QUESTION & ANSWER OF FINANCIAL RULES FOR COMPETITIVE EXAMINATION


Q -  Explain the difference between revised & Supplementary estimate

ANS -  Difference between revised & Supplementary estimate –
Supplementary estimates – If it is necessary to do any additional work, after an estimate is sanctioned or if any substantial changes are required to be made Supplementary estimates are made in a similar manner as the detailed estimate. The details of items should include only the extra amount of work needed to be executed.
Revised estimates – Revision of estimates is some times necessary if there is rise in rates of materials, cost of labour, alteration in design etc. If the rise in the cost of work is likely to be more than 10% or Rs. 10,000/- a revised estimates is required to be made. Revised estimates should be prepared in the same degree of detail as the original estimates. The reasons for exceed should clearly explained.


Q. - Why is earnest money taken ?
Ans. - Earnest money – 
The Tenderer shall be required to deposit Earnest money with the tender for the due performance with the stipulation to keep the offer open till such date as specified in the tender. Earnest money should be either in cash, deposit receipts, pay orders, demand draft.
The earnest money shall be 2% of estimated tender value. The earnest money shall be rounded to the nearest Rs. 10/- . Earnest money shall be applicable for all modes of tendering

Q. - When is supplementary estimate prepared?
Ans. - Supplementary estimate –
Supplementary estimate should be prepared for any item of work, which ought to have been included in the first instance in an estimate already sanctioned but has not been so included, or which it is found later, should be considered as being a part or a phase of an estimate already prepared and sanctioned if it cannot be met out of contingencies. Such a supplementary estimate should be prepared in the same form and the same degree of detail as the main estimate and for all purposes be treated as a part of the main estimate.

Q. - What is Operating ratio?
Ans.- Operating Ratio –
Operating Ratio is the ratio which the total working expenses excluding suspense of a Railway bear to its gross earning or in other words represents the percentage of working expenses in this connection include appropriation to DRF and Pension fund as well. This is used to measure the efficiency of the railway.


Q.  - What is the importance of Pink book in railway working.
Ans.- Importance of Pink Book :- 
This shows the various sub heads under which the lum sum amount sanctioned by allotment is to be spent and this indicates the works for which the allotment of money is intended. These books are furnished to the Railways along with budget orders.
The Pink Books also show in the case of work costing over one lack each , total estimated cost of each work and railway administration are required to exercise control over expenditure not only against the allotment sanctioned for the year for each work but also against its total estimated cost as shown in Pink Book for works costing less than one lack rupees each a lum sum is allotted to each Railway administrations in Pink Book. 

Q.  - What is the object of including arbitration clause in contract?
Ans.- Object of including arbitration clause in contract :-
In the event of any dispute or difference between the parties here to as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the Contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' referred to in clause 63 of these conditions, the .Contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that then dispute or difference be referred to arbitration.
The demand for arbitration shall specify the matters which are in question or subject of the dispute or difference as also the amount of claim item-wise.
The arbitration proceedings shall be assumed to have commenced from the day a written and valid demand for arbitration is received by the railway.

Q.3.- What are the different types of Engineering surveys under taken before construction of a new line/ Explain their scope and significance.                      

Ans.- Different types of Engineering surveys –
Reconnaissance Survey -
Rough and rapid survey with or with out instrument of one or more routs for a proposed line is calledReconnaissance Survey. Approximate heights and distances are collected using instruments such as prismatic compass,  hand level and range finder.
Preliminary survey –
A detailed instrumental examination of the rout or routes selected as a result of Reconnaissance Survey  in order to obtain a close estimate of the line is called preliminary survey. It includes compass traverse along one or more routes longitudinal and transverse levels are taken at required locations. Alignment need not be fully staked out with theodolite. Stone pillars or permanent mark are provided on ground.
Final Location Survey -

A final Location Survey is under taken on the completion of traffic survey to select the final rout of the line to be constructed, taking into consideration all the circumstances of the case including the probable expenses to ensure that alignment selected final is most economical. During the course of the survey the center line finally located should be marked out by pegs at every 30 meters. Survey is made in connection with all the bridges waterways curves and stations proposed to be built and their plans, sections and designs are also prepared.

Q. Describe the various budget stages for review / modification of budget grants.     
         
Ans.-  Various budget stages for review / modification of budget grants-
              i.     August Review – This is one of the Budgetary reviewed stages. This is conducted in the month of August every year by all the spending units / executives to see that any modification are necessary in the allotments placed at the disposal at the beginning of the year.


             ii.      The second budgetary review is carried out at the time of submission of revised and Budget estimate. The revised estimates for the current year are shown on the basis of conclusions derived after this examination in respect of revenue expenditure.
            iii.     Modification Statements – Railway Administration are required to review the budgetary position even after the receipts of revised allotment and advise the position to Railway Board in regard to additionalallotment required or surrenders to be made during the current year under each head of grant or appropriation. This is done through the submission of modification statements. First modification statement is sent to Board by 1st February and final modification statement is sent by 21 st February.
Q.  Describe the various kinds of tender system for letting out works on contracts.  

 ANS -  Kinds of tender –
1.    Open tender –
The system of invitation of tender by public advertisement in the most open public manner possible should be used as a general rule and must be adopted subject to certain exception.
Wide publicity may be given to the call of tenders by –
        i.Notices in railway offices.
       ii.Notices in other Government offices.
      iii.Advertisement in vernacular / Local newspapers.
       iv.Advertisement in national / international newspapers, if work is very important.
2.    Limited Tender –
It is considered not possible to call for open tenders. Limited tender has now been approved by the Board as a regular measure and works up to a limit of Rs.20 lakhs can be awarded on limited tender basis. Finance concurrence is not necessary in case contractors are borne on the approved list. However, if the limited tenders are proposed to be invited from contractors not borne on approved list, prior finance concurrence will be necessary.
Limited tenders are to be invited only when it is advantageous to the Railway. Further there is no restrictions on calling open tenders even if the cost of works is less than Rs.20 lakh.
3.    Single Tender –
In case of emergency, the tender can be invited from a single contract provided that he should be from approved list of contractor.
4.    Global Tender –
This system is adopted by Railway Board or the Government of India for purchases throughout the world. For this type of tenders the General Managers of Zonal Railways and the Administration under them have no power.

Q.- Describe the various budget stages for review / modification of budget grants, what is the time schedule for the divisions to submit their requirements to the Head quarters at each stage?                                                                                          
Ans.- Following are the Budgetary reviews under taken on Railway during the course of a financial year –
    i.  August Review – This is one of the Budgetary reviewed stages. This is conducted in the month of August every year by all the spending units / executives to see that any modification are necessary in the allotmentsplaced at the disposal at the beginning of the year.
   ii.  The second budgetary review is carried out at the time of submission of revised and Budget estimate. The revised estimates for the current year are shown on the basis of conclusions derived after this examination in respect of revenue expenditure.
  iii.  Modification Statements – Railway Administration are required to review the budgetary position even after the receipts of revised allotment and advise the position to Railway Board in regard to additional allotmentrequired or surrenders to be made during the current year under each head of grant or appropriation. This is done through the submission of modification statements. First modification statement is sent to Board by 1stFebruary and final modification statement is sent by 21 st February.

Q.- Distinguish between any three of the following -              
a)  Earnest money and security deposit.
b)  General Conditions of Contract and Special Conditions of contract.
c)  Revised Estimate and Supplementary Estimate.
d)  Final modification Material Modification.
e)  Reappropriation of Funds and Misappropriation of Funds.
Ans.-
( a ) Earnest money and Security Deposit –
Earnest money –
The Tenderer shall be required to deposit Earnest money with the tender for the due performance with the stipulation to keep the offer open till such date as specified in the tender. Earnest money should be either in cash, deposit receipts, pay orders, demand draft.
The earnest money shall be 2% of estimated tender value. The earnest money shall be rounded to the nearest Rs. 10/- . Earnest money shall be applicable for all modes of tendering

Security Deposit – A Security deposit is taken for the satisfaction of and efficient execution of the work within the agreed time from contractors. Such Security deposit may also be percentage deduction from on accounts bills of contractors called as retention Money usually 10% of the gross amount of bill. The scale of Security Deposit is as under –
  1. Contracts up to one lack in value 10% of the value of contract.
  2. Next one lack in value 7½% of the value of contract.
  3. For 3rd one lack and above in value 5% of the value of contract. Subject to maximum of 10 lacks.
The amount over and above 3 lacks to be recovered from the progressive bills of the contractor at the rate of 10% till it reaches the required value.
( b ) General Conditions of Contract and Special Conditions of Contract -
General Conditions of Contract – Operation of a contract is based upon the various stipulation contained in the General condition of contract. This is in the form of a booklet and forms as essential part of the tenderdocuments and ultimately of the contract documents. It is essential that every body dealing with contract should be aware of the contracts of this booklet. These general conditions are normally applicable to all contracts and can be superseded when special conditions are specially formed and stipulated in the tender documents / agreement.
Special Conditions of Contract – These are the conditions which are not covered in the general conditions of the contract.
The special conditions of contract arise due to the site conditions and the nature of work to be carried out. These conditions are framed by the Executive and the contractor is bound to fulfill the conditions during the execution of specific works and all out general application.
( c ) Revised Estimate and Supplementary Estimate.-
Revised estimates –
Revision of estimates is some times necessary if there is rise in rates of materials, cost of labour, alteration in design etc. If the rise in the cost of work is likely to be more than 10% or Rs. 10,000/- a revised estimates is required to be made. Revised estimates should be prepared in the same degree of detail as the original estimates. The reasons for exceed should clearly explained.
Supplementary estimates –
If it is necessary to do any additional work, after an estimate is sanctioned or if any substantial changes are required to be made Supplementary estimates are made in a similar manner as the detailed estimate. The details of items should include only the extra amount of work needed to be executed.
( d ) Final modification Material Modification. -
Final Modification :- 
Railway administration are required to review the budgetary position even after the receipts of revised allotment and advise the position to Railway Board in regard to additional allotment required or surrenders to be made during the current year under each head of grant of appropriation . This is done through the submission of modification statements.
The third review is conducted in the month of February every year and is known as final modification. Actual expenditure during first Nine months and approximate expenditure for the Tenth month is reviewed and compared with: -
Budget grant/ revised grant (if received)
Budget proportion.
Actual expenditure during the last financial year.
Actual expenditure during corresponding period of the last financial year.
Material modification :-
No material modification in a work or scheme as sanctioned should be permitted or under taken with out the prior approval of the authority who sanctioned the estimate . In the case of estimates sanctioned by the Railway Board or higher authority instances of will be considered to be a material modifications of a sanctioned project or work are given in below –
The following may be taken as material modifications on the lines under construction and open line works estimated to cost rupees one crore and over .
Any change in the alignment likely to affect the facilities offered to the public in the neighborhood or likely to increase or decrease the length of the line by over one kilometer.
Introduction of any new station or omission of any station.
Any alteration in the type or number of engines or vehicles provided in an estimate for rolling stock.
A change in the layout of a yard affecting the general method of working or increasing or deducting the number of trains that can be dealt with.
    i.  Any departure from the standards of  construction as accepted by the railway board in the Abstract estimate or use of any second new material.
   ii.  The introduction or omission of any work or facility involving a sum of Rs. 5 Laces and over.
  iii.  Any modification of a sub work provided for in the estimate of a sanctioned work involving an additional out lay on that sub work of more than Rs. 5 laces.
  iv.  The introduction of any new sub work not provided for in the estimate of a sanctioned work involving an out lay of more than Rs. 5 laces.
   v.  Any alteration in the standards of inter locks.
( e ) Reappropriation of Funds and Misappropriation of Funds. -
Reappropriation  -   
The transfer of funds originally assigned for expenditure on a specific object to supplement the funds sanctioned for another object is called ‘’ Reappropriation’’.  
Misappropriation Of Fund  -
Misappropriation Of Funds allotted for specific works under capital or Revenue demand but the expenditure is incurred for another work for which there is no competent authority sanction i.e. expenditure is not voted by Parliament, voted by Parliament but not Reappropriated by the competent authority. Misappropriation Of Fund is a major irregularity in financial point of view and may invite accounts as well as audit objections
Q.   What are the guidelines for disposal of surplus railway land?   
                              
ANS - Guidelines for Disposal of surplus railway land –


  1. When it has been decided that a certain area of land is no longer required for Railway purposes and is eligible for disposal action should be taken.                
  2. Possession should be handed over jointly by the representatives of the Railway and the State Government to the purchaser.
  3. State Governments, in arranging disposal of surplus Railway land, decide to sell it by public auction, a minimum upset or reserve-price should be fixed along with such other terms, as will be beneficial to the Railway Administration with their consultation.  The auction should take place in the presence of a responsible railway representative.
  4. The amount payable by the Central Government or the State Government for lands relinquished by the Railway will in all cases be their market value at the time of transfer and not the original value paid on their acquisition by the Railway.
  5. In cases where Railway land is transferred to a State Government and where the capitalised value of the land revenue had been paid to the Local Government on acquisition, the amount payable by the State Government for the land should include the refund of the capitalised value.  In the case of land disposed of to private parties, the refund of the capitalised value of land revenue by the State Government will not however be necessary.
  6. In all other cases, land will be disposed of at the highest offer and also if that is considered  reasonable.                   
  7. In respect of relinquishment of railway land in favour of the State Government or outsiders for the approaches of ROBs / RUBs, specific approval of the Railway Board should be obtained irrespective of the value of land involved.
  8. Railways should include contingency charges @ 3% in all the relinquishment estimates to cover incidental charges incurred during the process.
  9. Powers of sanction - In all cases of disposals, conditions of restriction of uses agreed upon if any by both the parties may be embodied in the transfer of sale deeds.  When the estimated value exceeds Rs.5 lacs, a prior reference should be made to the Railway Board.   
Q. .- What do you understand by departmental charges as defined in Para 1137 of engineering code?
Ans.- Departmental charges.—
When work is undertaken by the Engineering Department of a railway for outside parties including other railways, government department, public bodies and employees of the railway, departmental charges should be levied to never the cost of tools and plant and of establishment supervision. The charges livable will be 12½ percent on the total cost of the work including the cost of land, except where a rate higher than 12½ percent is charged to governmental departments on a reciprocal basis. The charge will be levied once only on the total outlay on a work and will not be in addition to a first charge of 12½ per cent on the value of stores.

Q. - Indicate the procedure to sanction office building costing 42 Lakhs.
What are the various stages for processing the proposals for inclusion in works programme?
Ans - Various stages of processing the proposal for works programme as follows :-
As per Engineering code Railways are required to submit every year to Railway Board their preliminary works programme (in 15 copies) of works chargeable to Capital, D.R.F., D.F., and O.L.W.R. so as to reach the Railway Board not later than the 7th September of the preceding that to which they relate. These programmes are built up as a continuous process from the District/Divisional office level upwards.
A project should ordinarily commence at District/ Divisional Officer level. The District/ Divisional officer of all persons controlling the Department is in a position to state what works are needed and the reasons therefore. When he is satisfied about the need for a project, he obtains a rough estimate for the work from the Divisional/ District Engineer. At this state no detailed information is required and the estimate is required to be accurate enough to indicate the classification of the work e.g. New Minor Works. If in his opinion the work is essential or justified, he submits the case to the H.O.D.
That officer in turn, if he considers the project necessary and sound, prepares a detailed justification and sends the proposal to the FA&CAO. The FA&CAO then examines the project and returns the case with his comments to the H.O.D. either accepting, rejecting or questioning the justification. 
If the project is accepted by the FA & CAO, the H.O.D. then forwards the case to the Chief Engineer or whichever authority consolidates and compiles the programme. The programme is then considered for finalization by the G.M.
The departments work up schemes in this manner and maintain registers of projects justified, accepted and forwarded. Railway Administration takes proper care to see that the cost of each work is worked out as accurate as possible and only those works/projects which have reached maturity or which have been approved by the Railway Board are included in the programme.
Major works, like doubling of lines, rebuilding of big major bridges important yard remodeling and all works estimated to cost more than Rs. 30 lakhs, are not included in the programme unless these have been previously approved by the Railway Board. The proposals for all such works with full technical and financial justification together with the FA & CAO’s remarks are submitted to the Railway Board when they get ready and well in advance of the programme.
Each new work included in the programme should be supported by a brief explanation to be furnished below the work showing the necessity and urgency for the work and the essential features of the scheme. The financial implications of all new works costing more than Rs. 10 lakhs each, duly vetted by the FA & CAO is noted below the justification for each item. Fresh justification is given in case of work which although included in some previous year programme have been kept in abeyance and are proposed to be restored.
The programme before submission to the Railway Board is examined by the FA & CAO and his comments on each work are shown under the justification for each item.
Final Works Programme – The programme of individual railways are examined by the Railway Board and discussed with the General Managers. The Railway Board thereafter decide the works which should be undertaken during the following year and Railway Administration then modify their works programmes as a result of the Board’s decision and send their final programmes to the Railway Board.
Thus the works programme is given its final shape.

Q.6. - What are the consequences to after termination of contract.
Ans.- Consequences to after termination of contract –
( i ) Revival of the contract within 48 hours – The contract is alive till the notice of termination is issued. As such there is no need of its revival during this period. Notice may be withdrawn if the contractor is able to demonstrate his earnest intention to restart the work.
( ii ) Revival of the contract after expiry of 48 hours and issue of termination notice – Once the formal notice of termination has been issued revival of the contract, if on the same terms and conditions, is possible only as a single tender and would require the observance of all relevant orders relating to such tenders.
( iii ) Loss on account of failure to observe provisions for enforcement of risk action – The defaulting contractorhas to be given an opportunity for participating in a risk and cost tender in order to enable him to mitigate his losses keeping in view the spirit of natural justice.
Tender Committee to consider all aspects of the case such as the contractor’s capacity, credentials, financial status and changes in the relevant circumstances which might have taken place intervening period of award / termination of the earlier contract and opening of risk and cost tender.
It is specified that no work or supply should be entrusted for execution to a contractor whose capacity, credentialand financial status have been investigated before hand and found satisfactory.

Q.  - What do you understand by primary unit of expenditure?
Ans. – Primary unit of expenditure -
The primary units are an important and integral part of the classification of expenditure as they serve to analyse the expenditures by the elements of cost viz wages / stores / other expenditure etc. A few examples of classification using the code of primary units of expenditure. The code 27 representing PU-27 ( Primary unit 27 ) ‘’ Cost of material from stocks. And the code 28 representing PU-28 ( Primary unit 28 ) ‘’ Cost of material direct purchase.

Q.  - State the difference between stock and non stock item?
Ans.- Stock item – 
Stock items are those items which have regular turnover and required in day to day working frequently and at least 2 times in a year. As regards the procurement of stock items, the demand is sent by consignee and the items are recognized by P.L. number.
Non stock item –
Non stock item are those items which do not have regular turn over, not required frequently. These items are planned by the user department. The requirement with complete specification, detailed description of items is submitted to their concerned stores depts. on requisition form No. S – 3102.
As the procurement of items always take some time, advanced planning should be done to procure particularly costly items.