New Delhi: Accounting regulator ICAI on Tuesday said the proposed accounting norms for political parties, to be notified by the Election Commission, will ensure greater transparency in the way they operate.
“The recommendations given by the ICAI would be useful in bringing uniformity in the prevailing accounting and financial reporting practices of the political parties, which would ensure greater transparency in their operations,” said G Ramaswamy, president, Institute of Chartered Accountants of India (ICAI) in a statement.
On 27 May , ICAI submitted its recommendations to the EC making a case for all political parties to apply accrual basis of accounting (reporting transactions on a real-time basis).
“Every political party to follow 31 March as uniform financial year and consolidated financial statements be prepared incorporating the accounts of taluka, district and state-level party branch accounts,” the ICAI has suggested, adding that all political parties should follow “a common format for presentation of its general purpose financial statements.”
It also recommended that political parties must be mandated to get their accounts audited by CA firms, to be appointed by the EC. Besides, auditors should be rotated every three years, the ICAI has said.
It added that political parties must be mandated to “publish their audited accounts annually, which shall be available for the information and review by the concerned stakeholders and the general public at large within six months of the end of the financial year, on the parties’ website”.
Besides, it said, “annual financial statements be also published in English in leading national newspaper and in local language in the leading newspaper of the state.”
All registered political parties must be mandated to file the audited financial statements with the EC, the recommendations said, adding that the PAN number of the contributors of funds to the political party may be sought.
The ICAI has specified that “revenue from issuance of coupons of different denominations” by parties should be disclosed separately. It said grants, donations, contributions received should be categorised as individual donors, companies or organisations, institutions and welfare bodies.
Interestingly, the auditing body has also recommended that political parties should disclose the “fair value and quantitative details of the services renders by volunteers or members for which no payment has been made and the net gain or loss by the party on foreign currency transactions”.
The recommendations come against the backdrop of the EC creating an Election Expenditure Monitoring cell within its establishment in 2010, which has been vital in the conduct of polls in Bihar last year and five other states recently.