What is the accounting system followed by the Government?

The Constitution of India envisages the accounts of the Union and the States to be kept in such a form as the President may prescribe on the advice of the Comptroller and Auditor General of India.

The government accounts are kept on cash basis. Only actual receipts and payments during the financial year are taken into account. However, commercial units under a ministry or a department may be allowed to adopt commercial basis of accounting.

Each division in Consolidated Fund and Public Accounts is divided into sectors, which may be divided into sub-sectors and then into six tiers of accounting classification. Detailed

Demands for Grants presented by the Ministries to the Parliament should also adopt the same six tier numeric codification pattern.