Last update:December 22, 2024, 4:25 p.m. IST

The transition to accrual accounting is now operational across all 26 zones of Indian Railways in real time for the financial year 2023-24.

Representational image. (Archive photo)

Indian Railways has successfully transitioned to an accrual accounting system, a move that is expected to improve financial transparency and make it easier to mobilize resources from multilateral agencies and green financing, according to a senior official at the Institute of Railways. Chartered Accountants of India (ICAI).

The transition to accrual accounting is now operational across all 26 zones of Indian Railways in real time for the financial year 2023-24.

“Beyond better budgetary management, the adoption of accrual accounting will simplify fundraising from multilateral agencies like the World Bank and promote green financing with better accounting practices,” said the president of ICAI, Ranjeet Kumar Agarwal, to PTI.

“This move puts Indian Railways on an accounting standard comparable to that of government entities in developed economies that have already adopted it, moving away from cash accounting. This will also inspire other government organizations to adopt similar practices, recognizing the significant benefits of accrual accounting,” Agarwal said.

Indian Railways initiated the preparation of accrual-based financial statements in 2014 as part of its efforts to improve financial transparency and accountability. The ICAI and its Accounting Research Foundation (ICAI ARF) have played a vital role in promoting these reforms.

ICAI ARF has developed a transaction-based accrual accounting system to facilitate preparation of financial statements from FY 2023-24, aligning with Indian Railways’ efforts to achieve environmental targets, and governance (ESG), the official said.

“For the first time, environmental sustainability initiatives have been reflected in the financial statements on an accrual basis for 2022-23,” Nirupama Kumar, chief administrative officer (accounting reforms), Indian Railways, said in a press release.

Kumar also lauded the ICAI ARF’s contribution, calling it a “milestone in the history of the Government of India”. She highlighted that Indian Railways is the first ministry to adopt accrual accounting at the organizational level.

The ICAI chairman suggested that the Indian Railways should consider physical verification of assets to complement accounting reforms.

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(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)