EC mulls accounting rules for political parties
In an effort to curb the use of black money in the electoral process, the Election Commission now plans to ask political parties to conduct their finances in a corporate fashion.
New Delhi: In an effort to curb the use of
black money in the electoral process, the Election Commission
now plans to ask political parties to conduct their finances
in a corporate fashion by getting their accounts audited and
publishing their audited finance sheets annually.
The EC has received a host of such recommendations from
the country`s auditing regulator -- the Institute of Chartered
Accountants of India (ICAI) -- and will notify the official
guidelines to political parties and financial enforcement
agencies like the Income Tax department and the Enforcement
Directorate (ED) soon.
"The EC will deliberate upon and take up the final
recommendations submitted by the ICAI on May 27 and notify all
the stakeholders in this regard. The final recommendations by
the ICAI will help in making the electoral process free from
use of illegal money power," an official involved in the
drafting of the report said.
The recommendations by the top accounting body in the
country come in the backdrop of the EC creating an Election
Expenditure Monitoring cell within its establishment last
year, which has been vital in the conduct of polls in Bihar
last year and five other states recently.
The new cell, with the help of the I-T department, seized
and intercepted huge sums of cash in poll-bound states and
subsequent action by tax authorities led to the realisation of
huge hidden tax.
The ICAI, in its final report, has recommended that "all
political parties registered with the Election Commission of
India may be mandated to apply accrual basis of accounting
(reporting transactions on a real-time basis)."
"Every political party to follow March 31 as uniform
financial year and consolidated financial statements be
prepared incorporating the accounts of taluka, district and
state-level party branch accounts," the ICAI recommendations
suggested, adding that all political parties should follow "a
common format for presentation of its general purpose
"It is recommended that political parties must be
mandated to get their accounts audited by a firm of Chartered
Accountants, as appointed by the Election Commission of India.
The auditors should be appointed by rotation every three
years," the 38-page recommendation report of the ICAI said.
It also recommended that political parties must be
mandated to "publish their audited accounts annually, which
shall be available for the information and review by the
concerned stakeholders and the general public at large within
six months of the end of the financial year, on the parties`
"Annual financial statements be also published in English
in leading national newspaper and in local language in the
leading newspaper of the state," it said.
All registered political parties must be mandated to file
the audited financial statements with the EC, the
recommendations said, adding that the PAN number of the
contributors of funds to the political party may be sought.