Railway Accounts Department Examinations

Monday, April 13, 2020

Material Management - 2018-19

Material Management  - 2018-19

Source:  Year Book 2018-19

 

·         Total purchases - Rs. 62,134 Crores

 

Procured by

%

Zonal Rlys & PUs

63

Railway Board

36

Others

1

 

·         Total Number of Depots - 262

 

·         Total Number of items stocked - 1.3 Lakh

 

·         Scrap Sales - Rs. 4192 Crores

 

·         E-Procurement started in the year 2010-11

 

·         Single Web portal IREPS - Indian Railways Electronic Procurement System -   for Goods, Services, Works, Earning, Leasing & Sale of Scrap

 

·         IREPS - आपूर्ति - (Apoorthi) Android app  - enables access to useful information at one go.

 

·         System of Lot Publishing, instead of traditional catalogue publishing, has been rolled out for re-Auction in January, 2019.  This has made paradigm shift in the method of disseminating information pertaining to the available scrap for sale to prospective bidders in a transparent manner.

·         Common use Goods and Services available on GeM are reserved for procurement through GeM portal ( Government E Marketplace

Turn Over Ratio - TOR

 

·           Meaning: Ratio of Stores Balances at the end of financial year to Total issues during the year.

 

·         Formulae = Stores Balances as on 31st March/Total Issues during the year x 100

 

·         Stores Balances = Stores in stock + Stores in Transit + Purchase Suspense + Sales Suspense + Stores Adjustment Account

 

·         Calculated separately with fuel and without fuel

 

·         Expressed in Percentages

TOR

2014-15

2017-18

2018-19

Without Fuel

15

10

9

With Fuel

-

8

6

 

****


Saturday, April 11, 2020

Helicopter money






Helicopter money

«  It is a buzzing word during the Corona Crisis.

«  Meaning:  central banks (like RBI - Reserve Bank of India) printing money and making payments directly to the individuals or the private players.

«   First coined by Milton Friedman in 1969, when he wrote a story/parable of dropping money from a helicopter.

«  When:  When Interest rates near Zero and the Economy in rercession (i.e., in liquidity trap). Also to prevent deflation.

«  It is an alternative to the Quantitative easing (QE).  QE is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy.

****

Heritage Rolling Stock


Heritage Rolling Stock

·         Source: Indian Railways Rolling Stock Code Chapter 7 Para No.734

·         The following are the Heritage Rolling stock

1.       All types of Steam locomotives
2.       All Narrow Gauge coaches
3.        Wooden body/Saloons/special coaches of All Gauges.
4.       Oldest of a particular kind/class/special purpose Rolling stock
5.       Rolling stock of over 100 years old.
6.       Rolling stock identified/selected to be of special significance

Sale of Heritage Rolling Stock

·         By Heritage Directorate of Railway Board only
·         Offered for sale to other Govt/Quasi Govt, Private institutions/individuals in the country as well as abroad, if it is not required by the Railways.
·          Sale to educational institutions/museums/Govt bodies/Trusts – 50% of the scrap value without adding overhead charges, profit and antique value.   – applicable for sale within the Country.
·         Waival in sale price  - in specific cases by the Competent Authority in consultation with associate finance.
·          Sale to private rail-road companies /Institutions/Trusts/Individuals shall be made at full scrap value without adding overhead charges, profit and antique value.
·         Special relaxation or discount shall be offered in deserving cases by the competent authority in consultation with Associate Finance.
·         In all cases, the cost of transportation/restoration shall be borne by the purchaser in full.
·         All cases of sale to parties abroad shall be referred to Railway Board for a decision.
()()()()()

Friday, April 10, 2020

Estimates and Verification of Estimates - Engineering Code

Estimates

Most important question

 


Click for article in PDF

·         7th Chapter of Engineering Code  - 7 Kinds of Estimates

 

·                  Estimate meaning: To form an approximate judgment regarding cost of the work or Calculate the approximate cost of the work.

 

·                  Estimates required for :

 

v  Construction or Purchase of new works or Assets

v  Renewals & replacements of existing works or assets

v  Scrapping or dismantling or abandonment of existing works or assets

v  Reconditioning of existing works or assets

v  Repair works

v  Temporary & experimental works

v  Renewals & replacement of worked lines

v  Renewals of Ballast

 

·         Estimates not required for

 

Recondition works

Renewal works (Revenue)

Repair works (Revenue)

Up to Rs. 1 Lakh

Up to Rs. 2 Lakhs

Up to Rs. 5 Lakhs

 

·         Currency of the Sanction:   5 years    ( 2 years, if work is not commenced)

 

·     Names of Estimates - easy to remember - A D S R P C C

 

SN

Estimate

1

Abstract Estimate

2

Detailed Estimate

3

Supplementary Estimate

4

Revised Estimate

5

Project Abstract Estimate

6

Construction Estimate

7

Completion Estimate

 

 

Open Line Works

Construction Projects

Remarks

1. Abstract Estimate

5. Project Abstract Estimate

For obtaining Administrative approval

2. Detailed Estimate

6. Construction Estimate

For obtaining Technical Sanction

3. Supplementary Estimate

Prepared both for Open Line Works & Construction Projects

4. Revised Estimate

Prepared both for Open Line Works & Construction Projects

Nil

7. Completion Estimate

Stock taking Estimate for Construction Projects

 

 

1.       Abstract Estimate:    (for Open Line Works)

 

·         Prepared to obtain Administrative approval of the Competent Authority.

·         To form a reasonable accurate idea of the probable expenditure and such other data

·         Consists of A. Brief Report,   B. Justification,  C. Specifications  & D. Funds required in Current year or not.

·         Source of Finance is to be identified i.e., Capital, DRF, DF etc for different items.

·         Inclusion of item in Works Programme/M&P Programme/RSP with Budget provision - Deemed to be the administrative approval of the Abstract Estimate.

 

 

2.       Detailed Estimate: (for Open Line Works)

 

·         Prepared to obtain Technical Sanction of the Competent Authority

·         Prepared in sufficient detail

·         Ensure that the cost should not exceed the Abstract Estimate.

·         Work should commenced after the technical sanction of the Detailed Estimate and provision in the Budget

 

The sanction of the Competent Authority to the Detailed Estimate of a work is called the

 " Technical Sanction"

 

Detailed Estimate of Open Line Works consists of

Statement of

Details of Estimated cost

Outer sheet consists of Abstract cost of work, Report, financial Justification & Allocation

 

·         If Administrative approval and Technical sanction - both within powers of GM - Sanction for the both can be accorded at the stage of Detailed Estimate, skipping the Abstract Estimate.

 

 

3.       Supplementary Estimates: (for both Open Line works and Construction Project)

 

·         Two occasions:

 

A. An item of work which ought to have been included in the estimate already sanctioned, but has not been included.

 

B. An item of work, which it is found later, should be considered as being a part of an estimate already prepared and sanctioned.

 

·         Prepared in the same form and same degree as the Main estimate

 

·         All purposes, supplementary estimate be treated as a part of Main Estimate.

 

 

4.       Revised Estimate: (for both Open Line works and Construction Project)

 

·         If the expenditure on a work likely to exceed the sanctioned one.

 

·         Prepared and submitted for sanction of the Competent Authority

 

·         Prepared in the same degree, same form like Original Estimate.

 

·         Comparative statement showing excesses/savings under each sub head.

 

 

5.       Project Abstract Estimate  (for Construction works)

 

·         Prepared to obtain the approval of Railway Board. 

 

·         Prepared from an Engineering Survey Report

 

·         Accompanied by A. Narrative report explaining the salient features and major items of expenditure B. Detailed estimates prescribed under various heads.

 

 

6.       Construction Estimate: (for Construction works)

 

Detailed estimates of all works in the Project are collectively known as " Construction Estimate"

 

·         Prepared from the Final Location survey report.

 

·         Divided into convenient sections like engine runs, branch lines, junction arrangements, sections based on topography, divisions etc.

 

·         In special cases work may commence by preparing the Part estimates for sub - works, before preparation of Construction estimate for whole Project . But the same (sub works) should not be redundant at the time of Project Construction estimate is prepared.  Examples are A. Preliminary works B. Final Location survey C. Project office D. Land acquisition etc

 

7.       Completion Estimate: (for Construction works)

 

·         Prepared in supersession of a Construction Estimate

 

Also called as Stock taking estimate

 

 

·         Shows in tabular form as shown below.

 

Amt of Sanctioned estimate

Actual expenditure as on date

Commitments as on that date

Anticipated further outlay

Total estimated cost

Differences between sanctioned cost and the estimated cost

1

2

3

4

5

(2+3+4)

6

(6-1)

 

·          Prepared with brief explanations  - Excesses - Rs. 10,000 or 10% which ever is less and Savings - Rs. 1 Lakh or 20% which ever is less

 

·          Prepared  - At the end of one of the first three financial half years after the date of "opening"  

 

 

 

Verification of Estimates

 

·         Important phase of the Control of Expenditure

 

·         Regular check by the Accounts Officer on all estimate before they are sanctioned by the Competent Authority.

 

·         Object: To avoid irregular expenditure

 

Main Points - Easy to remember -  P I B E C

 

Propriety of Expenditure

Ensure expenditure charged to Railways is legitimate & proper. Ensured canons of financial propriety as enunciated in Para 116F. Proper financial justification.

Incidence & classification of charges

Incidence = Source of Funds,  Classification = Allocation as per Finance Code volume II. Ensure both as per rules in force.  while certifying the Estimate, Accounts officer should clearly state that both have been verified.

However, the estimate should not be delayed if any doubt in allocation. In such cases estimate should certify provisionally.

Budget provision in current year

Verified from the sanctioned budget allotment for the year

Errors & omissions - Freedom from

Executive is responsible for correctness of errors and omissions noted in the course of accounts verification. If not done, a check note appended to the verification certificate  duly pointing out the errors and omissions.  

Competency of Sanction

As per MSOP - checked and certified about the Competent authority empowered to sanction the estimate.

 

Subsidiary points   - Easy  to remember  - P I C A D O R (means Bullfighter)

 

Proper distribution between Cash & Stores

Proper distribution is made of the estimated outlay between Cash & Stores

Incidental expenditure

Incidental expenditure that can be foreseen has been provided in the estimate

CRRM - Credit for Railway Released Material

Provided CRRM in case of renewal, replacement or dismantlement of works

Abstract Allocation of all items

Abstract allocation for all items

Departmental Charges for Deposit works

Work done for other govt. depts or private parties, ensure provision of Departmental charges

Outlay & Outturn - manufacturing operations

Outlay & Outturn should be shown distinctly

Rent Statements in case of Railway Quarters.

Ensure 6 % return in case of each class of staff quarters & other rent returning buildings

 

 

 

 

 

 

 

 


Wednesday, April 1, 2020

Cash Flow Statement - Management Accounting for LDCE

Cash Flow Statement          -    Management Accounting for LDCE

 

«  Meaning: A statement which discloses the changes in Cash position between two periods (usually 31st March of previous year to 31st March of current year)

 

«  Example: A Balance sheet shows a cash balance as on 31.03.2019 at Rs. 5 lakhs, while the same position as on 31.03.2020 at Rs. 6 lakhs.  That means cash inflows during the year 2019-20 is Rs.1 lakh.

 

«  The statement also outlines the reasons for such cash inflows or cash outflows, which in turn helps to analyze the functioning of Business.

 

«  It is an important tool in the hands of Business Management.

 

«   Components of Cash are 1. Cash on Hand  2.  Cash at Bank  3. Short term, highly liquid investments that are readily convertible into cash.

 

Advantages:

 

1.       Efficient in Cash Management  - Helps how much cash will be available at a particular point of time to meet the day to day obligations.

 

2.       Helps in internal financial management.

 

3.       Discloses the movement of cash during the financial year. Understanding and analysis of what are the sources & applications of cash.

 

4.       Past years cash flow statement is used as an estimate for next year's cash flow.

 

5.       Shows the success / failure of cash management.

 

6.       Comparison between two firms.

 

7.       Analysis of relationship between profitability and net cash flow.

 

                  Limitations

 

1.       Cash flow statement cannot serve the purpose of Profit and Loss Account.  Because later covers both cash items and non cash items, whereas former covers only cash items.

 

2.       Cash  flow statement can't replace the Fund flow statement. The later one is reflecting the complete financial picture than the former one.

 

3.       Cash balance as per Cash flow statement cannot represent the real liquid position of the firm, because of postponing of purchases & other payments.

 

4.       Very difficult to define the term "Cash". whether the items like cheques, stamps, postal orders etc are comes under purview of cash or not.  

 

()()()()()()

 

 

 


Working Capital Management Accounting for LDCE

                                                      Working Capital Management Accounting for LDCE

1991 LDCE SCR - 5 marks

 

ü  Meaning:  Represents the amount of funds required to finance " the day to day activities".

 

ü  Excess of Current Assets over Current Liabilities.

 

ü  It should be ideal/sufficient.  That means neither more nor less to the correct requirements of working capital.

 

ü  Shortage - Difficult to manage day to day activities/payments.

 

ü  Surplus - Capital will be blocked / unutilized.

 

ü  So it should be sufficient to meet current obligations  ( not long term obligations)

 

ü  The difference between Gross Working Capital and Net Working Capital is "Current Liabilities". Total sum of all current assets is called Gross Working Capital.  The difference between Current Assets & Current Liabilities is called Net Working capital.

&&&&

 


ROCE - Management Accounting for LDCE

ROCE     -     Management Accounting for LDCE

·         Full form is Return On Capital Employed

 

·         It is most important Ratio among all the Financial Ratios

 

·         ROCE = Return /Capital Employed  x 100

 

·         Expressed in Percentage.  Example  Return is 200 rupees against the capital 2000 rupees employed. ROCE is 200/2000 x 100 = 10 %. 

 

·         Return = Net Profit + or - Non Trading adjustments + Interest on Long term debts + Provision for tax - Interest/Dividend from non trade investments

 

·         Capital Employed = Equity share capital + Reserves & Surpluses + Preference share capital + Debentures & other long term loan - Misc Expenditure & loss - Non trade investments.

 

ROCE in Indian Railways

 

·         Para 511 of Indian Railway Finance & Administrate Code mentions Return on Capital.

 

·         Return on Capital = Percentage of Revenue Surplus/Net Receipts to Capital at charge and Investments from Capital Fund.

 

·         Revenue Surplus/Net Receipts = Total Revenue Receipts - Total Revenue Expenditure

 

·         Since element of Dividends is not there (from 2017-18 onwards due to merger of Railway Budget with General Budget), the Net Receipts and the Revenue Surplus are one and same.

 

·         Total Revenue Receipts = Gross Earnings (X, Y & Z) minus  Suspense

 

·         Total Revenue Expenditure = Gross Working Expenses ( OWE + Appropriation to DRF & Pension Fund) minus Suspense.

****