Cost and Management Accounting for local bodies.

Local Bodies in India can be classified as those independent democratic institution that exist in India within the federal framework of our constitution.These bodies have elected representatives like in Municipalities/Municipal corporations/Zilla parishads etc.
Their function is take up the work delegated by the respective legislature.Many local bodies primarily discharge the function like maintaining cleanliness and sanitation,pre-primary and primary education,Primary health care,local road & infrastructure developments,directing business development,other social welfare schemes(managing public distribution system) directed towards Nation building.
From the above it will be noted the function of local bodies are wide and varied and local bodies can be huge like Municipal corporation of greater mumbai which has budget equalling and surpassing some states and small as even panchayats.
Funds generated for execution of objectives of local bodies are from different sources like Levy by local bodies themselves ,being empowered to do so in many cases,Budgetary allocation by the state government and in some cases scheme based infusion by central government and international aid agencies,The money received can be in the form of soft loans,grants or revenue sharing schemes.
While the local bodies are required to keep accounts of the expenditure the method differs and there is no uniformity currently among local bodies.
Basically each local body is an accountable unit(societal development motive) with social-cost benefit parameters.
A local body thus expends on small projects,social welfare schemes,maintenance of cleanliness sanitation,education and health.
While financial accounting is yet to be streamlined where ICWAI can help such bodies in coordination with the respective state governments by forming a "Local bodies uniform Accounting committees" there is much left to be done on Management accounting in Governance.
ICWAI would do well in formulating management accounting guidelines for local bodies which are the bottomline of the economy.
Each activity of the local bodies undertake has to be analysed for cost-social benefit and suggestion for re-engineering the activity should be addressed on an yearly basis.Here the question is not of sustenance of business or profit motive but Societal sustenance,Growth of nation(also called nation building-egalitarian society).
Costs incurred interms of activity towards wages,material and overhead should be analysed and improvement in the service should be made.Most local bodies are today complacent towards cost and efficiency.A definitive cost model can be developed and local bodies encouraged on analysing its efficiency.
C&AG needs to convinced on the Cost-Model accounting in Local bodies and appointment of ICAS officer inevery state government to be the chief to monitor implementation of Cost-model accounting rules and An audit of the same can be designed by Cost-Accountant.
Here is a simple example of Cost-model accounting of and activity:Primary Health care centre.
Sources of funds are basically from state government towards Salary and establishment expenses of PHC,either medicine are directly supplied or funds are allocated by the state or independently generated by local body through levy of taxes,equipment and infrastructure or either donated granted by the state or procured by the local bodies,PHC levies either nominal fees or discriminatory charges depending on the social strata,there are controllable expenses,re-engineerable expenses and fixed expenses for maintaining quality that needs to be collected and analysed,Stores control is important;Like wise every other activity can designed cost sheet prepared.