Kolkata, Dec 22: Indian Railways has successfully implemented an accrual-based accounting system, a development anticipated to improve financial transparency and facilitate resource mobilization from multilateral organizations and green financing, as stated by a senior official from the Institute of Chartered Accountants of India (ICAI).
This new system is now fully operational across all 26 zones of Indian Railways for the fiscal year 2023-24.
“The shift to accrual accounting not only enhances budget management but also streamlines the process of securing funds from multilateral entities like the World Bank, while supporting green financing initiatives through enhanced accounting practices,” commented ICAI president Ranjeet Kumar Agarwal in an interview with PTI.
“This initiative places Indian Railways on an accounting standard equivalent to that of government agencies in developed countries that have already moved away from cash-based accounting. It is expected to encourage other government bodies to adopt similar methodologies, recognizing the considerable advantages of accrual accounting,” Agarwal added.
Indian Railways began preparing Accrual-Based Financial Statements in 2014 to boost financial transparency and accountability. The ICAI and its Accounting Research Foundation (ICAI ARF) have been instrumental in advancing these reforms.
The ICAI ARF has established a Transaction-Based Accrual Accounting System to support the generation of financial statements starting in FY2023-24, aligning with Indian Railways’ goal of achieving environmental, social, and governance (ESG) objectives, according to the official statement.
“For the first time, initiatives focused on environmental sustainability have been incorporated into the accrual-based financial statements for 2022-23,” stated Nirupama Kumar, Chief Administrative Officer (Accounting Reforms) at Indian Railways.
Kumar praised the contributions of ICAI ARF, describing it as “a significant milestone in the history of the Government of India.” She also emphasized that Indian Railways is the first ministry to adopt accrual-based accounting at an organizational level.
ICAI president suggested that Indian Railways should implement physical asset verification to further enhance accounting reforms. PTI BSM
