which shall be returned by SBP to NBP duly verified by 10th of the month. Even ‘Nil’ balance shall also be reported by NBP to SBP. (XIV) Withdrawal Applications will be prepared and submitted to donors by the project management, requesting the amount of initial deposits/subsequent funding to the Revolving Fund Account through the foreign currency account of SBP Karachi for further simultaneous credit to the Revolving Fund Account (a named sub-account of the Central Account-I) at the concerned branch of the NBP. The assigned identification number of the Revolving Fund Account will be indicated on the Withdrawal Applications. The person authorized to sign Withdrawal Applications and/or operate ‘Revolving Fund Accounts’ shall furnish copies of the Withdrawal Applications, simultaneously, to their respective Administrative Ministries /Divisions as well as to the Economic Affair Division, NBP Head Office, Karachi, relevant branch of NBP, SBP Finance Department, Karachi and concerned AG/AGPR office. (XV) The Finance Managers of the respective projects (or the persons so authorized) shall perform the role of DAO to the extent of authorization for payment within the available budgetary limits. He will also be responsible for the reconciliation with NBP, reporting of authorized ‘direct payments’ to the contractors/suppliers through the donors, and financial reporting. All payments, except for an authorized petty-cash to be notified in writing by the Project Director to the relevant NBP branch, shall be made directly to the recipients through crossed-cheques. Cash payments or funds transfers from Assignment Accounts to any DDO-account or any other account for the sake of onwards disbursements shall be strictly prohibited. The following entries will be made at the time of issue of payment/ cheque out of each Assignment Account: Debit:
