Spending limits or Working Budget Grant

 Spending limits or Working Budget Grant

• Limiting the Revenue Grant to certain extent, say 90% or 95% by keeping some amount as Reserve to meet the unforeseen expenditure that may arise during execution of budget, is achieved by fixing SL/WBG.

 

• Example: Budget Grant - Rs.100,  Reserve - Rs. 10 and SL/WBG is Rs. 90

.

• Usually this exercise is undertaken  by the Railway Board or General Managers, after distribution of Budget Grant (BG). While distributing BG to the units, it will be made clear that this shall be used only for the purpose of budget reviews and not for spending. 

• After identifying the possible savings in SMH (erstwhile Demand)  and PU to the extent indicated by the Board, the same will immediately be communicated as Spending Limit (SL) /Working Budget Grant (WBG) to the units within which expenditure shall be incurred. 

. 

• The Objective of keeping such a Reserve is to meet emergency needs and ensure austerity measures in the Railways. 

• Amounts kept in Reserve may be released or distributed to the Spending authorities as part of RG or FG, based on their projections.

• If there is no demand for such a Reserve amount, the same may be surrendered during the Budgetary Reviews.

• Proportionate Budget Allotments (PBAs)  are worked out on both BG and SL/WBG. 

However, Monthly Financial Reviews will be carried out wrt SL/WBG.

• There are no fixed guidelines/instructions to determine the amount to be kept as reserve. Also it is not mandatory for keeping the reserve always.  It is at the discretion of the Railway Board or General Managers at Zonal Level. 

******

Post Audit of Paid Vouchers & Acquittance Certificate

  Post Audit of Paid Vouchers & Acquittance Certificate

(Most Important question - Asked many times - 1985, 1987, 1988 & 1991)

• Source: Chapter 8 & 19 of Accounts code Volume One

  

• Acquit meaning: To release or discharge (a person) from an obligation.

 

• So in the Railway’s parlance, Acquittance Certificate is to discharge a Cashier from his/her responsibility or obligation. 

 

• All paid and unpaid bills should be carefully examined by the Chief Cashier. (usually retention period of Bills is one month)

• They should then be posted under the column “particulars of return” in the Chief Cashier’s Cash Book , and forwarded to the Accounts Office with the cash book.

Check of Paid Vouchers.

1. That the acknowledgements of payments are in English or in Hindi, and if in any other language have been rendered into English or Hindi;

2. That the names of payees mentioned in the bills tally with the signatures obtained in acknowledgement of the amount paid;

3. That the payment has been witnessed, where so required, by the official named in the bill and that the acknowledgement is unqualified and that, prime facie, the voucher is a full acquittance of the amount due so that a second claim against the Railway on the same account is impossible;

4. That where a person other than payee himself has received the amount, the payment has been made under proper authority;

5. That vouchers are stamped, where necessary;

6. That each voucher has been cancelled efficiently and prominently. 

7. Receipt stamps affixed to paid vouchers should be punched or defaced with "Paid" stamp. 

• The Chief Cashier’s Cash Book should be submitted to the Accounts Office for check at least once in a month.

• The Chief Cashier’s Cash Book and the bills (paid and unpaid) should, on receipt in the Accounts Office, be examined to see that:

• All the cheques issued in favour of the Chief Cashier for the disbursement of bills and in favour of other parties included in the Abstracts of bills (A. 1107)) passed during the month have been correctly taken to account in the Chief Cashier’s Cash Book;

• the receipts of the payees are forthcoming in all cases where payments have been made;

•  (iii) the necessary Unpaid Wages Lists and Treasury/Bank receipts have been received for the amounts returned as unpaid; and

•  (iv) there are no bills outstanding with the Chief Cashier beyond the period permitted under paragraph 1988.

Accounts Officer’s Acquittance on Chief Cashier’s Cash Book

• After check in the manner indicated above, an acquittance certificate should be recorded on the Chief Cashier’s cash book in the following form (suitable modification being made, when necessary) and the cash book returned to the Chief Cashier for record.

• Accounts Officer Acquittance certificate on Chief Cashier’s Cash Book. 

• “This is to certify that all bills for Rs …………………………….relating to the month of ……………………………………have been received back from the Chief Cashier and there is no outstanding regarding objectionable vouchers, Payee’s receipt, acknowledgements, etc. Hence the Chief Cashier’s Cash Book is passed finally .

 

• The amount of Rs. …………………………….returned as unpaid has been deposited into the Bank/Treasury as detailed below :-

•  Bank/Treasury receipt No.___  - Date _______- Amount Rs. _______

Accounts Officer

Miscellaneous Receipts on Capital side

 Miscellaneous Receipts on Capital side 

(as per Finance Code Volume II)

Detailed Head Allocations:

• 1198 under Plan Head 1100 - New Lines

• 1798 Under Plan Head 1700 - Computerization

• 3368 under Plan Head 3300 - S&T Works

• 6568 under Plan Head 6500 - Training/HRD

Consists of: 

1. Earnings from an unopened line or a line partially opened for traffic and not made over to the open line administration.

2. Sale proceeds of Tenders on the construction organisations, whether attached to Open Lines or not.

3. Forfeited EMD

4. Forfeited SD

5. Penalties recovered from Contractors.

***

Proportionate Budget allotment / Budetary Proportion limits ( BP limits)

Proportionate Budget allotment

or

BP limits ( Budgetary Proportion limits)

 

(Very Important Question)

 

Ref: Para Nos. 508 to 511 of Indian Rlys.Financial Code vol.I

 

Purpose:

 

Carrying out a meaningful comparison of the actual workings expenses (for the month as well as to end of month) with the Budget Allotment.

 

BP limits are a tool of Control over Expenditure.

 

To whom, the responsibility lies:

 

●    The executives, to whom the allotment/grant has been placed. Also they are responsible for the control of expenditure against the budget allotment.

●    But the Accounts officer, in his capacity as the financial adviser to the administration, to render all possible assistance to the controlling/spending authorities in exercise of Proportionate Budget allotment/fixing Budget Proportion (BP) limits.

 

How it done:

 

●    Distribute the sanctioned allotment for the whole year into 12 months after taking all known factors of disturbance or special features into account.

●    The following factors keep in mind before resort to distribution of Grant/Allotment over the full years.

 

(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 (say PLB), 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.

 

 

Examples:

 

i) Pay - Usually the allotment/grant under PU: 01 ( Pay) distributed over the 12 months almost uniformly (from July to March - a little bit more than April to June months because grant of annual increment in July month).  Also the No. of retirements and recruitments also bear in mind before distributing such allotment.

 

ii) PLB -  Entire grant is distributed in September month ( for Dussehra festival).  It is better to leave some grant in the rest of months after September for arranging late payments of PLB)

iii) Contractual payments : Depend on the execution of actual works

Certain heads say Establishment expenses such as Salaries:

Past actuals as worked out for a number of years may form the basis for fixing BP limits for current year. Because such expenditure does not fluctuate from month to month.

 

How purpose is fulfilled:

 

As above, the BP limits for each month worked out for each Sub Head of Grant and the progress of expenditure under each sub-head is then watched from month to month through MFRs - Monthly Financial Reviews and other Budgetary Reviews (RE/BE & FME) in order to see that the expenditure is according to the BP limits and not at a pace which is likely to lead an excess at the end of year.

 

  &&&&

 

IRFA - Indian Railway Financial Adjustments

IRFA - Indian Railway Financial Adjustments

 

Short notes question in 2016 Books & Budget (with books)

 

●     Para 869 of Indian Railway Finance Code Volume one. 

 

●     Relates to the Receipt / Charges on account of Adjustments carried amongst Zonal Railways on account of A) Repairs  B) Maintenance & C) Depreciation in respect of Rolling Stock (Locos & Coaches only) of One Zonal Railway used in other Zonal Railways.

 

●     In respect of transactions/adjustments of Wagons, IRCA - Indian Railways Conference Association will take care of it.

 

●     Such mechanism i.e., IRFA, is necessitated to perform Zonal Railway as a "Profit Centre" to calculate the "Operating Ratio" in its truest sense to assess their (Zonal Railway) performance.

 

●      Chargeable to SMH - Sub Major Head No. 7 (erstwhile Demand No.09)  -09-750-33

 

●     Zonal Railways are responsible for raising charges on other Zonal Railways.

 

●     Basis for calculation - Locos :

 

                         i.            Unit cost based on the total engine hour on outage basis (i.e. from the time it leaves from the shed & till it returns to the shed) earned by the engines on the using Railway.  

                            ii.            It should  be ensured that the constituent elements of the debit viz., repairs and maintenance, and depreciation charges are shown under relevant heads.

 

●     Basis for calculation - Coaches:

 

                                                          i.            The credit/debit adjustments should be worked out on the basis of kilometers earned through rakes/passenger coaches running on more than one railway system. Vehicle kilometers  in respect of through coaches should be worked out on the basis of the working time table periods and the rake links.

 

                                                         ii.            Ensured  that the three distinct constituent elements, viz., Repairs, maintenance and Depreciation charges shown separately. Unit cost should be worked out by the Zonal Railways separately for each of these constituent elements per vehicle kilometre and the individual rates should be applied.

                    ****