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Indian Railways is conducting a pilot study on introduction of accrual accounting at its Ajmer division and Ajmer group of workshops with the assistance of the Accounting Research Foundation of the Institute of Chartered Accountants of India (ICAI).
Accrual accounting is a method wherein revenues and expenses are recorded when incurred, regardless of when cash is exchanged. At present, the Railways use the cash accounting method.
Railway Minister Suresh Prabhu, who had earlier stated that accounting reforms were the first step toward having a regulator, stressed the need to focus on assessing the cost of services to determine a rational pricing structure for the Railways.
The proposed accounting framework will provide greater transparency, said an official release.
Indian Railways has engaged ICAI to develop a design for implementing an integrated Outcome Budgeting and Performance Costing System. An advisory body consisting of domain experts and a multi-disciplinary working group of the Railways has also been constituted to assist ICAI in designing a detailed framework of the proposed accounting system, as envisaged in this year’s budget announcement.
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