Section 5 in The M.P. Housing Board Accounts Rules, 1991
5. Features of Project Accounting.
(a)Each project shall be distinguished in accounts rendered to the Circle Officer at the following stage :-(i)Work-in-progress;(ii)Completion;(iii)Transfer of assets (i.e. completed projects); from Divisions to Estate Management;(iv)Assessment of Cost of Sales;(v)Deposits of Allottees;(vi)Sales;(vii)Operation of Hire-Purchase Debtor Accounts.(b)Project expenditure and revenues shall be collected in a unified account (separately for each project) called Integrated Project Account in the formats set out in Annexure 'E', F' and 'G';(c)Account of project shall be formally closed on complete disposal of the assets created under orders of officers authorised in this behalf by the Board. Loss or gain on project account shall be assessed for each project and explained. The Board may require that results of such project analysis duly audited should be submitted to it in respect of specified categories of projects or projects costing more than prescribed ceilings.(d)Project accounts shall be maintained on generally accepted principles of commercial accounting subject to the provision of this section.(e)Cost of land acquired and contractor's claims on project account shall be brought to account on accrual and cash basis respectively. Sales on project account shall be brought to account on accrual basis. (Also see Annexure 'A' and Rule 5.5).5.1Sections of Project Account - Project Account shall be maintained in two section i.e. in the General Account and Subsidiary Accounts. The General Account records project-wise expenditure and receipts whereas project subsidiary account records expenditure under prescribed cost and allottee-wise receipts.5.2Project Cost Heads - 5.2.1 The following shall be the project cost heads :-(i)Cost Heads (Works) (See Rule 5.2.2);(ii)Cost Escalation (Materials)(iii)Losses(iv)Overheads (Admn.)(v)Overheads (Interest)5.2.2The group of Cost Heads (Works) shall be sub-divided into suitable number of standard cost heads (e.g. earth, work Masonry, RCC) which shall be prescribed by the Housing Commissioner. A separate set of standard cost heads may if necessary, be prescribed for separate categories of projects, (e.g. Land Development Projects and Building Projects). During the progress of work as well as on completion of the project, a variance analysis shall be conducted to disclose to the Housing Commissioner the reasons for variation, if any, between estimates and actuals under each standard cost head.5.2.3All administrative approvals, technical sanctions, contracts, work-orders and bills shall also contain break-up under standard cost-heads. While project subsidiary account shall also collect expenditure under standard cost heads, they may be done only once on completion of project where a project is executed under a single contract. In such cases, lump-sums amount under the group head "Cost Heads (Works)" may be posted for balancing the account when work is in progress.5.3Project Overheads. - 5.3.1 Overheads shall be charged to the project account on completion of the project. However, in order to place year-wise expenditure on administration overheads on a comparable basis with the portion capitalised and charged to project account, overheads attributable to work-in-progress at the end of each year shall be brought to account as an asset under the account headSupervision charges in respect of work-in-progress pending capitalisation" per contra credit to Income and Expenditure Account. The debit balance in this account shall be re-transferred to Income and Expenditure Account in this next year as opening balance.5.3.2Administration overheads including the liabilities for payment of retirement benefits of the Staff shall be allocated among the following functions on a realistic basis :-(i)Project Construction Activity.(ii)Project and non- Project Maintenance Works.(iii)Project Revenue Management.The portion attributable to project construction activity shall be allocated among various projects in accordance with the guidelines set out in Annexure 'H' However, actual expenditure can be allocated only after the end of the financial year whereas it may be necessary during the year to finalise the accounts of completed projects for the purpose of sale of sites or buildings. Therefore, project account may, on a uniform basis, be charged with administration overheads at an estimated percentage of project outlay per contra credit to overheads account. This percentage shall be so fixed by the Housing Commissioner as to secure to the maximum possible extent full absorption of these overheads. Fresh estimates may be made for each year and rates revised wherever necessary. As these rates are in the nature of arithmetical derivatives and no decision making is involved it is not necessary to obtain the approval of the Board (unlike in respect of determination of sale price). While the Income and Expenditure Account of the Board shall reflect the loss or gain or overheads being the difference between actual expenses and the aggregate of the portions absorbed by all the project accounts, the Integrated Project Account referred to in Rule 5 (b) explains such loss or gain through project-wise analysis.5.3.3Similarly the overheads relating to interest charges shall be charged to project account at an estimated average cost of funds separately for each year of investment in the project. As in the case of Administration overheads this is also an arithmetical derivative and does not require the approval of the Board. Average cost of funds may be notified by the Housing Commissioner. Applying this rate of interest, overheads shall be charged on the basis of actual expenditure. The procedure for working out loss or gain on this account is the same as in respect of administration overheads.5.4Sale Price. - Sale price of sites and buildings shall be separately determined in accordance with the guidelines issued by the Board. But where they yield a sale price for any reason different from cost price determined under Rule 5.3.2. and 5.3.3. (e.g. due to adoption of different rates of overheads for different income groups, charging premium from higher income groups for appreciation in land value, grant of concessions to Board's employees adoption of average expenditure on project instead of year-wise expenditure for calculating overheads on interest, adoption of uniform rate of interest for the entire construction period instead of varying rates of interest for separate years), sales may be brought to account in the revenue section of project accounts without prejudice to the operation of Rules 5.3.2 and 5.3.3 (these rules deal with account adjustments in the expenditure section of project account up to the stage of recording under the account head "Cost of Sales"). Accordingly account adjustments regarding capitalisation of overheads, transfer of assets form Divisions to Estate Management and incorporation of costs in the account "cost of sales" in the ledgers of Estate Management shall be carried out immediately on completion of project and not held up till sale price is approved by the competent authority.5.5Project Liabilities. - Project liabilities shall be brought to account before submission of proposals by Divisional Officer to Circle Officer for assessment of cost price and determination of sale price. "Project Liabilities Account" which receives credit per contra debit to project account shall be cleared on liquidation of liabilities or on transfer of dues to the contractor to his personal account. The Board may prescribe a cut-off date for such liquidation. Liabilities remaining beyond the cut-off date and attributable to over assessment or under-assessment of liabilities shall be transferred to Income and Expenditure Account as gain. Where actual expenditure exceeds the liabilities brought to account, if the sale price is not yet finally determined the project account may be re-opened for receiving the additional debit. Where such re-opening is not permissible under the financial rules, it may be treated as a loss and transferred to income and Expenditure Account.5.6Project Inputs. - The following are the inputs for the project accounts. Treatment of these inputs in accounts shall be as set out in the subsequent rules in this section.InputsProject Expenditure(a)Land(b)Stock Materials(c)Contractors Payments(d)Wages to labour employed departmentally and materials consumed on work executed departmentally;(e)Miscellaneous expenditure(f)Sales(g)Recoveries from Hire-Purchase Debtors.5.7Land. - 5.7.1 Land acquired shall be brought to account on accrual basis. Land made over to the Board free of cost shall be brought to account at nominal price.5.7.2Land account shall be maintained in General Account under prescribed heads of account (see Rule 5.7.3). In addition a subsidiary account in the nature of a numerical account shall be maintained. Provision shall be made therein for recording cost price of land and it shall be agreed with the General Accounts.5.7.3Land acquired for reserve or for more than one project shall be brought to account under a distinct major head "Land (Reserve)". On commencement of work on a project, cost of the portion covered by the project shall be transferred to the Project Account.5.7.4For the purpose of assessing the cost of a project i.e. debiting "Cost of Sales" as well for the purpose of valuation of closing stock in Final Accounts, appreciation in land value shall be ignored. The Board may, however, take it into account for the purpose of determination of sale price.5.7.5On closure of a Project Account, untilised virgin land, if any, shall be transferred back to the account "Land (Reserve)".5.8Stock Materials. - 5.8.1 Material required for consumption on projects shall be initially brought to account in a common account "Stock and Stores". Cost of materials issued therefrom for consumption on individual projects shall be transferred to individual project account.5.8.2Stock materials shall, for the purpose of transfer from stock account to individual project account, be valued at cost price (i.e. Basic Issue Rate) but an addition (at a percentage of Basic Issue Rate) shall be made to cover the expenses of Material Management.5.8.3Stock Accounts shall be maintained in separate set of books by a nominated Sub-Divisional Officer who shall render a classified account to the Divisional Officer. In these accounts issues to each project shall be distinguished. In addition, the following break-up shall be furnished in respect of issues to contractors.Issue Rate = Debits to contractors a/c (total contractors relating to a project) + Debits to project or a/c or all (balancing entry).(i.e. total credit to stock)The Stock Account rendered to the Divisional Officer shall be accompanied by the indents containing contractor's acknowledgements for the materials received by them. The Divisional Officer shall arrange to bring to account the debits to contractors account under a separate major head "Contractors Accounts". Simultaneously, the Contractor-wise Subsidiary Account in the contractors ledger shall be posted direct from the indent. For the purpose of updating the contractors ledger the Sub-Divisional Officer may be required to forward indents to the Divisional Officers weekly in advance. Classified Stock Account may, however, be rendered monthly.5.8.4Materials Management Expenses shall be brought to account under a separate minor head below the major head "Stock and Stores". Expenses charged to the project account by an addition to the Basic Issue Rate shall be transferred at the end of each year from the minor head "Materials Management Expenses" to the minor head "Store Articles". Any difference between the actual expenses and the amount charged to project account shall be transferred to the Income and Expenditure Account.5.9Contractors Payments. - 5.9.1 Payment to contractors shall be regulated by the financial rules of the Board subject to the following provision (also see Rule 4).5.9.2Payments shall be made on bills in prescribed form which shall provide for recording details of payments under the prescribed project cost heads.5.9.3Separate bills shall be prepared for Secured Advances to contractors where permissible under the financial rules of the Board. Payment of these advances shall be recorded in contractors personal accounts and recoveries in bills checked with them.5.9.4Cost of materials issued to the contractors under the terms of agreement shall be debited to contractors personal account both in General Accounts (under the major head "Contractors Accounts") and in Subsidiary Accounts (Contractors Ledger). In the Contractors Ledgers separate folio shall be set apart for each contract to facilitate providing of contractors accounts by reference to the corresponding debits worked out in the classified Monthly Stock Account.As a rule no payment to contractor shall be made without verification with the Contractors Ledger to ensure that no recoveries due are lost sight of.5.10Work executed departmentally. - 5.10.1 Work may be executed departmentally (i.e. by engaging labour directly) on a formal Department Work Order issued by Circle Officer.5.10.2Payments towards work executed departmentally shall be recorded in vouchers in the same manner as payments to contractors i.e. in a running account for each work order. Advances to the Sub-Divisional Officers for disbursement of wages shall be accounted for under " Work Advances with Officer of the Board". On measurement of the work done (wherever it is susceptible of measurement), the update cost of work covered by Departmental Work Order shall be billed for and disbursed wages shall be deducted therefrom. Difference between value of work billed for at the rates specified in project estimate and disbursement of wages represents the loss or gain on project account due to departmental execution. It shall after analysis be written off to Income and Expenditure Account.5.10.3Stock materials issued to the Sub-Divisional Officers for use on works executed departmentally shall also be debited to the account mentioned in Rule 5.10.1 and deductions made in works bills to the extent of usage assessed with reference to the work done. Differences between work billed for and recovery of cost of stock materials shall be dealt with in the same manner as laid down in Rule 5.10.1.5.11Project Revenue (Inputs). - 5.11.1 Project revenues (i.e. sales and recoveries from Hire-Purchase Debtors) shall be collected in Cash Book or main Ledger project-wise in accounts called project Revenue Central Accounts. Pending making up of allottee-wise or debtor-wise accounts balances in these control accounts shall be incorporated in Trial Balance. Subsidiary accounts (i.e. debtor-wise accounts) shall be proved by agreement with the Control Account.Section 6Subsidiary Account
