Indian Railways

Accounts Department An Overview

Parimal Kasliwal Professor Accounts Management

No Taxation without Representation

265. No tax shall be levied or collected except by authority of law.

112. (1) The President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year, in this Part referred to as the annual financial statement. (2) The estimates of expenditure embodied in the annual financial statement shall show separately (a) the sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of India; and (b) the sums required to meet other expenditure proposed to be made from the Consolidated Fund of India, and shall distinguish expenditure on revenue account from other expenditure.

283. (1) The custody of the Consolidated Fund of India and the Contingency Fund of India, the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of public moneys other than those credited to such Funds received by or on behalf of the Government of India, their payment into the public account of India and the withdrawal of moneys from such account and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by Parliament, and, untill provision on that behalf is so made, shall be regulated by the rules made by the President

Indian Railways and the Constitution of India

Constitutional Provisions
Seventh Schedule Rules of Allocation of Business Railways & MoF

Seventh Schedule
(Article 246)

(List I- Union List)

22. Railways 30. Carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels.

Allocation of Business Rules

RAILWAY BOARD (RAIL BOARD)
1. Government Railways- All matters, including those relating to Railway revenues and expenditure, but excluding Railway Inspectorate and Railway Audit. 2. Non-Government Railways Matters in so far as provision for control by the Ministry of Railways, Railway Board as provided in the Railways Act, 1989 (24 of 1989) or in the contracts between the Government and Railways, or in any other statutory enactments, namely, regulations in respect of safety, maximum and minimum rates and fares, etc. excluding the item of work allocated to the Department of Urban Development. 3. Parliament Questions regarding offences relating to pilferage of railway property other than offences relating to crime on Government Railways and Non-Government Railways. 4. Administration of pension rules applicable to Railway employees.

HISTORICAL BACKGROUND
33 separate Railway administrations (4 by Govt., 5 by Indian Princely states & 24 by pvt. Companies) Headed by an officer of the ICS Assisted by 1 Secretary, 3 Deputy Secretaries, 4 Under Secretaries, 4 Assistant Secretaries 7 circles- Consulting Engineer, Govt. Examiner of Accounts Accounting and auditing by Accuontant General (Public Works Department)

HISTORICAL BACKGROUND
Oct 1901 Sir Thomas Robertson appointed as Special Commissioner of IR Report in 1903 Setting up of Railway Board Chairman & 2 Members March 1905-Control given to Railway Board Examiner of Accounts

HISTORICAL BACKGROUND
1908, Railway Finance Committee Independent of Department of Commerce and industry: Post of Accountant General Railways created Based on recommendations of Acworth Committee (1921), appointment of Financial Commissioner (Railways) in April 1923

HISTORICAL BACKGROUND
Objective-Economy in expenditure of public money; coordination of Railway policy with general financial policy. Separation convention of 1924 Evolution in five stages

HISTORICAL BACKGROUND
Stage I: Railway finance part of Finance Department; accounting by AG Stage II: Appointment of Financial Commissioner (Railways) in 1923 Stage III: Separation process complete in 1929, AG replaced by Controller of Railway Accounts (under FC(Rlys.)) and Director of Railway Audit under Auditor General
Beginning of IRAS

HISTORICAL BACKGROUND
Stage IV: Railway Accounts Department placed under General Manager (Wedgewood Committee (1937))
Change of designation to FA&CAO

Stage V: distinct Finance Branch under Financial Adviser & Chief Accounts Officer (FA&CAO)

Railway Board
Chairman, Railway Board Financial Commissioner (Railways) Members of the Railway Board
Member Engineering (ME) Member Electrical (ML) Member Mechanical (MM) Member Staff (MS) Member Traffic (MT)

Financial Commissioner (Railways)

Separation Convention
Railway Budget separate from General Budget Railway to manage its own finances Sanctioning of Expenditure for Railways

FINANCIAL COMMISSIONER (Railways)

Professional head; ex-officio Secretary to Govt. of India In event of disagreement with Chairman, Railway Board (and the Minister of Railways) in matters concerning Railway Finance, can directly refer to Finance Minister Can issue instructions to all FA&CAOs on accounting and financial matters.

Accounts Department of IR
3 Levels Apex Railway Board Zonal Railway Field Units Audit Offices are attached at all 3 levels; viz. Dy. CAG (Railways) at Railway Board PDA at Zonal Railways Senior Divisional Audit Officer at field level

Financial Commissioner
Accounts Accounting Reforms Finance Finance Budget Finance Commercial Establishment Pay Commission Statistics & Economics

FINANCIAL ADVISER &CHIEF ACCOUNTS OFFICER

FA&CAO/G DY.FA&CAO DY.FA&CAO/G

FA&CAO/WST

FA&CAO/CONSTN

DY.FA&CAO/TFC DY.FA&CAO/Stores

Chief Cashier

Dy FA&CAO/Const

SAO

SAO

SAO

SAO

SAO

SAO

JAO

JAO

JAO

JAO

JAO

JAO

DIVISIONAL ACCOUNTS ORGANISATION

Sr DFM

ADFM

DFM

ADFM

FUNCTIONS OF ACCOUNTS DEPARTMENT

Keeping the accounts of the Railways in accordance with prescribed rules Internal check of transactions affecting the receipts of expenditure of the railways. Tendering financial advice Compilation of budget Other management accounting functions Ensuring financial propriety

MAIN DIVISIONS OF WORK

Administration Booking and Compilation Budget Cash and Pay Compensation Claims Engineering Accounts Establishment accounts

MAIN DIVISIONS OF WORK

Finance and planning Fuel Accounts Inspection(Executive and Accounts Officers) Expenditure accounts PF and Pension Traffic Accounts Stores Accounts Traffic costing Workshop accounts

INTERNAL CHECK OF EXPENDITURE

Precheck and postcheck All claims against the Railways should be prechecked. Payments from imprest, station earning, payments of certain classes of pay bills,master sheets, payments made in advance for purchase of stores may be postchecked.

INTERNAL CHECK
Check of sanctions and orders Check of delegation of financial authority Check of all establishment bills Pre check and post check of expenditure Maintenance of PF accounts Check of pension payments Prior check of all contractors bills, stores bills before passing the same for payment

INTERNAL CHECK
Conducted with reference to rules and orders issued Codal provisions Cannons of financial propriety For example while scrutinizing receipts Amount due to railways are correctly and promptly assessed and recovered All receipts are properly brought into account Correctly clarified/correctly apportioned Sanctioned by competent authority.

RAILWAY ACCOUNTS AS A COMMERCIAL ENTERPRISE

Capital and revenue transactions Capital and revenue accounts Profit and loss accounts, balance sheet Prepared at close of financial year

RAILWAYS ACCOUNTS AS A GOVT. ENTERPRISE

Govt accounts are maintained in 3 parts Consolidated Fund of India(Part I)Article 266 Contingency Fund of India(Part II)Article 267 Public Accounts of India(Part III)Article 268

RESULTS OF INTERNAL CHECK

Irregular payments and objections
Disallowance list,objections statement, objections book, register of serious irregularity

Classification of objects
Want of sanctioned estimate, excess over estimate, irregular personal claims, absence of vouchers

Regularisation of objections
Requiring GMs sanction, Railway Boards sanction, action taken by the Accounts Officer

FINANCIAL APPRAISAL OF RAILWAY PROJECTS

General principles of investment decisions Scrutiny by Accounts Officer Test of remunerativeness-14% New lines, line capacity works, yard remodelling, change of traction,introduction of new services 50 lakhs and above-detailed traffic survey

Structure of Railway Accounts

Revenue- Traffic earning main source, working expenses main revenue expenditure. Capital- Expenditure to increase concrete assets, block account. Debt- Loan and advances. Remittances- Adjusting heads, transfer between different accounting circles.

Performance Budgeting
Demands for grants- Spell out the function, activities and objects. Each demand has three subdivisions- Subhead, detailed head which answers why, primary unit, which answers what. 13 demands for grants. This classification provides direct integration, flexibility, management information.