Certification of Finance and Appropriation accounts of Railways

Transcription

1 Certification of Finance and Appropriation accounts of Railways

2 Organisational set up of the Railway Audit Branch Comptroller and Auditor General of India Deputy Comptroller and Auditor General of India Principal Director Director General of Audit, Zonal (Railways) & (Railway Board) Railways Deputy Assistant Senior Administrative Officers/ Directors Directors Administrative Officers Senior Audit Officers/ Audit Officers

3 Hierarchy of Audit The responsibility of the CAG of lndia for audit of Railway accounts is discharged through the Additional Deputy Comptroller and Auditor- General of India (Railways) ADAI/ DAI (Railways) exercises the function of audit of finance and Appropriation Accounts of Indian Railways through the Principal Directors of Railway Audit associated with the various Zonal Railways. Certification of the consolidated Finance and Appropriation Accounts of the railways by the Principal Director of Audit is based on the Audit certificates submit by the Senior Divisional Audit Officers/ Divisional Audit Officers/ Senior Audit Officers/Audit Officers of the accounting units in the zonal railways. Audit Officers are assisted by Asstt. Audit Officers and Auditors. Audit involves examination and evaluation of financial records with a view to express an opinion on the set of financial Statements.

4 Objectives of Audit To produce assurance : The assurance about the figures in the financial statements is derived through conducting an audit which involves auditing against the objectives of : Completeness/recognition/authority; (this means that all valid transactions or balance which have a bearing on the overall magnitude of financial figures depicted in the Consolidated Financial Statements at Zonal and All India level are duly incorporated and that all transactions are backed by the authority of a sanction/order of Competent Financial Authority.) measurements/ estimation; (This means that the transactions/balances included in the Financial Statements have been correctly computed.) presentation/classification; Regularity- transactions are as per applicable laws and rules ; Disclosure of material circumstances which affect completeness of the accounts, the measurement of transactions and their classification and there is no attempt to misclassify transaction/balances or to misrepresent figures through errors of omission or commission.

5 Audit Procedure Auditors compare the criteria framed by the Central Govt. with the procedure followed by Railways in collection of earning, disbursement of payment, its accounting and preparation of financial & appropriation statements. Audit teams should have complete knowledge of list of major and minor heads of Railway accounts, Railways codes and manuals, budget circulars/ documents, supplementary grants, re-appropriation orders etc. Financial/ Appropriations statements shall carry an explicit Statement of Management Responsibility and examine that these are free from material misstatements due to error or fraud. The audit procedures for recognition/authority include ascertaining the existence of transactions through audit of vouchers, challans, general vouchers, local audits etc. Audit procedures for deriving assurance against the objective of Completeness includes non accounting procedures like field inspection during local audit, reconciliation between ledgers balances and related subsidiary registers.

6 Audit Procedure. The audit requires identification and conduct of audit procedures and policies to derive assurance. The audit procedures for recognition/authority include ascertaining the existence of transactions through audit of vouchers, challans, general vouchers, local audits etc. Audit procedures for deriving assurance against the objective of Completeness includes non accounting procedures like field inspection during local audit, reconciliation between ledgers balances and related subsidiary registers. It has to been seen that all transactions comprising the financial statements have been measured appropriately as per applicable accounting principles like appropriations to DRF and pension fund. It is to be ensured that the financial statements are complete in form and content with suitable disclosures to ensure complete understanding by the stakeholders and users of the financial statements.

7 Audit Procedure. Monitoring mechanism to ensure that the issues raised during transaction audit, thematic audit, performance audit that have a bearing on the financial reporting by Railways in terms of completeness, measurement and reporting of financial information are taken into consideration while conducting Financial Attest audit and vice versa. Each audit para/objection noticed in the transaction audit (Specific Report and Part-I)/ performance/thematic audit may be judged for its inclusion in the certification audit by the Branch Officer and recommended for its impact on certification. 'Register of Important points:- RIP may contain the columns viz., name of the file, Remarks of PDA and its date, relevant year of accounts in which it is to be seen, etc. This register can be as far as possible kept in electronic form with periodic backup as well as hard copies taken at the end of each quarter. Similar exercise will be done by the Senior Divisional Audit Officers/ Divisional Audit Officers/ Senior Audit Officers/Audit Officers for Part-II IR s and Audit Notes and use the results in certification process.

8 Audit Procedure. The verification of various financial statements are done to have an assurance that the moneys, representing receipt into and Disbursement from Consolidated Fund of India; the liabilities and assets of the Railways as worked out from the balances reflected in these financial statements represent a true and fair view of their financial position. Demands Recoverable, DHR, Dividend, Balance sheet, Receipt Audit observations framed should necessarily be based on the deviations/ violation from/ of codal provision/ accounting principles. Observations are communicated to Indian Railways. Disposal ofaudit Objections

9 Certificate Certificate on Income tax Certification on Debt head report/ balances Certificate on Finance Accounts Certificate on Appropriation Accounts Specific qualification of the certificates of audit on the Appropriation Accounts and the Balance Sheet with reference to misclassification in the accounts of the year would rarely be necessary and should not be made without the prior approval of the DAI. The certificates on the March Accounts and the review of balances may, however, be qualified wherever necessary. So long as a full list of misclassifications affecting the accounts of the year concerned is appended to the Appropriation Accounts, the certificate of audit on the Finance Accounts and the Capital and Revenue Accounts of the railway need not be qualified with reference to misclassifications.

10 Thanks

11 Audit of Receipts (Revenue and Capital) F- II provides that revenue earnings would be reflected under classification X, Y and Z. The cash collected against Earnings gets reflected in the revenue receipt head 1002 and The remaining earning representing the credit sale (traffic account) and the bills raised, but not realized, is shown under the suspense head Traffic Account (Minor Head 101) Demands Recoverable (Minor Head 102). Issue of Completeness Reconciliation may be done between the amounts shown in bills recoverable registers and as shown in the 'Suspense head - Traffic, Demands recoverable' to see that all items of bills recoverable are a part ofthe suspense.

12 Issue of Measurement The items under the suspense account is to be scrutinized from the point of view their estimated value and recoverability. Amounts in suspense without appropriate justification lead to overstatement of earnings. The amounts under the suspense should also be checked for appropriate measurement through local audits etc. Measurement implies that audit assures itself of the correctness of the demand against the applicable rules and orders. Unremunerative Branch lines are qualified for subsidy only when they have been classified as unremunerative on marginal cost principle. The annual financial results of each line is to be examined to see that the subsidy is correctly valued. RCC allows a moratorium on payment of dividend on investments in New Lines during the period of construction and for the first five years after opening of the line for traffic. Dividend becomes payable on the New lines if it becomes remunerative by adopting the marginal cost principle. The financial results of each such line is to be seen for comment. back