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ii. Depicts Financial Position
Auditor checks the crucial financial documents of business and government; So, true
picture of the financial position can be depicted. So helps and belief from different sectors
increase towards the organizations.

iii. Formulation of Plans
The data of the reports after auditing are true; So, the works of planning and
budgeting work will be easy and valid.

iv. Helps in Tax Fixation
The tax can be fixed on the basis of audited accounts and government will have
easiness to frame tax policies in the future.

v. Helps in Financial Administration of Government
Government can find defaulters through the internal and external auditing and
forward action against them. This way financial administration becomes sound and fair.

vi. Helps to Obtain Loan
Financial institutions or banks provide loan on the basis of audited financial
statements. So an organization should make audit compulsorily to obtain loan.

Points to Remember
i. Detect and Prevent Frauds and Mistakes ii. Depicts Financial Position
iii. Formulation of Plans iv. Helps in Tax Fixation
v. Helps in Financial Administration of Government vi. Helps to Obtain Loan

Classification of Budget Expenditures under New
Accounting System

To have proper control over the expenditures and to make the recording work simple,
clear and accurate, government expenditures have been classified into different budget
heads. Numerical codes are allocated for every budget expenditure account. The code
number is called budget head number and the amount is called budget expenditure
amount. The new budget expenditure concept has been implemented from the fiscal year
2068/069 by the government of Nepal.
All budget expenditures are allocated under budget expenditure head no. 20000. They
are categorized as base heads, main heads, heads and sub expenditure heads. The
expenditure heads having ‘000’ at last like 24000, 23000, etc. are base heads, heads having
`00’ at last like 21100, 22200, etc. are main heads, heads having ‘0’ at last like 21110, 21120
are heads and other heads having no ‘0’ at last like 21111, 22111, etc. are sub expenditure
heads. Only the sub expenditure heads are treated as expenditures but other base heads,
main heads and heads are not treated as budget expenditures. Government offices should
strictly follow the heads of expenditure classification while recording the expenditures
made by them which are given below:

196 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 197