CAG finds misclassification in railways accounts

New Delhi: The country's apex auditor CAG has flagged "glaring lapses" on the part of railway accounting officials, leading to numerous cases of misclassification and mistakes in accounting.

Despite repeated assurances by the railways of rectifying the errors, the Comptroller and Auditor General (CAG) has observed several cases of misclassification in the railways' accounts in the five-year period between 2010-11 and 2014-15.

Misclassification refers to an income or expenditure classified under the wrong head of account. Mistakes in accounting include non-accounting of transactions, belated adjustments in accounts and operations of unauthorised heads of accounts.

In its latest report, the CAG also referred to the findings of the Public Accounts Committee (PAC) which had objected to the accounting errors repeatedly. Quoting PAC reports, it said the railways should devise a mechanism to bring down the cases of misclassification as these indicate not only apparent inadequacies in the accounting system but also glaring lapses on the part of accounting officials.

The national auditor has also examined the impact of non-rectification of errors on financial statements and key indicators. During the review, 64 cases of persistent miscalculations of expenditure worth Rs 53.47 crore were pointed out by the CAG and accepted by the railways.

Similarly 66 cases of irregular adjustments in 11 zonal railways involving a monetary value of Rs 1,431.05 crore were pointed out by the auditors and accepted by the railways.

The CAG has suggested effective coordination between executive departments and accounts to detect and rectify the mistakes before the end of a financial year and to take effective measures so as to keep stringent check on misclassification in accounting.

The national auditor has advocated for internal audit to identify the thrust areas where misclassifications are committed and to strengthen the internal control mechanism suitably.

In order to prevent errors, it has suggested that compendium of common mistakes to be prepared and circulated for guidance of the staff. A checklist for guidelines of the staff in view of audit observations should be prepared so that mistakes are not committed year after year.