(1) Specific grants and contributions received shall be treated as a liability until utilised for the purpose specified. General grants shall be treated as income of the Municipality.
(2) A Grant Register in KMF NO.35 shall be maintained by the Municipality in respect of specific grants, to record receipts and utilization of grants.
(3) Immediately on its utilization in accordance with the conditions of grant, the portion spent on capital works shall be transferred to “deferred income”, and after capitalisation of Capital Work in Progress shall be allocated to income over the period in proportion in which depreciation is charged on those assets
(4) In case any part of a specific grant is allowed to be used for revenue expense and is so used, a corresponding amount shall be immediately transferred to income from the specific grant (liability) account.
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(5) In case of a capital project involving municipal fund, grant and loan, the grant portion shall be accounted as in sub rule (3) above. The loan portion shall be treated as ‘liability’ for being cleared in due course.
(6) Local contribution [financial assistance by NGOs and other individuals] shall be treated as “contribution by others”. On its utilisation for capital expenditure, the accounting shall be in the same manner as specified in sub rule (3) above.
CHAPTER 14 PROCEDURE FOR ACCOUNTING PUBLIC WORKS