CLARIFICATION ON ACCOUNTING HEADS AND PROCEDURE
FINANCE & ACCOUNTS DIVISION
EMPLOYEES’STATE INSURANCE CORPORATION
C.I.G. MARG, NEW DELHI -2
SUB:CLARIFICATION ON ACCOUNTING HEADS AND PROCEDURE
Accounting system in ESIC has been changed from cash basis to accrual basis from the financial year 2012-13. Necessary guidelines/instructions for accounting of different transactions under revised accounting system have been issued from time to time. Comprehensive training has also been imparted to all the accounting units on the revised accounting procedure. In spite of all the measure taken, it is observed that a few accounting units are not strictly adhering the instructions/ guidelines issued by the Finance & Accounts Division for the preparation of monthly accounts. This has been viewed seriously by the Financial Commissioner. Therefore, in order to ensure uniformity amongst the accounting units, accounting procedures of some important items are narrated below:
1. Cash Book -Account No.1: Cash book of Account No.1 is required to be maintained only in the case of amount is deposited in ESI Fund Account No.1 maintained by them in the State Bank of India (SBI). The system of depositing the amount by cash in ESI Fund Account No.1-Regional Office has already been withdrawn. However, it is observed that a few accounting units are still depositing the amount by cash in their Account No.l maintained with SBI which is unwarranted. It is also further observed that a few accounting units are writing cash book of Account No.1 on the basis of ERP report which is also unwarranted. The ESI contribution is collected through e-challans and deposited in Hqrs. Pool account. Hence, the accounting units need not reflect this amount in their Account No.1 - Cash book on the basis of ERP report. The amount reflected in the report of ERP under the head - "Exchange Account - Responding Items – Deposit in Account No.1 Central" should be incorporated only in their monthly accounts through Classified Abstract Register.
2. Remittances- Cash Remittances: Cash Remittances head is meant for transfer of fund from one unit to another unit. Fund transfer is monitored through these heads. Hence, utmost care should be exercised for operating these heads. The purpose and procedure of different account heads is reproduced as under:
2.1 Between AIC No. 1 Regional Office and AIC No.1- Central(107010100000001) (Payment Side): This head is meant for remitting funds by field units collected in their Account No.1 maintained by them with SBI. Since, the system of depositing the amount by cash in ESI Fund Account No.1- Regional Office has already been withdrawn after IT Rollout no amount under this head should be reflected. Detailed scrutiny under this head may be ensured for rectification of errors by all accounting units.
2.2 Between AIC No. 1 Regional Office and AIC No. l-Central (206010100000001) (Receipt Side): This head is operated by Finance and Accounts Division of Hqrs. Office only due to the fact that the fund is automatically remitted by SBI to Central Account No.-1 after IT Rollout. Therefore, normally, entries in this head should be NIL as accounting units are not supposed to deposit any amount in their Account No.-l. It is observed that some field units have booked amount in this head on the plea that the same was appearing in ERP General Ledger (GL) "Responding items - Deposits in Account No.1 Central-107040 100000004. It is clarified that this head appears in ERP GL-107040 100000004, only when e-challan for remitting fund to Hqrs. Is created selecting this head by the ESIC Hospital / RO/ SRO or Branch Office under their jurisdiction. To prevent this mistake all Accounting / Subordinate unit should select proper head for creating e-challan.
2.3 Between AIC No. I-Central and AIC No.2-Regional Office (107010100000002) (Payment Side): This head is meant for operation by Finance and Accounts Division of Hqrs. Only for remittance to RO/SRO/Hospital/NTA/Hqrs/DMD. Field offices are not supposed to operate this head. Accounting units who have already classified any amount under this head till Sept' 2013 are required to make necessary adjustment by passing transfer entries in monthly accounts of November/December, 2013.
2.4 Between AIC No. I-Central and AIC No.2-Regional Office (206010100000002) (Receipt Side): This head IS to be operated by RO/SRO/ESICH/NTA/Hqrs/DMD for receipt of funds from Finance Division of Hqrs. Office. Branch Offices are not supposed to operate this head.
2.5 Between A/C No. 1-Central and A/C No.2-Brance office (107010100000003) (payment Side): Remittance from Hqrs. Office to Branch Offices is made through ESI Fund Account No.2 of Regional Offices/Sub – Regional Offices. As per pre-defined limit, SBI of RO/SRO automatically transfers the fund to Account No.2 of Branch Office. Earlier, most of the ROs/SROs were not accounting the receipt and transfer of fund for Branch Offices. The same were accounted for on the basis of DCR (A-19) of Branch Offices.
Now, there is no change in fund transfer process. But accounting process of the same has been changed w.e.f. 01.04.2013 on introduction of Finance 2.0 version in ERP. As per the new procedure ROs/SROs will show receipt of full amount (including received on behalf of Branch Offices) under the head Between A/C No.1-Central and A/C No.2-Regional Office (206010100000002) (Receipt Side) and remittances will be shown under the head Between A/C No. 2- Regional Office and A/C No.2-Branch office (107010100000006) (Payment Side). Branch Office will book amount received under the head 206010100000006 (Receipt side) This will enable control over movement of fund and proper accounting thereof.
2.6 Between A/C No.1-Central and A/C No.2-Branch Office (206010100000003) (Receipt side): As explained in sub para 2 (v), use of this head is not allowed w.e.f. 1.4.2013. Since the Branch offices are receiving the funds through ROs/SROs only, Branch offices should operate the head-Between A/C No.2-Regional office and A/C NO.2-Branch Office (206010100000006) (Receipt side ) for receipt of fund from RO/SRO.
Accounting units who have already booked amount under this head are required to make necessary rectification by passing transfer entries before submission of monthly accounts for the month of November/December, 2013.
2.7 Between A/C No.1-Central andA/C No.2-Central – 107010100000004 (payment Side) / 206010100000004- (Receipt Side): This head is meant for Hqrs only. Field Accounting units are not supposed to book any amount in this head.
2.8 Between a/c No.2 Regional Offices and A/c No.2 Regional Offices (outside Region) 107010100000005 (payment Side ) /206010100000005 (Receipt Side): This head is to be operated only by the accounting units where fund is remitted by one accounting unit to another accounting unit. This may happen where office of SSMC/SMC situated at Regional Office is remitting funds to Branch Office under control of Sub-Regional Office. Since Regional and Sub-Regional Office is separate accounting unit, booking of remittances between these units will be done in this head only.
2.9 Between A/C No.2-Regional Office and A/C No.2-Branch Office – 107010100000006 (payment Side) /206010100000006 (Receipt Side): RO/SRO will book remittances to Branch Offices in the head – 107010100000006 and Branch Office will book under – 206010100000006. Explanation is given in sub para 2.5 above.
Amount booked in heads 107010100000006 (payment Side)/206010100000006 (Receipt Side) must match every month. Non-matching of amount will represent improper accounting by R)/SRO or BO.
2.10 Between A/C No.2-Branch Offices and A/C No.2- Branch Offices (within the region) – 107010100000007 (payment Side) / 206010100000007 (Receipt Side): This head is to e operated when amount is transferred from one Branch Office to another Branch Office within the Region. Such cases are very rare and therefore the booking of expenditure under this head required detailed reasons and name of Branches involved.
Some accounting unit have already booked amount under this head which requires immediate scrutiny and rectification.
2.11 Between Hospital Development Committee – Improvement of hospital A/C (B.O) and A/c No.2 R.O – 107010100000008 (Payment Side)/206010100000008 (Receipt Side) – This head is to be used for transferring fund from HDC – R&M Branch office to RO/SRO Account No.2. This scenario is exceptional, as excess fund is remitted back to Account No.1 Central through e-challan. Booking under head requires approval from Hqrs. Wrong amount already booked under this head during 2013-14 may be rectified through transfer entry.
2.12 Between hospital Development – R & M of hospital A/c (B.O) and a/c No.2 r.O – 107010100000009 (payment Side) 206010100000009 (Receipt Side) This head is to be used for transferring fund from HDC – R&M Branch office to RO/SRO Account No.2 This scenario is exceptional, as excess fund is remitted back to Account No. 1 Central through e-Challan. Booking under head requires approval from Hqrs. Wrong amount already booked under this head during 2013-14 may be rectified transfer entry.
2.13 Between A/C No.2 – Branch Offices and A/C No.1 – Regional Office – 107010100000010 (payment Side) /206010100000010 (Receipt Side): Now the system of manual challan is totally dispensed with. Hence operation of this head is to be avoided totally. All Branch Offices are required to generate e-Challan under the head – “Between a/C No.2-Branch Offices and A/C No.1 Central – 107010100000011 (payment Side) “. Wrong classification already made under this head during 2013-14 may be rectified through transfer entry.
2.14 Between AIC No. 2- Branch Offices and AIC No.1-Central-107010100000011 (Payment Side)12060 10100000011 (Receipt Side)-As explained in sub-para 2.13 above, this head is to be operated for remitting excess fund to Hqrs.
2.15 Between AIC No. 2- Regional Office and AIC No.1- RO-107010100000012 (Payment Side)- Now all transfers of fund from Account No.-2 of Accounting unit is directly made to Account No.1-Central through e-challan and booked under the head- Between AIC No. 2- Regional Office and AIC No.l- Central-107010100000013(Payment Side). Hence booking under this head should be avoided. Wrong amount already booked under this head should be rectified through transfer entry.
2.16 Between AIC No. 2- Regional Office and AIC No.1- Central-107010100000013 (Payment Side)1 Between AIC No. 2- Regl. Office and AICNo.1- RO-206010100000012 (Receipt Side): As explained in sub-para 2.15 above, Remittance from Accounting Units (RO/SRO/Hospital/NTA/D(M)D) to Hqrs. at the end of the year should be done through e-challan and booked under this head. After challan reconciliation, the same should be booked under the head -"Between AIC No.
2- Reg!. Office and AIC No.l- RO-206010100000012 (Receipt Side). This head is to be renamed as "Between AIC No. 2- Reg!. Office and AIC No.l- Central-206010 1000000 12 in future. This head should not be used by Branch Offices. Wrong amount already booked under this head during 2013-14 should be rectified through transfer entry.
2.17 Between AIC No.2-Regional Office and Alc No.HDC RM.-Branch office-107010100000014 (Payment Side)1206010100000013 (Receipt Side)-This head is meant for Remittance between RO/SRO to BO-HDC-R&M.
2.18 Between Alc No. HDC RM-Branch office and Alc No.1-Regional Office 107010100000015(Payment Side)12060 10100000014 (Receipt Side)-As explained in para (xv),all remittances to Hqrs is done through e-challan and booked accordingly. Booking under this head should be avoided. Wrong amount already booked under this head during 2013-14 should be rectified through transfer entry.
2.19 Between Alc No. HDC RM-Branch office and Alc No.1 Central-107010100000016 (Payment Side) I 206010100000015 (Receipt Side)-This head is to be used for remittances from BO-HDC to Account No.1-Central.
3. Interest in Account No.-2, HDC-R&M and HDC – Improvements Account:
3.1 Interest credited in Bank Account Np-2 (RO/SRO/ESIH/D(M)D/NTA/BO/BO-HDC (R&M) – Interest earned is Account No. -2 is credited by Bank twice a year in the month of June and December. As per earlier instruction, the amount of interest is to be remitted to Hqrs immediately. The accounting procedure of interest earned is that, on receipt of bank statement/interest credit information from bank, amount of interest should be taken in Cash Book of account No.-2 under the head – Other Interest Income or interest Accrued but not due, as the case may be. Next day e-Challan is to be generated for remitting this amount to Hqes. The e-challan should be created under the head –
· Between A/C No.2 – Branch Offices and A/C No.1-Central – 107010100000011 – By the branch Offices
· Between A/C No.2-Regional Office and A/C No.1 – Central 107010100000013 – By RO/SRO/Hospital/NTA/D(M) D
· Between A/c No.HDC RM-Branch office and A/c No.1 Central – 107010100000016 – By Branch Office for HDC- R &M Account.
3.2 Interest credited in Bank Account No-2 BO-HDC-Improvement- Interest credited by Bank in HDC – Improvement Account also is remitted to Hqrs. The e-Challan for remitting the same should be created under the head – Other interest income – 302010100000004.
4. Group Savings Link Insurance Scheme (GSLIS) : GSLIS is self-financing scheme in which ESIC contribution is limited to 2% of annual premium payable in respect each employee. Premium for 4th Quarter (January – March) is paid to LIC in the month of December only. Hence booking of 2 % ESIC Share should be done in monthly accounts of December. For example, w.r.t. Group –A officer monthly premium is Rs.500/-, and 2% of annual premium is Rs.120/- (Rs.500 pm x12 months x 2%). In the month of December. Premium paid for 3 months (January – March) will be Rs 1500/-. The accounting entry for this payment will be:-
· ESIC Share of contribution to GROUP INSURANCE SCHEME – 401010210000002 (For Hospital A/c Units)/401010306000002 (For Medical Education A/c Units) / 402050200000002 (For R)/SR)/NTA/Hqrs) – Rs.120.00
· Employees’ contribution – ESIC-GROUP INSURANCE – Premium paid to LIC – 203040100000004 (For All Units) – Rs.1380.00
The above entry will appear in the month of December only. For rest of the year. Full amount of quarterly premium payment to LIC will be booked under the head Employees’ Contribution - ESIC – GROUP INSURANCE – Premium paid to LIC – 203040100000004 (For All Units).
5. Bouncing Back of payment made through ECS/NEFT/RTGS etc.ru is observed that many times payment to IP's/ Employees or third party bounces back due to technical or some other reasons. Bank credit the amount of such reversal in account No.2. Such reversal need to be taken back in Cash Book under different heads as follows:
• Reversal of PDB -Permanent disablement benefit-Actual Payments--202060100000003 (Payment Side-Minus entry)
• Reversal of DB payment - Dependant benefit -Actual Payments-202070100000003 (Payment Side-Minus entry)
• Reversal of Sickness Benefit/ TOB or any other Cash Benefit-Cash Benefit Payable-203080 100000009 (Receipt Side)
• Reversal of third party payment-Suppliers / service providers /contractors bill payables -203080100000006 (Receipt Side)
• Reversal of Payment to tie-up hospitals- Bills payable to Super Specialties Hospital-203080100000005 (Receipt Side)
• Reversal of payment to employees-Salary Payable-203080100000001(Receipt Side)
While making re-payment to the bounced back amount, the concerned head in which the receipt is booked only is to be used. All such entries are to be done up-to monthly accounts of March only. Full detail shall be maintained for these transactions.
6. Booking of Super Specialties Treatment expenditure in proper head- It is observed that some hospital accounting units are booking entire payment to tie-up hospitals under the head - Charges forinvestigations-401010204000003. While booking amount under these heads, precautionary measures should be taken that amount is booked as per nature of expenditure.
7. Adjustment of Advances to Construction Agencies- Timely adjustment of advances given to construction agencies against Annual Repair & Maintenance and Special Repair & Maintenance is utmost important. The progresses of adjustment under this heads are not satisfactory. It is also experienced that even after submission of adjustment bills by construction agency adjustment is not being reflected in monthly accounts. Hence due care should betaken for proper adjustment and booking of the same in monthly accounts. While booking the adjustment bill, full amount of advance as per adjustment bill should be booked in Receipt Side in Advances head and in Annual Repair & Maintenance / Special Repair & Maintenance in Payment Side. There may be a case for full adjustment or part
adjustment under these heads. Illustration for each case is given below where advance of Rs.2.00 Lakhs was given for Special Repair work:-
i. When bill for entire amount is submitted by construction agency: -Receipt Side -Amount advanced to Construction Agencies for special repairs of Office buildings & staff quarters-106010100000001 Rs. 2.00 Lakhs. Payment Side-Special Repair & Maintenance charges-202010100000003 Rs. 2.00 Lakhs. In this case bill will be passed for payment as NIL.
ii. When actual bill is more than the advance given: If actual bill is Rs. 2.10 Lakhs. Receipt Side -Amount advanced to Construction Agencies for special repairs of Office buildings & staff quarters-106010100000001 Rs.2.00 Lakhs. Payment Side-Special Repair & Maintenance charges-202010100000003 Rs. 2.10 Lakhs. In this case bill will be passed for payment for Rs.10 thousand.
iii. When actual bill is less than the advance given: If actual bill is Rs. 1.90 Lakhs. Receipt Side -Amount advanced to Construction Agencies for special repairs of Office buildings & staff quarters-1 06010100000001 Rs. 1.90 Lakhs. Payment Side-Special Repair & Maintenance charges- 202010100000003 Rs. 1.90 Lakhs. In this case bill will be passed for payment of Rs.NIL. The construction agency will refund the shortfall amount of Rs. 10 thousand and the same will be deposited in ESI Fund Account No. 1 after creating e-challan in the head- Amount advanced to Construction Agencies for special repairs of Office buildings & staff quarters- 106010100000001.
iv. Adjustment of part amount.·-Even if the construction agency has submitted part bill, adjustment of part amount as explained above should be done immediately without waiting for submission of full and final bill.
8. Adjustment of Advances to Employees - Problem of adjustment of employees advance arises where the employee is transferred to other accounting unit. In this case suspense slip should immediately be issued along-with last pay certificate and copy of the suspense slip should also be sent to the transferee unit via e-mail. Accounting entry of this transaction is explained in Hqrs. letter no. F-12/12/1/2013-14/A/cs-1 Dated 12.12.2013 (Para-3).
9. Segregation of Expenditure between Hospital & Medical Education: All expenditure which is directly belonging to Medical Education shall be booked under Sub-Major Head 4010103 -ESTABLISHMENTOF MEDICAL COLLEGES AND RELATED EXPENDITURE only. If any such expenditure concerning to Medical Education is already booked under sub-major head 4010102, the same may be rectified in December'2013 monthly accounts through transfer entry.
Expenditures which are common for both Hospital and Medical Education may be booked in Hospital only (4010102). However efforts should be made to i segregate the expenditure to the extent possible.
10. Miscellaneous Income -309010100000008 / Miscellaneous Expenditure -402010900000014/402070100000004: A huge transactions are classified under these heads when detailed heads for classifying income and expenditure is already provided in the list of Major and Minor heads of accounts. All the accounting units are therefore, requested to reconcile the amount booked under these heads and rectify the erroneous classification made, if any. In future, a separate statement showing the amount classified under these heads may be furnished along with the monthly accounts showing the nature of income/ expenditure and amount involved. All accounting units are requested to note these instructions carefully for their guidance and compliance. If any further clarifications are required, the Finance and Accounts Branch-I in the Hqrs. Office may be contacted. This is issued with the approval of Additional Commissioner (Finance).
(Hemant Kumar Pandey)
Deputy Director (Finance)