Indian Railway Codes and Manuals-Engineering code-Chapter- 15 (XV)
CHAPTER XV
EXPENDITURE
AND BUDGETARY CONTROL
Responsibility with regard to expenditure
1501. General
Rules on Budget.-The general rules on
budget are contained, in Chapter Ill, IV and V of the Indian Railway Financial
Code to which reference may be made.
1502. Responsibility with regard to expenditure.-No
expenditure shall be incurred by any authority without the allotment of funds.
The expenditure on each work shall be limited to sum allotted for it. If for
exceptional reasons expenditure in excess of Budget allotments has to be
incurred and if the authority incurring expenditure is either not empowered to
sanction a reappropriation therefor application for additional funds shall be
made to the next higher authority stating how the expenditure is proposed to be
met. In doing so it should invariably be explained why the need for the
expenditure was not foreseen in time for inclusion in the Budget and why the
outlay could not be postponed to the next financial year. (c f. 367 F, 368 F).
1503. The authorities to whom the funds are allotted are
responsible to report at once to the next higher authority, the probability of
any lapses of excesses over the sums placed dt their disposal. No liability may
be incurred in one year against anticipated grants of a succeeding year, except
that advance commitments for procurement of stores for works may be made as
provided in para 812-S to the extent authorised by the Railway Board from time
to time. (c f. 371 -F).
1504. It should be the duty of the administration to see that
the allotments made to them are fully expanded, in so far as is consistent with
economy and the prevention of large expenditure in the last months of year for
the sole purpose of avoiding lapses. They shall be responsible for ensuring
that money which is not likely to be needed during the year is promptly
surrendered as to allow its appropriation for other purpose, (c f. 372+).
1505. Mixed
Works:- In the case of mixed works
involving more than one department, the department to which major portion of
the estimated cost relates will co-ordinate the budgetary and expenditure
control. On receipt of allotment of funds for the year, the co-ordinating
departments shall arrange to distribute funds to other departments connected
with the execution of such works.
Budgetary Control
1506. Budgetary
Control over Revenue Demands: --For
exercising control over Revenue expenditure, Revenue Allocation Registers
(refer para 512+) serve as an important management tool. All revenue
expenditure is recorded in this Register by various heads of accounts as
prescribed in the Revenue Expenditure Classification. A monthly comparison is
made of the expenditure, with Budget Allotment and for this purpose the
sanctioned Budget Allotment for a year is distributed among the various months
after taking in to account various known factors of disturbance keeping the
guidelines outlined in para 508-F in view. The proportionate budget allotment
for each month, for each sub-head of grant is worked out by the Accounts
Officer at the beginning of each financial year in consultation with the
officers responsible for the control of expenditure. The progress of
expenditure is monitored through monthly Financial Reviews prepared by the
Accounts Officers in Form 513-F, and furnished to the controlling authorities
every month by such dates as may be fixed in consultation with them. (c f.
508-F. 512-F)
1507. The monthly Financial Reviews provide two projections
viz. (j) actual expenditure compared to the proportionate allotment of the end
of the month under review, and (ii) actual expenditure to the end of the month
under review compared to the expenditure to the end of the corresponding month
of the preceding year. The financial reporting system provided by the monthly
Financial Reviews offers a means of exercising control over expenditure under
Revenue Demands.
1508. Budgetary
Control over expenditure on Acquisition, Construction and Replacement of
Railway Assets.- In the case of works
chargeable to Capital, Depreciation Reserve Fund, Development Fund, Accident
Compensation Safety and Passenger Amenities Fund and Open Line Works Revenue,
Railway Administrations are required to exercise budgetary control not only
under each sub-head of grant. but also against the allotment sanctioned for the
year for each work costing over Rs. 50,000 each. For this purpose the financial
reporting system provides for the preparation of two review statements by the
Accounts Officers every month (i) by sub-head of grant in Form 525-F and (ii) by
individual work in Form 526-F These reviews are furnished to the authorities
concerned by the Accounts Officer by such dates as may be fixed in consultation
with them (c.f.519-F).
1509. Budgetary
Reviews.- During the financial year
three budgetary reviews are made during August, December and February to review
the requirements of funds. Reference may be made to Chapter 111 of Indian
Railway Financial Code, regarding the relevant provisions in this connection.
These reviews provide a means of reassessing the requirements of funds and they
should commence at the "grassroots level" i.e. Division. Workshop as
the case may be. Since the responsibility for framing the requirements devolves
upon the spending authorities concerned. care should be taken to see that the
data on which the forecast is based is adequate and reliable and that the
conclusions arrived at from the data can be sustained by past experience and
future expectations of likely events to make the assessment as accurate as
possible.
1510. Exchequer
Control.- Exchequer Control is an
important tool for budgetary control, and functions as a mechanism for
concurrent of cash outgo by each disbursing officer against the cash content of
the budget allotment. The regulation of cash disbursements will be made by
disbursing officer separately under each grant and executive officers should
assist the disbursing officer in framing the data as indicated in para 1512.
(cf. 540-F).
1511.
Implementation of Exchequer Control.- Implementation
of Exchequer Control involves the following steps
·
(i) Correct assessment of the `cash' and `adjustment' portions
of the sanctioned annual budget under each demand by cash disbursing officer;
·
(ii) As accurate an assessment as possible of the
quarterly requirement of cash.
·
(iii) Issue of quarterly/monthly cash authorisation to disbursing
officer, and
·
(iv) Concurrent control of cash outgo by each disbursing officer
(c f. 545-F).
1512. Information to be furnished by Executive
Officers.-Executive officers, should assist the disbursing officer in
making a correct assessment of `cash' and `adjustment' portions of the
sanctioned annual budget under each Demand, keeping the guidelines indicated in
para 546-F in view. They should also make an assessment of quarterly forecast
of expenditure under the categories 'cash' and 'adjustment' and finish the data
to the disbursing officer for exercising control of cash outgo.
1513. Limitation of Exchequer Control.-Exchequer
Control is a self imposed expenditure disciplirie by means of a system of day
to day monitoring. to ensure that the cash contents of the budgetary allocation
is not exceeded (cf. 543-F).
1514. Watch or
Credit on Recoveries .The credit for
released materials do not figure in the gross Demands, and are outside
the scope of the Grants, but constitute a reduction of expenditure in accounts.
The expenditure voted by Parliament is on gross basis but the compilation of
expenditure by Plan Heads is on a net basis taking into account the credit or
recoveries reflecting the effect of the resources generated by the realisation of
credits for released materials. The resource allocation made for framing the
Works Programme take into account the additional resources that would accrue by
the realisation of credits indicated by the Railway Administrations and hence
it is necessary that a watch on the actual credit realised is maintained. If
credits as indicated at the planning stage do not materialize, it will have an
adverse effect on the resource position.
Expenditure Control
1515.
Expenditure Control.-The sanction to an
estimate constitutes authority for spending a specific amount on a particular
work. Executive Officers should not, therefore, incur expenditure or liability
on a work in excess of the sanctioned estimate without the prior sanction of
the competent authority. 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 funds. The check should originate at the
lowest executive level viz. a Division.
1516. Method of
exercising control over expenditure.-The
control over expenditure on railways is exercised through
·
(i) The preparation in advance of estimates of the expenditure;
·
(ii) The allotment of funds through budget grants for the year
on the basis of these estimates; and
·
(iii) 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 reappro- priation of funds are
arranged for at the earliest possible point of time.
1517. Use of
Works Register.-The Works Register (refer
to para 1472) maintained in each division serve as an important management tool
in providing information which enables a comparison of the expenditure incurred
against a work with the provisions made in the estimate. The Executive Officer
should examine the information recorded in 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 estimate may be investigated
and curbed or fresh administrative and technical sanction obtained in time to
cover the anticipated excess.
1518. Progress
Report-Cum-Financial Review.-For effective
financial control of works a system which will monitor the relation between
achievement and expenditure is essential. Financial Reviews assist in such a
monitoring process and also serves as a management reporting system linking the
progress of work with the expenditure incurred. Financial Review provides a
means of assessing probable variations from* sanctioned estimate at the
earliest possible date.
1519.
Preparation of Progress Report-Cum-Financial Review.-Financial Reviews are to be prepared half yearly in the
proforma given below (From E-1519) and should include (a) new construction
conversions, doubling, (b) open line works costing Rs.50 lakhs (gross) and
over, and (c) track renewal - works costing Rs.50 lakhs (gross) and over.
Form E-1519 (continued to...............list of forms)
1520. Progress Report-cum- Financial Reviews are to be prepared
by the Divisional Executive Officer and countersigned by the Divisional
Accounts Officer and sent to Chief Engineer and the Financial Adviser and Chief
Accounts Officers. These Financial Reviews should be submitted before the end
of the 3rd week of the 2nd month following i. e. before 21st May and 21st
November for the period ending 31st March and 30th September respectively.
1521. These reviews are to be prepared from the time the
expenditure is incurred on the work even though the work might not have been
physically commenced. The review should show both the progress of works based
on physical progress as well as progress of expenditure, actual and anticipated
for each of the works. They should also give the overall financial and the
physical progress as also the dates of commencement of the work and the
probable date of completion.
1522. In the remarks column of the Financial Review (E-1519) any
anticipated excess of not less than Rs.20,000 or 10 per cent over the provision
under sub heads of account should be explained briefly When a financial review
shows the probability of a variation which is beyond the power of the Railway
Administration to sanction, an explanation should be given of the measures
taken or proposed to be taken to regularize the position. Explanations for
savings of 20 per cent or one lakh. whichever is less occurring under any main
head of account such as "Formation` "Bridge Work etc. should also be
given in the remarks column.
Multiple choice questions:
1.What must happen before any
expenditure can be incurred by an authority?
- A. An application for additional funds must be made.
- B. The expenditure must be sanctioned by the next
higher authority.
- C. Funds must be allotted.
- D. A detailed project report must be prepared.
Answer: C. Funds must be allotted.
2.What is required if expenditure
in excess of the budget allotment must be incurred?
- A. Immediate reappropriation by the current authority.
- B. A detailed explanation must be provided for why the
expenditure was not included in the Budget.
- C. Approval from the Railway Board.
- D. A revision of the budget estimate for the next
financial year.
Answer: B. A detailed explanation
must be provided for why the expenditure was not included in the Budget.
3.Who is responsible for
reporting the probability of lapses or excesses over the funds allotted?
- A. The Accounts Officer
- B. The next higher authority
- C. The authority to whom the funds were allotted
- D. The Financial Adviser
Answer: C. The authority to whom the
funds were allotted
4.What should be done with money
that is not likely to be needed during the financial year?
- A. It should be spent on additional works.
- B. It should be promptly surrendered for appropriation
to other purposes.
- C. It should be reserved for future needs.
- D. It should be transferred to the Reserve Fund.
Answer: B. It should be promptly
surrendered for appropriation to other purposes.
5.For mixed works involving more
than one department, which department takes the lead in budgetary and
expenditure control?
- A. The department with the smallest estimated cost
- B. The department with the major portion of the
estimated cost
- C. The department with the most experience
- D. The department that receives the largest allocation
of funds
Answer: B. The department with the
major portion of the estimated cost
6.How is budgetary control over
Revenue Demands managed?
- A. By creating a single, annual budget
- B. Through monthly comparisons of expenditure with
budget allotment
- C. By reviewing financial reports annually
- D. Through quarterly budget adjustments
Answer: B. Through monthly
comparisons of expenditure with budget allotment
7.What form is used to monitor
the budgetary control over expenditure on works costing over Rs. 50,000?
- A. Form 513-F
- B. Form 525-F
- C. Form 526-F
- D. Form E-1519
Answer: C. Form 526-F
8.When are the budgetary reviews
conducted during the financial year?
- A. January, April, and July
- B. August, December, and February
- C. March, June, and September
- D. April, October, and January
Answer: B. August, December, and
February
9.What is the purpose of
Exchequer Control?
- A. To ensure that expenditures exceed the budgetary
allocation.
- B. To monitor cash disbursements and ensure they do not
exceed the budget allotment.
- C. To control the amount of cash available for future
projects.
- D. To limit expenditures to the next financial year's
allocation.
Answer: B. To monitor cash
disbursements and ensure they do not exceed the budget allotment.
10.Which document should be used
for monitoring the progress of works and related expenditures on a half-yearly
basis?
- A. Form 525-F
- B. Form 526-F
- C. Form E-1519
- D. Form 513-F
Answer: C. Form E-1519
11.What should the Financial
Review include according to the guidelines?
- A. Only the total expenditure for the financial year.
- B. The physical progress of work and expenditure
incurred, both actual and anticipated.
- C. A summary of all financial transactions for the
year.
- D. Projections for future budget allocations.
Answer: B. The physical progress of
work and expenditure incurred, both actual and anticipated.
12.What action should be taken if
a financial review indicates an anticipated excess of not less than Rs.20,000
or 10 percent over the provision?
- A. Ignore the excess and adjust in the next review.
- B. Provide a detailed explanation in the remarks column
of the Financial Review.
- C. Immediately request additional funds from the
Railway Board.
- D. Halt all related expenditures until further notice.
Answer: B. Provide a detailed
explanation in the remarks column of the Financial Review.
13.What is the primary role of
the Works Register in expenditure control?
- A. To record all expenditures on minor works.
- B. To provide a comparison of actual expenditure with
the budgeted provisions.
- C. To track the total number of works undertaken.
- D. To list all approved projects for the year.
Answer: B. To provide a comparison
of actual expenditure with the budgeted provisions.
14.What does Exchequer Control
primarily aim to manage?
- A. Annual budget revisions
- B. Cash disbursements and expenditure limits
- C. Long-term financial investments
- D. Departmental financial reports
Answer: B. Cash disbursements and
expenditure limits
15.When should Financial Reviews
be submitted to the Chief Engineer and the Financial Adviser and Chief Accounts
Officers?
- A. Within the first week of the new fiscal year.
- B. Before the end of the 3rd week of the 2nd month
following the review period.
- C. At the end of every quarter.
- D. Annually in December.
Answer: B. Before the end of the 3rd
week of the 2nd month following the review period.
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