(1) “Act” means the Karnataka Municipalities Act, 1964 (Act No. 22 of 1964);
(2) “Accountant” means the Chief Accounts Officer, Accounts Superintendents and the Accountants of a Municipality.
In case of vacancy in these posts or in case of such Municipality where such posts do not exist it means an employee of the Municipality or a person borne on the payroll of the Municipality entrusted with the responsibility of accounting the incomes, expenditures, assets and liabilities of the Municipality, irrespective of the cadre to which the employee belongs;
(3) “Asset” means asset of the Municipality (movable or immovable), and includes an asset that is acquired in future, gifted by others or transferred by the Government and includes cash and bank balances, any advance, or investment and any receivables or outstanding dues to the municipality;
(4) “Auditor” means a person appointed for the purpose of carrying on audit of the accounts of the Municipality and 3 includes the Statutory Auditor and the financial statements auditor.
(5) “Balance Sheet’ means the statement showing the assets and liabilities of the Municipality as at the end of a period or year prepared by extracting ledger balances. ;
(6) “Budget or Budget Estimate” means the annual statement of estimated receipts and estimated payments of the Municipality for a year, prepared by the Municipal Commissioner or Chief Officer as the case may be, and approved by the Council, before the commencement of the year;
(7) “Capital Expenditure” means expenditure incurred towards construction or acquisition of fixed assets and additions thereto, including those that are incurred for increasing the value or life of the existing asset;
(8) “Capital Payment” means payment made for capital expenditure i.e. any payment towards construction or acquisition of fixed assets and additions thereto including those incurred for increasing the value or life of the existing asset
(9) “Capital Receipt” means any grant or loan received specifically for construction or acquisition of fixed assets and additions thereto and also include proceeds from sale or disposal of fixed assets and investments.
(10) “Cashier” means the person who is responsible for receiving payments to the Municipality by way of cash, cheques or any other instruments, and for making cash payments on behalf of the Municipality.
(11) “Chief Officer” means an Officer appointed under Section 327 of the Act;
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(12) “Controller” means the Controller, State Accounts Department, Government of Karnataka, and includes the Deputy Controller and Assistant Controller in charge of the Local Audit Circle;
(13) “Director of Municipal Administration” means the Director of Municipal Administration appointed under sub section (1-A) of Section 388 of the Act;
(14) “Extra-ordinary Payment” means a payment that does not result in - construction or acquisition of fixed assets or additions thereto - or that does not result in the enhancement of the useful life of the fixed assets e.g. repayment of loans, and also means a payment that is in the nature of advance, refund of deposits, or payment of recoveries.
(15) “Extraordinary Receipt” means a receipt that is in the nature of recovery of a loan or an advance or deposit from others
(16) “Financial Statements” means the annual accounting reports prepared under the fund based double entry accrual accounting system, in accordance with these rules, and consist of the statements detailed in Chapter 21;
(17) “Financial Statements Auditor” means the auditor, appointed for carrying out an audit of the financial statements of a municipality.
(18) “Forms” means the forms appended to these rules in Schedule IV
(19) “Grants – Specific” means such grants that are given for a specific purpose or use in a particular manner or proportion as per the conditions of the grant, requiring submission of 5 Utilisation Certificate and are recoverable if not used according to the conditions attached.
(20) “Grants – General” means grants which have no conditions attached to their usage. They include grants which can be used for other purposes, if the conditions or purposes for which they are received are met or paid out of municipal funds.
(21) “Income” is the money or money equivalent earned or accrued during an accounting period, increasing the total of previously existing net assets, and arising from exercise of any right or the provision of any type of services or rentals. Income includes not only the amount received but also the amount receivable under accrual system of accounting.
(22) “Income and Expenditure Account ” means the financial statement showing all items of income and expenditure extracted from ledger balances, showing the excess of income over expenses (or vice-versa) for an accounting period.
(23) “Liability” means the items for which the Municipality is responsible to pay or repay and include loans, deposits and cesses collected on behalf of the Government and kept in the accounts pending payment and all dues payable by the Municipality;
(24) “Municipality” means an institution of self-government constituted under Article 243-Q of the Constitution of India;
(25) “Municipal Commissioner” means an Officer appointed under Section 331 of the Act;
(26) “Municipal Council” or “Council” means the elected council of the Municipality and for the purpose of these rules shall include the elected body of the Town Panchayat;
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(27) “Payments” means amounts actually paid and accounted during the year;
(28) “Receipts” means amounts actually received and accounted during the year.
(29) “Revenue Expenditure (or Expense)” means expenses incurred or liabilities created in exchange of a service or benefit that has been availed or derived. It excludes expenditure that result in construction or acquisition of fixed assets or additions thereto or that result in extension of life of fixed assets. Revenue expenditure also includes decrease in economic benefit during the accounting period in the form of outflows or depletions of assets;
(30) “Revenue Payment” means a payment in discharge of revenue expenditure and is, therefore, a payment other than a capital payment or an extra-ordinary payment.
(31) “Revenue Receipt” means a receipt other than a capital receipt or extra-ordinary receipt.
(32) “Receipts and Payments Account” means the financial statement summarising the cash and bank balances, cash inflow (actual receipts) and cash outflow (actual payments) during an accounting period.
(33) “Statutory Auditor” means an Auditor appointed by the State Government under Section 290 of the Act.
(34) “Year” means the financial year i.e., the period of twelve months beginning with the first day of April and ending with the following 31st March.
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CHAPTER 2 ACCOUNTING SYSTEM
3. Accounting System - (1) Every Municipality shall maintain its books of account using the double entry system of bookkeeping and following the accrual system of accounting.
(2) All financial transactions shall be identified with funds in accordance with rule 4 below, and separate books of account maintained for each such fund.
(3) The Government may prescribe the accounting policies or accounting standards for Municipalities.
Provided that the Government may direct the Municipalities to adopt accounting standards prescribed by a professional body with such modifications as the Government may deem fit.