The Constitution of Azad Jammu and Kashmir sets out the primary accounting requirements of the AJ&K government and the role/responsibilities of the Auditor-General of Azad Jammu and Kashmir.
The Government's accounting function is structured as a hierarchy with four levels.
First of all, the Auditor-General, has overall responsibility for the accounts of the AJ&K Government/Council. The Auditor-General additionally submit the Annual Accounts (Finance and Appropriation Account) of the AJ&K Government to the President of AJ&K. In the case of the AJ&K Council, Annual Accounts are submitted to the Chairperson Azad Jammu and Kashmir Council.
The relationship between the Auditor-General, having ultimate responsibility, and the other levels is structured through a scheme of delegation of authority and reporting lines.
Secondly, the Accountant General AJ&K is responsible for transactions of the AJK Council and Government level.
The Accountant General AJ&K is responsible for the centralised accounting and reporting of AJ&K transactions. Additionally the AGAJK is responsible for the consolidation of summarised financial information prepared by AJK self-accounting entities. The AGAJK receives accounts and reports from the DAOs, Div. Accounts Offices, and SBP/NBP, and provide Annual Accounts (to the AGP) and Consolidated Monthly Accounts to the Finance Department of AJ&K. There is AGAJK sub-office in Islamabad who also acts as the DAO in respect of AJ&K Council transactions and transactions relevant to AJK Government.
Accountant General (AG) is responsible for the centralised accounting and reporting functions within their respective Government and Council, under the authority of the Auditor-General. Additionally the Accountant General is responsible for the consolidation of the summarised financial information prepared by AJ&K self-accounting entities. They receive accounts and reports from the DAOs and Div.AOs, and provide Annual Accounts (to the AGP) and Consolidated Monthly Accounts (to the AJK Government, through the Finance Department). In addition each Accountant General also acts as the DAO in respect of the Capital of AJ&K State.
There is a Principal Accounting Officer (PAO) in each Ministry/Division/Department. Within self-accounting entities the PAO has been delegated the authority by the MoF for the accounting functions and for preparing accounts for submission to the Accountant Generals. The PAO has the authority to control the financial management of the entity under him/her, within the limits prescribed by the Government. They also reconcile accounts with the AG offices.
Thirdly, the District Account Officers are responsible for the accounting functions of the districts. AJ&K is divided into 10 districts. The DAOs have the authority to pre-audit bills, issue payments and record government transactions at a district level. They receive reports from the DDOs and bank scrolls from the SBP/NBP and prepare reports for submission to the AG office. The DAO perform the above mentioned functions for both AJ&K Government and Council transactions occurring within his/her District. Separate accounting records are maintained for Government and Council transactions. In turn the DAO reports both to the AG.
As well as DAOs, departmental treasuries are established to record specific accounting transactions, such as Income Tax, Sales Tax, Customs and National Savings Treasuries.
Personnel functions of specific entities within departments. Each district contains a number of entities each having a DDO. The DDOs have the authority to submit bills for pre-audit to the DAOs, and report to both the DAO of the district and the PAO of his/her entity/department.
At both the Government and Council level, the Government's banker is the State Bank of Pakistan, with National Bank of Pakistan acting as its agent.