Functions of Finance dept in indian railways
- 1. Overview of Functions of Finance • Railways - Government concern as well as Commercial Enterprise • Engaged in selling of transport services - Earning Revenue and profits, maintaining its own assets • IR Govt. Department - subject to control of parliament. It cannot spend any money without approval of the parliament through Budget. • Budgeting and Monitoring of Expenditure • Accounting – Monitoring all Transactions – Booking of Revenue and Expenditure in prescribed proforma • Finance Viability of Various activities carried out for Rail Operations • Tendering advice to the Executive departments in all matters involving Railway Finance • Internal check to verify legitimacy of charged expenditure to Railway revenues • Control of Inventory • Costing • GST • To settle proper claims against the Railways promptly. • Establishment matters • House keeping jobs and IT
- 2. Finance Department structure • Member Finance (Railways) • Ex Officio secretary to the Government of India, In financial matters of Railways • Representative of Finance Ministry • Vested with full powers to sanction Railway expenditure subject to the general control of the Finance Minister. • Assisted by Officers in Board- Additional Member, EDs, Directors etc. • Principal Financial Advisor (Zonal Railway and Production Units) • Financial Adviser and Chief Accounts Officer (FA & CAO) • Deputy F.A. & C.A.O (s) and Sr. Accounts Officer/ Accounts Officer • Division level - Sr.DFM/ADFM and other subordinate staff.
- 3. Budgeting • 1921 Acworth Committee- Separated Railway Budget from General Budget • Presently Merged with General Budget • Budget – Annual statement of the Estimated Annual Receipts and Expenditure both on Capital as well as Revenue transactions of an Organisation. • Voted and Charged Expenditure • Demand 85 – Railways - Year wise change – 2 segment Capital and Revenue • Revenue Receipts -1001 (Misc Receipts ) and 1002 (Traffic Earnings) • Revenue Expenditure- 3001 (Misc Expenditure) and 3002 (OWE of Commercial Lines) • Capital Expenditure – 5002 (Commercial Lines) , 5003 (Strategic Lines) • Planning and reviewing the activities of an organization (Estimation process in budgeting) • Review of the preceding year’s physical performance. • Actuals of previous year. • Actuals of receipt & expenditure up to Oct. (7months) and trend for remaining months (5 months) of current year. • Proposals for meeting requirement of the current year (Revised Estimates). • Estimate of receipts and expenditure of the coming year (Budget Estimate)
- 4. Budget Cycle • Budget Estimate Oct Nov previous year • Budget presented to Parliament (Demands) Feb Current year • Grant (Budget Orders), On Account/ Regular March/May Current Year • Revised Estimate Current year and • Budget Estimate Ensuing year Oct Nov previous year • Revised Grant Jan Current year • Final Modification Feb Current Year • Final Grant March Current year • Cash Closing 31st March Current FY • Transfer Transactions April-May- Current FY • Closing of A/C June Next FY • Appropriation A/C Sept Next FY
- 5. Budgeting- Earnings The money earned is not directly available for expenditure to be done by the Railways as it flows into the Consolidated Fund of India. Money is withdrawn from the Consolidated Fund of India (CFI) through the presentation of budget. The money which is drawn from the CFI is under 2 broad categories: Revenue Expenditure and Capital / Works Expenditure • Estimates of Earnings prepared taking into account- • Originating earnings and Apportioned Earnings. • This includes Adjustments with other Railways and other Govt. departments. • Physical parameters • Passenger originating, Passenger Kilometres, Lead • Loading in Million Tonnes, NTKM, Lead • Realization of dues from sundry debtors Classification • Abstract ”X”-Earnings from Coaching traffic • Abstract “Y” Earnings from Goods traffic • Abstract “Z”-Sundry other earnings. • The Internal Check , Collation of Earnings etc is done by Traffic Accounts office.
- 6. Budgeting- Revenue Expenditure • For maintenance and operation of services to generate business and meet other charges and appropriations • Short term (One year) • SMH no 1 to 12 • Allocation – 8 Digit • SMH with Minor Head (100) , Subhead (110) , Detailed Head (111) • Primary Units (Objects) of Revenue Expenditure – Salary, Overtime, advertisement expenses, Contractual
- 7. Budgeting Capital Expenditure • Major Head 5002/5003- Erstwhile Demand no 16--Plan Heads • Allocation- Source( 2 digit CAP -20), 4 Detailed head - 1111 (Preliminary Expenses new Line), Last 2 digit - PU • Book containing Works, Machinery and Rolling stock Programme called Pink Book. • Railway has two sources of receipt – • Govt. grant (i.e. grant from General revenue through budgetary support) • Generation of its own revenue through passenger and goods traffic earnings and other miscellaneous earnings. • Major Sources of Funds for Capital Expenditure • Loan from General Budget – Capital at charge • Internal Surplus Depreciation Reserve Fund (DRF) used for replacements/renewals Development Fund (DF) used for Passenger Amenities Staff Welfare Unremunerative works Safety Capital Fund (CF) for new assets which are remunerative. Partly internal: (RRSK) One time fund for 5 years from Finance ministry – For Safety and Renewal Works(75:25) Safety Fund - funded by Indian Railway’s share of diesel cess in Central Road Fund – ROB/RUB Alternative sources EBR: e.g. IRFC, PPP
- 8. Accounting Statement and Financial Indices • Monthly Account Current – Annual Account Current • Accounts maintained separately for Revenue and Capital purposes • Appropriation Account - : • Block Account including Capital Statement. (Exhibits the entire expenditure of capital nature irrespective of the head of account to which it has actually been charged. ) • Income and Expenditure show the profit or loss made by the Railways during a year • Balance Sheet reflects the Assets and Liabilities, debtors and creditors and various fund balances as well as Cash balance at the end of the financial year. • As per para 434 of F-I, Operating Ratio i.e. A ratio of working expenses to earnings, expressed in percentage terms is to be submitted along with the Appropriation Accounts to CAG for scrutiny and submission to Parliament • Unlike Government accounts which record expenditure only when actually disbursed or receipts only when actually realized, the railway accounts maintained on a commercial basis record the expenditure incurred or earnings accrued in a month irrespective whether they have actually been paid or realized. • Demands Payable is a suspense head of account under the Major Head 3002 & 3003 • Deposits – Deposits made by Parties (Vendors, Other Govt Departments) – Not part of Railway Earnings – Like GST • Miscellaneous advances – Revenue and Capital – Part of Railway Expenditure- Whose Final Allocation not known
- 9. Traffic Accounts Accountal of all the earnings correctly and timely .The flow of earnings from the origin to final account monitored and checked in TA Branch • That the party to whom the service is rendered pays the proper amount • that the railway servants receiving payment correctly account for the same ; • and that, if more than one railway renders the service; the amount is properly distributed between them unless otherwise provided for any specific traffic. • Associate Finance to Commercial department • Evaluating Earning Proposals • Carries out internal Check of earnings • Compilation of earnings Budget • Raising of Carriage bills against Defence, BSF, CRPF, AGs etc., and realise the earnings • Compilation of Accounts Office Balance Sheet • Issue of Error Sheets Short collection, , Undercharges, Non- accountal and Misappropriation of cash etc., • Compilation of Outstanding Lists • Inspection of Station Accounts through the Mechanism of Sr TIAs
- 10. Stores Accounts • Responsible for looking into procurement, accounting, and payment for stores, as well as advising on inventory management and budget adherence. • Associate Finance to Stores department • Direct Purchase (Stock) and Purchase Through Stores (Non Stock) • Indent and Requisition Vetting( Indent received from Stores Department for both Stock and Non Stock Items and Requisition received Consuming Departments for non stock items) • AAC/EAC vetting of A category items for Stock items received from Stores Dept. • PO/Modification Advice vetting in case of financial implication (30% option clause and other amendment in PO conditions such as change of bank details) • Vetting of Sale order for Excess Depot items sold to other Railway and other Govt Deptt. • Concurrence of RSP Proposal(itemised/umbrella work) and Detail Estimate received from mechanical /electrical and Engg Dept. (Rolling stock and spares etc) • Concurrence for 100 % Advance payment for HSD oils , Lubricants and other safety and vital items. • Concurrence for Condemnation of Premature/under-aged Assets for high value machinery and Rolling Stock items • Concurrence for creation of new Consignee Code (To issue material from Stock Depot to User Department ) • Inventory Control/Accountal of Depot Material- Issue of Stock items to WMS(under PU-05) and to Revenue(under PU-27). Maintenance of Stores Priced Ledger and Class Ledger duly reconcile with Stores Bin Card .Communicate the Stores Balance to COS office every month highlighting high value items for proper management in inventory control(by reducing purchase activities) • Bill Passing (Stock, Non-Stock i.e Engineering and other than Engg Bills). Passing of Stock items purchase through tender, Non Stock Items PO of Stores Deptt and Engineering Rails and Sleeper Bills.
- 11. Stores Accounts • Stores Budget- Stores Budget is an integral part (under plan head No.71) of Railway Budget under Demand No.16. Assets, Acquisition, Construction and replacement. Stores Budget is in two parts i.e. Part ‘A’ containing details of stores other than fuel and Part ‘B’ containing details of stores fuel. Based on annual requirements submitted at the programmed schedule, Stores department procures the material and stocks the same in the Depots. • Stock Verification. Verificatrion of stocks of all departments including T & P items as per Annual Programme drawn and approved by FA & CAO. Accountal of shortages and excess through Stock Sheet and recoveries for shortages from staff responsinbel. • Scrap sale- Lot formation, witnessing of Scrap sale and Accountal of scrap items both Depot items and Engg items(rails ,sleepers etc) • Concurrence of Cancellation of Lots of Scrap sale due to administration/Default party ground • Maintenance of all Suspense Register- in IMMS Suspense module. • 1.Purchase Suspense- This module is developed to maintain purchase of Store materials and passing of Bills and Posting of Receipt notes and Bill passing derails in suspense register and watching of receipt of material specially in case of advance payment and materials received from other Railways. • 2.Sales Suspense- Accountal of Scrap sale for both Depot scrap and Line Scrap(engg items) . Reconcile the Amount realised from scrap sale with RIB and transfer the amount to the final head by preparing JV( PH-31 credited for Engg Scrap) • 3.Other Suspense- SINT (Stores in Transit ) and Stock Adjustment Account
- 12. Co-relation between Stores, WMS & Revenue • PU27 • Issues to Revenue (Cr side) • Issues to WMS (Cr side) • ‘Materials and Stores’ (Dr Side) Revenue Budget Stores Budget Stores Budget WMS
- 13. Finance and Bill passing Function • MSOP • GFR 2017 • USSOR • DSR • Negative Powers of GM • Code Books and other Circulars • Tendering Process through IREPS, GeM