Indian Railways move to accrual accounting

4 May 18

Indian Railways – one of the biggest public sector employers in the world – is starting a move to implement accruals as part of a major reform of its accounting system.

The government department, which has more than 1.3 million workers, has been preparing its financial statements through cash-based accounting but will produce its statements for the current fiscal year under the accrual-based system, the Economic Times has reported.

“As part of accounting reforms, accrual-based financial statements will be rolled out by March 2019,” a senior railway ministry official was quoted as saying in the local news site.

The official added that around 130 chartered accountants placed in the field by the Institute of Chartered Accountants of India (ICAI) were assisting the rollout.

By moving to accruals, Indian Railways expects to be able to more accurately monitor the profitability of various lines of business and services.

The railway ministry official said: “Through accrual-based accounting system, we will be able to analyse step-wise costing of every asset created and services delivered.

“We will also be able to arrive at micro details such as train, section and rail route costing and profitability numbers.”

India Railways is a government department and has under its Accounting Reform Project taken up a pilot study for the introduction of accrual accounting.

The financial commissioner of the department has previously said that training courses on accrual, cost and management accounting was being formulated to “develop necessary skill sets and knowledge base among railway officials”.

According to 2016 official figures, the department has 1.308 million employees.

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