Suspense balance in Railways

Under Revenue Receipts: Traffic Account, and Demands Recoverable.

Under Revenue Expenditure: Demands Payable, and Miscellaneous Advance- Revenue

Under Capital Expenditure: (main suspense heads operated)

Purchase Suspense:

7110-Imported, 7120-Indigenous, and 7130-DGS&D

Stores Suspense:

7160-Stores, and 7170 –Stores-in-Transit

Workshops:

7200-Workshop Manufacture Suspense (WMS)

Miscellaneous:

7300-Miscellaneous Advances- Capital (MA-C)

Suspense Heads are operated on Railways:

For Adjustment of Remittance Transactions: (main suspense heads)

Reserve Bank Suspense, Remittances into

Bank and Cheques and Bills etc.

For settlement of inter governmental transactions:

PAO Suspense

For receivables having the character of reduction in expenditure:

8660- Railway Suspense and Government

Adjustment Accountant

Audit Objective:

• Audit reviewed the Suspense Accounts to assess whether

• System of accounting of revenue receipts/expenditure toSuspense Heads is effective and there are no incorrect orinefficient items.

• Suspense Heads and Suspense Registers are maintained andreconciled with General Books as per the codal provisionsand Railway Board’s instructions thereon.

• Internal control mechanism for clearance of suspensebalances and its monitoring is efficient.

Result of audit:

Traffic account:

• Traffic Account is a Suspense account under the Major Head1002/1003, operated for the purpose of recording the revenueearnings in the month’s account to which they pertain and also forwatching the progress of their realization. This head is debited with allearnings whether its own zonal railway or foreign (other zonalrailway) for realization of which the home Railway is responsible. It iscredited with all recoveries of such earnings.

• The Traffic Account Balance is expected to carry a debit balance bythe very nature of the transactions involved. However, the balancesreflected in the Balance Sheets of NWR for the period covered in thisAudit as well as those arrived as on 31st March 2014 are found to becredit balances. Thus, the balances under Traffic Accounts are foundto be adverse which have not been explained. The review of theSuspense Balance for Traffic Accounts prepared at Traffic Accountsoffice Ajmer shows a Balance of Rs.58.64 crore as on 31st March 2014and Rs. 39.09 crore as on 31st March 2013. Thus, the Balance Sheetfigure of Traffic Account of NWR as on 31st March 2013 is understatedby Rs.113.89 crore and by Rs.113.89 crore as on 31st March 2014. Thedifference was also found to be the same as on 31st March 2012 and31st March 2011.

• cumulative balance under station outstanding’s for the period 2009-10 to 2013-14. Review of the station outstanding’s for the year endingMarch 2014 review that these have increased by Rs. 5.40 crores(13.84 percent) over the last one year. The total outstanding as on31st March 2014 are Rs.44.41 crores which include Rs.38.06 crores ofoutstandings against Electricity Board, Power House/Steel Plant/Public sector undertakings.

• Demands Recoverable: This Suspense Head was introduced from01.04.1988 under the Major Head 1002/ 1003 to bring to account alldues pertaining to Rent/lease of Railway Land and Buildings andInterest and Maintenance Charges of Sidings. All the amounts due tothe Railway will be raised in the form of bills and are placed at thedebit of ‘Demands Recoverable’. On the receipt of remittance fromthe parties concerned the ‘Demands Recoverable’ is credited. Theclosing balance under this head represents unrealized amount in theform of outstanding ‘Demands Recoverable’.

• During certification of accounts 2011-12 it was pointed out thatfollowing bills amounting to Rs.63.29 crores (Enclosure I) were notshown in Demands Recoverable/ Railway Suspense/ GovernmentAdjustment Account:- Rs.3.79 crore relating to Sidings, Building,Railway Land, Level Crossings, ROB/RUB, Welfare building etc.

• Demands recoverable of Rs.0.0449 crore on a/c of rehabilitation for derailment took place in private siding of Jaipur Division

• 3.82 crore outstanding recovery of license fee due from vending contractors transferred from IRCTC.

• Rs.2.54 crore in respect of interest & maintenance charges of siding, rent of building, level crossings etc. of Aimer & Bikaner Divisions.

• Bills due on account of advertisement and Foreign servicecontribution are not being accounted for in Demands recoverable(bills recoverable) in the accounts 2013-14, though Jaipur Division hascollected Rs.11.50 crore of Foreign Service Contribution (FSC) (figurestaken from Foreign Service Contribution Register) and Rs.3.13 crore ofcommercial publicity (Enclosure II), but the same has not beenaccounted for. Similarly bills of Rs.0.78 crore preferred by AjmerWorkshop on account of FSC charges have not been accounted forunder these Heads.

• Bills for Rs.1.05 crore towards cost of gateman employed at LCs of Ajmer Division.

• Bills for haulage charges of Rs.52.05 crore relating to run of RROW/ POW.

• In three cases of level crossing gate, bills for cost of staff andmaintenance charges for Rs.2.29 crore were raised by Bikaner Divisionwith delays ranging from 4 to 28 years.

• Bills recoverable of NWR zone increased Rs. 1crore (2012-13) toRs.6.95 crore (increase of 594.63%) in 2013-14. However, Thereview of the Suspense Balance for Demands recoverableprepared at Traffic Accounts office Ajmer shows a Balance ofRs.12.70 crore as on 31st March 2014 and Rs.6.75 crore as on 31st

March 2013. Thus, the Balance Sheet figure of DemandsRecoverable of NWR as on 31st March 2013 is understated byRs.5.75 crore and also by Rs.5.75 crore as on 31st March 2014.

• Two old items for Rs.6.21 crore were attributable to pendingcourt case at Bhiwani against a sick unit a Charkhi Dadri(Bikaner Division).

Demands Payable• Demands Payable is operated on yearly basis to bring to account the Pay

and allowances of March which are disbursed in the April month.

• No liability details are kept by accounts Department. In absence, the provisions made in the Demands payable are not found reliable and hence could not be verified in Audit.

• Bills of expenditure of Rs.20.64 crore in NWR accrued prior to 31/3/2012but paid in April to June 2012-13 as shown in Enclosure I. Out of these billsnot paid in Jaipur Division, Bikaner Division & Ajmer workshop were ofRs.1.53 crore, 0.18 crore and 11.88 crore respectively.

• Similarly Bills of Rs.31.75 crore received in Accounts office in the month ofMarch'14 and entered in CO6 register but returned. Out of these bills notpaid in Jaipur Division, Bikaner Division & Ajmer workshop were of Rs.3.46crore, 0.75 crore and 0.29 crore respectively.

Miscellaneous Advances-Revenue• Under MAR of Ajmer Workshop, the outstanding balance of Rs.0.049 crore

to end of the year (2013-14) included advance with staff of Rs.0.04 croreand advance with private parties of Rs.0.004 crore in Ajmer Workshop.(Annexure

• Loss of cash of Rs.5,85,902 in robbery took place in Agra- Achhnera sectionin the year 1994 was kept in MAR by Jaipur Division. It was transferred toAgra Division of NCR in the Jan'2011and the same has been written back inApril 2012 to NWR. The issue could not be resolved even after lapse of 20years. Accounts indicates this old item as pertaining to the year 2011-12instead of 1994-95.

• MAR details related to expenditure items for the year 2009-10 was notmade available in Ajmer workshop.

• Under MAR of Ajmer Workshop, the outstanding balance of Rs.0.049 croreto end of the year (2013-14) included advance with staff of Rs.0.04 croreand advance with private parties of Rs.0.004 crore in Ajmer Workshop.(Annexure

Misc Advance Capital

• No register for MA Capital is being maintained and Nil- statement forSuspense balance has been provided by S&C Jaipur. However, data of IPAS(the Accounting application being used in NWR for maintenance ofAccounts). indicates the following booking in allocation '207314' indicatingMA Capital during 2013-14:-

• Allocation Dr/Cr No. of transaction Amount in Rs.

• 20731409 C 86 64753655

• 20731409 D 24 165934327On enquiry it was given by S&C Jaipur that these figure are of mobilization advance only. Though the Mobilisation advance to contractors should have been accounted for in Major head 7615. This issue is being raised in the certification of accounts 2012-13.

Purchase Suspense--Imported [P.7110], Indigenous [P.7120] and DGS&D [P.7130]:

• Credit side of the Purchase Account is posted on receipt of Accounts copy of Receipt Note, indicating the quantity and other details.

• P

• Opening balance for the year 2011-12 of all Stores units were different from closing balance of 2010-11:

Unit OB as per CB of 2010-11 OB adopted

Ajmer Stores 22, 66, 57, 000 30,09,71,000

Bikaner Stores 2.53 crore 2.65 crore

Jodhpur Stores 12,24,09,888 1,39,99,316

Difference 10,72,10,572

• On enquiry it was given to understand that this was changed through CIO/ NWR/ Jaipur’s letter date 17 April 2012, which neither contained any reasoning for this act nor any approval of the competent authority. Further, the same has also not been journalized in the account.

• An issue relating to difference between physical & book balances ofstores valuing Rs.14,45,497 was raised by Audit Officer/S/Ajmerthrough supplementary Pt. I inspection report No. 405 dt. 30/7/2011.

• A DP No.17 (2003-04) was issued on 13/1/2004, wherein shortage ofP. way material during stock verification was mentioned. An assurancegiven in 2006 by Dy. FA & CAO (S&C) Jaipur that ir-recoverableamount of Rs. 1.92 crore would be written off. Even after lapse of sixyears the issue has not been processed for writing off the loss.

Workshop Manufacture Suspense – [P.7200] • The purpose of this head is to charge the total expenditure incurred in the

Workshops to the Final Accounts Heads Concerned. The Debit side indicatethe ‘Inputs’ and the Credit side indicates the ‘Output’. The debits consist ofLabour, Stores, Freight charges, Proforma On Cost and Workshop Transfers.The credit side indicates the issues relating to Works, Revenue, Works donefor Stores Department and Deposit works etc. The balance represents theoutlay on Works in progress and Completed works which are awaitingacceptance of the parties ordering for manufacture.

• Review of the balances under this Suspense Head revealed that in AjmerWorkshop there are long pending items of Rs.1.79 crore awaiting clearancesince Nov'08. Out of Rs.9.27 crore outstanding, Rs.1.75 crore relates toDefence, Railway Mail Service due to deposit amount being less thanexpenditure on the deposit work and Rs.5.73 crore is due to non-acceptance of debits due to retrospective revision of cost.

Reserve Bank Suspense (RBS):

• This is a Suspense Head operated for the temporary adjustment oftransactions initiated by other Accounts Officers of Non-RailwayGovernment Departments. On receipt of accounts from suchAccounts Officers the various items included therein are adjustedagainst the final heads of accounts by per contra credit/debit to thehead ‘Reserve Bank Suspense’. On receipt of the clearance memofrom the Reserve Bank, the head ‘Reserve Bank Suspense’ isdebited/credited by credit or debit to the head ‘Reserve Bank Deposit(Railways)’. Normally all items under ‘Reserve Bank Suspense’ shouldbe cleared by the close of March Accounts.

• Balances as on 31st March 2010, 2011, 2012 & 2013 is negligible.However the same has not been transferred to relevant head.Statement of DHR for 2013-14 has not been received.

Remittances into Bank (RIB):• This is a Suspense Head operated to record the remittance of

earnings into the Banks. This Suspense head is debited with amountof all Remittance Notes by crediting the Appropriate Revenue Servicehead. Each Bank with which the railway has transactions sends dailystatement (known as Credit Scrolls) showing the amounts depositedby the various departmental officers on behalf of Railways.

• A review of the balances under these Suspense Head revealed that:

• Out of 13 Accounting units in NWR five units (Ajmer TA, Ajmer W&S, Jaipur S&C and Jodhpur Division) are not operating the head RIB, though the collection of earning is made by them.

• Transactions recorded in IPAS indicates that RIB is debited the amount of earnings remitted into bank, but reconciled amount is not credited to RIB, but minus debit is done.

• During the entire year 2013-14 only one transaction of Rs.0.0049 croe inthe month of June'13 for Jaipur Division was shown in IPAS and the samewas written back in next month (details enclosure V). However, JaipurDivision has remitted cheques of Rs.3.13 crore collected from parkingcontractors only through challans. Other cheques i.e. advertisement feewould be additional. This indicates that all the remittance of cheques tobank has not been routed through RIB.

• Similarly in S&C Jaipur no transaction has been seen in IPAS data. Howevercheques received for earnest money, Performance Guarantees etc. havebeen collected and remitted to bank. Transaction has not been routedthrough RIB. Details of cheques received and remitted to bank in March'14are given in enclosure VI.

• In NWR balance under RIB has decreased from a debit balance of Rs.39.53crore (2009-10) to a debit balance of Rs.2.56 crore (2013-14) (details inAnnexure-XIX). Oldest item is for Rs.0.84 crore and it relates to 1991-92.

Cheques and Bills:• The system of Railway Accounts provides for operation of a Suspense

Head ‘Cheques and Bills’ operated under Major Head ‘L-Suspense andMiscellaneous Suspense Accounts. When Cheques are issued thehead ‘Cheques and Bills’ is credited with the amount of chequesissued and the appropriate Revenue Service head is debited. At theend of the month when the total amount of the Cheques paid (i.e.cashed at the Banks) are available from the Reserve Bank andreconciled, the head ‘Cheques and Bills’ is debited and ‘Reserve BankDeposit (Railways)’ is credited. The balance under this suspense head,therefore, represents mainly total value of uncashed cheques. Thebalances under this Suspense Head should always be a ‘CreditBalance’.

• A review of the balances under this Suspense Head revealed thefollowing:

• while certifying the Balance sheet of the Zone 2012-13 it wasremarked that the figures under Cheques & Bills in Debt Head Reportand the same in Balance Sheet were differing by Rs.113.53 crore.(enclosure VII). Reasons put forth by Railway Administration statedthat these differences were attributable to directions of the officialsat the Railway Board.

• Existence of adverse balance in Debt Head Report of 2011-12 ofRs.110.37 crore was reported in the certification process.Reconciliation with the General Book of the subordinate accountingunits revealed a difference of Rs.163.03 croes. Reconciliationbetween the General Books of the basic accounting units andsubsidiary details of unencashed cheques in the units showed anegative difference of Rs.4.61 crore and a positive difference ofRs.6.41 crore

• The certificate of reconciliation with General Books over thesignature of Gazetted Officer is not available in the SubsidiaryRegister of Jaipur Division.

• 5.4.3.10Reconciliation of Bank credit scrolls is done by GazettedOfficer of Accounts Deptt. But the certificate of reconciliationwith General Books over the signature of Gazetted Office is notavailable in the Subsidiary Register of Bikaner Division.

• 5.4.3.11Balances under Cheques & Bills of Bikaner Division haveconsiderably increased from Rs.0.340 crore during 2012-13 toRs.1.475 crore during 2013-14 (333.82%)

• In 2013-14, opening balance of cheques & bills was shown asRs.2,51,32,085 (as per ledger). Thus, a difference ofRs.2,17,28,225 could not be explained by Accounts Deptt ofBikaner Division.

PAO Suspense:

• This suspense head is operated for the settlement of interdepartmental and inter-governmental transactions arising in thebooks of an Accounts Officer. Debit under ‘PAO Suspense’ is clearedby ‘Minus Debit’ on receipt and realization of cheques from theAccounts Officer on whose behalf payment was made. Credit underthis head is cleared by ‘Minus Credit’ when cheque is issued by theAccounts Officer in whose books initial recovery was accounted for.Outstanding Debit balance under this Suspense Head would meanthat payments made on behalf of other Accounts Officers are yet tobe recovered. Outstanding Credit balance under this Suspense Headwould mean that payments have been received by the PAO on behalfof other PAOs which are yet to be paid.

• A review of the balances under this Suspense Head revealed the following:

• On Bikaner Division, PAO suspense balance of Rs.0.006 crore pertaining tounpaid amount of DLI payment to Trackman of Bhiwani station in one casewas seen during 2013-14. Booking to PAO suspense is not correct.

• Balances as on 31st March 2012 and the balances as on 1st April 2012 weredifferent, the reasons for the difference has not been kept on record.

• Statement of Debt head Report 2013-14 has not been received. Thus thefigures as on 31st March 2014 have been arrived at through the net effectof transactions appearing in the Account Current for 2013-14. Oldest itemof Rs.58,866 relates to 1995-96.

• The heavy and continuous growth in the ‘PAO Suspense’ indicates lack ofproper communication with different PAOs for clearing these balances.Balance was credit as on 31st March 2010 and debit thereafter. Thebalance as on 31st March 2014 is a debit balance of Rs.19.42 crore.

END