Shri Suresh Prabhakar Prabhu, Hon’ble Union Minister of Railways, in his budget announcements for 2015-16 and 2016-17, highlighted the need for tracking of expenditure to desired outcome for optimal utilisation of public funds. For this purpose, he introduced one of the key strategies of Indian Railways on “Mission beyond bookkeeping” which is not just focused on the move to accrual accounting but also on implementing performance linked costing techniques and budgeting based on outcome. A remarkable step was taken to include ‘Accounting Reforms’ in the agenda of Indian Railways to improve the financial reporting by voluntarily opting for accrual based financial information (in addition to the financial information prepared using cash basis) and to ensure that it becomes self-sustainable in long-term. We, at Indian Railways, share the Vision of Shri Suresh Prabhakar Prabhu to transform Indian Railways into a world-class competitive mode of transportation. ... more...
Indian Railways has taken a number of steps in the direction of achieving the said mission such as the completion of the pilot study on introduction of accrual accounting at North Western Railway (NWR) Jaipur, preparation of the concept paper on outcome budgeting.
Towards this end, Indian Railways is conducting a National Conference on “Accounting Reforms in Indian Railways – A Strategic Mission for Sustainable Growth” tomorrow i.e. 20 December 2016 at Vigyan Bhawan, New Delhi
Shri Arun Jaitley, Hon’ble Minister of Finance and Corporate Affairs will be the Chief Guest for the programme. Shri Suresh Prabhakar Prabhu is the Guest of Honour.
The Conference would begin with an Inaugural session followed by three Technical Sessions. The Inaugural Session would be addressed by Shri Shahzad Shah (Financial Commissioner, Railways) and President, Confederation of Indian Industry. The Seminar would provide a brief overview of Accounting Reforms in India focusing on the Vision of Accounting Reforms of Indian Railways with a keynote address by Shri Suresh Prabhakar Prabhu. In the Inaugural session, Shri Arun Jaitley will also release Publication on NWR Financial Statement (Accrual Basis), Implementation Manual & Accounting Policies.
The conference has been divided into three technical sessions viz., Technical session 1 on ‘Accounting Reforms in Railways- Investor's perspective’ would bring in the stakeholders’ perspective especially lenders and the industry at large while focusing on the strategy for sustainable growth. The session would be led by leading veterans from industry and profession including Dr. Rajiv Lall (Founder Managing Director & CEO, IDFC Bank), Smt. Varsha Purandhare (MD, SBICAPS), Shri Bharat Salhotra (Managing Director, Alstom India Pvt. Ltd.) and Shri Pankaj Chadha (Partner, Indian Member Firm of EY Global).
Technical Session 2 on ‘Accounting Reforms in Government- Practitioners’ needs and expectations’ includes topics on governance through accounting, recent development initiatives in government accounting, etc. and would be taken up by eminent speakers from different Regulators including Shri Amarjit Chopra (Chairman, National Advisory Committee on Accounting Standards), Shri M Devraja Reddy (President, Institute of Chartered Accountants of India), Shri Manas Kumar Thakur (President, Institute of Cost Accountants of India) and Shri M J Joseph (Controller General of Accounts).
Technical Session 3 on ‘Accounting Reforms in Indian Railways- Opportunities and Challenges’ would largely focus accrual accounting, performance costing and outcome budgeting including discussion on the opportunities and challenges of Accounting Reforms and would be taken up by Shri Vikamsey Nilesh Shivji, Shri Satyendra Kaushik (Chief Project Manager (AR), Northern Railways), Shri B Goyal (Advisor, Institute of Cost Accountants of India) and Shri A. Venkateshwar (Consultant (AR), Railway Board).
The programme will be attended by Members of Railway Board and delegates from the World Bank, CII, FICCI, ASSOCHAM, GASAB, Institute of Chartered Accountants of India, Institute of Cost accountants of India and senior leaders from industry and profession. The detailed agenda has been enclosed as an annexure.
The National Conference would provide an opportunity to Indian Railways and its stakeholders for sharing of experiences of Accounting Reforms of Indian Railways including the expected benefits from the transition. The session would also be useful in knowing the global position and learning from the best practices around the world on Accounting Reforms including the global experiences of Railways through videos of eminent speakers. It will also address the expectations of industry and other stakeholders from accounting reforms in Government sector.
Current Steps taken: As part of Accounting Reforms project Indian Railways have: ● prepared financial statements of NWR for 2014-15 ● completed the pilot implementation of accrual based financial statements in NWR ● finalised the publication on ‘NWR Financial Statement (Accrual Basis), Implementation Manual & Accounting Policies’
Plan for future: Actions have already been started for completion of pilot study at Rail Coach Factory, Kapurthala, preparation of consolidated balance sheet for 2015-16 and 2016-17, development of detailed design framework for performance costing and outcome budgeting, implementation of robust IT system. Soon we will be able to roll out accrual accounting across seventeen zonal railways and eight production units in addition to Central Organisation for Railway Electrification (CORE), Central Organisation for Modernisation of Workshops (COFMOW) and Railway Board. Consequently, in-long term, we have a plan to move to IGFRS which are in line with the global Standards (i.e., IPSAS).
Benefits to stakeholders ● Accounting reforms focusing on right accounting, right costing and right pricing would enable provision of improved services and availability of world-class transportation system to customers ● Accrual accounting coupled with variable marginal costing technique under Accounting Reforms, Indian Railways would be able to identify money makers/ money losers resulting in reduction in transportation cost which would benefit the industry and citizens ● Accounting Reforms would support decision-making and strategic management for the leadership of Indian Railways ● Segment wise business reporting would help in knowing profitability of different lines of business/ lines of services ● Accounting Reforms would facilitate effective resource mobilisation considering availability of limited resources ● Determination of true cost of services- online availability of costing data would enhance transparency ● Investors (including lenders) would be able to make better assessment of the financial health of the organisation- on account of availability of comprehensive, meaningful accrual based financial statements with adequate disclosures