NEW

ACCOUNTING
MODEL
(NAM)
 WHY THE NAM WAS ADOPTED
• Due to Technical Advancement and
Modernization the Modern Life is Changing
Every Day.
• In the Present Time Utilization of Computer
and Information Technology have become
inevitable for the human being.
• Even after many efforts the Old system of the
Government Accounting Adopted in Pakistan
Could not give the results
• It was failed to meet the reporting
requirements of donor agencies like WB and
IMF.
 SHORTCOMINGS OF THE OLD SYSTEM OF
ACCOUNTING
The System of Government Accounting was
developed in early nineties and thus it:-
 Lack to be in conformity with international
Generally Accepted Accounting Principles;
 Lack of information between budgetary and
accounting data for financial reporting;
 Failure to provide financial analysis in the
reports and resultant lack of meaningful
information;
 Non-comprehensive Chart of Accounts
 LIMITATIONS
• Timing of cash inflows and outflows
has no direct relationship to actual
financial performance;
• Obligations to make future payments
not properly identified, and;
• Little or no indication of an entity’s
financial position (proper Balance Sheet
of the GoP was not being prepared)
 Old System vs N A M
Basis of Accounting

• Cash basis of Modified Cash Basis of

Accounting; Accounting
• Receipts are recorded • Receipts are recorded on
on the basis of actual the basis of actual
collections collections
• Expenses are recorded • Expenses are recorded
when the payment is when the payment is made
made PLUS
• Uses mainly Single • Commitments are recorded
Entry Bookkeeping • Fixed Assets Register is
maintained
 Old System vs N A M
Financial Reporting

Reporting under New Accounting Model

legacy system does shall incorporate the
not incorporate principles of :
principles of : • Quality
• Quality • accuracy,
• accuracy, • validity,
• validity, • Completeness
• Completeness • comparability
• Comparability • Timeliness
• Timeliness
 Old System vs N A M
Financial Reporting

• Expense and revenue • Figures will now be reported

figures were not reported Object Head wise
“By Object” • AG/AGPR/CGA to provide
• No Programs and Projects quality information timely
Reporting. • AG/AGPR/CGA will provide
• Fixed Assets were not FD/Departments information
reported separately. that is useful for the
• Disclosures relating to purposes of preparing ABS
National Debt were and for monitoring
inadequate performance against budgets
• Comparison to budget was • AG/AGPR/CGA will give
limited and not meaningful country’s “Financial
Managers” information to
assist in their financial
management
Old System vs New Accounting Model
Funds Accounting

• Does not provide • Clear distinction

adequate between
transparency Consolidated Fund
between and Public Account
Consolidated Fund (PA) with further
and public Account breakup of PA into:
• Trust accounts;
• Special Deposit
Accounts
 Old System vs New Accounting Model
Chart of Accounts

• The function code does not • New Chart of Accounts is fully

match GFS requirements; GFS compatible;

• Chart elements are not

properly applied
• Does not meet the new
reporting requirements
• Clearly distinguishes between
entity, object, fund and function
elements;
• Will meet all specified reporting
requirements;

• Does not allow for project
accounting
• Structure of the chart is not
suitable for a computerized
system
• Will allow for future growth in the
coding series
• Designed to accommodate future
developments (accrual and
computerized systems)
• Enhances Budgetary Control
 New Accounting Model
The New Accounting Model
(NAM) developed with the help
of international consultants and
involvement of all stakeholders is
consistent with international
standards
 New Accounting Model (Contd.)
• The NAM is codified in seven volumes of
Manuals

• The NAM would replace existing codes,

some of which have been in operation for
over a century.

• Its implementation involves a

comprehensive process reengineering, while
making the accounting consistent with
international best practices.
 New Accounting Model (Contd.)
• NAM is consistent with international best
practices and includes a powerful
classification scheme geared to modern
financial management needs

• Countrywide adoption of NAM will ensure

common standards and uniformity of
accounting information
 New Accounting Model
• Timely and credible accounting reports
will facilitate better financial management

• Computerized accounting systems will

enable audit to focus more on system
controls and performance of entities. The
emphasis of audit reports would be
significantly different.
 SEVEN MANUALS OF NAM
1. Manual of Accounting Principles (MAP);
2. Accounting Policies and Procedures Manual
(APPM);
3. Accounting Policies and Procedures Manual
(Books of Forms);
4. Chart of Accounts (CoA);
5. Financial Reporting Manual (FRM);
6. Handbook of Accounting Guidelines; and
7. Accounting code of Self Accounting Entities.
Thank you