SOME IMPORTANT QUESTIONS FOR APP IREM 3A

BOOKS
1. Distinguish between appropriation accounts and approximate accounts
2. Plan heads and revenue heads
3. Revenue and Capital PUs
4. Various funds in railways DRF, DF OLW-R, Capital and Capital fund
5. Differentiate DATC/DATD and TWFA
6. Remittance transactions and transfer transactions
7. RBI and PSB suspense
8. Features of Focal Point
9. Reconciliation of Cheques and bills
10. Deposits
11. Suspense heads for revenue, capital, traffic, workshop, stores and gen accounts
12. Annexure to appropriation accounts – what is annexure J
13. Internal audit and audit checking
14. Apportionment of earnings
15. Demands for grants 03-13, 1-2, 14-16
16. Allocation structure – capital and revenue
17. Parliamentary control
18. Structure of Govt accounts
19. Link heads between finance and commercial accounts
20. Half yearly arrear report
21. Debt head report
22. Debit/credit scroll
23. Appropriation accounts and Annexure to
24. Focal point
25. Link cell
26.
BUDGET
1. Distinguish between gross budget and net budget
2. Performance budget and the performance units
3. Integrated budget, deficit budget
4. ZBB
5. Capital budgeting in railways – RSP,FWP and M&P
6. Financial reviews
7. August review
8. FM/Final Modification
9. Budget grant
10. Proportionate budget grant
11. SL/ISL
12. Controllable PUs
13. Budget order
14. Cash estimates/requirement/cash authorization/
15. Cash budgeting
16. COPPY
17. RE/BE
18. Revised estimates/revised grant
19. Operating ratio
20. Voted and charged expenditure
21. PEI

WMS BUDGET PARA W 1624

WMS BUDGET PARA W 1624
DEBITS
Balance at the debit of manufacture at the
Commencement of the year
Debits during the year
1 locomotive workshop
1 payment of shop labour
2.material & stores ( from stores suspense)
3. misc charges
4. material by direct purchase
2. deduct for issues from manufacture suspense
towards within the demand
Issues to stores suspense
Issues to works

Total debits during the year
Grand total
CREDITS
I To Works – Capital
II TO Works - DRF
III To Works – DF
IV To Works – OLW(R)
Total I - IV

To capital stores suspense manufacture
For stock
I stock manufacture
II material returned
Total stores suspense to Revenue
i repair of stock
ii repair of machinery & plant
iii misc manufacture for revenue
total revenue
iv work done for foreign railways &
Govt depts., and other public bodies
Total credits
Viii deduct for issues within the demand
Total credits during the year
Anticipated balance at the close of the Year
Grand totalNet debit or credit during the year

MATERIAL BUDGETING

MATERIAL BUDGETING
PARA S 3101 STORES CODE
DEBITS
A. Stores In Stock (Other Than Those In Grain Shop
B. Outstanding Stores Suspense Balance
C Outstanding In Stock Adjustment Account
D COAL
E COKE
F FUEL OIL
TOTAL
RECEIPTS DURING THE YEAR
I Purchase
1. Stores For Works
2. Stores For General Purpose Excluding Coal.
Coke. Fuel Oil
3. Grain Shop Supplies
4. Coal
5. Coke
6. Fuel Oil
TOTAL
II Receipts From Manufacture In To Stores
III MATERIALS RETURNED FROM WORKS
i WORK SHOP MATERIAL
ii OTHER MATERIAL
IV DEDUCT FOR ISSUES FROM STORES
SUSPENSE TO SERVICES/WORKS
WITHIN THE DEMAND VIDE ITEMS
I , IV & V PER CONTRA
i MANUFACTURE OPERATION
ii WORKS
iii MISC ADVANCE CAPITAL
TOTAL DEBITS
GRAND TOTAL
CREDIT
ISSUES: I To Works – Capital & DRF
II To Works – DF
III To Works – OLW(R)
IV To Capital – Manufacture Suspense
i Locomotive Workshops
ii Carriage & Wagon Shops
iii Engineering Workshops
iv Electrical Workshops
v Signal Workshops
vi Printing Press
V TO MISC ADVANCE CAPITAL
VI TO REVENUE
VII SALES & TRANSFERS
VIII SALES BY GRAIN SHOPS
IX LOSS IN GRAIN SHOPS
X TO ISSUES OF FUEL OIL FOR
LOCOMOTIVES
XI TO ISSUES OF COAL,COKE &
FUEL OIL FOR OTHER PURPOSES
TOTAL
DEDUCT ISSUES WITHIN THE DEMAND
( VIDE ITEM VI ) FOR CONTRA
TOTAL CREDITS DURING THE YEAR
ANTICIPATED BALANCE AT THE CLOSE OF THE
YEAR:
A. STORES IN STOCK(OTHER THAN IN GRAIN SHOPS
B. OUTSTANDING STORES SUSPENSE BALANCE
C. OUTSTANDING IN STOCK ADJUSTMENT ACCOUNT
D. STORES IN GRAIN SHOPS
E COAL
F COKE
G FUEL OIL
TOTAL
GRAND TOTALNET DEBIT/CREDIT DURING THE YEAR

PERFORMANCE BUDGET

Demand, Nature of demand, Performance units
Demand No 4, Repairs and Maintenance of Permanent Way and Works- The staff and non - staff expenditure of the technical side pertaining to civil Engineering Dept. including Bridge, water supply, maintenance of buildings etc., P Way – Equated Track KM
Service – 10 Sq Mts of plinth area
Water supply – million liters for 10 m 2
Bridges – linear meters
Demand No 5, Repairs and Maintenance of Motive Power The staff and non - staff expenditure of the technical side pertaining to Mechanical Engineering Dept. including maintenance of steam, diesel locomotives both in open line and in workshops etc., Steam locos- Engine holding/outage
Runnig repairs
POH, IOH and Spl Reparis
Diesel locos
Electric Locos
Demand No 6, Repairs and Maintenance of Motive Power The staff and non - staff expenditure of the technical side pertaining to Mechanical Engineering Dept. including maintenance of coaches, wagons both in open line and in workshops etc., Carriages:
Running repairs- out turn in sick line in terms of vehicle units and No of trains dealt with in yards/stations
POH and Spl Repairs – repair units

Demand No 7, Repairs and Maintenance of Plant and Equipment. The staff and non - staff expenditure of the technical side pertaining to Civil, Mechanical, Electrical, Signal & Telecommunication Engineering both in open line and in workshops etc., Civil Engg Dept, Mech and Electrical – No of machines
Over head equipment – Ele Engines / EMU Kms
Signalling equipment- No of trains

demand No 8, Operating Expenses - Rolling Stock and Equipment. The staff and non - staff expenditure of the technical side pertaining to Running Staff ( Drivers, etc., Steam locos
Running staff – engine hours
Shed and yard staff – No of engines
Other expenses including water, lubricants- total engine hours
Diesel locos – as above
Electric locos – as above
Carriages and wagons – trains Kms
Demand No 9, Operating Expenses Traffic / Commercial - Records the staff and non - staff expenditure of the Train Passing Staff and Commercial Staff like the Station Masters, Points Man, Booking clerks, Reservation Clerks ,Guards etc., Traffic and movement inspectors – No of trains
Passenger station staff – No of originating passengers
Goods train staff – No of invoices
Stationery ticket collectors- Passengers terminating

Demand No 10, Operating Expenses - Fuel - Records the cost of coal , Diesel Oil and Electricity only., Steam traction-Passenger – 1000 GTKM
Goods - 1000 GTKM
Shunting - Engine KM
Diesel Traction- as above
Electric traction–as above
Demand No 11, Staff Welfare and Amenities Records the expenditure of the railway schools, hospitals and health units, sanitation in railway colonies, sports and railway institutes, repairs to residential and welfare buildings., Demand No 12, Miscellaneous Expenditure Records the expenditure on the Railway Protection force, Commercial claims, cost of training to staff, Workman compensation, Catering and Hospitality and entertainment etc.

INTERLINK BETWEEN STORES, WMS AND REVENUE BUDGET

INTEGRATION OF WORKSHOP ACCOUNTS WITH STORES ACCOUNTS:
INTEGRATION AT THREE LEVELS
1. WORKSHOP ACCOUNTS & STORES ACCOUNTS
2. WORKSHOP ACCOUNTS & GENERAL BUDGET
3. STORES ACCOUNTS & GENERAL BUDGET
WORKSHOP ACCOUNTS & STORES ACCOUNTS:
The WMS top sheet shows the debits and credits thus
Debit side credit side
• LABOUR DRF, DF
• STORES CAPITAL
• DP REVENUE
• MISC HOME RLY SHEDS
• FOREIGN RLY

Stores budget credit side

Issues to workshop (WMS)

The debit in the WMS budget to tally with the credit in the stores budget
Credits from WMS to Stores budet debit
Debit side credit side
• LABOUR DRF, DF
• STORES CAPITAL
• DP REVENUE
• MISC HOME RLY SHEDS
• FOREIGN RLY
Manufactured stores
Stores budget
Debit side

Manufactured stores

The debits in the stores budget to tally with the credits in the WMS budget
Returned stores
Debit side credit side
• LABOUR DRF, DF
• STORES CAPITAL
• DP REVENUE
• MISC HOME RLY SHEDS
• FOREIGN RLY
Manufactured stores
Returned stores
Stores budget
Debit side

Returned stores
The debits in the stores budget to tally with the credits in the WMS budget
WORKSHOP ACCOUNTS & GENERAL ACCOUNTS:
Debit side credit side
• LABOUR DRF, DF
• STORES CAPITAL
• DP REVENUE
• MISC HOME RLY SHEDS
• FOREIGN RLY
Manufactured stores
Returned stores
DIVISIONAL budget
Debit side
Repairs activities

The Repairs activities debits in the divisional budget to tally with the division wise work done statement in the WMS(WGR)
The bills are raised as divisional bills from W/PER to respective divisions for acceptance. On acceptance, WMS will be credited. In the transactions pertaining to divisions, the credit is afforded to WMS as soon as the work is completed, the these works are carried out in the workshop only after the acceptance by the divisions
The divisions will seek funds under demand no 5 ( repairs and maintenance of locomotives) and demand no 6 (repairs and maintenance of carriage & wagons)

STORES ACCOUNTS & GENERAL ACCOUNTS:
GENERAL BUDGET:
DEBIT SIDE CREDIT SIDE
Issues
To Workshops – WMS
To works – Demand No 16
To Revenue other than fuel
To Revenue Fuel

STORES BUDGET
Debit side credit side
Receipts issues
WMS BUDGET
stores

INTERNALCHECK AND STATUTORY AUDIT

INTERNAL CHECK –PRE AND POST CHECK
1.1 INTERNAL CHECK
The check exercised By the Accounts office on the financial transactions of the Railways on half of Railway Administration is called internal check. This is called so to distinguish it from the audit conducted by the chief auditor of the railways receipts and expenditure on behalf of the controller and Auditor General of India. In fact the audit conducted by the Chief auditor should be rightly called “external audit” and the internal check carried out by the financial Adviser and his officers, on behalf of the Railway administration should be called “Internal audit” in modern parlance.

1. 1.1 The Scope and methods of internal check or internal audit have been brought out in detail in Chapter VIII of Accounts Code Volume I.

The Salient features of internal audit are as under.
(a) Check of Sanctions and orders,
(b) Check of delegation of financial authority,
(c) Check of all Establishment bills
(d) Pre-check and Post-check of expenditure
(e) Scrutiny of receipt - this includes inspection of original records at the stations as well as post audit of returns from the stations in the Traffic Accounts office;
(f) Internal check of debt and remittance transactions,
(g) Maintenance of Provident Fund Accounts,
(h) Check of pension payments,
(i) Prior check of all contractors bills etc., before passing the same for payment inspection of stations and other executive officers for checking the original records.

1.2 The Internal check is conducted with reference to -
(a) rules and orders issued by the President Railway Board, General Managers of Railways and various authorities,
(b) the instructions contained in the Codes and instruction issued from lime to time by the Railway Board,
(c) The recognized standards of financial propriety,

1. 3 While scrutinizing receipt. It should be seen
(i) That the amount due to the Railway for services rendered, supplies made, arc correctly and promptly assessed recovered as soon as they fall due,
(ii) that all receipt arc properly brought into account,
(iii» that all receipts are correctly classified, and if they represent an amount due to more than one railway, that they are correctly apportioned among the railways,

1.4 All claims against the railway are scrutinized with a view to see
(a) that the expenditure has been sanctioned by competent authority and that the expenditure is incurred by .an officer competent to incur it,
(b) that all prescribed preliminaries to expenditure are observed before disbursement of pay, etc.
(c) that it is covered by the grant at the disposal of the officer incurring it,
(d) that the expenditure does not contravene any rules and orders in force,
(e) that the expenditure does not involve a breach of the Standards of financial Propriety
(f) that the expenditure sanctioned for a limited period is not admitted beyond that period without further sanction,
(g) that in the case of recurring charges, which are, payable on the fulfillment of certain condition a certificate is forthcoming from the drawing office to the effect that necessary conditions have been fulfilled,
(h) that the charge is correctly classified,
As exceptions to this general rule the following payments may be; made before such check: - \
a} Payments from imprest
(h) Payment from station earnings when permitted under rules.
(e) Commission deducted by auctioneers from sale proceeds,
(d) Payment of certain classes of pay bills, muster sheets and labour pay sheets of open line staff specially permitted to be made by F.A. & C.A, 0.

1.5 INTERNAL CHECK OF SANCTIONS AND ORDERS
The Accounts Officer -should examine every rule. order or sanction whether issued by the president, the Railway Board, or any sub-ordinate authority in order to see
(a) that the authority framing the rule or according the sanction is competent to do so,
(b) that the sanction is definite.
(c) that the rule or order or sanction does not contravene any general or special orders of any higher authority and
(d) that the sanctions to expenditure of definite amounts, [he same arc always expressed both in words and figures.

1.6 TREATMENT OF ERRONEOUS PAYMENTS
When erroneous payments have been passed for considerable time. owing either to a wrong interpretation of financial rules or due lo oversight, the following procedure should he observed:
f) Wrong interpretation:
The new interpretation should be given effect from the date, which the competent authority may decide. If no date is specially fixed, the correct interpretation -should be given effect to from the date it is stated by the competent authority
Oversight
Payment made less than 12 months ago, should be recovered. Every overpayment of money to a railway servant is and must be regarded as a debt to public and all possible action should be taken for speedy recovery

1.7 POST CHECK OF PAID VOUCHERS
All bills, whether under the pre-check or the post check system in which payment has been made should be checked to see -
(a) that the acknowledgements of payments have been obtained (in English or Hindi).
(b) that the names of payees mentioned in the bills tally with the signatures obtained,
(c) that the payment has been witnessed, whereso required, by the official named in the bill and the acknowledgement is unqualified,
(d) that where a person other than payee himself has received the amount, the payment has been made under proper authority.
(c) that vouchers are stamped,
(f) that each voucher has been cancelled efficiently and promptly,

1.8 INTERNAL AUDIT AND INTERNAL CHECK :
Though Internal Check is part of Internal Audit as far as Railways are concerned yet there is a distinct difference between the two.
''International Audit is an independent appraisal function within an Organization for the review of activities as a service to all levels of Management. It is a review of the operations and accounts some-times continuously undertaken within a business by specially assigned staff".

The objectives of Internal Audit are
i) a Service to Management;
ii) ensures reliability and integrity of Accounts System.
iii) ensures compliances with rules and regulations;
Facilitate preventions and detection of frauds.
Internal Check is a part of the overall internal control system. The internal check is the check exercised on the day-to-day transactions which operate continuously as part of the routine system whereby the work of one person if proved independently of another.

SYSTEM OF INTERNAL AUDIT IN INDIAN RAILWAYS:
Internal Audit functions are performed in the form of Inspections of activity centres and offices by different agencies from Zonal and Divisional Railway offices:-
i) Inspection of Executive offices by Accounts Officers and Staffs as provided in Chapter-XVII of the Accounts Code Part-1,
ii) Inspection of stations by TIAs as per Chapter - XXXIII of Accounts Code - Part-II
Accounts Stores Verification of Stores as per Chapter-XXXIII of Stores Code
iv) Inspection of Subordinate Accounts offices by FA & CAO and his officers.
v) Inspection of Zonal Railway's Account Offices by the Board's Inspection Party,
All these Inspections are in the nature of Systems Audit ad Transaction Audit.
Further reading: Please refer Chapter-XVII of Accounts Code Part-1 to know more about the objectives of Inspections of executive offices and the records that are to be inspected.

STATUTORY AUDIT
2.1 Railways are part of the Government of India and not a corporation under any statute or Indian Companies Act. There is, therefore, no statutory audit of the type under Indian Companies Act. Statutory Audit is conducted by CAG which is much more comprehensive than company auditors and the audit report on performance is submitted lo the Par/lament by CAG, Public accountability is, therefore, maximum.

2.2 FUNCTIONS
The Comptroller and Audit General of India is the final audit authority in India and he is responsible for the audit of the accounts of the Indian Railways hut has no responsibility for the compilation of such accounts. The form in which account of the Indian Railway should he kept and changes in accounts classification affecting the recording of The expenditure in the Finance and Revenue Accounts are, however, subject to his approval (113-!).

2.3 OBJECT OF STATUTORY AUDIT (116 AI and 911 of Finance Code)
The Statutory audit has three fold purposes viz.
it is an accountancy audit - to check the accuracy and to see that all payments are supported by receipted vouchers,
it is an appropriate audit - to check to ensure that expenditure, receipts have been properly classified, and voted appropriations have not been exceeded
iii) it is also an administrative audit to check that expenditure has been incurred according to prescribed rules and regulations.
The main object of audit is to ensure -
a) that the system of accounts used by the internal check authority is correct,
b) that the method of check applied at every stage of the accounts is sufficient,
c) that the accounts are maintained and the checks applied with due accuracy and
d) that the arrangements exist in the accounts office to ensure attention to the financial interest of the railways on the part of all concerned.
2.4 RESPONSlBILITY
The responsibility of statutory audit is briefly as follows :-
a) it extends in respect of expenditure transactions lo all expenditure incurred in India.
(i) in respect of receipts, it includes receipt of Indian railways including receipts relating to accounts of manufacture,
c) it includes stores and stock accounts to do the extent prescribed by the Comptroller and Auditor General of India.
2.5 Audit is always conducted ex-post facto i.e. after the event-
Audit cannot prevent an overpayment through negligence or non-observance of rules and regulations. It is the duty of Audit to report results to the proper authority so that appropriate action is taken to rectify the irregularity wherever possible and atleast prevent its recurrence

COMMUNICATION FROM AUDIT -DRAFT PARAS AND AUDIT REPORTS (Chapter IX of Finance Code)
Ordinarily the results of statutory audit are communicated through -
a) Specific reports of the more important and serious irregularities discovered in the course of audit, of Accounts and departmental offices and station records,
b) Audit notes detailing minor irregularities discovered in the course of audit of accounts office records,
c) Inspection reports showing the results of audit of the initial records of executives offices (Para 916 of Financial Code).

An inspection report will consist of two parts, namely Part I dealing with the more important matters and Part II dealing with the rest, containing minor routine matters. Audit notes will also similarly consist of two parts. The final disposal of part II of audit notes and inspection reports rests with the Accounts officers and no formal reply to the Director of Audit is necessary. Replies to part I of inspection reports and audit notes and specific reports should be sent by the executive offices concerned to the accounts officer. In scrutinizing them, the Accounts officer should call for further information, if necessary, and consult the head of the division or department concerned, where desirable before giving a reply to the Director of Audit (918 and 919 of Financial Code). All audit objections and notes should be promptly attended to by the Accounts officer.

All important eases coming to the notice of Audit during inspections or regular audit which in the opinion of the Director of Audit merits inclusion in the Audit Report are brought to the notice of the Railway Administration through special letters, notes of objection etc., to the Heads of Departments/FA&CAOs by the Director of Audit. Since these special letters, factual statements form the basis of the material for the Audit Report, the Railway administration should deal with them at a sufficiently high level and bring out their point of view in a convincing manner before they proceed to prepare a draft paragraph for incorporation in the Audit report.

11.3 Draft paras
If it is decided by the Director of Audit that the statement of facts are required to be converted into a Draft Para for the Audit report, the draft Para prepared will be sent by the Director of Audit to the Personal address of the GM simultaneously sending advance copies of the draft Para with connected correspondence to the FA&CAO. HOD concerned, the additional Deputy, C&AG (Rlys) and the Director (Finance) Railway Board to facilitate prompt action and detailed examination. The railway administration is required to give a final reply lo the Director of Audit, after consultations with the Railway Board, within a period of eight weeks from the receipt of the draft Para. To allow some time for further enquiries and examination by the Railway Board, it will be necessary for the railway to forward the draft Para alone with a report from the Railway administration personally to the Director (Finance) Railway Board, as quickly as possible as but not later than five weeks of the receipt of the draft Para. The reply will be sent over the personal signature of the GM duly vetted by the FA&CAO.

Any modifications, which the Railway administration may desire to suggest, or any comments, which they wish Director of Audit to consider before giving their final reply should, as far as possible, be settled by personal discussions so that the final reply of the administration is sent within the overall time limit of 8 weeks. After the railway, administration has replied finally, any further enquiries by the Board or the Director of Audit will have to be dealt with based on highest priority,

11.4 Audit report of CAG
If the Audit is convinced of Railway administration replies that there are no irregularities, the draft paras will be dropped- If the audit considers the cases as irregular the draft paras will be included in the report of the CAG and the report is presented to the Parliament where it is taken up for consideration by the Public Accounts Committee. The Committee obtains personal evidence of senior officers of the Railway Board. The recommendations made by the Committee are considered by the Railway Board and notes on action taken by the Board are submitted to the Committee.

The Audit Report Covers Comments arising from audit of the Accounts of Railways and Appropriation Accounts on Railway Grants. Other points arising from the test audit of financial transactions of Railways are also included,

The Audit Report generally highlights :-
Financial Results of the year,
Leakage and Seepage of Railway Earnings,
Avoidable expenditure
Underutilization of assets:
Cost over runs due to Time overruns in the execution of projects
Inventory Control,

11.1 RECTIFICATION OF MISTAKES IN ACCOUNTS DISCLOSED BY AUDIT
(Para 922 of Finance Code)
if any mistake or inaccuracy is disclosed by Audit or detected in internal check, the following procedure should he adopted :
1) The mistakes should be rectified through the account of the month in hand if the accounts of the year have not been finally closed. (Any nature or mistakes)
2) Mistakes and misclassification noticed after, closing March Accounts but before the preparation _of Capital and Revenue and Finance Accounts should be rectified - The corrections should be intimated to the Railway Board by the first week of August either through a revised account or through corrections to accounts already submitted.
3) The following rules are lo he followed if the mistakes are noticed after the submission of Capital and Revenue and Finance Accounts :-
(a) If the item belongs to one revenue or service head but is wrongly classified under another - No correction need be made. A suitable note against the original entry is sufficient
The mistakes must, however, be corrected if the error affects (i) the revenue or expenditure of another Railway or a branch line company or another Government Department (ii) Capital Head (iii) Debt or remittance head.
(b) Capital - If the corrections affect capital major heads the same should be effected as without financial adjustment i.e. by altering the progressive figure of capital outlay.
(c)Debt or Remittance head : If the error affects a debt or remittance head the following procedure should be followed ;-
(i) Item taken to one debt or remittance head instead of another (either debit or credit) the correction should be made by transferring it from one to the other
(ii) Item credited or debited to a debt or remittance head instead of revenue or service head - same procedure as mentioned at (i) above,
(iii) Item credited or debited to a revenue head instead of to a debt or remittance head - correction should be made by minus crediting or minus debiting the revenue head and crediting or debiting the proper head,
4, If the rectification of mistake would lead to an excess over grant or grants voted by Parliament or to a considerable change in the dividend payable in General Revenue, the orders of Financial Commissioner (Railways) must be obtained.

GOVT. ACCOUNTING AND BOOKS

GOVERNMENT ACCOUNTS,
1. Governed by the requirements of the constitution and instructions of parliament through its committees,
2. Purpose is to determine as to how as little money as possible may be taken from the tax payer to maintain the activities,
3. There must be a systematic record of all receipts and expenditure classified appropriately,
4. Generally kept on a single entry system,
5. Maintained on cash basis,,
6. Statement of receipts and expenditure is only prepared,

COMMERCIAL ACCOUNTS
1. Governed by standard accounting practices and conventions and the law of the land such as company law, income tax law etc
2. Purpose is to show how as much can be earned as possible consistent with the requirement of the business
3. There should be a record of the usage of capital, profit/loss source of profit/loss and indication about the solvency of the company
4. Maintained on double entry basis
5. Maintained in accrual basis
6. Trading accounts, manufacturing account, profit and loss account and balance sheet are prepared

STRUCTURE OF GOVT. ACCOUNTING
PART I
CONSOLIDATED FUND OF INDIA
It is governed by Article 266 of constitution of India All receipts and expenditure both h on capital and revenue accounts are accounted for. In addition, loans and advances to Govt employees are accounted
REVENUE
Deals with the proceeds of taxation and other receipts classified as revenue and expenditure there form Rlys: The traffic receipts form the main source of revenue and working expenses are the main revenue expenditure
CAPITAL
Deals with expenditure met with the object of increasing the assets. Rlys: Capital, DRF, DF, OLW-R & Capital Fund according to nature of assets and rules of allocation Block account prepared for all assets irrespective of the source of funds. Loan account reflects expenses charged to loan from General revenue - Capital
DEBT – PUBLIC DEBT, LOANS & ADVANCES
Rlys: HBA, Scooter advance, cycle advance, natural calamity etc both advances and repayment of loans and recoveries of advances

PART II
CONTINGENCY FUND OF INDIA
It is governed by Article 267 of constitution of India. It is operated to meet unforeseen expenditure pending authorization of parliament. It is under the disposal of the F C of Railway.
PART III
PUBLIC ACCOUNTS OF INDIA
It is governed by Article 268 of constitution of India. All receipts and expenditure both h on capital and revenue accounts are accounted for. In addition, loans and advances to Govt employees are accounted
DEBT (OTHER THAN IN PART I)
It consists of receipts and payments other than those under Debt heads pertaining to Part I. eg. PF, Reserve Fund,Security Deposits, EMD, Departmental advances
REMITTANCES
It merely embraces adjusting heads which appear transfer among different circles.
GENERAL and SUBSIDIARY BOOKS

GENERAL
1. The General Cash Book or The Daily Abstract Of Cash Transactions (Form A 304)
2. The General Cash Abstract Book or The Monthly Classified Abstract Of Cash Transactions (Form A 306)
3. The Journal ( Form, A 307)
4. The Ledger (Form A 310)
SUBSIDIARY
1. Register of Works
2. Registers of Capital, DRF, DF, Capital Fund and OLWR
3. Revenue Allocation Register
4. Register of Earnings
5. Suspense Registers
a. Demands Payable Register
b. Misc. Advance Register
c. “F” Loans And Advances Register
d. Deposit Misc. Register
e. Deposit Unpaid Wages Register
f. Demands Recoverable Register
Capital Suspense Registers(Stores & Workshop Suspense

DIFFERENCE BETWEEN GENERAL AND SUBSIDIARY BOOKS
GENERAL BOOKS
Monthly accounts are prepared from the postings made in the general books,
Only the voucher no and amount are posted in the general book,
Maintained to collect and bring into account the transactions of an accounts circle,
Are mainly meant t prepare accounts suiting the principles of Govt. accounting,

SUBSIDIARY BOOKS
Schedules accompanying account current are prepared from the ;postings made in the subsidiary registers ( e.g. details of earnings and working expenses and works expenditure)
Details of transactions are recorded in the subsidiary registers
Maintained to exercise control over expenditure of an accounts circle
Serves to keep accounts to suit the commercial principles of accounting

PERFORMANCE BUDGET

PERFORMANCE BUDGETTING
1 The performance budgeting came into effect in Railways in 1979-80 and has been gradually stabilizing for purposes of management control over the costs in relation to the physical activity. Before discussing the merits and advantages of P.B, it is nccessary to have an understanding the form of budget which was in existance prior to the introduction of Performance Budgetting.
in one of the reports the World Bank Study team has described Budget as prepared in the Past as a "routine and dogged exercise, undertaken and produced by the bureaucratic elite" The form in which the Railway Budget was presented to Parliament till 1979-80 provided for appropriaition of funds for certain items of expenditure falling under each demand without correlating expenditure to the quantum of service to be rendered with the aid of the funds sanctioned. For all practical purposes the Budget was a potrayal or record of cash transactions and their anticipations; it did not at all serve as a tool for management or as a device for evaluation performance-
The Conventional Budget was more ‘appropriation oriented’ than 'performance oriented’. There were in all 22 demands for grants not strictly representing homnogenous functional groups or activities though the demands for grants’ are supposed to basicaly represent the estimated expenditure in a 'Single' or ‘homogenus’ group of functions. The other defects in the old system of budgetting were;-
i) The Accounts heads under the detailed heads of accounts did not correlate with the Budget heads. The expenditure under demands had to be eolleccted from different revenue abstracts.
ii) Budget had liltle relevance to performance.
iii) When Parliament sanctioned the budget, it was not aware of the quantum of services that would be rendered in Ihe various aspects of Railway activities,
i5.2 Based on the recommendations of a Task Force appointed for the purpose the demands for grants have been restructured with the approval of the Estimates Committee. It was therefore considered necessary that the budget as a document must be capable of fulfilling the following objectives:-
i) to present more clearly the purpose and objectives for which funds are sought and to bring out the programmes and accomplishments in financial and physical terms.
ii) to help in the better understaniding and review of the budget
iii) to improve the formulation of the budget and to aid the process of decision making at all levels of Govt., and
iv) to incorporate an element of accountability,
3 Performance budgetting therefore, implies fixing in advance performance, targets, under each activity, in acceptable and feasible measures of output, fixing corresponding finance outlay for achieving these physical outputs and monitoring and comparing the actual performance both in physical and financial terms.
The steps involved in Performance Budgetting, are identification of functions, programmes and activities. In order to achieve the objectives of P.B, the demands for grants have been restructured to spell out the functions, activities and objects. Each demand has 3 sub­divisions -
i) Sub Heads of Demands representing major functions,
ii) Detailed Heads representing further break-up of the activity classification i.e. identifying 'Why' the expenditure is incurred,
iii) Primary Units identityfying 'what' the expenditure denotes (objects of expenditure, i.e salary, allowances, material etc)
An example of concordance between the Sub-Heads of Demands for Grants and Main Heads of Accounting Classification is given below :-

EARNINGS BUDGET

EARNING BUDGET
The Budget Estimation of Traffic earnings is framed under Four distinct categories viz. (i) Passenger (ii) Other Coaching (iii) goods and (iv)sundries. The cumulative total of the above categories form the gross earnings. The commercial branch initially compiles the estimate of earnings in the proforma prescribed by the Board. This is based on the physical performance of previous year and the and the actual earnings and other available statistical data for the current year. Following are the methodology adopted for estimates of figures under each category.
1 PASSENGERS :
The originating No. of passengers separately for suburban and non-suburban should be first assessed in the basis of the trend during the first four months. the current year and the actual of last year. This information is available in the 6 A statement. While assessing the above, commitments of growth in passengers as in the Budget papers as well as Railway's own growth and pattern of traffic should also be taken into consideration. These originating No of passengers, thus estimated should then be converted into carried passengers. This is done by applying the ratio of originating to carried No of passengers as per the trend of current year and last year. The average lead i.e., the average distance carried over the Railway shall then be fixed based on the trend of previous year. Change in the lead depends on the Railways jurisdiction or change in the pattern of traffic. Normally the lead of' passenger traffic is constant. The average fare per passenger per km is used at the fare of previous year's actual. In the event of any revision in fare, the average fare is suitably modified with reference to the trend of current year. By multiplying the rate to the passenger KMs, passenger earnings are assessed (carried No of passengers x lead x rate = passenger earnings)
2 OTHER COACHING;
This head consists of earnings of parcels, luggage and other traffic. The traffic prospects, in this category are assessed by the Commercial Department considering the trend of movement of fruits (like plantain and oranges) based on the reports given by DRMs. Here again the factors like postal haulage charges billed against P&T Department and their acceptance are also taken into consideration.
3 GOODS
The originating tonnage are fixed by thc Board after discussion with the COPS in a meeting in the Board's oflice. The originating tonnes thus fixed will form thc basis for thc preparation of the Goods earning projection. Based on the originating tonnes as fixcd and approved hy GM. the carried tonnes arrived at range-wise by applying the ratio of originating to carried tonncs as is available in the 7-C statistical statement for the last year and current year. The average falr per tonne per kilo meter is arrived after taking into account the rate prevalent in the 7-C statement after suitably modifying the same with the current ttend and revision in freight rate etc. On the basis of the above statistical data the freight earnings are estimated as under :-
Carried tonnes x lead = NTKM
NTKM x rate = earnings (by multiplying the lead and rate to carried tonnes, goods earnings projections are fixed)
In addition to the freight earnings as estimated above, certain Misc, earnings such as wharfage, demurrage, siding charges, etc- are added by estimating the same based on the previous years actuals and the trends noticed during the year.
The freight earnings together with the Misc. earnings will form the total goods earnings of the Railways, commoditiy wise steel( manufactures, pig iron, alloy steel), coal for steel plants, washeries railway and other users, cement, ore for exports, food grains, fertilizers, general goods, but railway material separately.
4 SUNDRIES
an
The sundry earnings consists of rents recovered, advertisement thargc, catering earnings, profit for work done for outsiders in workshop, dividend accrued from State Road Transport Corporations and interest and maintenance charges of siding etc. The estimates under this category are done in relation to the current year's trend as well as earnings potential.

EARNINGS BUDGET (SPECIMEN)
Sl no PASSENGERS ANTICIPATED FOR THE YEAR
1 No. of originating passengers 200 MILLION
2 Carried No, of passengers 220 MILLION(100:110)
3 Average lead (in km) 230
4 Passenger km (2 x 3) 220x230)=50600 MILLION
5 Average fare in paise 12 paise
6 Earnings (4 X 5) (Rs in Crores) 607 Crores

GOODS:
Originaring tonnage 34.5 million tonnes
Tonne carried (100:260) 89.7 million tonnes
Average lead in km 435
Net tonne km (2 x 3) (435x89.7) =39019.5 million
Average rate per km 35 paise
Goods Earnings (4x5) 1365.68 Crores
Other earnings (siding,wharfage, Demurrage etc) 14.32 Crores
Total Goods Earnings 1380.00 Crores
Traffic suspense: station outstanding, outstanding in the accounts office balance sheet, admitted debits, objected debits, wharfage, demurrage, frieght on hand, frieght not on hand, current freight special advices

MANAGEMENT OF VARIOUS FUNDS IN RAILWAYS

MANAGING OF VARIOUS RAILWAY FUNDS
1.1 The Railways maintain the following funds for different purposes viz
a) Depreciaion Reserve Fund (DRF)
b) Pension Fund
c) Development Fund
d) Capital Fund
e) Railway Safety Fund
f) Special Railway Safety Fund
The Development Fund maintained by the Zonal Railways record expenditure only and the overall balance/overdraft position is maintained by Railway Board. Balances in the funds remain with the Ministry of Finance and interest is credited to the funds on the balances. Plan outlay of Indian Railways comprises of budgetary support i,e capital from thc Ministrv of Finance and expenditure to be met by Indian Railways from their own internal resources i,e. DRF,DF. OLWR and Capital Fund.
The first two funds viz.. Depreciation Reserve Fund and Pension Fund are in the nature of 'Provision^' earmarked for a very specific purpose. They are 'charge’ funds and represent amounts set aside for "providing coins and currency' for the specific purpose for which they are created. On the other hand, the last two viz Development Fund and Capital Fund can be said to be General purpose funds. DF and Capital Fund are maintained only out of 'profits' or 'surplus', but the charge' funds have to be maintained out of the revenue 'before true profits’ can be ascertained.
Let us discuss each of these funds to ascertain how far do the railways finance them properly and to what extent is the.expenditure properly debited to them.
1.2 DEVELOPMENT FUND
This fund was created in 1950 replacing the "Betterment Fund". Presently, the following items are chargeable to DF.
i) Works of Railway Users' Amennies.
ii) Labour Welfare works above Rs 1 lakh
iii) Unremunerative works costing over Rs10 lakhs.
iv) Safety Works
v) Passenger Amenities Works.
This fund started borrowing from GeneraI Revenues since 1960’s. interest has to be paid on money borrowed from General Revenues. The loan otistanding to General Revenue as on 31-3-1990 was Rs.34 Crores and the entire liability was discharged by the Railways during 1992-93 and the balance under this fund as on 31-3-94 is a meagre amount of Rs 32 lakhs,
1.3 DEPRECIATION RESERVE FUND
This fund was created from 01-04-1924. This Fund, being a charge fund this has to be financed not from the surplus but from revenues. Uplo 1935 the amount tobe credited to the fund was determined on Straight line Method i.e. by dividing the cost of each class of assets by their normal life. From 1935-36 to 1949-50, one-sixteenth of the capital at charge was credite to the fund every year. The 1950 Convention Committee however, started fixing a lumpsum amount to be credited to the fund due to Railway’s inability to appropriate adeqyuate money to this fund for several years. Raiwlays faced a heavy backlog in replacements and renewals. As a result the contribution was increased from rs 200 Crores in 1980-81 to Rs 2000 Crores during 1995-96. this amount to be credited to this fund for each quinquenium is decided by the Railway ConventionCommittee.
1.4 PENSION FUND
this fund was created in 1964-65 when the system of Contributory Provident fund was discontinued for the new entrants in Railway service and Pension Scheme was made compulsory for them and optron for the old employees.
The Pension Fund is financed:
i) by transfer of money CSRPF of the employees
jj) from Revenue also,
iii) from Capital (Production Units)
The number of pensioners and quantum of pension are taken into account while deciding the amount to be credited to the fund. After implementation the recommendations of the 4th Pay Commission, the expenditure charged to this fund has increased tremendously and so also the appropriation to the Fund. The amount of Appropriation to Pension fund for 1995-96 is Rs.1971 Crores. Appropriation to DRF and Pension Funds is made having regard to the recomincndations of thc R.C.C.
1.5 CAPITAL FUND
In pursuance of the rccommmendations of the Railway Convention Committee a new fund "capital fund" has been constituted from the surplus left after payment of dividend and appropriation to DF for 1992-93.
The plan expenditure initially used tio be met from out f the budgetary support received by the Railways from the central Govt. and their own internal resources generation. ini view of the acute resource crunch, the budgetary support provided by the Central Govt to the railways started dwindling. The Budgetary support which was 58 % in the VI Five Year Plan came down to 41 % in the VII Five Year Plan and then to 32 % in 1991-92. it was 16 % in 1995-96.
Resources are going to become more and more scarce and the time is not far when the budgetary support may cease to exist. Raising of resources from the market has been an expensive proposition. The Railways annual Iease charges of 16 % to IRFC is almost double the rate of dividend of 7.5%. Moreover, the 9 % tax free bonds floated by the IRFC are noo longer popular. In a situation like this when the Budgetary support is declining and market borrowing expensive and uncertain, the Railways have no option but to function on a self-sustaining commercial basis.
The size of the VIII Five Year Plan Rs 27202 Crores, not sufficient to meet the transport demands. if the Railways are able to generate additional resources by themselves, the plan size£ may be adequately increased to meet in full the transport demands.
The Capital Fund should be used to Finance Capital works on the Railways and is not intended to improve the general ways and means of the Government.
1.6 DISPENSATION OF RRF AND ACSPAF
RRF was created in 1924 and started sustaining year after year in 'Loans from General Revenues'. With the introduction of Deferred Dividend Liability Account the utility of this fund ceased to exist. Hence this fund was dispensed with from 01-04-1993.
ACSPAF came into existance from 01-04-1974. This fund was to meet the liability arising of Accident Compensation and also to meet the cost of certain Safety and Passenger Amenity works. As similar expenditure is already booked to DF there is overlap of expenditure. It has therefore been deicided to abolish ACSPAF with effect from 01-04-1993 and the expenditure presently charged to this fund is re-allocated as under-
Accident compensation Demand No. 12 Abstract K-250
Safety Works DF IV
Passenger Amenities DF I
1.7 The appropriation to DRF, DF, Capital Fund, Pension Fund is budgetled under Demand No, 14 and appropriation from the fund (expenditure from the fund) is budgeted under Demand No. 16 for. DRF, DF and Capital Fund and Demand No 13 for Pension Fund. The Interest on the Fund balances is credited to these funds.
1.8 Capital -at-Charge and Capital Fund :
The rules of allocation are same for booking the expenditure to Capital at-charge and Capital Fund.Capital-at-Cbarge is a loan Capital borrowed from General finance for creating assets. The Capital-at-Charge is non-refundable and interest bearing loan. The Interest is paid in the form of dividend to General Revenues. The payment of dividend is perpetual. The rate of diividend is as per the recommendations of R.R.C.
Capital-at-Charge is also termed as budgetory support for Railway's Plan investment. The Plan investment is financed through generation of internal resources, budgetary support and also market borrowings through IRFC. The Capital-at-Charge is the book value of assets created from the loan Capital from General Revenues.
Capital Fund is created out of Railway's surplus to meet the needs of Railway's Plan investment. The plan size of Railways cannot be reduced since capacity constraints would endanger economic progress of the Country. The gap between the requirements of resources and the availability is to be bridged. The growing self-reliance on the part of Indian Railways is to be continued. The only way is to increase the internal resources. The creation of Capital Fund is to reduce the borrowing from General Revenues.
No dividend will be paid on the expenditure met from Capital Fund. On the other hand, interest is credited to the fund on the balance of the Fund at the end of each financial year. Though there are no seperate rules of allocation for booking the Capital expenditure to Capital-at-Charge and Capital Fund, it is seen from the Budget Papers that the Capital-at-Charge is operated to book the expenditure under Plan Heads 1100- 'Construction of New Lines' and Plan Head 5100 - 'Staff Quarters' and Capital Fund is operated for other Plan Heads. At present the capital fund is not operated.
1.9 Railway Safety Fund:
the fudn was effective from 01.04.2001. The fund was created fro a specific purpose of manning of unmanned level crossings and construction of Road Under Bridge (RUB)/ Road Over Bridge (ROB) . the source of the fund is Central Road Fund, through a levy of 1 % cess on petrol and diesel. The Indian railways received 12 ½ paise on every litre of petrol sold ( 1 % cess) and receives 6 ¼ paise on every litre of diesel sold ( 1 % cess).

1.10 Special Railway Safety Fund:
The fund was effective from 01.10.2001. The fund was created for the following purposes: renewal and replacement of overaged assets renewal of track, bridges, signal equipments, rolling stock and other safety enhancement works. The source of the fund is the levy of safety surcharge on passenger traffic (Rs 5000 croers) and the additional financial assistance by the ministry of fiancé (Union Ministry). This is a non-lapsable fund.

ZERO BASED BUDGETING

ZERO BASED BUDGETING
Zero Base Budgeting has been defined as "a Planning and Budgeting process which requires each Manager to justify his entire budget request in detail from scratch (hence zero base) and shifts the burden of proof to each manager to justify why he should spend any money at all. This approach requires all activities be identified in 'decision packages' which will be evaluated by systematic analysis and ranked in order of importance
The traditional budgetary system relies on the present accounting data base. Thus, if salaries and wages of the employees have increased by five per cent every year on an average, the salaries and wages budget for the coming year is fixed by increasing previous years expense figures by five per cent. This system of budgeting has served well to exercise a measure of financial control and discipline in an organisation. However such a measure is not enough.

1.2 ZBB is a technique which complements and links the existing planning, budgeting and review processes. It is a management tool which provides a systematic method for evaluating all operations and programmes current or new, allows for budget reductions and expansions in a rational manner and allows the re-allocation of resources from low to high priority programmes. It is also a tool for the decision makers enabling them to frame range of options and choose priorities among alternative programmes in relation tor resource availability.
In ZBB. a unit is required lo justify not only the new activities and the funds therefor but also the ongoing activities. The ZBB requires identification and sharpening of objectives, examination of various alternatives ways of achieving through cost-benefit and cost-effecetiveness analysis, prioritisation of objectives and programmes which have outlived their Utility.
1.3, Suppose in an administrative set up, six clerks are employed as comptists for doing the work of addition and substractions. Recently the administration provided the staff with electronic calculating machines and also installed personal computer, with the result, the comptomer clerks have either no work or very little work. The Administration would fail to see that the clerks could be effectively redeployed or dispensed with. The traditional budgetary system would ensure that their salaries were paid till retirement for very little or no work.
The above example, although exaggerated can correspond to many situations in our exiting organisation where ‘dead wood’ abound in many areas. The ZBB helps to identify such areas of wasteful extpenditure and if desired can also suggest alternative uses of items of expenditure that are presently wasteful in nature.
The ZBB is an extension of Performance Budgeting as The ZBB technique links the budget with corporate objective.
1.4 In the Railway system/preparation of works programme well in advance partly suits the req uirements of ZBB. The same cannot be said so in respect of Revenue Budget. The technique of ZBB will help certain specialised areas especially whenever there is switch over from one system to another (e.g. Steam traction to Diesel. Diesel to electric and from manual to Computerisation etc.) indentify the 'Dead Woods',
1.5 HOW ZBB DIFFERS FROM TRADITIONAL BUDGETING
o A traditional budget is function-oriented, a ZBB is programme or project oriented
o in traditional budgeting, Justification is required only for new programmes, existing programmes are sell perpetutating whereas ZBB requires all programmes and projects are to be justified.
o traditional budgeting views critically only cost increases; ZBB critically examines existing levels of expenditure.
o traditional budgeting is input oriented; ZBB is output oriented
1.6 STEPS INVOLVED IN ZBB
1. Define the objectives of the budgeting exercises to achieve cost reduction in areas such as staff overheads, or to analyse and drop projects that are unlikely to achieve corporate objectives or to restructure the organisation itself.
2. Decide on the strategy for implementation, here the object is to decide whether to implement the ZBB technique in one particular area.
3. Develop decision Units: This is the key to effective ZBB, Each decision unit must be independent of all other units so that if the cost benefit analysis proves unfavourable the unit can be dropped.
4. Completion of decision package : After the decision units are identified a decision package for each such unit is made up.
5. Rank all packages : Once the decision packages are completed, all the packages are ranked according to the cost-benefit analysis,
6. Implement : Implementation process consists of simply acccpting those projects that have a positive cost benefit analysis.
1.7 CONCLUSION : To some, ZBB , is simply an old idea dressed up in a new name, To others, ZBB symbolises a new approach to management. But nobody would question its real value.

INTEGRATED BUDGET

INTEGRATED BUDGET
The budgeting work on Railways is connected with assessing or the annual requirements under Revenue Budget, the Works Programme and the Rolling Stock Programme. The Railways also submit the forecasts of earnings. These documents form the part of the Railway Budget presented to Parliament. However, hitherto, these programmes were considered separately at Railways and Board level and no connection was attempted with each other .The Capital and Revenue budgeting were slightly disjointed. It has since been realised that an integrated approach is necessary to evaluate performance of Railways,
Capital Budgeting aims at creating of infra-structure for economic development and the primary aim of investment is to generate income. Revenue Budgeting is nothing but translation of physical objectives into financial terms.
Some times Railways are in no position to generate sufficient income to pay dividend due to various social obligations investment of which have not generated sufficient income or sluggishness on the economy.
Aim of the capital inputs are primarily to generate income so that integrated approach to budget requires that each zonal railway should spell out in one place the capital and revenue inputs needed to achieve a certain level of earnings. With this aim in view, the Railway Bloard have directed all the Railway Administrations to submit a consolidated budget (ie., integrated budget) which should give the essential features of the proposed performances of each zonal railway and balance sheet reflecting the capilal-at--charge, the budgeting earnings ,an the working expenses, the net revenue and the return on capital.

The parameters to judge the performance of Railways are operating ratio, engine utilisation, passenger vehicle utilisation, wagon turn around, fuel consumption, turn over ratio etc, and the integrated budget therefore includes brief comments on the following important aspects :-
1.2
1. FINANCIAL RESULTS indicating the gross traffic receipts, working expenses, the operating ratio and the ratio of net revenue to the capita!-at-charge.
2. Proposed Plan outlays, capital investment, the dividend liability to General Revenue, the anticipated earnings for the year vis-a-vis the working expenses-
3. MATERIAL MANAGEMENT showing the position of inventories, .stores balances, manufacturing suspense and how efficient the systems are working. The "turn over ratio" is also furnished to work out the efficiency of inventory control.
4. Progress of computerization of accounts work relating to stores, traffic accounts etc.

5. Commitments about the overall operating performances with references to
a) Wagon turn round ( gap between two subsequent loading)
b) Engine turn round ( gap between two subsequent haulage)
c) Fuel consumption ( Specific Fuel Consumption - 1000 GTKMs
6. For earnings, the average lead and average rates both for goods and passenger traffic should be given
7 Projection of traffic earnings
8.Rolling Stock Programme both on additional and replacement account
9.Work, Machinery and Plant Programme
The integrated budget brings to limelight the efficiency, of working of financial viabiliity of the Railway system.
The Integrated Budget also highlights the following activities ;-
i) Requirements of Rolling Stock (Both on additional account and replacement account).
il) Incremental cost of additional traffic
iii) New trains introduced during the year.
iv) Other activities such as energisation, improvement in loco utilisation, All India whole sale price index and any other achievements worth mentioning,

1.3 The Integrated Budget is submitted along with the Preliminary work Programme in the first week of September. After discussion of the PWP, a revised Integrated Budget should be submitted along with Final Works Programme duly taking into account the changes thati might have taken place in the meantime (Para 622 of Engineering Code)
1.4 Utility
After the introduction of Performance Budget, the Significance of Integrated Budget is lost, Various statistical information that are already available can be made use of.
CHAPTER XVIII
WORKS BUDGET
1.1 The requirements of funds of Zonal Railways to progress their ongoing and new schemes proposed are to be grouped under the prescribed Plan Heads. Investment decisions relating to the creation, acquisition and replacement of assets on the Railways are processed through the Annual Works Machinery and Rolling Stock Programmes. These programmes are examined by the Board and discussed with the General Managers and the works to be undertaken and outlays during the budget year decided upon.
The works budget process stats almost a year in advance of the financial year to which it relates. Tentative requirements of funds are required to be projected at the beginning of say May '06 for the year 2007-08. This information is required to be presented in two parts.
(A) Throw forward amounts for the year 2006-07 from
i) Works in progress included in the budget of 2005-06
ii) Anticipated cost of new works included in the budget for 2006-07 workwise and classified under Cap, DRF, DFand Capital Fund.
(B) Tentative requirements for 2007-08 for:
i) Works in progress
ii) For new works proposed in 2006-07 classified workwise and under Cap, DRF, DF and Capital Fund.
In addition, Fhe plan oullay during the subsequent years of fhe plan is also required to be furnished under each plan head workwise. Simultaneously all schemes costing over Rs 3 Crores are required to be got cleared by the Board after a broad serutiny of the financial implications as presented by the Railways. Track renewal proposals are furiher examined with reference to overall priorities having regard to the availability of Permanent Way materials.
1.2 i) In about June/July '2006 the Railway Board will convey to each railway in respect of each plan head the total outlay within which the works programme should be framed by the Railways. The railway taking note of the ceilings is required to submit the Preliminary Works Proramme some time in Aug/Sep 2006. In this outlay proposal for each work indicating the actual expenditure upto March 2006, outlay proposed for 2006-07, outlay proposed for 2006--08 together with balance to complete the works have to be shown. In addition two more annexures regarding (i) the position of actual expenditure on staff quarters and outlays proposed in the current and next year as also balance to complete the work and (ii) employment likely to be generated in the current year and next year under unskilled, educated, technical and non-technical are required to be given.
n) Project costs have to be based on firm dala and once the same is approved the changes in scope of the project should be allowed without prior reasons being adduced for accpctance by the Railway Board. As far as possible only the last sanctioned costs should be exhibited. Works sanctioned and taken up should continue to be included every year till they are finally completed.
iii) Works approved in earlier years and but commenced as well as works approved in earlier years but for which estimates have not been sanctioned by 30th June are required to be indicated in the programme.
iv) Certain far-reaching decisions have been taken in the recent years in regard to regard excess over estimates, material modification etc. It has been decided tlhat no outlay would be made available if there is no corresponding estimate provision left for utilization. This would mean that wherever there has been excess over estimates, these would have got to be covered by a proper sanction for the revised estimated cost by August itself. Only then it will be possible to reflect the revised cost in the statements and ask for the required budget provision in the succeeding year. In respect of material modifications also, Board have decided that a serious view would be taken if material modification not within the GM powers are not covered by a proper sanction. While approaching the Board with material modifications, the revised financal iimplications have to be brought out. These measures have cast a great responisibility on the project organisations to see that they confine themselves to the works provided for in the original estimate and if material modifications within their own powers are involved find out savings elsewhere to absorb them and where they are not within their own powers approach the Baard in time before the works are executed. In practice, however there are considerable problems in getting the revised estimates sanctioned mainly due to the time laken for secretarial scrutiny.
v) After having examined the individual railways progrommes the Board decide which works should be included in the next year's budgel and direct the railways to modifiy the programmes and submit the works programmes on ihe stipulated dates. The budget estimates therefore reflect the final investment decisions. The estimated amount is advised to the Planning Commission/Ministry of Finance for necessary provision being made in the ways and means budget of the Govt. of India and after it has been ascertained that funds will be available, the programmes are submitted to the Ministry for approval.
vl) Thereafter the demands for grants and other papers are presented to Parliament. With the recommendations of the President Appropration bill is also introduced for drawal of funds from consolidated fund of India. This bill passed in the Parliament and asssented to by the President forms the budgetary allocation to the railways, Thereafter, allotments are made to the railways through budget orders. Allotments fixed by the President are shown as 'charged'.
I.3 No reappropriation is permissible between 'voted' and 'charged' allotments as also between capi al, railway funds and revenue. The provision under ihe plan heads (i) electrification projects (ii) new lines, (iii) gauge conversions, (iv) track renewal cannot be reappropriated without the approval of the Board. This equally applies in (i) staff quarters and (ii) amenities for staff under staff welfare works as well as passenger amenities and other railway users' amenities. Other re-appropriations are, permissible before the close of the financial year.
*
The stages for review and asking for additional provision/surrendering provision not required are at the August review, revised estimate, first modification and final modification stages. Supplementary grants should be sought in the same financial year in which it is required. In case expenditure has already been incurred, these should be covered by seeking excess grants based on the recommendations of the Public Accounts Cummittee as a result of the scrutiny of the Appropriation Accounts by the C&AG of India.
1.4 The expenditure to be forecast is also to be comipiled and reflected under diffarent primary units,
The main points to be taken care of in framing these estimates are :
a) Wherever payments are made by other railways on Railway Board contracts a forecast of the likely payments is to be obtained from them.
h) Similarly in respect of services rendered or work done also either by home railway or others the adjustments are to be estimated properly and incorporated.
c) budget section should identify the spending units and ensure That the projections arec received in time and taken note of
d) In the above cases the process involves advance action. in other respects it is just the process of review of likely payment;it has to be carefully noted in this connection that if the reviews are to be purposeful the current state of expenditure should be readily available under various primary units and further split up into the components thereof in the same manner in which the budget has been built up. This would only be possible if a computerised system of compiling the transactions under these components on a monthly basis is evolved. With the advent of personal computer this is an elementary exercise and from February onwards even a day to day watch can be attempted to produce worthwhile results. Large scale adjustiments vitiate the budgetary process and it is here that a close interaction between the executive and Accounting Wings is called for.