Page 145 - DLIS003_LIBRARY ADMINISTRATION AND MANAGEMENT

Library Administration and Management

Notes should a new product line be introduced, are the sales sufficient, etc.) strike our mind. To answer
questions of such nature, we need to have information generated through the accounting process.
The people who take policy decisions and frame business plans use such information.
All business organisations work in an ever-changing dynamic environment. Any new
programme of the organisation or of its competitor will affect the business. Accounting serves
as an effective tool for measuring the financial pulse rate of the company. It is a continuous cycle
of measurement of results and reporting of results to decision makers.

8.1 Fund Accounting

Accounting means a systematic maintenance of the income and expenditure flow on records.
A properly conducted accounting system is a basic prerequisite of efficient financial
administration. Its main purpose is to ensure that the library funds are spent correctly, properly
and within limits. In other words, the purpose of fund or financial accounting for not-for-profit
organizations is to assure proper use of monies provided and to make it possible to track
expenditure.
The major part of the fund in a library is the operating fund. For fund accounting purposes the
operating fund can be divided into restricted fund and unrestricted fund. Unrestricted fund
allows flexibility in use for purposes other than that specified whereas restricted fund cannot be
used for other purposes.

The cardinal principle of fund accounting is that every financial transaction is charged to some
account and a record exists of what the transaction involved. The fund accounting system should
allow for verification of all the transactions and provide an accurate report. Proper fund accounting
by allowing one to know how much money is spent, how much is left and how much is
encumbered or committed aids the budgetary control process and enables a continuous checking
and reviewing of the situation and examination of the need for reallocation or re-appropriation
of funds. It makes clear to the spender how much amount he has spent and how much is left, so
that there is neither under-spending nor over-spending.

It helps the administration to remain alert against misappropriations and maladjustments.
Before setting up a book keeping system, the librarian should consult the finance section to
determine the procedure of accounting so as to serve best their mutual purposes.

Notes Fund Accounting helps in planning future budgets and for making special studies.

Self Assessment

Fill in the blanks:

1. Accounting means a systematic ………………. of the income and expenditure flow on
records.
2. The major part of the fund in a library is the ………………. fund.

3. The ……….… accounting system should allow for verification of all the transactions and
provide an accurate report.

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