No official Railway Board PDF has been traced for this entry yet. The text below was read from the document held in the library.
| Type | Commercial Circular |
|---|---|
| Topic | reservation |
| Currency | Currency not verified |
ACCOUNTING SYSTEM IN GOVT, BUDGETING AND ACCOUNTING.
INDIAN RAILWAYS ACCOUNTING REFORMS- THE WAY FORWARD A PRESENTATION BY DIPTIMAN DAS FA&CAO/IROAF PRESENT ACCOUNTING SYSTEM ON IR IS CASH AND NOT ACCRUAL BASED. THIS IS IN CONSONANCE WITH GOVT. ACCOUNTING RULES BUT, FOR A COMMERCIAL ENTITY, IT DOES NOT GIVE CLEAR PICTURE OF CURRENT LIABILITIES AND ASSETS. IT IS NIETHER TRANSPARENT NOR MEANINGFUL TO OUTSIDERS (MULTILATERAL LENDING AGENCIES/ CREDIT RATING AGENCIES / FINANCIAL INSTITUTIONS). FURTHER PRESENT ACCOUNTING REPORTS ARE NOT MEANIGFULLY USED BY RLY MANAGERS. INDIAN RAILWAYS BEING A DEPARTMENTAL COMMERCIAL UNDERTAKING, AS PER ACCOUNTS CODE, PREPARE A PROFORMA BALANCE SHEET AND A PROFIT AND LOSS ACCOUNT IN SUPPORT OF THEIR APPROPRIATION ACCOUNTS. THIS IS RECOMMENDED UNDER RULE 36 OF GOVERNMENT ACCOUNTING RULES , 1990. IR DOES NOT FOLLOW A SYSTEM OF DISCLOSING THE SIGNIFICANT ACCOUNTING POLICIES WHICH SHOUD FORM THE VERY BASIS OF PREPARATION OF ANY FINANCIAL STATEMENT (EG., ACCOUNTING OF FIXED ASSETS, DEPRECIATION AND PROVISION OF LIABILITY FOR PENSION, REVENUE RECOGNITION ETC.).NO ACCOUNTING STANDARD(AS) IS FOLLOWED ON IR. PRESENT IR ACCOUNTING POLICY- GENERAL-I IR PROJECTS AN “OPERATING RATIO” AS THE ONLY PARAMETER OF EFFICIENCY. THE SAME CANNOT REPLACE NET PROFIT (PBIT OR PAT) TO TRANSPARENTLY DEPICT ITS FINANCIAL HEALTH AND FOR BENCH MARKING. ‘’DIVIDEND’ TO EXCHEQUER’ ON IR IS A MISNOMER AS IT IS PAYABLE IRRESPECTIVE OF PROFIT OR LOSS .THIS IS AN INTEREST ON DEBT IN PERPETUITY WHICH IS BOOKED TO ORDINARY EXPENSES. ACCORDINGLY RECOGNITION, MEASUREMENT, DISCLOSURE AND COMPARABILITY IN ACCOUNTS ARE PRESENTLY INACCURATELY DONE OWING TO THE LIMITATION IN IR’s ACCOUNTING. PRESENT IR ACCOUNTING POLICY- GENERAL-II LIABILITIES DEPICTED IN B/S ON IR COMPRISE OF INVESTMENTS FINANCED FROM LOAN CAPTIAL (ADVANCED FROM GENERAL BUDGET) AND OTHER FUNDS (EITHER FINANCED FROM INTERNAL RESOURCES OR SPECIAL CONTRIBUTION FROM GENERAL BUDGET OR SHARE OF DIESEL CESS ), BALANCES UNDER RESERVE AND OTHER FUNDS/ DEPOSITS LYING IN THE PUBLIC ACCOUNTS OF INDIA AND SUNDRY CREDITORS (DEMAND PAYABLE AND OUTSTANDING DUES). ASSETS OF IR COMPRISE OF BLOCK ASSETS (LAND ,STRUCTURES, EQUIPMENT, MOVEABLE ASSETS, INVENTORY AND INVESTMENTS) CREATED OUT OF LOAN CAPITAL AND OTHER RESERVE FUNDS/ DEPOSIT LYING IN GOI, OTHER ASSETS SUCH AS CASH IN HAND, UNREALIZED REVENUES AND SUNDRY DEBTORS. THE SCHEDULES IN THE BALANCE SHEET ARE PRESENTLY INADEQUATETO PROVIDE INSIGHT INTO DIFFERENT ENTRIES. PRESENT IR ACCOUNTING POLICY – BALANCE SHEET DESPITE BEING A COMMERCIAL ORGANISATION, A TRANSPARENT ,TRUE AND FAIR PICTURE OF PROFITABILITY IS NOT AVAILABLE IN THE ABSENCE OF OBSERVANCE OF STANDARD COMMERCIAL ACCOUNTING PRACTICES. ESSENTIAL REQUIREMENT OF STANDARD COMMERCIAL ACCOUNTING PRACTICES MUST BE FOLLOWED BESIDES CONFORMING TO GOVT. ACCOUNTING NORMS. THIS AS A FIRST STEP IS REQUIRED TO BE INCORPORATED IN THE PROFORMA ACCOUNT WHICH ARE KEPT OUTSIDE NORMAL GOVT. ACCOUNTS. STRATEGIC DECISIONS ON PRICING, INVESTMENTS, ASSET RENEWAL AND REPLACEMENT & PROFITABILITY PRESENTLY CAN ONLY BE TAKEN BASED ON RESULTS DERIVED FROM STANDARD PRACTICE OF COMMERCIAL ACCOUNTING. -IT IS A COMMON BELIEF THAT IR UNDERPRICICES CERTAIN SERVICES AND UNDER INVESTS & CREATES INADEQUATE DEPRECIATION PROVISION WHICH LEAD TO SUB_OPTIMAL ASSET CREATION/MAINTENANCE, PROFITABILITY & GROWTH. NEED FOR ACCOUNTING REFORMS-I IT IS ALSO AN ACCEPTED BELIEF THAT IF SIGNIFICANTLY DISCLOSED APPROPRIATE NORMS OF COMMERCIAL ACCOUNTING ON DEPRECIATION AND PENSION PROVISION WERE TO BE FOLLOWED AND CORRECT PAYMENT OF INTERST(DIVIDEND AT CHARGE) ENSURED,IR WOULD HAVE POSSIBLY PROJECTED A NET LOSS IN SOME OF THE PAST YEARS. 100% FDI HAS NOW BEEN PERMITTED BY GOI. FD INVESTORS AS WELL AS PPP INVESTORS WOULD DEFINITELY REQUIRE CLARITY ON PROFITABILITY OF THE NETWORK THROUGH OBSERVANCE OF GENERA
Extract shown above; the full text is available in the search app.
Open this circular in the search app · Search all 4,233 documents