Traffic Account

The principle of Railway account is that all -Revenue earnings and expenditures should be accounted in the month to which those relate. for the purpose of accountal of traffic earnings in the related month and watching  the progress of their realisation , a separate separate suspense head is maintained called traffic account.

this account serves the same purpose for earnings as demands payable does for -Revenue exp3nditure . this is debtor for all earnings whether local or foreign for the realisation of which the home Railway is responsible and is creditor for all recoveries of such earnings. the balances therefore represent unrealised earnings at station balance sheets and in the accounts office balance sheets maintained by the accounts office.

OPERATING RATIO

Operating Ratio: The operating ratio is broadly speaking, the ratio between working expenses and gross earnings and as such is an important figure in the estimation of the relative operating efficiency. This operating ratio depends on gross earning as well as on working expenses. The smaller the operationg ratio, the more the economical and efficient the working other things being equal. This ratio is not always a good criterion of the relative operating efficiency of different Railways where the conditions of working vay considerably, and this is particularly so in India where differences in climate, topography, commercial and agricultural activity show so little uniformity. Moreover, the present systems of working expenses/gross earnings do not provide for meticulous apportionment/adjustments between Railways, nor do they leave enough freedom of fixing rates of freight and fares.

In comparing the ratio of one year with another of the same Railways. Also , great care, must be taken to see that the terms"working expenses" and "gross earnings" are clearly defined and that the figures have been compiled on the same basis. The object of a railway Administration is to keep this ratio as low as possible consistent with efficient working and good maintenance; it will tend to fall with efficient working, increase of traffic and fall in expenditure. This will also fall or rise with variation in the rates charged to the public for movement of passenger and good. Allowances has also be made for the peculiar features affecting earnings/working expenses of a particular year such as occurrence of breaches, realignment of routes, gauge conversion etc.

Hence it can be said that the operating ratio is not a measure of the efficiency of the operating staff. The operating ratio is correctly comparable when other things are equal, or if due provision is made for variation in other factors.

However, in the present question, assuming that operating ratio of both the zones'A' & 'B' have been computed on the basis of same standards and same set of environment  and other factors being equal. It can be safely said that zone 'A' Railway is more efficient in comparison to Zon "B" Railway as thej operating ratio zone 'A' is 81.16% which is less than 96.58% of zone'B'.

PROFORMA ADJUSTMENT

                   

PROFORMA ADJUSTMENT:    Adjustment with non-Railway account officers on proforma basis.

All adjustments involving amounts of magnitude which cannot be made through Reserve Bank by 25th April should be intimated to the Railway Board by 1st May positively stating the circumstances under which the adjustment cold not be made. The transactions should not, however, be included, in the Accounts till an intimation to that effect has been received from the Board who act after approval of the Controller General of Accounts., Ministry of Finance.

The statements of transactions proposed to be adjusted on proforma basis received in Railway Board's office are consolidated and one consolidated  list indicating the amount in respect of each item indicating nature thereof and the Accounts Officer?(Non-Railway) with whom the same is adjustable, debit or credit as the case may be is sent to the Controller General of Accounts, Ministry of Finance. Simultaneously, copies of these statements are sent to  the Accounts Officer in whose books the transactions are adjustable. On approval of the proposal for proforma adjustments, CGA advises those Accounts Officers to accept the adjustments. The Railway accounts officers are advised by Railway Board to send all vouchers direct to the other Accounts Offices and obtain their acceptance. Thereafter, they send transfer certificates debiting/crediting Railway Board and carry out adjustments under final/service head in their account.

This is done to ensure adjustments of transactions pertaining to an year in that year's account. This is a necessity specially in cases where it is not possible to settle transactions through Reserve Bank such as interest on PF balances payment of dividend to General Revenue etc.

Write Back adjustment - Indian Railways

Write Back adjustment - Indian Railways

WRITE BACK ADJUSTMENTS IN INDIAN RAILWAYS

• What is Write back in Indian Railways lingo? 

• In Indian Railways lingo, Write Back means, at the time of condemnation of asset like rolling stock, the original cost of that asset will be write back from the source of finance for which originally used (normally “Capital” ) and debited to the Source of finance i.e., DRF – Depreciation Reserve Fund.

• For example, if the asset Diesel locomotive which is purchased at a cost of 35 Lakhs in the year 1965 and was put to condemnation in the year 2014, after expiry of its useful life period.  The Competent Authority gave its approval for such condemnation. 

• In the books of Zonal Railway, the write back entries (Journal entries )are posted by using CONTRA JVs.

    In the Capital Books  - CJV

    CAP -20-2113 -08(Rolling Stock)                             ( - ) Debit  - Rs. 35 Lakhs

       Transfer Railway Revenue           (00878243)              Debit  -  Rs. 35 Lakhs

    In the Revenue Books  - RJV

     DRF – 2113- 08  (Rolling Stock)             Debit   - Rs. 35 Lakhs

     Transfer Railway Capital (008782 44)       Credit   -  Rs. 35 Lakhs

·         There by, the Capital Account is reduced to that extent (because the asset is no longer in use and condemned) and the dividend liability also reduced correspondingly.

·         The DRF - Depreciation Reserve Fund Account is debited to that extent .  The logic is,  throughout the life period of employing the said Diesel Loco in Indian Railways, "Depreciation" on yearly basis is credited to the DRF (fund). 

·         Hence the amount Rs. 35 Lakhs was write back from Capital (by minus Debit/Credit) and added to DRF (by Debit).

·         Also the proceeds realized from the condemnation of Diesel Locomotive credited to DRF  by debit to Railways Fund in RBI/Nagpur (through RIB - Remittances Into Bank A/c)

·          The operation of Depreciation Account and policy of Depreciation in Indian Railways is entirely different from commercial organizations.  Instead of providing Depreciation on individual basis, the Railways is appropriation to DRF on entire block of assets employed in Indian Railways.  In this, there is no scientific policy in providing contributions to DRF and at large depend on available amounts at the Railways.

REVISED ESTIMATE

                          Revised Estimate: A revised estimate is prepared and submitted for the sanction of Competent Authority, as soon as it becomes apparent that the expenditure on a work or project is likely to exceed the amount provided therefor in the detailed estimate and in the case of construction of a new-line,  construction estimate. It should, unless otherwise ordered by the sanctioning authority, be prepared in the same form and the same degrees of detail as the original estimate, and should be accompanied by a comparative statement showing the excess or saving under each sub-head of account against the latest sanction. In cases where a supplementary estimate or a previous revised estimate has been sanctioned by the Railway Board, it should be made clear how the original sanction has been modified by such further sanction.

                         In cases, however, where the work is in an advanced stage and is likely to be completed before revised estimate can be got out, the excess may with the prior approval of the Competent Authority, be dealt with in the completion report of the work. The fact that a Competent Authority has permitted the regularization of excess over an estimate through completion report should invariably be intimated to the Accounts Officer.

                       Hence it is not possible to put every work under completion report as Engineering Code allow only in very exceptional cases where there is no time for preparation and submission of revised estimate.

                      However so far as Completion Estimate has concerned it is only prepared in respect with line construction, and open line works each estimated cost upto Rs.one crore and above vide para 17.1-E. It is prepared in supersession of a construction estimate or project abstract estimate as the case may be. Hence for the works where preparation of Revised Estimate is necessary it can not be replaced through Completion Estimate.

                Revised Estimate is prepared only when Estimated Cost deviated with actual cost as stated below:

(i) For Less Expenditure-- If the expenditure  is going to be held less than 20% of the Estimated cost.

(ii) For Excess Expenditure-- If the Expenditure is going to be held more than 10% of the estimated cost.

                  In  both the cases, revised estimate is prepared as stated earlier and submitted to Competent Authority, who have verified original detailed estimate than for obtaining approval.

CAPITAL-AT-CHARGE

                            Capital-at-Charge: The Capital-at-chage of Railways mainly comprising Tracks and Bridges, Rolling Stock, Buildings and Structures including Land and Machinery and Plant invested in the Railways by the Central Government. This is exclusive of the capital invested in Metropolitan Transport Projects and Circular Railways and amount transferred to SRSF and capital invested on Udhampur-Srinagar-Baramulla line. The Capital-at-charge of the Railways, otherwise known as the Loan Account made up is represented by the fixed and w.e.f. 01.04.1950 two separate accounts are maintained to represent the value of all the physical assets of the Railway undertaking a Loan Account and Block Account. The Loan Account represents the loan(Share) capital and the physical assets created therefrom. The Block account represents all physical assets  of the undertaking whether financed from loan capital of the Railways own  generation or funds

ANNEXURE -K

                          ANNEXURE-K: Annexure K is a statetment  or Defects in budgeting statement showing defects in budgeting should be prepared in two parts, one showing defects in estimating noticed during the year and other showing expenditure classified in the budget differently from the accounts. The grant affected and amount involved should clearly be shown. Annexure K is an Annexure to be prepared and sent alongwith Appropriation Accounts.

FOCAL POINT SYSTEM

              FOCAL POINT SYSTEM: According to the  revised procedure of reporting and reconciliation of Railway's Bank Reconciliation  i.e. under the Focal Point System, all paid cheques are sent  to F.A.& CAO on daily schedule by the "Focal Point Branch" of each Bank duly entered in the daily main scroll including  the daily scrolls rendered by the various dealing branches in duplicated. These scrolls are verified in detailed inter alia with paid cheques . This Verification will ensure that prima facie the paid cheques do not bear an indication of having been tampered in respect of the name of the payee or the amount recorded in the figures and words.

              After verification of daily scroll with paid cheques, one verified duplicate copy is returned to the "Focal Point Branch" and the paid cheques are retained for reconciliation with data of cheques issued for clearance of cheques and bills suspense.