Indian Railway Codes and Manuals-Finance code-Vol-I-Chapter- 5 (V)

 

CHAPTER-V

Budgetary & Expenditure Control Financial/ Management Reporting

501. As stated in para 304, the Railway Budget is an important instrument of Parliamentary Financial Control, expenditure control and management tool. The financial targets as set out in Budget broadly guide the performance targets of the Railway administration. The manner in which budgetary and expenditure control is exercised is stated in the following paragraphs.

502. Gross Revenue - It is important that a continuous and concurrent watch is kept on the realisation of revenue as envisaged in the Budget. This is done through the medium of a ten-day statement of revenue on "originating" basis and monthly financial review on „apportioned‟ basis. These statements should give also the proportionate budgeted revenue on originating and apportioned basis and the actuals for and to end of the relevant period of the preceding year for comparison. The originating basis is adopted to secure prompt reporting since the Railway wise apportioned revenue for each month does not become available until a week later. Enhancing the Gross Revenue is of utmost importance and it should be ensured that any shortfall in any segment of traffic revenue is promptly brought to the notice of concerned departments.

503. A monthly statement of „approximate' gross revenue on the basis of estimated apportionment between various Zonal Railways is also sent by the Railways to the Railway Board in the first week of the following month in Form 344-A l. This statement should be compared with the proportionate budget for and to end of the month to see the extent of variations, if any, between the budget and actuals, ascertain the causes thereof and take such step as are necessary.

504. Revenue and Capital Expenditure -As all Railways expenditure, other than that “charged” on the Consolidated Fund of India, is voted in the form of the Demands for Grants (para 305), the budgetary control is intended to ensure that expenditure is incurred for the purposes and within the limits, as voted by Parliament. The authorities responsible for the control of expenditure against each Major Head of the Grant are detailed in Annexure I to Chapter III. While it is the duty of the Railway Board, as the controlling authority in respect of the total amount of each Major Head within the Grant voted by the Parliament and Appropriation sanctioned by the President, to watch the progress of expenditure and to keep the aggregate charges within the amount of the Grant or Appropriation placed at their disposal, it is the responsibility of the individual 4 railway administration to exercise a similar control over the allotments placed at their disposal. When several officers are authorized to incur expenditure relating to a submajor head, against a lump sum allotment placed at the disposal of a single higher authority, it devolves upon this authority, to watch the progress of expenditure in all the concerned offices and to keep the aggregate charges within the allotment fixed under that sub- major head.

505. Power to incur expenditure on Railway matters have been delegated by the Ministry of Railways (Railway Board) to authorities subordinate to them (vide Annexure I (Now deleted) and Annexure-II). The exercise of authority for incurrence of expenditure carries with it also the responsibility for control of expenditure within the authorized limits. Further, these powers are subject to provisions contained in the various Codes, rules and regulations and also observance of the standards of financial propriety (Para116).

506. Revenue Expenditure -The revised and budget estimates of ordinary working expenses submitted by the General Manager to the Railway Board are based on detailed-estimates of revenue expenditure obtained by him from the various heads of departments of the railway. On receipt of the allotment from the Railway Board, these detailed estimates may require modification consistent with the allotment sanctioned by the Railway Board or as may be deemed necessary by the General Manager.

507. (Ref Para 506). Within the amounts of the allotments fixed by General Manager under paragraphs 365 and 506 for the various spending authorities in charge of divisions and departments, such authorities have full power to sanction expenditure on revenue account during the year, subject to the condition that the specific sanction of the competent authority must be obtained separately to all items of expenditure on establishment and experimental or special temporary works where under rules or orders such sanction is necessary; in a case in which the General Manager has prescribed that detailed estimates should be prepared and administrative approval and technical sanction obtained before the incurrence of expenditure, the procedure laid down by the General Manager must be followed. The sanction as prescribed should be accorded only after ascertaining the quantum of allotment. A liability register should be maintained by executive as well as accounts office for the same including, inter alia, incurred as well as accrued liabilities. Any sanction should not be based merely on past trends. The principles of Zero Based Budgeting i.e. necessity and utility of any expenditure being sanctioned must be thoroughly applied prior to according sanction. 5 507 A. (Ref Para 506). A sanction for any fresh charge shall, unless it is specifically renewed, lapse if no payment in whole or in part has been made during a period of twelve months from the date of issue of such sanction. Provided that – i) when the period of currency of the sanction is prescribed in the departmental regulations or is specified in the sanction itself, it shall lapse on the expiry of such periods; or ii) when there is a specific provision in a sanction that the expenditure would be met from the Budget provision of a specified financial year, it shall lapse at the close of that financial year; or iii) in the case of purchase of stores, a sanction shall not lapse, if tenders have been accepted (in the case of local or direct purchase of stores) or the indent has been placed (in the case of Central Purchases) on the Central Purchase Organization within the period of one year of the date of issue of that sanction, even if the actual payment in whole or in part has not been made during the said period. Notwithstanding anything contained above, a sanction in respect of an addition to a permanent establishment, made from year to year under a general scheme by a competent authority, or in respect of an allowance sanctioned for a post or for a class of Government servants, but not drawn by the officer(s) concerned, shall not lapse.

508. Proportionate Budget allotment -For the purpose of carrying out a meaningful comparison of the actual working expenses for (and to end of) the month with the budget allotment, it is necessary to distribute the sanctioned allotment for the year over the twelve months after taking all known factors of disturbance or special features into account. While the responsibility for the control of expenditure against the budget allotment devolves upon the authority at whose disposal the allotment has been placed, it is the duty of the Accounts Officer, in his capacity as the financial adviser to the Administration, to render all possible assistance to the controlling authorities in the exercise of such control. Accordingly, he/she works out, at the beginning of each financial year, in consultation with the officers responsible for the control of expenditure, the estimated progressive expenditure (Proportionate Budget Allotment – BP) under each Major Head and sub major head keeping in view the following factors: i.Throw forward from the previous year. ii. All expenditure whether in cash or by transfer, the liability for which already exists, but which is not likely to be distributed evenly during the year, whether 6 because it is of a periodical nature, or because it is contingent on the receipt of supplies, or for any other reason. iii. Expenditure which is practically fixed and evenly distributed throughout the year. iv. Other expenditure which is likely to be incurred during the year but liabilities for which have yet to be incurred. v. The need to keep some amount as a reserve for meeting fresh or unanticipated expenditure. The BP so fixed may be fed in accounting software (IPAS) for monitoring of progress of expenditure.

509. In respect of sub-heads for which such detailed analysis is not practicable or necessary, may be ,interalia ,because the expenditure does not fluctuate from month to month, e.g. establishment charges, past actual as worked out for a number of years may form the basis for this estimate.

510. From the details thus worked out, the "Proportionate Budget Allotment- BP" for each month is worked out for each sub-major head of the Major Head, and the progress of expenditure under each sub-major head is then watched from month to month through Monthly Financial Reviews (see paras 511&513) in order to see that the expenditure is according to anticipations and not at a pace which is likely to lead to an excess at the end of the year.

511. Monthly Statement of Approximate Receipts and Expenditure -A statement of approximate receipts and expenditure under such heads as may be prescribed should be sent to the Railway Board. The merit of this statement lies in supply of information promptly to the Railway Board for the purpose of watching the expenditure against the proportionate budget allotment. The monthly statements will, on receipt from the various railways, be consolidated in the Railway Board's office in one single statement for all the railways. A copy of the consolidated statement should also be furnished to the Ministry of Finance of the Government of India and the Accountant General, Central Revenues, in the first week of the second month following that to which it pertains.

512. Revenue Allocation Registers -As described in para 311 of Accounts Code part I, all revenue expenditure is to be recorded in Registers, which are known as Revenue Allocation Registers, by the various heads of accounts prescribed in the classification given in Appendix I (Volume II). The object of these registers is to keep the heads of divisions, and departments informed of the progress of expenditure 7 against the allotments placed at their disposal by the General Manager, which should be entered in red ink in the appropriate columns provided for in these registers, so as to form a ready means of comparison and check with the outlay. However, under computerized system, the RAR may be drawn through system and used for complying with the above objective.

513. Monthly Financial Reviews -The monthly reviews show the expenditure to the end of the previous month, against the allotment placed at the disposal of the controlling authorities under each sub-major head of the Major Head for which they are responsible. The review should be prepared in Form No.513 and submitted to the controlling authorities every month, by such date as maybe fixed in consultation with them. It may be ensured that no liability is committed to in excess of the respective allotments as derived from the Monthly Financial Review.

 

514. The "Proportionate Budget Allotment" to the end of the month (column 3) is worked out by the Accounts Officer in accordance with the Instructions contained in paragraph-508 above. The figures of actual expenditure for and to end of the month (column4), and for the corresponding period of the last year (col.5) will be available from the Allocation Registers and the compiled accounts. The Accounts Officer should complete the other columns of the review provided above and submit it to the controlling authority, along with the comments of the executive officers responsible for the expenditure and with such remarks of his own as may be necessary

515. In compiling this review, the Accounts Officer should see whether

a) The non-fluctuating expenditure is in accordance with the monthly appropriation as worked out on the basis of actuals in past years,

b) The periodical expenditure is in accordance with the proportion at budget allotment,

c) The correlation assumed between receipts and expenditure, in the preparation of the budget is maintained. For the purposes of this comparison, items pertaining to the period, but remaining unadjusted for any reason, should not be lost sight of.

Care must be taken to ensure that any major deviation in anticipated expenditure, which may either result in extra spending or savings, are accounted for even in case of non-fluctuating expenditure. Savings can be affected due to cancellation of large number of trains for prolonged period, spending can increase due to implementation of Pay commission, commissioning of a new block section etc.

516. The Monthly Financial Reviews should be prepared by the Divisional/Workshop/ Construction Accounts officers concerned for each Division/Workshop/Construction Unit and the Financial Adviser and Chief Accounts Officer should arrange for the consolidation of these reviews into the Monthly Financial Review for the railway, the details of procedure and the due dates being prescribed in consultation with the railway administration.

517. Re-appropriations -No liability, for which a provision does not exist or the provision for which is inadequate in the allotment sanctioned by the General Manager, should be incurred unless the necessary funds can be obtained either by reappropriation or fresh allotment. Such liabilities may, however, be liquidated provisionally, if otherwise in order, on the spending authority‟s undertaking to find the requisite funds. All such expenditures should, however, be held by the Account Officer under objection "for want of appropriation " or as "excess over appropriation."

518. The Accounts Officer should advise the spending authorities about reappropriations wherever needed, and how they are to be made. He should ensure that re-appropriations are carried out promptly and that whenever a saving under some head is reasonably certain, steps are taken at once to withdraw funds from the subhead, and whenever it is clear that the progress of expenditure under some head is such as to require an additional appropriation, steps are taken to arrange for it by reappropriation or otherwise.

Expenditure On Acquisition, Construction And Replacement Of Railway Assets

519. Separate allotments are placed at the disposal of railway administrations under 9 each Grant for expenditure on works chargeable to Capital, Depreciation Reserve Fund, Development Fund, Railway Safety Fund, Rashtriya Rail Sanraksha Kosh and Capital Fund. These allotments are made in lump sum and their distribution over the various sub-heads and over the works for which they are intended are spelt out in the 'Works, Machinery and Rolling Stock Programmes' which are furnished to the railways along with the Budget orders sanctioning the allotments. These “Programmes” also show, in the case of work costing Rs 2.5 crore and above each, the total estimated cost of each work, and the Railway administrations are required to exercise a control over expenditure, not only against the allotment sanctioned for the year for each work, but also against its total estimated cost as shown in the 'programmes'. In regard to works costing not more than Rs.2.5 crore each, a lumpsum is allotted to each railway administration in the programmes; before any expenditure is incurred against the lump sum allotment, the estimates of such works should be sanctioned by the General Manager or any lower authority empowered by him in this behalf. Thus the control of expenditure on railway is exercised through1) the-preparation, in advance, of estimates of the expenditure to be incurred; 2) the allotment of funds through budget Grants for the year, on the basis of these estimates; and 3) the continuous and concurrent review of the expenditure as incurred against the details of the estimates and against the sanctioned grants, so that revisions of estimates or re-appropriation of funds are arranged for at the earliest possible point of time. The procedure to be followed in controlling expenditure against estimates is detailed in Chapter XIV and XII of the Indian Railway Code for the Engineering and Mechanical Departments, respectively.

520. Watch over Progress of Expenditure -From the moment expenditure or liability is incurred on works, a check at regular and frequent intervals should be made on its progress, both against estimates and against funds. The check should originate in the lowest executive unit,viz., a division.

521. The Works Registers (Form No. E. 1474) maintained in each division enable a running comparison to be made betweena) The expenditure incurred on each work and the detailed provision made in the estimate for the work, and 10 b) the budget allotment for the work and the actual expenditure to the end of the month. The executive officer should examine the works registers monthly or at more frequent intervals, and watch the progress of expenditure on each work, so that any tendency towards excess over sanctioned estimates may be investigated and curbed, or fresh administrative and technical sanction is obtained in time to cover the anticipated excess.

522. The Accounts Officer should also watch the progress of expenditure on works on the lines laid down in paragraphs 523 to 533 and advise the executive officers as to the need of re-appropriations, whenever such necessity arises (vide paragraph 518).

523. In watching the progress of expenditure on works, the Accounts Officer should see whether

a) the expenditure upto any date is not in excess of the estimate for the quantum of work done;

b) the anticipated credits have actually been realized;

c ) all adjustments are made in time and d) expenditure on any new work is not met by merely postponing or retarding the progress of sanctioned work.

524. Review of Expenditure -The Accounts Officer should prepare every month two reviews, one by Sub-heads /PlanHeads of the Grant and the other by individual works, and present them to the authorities concerned by such dates as may be fixed in consultation with them.

525. The review of expenditure chargeable to Capital, Depreciation Reserve Fund and Development Fund by Sub-heads /Plan Heads of the Grant, should be prepared monthly by the Accounts Officer in Form No. F. 525. Form No. F. 525 Review showing, Progress of Expenditure chargeable to Capital, Depreciation Reserve Fund and Development Fund to end of--------------

The quarterly reviews for period ending June, September and December may be sent to the Board as per extant guidelines.

Reasons for variations and brief remarks as to the rate of progress of expenditure to be indicated in column 12 of the Form should be meaningful and should be recorded in consultation with the spending authorities.

526. The review of expenditure by works should be prepared in Form No. F. 526

528. The review of the expenditure on the new lines (construction) should show the information in regard to each construction shown in the "Works, Machinery and Rolling Stock Programme" for the current year or for which, though not so shown, there is a „throwforward'.

529. In the case of works, other than track renewals and rolling stock, the review should be made in respect of

i) each individual work estimated to cost over rupees 2.5 crore and above shown in the Works, Machinery and Rolling Stock Programme for the current year, or for which though not so shown, there is a 'throwforward'.

ii) All works costing not more than rupees 2.5 crore each whether in progress or new, not as individual works but as one item for the total of such works, including the „throw forwards'. If the General Manager so directs, the review should show in detail each item of work for which an estimate has been sanctioned.

530. In regard to track renewals, the review should show each item of work for which a separate estimate has been sanctioned by the competent authority.

531. As regards Rolling Stock, each individual item shown in the Works, Machinery and Rolling Stock Programme for the current year or which, though not so shown, there is a throwforward from the previous year, should be included in the review under the following detailed heads.-

i) Locomotives.

ii) Boilers.

iii) Carriages.

iv) Wagons.

v) Ferries.

532. With a view to complete the review, the information in regard to

(a) the expenditure for the month,

(b) commitments which have neither been paid for nor included in the accounts for the month and

(c) the amount of probable further outlay to complete the work(columns 6 (ii), 7 and 9 of Form No. F 526) should be obtained by the Accounts Officer from the controlling authorities concerned.

533. The figures of 'actuals' required for the review will be furnished to the concerned authorities by the Accounts Officer immediately after such figures are available. The reviews should be completed by them in accordance with the instructions contained in paragraphs 525 to 531 and submitted to the Financial Adviser and Chief Accounts Officer, so as to reach him by the date stipulated by Board.

534. Control of Expenditure against the Capital Suspense Grant -The details of allotment placed at the disposal of Railway Administrations under the sub-beads/ Plan heads "Stores Suspense" and "Manufacture Suspense" under capital section are shown on the debit side of the statements of "Stores' Transactions" and "Manufacture Operations" included at the end of the "Works, Machinery and Rolling Stock Programme" furnished to the Railway with the Budget Orders. The details of anticipated credits under these suspense heads are shown on the credit side of the said statements.

535. The detailed manner, in which the control over expenditure, against the funds allotted for purchases of stores under "Stores Suspense" should be carried out, is prescribed in paragraphs 505 to 507 and 2862 of the Indian Railway Code for the Stores Department.

536. Monthly Reviews of Suspense Grant -The progress of debits against the allotments sanctioned by the Railway Board under 'Stores Suspense' and 'Manufacture 15 Suspense' and the credits in respect of these suspense heads anticipated to be adjusted in the accounts should be reviewed by the Accounts Officer in the form given below.—

537. The information in column 1 of the review should be given under all the sub and detailed heads appearing in the statements of 'Stores Transactions' and 'Manufacture Operations' referred to in paragraph 534. In column 7, the Accounts Officer should furnish the comments on the progress of actual debits as compared with the sanctioned allotment and credits as anticipated.

538. The attention of the General Manager should be drawn to the progress of debits and credits, if it shows any necessity for the curtailment of the programme of purchases. Debits and credits may be sub-divided by the more important items of stores, if the railway administration so require, in order to regulate purchases.

539. Financial Adviser and Chief Accounts Officer‟s Review of monthly Receipts and Expenditure – Financial Adviser and Chief Accounts Officer should submit summary of periodical budgetary MIS of receipts, revenue and capital expenditure to General manager to enable him to review progress as per milestones.

 

Exchequer Control

540. All executive officers of the Railway Administrations, who are empowered to authorize revenue/capital expenditure, must ensure that no expenditure is incurred in 16 excess of the sanctioned allotments. Any such excess has to be viewed as a 'lapse' for which the officer concerned is liable to be held personally responsible. Railway expenditure falls into two categories viz., cash and adjustments. The former covers all transactions completed through cash-payments or issue of cheques and broadly comprises disbursements to staff and outsiders as also settlement of bills/claims for supplies and services. Adjustments represent inter or intra accounting unit book keeping transactions which entail no cash outgo. Exchequer Control is a mechanism for concurrent regulation of cash outgo by each Disbursing Officer against the cash content of the budget allotment. The object of Exchequer Control is to establish a system for correct estimation of cash outgo and to monitor disbursements. It is thus an important tool of budgetary control. It is, therefore, important that there should be a total commitment at all levels of Railway Management to the Exchequer Control procedure.

541. Importance and limitations of Exchequer Control--Para.539 requires the compilation of a 'Financial Review' wherein the revenue receipts and expenses of each Railway Administration for and up to the end of every month are compared to the proportionate sanctioned budget and variances explained. However, as the figures of actual receipts and expenses for a month are available only in the first or second week of the second following month, there is a time lag of 6 to 8 weeks between incurrence of expenditure or realization of revenue receipts and their review with the proportionate budget. The reason for the time lag is that while cash disbursements and receipts are accounted for immediately, book adjustments between one accounting unit/Railway Administration and another take a great deal more time; the books of account for a month are, therefore, kept open for a longer period to accommodate such 'book adjustments'. As 'cash' forms, most of the total expenditure of a Railway, Exchequer Control has the merit of providing an effective means of monitoring a substantial part of the expenditure on a day-to-day basis.

542. Since the budgetary allocations are sanctioned only for expenditure, Exchequer Control mechanism is necessarily limited in scope to the control of cash outgo. Railway revenue receipts are thus excluded from the purview of Exchequer Control but are subject to usual examination through the monthly financial reviews as well as the recurring scrutiny of cash remittances from stations and of Bank advices.

543. Exchequer Control implies a self-imposed expenditure discipline by means of a system of day-to-day monitoring to ensure that the cash component of the budgetary allocations is not exceeded. For this, the IPAS module may indicate the cash component of each month‟s revenue/capital expenditure by way of BP (Budget proportion) as also in the trends of expenditure (for and to end of a period).

544. Railway budgeting is on 'gross' basis. i. e., Parliamentary approval is obtained for gross expenditure, ignoring the credits/recoveries which are outside the scope of the Demands for Grants. The actual cash against each budget Demand is also „gross', since credits/recoveries are usually effected through 'book adjustments' or receipts of cash. Further, the sanctioned budget grants involve a certain amount of overlap, e.g. ,funds for purchase of stores are sanctioned under Capital Section of Demand, but when the purchased stores are utilized for (say) maintenance and operation, budget allocations are also provided under Revenue section. Cash outgo is, however, involved only at the first point of activity, i. e., when stores are purchased and paid for and the 'overlap' is represented in railway accounts through 'book adjustments'.

545. Implementation of Exchequer ControlImplementation of Exchequer Control involves the following steps.- i) Correct assessment of the 'Cash' and 'adjustment' portions of the sanctioned annual budget under each segment of the Demand by each Disbursing Officer, and also the cash disbursement in respect of 'non-budget' items e. g. refund of fares and freight. ii) As accurate an assessment as possible of the monthly requirement of cash, iii) Issue of monthly cash authorization to Disbursing Officers, and iv) Concurrent control of cash outgo by each Disbursing Officer. For the above, the Financial Adviser and Chief Accounts Officers, while submitting their Budget Estimates of revenue / capital expenditure and expenditure for Non-budget items to Railway Board, need to submit monthly/quarterly expenditure plan (MEP/QEP) with Cash/Adjustment bifurcation.

546. Assessment of Cash Outgo-General Guidelines Broad guidelines for making a realistic estimate of the 'cash 'and' adjustment' portions of expenditure falling within the sanctioned budget as well as in respect of' non-budget items' are given in Annexure III. 'Adjustments' may involve transactions between two or 18 more accounting units within the same Railway Administration or between one Railway Administration and another or between a railway and a non-Railway Administration. For example, as stated in para 544, issue of maintenance stores from stock will involve book adjustment by transfer from 'Stores Suspense' under Major Head 5002/5003 to the final head under sub-major heads 04-07 of Major Head 3002/3003. Likewise, in the case of contracts where one Railway Administration is nominated as the paying authority for supplies to be despatched to consignees on other railways, the disbursements by the former will involve cash outgo, but would appear as 'adjustments' in the books of the consignee Railways. The assessment of cash and adjustment portions of the expenditure must, therefore, be made very carefully by each Railway Administration strictly in accordance with the guidelines given in Annexure III. As a further check on the reasonableness of the bifurcation between cash and adjustment, comparison with the corresponding figures of the previous year (s) would also be useful.

547. Staff -The total revenue expenditure of the Railways is accounted for mainly under the heads 'Staff', 'Fuel & Stores' and 'Miscellaneous'. The commitments in respect of staff payments are easily ascertainable, and the cash outgo will represent the net amount payable to the staff, recoveries made through pay rolls/settlement bills being shown as 'adjustments' except in so far as some of them have also to be paid out in cash, e. g., Court decrees, payments to Co-operative Societies etc., (cash & adjustments taken together should add upto the gross debit to the final heads).As staff expenditure does not usually fluctuate to the extent adjustment expenditure does, the outgo on account of cash payments is capable of fairly precise estimation on the basis of the past actual and other relevant factors.

548. Fuel -As regards 'fuel' Exchequer Control is applied at the stage of 'purchases' of coal and diesel oil under 'Stores Suspense'. Under the final heads, however, the payment of tax element as well as the cost of electric current for traction purposes and handling charges will involve cash disbursements. Provision for the cash outgo in respect of 'fuel' will, therefore, be made at the point where cash payment is involved, having due regard to the performance link-up for fuel under sub major head 08.

549.Works and Stores -Works and Stores expenditure involve a substantial amount of cash outgo for payment to contractors/suppliers and departmental establishment. Likely payments to contractors/suppliers should be forecast by the departmental officers on the basis of the budget allotment, progress of works and purchase orders, and the contract terms regarding on account/ final payments.

550. For other disbursements covering Compensation Claims, Municipal Services and Port Charges etc., quarterly/monthly estimates, should be based on the claims likely to be discharged during the period.

551.Civil Grants -Payments against Civil Grants such as 'Loans & Advances' and 'Debt/Deposit' heads mainly involve cash outgo. There is an annual budget for the Civil Grants and this should be the guiding factor so far as the cash outgo for the year is concerned. Subject to this limitation the best possible way of estimating the likely cash outgo for the year would be the past actuals subject to any specific orders of Government regarding advances etc. For short-term forecasts, the claims pending for payment during the quarter/month should be evaluated and provided for.

552.Railway Board Contracts -The effectiveness of Exchequer Control as an aid to budgetary control depends on the extent of its coverage of Railway Transactions. In this connection two important areas of control over cash disbursements in respect of contracts placed by the Railway Board are

i) Bulk Order contracts, and

ii) Contracts for purchase of free-supply items, steel, track material signalling and general electrical equipment for Open Line Railways and Electrification Projects, etc. The principle in both the cases is the same, viz., one or more Railway Administrations is/are nominated for making payment to the suppliers, and the debits are then transferred to the Railways concerned in respect of the materials consigned to them. So far as the paying Railways are concerned, authorizations for cash disbursements will be given to them in addition to their own sanctioned budget whereas, for the consignee Railways, there will be no cash authorization, the transaction being only a 'book adjustment'.

553. In the Railway Board, the Directorates placing the orders will furnish to the Budget Branch (Exchequer Control) a statement in the following proforma. This statement should be sent at the beginning of the year, and supplemented, as necessary, during the course of the year.

In the case of the Railway Board Bulk Order contracts, the estimated amount of payment during the year should be reconciled with the provision in the sanctioned budget to ensure that payments made by the disbursing units are in line with the budgetary allocations.

554.Assessment of monthly cash outgo- As indicted in Para 545, the PFAs, while submitting their Budget Estimates of revenue / capital expenditure and expenditure for Non-budget items to Railway Board, need to submit Major Head-wise monthly/quarterly expenditure plan (MEP/QEP) with Cash/Adjustment bifurcation.

This statement will form the basis for the Board to issue monthly authorization of cash expenditure to each Railway Administration and by the latter to the various disbursing units within the Railway keeping in view the sanctioned budget and extant instructions of Ministry of Finance.

555.Control of cash disbursements-Spending Units like Zonal Railways/Production Units and other Units would project their cash expenditure requirement on a monthly basis by the last working day of a month for the following month under revenue heads (Staff/Pension, Other than Staff), Capital heads (GBS, Railway Funds, EBR) and Non budget items in the manner prescribed by Railway Board (Budget Directorate) from time to time. Based on the sanctioned budget, the Railway Board (Budget Directorate) would issue authorisations for such cash expenditure. The Units may seek authorisation of additional cash expenditure for a month by 20th of the month, if any. Cash utilisation should be reported to Board by 5th of the following month in the manner prescribed by Board. IPAS (accounting and transaction software) shall disallow any expenditure beyond the authorisation given to the spending unit. PFAs would however have the discretion to  allow additional expenditure beyond authorisation in case of exigencies while keeping the Board informed.

556. Deleted

557. Various documents and returns prescribed have to be submitted to Railway Board as per the extant schedule issued by Board.

558. Deleted

559. Watch over Expenditure and Revenue of the last quarter of the yearSpecial watch over the progress of expenditure and revenue receipts should be kept by the Financial Adviser and Chief Accounts Officer in the last quarter of the financial year, and the attention of the controlling authorities should be drawn to the necessity of the re-appropriations, withdrawals or additional allotments, as the case may be, and the manner in which such re-appropriations should be made. Orders of the General Manager should also be obtained as to whether savings in the current year's grant, represented by the carry-forward to the subsequent year should be permitted to be utilized for meeting any other expenditure recurring or non-recurring, during the year. If any such savings, or any other savings of a non-recurring character, are sought to be utilized by any authority to meet fresh recurring expenditure, it should be brought to the notice of the General Manager and ,in important cases, to the notice of the Member Finance, Railway Board, as well, through the proper channel.

560. Annual Review of Expenditure- The total expenditure for the year, as actually booked in the accounts of each railway, against the various Grants and Appropriations, is reviewed through the „Appropriation Accounts‟ described in Chapter IV Of this Code.

Annual Reports Of Railways

561.Object and Scope -Each Railway Administration should submit to the Railway Board an Annual Report reviewing the year's working under all departments and referring to any matters either materially affecting the results of working or of general interest. These reports are intended for the use of the Railway Board and the administration of the railway concerned.

562. Reports prepared by the Railways will consist of four parts, viz

I. Report Proper (the narrative portion).

II. Financial statements (Capital and Revenue Accounts).

III. Analysis of Working (Statistical Statements.)

IV. Appendices (Statistical Statements.)

563.Responsibility for preparation-The administrative head of the Railway is responsible for the preparation and submission of the Report, the Accounts Officer compiling the Financial Statements and furnishing such other information and figures as may be required for the purpose of the Report.

564.Section-I-Report Proper -This section which is signed by the Head of the Railway Administration should be devoted to a review of the working of the railway during the year. It should contain for instance, the reasons for variations in gross receipts and departmental expenditure (generally as compared with the previous year); brief descriptions of exceptional events, such as damages by floods, etc., and the measures taken to cope therewith; important fluctuations in the operating results together with the contributory causes; major works undertaken or completed during the year; and steps taken to improve or add to the facilities provided for the comfort of the travelling public, particularly lower class passengers, etc.

565.Section II-Financial Statements -This comprises a set of statements of accounts of the capital and revenue transactions of the railway. These should be prepared in accordance with the instructions laid down in Chapter VII of the Indian Railway Code for the Accounts Department, Part I.

566. Section III- Analysis of Working -This section should include statistical statements dealing with the different aspects of railway working, which are chiefly used for the compilation of the statistics published in Indian Railways-Annual Statistical Statements by the Railway Board. This section should also contain detailed Statements of Rolling Stock, Statements of Revenue (Earnings and Expenditure) and of Operating Statistics.

567. Section IV-Appendices -Statements relating to number and cost of staff, accidents, etc., should be included in this section.

Multiple choice questions:

1.The Railway Budget is an important instrument of:

a) Parliamentary Financial Control

b) Expenditure Control

c) Management Tool

d) All of the above

Answer: d) All of the above

2.Continuous and concurrent watch on the realization of revenue is done through:

a) Weekly statements

b) Ten-day statement of revenue

c) Annual financial review

d) Quarterly reports

Answer: b) Ten-day statement of revenue

3.The monthly statement of approximate gross revenue is sent to the Railway Board in the first week of the following month in which form?

a) Form 344-A

b) Form 501-B

c) Form 440-A

d) Form 403-A

Answer: a) Form 344-A

4.Who is responsible for the control of expenditure against each Major Head of the Grant?

a) General Manager

b) Railway Board

c) Accounts Officer

d) Spending Authorities

Answer: b) Railway Board

5.The responsibility for the control of expenditure within the authorized limits is exercised by:

a) The Ministry of Finance

b) The Railway Board

c) Authorities subordinate to the Railway Board

d) The Public Accounts Committee

Answer: c) Authorities subordinate to the Railway Board

6.A liability register should be maintained by:

a) Executive office only

b) Accounts office only

c) Both executive and accounts office

d) None of the above

Answer: c) Both executive and accounts office

7.The principles of Zero Based Budgeting emphasize:

a) Necessity of the expenditure

b) Past trends of expenditure

c) Previous year’s expenditure

d) Fixed budget allotment

Answer: a) Necessity of the expenditure

8.A sanction for any fresh charge lapses if no payment has been made within:

a) Six months

b) Nine months

c) Twelve months

d) Eighteen months

Answer: c) Twelve months

9.The "Proportionate Budget Allotment" for each month is worked out by:

a) General Manager

b) Accounts Officer

c) Railway Board

d) Spending Authorities

Answer: b) Accounts Officer

10.The statement of approximate receipts and expenditure is sent to the Railway Board:

a) Quarterly

b) Monthly

c) Annually

d) Bi-annually

Answer: b) Monthly

11.Revenue Allocation Registers are maintained to:

a) Keep track of revenue collections

b) Monitor the progress of expenditure against allotments

c) Record capital expenditures

d) Manage staff salaries

Answer: b) Monitor the progress of expenditure against allotments

12.Monthly Financial Reviews are prepared in which form?

a) Form No. 344-A

b) Form No. 501

c) Form No. 513

d) Form No. 401

Answer: c) Form No. 513

13.Re-appropriations are necessary when:

a) There is no provision or inadequate provision in the budget allotment

b) Expenditure matches the budget allocation

c) Expenditure is under budget

d) There is surplus revenue

Answer: a) There is no provision or inadequate provision in the budget allotment

14.In the Monthly Financial Review, the figures of actual expenditure are obtained from:

a) Financial statements

b) Allocation Registers

c) Revenue reports

d) Expense vouchers

Answer: b) Allocation Registers

15.Who consolidates the Monthly Financial Reviews for the railway?

a) Divisional Accounts Officers

b) Construction Accounts Officers

c) Financial Adviser and Chief Accounts Officer

d) General Manager

Answer: c) Financial Adviser and Chief Accounts Officer

16.The Accounts Officer should ensure that re-appropriations are carried out:

a) Annually

b) Promptly

c) Quarterly

d) Semi-annually

Answer: b) Promptly

17.What are the separate allotments placed at the disposal of railway administrations for expenditure on works?

• A) Maintenance Fund, Capital Fund, Rashtriya Rail Sanraksha Kosh
• B) Depreciation Reserve Fund, Development Fund, Railway Safety Fund
• C) Capital, Depreciation Reserve Fund, Development Fund, Railway Safety Fund, Rashtriya Rail Sanraksha Kosh, and Capital Fund
• D) Rashtriya Rail Sanraksha Kosh, General Fund, Contingency Fund
• Answer: C

18.Which statement is true about works costing not more than Rs.2.5 crore?

• A) They do not require estimates before expenditure.
• B) A lumpsum is allotted to each railway administration.
• C) They are always funded by the General Fund.
• D) They do not require General Manager's approval.
• Answer: B

19.Which of the following is NOT part of the control of expenditure on railway assets?

• A) Preparation of expenditure estimates in advance
• B) Continuous and concurrent review of expenditure against estimates
• C) Arbitrary allotment of funds without estimates
• D) Allotment of funds through budget grants for the year
• Answer: C

20.What should be examined in the Works Registers maintained in each division?

• A) Monthly salary details
• B) Expenditure against estimates and budget allotment
• C) Annual leave records
• D) Employee attendance
• Answer: B

21.What is one of the responsibilities of the Accounts Officer in monitoring expenditure?

• A) Ignoring anticipated credits
• B) Ensuring adjustments are made in time
• C) Postponing all new works indefinitely
• D) Overlooking excess expenditure
• Answer: B

22.The review of expenditure chargeable to Capital, Depreciation Reserve Fund, and Development Fund should be prepared monthly in which form?

• A) Form No. F. 526
• B) Form No. F. 513
• C) Form No. F. 525
• D) Form No. E. 1474
• Answer: C

23.Which detailed heads should be included in the review of Rolling Stock expenditure?

• A) Locomotives, Boilers, Carriages, Wagons, Ferries
• B) Stations, Platforms, Signals
• C) Tracks, Tunnels, Bridges
• D) Engines, Coaches, Goods Carriers
• Answer: A

24.How often should the Financial Adviser and Chief Accounts Officer submit a summary of periodical budgetary MIS to the General Manager?

• A) Monthly
• B) Quarterly
• C) Annually
• D) Periodically
• Answer: D

25.What should be done if there is a tendency towards excess over sanctioned estimates?

• A) Ignore the excess
• B) Investigate and curb the excess or obtain fresh sanctions
• C) Postpone all expenditures
• D) Increase the budget allotment without justification
• Answer: B

26.Which form is used for the monthly review of expenditure on works by individual works?

• A) Form No. F. 513
• B) Form No. F. 526
• C) Form No. F. 525
• D) Form No. E. 1474
• Answer: B

27.What should the review of expenditure on track renewals show?

• A) Each item of work for which a separate estimate has been sanctioned
• B) Only the total expenditure for all works
• C) Detailed employee salary distributions
• D) General overall costs without specifics
• Answer: A

28.What should the Accounts Officer do if there is a necessity for the curtailment of the programme of purchases?

• A) Ignore the necessity
• B) Inform the General Manager
• C) Proceed with purchases as planned
• D) Delay informing the General Manager
• Answer: B

29.What is the purpose of the "Works, Machinery, and Rolling Stock Programmes"?

• A) To list employees' personal information
• B) To specify the distribution of allotments over various works
• C) To maintain stock of office supplies
• D) To track employee performance
• Answer: B

30.Who should review the Works Registers monthly or at more frequent intervals?

• A) The Accounts Officer
• B) The executive officer
• C) The Financial Adviser
• D) The General Manager
• Answer: B

31.What should the Accounts Officer's monthly reviews include for controlling expenditure against the Capital Suspense Grant?

• A) Employee leave records
• B) Progress of debits and credits
• C) Stock inventory
• D) Monthly salary details
• Answer: B

32.What is the main purpose of Exchequer Control in the context of Railway Administration?

• a) To increase revenue receipts
• b) To monitor and regulate cash outgo against budget allotment
• c) To approve new projects
• d) To manage staff payments

Answer: b) To monitor and regulate cash outgo against budget allotment

33.Who is held personally responsible if expenditure exceeds the sanctioned allotments?

• a) General Manager
• b) Financial Adviser
• c) Executive officer authorizing the expenditure
• d) Accounts Officer

Answer: c) Executive officer authorizing the expenditure

34.What is excluded from the scope of Exchequer Control?

• a) Revenue receipts
• b) Capital expenditure
• c) Staff payments
• d) Purchase of stores

Answer: a) Revenue receipts

35.How often should Disbursing Officers assess the monthly requirement of cash?

• a) Annually
• b) Quarterly
• c) Monthly
• d) Weekly

Answer: c) Monthly

36.Which tool helps in monitoring the cash component of each month's revenue/capital expenditure?

• a) IPAS module
• b) Financial Review
• c) Expenditure Plan
• d) Budget Proportion

Answer: a) IPAS module

37.What forms the main components of the total revenue expenditure of the Railways?

• a) Loans and Advances
• b) Staff, Fuel & Stores, and Miscellaneous
• c) Capital expenditure
• d) Municipal Services

Answer: b) Staff, Fuel & Stores, and Miscellaneous

38.What should the Financial Adviser and Chief Accounts Officers submit along with their Budget Estimates?

• a) Monthly/Quarterly Expenditure Plan (MEP/QEP)
• b) Annual Report
• c) Financial Review
• d) Cash Flow Statement

Answer: a) Monthly/Quarterly Expenditure Plan (MEP/QEP)

39.Who should monitor the expenditure and revenue in the last quarter of the financial year?

• a) General Manager
• b) Financial Adviser and Chief Accounts Officer
• c) Disbursing Officers
• d) Accounts Officer

Answer: b) Financial Adviser and Chief Accounts Officer

40.What should be done if there is a need for re-appropriations, withdrawals, or additional allotments?

• a) Report to the Railway Board
• b) Seek approval from the General Manager
• c) Inform the Member Finance, Railway Board
• d) Submit a Financial Review

Answer: b) Seek approval from the General Manager

41.In case of contracts placed by the Railway Board, what should be reconciled with the provision in the sanctioned budget?

• a) Total expenditure
• b) Estimated amount of payment during the year
• c) Cash receipts
• d) Staff salaries

Answer: b) Estimated amount of payment during the year

42.Which document describes the annual review of expenditure as actually booked in the accounts of each railway?

• a) Financial Review
• b) Appropriation Accounts
• c) Budget Estimates
• d) Expenditure Plan

Answer: b) Appropriation Accounts

43.For effective implementation of Exchequer Control, what should the Disbursing Officers be issued?

• a) Budget Grants
• b) Monthly cash authorization
• c) Financial Review
• d) Expenditure Plan

Answer: b) Monthly cash authorization

44.What is the main advantage of Exchequer Control in terms of Railway expenditure?

• a) Increases revenue receipts
• b) Provides effective means of monitoring cash expenditure
• c) Approves new projects
• d) Manages staff payments

Answer: b) Provides effective means of monitoring cash expenditure

45.When is special attention given to the progress of expenditure and revenue receipts?

• a) First quarter of the financial year
• b) Second quarter of the financial year
• c) Third quarter of the financial year
• d) Last quarter of the financial year

Answer: d) Last quarter of the financial year

46.In Railway budgeting, what does the term 'gross' basis imply?

• a) Approval is obtained for net expenditure
• b) Approval is obtained for gross expenditure ignoring credits/recoveries
• c) Only capital expenditure is considered
• d) Only revenue receipts are considered

Answer: b) Approval is obtained for gross expenditure ignoring credits/recoveries

47.What is the primary purpose of the Annual Report submitted by each Railway Administration to the Railway Board?

• a) To seek additional funding
• b) To review the year's working under all departments and refer to significant matters
• c) To provide training guidelines
• d) To propose new projects

Answer: b) To review the year's working under all departments and refer to significant matters

48.Which part of the Annual Report contains the narrative portion?

• a) Financial Statements
• b) Analysis of Working
• c) Appendices
• d) Report Proper

Answer: d) Report Proper

49.Who is responsible for preparing and submitting the Annual Report?

• a) General Manager
• b) Head of the Railway Administration
• c) Financial Adviser
• d) Accounts Officer

Answer: b) Head of the Railway Administration

50.  What does the Financial Statements section of the Annual Report include?

• a) Narrative of major events
• b) Statements of accounts of capital and revenue transactions
• c) Analysis of staff costs
• d) Statistical Statements of Operating Statistics

Answer: b) Statements of accounts of capital and revenue transactions

51.Which section of the Annual Report is signed by the Head of the Railway Administration?

• a) Report Proper
• b) Financial Statements
• c) Analysis of Working
• d) Appendices

Answer: a) Report Proper

52.What kind of information is included in the Analysis of Working section?

• a) Reasons for variations in gross receipts
• b) Statistical statements of railway working
• c) Major works undertaken
• d) Number and cost of staff

Answer: b) Statistical statements of railway working

53.Which section of the Annual Report includes statements related to the number and cost of staff?

• a) Report Proper
• b) Financial Statements
• c) Analysis of Working
• d) Appendices

Answer: d) Appendices

54.What should the Report Proper contain regarding exceptional events?

• a) Financial implications
• b) Detailed statistical analysis
• c) Brief descriptions of the events and measures taken to cope with them
• d) Forecast of future events

Answer: c) Brief descriptions of the events and measures taken to cope with them

55.Who compiles the Financial Statements included in the Annual Report?

• a) General Manager
• b) Financial Adviser
• c) Accounts Officer
• d) Head of the Railway Administration

Answer: c) Accounts Officer

56.In which section are the statements of revenue (earnings and expenditure) and operating statistics included?

• a) Report Proper
• b) Financial Statements
• c) Analysis of Working
• d) Appendices

Answer: c) Analysis of Working

57.What kind of events should be briefly described in the Report Proper?

• a) Routine maintenance activities
• b) Exceptional events like damages by floods
• c) Annual financial summary
• d) Staff training programs

Answer: b) Exceptional events like damages by floods

58.For what purpose are the statistical statements in the Analysis of Working section primarily used?

• a) Budget planning
• b) Compilation of statistics published in Indian Railways-Annual Statistical Statements
• c) Staff promotions
• d) Procurement of new equipment

Answer: b) Compilation of statistics published in Indian Railways-Annual Statistical Statements

59.Which section of the Annual Report should provide details of major works undertaken or completed during the year?

• a) Report Proper
• b) Financial Statements
• c) Analysis of Working
• d) Appendices

Answer: a) Report Proper

60.In the context of Railway Administration, what does the Financial Statements section comply with?

• a) General accounting principles
• b) Instructions in Chapter VII of the Indian Railway Code for the Accounts Department, Part I
• c) Railway Board directives
• d) Ministry of Finance guidelines

Answer: b) Instructions in Chapter VII of the Indian Railway Code for the Accounts Department, Part I

 

******