Budgetary And Expenditure Control Financial/ Management Reporting


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CHAPTER-V

BUDGETARY AND EXPENDITURE CONTROL FINANCIAL /MANAGEMENT REPORTING

Budget, an instrument of Parliamentary financial control and expenditure control Gross Earnings Revenue and works Expenditure Revenue Expenditure Proportionate Budget Allotment Monthly Statement of Approximate Receipts and Expenditure Revenue Allocation Registers Monthly Financial Reviews Reappropriations Expenditure on Acquisition, Construction and Replacement of Railway Assets Watch over Progress of Expenditure Review of expenditure Review of expenditure Review of expenditure Review of Works Expenditure Control of Expenditure against the Capital Suspense Grants Monthly Review of Suspense Grant Financial Adviser and Chief Accounts Officer's Review of monthly Receipts and Expenditure Exchequer Control
Importance and limitations of Exchequer Control

501
502 - 503 504 -, 505 506 - 507 508 - 510 511 512 513 - 516 517 - 518 519
520 - 523 524 - 526 525 526 527 - 533 534 - 535 536 - 538 539
540 541 - 544

Implementation of Exchequer Control
Assessment of Cash Outgo-General Guidelines Staff Fuel Works and Stores Civil Grants Railway Board Contracts Assessment of Quarterly Cash Outgo Control of cash disbursements Monthly Quarterly Report to Railway Board Calendar of returns Watch over Expenditure and Earnings of the Last quarter of the year

545
546 547 548 549-550 551 552 - 553 554 555 556 557 - 558 559

Annual Review of Expenditure

560

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Annual Reports of Railways, Object and Scope
Responsibility for preparation Section –I Report Proper Section II-Financial Statements Section III -Analysis of Working Section IV-Appendices
ANNEXURE Powers of Chairman Railway Rates Tribunal Powers of General Managers, of Indian Railways Assessment of cash requirement Cash Budget for the year Cash Outgo Quarterly Variation Statement
*****

561 - 562
563 564 565 566 567
Annexure-I Annexure –II Annexure –III Annexure-IV Annexure-V

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CHAPTER- V
BUDGETARY & EXPENDITURE CONTROL FINANCIAL /MANAGEMENT REPORTING
501 As stated in para. 304, the annual Railway Budget is an instrument of both Parliamentary financial control and expenditure control. The manner in which budgetary and expenditure control is exercised is stated in the following paragraphs.
502 Gross Earnings - It is important that a continuous and concurrent watch is kept on the realisation of earnings as envisaged in the Budget. This is done through the medium of a tenday statement of earnings on "originating" basis, the statement for the last period of the month giving also the position for the month and the cumulative position from Ist April to end of the month. These statements should give also the proportionate budgetted earning on originating basis and the actuals for and to end of the relevant period of the preceding year for comparison. The originating basis is adopted to secure prompt reporting since the Railway wise apportioned earnings for each month do not become available until a few weeks later.
503 A monthly statement of 'approximate' gross earnings on the basis of estimated apportionment between various Zonal Railways is also sent by the Railways to the Railway Board by the middle of the following month in Form 344-Al. This statement should be compared with the proportionate budget for and to end of the month to see the extent of variations, if any , between the budget and actuals, ascertain the causes thereof and take such steps as are necessary.
504 Revenue and Works Expenditure.-As all Railways expenditure, other than that “charged” on the Consolidated Fund of India, is voted in the form of the Demands for Grants (para 305), the budgetary control is intended to ensure that expenditure is incurred for the purposes and within the limits, as voted by Parliament. The authorities responsible for the control of expenditure against each Grant are detailed in Annexure I to Chapter III. While it is the duty of the Railway Board, as the controlling authority in respect of the total amount of each Grant voted by the Parliament and Appropriation sanctioned by the President, to watch the progress of expenditure and to keep the aggregate charges within the amount of the Grant or Appropriation placed at their disposal, it is the responsibility of the individual railway administrations to exercise a similar control over the allotments placed at their disposal. When several officers are authorized to incur expenditure relating to a sub-head, against a lump sum allotment placed at the disposal of a single higher authority, it devolves upon this authority, to watch the progress of expenditure in all the concerned offices and to keep the aggregate charges within the allotment fixed under that sub-head.
505. Power to incur expenditure on Railway matters have been delegated by the Ministry of Railways ( Railway Board ) to authorities subordinate to them (vide Annexure I & II @) The exercise of authority for incurrence of expenditure carries with it also the responsibility for control of expenditure within the authorized limits. Further, these powers are subject* to provisions contained in the various Codes, rules and regulations and also observance of the standards of financial propriety (Para 116).
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@Corresponding to appendices V to VII of G - II (Appendix V since deleted) *Preamble to the delegation of powers to general Managers - Annexure II.
506 Revenue Expenditure-The revised and budget estimates. of ordinary working expenses submitted by the General Manager to the Railway Board are based on detailedestimates of revenue expenditure obtained by him from the various heads of departments of the railway. On receipt of the allotment from the Railway Board, these detailed estimates may require modification consistent with the allotment sanctioned by the Railway Board or as may be deemed necessary by the General Manager.
507 Within the amounts of the allotments fixed by General Manager under paragraphs 365 and 506 for the various spending authorities in charge of divisions and departments, such authorities have full power to sanction expenditure on revenue account during the year, subject to the condition that the specific sanction of the competent authority must be obtained separately to all items of expenditure on establishment and experimental or special temporary works where under rules or orders such sanction is necessary; in a case in which the General Manager has prescribed that detailed estimates should be prepared and administrative approval and technical sanction obtained before the incurrence of expenditure, the procedure laid down by the General Manager must be followed.
508 Proportionate Budget allotment:- For the purpose of carrying out a meaningful comparison of the actual working expenses for (and to end of) the month with the budget allotment, it is necessary to distribute the sanctioned allotment for the year over the twelve months after taking all known factors of disturbance or special features into account. While the responsibility for the control of expenditure against the budget allotment devolves upon the authority at whose disposal the allotment has been placed, It is the duty of the Accounts Officer, in his capacity as the financial adviser to the Administration, to render all possible assistance to the controlling authorities in the exercise of such control. Accordingly, he works out, at the beginning of each financial year, in consultation with the officers responsible for the control of expenditure, the estimated progressive expenditure under each sub head of a grant keeping in view the following factors:
(i) Throw forward from the previous year. (ii) All expenditure whether in cash or by transfer, the liability for which already exists, but which is not likely to be distributed evenly during the year, whether because it is of a periodical nature, or because it is contingent on the receipt of supplies, or for any other reason. (iii) Expenditure which is practically fixed and evenly distributed throughout the year. (iv) Other expenditure which is likely to be incurred during the year but liabilities for which have yet to be incurred. (v) The need to keep some amount as a reserve for meeting fresh or unanticipated expenditure.
509 In respect of sub-heads for which such detailed analysis is not practicable or necessary, may be, inter alia, because the expenditure does not fluctuate from month to month, e.g. establishment charges, past actuals as worked out for a number of years may form the basis for this estimate.
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510 From the details thus worked out, the "Proportionate Budget Allotment" for each month is worked out for each sub-head of the Grant, and the progress of expenditure under each sub-head is then watched from month to month through Monthly Financial Reviews (see paras 511 & 513) in order to see that the expenditure is according to anticipations and not at a pace which is likely to lead to an excess at the end of the year.

511 Monthly Statement of Approximate Receipts and Expenditure -- A statement of approximate receipts and expenditure under such heads as may be prescribed should be sent to the Railway Board so as to reach them not later than the l5th of the month following that to which the figures relate except for the months of July, October and January in which case the statement may be sent not later than 20th of the following month to which the figures relate. The merit of this statement lies in supply of information promptly to the Railway Board for the purpose of watching the expenditure against the proportionate budget allotment. The monthly statements will, on receipt from the various railways, be consolidated in the Railway Board's office an one single statement for all the railways. A copy of the consolidated statement should also be furnished to the Ministry of Finance of the Government of India and the Accountant General, Central Revenues, in the first week of the second month following that to which it pertains.

512 Revenue Allocation Registers -- All revenue expenditure is to be recorded in Registers, which are known as Revenue Allocation Registers, by the various heads of accounts prescribed in the classification given in Appendix I (Volume II). The object of these registers is to keep the heads of divisions, and departments informed of the progress of expenditure against the allotments placed at their disposal by the General Manager, which should be entered in red ink in the appropriate columns provided for in these registers, so as to form a ready means of comparison and check with the outlay.

513 Monthly Financial Reviews --The monthly reviews show the expenditure to the end of the previous month, against the allotment placed at the disposal of the controlling authorities under each sub-head of the grant for which they are responsible. The review should be prepared in Form No. 513 and submitted to the controlling authorities every month, by such date as may be fixed in consultation with them.

subheads of grant and heads of account.

Budget allotme nt for 1974-
75

Proportionate budget
allotment to end of June, 1974

Actual expenditu re to end of June,
1974

Actual expenditu re to end of June,
1973

Form No. F. 513 Expenditure upto June-1974
more (+) or less (-) as compared as compared with column- with column-5 3

1

2

3

4

5

6

7

Note-the periods have been shown in the proforma for the purpose of Illustration only.
514 The "Proportionate Budget Allotment" to the end of the month (column 3) is worked out by the Accounts Officer in accordance with the Instructions contained in paragraph 508 above. The figures of actual expenditure for and to end of the month (column 4), and for the

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corresponding period of the last year (col.5) will be available from the Allocation Registers and the compiled accounts. The Accounts Officer should complete the other columns of the review provided above and submit it to the controlling authority, along With the comments of the executive officers responsible for the expenditure and with such remarks of his own as may be necessary.
515 In compiling this review, the Accounts Officer should see whether-
(a) the non-fluctuating expenditure is in accordance with the monthly appropriation as worked out on the basis of actuals in past years,
(b) the periodical expenditure is in accordance with the proportionate budget allotment,
(c) the correlation assumed between receipts and expenditure, in the preparation of the budget is maintained. For the purposes of this comparison, items pertaining tothe period, but remaining unadjusted for any reason, should not be lost sight of.
516 The Monthly Financial Reviews, should be prepared by the Divisional/Workshop / Construction Accounts officers concerned for each Division/Workshop/Construction Unit and the Financial Adviser and Chief Accounts Officer should arrange for the consolidation of these reviews into the Monthly Financial Review for the railway, the details of procedure and the due dates being prescribed in consultation with the railway administration.
517 Re-appropriations --No liability, for which a provision does not exist or the provision for which is inadequate in the allotment sanctioned by the General Manager, should be incurred unless the necessary funds can be obtained either by reappropriation or fresh allotment.
Such liabilities may, however, be liquidated provisionally, if otherwise in order, on the spending authority undertaking to find the requisite funds. All such expenditure should, however, be held by the Account Officer under objection "for want of appropriation " or as" excess over appropriation."
518 The Accounts Officer should advise the spending authorities about reappropriations wherever needed, and how they are to be made. He should ensure that reappropriations are carried out promptly and that whenever a saving under some head is reasonably certain, steps are taken at once to withdraw funds from the sub-head, and whenever it is clear that-the progress of expenditure under some head is such as to require an additional appropriation, steps are taken to arrange for it by reappropriation or otherwise.
EXPENDITURE ON ACQUISITION, CONSTRUCTION AND REPLACEMENT OF RAILWAY ASSETS
519 Separate allotments are placed at the disposal of railway administrations under each Grant for expenditure on works chargeable to Capital, Depreciation Reserve Fund, Development Fund, Accident Compensation, Safety and Passenger Amenities fund or Open Line Works Revenue. These allotments are made in lump sums and their distribution over the various sub-heads and over the works for which they are intended are spelt out in the 'Works, Machinery
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and Rolling Stock Programmes' which are furnished to the railways along with the Budget orders sanctioning the allotments. These “Programmes” also show, in the case of work costing over Rs 50,000 each, the total estimated cost of each work, and the Railway administrations are required to exercise a control over expenditure, not only against the allotment sanctioned for the year for each work, but also against its total estimated cost as shown in the 'programmes'. In regard to works costing not more than Rs. 50,000 each, a lump sum is allotted to each railway administration in the programmes; before any expenditure is incurred against the lump sum allotment, the estimates of such works should be sanctioned by the General Manager or any lower authority empowered by him in this behalf. Thus the control of expenditure on railway is exercised through--
(1) the-preparation, in advance, of estimates of the expenditure to be incurred; (2) the allotment of funds through budget Grants for the year, on the basis of these
estimates ; and (3) the continuous and concurrent review of the expenditure as incurred against the
details of the estimates and against the sanctioned grants, so that revisions of estimates or re-appropriation of funds are arranged for at the earliest possible point of time.
The procedure to be followed in controlling expenditure against estimates is detailed in Chapter XIV and XII of the Indian Railway Code for the Engineering and Mechanical Departments, respectively.
520 Watch over Progress of Expenditure --From the moment expenditure or liability is incurred on works, a check at regular and frequent intervals should be made on its progress, both against estimates and against funds. The check should originate in the lowest executive unit, viz., a division.
Note.-Estimates are prepared for New Minor Works costing over Rs. 5,000 each which are chargeable to "Open Line Works--Revenue". The provisions in paragraph 521 et seq apply equally to such works.
521 The Works Registers (Form No. E. 1474) maintained in each division enable a running comparison to be made between-
(a) the expenditure incurred on each work and the detailed provision made in the estimate for the work, and
(b) the budget allotment for the work and the actual expenditure to the end of the month.
The executive officer should examine the works registers monthly or at more frequent intervals, and watch the progress of expenditure on each work, so that any tendency towards excess over sanctioned estimates may be investigated and curbed, or fresh administrative and technical sanctions obtained in time to cover the anticipated excess.
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522 The Accounts Officer should also watch the progress of expenditure on works on the lines laid down in paragraphs 523 to 533 and advise the executive officers as to the need of re-appropriations, whenever such necessity arises (vide paragraph 518).

523 see whether-
(a)
(b) (c) (d)

In watching the progress of expenditure on works, the Accounts Officer should
the expenditure upto any date is not in excess of the estimate for the quantum of work done; the anticipated credits have actually been realized all adjustments are made in time and expenditure on any new work is not met by merely postponing or retarding the progress of sanctioned work.

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

525 The review of expenditure chargeable to Capital, Depreciation Reserve Fund, Development Fund, Accident Compensation, Safety & Passenger Amenities Fund and Open Line Works-Revenue, by sub-heads/Plan Heads of the Grant, should be prepared monthly by the Accounts Officer in Form No. F. 525.
Form No. F. 525 Review showing, Progress of Expenditure chargeable to Capital, Depreciation Reserve Fund, Development Fund, Accident Compensation, Safety and Passenger Amenities Fund and Open Line Works-Revenue to end of-------------------

Department ------------------

Office--------------------

Sub-Head/ Plan Head Grant No. 16

Budget Allotm ent for the year

Total Estimates Sanctione d during the Year

(Figures in thousands of rupees) Approximate Expenditure to end of June, 1979

Capital D.R.F D.F. O.L.W. ACS & Total

(R)

PA Fund

1

2

3

4

5

6

7

8

9

Percentage

of

Expenditure to allotment

(Col.9/ Col. 2 X 100)

10

Percentage of Expenditure to allotment of the corresponding period of last year
11

Reasons for variations between Cols. 10 & 11 and brief remarks as to rate of progress of expenditure
12

8

Date. ----------------------

Signature ---------------------------Designation -------------------------

The quarterly reviews for period ending June, September and December may be sent to the Board by 25th of the second following month to which the figures relate. The review for the period ending March, will be sent to the Board by 6th August, each year.

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

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

Form No. F.-526

Description of Amount of Expenditure to Balance

of Budget

the work and sanctioned

end of previous estimate.

allotment for

sub-head / plan estimate

year

the Year

head.

1

2

3

4

5

Expenditure during the current year.

Actuals to end Approximate Total

of previous for the month expenditure to

month

end of the month

6 (i)

6 (ii)

6 (iii)

Commitments neither paid for nor included in the approximates for the month
7

Total expenditure and commitments to end of the month [ Col. 6(iii) + 7 ]
8

Probable further outlay to complete.

Deduct estimated throw forward to next year.

Total expenditure and commitments to be paid for in the year (cols. 8+9-10)

Balance

of

allotment

available(5-11)

Remarks.

9

10

11

12

13

Date. ----------------------

Signature ---------------------------Designation -------------------------

527 The above review of expenditure on individual works chargeable to Capital or Capital and Depreciation Reserve Fund, or Development Fund, or Accident Compensation,

9

Safety and Passenger Amenities Fund, or Open Line Works-Revenue, information should be classified under each sub-head/Plan head of the grant, viz.-
11. New Lines (Construction). 12. Purchase of new lines. 13. Restoration of dismantled lines. 14. Gauge conversion. 15. Doubling. 16. Traffic facilities-Yard remodelling and others. 21. Rolling stock. 31. Track renewals. 32. Bridge work. 33. Signalling & Tele-communication works. 34. Taking over of line wires from P & T. 35. Electrification Projects. 36. Other electrical works. 41. Machinery & Plant. 42. Workshops-including Production Units. 51. Staff quarters. 52. Amenities for staff. 53. (i) Passenger Amenities.
(ii) Other Railway Users' amenities. 61. Investment in Government Commercial undertakings-Road services. 62. Investment in Government Commercial undertakings-Public undertakings. 64. Other specified works. 71. Stores suspense. 72. Manufacturing suspense. 73. Misc. Advances. 81. Metropolitan Transport Projects.
528 The review of expenditure on new lines (construction) should show the information in regard to each construction shown in the "Works, Machinery and Rolling Stock Programme" for the current year or for which, though not so shown, there is a 'throwforward'.
529 In the case of works, other than track renewals and rolling stock, the review should be made in respect of-
(i) each individual work estimated to cost over rupees one lakh shown in the Works, Machinery and Rolling Stock Programme for the current year, or for which though not so shown, there is a 'throwforward'.
(ii) all works costing not more than rupees one lakh each, whether in progress or new, not as individual works but as one item for the total of such works, including the ‘throwforwards'. If the General Manager so directs, the review should show in detail each item of work for which an estimate has been sanctioned.
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Budgetary And Expenditure Control Financial/ Management Reporting