GENERAL EXPENDITURE - SUBJECTS FOR ACCOUNTS DEPT OF INDIAN RAILWAYS.

GENERAL EXPENDITURE
1. Surveys
2. Estimates: A. Check Of Estimates
3. Tenders
4. Contracts And Agreements
5. Measurement Book
6. Contractor’s Ledger And Check Of Contractor’s Bills
7. Works Registers And Revenue Allocation Registers
8. Material At Site Accounts
9. Deposit Works
10. Sidings – Private And Assisted
11. Maintenance Of Land And Buildings
12. Completion Report
13. Objectionable Item Register
14. Labour Pay Sheets
15. Initial Records At XEN’s Office
16. Duties Of Works Accountant
17. Revised Classification
18. Various Funds – Capital, OLWR, DRF, DF
19. Parliamentary Control Over Expenditure

GENERAL EXPENDITURE SHORT NOTES
1. Feasibility Report
2. Techno Economic Survey
3. Departmental Expenditure
4. Divisional Schedule Of Rates
5. Financial Propriety
6. Late And Delayed Tender
7. Tender Committee
8. Terminal Tax
9. Earnest Money Deposit And Security Deposit
10. Deposit Miscellaneous Receipts / Expenditure
11. Muster Sheet
12. Completion Statement
13. Exchequer Control
14. Final Financial Review
15. August Review
16. Revised Estimate
17. Final Modification
18. Final Grant
19. Demands For Grants
20. Budget Order
21. Works Programme
22. Pink Book
23. Ballast
24. Buffer Stock
FEASIBILITY REPORT
TECHNO – ECONOMIC STUDY
Since the Planning Commission monitors all infrastructural and developmental works, prior to incurring the huge capital expenditure, a feasibility report or a techno –economic study is conducted to gauge the monetary value of the project. Plan Heads are used to indicate the source of funds and these are common to all ministries.

RECONNAISSANCE
This is a rough and rapid survey without any technical instrument. The purpose is to assess the
PRELIMINARY
Consists of a detailed instrumental examination of the route/s selected as a result of reconnaissance survey in order to obtain a close estimate of the probable cost of the projected railway. Based on this survey, the decision whether the line is taken up of not is usually taken in conjunction with Traffic survey. In this survey no sophisticated survey equipments are used.
TRAFFIC
This is detailed survey of the traffic conditions and prospects of an area with the object of determining the most promising (economic) route for the rly line in the area, the probable traffic. Based on this survey only project is determined
FINAL LOCATION
This is a more sophisticated and detailed technical survey and is normally conducted after once the justification of the project is accepted, based on the Preliminary Survey. The alignment of the line is finally selected is fully staked on the ground with a “theodolite” or “ tachometer” and the report with detailed plans and sections prepared only after the final location survey has been completed and the report received by the Rly Bd , sanction for the project is accorded.

Estimate is an assessment of quantum of labour, material and other services required to complete a work and it is expressed in monetary values.
ABSTRACT ESTIMATE - 702 E, DETAILED ESTIMATE- 707 E, SUPPLEMETNARY ESTIMATE - 707 E, REVISED ESTIMATE - 708 E, PROJECT ABSTRACT ESTIMATE - 709 E, PROJECT DETAILED ESTIMATE -710 E, COMPLETION ESTIMATE - 713 E

ABSTRACT ESTIMATE is prepared in order to enable the authority competent to
give administrative approval to the expenses to judge the necessity, utility and Financial prospects and to enable the authority to gauge the magnitude and Nature of the work contemplated. These estimates avoid the delay and expenses Of preparing estimates in detail at a stage when the general desirability of the work Has not been decided. Para 702 E

DETAILED ESTIMATE is prepared to secure technical sanction to the work After the administrative approval is accorded. These estimates are prepared In sufficient details to enable the competent authority to ensure that the cost Indicated in the abstract estimate in not exceeded. The work is taken up only After the sanction of this estimate. Para 707 E
PROJECT ABSTRACT ESTIMATE is prepared after the Final Location is completed. This is submitted to Rly Bd showing the abstract cost of the project under Different sub heads of allocation showing further the unit cost and rate of Expenses per kilo meter of the line for the whole line and sections of the line. This is accompanied by i. an abstract estimate of junction arrangements
ii. A narrative report of explaining the proposed expenditure under capital heads
like workshop, stores, buildings, plant & machinery etc iii. Detailed estimate
for the civil construction.
This estimate is submitted for purposes of Parliamentary and Administrative Approval and necessary funds for taking up the work are allotted to the Rlys Based on these estimates. Para 702 E

PROJECT DETAILED ESTIMATE is detailed working estimates of all works Included in the project and is prepared after a careful examination of all Various details of construction involved in the project. Once this estimate is Prepared preparation of further working estimates should not arise except Some supplementary or revised estimate becomes necessary. This is prepared and submitted to the competent technical authority for his sanction. Details of junction arrangements, main line and branch line estimates, Divisions of project including estimates for the alternative alignmentss and For the length with it would supercede if adopted to be furnished. It should be Split geographically based on the sections likely to be opened for traffic in stages

SUPPLEMENTARY ESTIMATE is prepared for any item of work which ought to have been included in the first instance in an estimate already sanctioned but has not been included, which it is found later should be considered as being a part of or a phase of an estimate already prepared and sanctioned, if it cannot be met out of contingencies. Such estimates should be prepared in the same form and the same degree of detail as the main detailed estimate and for all purposes be treated as part of the detailed estimate.
REVISED ESTIMATE As soon as it becomes apparent that the expenditure on work or a project is likely to exceed the amount provided for in the detailed estimates or construction estimate ( including supplementary if any) a Revised Estimate should be prepared and submitted to competent authority. It should unless otherwise ordered by the sanctioning authority, be prepared in the same form in the same degree of detail as the original estimate. It should be accompanied by a comparative statement showing the excess or savings under each sub head a/c against the latest sanction.

COMPLETION ESTIMATE is prepared in supercession of construction estimate This estimate shows in a tabular form the following particulars: 1. amount of sanctioned estimate 2. Actual expenditure 3.commitmebts on that day 4. Anticipated further outlay 5. Total estimated cost 6. Diff between sanctioned estimate and estimate cost.

Check of estimates:
Propriety of expenditure
Incidence and classification of charges
Existence of budget provisions
Freedom from errors and omissions
Competency of sanction
As a Financial Advisor, it is the duty of AO to see
The expenditure proposed is to be charged to the railway funds is properly and legitimately chargeable
That proper financial justification is forthcoming in all works requiring financial justification,
That in the case of estimates for the staff quarters and other rent returning buildings the anticipated yield of rent as shown in the Rent Statement will not have the effect of reducing the return on the cost of each class of quarters to less than the dividend rate per annum.
Incidence and classification of charges should be verified in an estimate according to rules of classification of expenditure as provided in the Revised Classification ( FII). In the verification certificate AO should indicate the correct allocation and the same is verified.
Existence of budget provision. The provision in the budget for the proposed work should be verified with reference to the sanctioned allotment for the year. Errors and omissions should be got vetted by the executives where needed a check note indicating the errors and omissions should be enclosed to the estimate at the time of verification.
Competency of sanction The powers vested with the sanctioning authority should be verified with reference to the extent Schedule of Powers and a clear indication regarding the authority competent to sanction the estimate should be given in the estimate. A certificate of accounts verification I the following form is to be appended to “incidence and allocation verified subject to the check note attached. This requires the sanction of …………………….”

Minor points:
1 the particulars of work should be given in sufficient detail and proper distribution should be made between cash and stores
2 the allocation of each item is given and an abstraction of allocation is made
3 that all incidental expenditure that can be foreseen has been provided for in the estimate
4 that in the case of renewal, replacement or dismantlement, the credit for the released materials has been provided (CRRM)
5 that in the case of a work to be done for other Govt depts., or private bodies provision has been made for necessary departmental charges
6 that in the case of estimates for staff quarters and other rent returning buildings a Rent statement is enclosed



COMPLETION REPORT:
C R of a work or project is prepared by the executive dept in the prescribed format with a view to comparing the actual expenditure on the works, sub work wise with the latest sanctioned estimate/ completion estimate. Where ever more one dept has executed the work, part CR can also be prepared in respect of their sub worksfor which separate sub estimates are available. Where ever the expenditure of the work exceeds 10 % with reference to the estimated cost, under each cub work explanation for the same should be given. Similarly, for any savings exceeding 20 % an explanation is given.
Before the CR is drawn, the executive should ensure that all charges and receipts for the work have been fully booked to the work account. In order to help the executives in this direction, the work registers are viewed in the accounts office and where ever no bookings occur continuously for more than 3 months, such works are reported to the executive concerned thru” work suspended statement”. Based on the statement, the concerned executives should take speedy action in collecting further charges and receipts against the work so that CR may be drawn.
In case of works for which no revised estimates are prepared to cover the variations in the cost, the same shall be also regularized under competent sanction through CR. The CR prepared with the help of the postings in the works registers and they are submitted to the AO where the following points are verified.
that the CR has been prepared in the prescribed format
that the entries made therein agree with those mentioned in the concerned works registers
that the credit for released material as provide for in the estimate has been adjusted against the work concerned
that the materials originally charged to the work but not used u,p has been returned to stores or transferred elsewhere duly affording necessary credits to ht work
that the posting of all final bills of supply or contract relating to the work have nee made in the works register
that satisfactory explanation are given for excesses of savings
that necessary certificate that “addenda and corrigenda” to the list of building have been issued to given in the CR.
In case of deposit works a certificate that all charges have been fully booked should be entered in the register of deposit works or sidings. After checking the CR as above the same are certified for sanction of the competent authority duly indicating the authority in terms of Schedule of Powers. The CR is then suited to the competent authority for sanction and on receipt of the sanctioned CR the same is noted in the separate Register of CRs Sanctioned in the estimates register against the concerned work also in the works register.
Even in the case of work where work are not finished but there is no reasonable prospect of completing the works in the near future, the Accounts of the work should be closed as in the case of completed works and CR drawn and submitted to the competent authority who has accorded the administrative approval to the work duly certified by accounts.

COMPLETION STATEMENT:
In the cases of work of small value instead of preparing the CR completion statement the form E1817 is prepared on completion of the work showing the following details
reference to estimate
amount if sanctioned estimate
actual expenditure as finally booked
brief explanation for the excess and savings
The CS on receipt in AO is verified in the same manner as any CR and certified. These statements are then submitted to the competent authority for information. No CR or CS is necessary in respect of a work for which no detailed estimate is required to be prepared.

CR FOR LAND:
In the case of projects there is likelihood of delay in regard to the final adjustment of charges on account of land acquisition owing to disputes or litigation beyond the control of the Railways. In such cases therefore the CR may be drawn in two parts separately of land and other than land.

INCIDENCE AND EXPENDITURE ON ACCOUNT OF ROB/RUB
816. If an existing busy level crossing originally provided at Railway's cost is to be replaced by a road over or underbridge the apportionment of the cost of replacement will be as under :-
(i) The Railway will bear 50 per cent of the total cost of the over or under-bridge including approaches. The total cost would include the cost of diversion of road, sewers, cables, gas and water mains, etc., but would exclude the cost of acquisition of any land and structures thereon required for approaches or diversions.
(ii) The Road Authority will bear 50 per cent of the total cost of over or under-bridge including approaches, etc., as referred to above and the cost of acquisition of any land required for approaches and diversions and structures thereon.
(iii) The bridge will generally be of 7.2m.(24 ft.) width to suit two lanes of road traffic. In area within or close to cities and towns, two foot paths (each 1.8/6 ft. wide), may also be provided if required by the Road Authority.
(iv) If provision is required to be made in the bridge structure for crossing additional railways tracks in future the, cost of such extra length of the bridge structure will be borne by the Railway in addition to its share of the cost for the rest of the bridge and its approaches. If the provision for extra tracks is already a sanctioned scheme or included in the Works Programme the cost of extra length of bridge on that account shall also be shared on a 50 : 50 basis between the Railway and Road Authority.
(v) If additional width of roadway is required by the Road Authority over and above the limits of the width specified in item (iii), the cost of this additional width will be borne(
(a) Fully by the Road Authority for the length of the bridge required to span the existing tracks and the future tracks the provision of which has already been sanctioned or included in the Works Programme.
(b) Equally by the Road and Railway Authorities for any extra length provided for crossing additional railway tracks in future, not covered in (a) above.
The Railway will be responsible for the construction of the over or under-bridge proper across the tracks and the Road Authority for the construction of the approaches. On the actual completion of the work, a completion certificate for the work (excluding cost of land and structures thereon) giving the total cost of the work carried out by the Railway and by the Road Authority, separately, will be signed by the representatives of State Government/Road Authority and the Railway. The amount incurred by any party in excess of 50 per cent or its due share of the total cost will be reimbursed by the other party. With a view to ensure that the amount required to be spent in excess of the sanctioned share does not remain under suspense in the books of the party responsible for the execution of the works, arrangement will have to be made in with the State a Government/Road Authority for adjustment in the same year's accounts through transfer transactions of any amount spent by either party in excess of its share of the cost of the bridge.
1817. If an existing road over or under-bridge is required to be raised, lowered, extended widened or rebuilt on a new site, the cost will be borne by the authority requiring such raising, lowering, extension or relocation. Any extra cost due to additional width or length or other facilities required by any authority shall be borne by that authority. Where an existing bridge constructed originally at the cost of the Railway has reached a stage where its regirdering or rebuilding is justified on age or condition basis and the Road Authority desire to have the same regirdered or rebuilt to improve standards, the Railway should agree to bear a portion of the cost of the improved bridge to the extent of the expenditure necessary to replace or rebuilt the existing bridge to the original standards at present day rates.
1818. The maintenance and lighting of the roadway of the bridge and its approaches after its opening to public traffic is a charge against the Road Authority, while the maintenance of the bridge structure generally (excluding the roadway) is a charge against the Railway. Where, however, the cost of the bridge structure is shared by the Railway and State Government/Road Authority, the maintenance charges shall be borne by the parties in proportion to their share of the cost. In case the Road Authority concerned is agreeable, the capitalised value of the maintenance charges may be recovered, calculated on the basis of the average rate of interest applicable to Commercial Departments for that particular year.
Before undertaking construction of any over/under-bridges, the cost of which is to be entirely or partially borne by the Road Authority, they should be required to execute an agreement with the Railway which should inter-alia clearly spell out their liability to bear initial, recurring/maintenance and other costs.
1819. (a) If the construction of a new level crossing or an improvement or alterations in an existing one, whether necessitated by local conditions or any other cause, is asked for by a State Government or local authority, the capital cost of the works asked for will be borne by such Government or authority, except in cases where the liability is that of a Railway under the Railway Act. In regard to the incidence of maintenance costs in such cases no hard and fast rules can be laid down but ordinary maintenance costs should be borne by the party requiring the facility, and agreement to this effect should be reached before the work is commenced. In a case where the party asking for the facility agrees to pay only the initial cost but declines to bear maintenance, the case should be referred to, the Railway Board for orders before any commitment to provide the work is entered into.
(b) If a level crossing provided initially and maintained at the cost of the Railway in compliance with the statutory obligation under the Indian Railways Act is required to be manned (if it is unmanned) or upgraded/provided with additional gatekeepers due to subsequent increase in both road and rail traffic, the initial cost of such manning, additional manning or upgradation is to be borne by the State Government/Road Authority concerned, and the recurring and maintenance cost by the Railway. If such a level crossing is required, to be shifted, the capital cost involved in the shifting of the level crossing, is to be shared equally between 'the State Government/Road Authority and the Railway.
If, however, such a need arises due to subsequent improvement in the standard of the road or change in the nature and volume of the road traffic only, the cost (both initial as well as recurring and maintenance), has to be borne fully by the State Government/Road Authority concerned.. For level crossings provided originally at the cost of State Government/Road Authority the recurring cost on account of its subsequent manning/additional manning or upgradation has also to be borne by the State Government/Road Authority.
(c) If a 'D' class cattle crossing (which is meant for the use of cattle and pedestrians only), is required to be converted into a regular level crossing to suit the requirements of the vehicular traffic, the cost involved (i.e. both initial as well as recurring and maintenance) has to be borne by the State Government/Road Authority concerned.

PRELIMINARY & FINAL WORKS PROGRAMME FOR WORKS
601. Investment decisions relating to the creation, acquisition and replacement of assets on the Railways are processed through the annual "Works, Machinery and Rolling Stock Programme". Instructions regarding the preparation of the Machinery and Rolling Stock Programme are contained in Chapter XV of the Indian Railway Code of Mechanical Department (Workshops). On the basis of the estimate of the Plan funds requirement for the ensuing year, the Railway Board lay down the financial limits (see para 609) under various plan heads (refer to Appendix I) within which the Railway Administrations are required to make out their programme for the following years duly vetted by the Financial Advisor and Chief Accounts Officer for submission to the Railway Board by a specified date. The programmes are examined by the Railway Board and discussed. where necessary, with the General Managers and the works to be undertaken as well as the outlays during the Budget year are decided upon.
602. The various stages of investment planning and preparation of the Final Works Programme arc given below:-
(i) Formulation of schemes as a part of advance planning;
(ii) Submission of major schemes for advance scrutiny and clearance by the Railway Board for selection of Projects to be taken up in the following year;
(iii) Preparation of the Preliminary Works Programme within the financial ceiling laid down by the Railway Board; and
(iv) Discussions with the Railway Board and submission of the Final Works Programme.
The investment planning process through the above stages is dealt with in the following paragraphs.

Advance Planning
603. The preparation of the annual Works Programme of a Railway is not an isolated exercise for the year, but is part of a continuous planning process from the level of the Divisional Officer upwards. Investment proposals emanating from the Division would be those which are intended to effect improvement in operation or remove bottlenecks etc., within the Division itself. Major investment proposals which benefit a Zonal Railway System or the Indian Railway as whole should be co-ordinated and planned at the level of the Railway Headquarters or the Railway Board, where necessary.
604. An important requirement for effective investment planning is the realistic estimation of project costs. Full details of the scheme must be worked out and no scheme should be included in the Railway's Works Programme unless detailed plans and estimates have been prepared and are ready. Detailed Traffic and Engineering surveys should be carried out for new lines, gauge conversions doublings and for other line capacity works costing more than Rupees Five Crores each. In the case of yard remodelling, line capacity works i.e., goods shed facilities and important buildings the estimates should be based on plans approved and signed by the concerned departments who should scrutinise the plans carefully to avoid the need for making any substantial modifications in the required facility it a subsequent stage. If major changes in the plans/scheme/specification of works nevertheless become necessary and arc likely to lead to substantial excesses over the sanctioned estimate the changes asked for by the concerned departments should not be agreed to unless reviewed and approved by the competent authority sanctioning the original estimate. In regard to proposals for new marshalling yards goods terminals and tranship yards etc. work study teams should go into the actual working before formulating schemes for the additional facilities required.
605. It is an essential feature of the railway system as a commercial undertaking that expenditure other than that wholly chargeable to ordinary Revenue, incurred on new assets or for improvement of existing assets should be financially justified before it is incurred. Detailed instructions regarding the financial Appraisal of Railway projects are contained in Chapter II of the Indian Railway Financial Code to which reference may be made. The cases where no financial justification need be given are contained in para 202 of the Indian Railway Financial Code. Detailed financial implications (including financial return) should be worked out in all cases including works financed from Development Fund, Accident Compensation. Safety anti Passenger Amenities Fund or Open Line Works Revenue (see para 626). If the prescribed return is found to be not obtainable on the anticipated level of traffic, the Railway Administration should examine whether the proposal cannot he reduced in scope, or given up in favour of some other alternative. or postponed until traffic prospects improve.
606. When a number of works have to be carried out to achieve a common objective, the financial implications or justification should be worked out for the entire scheme as a whole. In case where the wider schemes covers two railway a joint estimate of cost should be prepared for the Railway Board's consideration, The Railway in which the major portion of the work falls should obtain figures from the contiguous Railway for submitting joint figures of cost anti financial implication to the Railway Board.
Scrutiny of Schemes before preparation of Preliminary Works Programme
607. All schemes costing Rs. 20 lakhs or above should be worked out comprehensively and sent to the Board alone with full details of (i) the technical features. (ii) Cost break-up, (iii) benefit expected to accrue and (iv) financial implications. A sketch map of each proposal should also be sent. The Railway Administration must clearly bring out the purpose of each scheme and confirm that the proposal meets the objective fully and that the scope and cost of the project have been arrived at after the fullest possible investigation including assessment of the financial implications. After the schemes have been scrutinized by the Board, the Railway Administrations should be advised of the acceptance, with or without any modifications for inclusion in the Works Programme.
608. Track renewal proposals costing Rs. 20 lakhs and above are initially scrutinised by the Board, keeping in view the availability of permanent way materials. progress of the works already sanctioned and other technical factors. For this purpose the Railway Administrations should send all track renewal proposals costing Rs. 10 lakhs and above together with technical data like traffic density, age, conditions of track components etc., in the form prescribed by the Board to reach the Boards office by the stipulate date. After the proposals are screened by the Board, guidelines are issued to the Railway Administrations to reframe their proposals for inclusion in the Works Programme.
Preparation of the Preliminary Works Programme
609. The Chief Engineer of the Railway will be primarily responsible for ensuring that the proposals prepared by the various departments are complete in all respects and are correctly prepared. The overall priorities within the ceilings given by the Board will also be fixed by him in consultation with the General Manager and other Heads of Departments. He will be responsible for the preparation and timely submission of the Preliminary and the Final Works Programme.
610. In or about June/July each year the Railway Board should convey to each Railway, in respect of each Plan Head, the total outlay within which the Works Programme should be framed by the Railway. A list of the Plan Heads is given in Annexure I. On receipt of this financial ceiling the Railway Administration should take stock of the schemes already formulated and those under consideration and select for inclusion in the Works Programme within the financial ceiling such works as are expected to yield the maximum benefit to the Railway preference being given to works in progress. Further necessary changes in the investment schedule may be made in order to work within the financial ceiling for the year such modification., being taken note of in framing the Preliminary Works Programme and revising the financial implications. if necessary.
611. The Preliminary Works Programme for the following year should be submitted by the Railways to the Railway Board by 1st week of September or such earlier date as may be laid down by the Board. Proper financial appraisal of each work should be given in the Preliminary Works Programme together with the comments of the Financial Adviser and Chief Accounts Officer.
612. The project cost should be based on firm data both as to quantity and rates at current price levels. and should any increase occur in prices during the period intervening between the initial preparation of the project estimate and its inclusion in the Works Programme. the estimate should be updated taking into account any significant changes in the wages and material prices as well as increase in freights and fares. No other increase such as on account of change in scope of the project should be allowed without prior reasons being adduced for acceptance by the Railway Board. A sketch showing the proposal should accompany each proposal.
613. Each investment proposal should be accompanied by a detailed plan showing the scheduling of the project to match the traffic requirements and the financial outlay proposed for the year should be in accordance with this project schedule to enable the Railway Board to arrange for a realistic funds allocation for implementation of the programme.
614. In deciding the outlays for the various works Railway Administration must endeavour to progress all works in progress speedily and bring them into use at the earliest possible date. A work which has been sanctioned and for which funds have been allotted whether in the original or supplementary budget of a year should be treated as a "work in progress" for the next year and provided for as such in the programme. Such works should be grouped as indicated in para 619.
615. The Railway Administrations should make a realistic assessment of the amount required for each work in progress and necessary provision should be made for it in the Works Programme. In estimating the provision for works during the budget year a generous allowance should be made for those delays in execution which though unforeseen are known from experience to be so liable to arise particularly prior to inception anti during the initial stages of large projects. The provision made should take into account adjustment of charges on surveys connected with a project.
616. In exhibiting the outlay for the current year against individual works in the works programme, the outlay should be as per Pink Book, and in exceptional cases where the Railways propose any substantial increase in the outlay with corresponding reductions against other works, such revised outlay may be shown separately in brackets below the outlay as furnished in the Pink Book duly explaining the reasons for doing so in footnotes at the appropriate places. As far as possible only the last sanctioned costs should be exhibited. Wherever it is visualised that the cost would involve an excess over the last sanctioned cost, effective steps should be taken well in time to have the revised estimate prepared and sanctioned by the competent authority before the Works Programme is sent to the Board. In case where the revised estimates are sanctioned subsequent to the despatch of the filial Works Programme but before the end of January of the following years the same should be promptly advise to the Board to enable to the latest sanctioned cost being exhibited in the Pink Book to be circulated alongwith the Budget. In all cases of revised costs sanctioned by the Board, reference to the letter of sanction should invariably be indicated.
617. Works once introduced through a Works Programme (including Track Renewal Programme) and taken up after the estimates have been sanctioned by the competent authority should continue to be included every year till they are finally completed, except in cases where the works have reached the completion stage and where funds required if meagre could be found by re-appropriation.
618. The Works Programme is compiled in the following format:-
Form E. 618
WORKS PROGRAMME 1975-76
Demand No................. (Figures in thousands of rupees)
Item No.
Authority
Particulars of Works
Cost
Expenditure to end of 3/74
Outlay for
Balance
1974-75
1975-76

1
2
3
4
5
6
7
8








Note.-Years have been shown in the form for the purpose of illustration.
In respect of "Works in Progress" reference to item No. of the current year's Pink Book and also the authority under which the work was first started should be indicated. The works should be arranged as per the Plan Heads.
619. The items in the Works Programme should be grouped under the following categories while compiling the Works Programmes:-
(i) New Works.
(ii) Works in Progress.
(ii) Works approved in earlier years, which have not been actually commenced and on which no expenditure has been incurred till 30th June of the year previous to the Programme year.
(iv) Works approved in the earlier years but estimates for which have not been sanctioned by 30th June of the year previous to the Programme year.
620. The works are further made into sub-groups of (i) Works costing more than Rupees Five Lakhs each and (ii) Works costing upto Rupees Five lakhs each. Under (ii) works costing upto Rupees two lakhs each in the case of Track Renewal works and for works costing upto Rupees one lakh each in the case of other works only lumpsum provision should be shown without detailing individual works. Within each sub-group, the works are presented under each Plan Head.
621. A map showing the Railway System and indicating the new lines, doublings, major yard remodelling, important line capacity and signalling works which are in progress as well as proposed should be attached to the Works Programme. An alphabetical index of works and various managerial information regarding critical materials, expenditure position relating to passengers and railways users amenities etc. which will be prescribed by Railway Board should be included.
622. Integrated Budget.-The Annual Budget of Railways consists of assessment of earnings and expenditure forming part of Revenue Budget and that relating to the investment decisions taken through the Works Machinery and Rolling Stock Programmes. In order to co-relate the decisions relating to all these aspects, a consolidated budget called integrated Budget including Revenue Budget, Works Programme and the Machinery and Rolling Stock Programmes should be submitted by the Railways alongwith the preliminary Works Programme. The Integrated Budget will include the projections of traffic and earnings, working expenses, the estimated financial results for the ensuing year, and the operating ratio in the proforma specified by the Railway Board. The Railways should also furnish the details of Rolling Stock required on replacement account and addition account, duly co-relating it to the anticipated increase in traffic. In the covering note to the Integrated Budget the Railways should bring out the effect of the budget proposals on the efficiency of operations as indicated by the operating ratio and the financial viability of the system as revealed by the financial returns on capital investment. After discussion of the Preliminary Works Programme, a revised Integrated Budget should be submitted along with the Final Works Programme duly taking into account the changes that might have taken place in the meantime. The Integrated annual budget may be prepared under the personal guidance of the General Manager and with the assistance of Financial Adviser and Chief Accounts Officer.
Final Works Programme
623. After having examined the individual Railways Programme, and discussions with the General Managers, the Railway Board will decide the works which should be undertaken during the following year and which should be included in the Final Works Programme. The Railway Administration will then modify their Works Programmes as a result of the Board's decision and send their Final Works Programme to the Railway Board by the stipulated date.
Section II- Works Budget
624. Works Budget.-The revised and budget estimates for the construction, acquisition and replacement of assets are briefly known as Works Budget. The revised estimate gives an estimate of funds required for the current year and the budget estimate refers to the following year. For a detailed study of the Railway Budget, Chapter III of the Indian Railway Financial Code should be referred to. The budget estimate for the works are based on the Works Programme approved by the Board. The requirement of funds both for new investments and for works in progress are submitted in the form of "Demand for Grants" in the Works Machinery and Rolling Stock Programme which forms a part of the Budget papers presented to the Parliament. While compiling the Works Machinery and Rolling Stock Programme for presentation in the Parliament only works costing Rupees five lakhs and above are itemised.
Demand for Works Grants
625. The proposal of Government in respect of sums required to meet the expenditure from the Consolidated Fund of India are to be submitted in the form of Demands for Grants to the Parliament. The Demand shall be for gross expenditure, the credits or recoveries (refer to para 335 of Indian Railway Financial Code) being shown in the form of footnotes to Demands.
The Demand for Grants for the Works Budget is :-
Demand No. 16 :-Assets-Acquisitions, Construction and Replacements.
Financing of Works Budget
626. Works chargeable to Demand No 16.- Assets-Acquisitions Construction and Replacements are financed from railway revenue when it is charged to OLWR or financed from Capital. Depreciation Reserve Fund. Development Fund, Accident Compensation Safety and Passenger Amenities Fund. Expenditure budgeted under "Capital" involves increase in the Capital-at-charge of the Railways and hence is the liability for payment of dividend to General Revenue subject to the relief/exemptions granted by the Convention Committee. "Works Expenditure" of the Railway is thus financed from Revenue, Railway Funds and Capital provided by the General Revenues. The Railway Funds are Depreciation Reserve Fund, Development Fund and Accident Compensation Safety and Passenger Amenities Fund. For Details regarding the operation of the funds, reference may be made to Chapter III of the Indian Railway Financial Code. In the event of the railways revenue surplus not being adequate to fully meet the requirements of Development Fund Expenditure, the budgetary support from the General Revenues would also include temporary loans to finance expenditure from the Development Fund. The expenditure under works Budget of the Railways is, therefore, determined by the resource allocation under various Plan Heads.

TIME AND COST OVER RUN IN RAILWAY PROJECTS
On railways the objective is to strengthen the infrastructure of the system and run the transport services as economically as possible. The planning system, therefore, need to be adopted and practiced with foresight, caution and technical skill. The project works are started with the sanction of the detailed estimates. The works-in-progress are controlled with the allotment of funds needed annually. A review of the works after completion has revealed that on a number of projects the time over runs are to the extent of 200 %.
The analyses for these variations as compared with abstract estimates indicate the following reasons:
delays in implementation and execution of the works
underestimation of the project expenditure
want of resources and adequate funds allotment
works started on urgency certificates without the support of detailed traffic surveys and techno economic surveys
The guiding principles for execution of works and avoid the time over runs and cost over runs are described below
it should be ensured that the implementation of the scheme or a project should be within the financial and physical resources
execution should be within the prescribed time schedules
systems like Programme Evaluation Review Technique (PERT), Critical Path Method (CPM) and Bar Charts should be adopted to identify the critical items of work and monitor their progress
it should be ensured that all preliminary works like acquisition of land, preparation of detailed estimates, drawing are done systematically
The cost and time over runs adversely affect the financial appraisals of railway projects. In justifying the projects railways have basically followed Discounted Cash Flow method to calculate the anticipated Rate of Return (ROR). The DCF method basically lays importance of cash flows and the time schedules. Any delays and excess costs while executing the works, will upset the conclusion arrived and decisions taken at the planning stage. The railways at zonal level have full fledged construction organization. There is an imperative need to ensure that projects are completed as scheduled in the planning stage. The decision for project implementation should be based on detailed studies conducted in the from of Traffic Surveys, Final Location Surveys and Techno Economic Surveys

For example, the line capacity can be increased by improved signally systems, provision of crossing facilities, doubling the section in a phased manner. The selection of appropriate scheme should be based on in-depth study and the needs of corporate plan.
The time and cost over runs can be avoided to a larger extent by the following
1. Many errors originate in imperfect knowledge of the field of enquiry. A good knowledge of the area of investigation is essential.
2. The information collected should be subjected to statistical enquiry
3. the analysis of fluctuation from month to month can provide a good way to foresee events with regard to the project implementation
4. the project implementation should be entrusted to the experienced personnel in the field
5. the variable factors in the project implementation should be studied at each stage
The railway management should accord priority to completer the works by allotting adequate funds. The project implementation should be reviewed quarterly at the higher levels of management at zonal railways. Once the project is sanctioned the preparation of detailed plans, estimates should be fixed in a time frame and strictly adhered to.

The following precautions/steps are therefore required to be taken to minimize the time over runs and cost over runs
Each work in progress should be given priority fro early completion by providing adequate funds rather than including more number of new works with lesser allotment of funds.
Meticulous ranking of works on priority basis is of particular significance for works of doubling, traffic facilities, S&T workshop modernization where the objectives are to achieve increased efficiency or better safety.
The co ordination between various executive authorities should be with reference to PERT and CPM charts and not on the basis of routine correspondence to avoid this over runs.
The out lay against each work should be adequate to enable the work being completed within a reasonable time.
To avoid cost over runs the full details of the scheme must be worked out with the realistic assessment of quantities and the prices at the current rates.
no scheme should be included in the railway’s preliminary works programme unless detailed plans and estimates have been prepared and kept ready to avoid time over runs
with a view to improve the system of monitoring the n going works, as per the anticipated schedule, a quarterly review of the works in progress should be conducted at GM’s level with the concerned field officers.
The physical and financial progress should be periodically reviewed by he field officers to ensure completion of the projects on due dates with reference to corresponding period of last year.
for each work the position regarding preparation of plans, estimates, calling of tenders, award of contracts, should time bound to avoid excess over estimates
At present the zonal railways indicate their works in progress in the preliminary works programme received in the railway board by September each year. This time schedule does not give enough time to the railway board to review the progress and issue policy directives. The monitoring system of works in progress should be delinked with the regular programmes and given priority to focus on the delays and consequent time and cost over runs.

PERT and CPM
Project managers frequently face the task of controlling projects that contain unknown and unpredictable factors. When the projects are not complex, bar charts can be used to plan and control project activities. These charts divide the project into discrete activities or tasks and analyze each task individually to indicate weekly manpower requirements. As the work goes forward, progress is charted and estimates are made on the effects of any delays or difficulties encountered during the completion of the project.In the mid-1950s more sophisticated methods of project planning and control were developed.

Two systems based on a network portrayal of the activities that make up the project emerged at about the same time. PERT (Program Evaluation and Review Technique) was first used in the development of submarines capable of firing Polaris missiles. CPM (the Critical Path Method) was used to manage the annual maintenance work in an oil and chemical refinery. Many variations and extensions of the two original techniques are now in use, and they have proved particularly valuable for projects requiring the coordinated work of hundreds of separate contractors.

The use of project planning and control techniques based on PERT or CPM are now common in all types of civil engineering and construction work, as well as for large developmental projects such as the manufacture of aircraft, missiles, space vehicles, and large mainframe computer systems.A simple example of a network, or "arrow diagram," used in developing an electronic component for a complex system, is shown in thefigure figure: Network diagram for the Critical Path Method problem.. Each circle on the diagram represents a task or well-defined activity that is part of the project. The number in each circle represents the expected time required to complete the task.Task A requires two weeks to complete and might, for example, represent the development of general specifications for an electronic unit in question. Tasks B and E might represent two related parts of the design of the unit's power supply, C and F the design of the main functional circuits, and D and G the design of the control circuitry. Arrows indicate the precedence of relationships and depict which tasks must be completed before subsequent tasks can begin. In this example, tasks B, C, and D cannot be started until A has been completed (that is, no one can design specific component items before the general specifications are agreed upon).Task H requires two weeks to complete but cannot be started until the designs of the power supply and the functional and control circuits have been completed. This task might represent the design of the unit's case or cover, and the case cannot be made final until all of the component designs are completed.

A 2
B 1
H 2
C 5
I 2
E 3
F 2
FINISH
F


2










G 3
D 4 KEY


Task identifier
Expected time to complete task

The arrow diagram is an invaluable planning aid for determining how long a project will take to complete. Adding all of the task times together in the example indicates that there are 24 weeks of work to be completed. Note, however, that several tasks can be done simultaneously. For example, once task A has been completed, B, C, and D can be started and worked on concurrently. Thus, the earliest completion date can be determined by looking at all possible "paths" through the network and choosing the longest one, or the one with tasks requiring the most total time. In this example the longest, or "critical," path is A-C-F-H, requiring a total time of 11 weeks.

The arrow diagram yields additional information to the project planner. The earliest possible time that task H can be started is nine weeks after the start of the project (that is, after tasks A, C, and F have been completed). When task A is completed at the end of week 2, tasks B and E do not have to be started immediately in order to complete the project in the minimum possible time; B and E each have three weeks of "slack." The diagram shows that if activity B is started three weeks later than its earliest possible start time (at week 5), it would be completed at the end of week 5; E would then start at the beginning of week 6 and be completed in time for H to begin at its earliest time, the beginning of week 10.


The notion of slack in a project network is a powerful concept that allows planners to schedule scarce resources efficiently and manage people and equipment so that critical activities are kept on schedule and slack activities are delayed without placing the project in jeopardy.This simple example is based on CPM logic; it uses single-point task time estimates and assumes that the completion time for the project is the simple sum of the task times along the critical path. PERT logic assumes probabilistic estimates for each task time, with pessimistic, realistic, and optimistic estimates for the completion times of each task.In actual projects the relationships among the required tasks are often complex, and the arrow diagram for the project might cover the entire wall of an office. Even though it is a time-consuming job to work out arrow diagrams, precedence relationships, task time estimates, and so on for large projects, CPM or PERT is an invaluable aid to planning and control. The proliferation of computer programs that handle critical path and slack time calculations and the development of computer systems capable of handling cost estimates, budget control, resource allocation, and time scheduling promise to make CPM and PERT even more valuable than in the past.(W.K.H.)Copyright © 1994-2001 Encyclopædia Britannica, Inc.___

from research and development:
Project management and planning techniques:
Value engineering and cost-benefit analysis in the areas in which technology advances fastest, new products and new materials are required in a constant flow, but there are many industries in which the rate of change is gentle. Although ships, automobiles, telephones, and television receivers have changed over the last quarter of a century, the changes have not been spectacular. Nevertheless, a manufacturer who used methods even 10 years old could not survive in these businesses.

The task of R and D laboratories working in these areas is to keep every facet of the production process under review and to maintain a steady stream of improvements. Although each in itself may be trivial, the total effect is many times as large as the margin between success and failure in a competitive situation. These efforts to improve existing products and processes have been formalized under the titles of value engineering and cost-benefit analysis.

In value engineering every complete product and every component have their primary function described by an action verb and a noun. For example, an automobile's dynamo, or generator, generates electricity. The engineer considers all other possible methods of generation, calculates a cost for each, and compares the lowest figure with that for the existing dynamo. If the ratio is reasonably close to unity, the dynamo can be accepted as an efficient component. If not, the engineer examines the alternatives in more detail.

The same treatment is applied in turn to each of the parts out of which the chosen component is built, until it is clear that the best possible value is being obtained. Cost-benefit analysis approaches the same fundamental problem from a different angle. It takes each part of a product or process and completely defines its function and the basis for measuring its benefits or effectiveness. Then the costs of obtaining each part are reviewed, taking full account of purchased material, labour, investment cost, downtime, and other factors.

This focuses attention upon the most expensive items and makes it possible to apply the principal effort in seeking economies at the points of maximum reward. In the effort to improve a product or process, care must be taken to evaluate alternatives on the same "cost" and "benefit" bases so that existing approaches do not enjoy a special advantage just because they are familiar. These two processes are unending. Every new material, new manufacturing technique, or new way of carrying out an operation gives the engineer a chance to improve his product, and it is from these continuing improvements that the high degree of economy and reliability of modern equipment derives.(T.S.McL./W.K.H.)Copyright © 1994-2001 Encyclopædia Britannica, Inc.___

SENSITIVITY ANALYSIS

1. simplest of handling risks
2. magnitude in the ROR by small change in the components of which are uncertain
3. selct variable –whose estimated values may contain significant errors or elements of uncertainty
4. key variables are – cost, price, project life, market share etc
5.
Cut off rate
Selling pricegraph

Sales when decline
N P V
Cost of fixed assets
Working capital
Variables cost







Adverse change in variable percentage

Advantage:
1. identify crucial variables that makes greatest impact in the NPV of the project
2. graphical presentation – better visual appeal
3. by confining SA to adverse changes in the variable that can be reasonably expected to occur one can obtain range of NPV that can be reasonably anticipated
4. knowledge is helpful for making decisions

Railways Risk Factors:
1. land - delay in acquisition – litigation
2. earth work availability of sand
3. soil condition – geographical factors –weak/loose Eg TEN-NGC line due to weak soil
4. alignment due to local or popular demand Eg KRCL in Madgaon line in Goa State
5. availability of sleepers – wooden/ Pre Stressed Concrete Sleepers – snags in production- ban on wooden sleepers as environmental policy of the Govt
6. availability of rails – change in the production pattern of the steel mills – delay in production- change in the Govt policy
7. estimated earnings – net production of commodities short fall in projected and traffic due to climatic and natural causes – import and export potential
8. delay in rolling stock in ordered quantity Eg Hassan – Mangalore line for transport of ore to Port of Mangalore diverted to road
9. cost and time over runs – likely delay due to paucity of funds/allotment
MATERIAL AT SITE ACCOUNTS
For works estimated to cost each Rs 1 lakhs or Rs 3 lakhs for relaying or track renewal work in relaxation of the limit of Rs 25000/-.
for stores not used up immediately
suspense head – on receipt of materials is debited with the cost of stores and is credited with issued of materials for work
daily record of such material in form E 1737 materials obtained for work on receipt are entered under with quantity, issued note and reference – Receipts: issues of stores for consumption, the date, quantity, sub head charged are recorded under – Issues . Materials issued but surplus – Minus Issues
materials released from the work are separately recorded as receipts with date, quantity on their utilization of the works shown as issues Materials retuned to stores transferred or otherwise deposed of is shown as minus receipts
works costing more than Rs 1 lakh to Rs 3 lakhs for relaying or track renewal works- monthly Return is sent containing only those items for which there have been any receipts or issue transactions during the month.
the monthly MAS a/c returns may be followed by a complete MAS a/c return for all the items of each quarter June, September, December & March on the basis of monthly returns from sub ordinates, the Divisional Officers prepare monthly adjustments get them approved by DEN and AO for necessary adjustment
periodical verification by the executive in charge for works costing more than Rs 1 lakh to Rs 3 lakhs for relaying or track renewal a. P Way material b. other MAS which can be readily operated and distinguished from any of the description but by a different category all items verified at least once in a year.
A certificate that such verification has been carried out should together with a note as to whether or not the materials were found to be duly depreciated, be furnished on the MAS returns this is in addition to stock verification.
At the end of every financial year the AO prepares a schedule of MAS balances of works of Rs 1 lakh to Rs 3 lakhs for relaying or track renewal and review in consultation with the executive.
At the end of every month, an excess materials return should be prepared in the prescribed proforma in respect of all the completed works. These returns should show separately for materials obtained and material released, the numerical balance only of MAS i.e. those that have neither have been consumed on the work nor returned to stores, transferred or otherwise disposed of and the ate of completion of the work to which they relate. If the excess materials cannot be utilized in some other work they should be returned to stores.

FUNCTIONS OF D A are
q as an accountant he should check arithmetical accuracy of all vouchers fully and compile the accounts of the divn in accordance with the prescribed rules and form the data supplied to him by the sub divns
q As representative of A/c dept he should apply all the checks which is normally applied in the A/c office to the initial a/cs vouchers and other documents
q As financial assistant, he should assist the executive in matters relating to a/c s , budget estimates and to the operation of financial rules generally
q the relation between the DEN and D A is that of a Sub divisional officer and the DEN. The DEN is supposed to consult the DA in all matters involving a/cs,. Finance or budget. The DEN should see that the DA is given fullest opportunity of becoming conversant with all sanctions and orders, estimates and proposals.
The DA is considered as the head of the office establishment of the DEN. While checking accounts and returns whenever the DA finds any irregularity, he should bring to the notice of DEN. If DEN differs from the views of DA he records his orders and the same should be carried out. In such cases DA should maintain a register as DA’s Internal Check Register and enter the same with full details in the register and obtain the remarks of DEN therein. This register is put up to any visiting officer for information
The DA should not however, be made responsible for any cash transaction except emergent cases not exceeding four months.
The DA should maintain cordial relationship not only with DEN but also with all other sub divisional officers and also educate the office staff and subordinates about proper maintenance of records, submission of accounts returns, preparation of budget etc
In the open line divisions also a SO (Works) is posted under the DEN designated as Works Accountant. The functions are the same as DA. However, he is not considered as he head of divisional works branch but will be the head of works accounts section.
The DA is considered as the head of the office establishment of the DEN. While checking accounts and returns whenever the DA finds any irregularity, he should bring to the notice of DEN. If DEN differs from the views of DA he records his orders and the same should be carried out. In such cases DA should maintain a register as DA’s Internal Check Register and enter the same with full details in the register and obtain the remarks of DEN therein. This register is put up to any visiting officer for information
The DA should not however, be made responsible for any cash transaction except emergent cases not exceeding four months.
The DA should maintain cordial relationship not only with DEN but also with all other sub divisional officers and also educate the office staff and subordinates about proper maintenance of records, submission of accounts returns, preparation of budget etc
In the open line divisions also a SO ( Works) is posted under the DEN designated as Works Accountant. The functions are the same as DA. However, he is not considered as he head of divisional works branch but will be the head of works accounts section.

CONTROL OVER EXPENDITURE

The primary duty of the executive is to ensure that the expenditure should be incurred for the purpose for which the vote of parliament has been obtained. it is also the duty of the executive that the expenditure is kept within the funds allotted to an authority. It is the duty of the executive to see that the progress of the expenditure is watched by means of maintenance of certain sets of registers and to keep the aggregate charges within the amount of the grant or appropriation placed at his disposal.

budgetary control and control against detailed estimate:- separate allotments are placed at the disposal of each railway administration under each grant for
i. revenue working expenses
ii. for expenditure on works chargeable to capital, DF, DRF etc. these lumpsum allotments and these distribution over various items of work are indicated in Pink Books, which show in the case of works costing over Rs 1 lakh total estimated cost of each work.
It is the duty of the railway administration to watch that the total estimated cost is not exceeded. In the case of works costing not more than 1 lakh the railway administration should see that the total allotment for a group of work is not exceeded.

Thus the COE on the railways is exercised through
the preparation in advance of the estimates of expenditure to be incurred
allotment of funds to budget grant for the year on the basis of these estimates
the continuous and concurrent review of expenditure as incurred against the details of the estimates and against the sanctioned grants, so that the revision of estimates or reappropriation of funds are arranged for at the earliest point of time.

Control over revenue expenditure: this is done by the maintenance of Revenue Allocation Registers which records all revenue expenditure commencing from the beginning of the year and ending at the end of the financial year( April to March). The object of the register is to advise the executive s regarding the progress of expenditure against the allotment. The allotment as sanctioned is shown at the top of the register in RED ink, so that a comparison may be made at the end of the every month between the expenditure for the month and the proportionate budget allotment.

Control over works expenditure: the control over capital, DF, DRF, OLWR works is done through the medium of works register. The WR shows
i. the expenditure incurred on each work and the detailed provision made for the estimate of the work
ii. the budget allotment for the work and the actual expenditure to end of the month

The executive officer should examine the WRs monthly and watch the progress of expenditure on each work so that these are no excess over sanctioned estimate.
The AO should also watch the progress of expenditure on works and advise the executive regarding the necessity of re appropriation of funds where necessary. The AO should also see whether
(a) the expenditure up to any date is not in excess of the estimate for the quantity executed
(b) the anticipated credits have actually been realized
(c) All adjustments are made in time.

The revenue allocation register is closed every year and the total expenditure compared with the total allotment for the year. The works register is closed only on completion of work and comparing the expenditure with the sanctioned estimate.

Budget exercises:
The expenditure to be incurred for the ensuing year is envisaged as early as in Nov the previous year based on the actual expenditure up to that period and approximate projection for the ensuing year. Finally this estimate becomes the basis for Demands for Grants to be voted in the parliament. While advising the zonal railways, the railway board specifies a spending limit to be adhered to by each zonal railway. Based on the budget orders, the proportionate requirement is distributed to twelve months and cash authorization is advised for each month. The cash authorization is cross checked with the actual cash expenditure at the end of the month to enforce budgetary discipline on units which have incurred expenditure beyond the authorization.

Fiscal Review exercises:
Review exercises are basically aimed at informing the railway board about the expenditure vis-à-vis earnings to be submitted to the parliament which originally sanctioned the demands for grants. The first is the august review which takes in to account the actual for the April, May, June and the approximate for July to review the financial situation. The second being the financial review in December. The third is the final modification in January and the fourth is the violent modification in February. Thus the review exercises also contribute greatly to control the expenditure.

Account currents:
In railways, the approximate and actual accounts current are prepared for the purpose of “ways and means” to enable the finance ministry to monitor excess / savings over the granted budget allotment. The approximate account current separately for revenue and capital are submitted in the first week of the subsequent month and the actual account current is submitted in the third week of the subsequent month. This account current contributes greatly to control the expenditure.

Control over capital expenditure:
All items of expenditure chargeable to capital, DRF, DF, OLWR other that Rolling Stock are programmed through works program. the proposals for creation, acquisition an replacement of assets on railways are processed through the annual works programme. The items of works to be included in the works programme is prepared by the individual departments and finally compiled for the railway under the supervision of chief engineer. The programme is prepared within the financial ceiling limits of probable out lay of funds as laid down by the board under various plan heads. Each zonal railway should submit the works programme for the following year to the railway board duly vetted buy FA&CAO by the specified dates. This is largely exercised through advance planning like Preliminary Works Programme and Final Works Programme. These programmes are accepted after meticulous planning and the financial justification. Thus the exercise acts as medium for controlling the capital expenditure.
The works chargeable to the above funds are initially framed by the concerned executive authorities in the form of abstract estimates (excluding items started on Urgency certificates and are thoroughly scrutinized buy the associate accounts officer from a finance angle. The points of check include
the propriety of expenditure to ensure that the amounts are properly and legitimately chargeable to the railways
the financial out lays are realistic and are based on factual data
the incidence and classification of charges are correct
the estimates are devoid of errors and omissions
The importance of works programme is further notable from budgetary control point of view since all proposals would be subjected to finance scrutiny with reference to guidelines on the subject. Thus, the itemized works programme is the tool for control over expenditure while executing the work.
Liability register: it is the responsibility of railway administration to ensure that the requirement of funds are realistically assessed and suitably provided for in the budget.

Parliamentary control over expenditure:
IR being the largest departemental undertaking of the GOI, their functions and finances are watched, monitored, and controlled by Parliament. The finances and performance of the IR as a commercial enterprise are controlled by the Railway Management (Railway Board).

Parliamentary control: the control of parliament over railway finances is exercised as follows:
voting the railway budget and review of the budget through appropriation accounts under various articles of constitution of India
Review of the policy and finances of railway by parliamentary committees viz, Estimates Committee, Public Accounts Committee, and Railway Convention Committee.
Parliamentary Financial Committees: even though parliament discusses the demands for grants for sufficiently long period before voting, due to magnitude and complexity of state activities, it is almost impossible for the parliament as a body to scrutinize the myriad expenditure proposals and Govt activities. In order to help it exercise effective control over public expenditure, Lok Sabha has set up three financial committees viz Estimates Committee, Public Accounts Committee, and Committee on Public Undertakings. Railway Convention Committee is an ad hoc committee functions like a finance committee.
Estimates Committee:
Public Accounts Committee
Railway Convention Committee


MODVAT RULES
MODVAT RULES are introduced with effect from 01.03.1986. Briefly it is the credit of duty paid on excisable goods used as inputs.
WHAT IS IT: These new rules seek to introduce a new scheme for allowing credit of the duty paid on specified inputs used in the manufacture of specified final products. The modvat rules contain a set of provisions relating to grant of credit of duty paid on inputs used in the manufacture of final products.
WHERE APPLICABLE TO: modvat credit is available in respect of the duty that may be specified and paid on goods (inputs) used in or in relation to the manufacture of final products. All inputs including packing materials are eligible for the relief. However, modvat relief is not available for duty paid on non consumables capital goods used in the manufacture of final products such as plant and machinery etc and the like.
WHERE EXEMPTED: Duty paid on the packaging materials whose value is not included in the assessable value is also not entitled for the credit. Credit is also not available in respect of cylinders for packaging gases etc. also textiles, tobacco and petroleum products are exempted from this benefit.
Tenderer should invariably quote in their quotations that “ we hereby declare that in quoting the above price we have taken into account the entire credit on inputs availed under the modvat scheme introduced w e f 1.3.86. We further agree to pass on such additional duties and set offs as may become available in future in respect of all the inputs used for the manufacture of he final product on the ate of the supply under the modvat scheme by way of reduction in price and advise the purchaser accordingly.
When the contract is silent on excise duty, no adjustment will be made in the bills.
Where the contract indicates rates are inclusive of ED and supplier does not claim increase in ED the accounts office will pass the bill, provided that the supplier furnished a certificate as per annexure A signed by a director of the company or a partner of the firm or the proprietor or by a chartered accountant of by an auditor.
Where the contractor indicates Ed extra with or without specify percentage, accounts department shall pass the contractors hill initially excluding the ED asking the supplier to claim through supplementary bill after issue of amendment by the COS who shall get the certificate as stated in the rule and obtain finance concurrence before issue of amendment.
Chapter 86 lays down the rate of ED on railways locomotives, rolling stock or parts thereof, track fixtures and fittings a parts thereof mechanical traffic signally equipments of all kinds. Previously railway locomotives, wagons, coaches and many other goods produced in the railway workshops were exempt from duty. Now the situation had changed. Railway products are liable to pay the ED at nominated rates.
ULTIMATE GOAL: introduction of modvat will increase the cost of the final product considerably through the availability of instant reimbursement of duties paid on the inputs and consequential reduction of interest costs. Consequently the scheme would benefit both the consumers and exporters.



ANALYSIS OF PASSENGER TRAFFIC BY CLASS OF TRAVEL
2000-2001

PASSENGER JOURNEYS
CLASS
PASSENGER EARININGS
29 %
Non suburban second ordinary
17.7%
6.5 %
Non suburban second mail & express
24.8%
3.3%
Non suburban second sleeper class
28.7%
0.8%
Non suburban upper class
20.8%
60.4%
Suburban
11.0%

ANALYSIS OF PASSENGER TRAFFIC BY NATURE OF FARES PAID
PASSENGER JOURNEYS
CLASS
PASSENGER EARININGS
23.3%
Non suburban full fares
81.7%
3.4 %
Non suburban reduced fares
5.6%
12.8%
Non suburban season tickets
1.8%
21.3%
Suburban full fares
6.0%
39.2%
Suburban season tickets
4.9%

FEE STRUCTURE
CLASS
ORDINARY
MAIL /EXPRESS
SECOND CLASS
100
100
SECOND CLASS
155
155
AC CHAIR CAR

300
AC 3 TIER SLEEPER

450
FIRST CLASS
525
525
AC 2 TIER SLEEPER

720
AC FIRST CLASS

1440






CONCRETE SLEEPERS
MIC
Audit observations:

1. Material supplied for production of concrete sleepers and high tensile steel wires but the firm has not supplied the concrete sleepers within the agreed to delivery schedule. Rs.56.38 Lakhs worth of HTS is lying waste from 1992 till 2000. These are rusting as these are stocked in open space though as per the contractual provision these are to be kept in a covered space.
2. Malleable cast iron (MIC) unused and defective MICs are to be returned to the Railway admin but MIC s worth Rs. 2950779 were not returned.



1
Demand No 1
Expenses incurred by the Railway Board


2
Demand No 2
Miscellaneous Expenditure - Records the expenditure pertaining to Railway Recruitment Boards, Research and Standard Organization, Lucknow, Railway Claims Tribunal, Railway Rates Tribunal, Statutory Audit, Survey etc.


3
Demand No 3
General Supervision and Services- Common to all Depts. Including the Office of the General Manager, Divisional Railway Manager - both the staff and non - staff expenditure. Consists of Financial( accounts ), Personnel, Materials, Way and Works, Rolling Stock, Electrical ,Signal and Telecommunication and Traffic Management.


4
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.


5
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.


6
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.


7
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.


8
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.

9
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.

10
Demand No 10
Operating Expenses - Fuel - Records the cost of coal , Diesel Oil and Electricity only.

11
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.

12
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.

13
Demand No 13
Provident Fund, Pension and other Retirement Benefits

14
Demand No 14
Appropriation to DRF, DF and Capital Fund
15
Demand No 15
Dividend to General Revenue
16
Demand No 16
Assets: Acquisition, Construction and Replacement

SALIENT FEATURES OF THE REVISED CLASSIFICATION:
1. Demands 1 and 2 are the nature of General On cost as formulated by the Study Team 1970 of the Administrative Reforms Committee. These expenses are common to all railways.
2. Demand No 3 common to each railway as the management and office establishment are charged to this demand.
3. Demand Nos. 4,5,6 and 7 are the nature of maintenance cost otherwise known as common cost in the Traffic Costing of the Railways.
4. Demand Nos. 8,9 and 10 are the nature of direct ( cost ) expenses.
5. Demand No 11 pertains to Staff Welfare as suggested by the Estimates Committee 1955 in their 31st Report.
6. Demand No 12 incorporates all the expenses that do not fit into the above functional demands.
7. Demand No. 13 pertains to all Retirement Benefits as the concept has been enunciated by the Study Team on Reforms in the Structure of Budget and Accounts 1970.
8. Demand No 14 and 15 pertains to all Appropriation to Funds and Dividend.
9. Demand No 16 pertains to acquisition to capital accounts.


CLASSIFICATON OF EXPENDITURE
1
Demand No 1
Expenses incurred by the Railway Board


2
Demand No 2
Miscellaneous Expenditure - Records the expenditure pertaining to Railway Recruitment Boards, Research and Standard Organization, Lucknow, Railway Claims Tribunal, Railway Rates Tribunal, Statutory Audit, Survey etc.


3

Demand No 3
General Supervision and Services- Common to all Depts. Including the Office of the General Manager, Divisional Railway Manager - both the staff and non - staff expenditure. Consists of Financial( accounts ), Personnel, Materials, Way and Works, Rolling Stock, Electrical ,Signal and Telecommunication and Traffic Management.


4
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.


5
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.


6
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.


7
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.


8
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.

9
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.

10
Demand No 10
Operating Expenses - Fuel - Records the cost of coal , Diesel Oil and Electricity only.

11
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.

12
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.

13
Demand No 13
Provident Fund, Pension and other Retirement Benefits

14
Demand No 14
Appropriation to DRF, DF and Capital Fund
15
Demand No 15
Dividend to General Revenue
16
Demand No 16
Assets: Acquisition, Construction and Replacement




CLASSIFICATION OF EARNINGS

ABSTRACT
DETAILS
REMARKS
X
Coaching earnings consisting passenger, luggage, parcels,




Y
Goods earnings

Z
Sundry other earnings




Classification of capital sources

APLPHA
NUMERIC
SUBJECT
P
20
CAPITAL
Q
21
DRF
R
22
OLW- R
S
23
33
43
53
DF I (P)
DF II (L)
DF III (U)
DF IV (S)
T
26
RSF
U
27
SRSF

Plan heads



CAPITAL BUDGETING MANAGEMENT ACCOUNTS
DISCOUNTED CASH FLOW TECHNIQUE
KAMALENDU CHOWDHURY, S. 0(A), EASTERN RAILWAY

The discounted cash--flow technique is a sophisticated tool of the management accountant for evaluation, of profitability of investments involving cash-out flows or capital outlays. This technique is regarded by many Management accountants as the most accurate method of evaluating the worth of investments in capital projects. It exhibits in graphical manner the estimated cash flow during the life of the assets and discounts the future proceeds in terms of current proceeds.

The main idea behind the D.C.F. method is that Rs 100/- receivable today (original outlay) is more than Rs. 100/- receivable a year after the sum of Rs. 100/- invested today will earn interest and will accumulate to more than Rs. 100/- in a year's time (cash flow) and it also shows the estimated period during which the cash flow should continue. Thus the D.C.F. technique gives guidelines to the management as to how capital investments can most profitably be made amongst various alternatives - projects.

The idea, of Opportunity cost or alternative cost or transferred earnings originally applied in the case of Agricultural land in theory of Rent, is^ also applicable to money or capital outlay which has alternative uses. The most suitable use of money is called the best alternative use amongst various capital projects appearing before the management for decision-making. Thus, under D.C.F. method deciding which of the projects should be taken up for investment is determined by the proposal that gives the best results.

The D.C.F. method, as it is made out of Pay back principle, which computes of the period of time by which it will pay-back from the additional earnings of the project the original cost of capital (or in short under pay back method the capital invested in a project during a particular. time is recovered during the same period from the extra proceeds the: project generates) also considers the net cash flow as representing the recovery of the original investment plus a. return on capital. This method is mostly like mortgage principle under which money is advanced with a certain rate of interest in such a manner as the same amount of money is recovered after the specified period as agreed between the parties. Yet there is some major differences in D.C.F. method since the rate of interest at which the capital-or cash outflows and cash inflows are discounted is not fixed or. Certain rather assumed under D.C.F. method whereas the rate of interest under mortgage principle is fixed or definite.

The basic tools of the D.C.F. technique for determining the economic viability for a capital project are mainly two viz.: present value of future earnings and the rate of interest at which future earnings are discounted so that the present value of the future receipts equal the capital cost of the project. But .how the- present value of future earnings is ascertained? - The net present value may easily be ascertained from the arithmetical formula given below

P – S/(L+I)N
Where P - Net present value of a future sum of money
S-Future value of a sum of money
I- .Interest rate
n - Number of years
To illustrate with an example the principle will be clear.
A sum of money is to be invested now to earn Rs. 5000/- in ten years. The rate is 8% compounded. Find the N.P.V.
From the above formula it is seen—
P- S = 50000 50000
(L+i)n (1+8%) 10- ( 1.08)10
-463 X 50000 - 23150 approximately
.463 being the P. V. of Re. 1-00 receivable in one payment at the end of 10th year. Similarly, with the help of the above formula tables can be prepared to find out the, value of Re. 1.00 receivable in one payment at the end of a given number of years (1+i) at different interest rates.
The D.C.F. technique may, well be .operated in two methods :—

(1) The present value method:—
The basic concept underlying this method is discounting future cash inflows an' necessary cash outflows and is based on the present value tables explained above method predetermines an acceptable minimum rate of return for any project under consideration. This rate is called, the "cut off-rate". If the project fails to produce of return on invested capital, the project will not be economically viable to justify installation. To ascertain-what "the cut-off rate", will be is a very difficult task for the management accountant. Normally, this is sorted out by computing the average of capital suitably adjusted to, allow for the risk element involved in the project. (In case of Indian Railways, the "cut off rate has-been affixed as 10% based on consideration of the following factors to the rcmunerativencss of financial proposals:—

1. A return at least 3.4% (57% of 6%;) on investment. That is charging dividend @ 6% on increased 57% capital at charge.
2. Dividend to general revenues @ 6%.
3. Risk allowance" @ 0.75%
(Vide page 23 of the Report on ' Techniques of financial appraisals of Railway projects).
It has been stated unequivocally in the report "the committee are of the Railway project should be accepted as financially remunerative only if it gives a rate of return not less than 10%i 'This rate maybe adopted as the discounting rate of interest for all projects, whether new lines or line capacity works or proposals for change of traction etc."

But it must also be simultaneously remembered that while making decisions the accuracy of the data supplied should be given prima-facie importance, since says Prof. Howard & Browne—"the validity of the conclusions depends on the accuracy of the data supplied. There are many variable factors included in the D.C F calculations, so unless the input figures are reasonably realistic, the out-put information will not be very useful."

The above principle will not be understood unless an illustration is given as follows :-


The assumed investment of Rs 1000.00 spent at zero year in plant and machinery gives a cash flow as shown in Col. A. The minus Rs. 1000 indicates initial investment at zero year. Discounting this cash flow at 7% per annum gives, the N. P.V. as equal to zero but when cash flow is discounted at less than 7%, the N.P.V. would be greater than zero ( @ 5% vide above ) and-discounting at 10% makes the N.P.V. negative. Thus it is seen that the proposal will be financially viable and-acceptable^ if the 'required "7% rate of return is the criterion of remunerative ness or the "cut-off rate". The proposal is also, worthwhile at a return less than 7%, since the N.P.V. is more than capital outlay.

(2) The internal rate of return method:
This method also involves discounting future cash inflows and cash out-flows and also based on present value tables. This method differs from the P. V. method only in respect of calculation of discount rate. Prof. Howard has called this method as the "trial & error" method since it involves making a number of .trial calculations to find out the correct interest rate, which equates the P.V. of cash inflows with the P.V. of cash outflows or in short rate of interest, which discounts the cash flows to zero. To clarify it may be shown at ratio
Cash inflow
Cash outflow = 1
Now, with the ratio thus found out, one is to refer to the P.V. tables and sort out the rate of interest at which one rupee discounted equals to the ratio found as above after a definite span of life of the project.

As for example (1) capital cost of a project of change of power supply for transaction from Low Tension (LT) to High Tension (HT) is Rs. 1.13 lakhs,
(2) Annual charges under HT supply ( excluding depreciations ) — Rs. 1.396 Lakhs
(3) Charges under LT system. - Rs. 1.704
(4) Annual net savings ( 1.704-1.395)- ' " Rs. .307

therefore R Capital outlay = 1.13 = Rs 3.67
Annual savings .307
Now by referring to the present worth tables we should look for the rate of interest
at which one rupee per year adds to a total present worth of 3.67 in 20 years. We find
Rate of discount N.P.V
20% 4.84
25% 3.94
30% 3.30
Thus, the return lies in the range of 25% to 30%' The accurate rate of discount also be had from the following formula:—
A + C (B-A) WHERE
C-D
A — Discount factor of the low trial
B - Discount factor of the high trial
C - P.V. of the cash inflow of low trial
D - P.V. of the cash inflow of the high trial.
- 25% +3.94 x (30%-25%)
3.94-(-3.30)
- 25% +3.94 x 5%)
7.24
- 25% + .5 X 5%
- 27.5 % approx. is the actual rate of discount in the instant.

The essential features of Discounted cash flow Technique are the following:—

(1) In computation of present value of cash outlay, which generates either savings of expenditure or increase in earnings, the life of the asset created by the cash outlay should always be determined very carefully. This task is enormous in business like Railways, Tramways, Electric Supply, Power generation Projects etc, where there are innumerable types of assets with varied life which pose varied problems for correct determination of the present values. To cite an instance, a line capacity work, viz. installation of Route—Relay interlocking in Railway Transport requires many types of assets such as conversion of the cabin Electronic key Board, Signal—Boxes, replacement of points and crossings to suit the needs of Route Relay operation, power supply apparatus etc. each of which has different life span. Unless life span of each asset is carefully ascertained the application .of D. C. F. technique will have no real usefulness.

(2) To assess the recurring expenditure for repairs and maintenance of the asset created out of the capital investment should also reasonably be calculated to give it the most realistic approximation. This should be worked out logically with respect to the different aspects of services rendered by the asset as also different incurrence of expenses involved therefor.

(3) In D.C.F. Technique, the clement of depreciation of asset has not been taken into account in computation of financial implication. The reason behind dropping the element of depreciation is implicit in D. C. F. method itself. That is, as it recovers the capital invested at the end of life of the asset, the concept of provision of depreciation" stands void.

(4) The data of the proposals to be formulated, under D.C-F. Technique must be based on well-founded statistics derived from careful survey by expert teams. This is especially expedient in case of large-businesses—like Railway, Tramways etc. As for example, normally line capacity works like Route Relay interlocking. Doubling, crossing stations, gauge conversion, change of traction from steam to Diesel or Electric etc are financially justified on the basis or( savings of expenditure calculated from savings of detentions to Engines and trains. This task of calculation of the savings of detentions to trains requires survey of the detentions usually sustained by the number of trains per day, and this survey must be reasonably worked out to suit the reality of the problem. Unless correct estimation of the detentions to trains is made the entire thesis will be of no practical utility. Similarly, in case of the projects involving increase in traffic earnings, the data of the increased earnings must be made out logically to meet the demands of the project.
(5) The base year is another important factor required for application of the D. C. F technique in-appraising financial proposals of projects. Normally, the base year is the Zero year at which capital is invested in a project. This is the year in which cash flow out of the Fund and Starts giving cash-in-flows for period of life of the asset. In some projects capital investment is spread oat for several months or years. If in such cases, whether investment is spread out in three phases the first dose of investment is marked as minimum 2 year, and the second dose is marked as minus 1 year and at the Zero year the last do applied and thus the accumulated doses of investments start giving returns for the period of life of the asset created. Therefore, the concept of Zero year, unless correctly understood being the most pivotal factor in D.C.F. Technique, may lead to erroneous conclusions In short it may be stated that Zero year is the year at which the accumulated doses of capital investment may be just sufficient to fetch earnings on and from the years succeeding.
(6) Cash in flows and where necessary, cash outflows are discounted on equated terms basis at different rates of interest to arrive at the correct rate of return from the project the help of interpolation formula already mentioned previously.
(7) Amongst .different alternative proposals, the best and most profitable one is screened out by application of Discounted cash flow technique.
(8) In brief Discounted cash flow technique may be called an equation of capital invested and capital recovery at a certain rate of discount at the end of the life of the asset
(9) The residual value, if at all remains at the expiry of the life of an asset, should always be credited to the project as extra earnings if the project is considered to be operated further. In Railways, this is a repeating feature of the assets mostly connected with transport business. So the question of crediting the asset account in although contravenes from the management point of view, is mostly justified from the viewpoint of public utilities and accounting.
The enumeration of the D.C.F. method as delineated above is made mainly with reference to its application to Indian Railways. The top Railway Management viz., the Railway Board have since, introduced the D C F. principles for appraisal of financial proposals in Indian Railways in replacement of the conventional method of financial justification as provided in the Gen Code Vo. I, Chapter VII. It is, therefore, necessary that Railways- Accounts staff should be equipped with the tools of sophisticated D.C F. technique so that its application in the appraisal of Railway proposals are rightly made in order to bring out the cost-benefit-analysis the best advantage of the Railway Department as a whole with this view in mind, the salient features of D.C.F. technique, as far as it is applicable to Railway. Department, have been brought out.





THE END





























NO
INTERNAL
EXTERNAL
1
SURPLUS REVENUE
Market borrowing through IRFC
Raising bonds in the market – Receive Rolling Stock on lease basis Charges 16 % p a
2
OLW(R)
General Exchequer – support from GOI
Interest bearing loan in perpetuity 7 % p a
3
DRF
Railway Safety Fund – a share from the Central
Road Fund – every litre of petrol sold railways
get 12.5 paise and diesel 6.25 paise –
meant for construction of ROB/RUB, manning unmanned level crossing
4
DF I P ( Passenger & rail users amenities)
DF II L ( Labor Welfare)
DF III U ( Un remunerative Operating expenses
DF IV S ( Safety Works)
Special Railway Safety Fund – non lapsable fund Rs 15000 Crores for renewal and
Replacement of tracks, bridges, Rolling Stock
Over aged coaches and wagons, signaling gears
5

Ministry of Defence for rail lines in strategic areas – Udhampur – Katra – Baramulla – Quazigund 100 % support
6

North East Development Forum – for all projects in the seven North Eastern States
7

State Participation:
Maharashtra: Mumbai Rail Vikas Corporation 2/3
Karnataka : Karnataka Rail Infrastructure
Development Enterprises 2/3
Andhra Pradesh: 50 : 50 sharing
West Bengal : Metro Rail – Dolliganj – Dahria
1/3 share
Jarkhand : 2/3 sharing
Tamil Nadu : MRTS – Taramani – Velacheri 2/3
GC – MSB – TBM 50:50
GC - SA - COT 50:50
8

Private Pariticipation:
Mundra Port Ltd – Mundra – Pipavav 50:50
9












ROLE OF ACCOUNTS MEMBER IN TENDER COMMITTEE

Competency - level of tender – basic rate is the criteria
indent / estimate duly vetted by associate/accounts
brief note and tabulation is available and vetted by accounts
availability of sanctioned estimate
funds availability
tender cost within estimated cost
special conditions if any detrimental to railway
in case of unusual conditions, legal opinion is obtained
rate inclusive of ED, ST, CD Etc
for huge projects plants, drawings, design, land availability
rate analysis – market rate – not merely previous purchase rates
credentials in case of new contractor
in case of LT from approved list A B C D as the case may be
advance to contractors in case of projects costing more than Rs 1 Crore
in case of RP tender, the same conditions as the original – if defaulter is L 1 sufficient SD to be collected to avoid second default
when L 1 is passed over, the reasons to be in written form
in case of single tender, prior concurrence of finance is obtained and reasons for ST are recorded
splitting is allowed in stores tenders contracts to develop alternative sources – but in works prohibited unless emergent situation to safeguard life and property
choose to visit the work spot if need be
no undue preference to contractors over past credentials
validity of offers exist
finance interest of railways is not lost sight off

AFRES - Advanced Financial Railway Earnings & Expenditure System
PRIME – Payroll Related Independent Modules
FMIS- Financial Management Information System
ROLIN - Railway On Line
IMMS- Integrated Material Management System
IPMS – Integrated Project Management System

AFRES - the prestigious accounting software is based on window platform and the language used is Oracle- proprietary software. The input forms are known as Developer 2000. The pilot project was launched in Madras division of Southern Railway. It is the replacement software for the existing Transaction Accounting System (TAS) based on Ms-Dos platform. The advantages of the windows system need not be explained here. The Graphic User Interface (GUI) of the windows has surpassed all kinds of user interface as it is the most user friendly and has crossed the barrier of language.

The following modules are in the AFRES. Internal check, contract management, costing, budgeting, inspection, books, traffic earnings and expenditure, pension, pf, cash office etc. These various modules envisage computerizing the entire functions of the accounts dept from receipt of money at the counters railways or other wise till the account current is sent to railway board on line.

Under internal check module the various bill processing activities are incorporated. Creation of master tables like Spending Units, Executive codes, Bill Units, Allocations, Primary Units, Vendor list, Purchase order list, vehicle list, telephone list, imprest holders list, miscellaneous list, contractors list, contract list etc.

Under these modules Pf, Pension, Establishment, E Suspense, Expenditure, Contractors sections are grouped. The ideal links to update the data bases are the PRIME – (Payroll Related Independent Module), the related software in stores branch and in the engineering branch.

AFRES – Advanced Financial Railway Expenditure System.
This program is built on Oracle 8.i and Developer 2000 to satisfy the accounting needs of the railways. From bill passing to compilation of account current, from preparation of JEs to compilation of financial accounts – every need has been taken care of in this program.

PRIME – Pay Related Independent ModulE. This program is basically intended for the Personnel Branch to prepare the initial salary bill and other employee relate details like the PF balance, leave credit, date of appointment, date of birth, date of retirement, date of increment, scale and rate of pay, traveling allowance details etc

ROLIN is the prestigious networking concept to link various offices in Chennai area. This pilot project was initiated with the office of SR DAO/MAS to start with. The idea behind the concept is to bring all the offices online so that the transparency is established and all works are connected. The ROLIN starts with EDPC/MAS and enables the offices linked to the network to have access to data in other offices. Through ROLIN any railway office with the help of RAILNET can be reached. Thus the data retrieval has been made faster and more efficient. The month long delay in data reaching the destination from the HQ is reduced considerably. In short, ROLIN has revolutionized the communication in railways.





ARBITRATION

In the interest of the railway administration, in case of any dispute or difference between the contractor and the railway administration over a contract is protected under clause 64 of standard general conditions of contract, for works contract and clause 2900 of IRS conditions of contract in case of supply. In case of any question or dispute arising under any conditions of contract, the same shall be referred to the sole arbitrator or joint arbitrators. The arbitrator shall be a railway gazttted officer appointed by the GM in case of contract entered into by zonal railways. In case of contracts entered in to by railway board by also GM/AGM the arbitrator shall be a JA grade officer or above. The arbitrator should be one who had not an opportunity to deal with the matter under dispute or who is course in his duties should not have expressed his views on any matter under dispute. The award of the arbitrator is final and binding on both the parties.

No arbitration demand from the contractor shall be entertained if the contractor has received the final settlement of all claims and given a no claims certificate. Railway board should be informed in case the payment of award exceeds by more than Rs 50000/- against the amount considered by the railway administration before the arbitration. The arbitration should begin only after a demand from the contractor. Excepted matters shall not be referred to arbitration. Excepted matters means, the items in the contract which will bind the contractor as per the conditions of the contact and the decisions of the engineer of the railways is final. For example, classification of soil.

A single arbitrator is appointed in the case the claim is less than Rs 5 lakhs and where the issue involved is not complicated in nature. Two arbitrators of equal status one invariably from accounts department if the claim is more than Rs 5 lakhs or complicated in nature are appointed. Where the claim is up to Rs 3 lakhs item wise award should be given. If above Rs 3 lakhs, a case a reasoned / intelligible award is given.

Appointment of arbitrators: Where two arbitrators are to be appointed, a panel of more than three officers is sent to the contractor who will select and suggest one of them as his nominee. GM shall nominate another. The arbitrators can nominate another gazetted officer as umpire and GM appoints him. In case the arbitrator dies ore resigns or unwilling, GM will nominate another arbitrator. The arbitration is covered under Arbitration Act 1940.
ADVANTAGE OF ARBITRATION:
1. Quick settlement, 2. Early finality, 3. Simple procedures, 4. Inexpensive proceedings, 5. Non involvement of lawyers, 6. Privacy maintained and 7. Awards are binding.
1. Quick settlement: As time given to the arbitrator / umpire is limited to 4/2 months respectively to settle the dispute. Therefore arbitration can not be dragged.
2. early finality: The arbitrator’s award can be set aside only on very limited grounds whereas in courts, the lawyers see to it and the case is taken to higher courts for several years causing financial and mental agony to both the parties of dispute.
3. Simple procedures: Arbitration is quasi judicial. Legal formalities are not followed. Lawyers need not be engaged. Any one can present the case and argue unlike the court where the presentation is filtered by the integrity, intelligence, industry and understanding of the lawyer.
4. Inexpensive proceedings: No court fee is to be paid. Only the expenses of the meeting or hearing are to be paid. Small honorarium is paid to the arbitrator.
5. Non involvement of lawyers: Arbitrator with technical knowledge and experience can decide the case. Hence the services of lawyers are not required.
6. Privacy maintained: Since the proceedings are held in camera, privacy is maintained.
7. Awards are binding: Very little scope exists for setting aside the award and going for appeal against the award.
Ingredients of arbitration: Arbitration is said to be a domestic tribunal. There must be an agreement between the parties in writing. There should be provision for arbitration in the agreement.

Nature of dispute referred to arbitration:
1. claim for extra item of work, quantum , rate of payment etc
2. claims for variations in scheduled quantities
3. delay in completion of work
4. compensation for prolonged duration
5. delay in settlement of bills
6. delay in giving decisions on matters referred
7. dispute against non – scheduled items
8. dispute on termination of contract at contractor’s risk and cost
9. questioning the decision of railway clauses on excepted matters
10. regarding measurement, specification and drawing, defective workmanship
11. dispute on hire charges of plant and machinery
12. Lacunae in contract conditions.

Procedure for conducting arbitration: The arbitrator may conduct the proceeding in any manner he deems fit but within the principles of natural justice. The arbitrator is not bound by any rule of procedure which the court shall follow. The arbitrator need not record statements and file documents etc. it is not obligatory on his part to take notes of his proceeding. If he keeps such notes he cannot be compelled to produce them in court. In arriving the decision by relying upon facts and conditions on which court of law does not interfere, but the arbitrator shall hear both the parties to submit their claim. Once the claim and the counter claims are received a date is fixed for the hearing, the arbitrator reads out the terms of reference and then the proceeding are started. Being the appellant, the contractor is given the first chance and then the railways. Both are given the full opportunity back and forth to present their respective points. Exhibits presented by both the parties are scrutinized and evidence adduced. The site is visited by the arbitrator / s if called upon by any party. The date of next hearing is also included in the minutes and handed over to both the parties. At the end of the haring a certificate is obtained from both the parties to be the effect that an adequate opportunity was given to both of them. Arbitrator than finalize the award.

The arbitrator advises the parties that 1. The award is ready 2. The amount of fees to be paid and 3. The amount to be paid as stamp duty. After the fees are paid, award is written and signed on the stamp paper. With the signing of the award which is known as publication of the award, the arbitrator becomes “ functus officio” . He then informs both the parties and the award is filed in a court. Filing of the award in compulsory if the reference for arbitration is directed by a court under section 20(4) of Arbitration Act 1940. The party calling for it will move to the court for issue of decree. Based on the decree the award is affected.

Honorarium: The quantum of honorarium paid to the arbitrator is as follows:
In some railways the honorarium is paid by the railways and in other railways the amount is paid / shared by both the railways and the contractor. All communications addressed by the arbitrator should be endorsed to both the parties. No deliberations should be done in the absence of any one of the aggrieved party.

Time limit: Where nothing is stipulated in the terms of reference the time limit is 4 month for the arbitrator and 2 months for the umpire. The time span can be enlarged only with the mutual consent of both the parties or by the court. If the arbitrator / umpire enlarge the time frame suo moto such action will be null and void. If the award is not given within the time limit, the arbitrator will become “functous officio”.

Provisions in the Act:
1. the arbitrator should be appointed by a third party or by a court
2. grounds for setting aside the award
a. where there is an apparent error
b. the arbitrator misconducted himself
c. the award has been made superceding the directions of a court
d. Award has been improperly procured in other words, “invalid”. The term “invalid” means where ambiguous and uncertain award which cannot be implemented. The award which does not decides all disputers, award otherwise than the authority conferred. The subject matter of the award is incapable of being referred, award passed on erroneous legal perspectives. All the above items narrated above come under the term “invalid”
e. no second appeal shall lie except to appeal to supreme court

Reasons for the increase in arbitration cases:
1. initial mistake and incorrect preparation of tender documents
2. improper maintenance of records for issue of materials
3. failure in giving appropriate notices for the delays on the part of the contractor
4. Delay in taking decisions relating to rates, new items, variation in quantity and modification in work.
5. improper assessment of contractor’s credentials
6. incorrect or ambiguous terms in the conditions
7. recording of measurements in the absence of the contractor
8. difference in opinion in the interpretation of scheduled items classification of soil etc
9. delay in supplying of materials leading the materials to the site, poor quality, incorrect assessment in quantity and accounts of scrap etc
10. delay in acquiring land
11. Granting of extension without valid reasons and without the consent of the party and not quoting the clause under which the extension is rendered.

Improvements: the above mentioned short comings are to be avoided

Pre Arbitration Committee: With a view to settle that claims of the contractors arising out of disputes and to reduce the number of arbitrations, new procedure was introduced in I R in the middle of the year 1991. A joint procedure was issued by FA & CAO and CE during June 1991. a divisional level and HQ level committee is nominated to deal with the disputes prior to the arbitration and termed as Pre Arbitration Committee. In divisional level, the members of the committee should be a J A Grade officer and accounts officer either in J A grade or in Sr Scale. In the case of HQ level JA grade officers from executive and accounts dept.

Matters referred to Pre Arbitration Committee:
v It is proposed to terminate a contract which has sufficiently advanced or the contract is running into trouble before taking decision to terminate a contract and to avoid the arbitration and solved problems, the matter will be referred to pre arbitration committee.
v For any claim while the work is in progress or work completed awaiting payment, the pre arbitration can enquire
v Even before the contractor seeks for any arbitration, the matter can be referred to the arbitration.
Nominations of the members of the committee at HQ level by PHOD for the contracts entered into by them or lower authorities by AGM/GM in other cases. All divisional leve the nominations are made by DRM. Recommendations of Pre Arbitration Committee should be put up to DDRM in the divisional level and PHOD or AGM/GM in case of HQ level..
Conduct of the Meeting:
Discussion held with the contractor or his representative and shall record the discussion signed by the members and contractor. The contractor shall be made known that the discussion is without prejudice to the railways interest. If any understanding ire reached for a full claim or a partial claim a “claims certificate” should be obtained in writing from the contractor.
Committee shall record the specific reasons for the conclusions and put up to the accepting authority. In case of difference of opinion, it should be recorded separately and put up to the accepting authority whose decision is final. The recommendations should be routed through associate finance. The proceedings of the committee should be specific and in detail. No firm commitment should be given to the contractor. He should be made known that the recommendations of the committee are tentative subject to acceptance of the accepting authority. To this effect, a specific letter should be obtained from the contractor.














1403. Imprest.- Imprest.-The payments which the Executive Engineer has usually to make are arranged by the Accounts Officer. Normally, therefore, all initial accounts of cash expenditure are kept in the Accounts Office. However, for the purpose of making certain specified class of payments and also to enable the Engineer to meet petty office expenses and emergent disbursements which can not be foreseen, the General Manager of a Railway, may with the concurrence of the Accounts Officer sanction an imprest or standing advance of a fixed sum of money to him. The General Manager may also redelegate his powers to sanction cash imprest, to authorities subordinate to him on such condition as he may think fit to impose.
1404. The following rules will govern the sanction and operation of an imrest to an executive officer:-
(i) The amount of the imprest money must not be larger than is absolutely necessary. It should be the lowest sum adequate to meet the type of expenses referred to in the foregoing para.
(ii) The arrangements for the safe custody of money rests entirely with the imprest holder but he should at all times be ready to produce the total amount of imprest in vouchers or in cash.
(iii) The imprest should be kept in duplicate in Form given below (E. 1404) and the original with the supporting vouchers forwarded to the Accounts Officer for recoupment from time to. The duplicate will be retained by the imprest holder. The imprest account should ordinarily be closed by the 27th of the month and recouped before the end of the month so as to ensure as many the as possible, of the months' transaction being accounted for in same month.
(iv) Should any item in the imprest account appear to the Recouping Officer to be open to objection, the imprest should nevertheless be recouped in full and the items placed under Suspense (Miscellaneous Advances), until the objection is removed or the amount is made good by the imprest holder.
Form E 1404
………….... RAILWAY &
CASH ACCOUNT
Department………………………….
Office …………………… Imprest ……………………………
Dr …………… in Account current with the………….Railway for the ……….Cr.
Date of payment
Voucher reference
Particulars of receipt
Allocation
Items
Amount
1
2
3
4
5
6










Date of payment
Voucher reference
Particulars of receipt
Allocation
Items
Amount
1
2
3
4
5
6









Certified that the cash in hand amounting to Rupees has been actually counted by me on this date and is of the amount above stated.
Signature……………………….
Designation…………………….
1408. Imprest Stores.-Materials obtained, not for specific works but as a standing advance for the purpose of meeting urgent requirements as and when Grey arise should. with the exception of consumable stores such as cotton waste, ute. oil and grease, be treated as imprest stores, so long as they are under the control of the authority in charge of the executive unit. All such stores should be borne on in imprest account to be maintained by the departmental subordinate in charge of the store, and thus form part of the stores balances of the railway. Materials such as cement, ballast bricks, brick bats, lime, sand surkhi etc. required for repairs and maintenance should be directly charged off to revenue heads and as indicated in para 1435 and no materials at site account need be maintained. Girders required for emergency use may be kept charged off to Engineering Stores-Imprest-other than permanent way materials required for works and procured specifically should be treated as charged off stores (c.f. para 1434).
1409. The imprest with every subordinate should be fixed by the head of the department or the Divisional Superintendent or any lower authority to whom the power has been delegated. The scale of imprest sanctioned for each subordinate should not be increased or decreased except by the authority who originally fixed the scale.
1410. The imprest stock should be kept segregated and a sign board 'marked.......... Inspector's Imprest erected thereon.
1411. Materials issued from Imprest stock should be recouped as soon after the issues as possible. The subordinate concerned may arrange recoupment of imprest stores in accordance with the procedure given in Chapter XVIII of Stores Code.
1412. No transfer of stores between imprest, holders should be permitted except when stores are immediately required in a particular area in an emergency and are not available at the time with the imprest holder of that area. In such exceptional cases, the stores required may be obtained from a neighbouring imprest holder, who will then charge them off to the final head in his own account.

Finance CODE I
CHAPTER-X
PETTY CONTINGENT EXPENSES-CASH IMPREST

1001 Nature of Contingent charges —Contingent office expenditure comprises charges of a miscellaneous character which are incidental to the management or upkeep of an office and are charged to the head "Contingencies" except where otherwise provided in this and other Indian Railway Codes, e.g.-

(i) Expenditure on stationery, books, newspapers and periodicals.
(ii) Furniture, typewriters and other office appliances.
(iii) Liveries and uniforms of Class IV servants.
(iv) Conveyance hire.
(v) Advertisement / entertainment charges.
(vi) Postage stamps and telegrams.
(vii) Telephone charges.

1002 Expenditure in respect of rents, rates and taxes, clothing, stationery and other stores required for traffic and running staff, the repairs and maintenance of furniture and office equipment, and rental of and stationery used for electronic computers is booked under sub-heads other than contingencies and is regulated by rules embodied elsewhere in this and other Indian Railway Codes.

1003 No pay, or additions to pay, or compensatory allowances of any kind may be charged as Contingent Expenditure. As an exception to this, however, pay and allowances in the following cases are treated as Contingent Expenditure;

(i) Hot weather establishment.
(ii) Staff employed in connection with the upkeep of an office.
(iii) Safaiwalas etc. whether whole time servants or not, provided they are not entitled to service gratuity.
(iv) Such Class IV staff as malies and grass cutters etc., specially permitted by the
Railway Board to be charged to contingencies.

1004 Classification of Contingent Charges.-The contingent charges may be broadly divided in to two classes, viz. ordinary and special contingencies. Charges coming under each of these classes may be recurring or non-recurring.

Special Contingencies
1005 Special contingencies include- (See Correction Slip No.49)

(i) charges regulated by scales such as liveries to class IV servants.
(ii) charges, the bills for which require the counter-signature of the head of the department such as charges on account of taxi hire.
(iii) unusual charges that require the special sanction of a superior authority such as entertainment expenses on special occasions.

Note.-(1) The expenditure on entertainment/refreshment at important meetings /conferences etc., will be regulated by the instructions issued by the Railway Board from time-to-time. The General Manager may delegate his powers to heads of departments for incurrence of expenditure on serving of light refreshments such as plain coffee / tea / cold drinks in conferences and meetings with official/ non-official visitors as are considered specially important and unavoidable as far as the Railway working is concerned.

The luncheon parties, dinners and receptions on the Railways can be arranged only with the personal sanction of the General Manager of Zonal Railway/Production Unit and the Divisional Railway Managers with prior concurrence of the Associate Finance.

1050 Cash Imprests.--An imprest is a standing advance of a fixed sum of money placed at the disposal of an individual to meet the following types of expenditure

(1) Petty office expenses.
(2) Cost of raw materials for the diet of indoor patients of hospitals.
(3) Emergent charges which cannot be foreseen.
(4) Other petty expenses up to an amount of Rs. 50/-in each case. Emergent petty advances, may also be made on the responsibility of the imprest holder out of imprest money placed at his disposal. (See Correction Slip No.43)

1051 The amount of an imprest must not be larger than is absolutely necessary. It should be reckoned at the lowest possible figure calculated to suffice for meeting charges of the nature referred to in the preceding paragraph and should be fixed in consultation with the Accounts Officer who will advise as to the appropriate amount of the imprest.

1052 Subject to the provisions of the previous paragraph, the General Manager of a railway will have full power to sanction imprests. He may redelegate his power in this respect to authorities subordinate on such conditions as he may think fit to impose. In the case of other offices, the grant of an imprest will require the sanction of the Railway Board.

1053 The number of imprests should not be multiplied unnecessarily. An officer's imprest should meet the needs of every branch of his office. If he has subordinates who require petty sums, he should rather spare a small portion of his own imprest for their use than apply for separate imprest for them, taking acknowledgements from them in the same way as he himself furnishes to the Accounts Officer and retaining them in his office.

1054. The responsibility for making proper arrangements for the safe custody of the imprest money rests entirely with the imprest holder and he must at all times be ready to produce the total amount of the imprest in vouchers or in cash.

1055. The imprest account should be kept in duplicate, the counterfoil being kept by the imprest holder and the original, supported by the necessary vouchers, forwarded to the Accounts Officer from time to time as the holder of the imprest may require it to be replenished. The account should be closed ordinarily on the 27th of each month and recouped before the end of the month so as to ensure as many of the month's transactions as possible being included in the account.

*****
stores code
711B. Opening of Current Accounts against Cash Imprest by Stores Officers. - Stores Officers at Major Stores Depots holding cash imprest for emergent purchases may open and operate "Current Accounts" with the Departmental Bankers or with other Nationalised Banks at places where Departmental Bankers do not have their paying branches, to deposit the unspent balances of cash including recoupments and to make disbursements therefrom for local purchases through cheques, subject to the following conditions: -

(a) Current Accounts should be opened only in cases where the imprest amount is more than Rs. 10,000/- each.

(b) Current Accounts should be opened against the official designation of the imprest holders and not in their personal names.

(c) The amounts of imprest should be reviewed half-yearly so that these are kept at the minimum in all cases. At least one recoupment of expenditure in a month should be made compulsory and with this end in view, the amount of imprest should be fixed on the basis of 50 per cent of the average monthly expenditure on emergent purchases in each case.

(d) Recoupments should be made through Crossed cheques issued by the F.A.& C.A.O. in favour of the imprest holder by his official designation only and not in favour of his personal name. Such cheques shall he deposited in the current accounts.

(e) It should be ensured that the imprest amount is utilised only for making payments for emergent purchases permissible under extant rules and not for making normal purchases which should be made through submission of Bills in the usual manner.

(f) All deposits into and withdrawals from the Current Accounts should pass through a subsidiary book and Imprest Accounts should he rendered with reference to the transaction recorded in that book.

IMPREST STORES (other than engineering Stores)

1801. Definition of Imprest Stores- Materials whether stock items or non-stock items, held in stock at Running Sheds, Train Examining Stations etc, not for specific works but as a standing advance for the purpose of meeting day to day requirements in connection with the repair and maintenance and operation of rolling stock shall, including consumable stores such as cotton waste, jute, oil, grease, etc., be treated as imprest stores, so long as they are under the control of the authority in charge of the executive unit, and have not been issued to works. The material required to upkeep of rolling-stock, by divisional electricians and that required for house lighting purposes at various stations by electric chargeman should also be treated as imprest stores.

Note.- Firewood used for lighting up purposes is not an item of imprest.

1802. Object of Imprest System- The main object of the Imprest System is to control the expenditure on materials used each month in the running repairs of rolling stock, etc. But this involves inter alia, effective financial and departmental control on the stocks of materials held at out-stations and their issue and recoupment.

1803. Two Systems of Imprests- These imprest stores may either be "charged-off stores", in which case their cost would have already been finally debited to Revenue working Expenses, or
Stores forming part of the stores balances of the Railway, the cost of which be at the debit of capital suspense. The railways on which the cost of all or most of the imprest stores held at running sheds etc., has been charged off to revenue, should follow the rules in paragraphs 1805 to 1858. Where the cost of such imprest stores stands charges to capital, the rules in paragraphs 1805 to 1858. apply only to the extent they are not inconsistent with the rules in paragraphs 1859 to 1877.

CHAPTER XVI
MISCELLANEOUS EXPENDITURE
1601. Check of Cash Imprest Account - Cash Imprest Account. - An imprest is a standing advance of a fixed sum of money placed at the disposal of an official to meet petty office expenses and emergent charges of small amounts which cannot be foreseen. An emergent petty advance may also be made on the responsibility of the Imprest holder, out of the imprest money placed at his disposal. The amount of imprest must not be larger that is absolutely necessary. It should be reckoned at the lowest possible figure calculated to suffice for meeting charges of the nature referred to above. In all cases including those for works and surveys, an imprest required must by specifically sanctioned as such by the General Manager or by the Heads of Departments or by any other authority to whom the powers in this regard may be delegated by the competent authority. Imprest holders are not authorised to increase or decrease the amount of their imprest without the sanction of the competent authority and this should be seen when checking the imprest account submitted to the Accounts Office.
1602. The Imprest Account should be kept in duplicate and the original supported by necessary vouchers should be forwarded to the Accounts Officer before the end of each month or oftener if necessary, for check and recoupment. The accounts should ordinarily be closed by the end of the month and recouped before the end of the month so as to ensure, as many as possible of the month's transactions being included in the accounts. If there is surplus money at the end of each month, as noticed from time to time or if there is delay of several months in sending the account for recoupment it is evident that the amount of imprest held is in excess of the monthly requirements and the matter should be brought to the notice of the authority who sanctioned the imprest with a view to reducing the amount of the imprest.
1603. Before recoupment is made, the Imprest Account should be scrutinised to see:
(i) that it is arithmetically correct:
(ii) That the balance brought forward is correct, i.e. the opening balance should be
checked with the closing balance of the previous account;
(iii) that all recoupments have been properly taken into account;
(iv) that payment made are of a nature which could be passed through imprest i.e. they
are not irregular or unauthorised ;
(v) that the charges which normally require pre-check by Accounts are not included
in the Imprest Account;
(vi) that all receipts are in proper form and signed by the persons in whose favour the
bill is drawn or by his agents and if the amount of the bill is over Rs. 20/- revenue
stamp is affixed.
(vii) that the sum acknowledged is written in words as well as in figures;
(viii) that the rates are not extravagant ;
(ix) that in case of special charges which require sanction of higher authority or are
regulated by a scale the requisite sanction has been obtained and the scale fixed is
not exceeded.
(x) The amounts shown as remitted have been received by the Chief Cashier and
accounted for in the books, Verification of the remittances should be obtained
from Traffic Accounts Branch ;
(xi) The certificate of actual amount of balance in hand is recorded under the signature
of Executive Officers in-charge ;
(xii) Miscellaneous receipts are remitted to the stations or the cashier and not used by
imprest holders for payment of bills;
(xiii) Proper acknowledgments in respect of moneys advanced are being obtained;
(xiv) In case of purchase of stock items a certificate is furnished that the stock items
purchased were not made available by the Stores Department.
The closing balance and the amount recouped during the month should be noted in a
manuscript register wherein the amount of imprest held by each officer should also be
recorded as soon as it is sanctioned.