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fUn zrti ~ "O"maTl FINANCE & ACCOUNTS DIVISION

~ ~ o!mr fc'1Jrn/ EMPLOYEES' STATE INSURANCE CORPORATION

~ ~,/ PANCHDEEP BHAWAN

~.~.;;fr.~, C1~R;("Ji-2/, Cl.G. MARG, NEW DELHI-2

Phone -011-23234336, VOIP-10011129, email-fal-hq@esic.in.dir-fin@esic.nic.in

TI1ROllGI1 £VlAll AI'ID WfBSITE ONl Y.

No. Fl3/1S/1/2009-14/A/cs-1 Dated 23.12.2013

MEMORANDUM

SUB:CLARIFICATION ON ACCOUNTING HEADS AND PROCEDURE

Accounting system in ESIC has been changed from cash basis to accrualbasis from the financial year 2012-13. Necessary guidelines/instructions foraccounting of different transactions under revised accounting system have beenissued from time to time. Comprehensive training has also been imparted to allthe accounting units on the revised accounting procedure. In spite of all themeasure taken, it is observed that a few accounting units are not strictlyadhering the instructions/ guidelines issued by the Finance & Accounts Divisionfor the preparation of monthly accounts. This has been viewed seriously by theFinancial Commissioner. Therefore, in order to ensure uniformity amongst theaccounting units, accounting procedures of some important items are narratedbelow:

1. Cash Book -Account No.1: Cash book of Account No.1 is required to bemaintained only in the case of amount is deposited in ESI Fund Account No.1maintained by them in the State Bank of India (SBI). The system of depositing theamount by cash in ESI Fund Account No.1-Regional Office has already beenwithdrawn. However, it is observed that a few accounting units are still depositingthe amount by cash in their AccountNo.l maintained with SBI which isunwarranted. It is also further observed that a few accounting units are writingcash 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. poolaccount. Hence, the accounting units need not reflect this amount in theirAccount No.1 - Cash book on the basis of ERP report. The amount reflected in thereport of ERP under the head - "Exchange Account - Responding Items - Depositin Account No.1 Central" should be incorporated only in their monthly accountsthrough Classified Abstract Register.

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2. Remittances- Cash Remittances: Cash Remittances head is meant fortransfer of fund from one unit to another unit. Fund transfer is monitoredthrough these heads. Hence, utmost care should be exercised for operating theseheads. The purpose and procedure of different account heads is reproduced asunder:2.1 Between AIC No. 1 Regional Office and AIC No.1-Central(107010100000001) (Payment Side): This head is meant for remittingfunds 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 thishead should be reflected. Detailed scrutiny under this head may be ensured forrectification 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 andAccounts Division of Hqrs. Office only due to the fact that the fund isautomatically remitted by SBI to Central Account No.-1 after IT Rollout.Therefore, normally, entries in this head should be NIL as accounting units arenot supposed to deposit any amount in their Account No.-l. It is observed thatsome field units have booked amount in this head on the plea that the same wasappearing in ERP General Ledger (GL)"Responding items - Deposits in AccountNo.1 Central-107040 100000004. It is clarified that this head appears in ERPGL-107040 100000004, only when e-challan for remitting fund to Hqrs. iscreated selecting this head by the ESIC Hospital / RO/ SRO or Branch Officeunder their jurisdiction. To prevent this mistake all Accounting / Subordinateunit 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 ofHqrs. onlyfor remittance to RO/SRO/Hospital/NTA/Hqrs/DMD. Field offices are notsupposed to operate this head. Accounting units who have already classified anyamount under this head till Sept' 2013 are required to make necessaryadjustment by passing transfer entries in monthly accounts ofNovember/December, 2013.

2.4 Between AIC No. I-Central and AIC No.2-Regional Office(206010100000002) (Receipt Side): This head IS to be operated byRO/SRO/ESICH/NTA/Hqrs/DMD for receipt of funds from Finance Division ofHqrs. Office. Branch Offices are not supposed to operate this head.

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.. 2.5 Between AIC No.1-Central and AIC No.2-Branch Office(107010100000003)(Payment Side): Remittance from Hqrs. Office to BranchOffices is made through ESI Fund Account No. 2 of Regional Offices/Sub-Regional Offices.As per pre-defined limit,SBI of RO/SRO automatically transfersthe fund to Account No.2 of Branch Office. Earlier, most of the ROs/SROs werenot accounting the receipt and transfer of fund for Branch Offices. The samewere accounted for on the basis of DCR (A-19)of Branch offices.

Now, there is no change in fund transfer process. BUT accountingprocess of the same has been changed w.e.f. 01.04.2013 on introduction ofFinance 2.0 version in ERP. As per the new procedure ROs/SROs will showreceipt of full amount (including received on behalf of Branch Offices) under thehead -Between AIC No.1-Central and AIC No.2-Regional Office(206010100000002) (Receipt Side) and remittances will be shown under thehead -Between A/C No.2-Regional Office and A/C No.2-Branch Office(107010100000006)(Payment Side). Branch office will book amount receivedunder the head 206010100000006 (Receipt Side)This will enable control over movement of fund and proper accounting thereof.

2.6 Between AIC No. 1-CentraZ and AIC No.2-Branch Office(206010100000003)(Receipt side): As explained in Sub para 2(v), use of thishead is not allowed w.e.f. 1.4.2013. Since theBranch offices are receiving thefunds through ROs/SROs only, Branch offices should operate the head-Between AIC No. 2-RegionaZ Office and AIC No.2-Branch Office(206010100000006) (Receipt side) for receipt of fund from RO/SRO.Accounting units who have already booked amount under this head arerequired to make necessary rectification by passing transfer entries beforesubmission of monthly accounts for the month of November/December, 2013.

2.7Between AIC No. 1-CentraZ and AIC No. 2-CentraZ- 107010100000004(Payment Side) I 2060101 00000004-(Receipt Side): This head is meant forHqrs only. Field Accounting unitsare not supposed to book any amount in thishead.

2.8 Between Alc No.2 Regional Offices and Alc No.2 Regional Offices(Outside Region) 107010100000005 (Payment Side) 1206010100000005(Receipt Side): This head is to be operated only by the accounting units wherefund is remitted by one accounting unit to another accounting unit. This mayhappen where office of SSMC/SMC situated at Regional Office is remittingfunds to Branch Office under control of Sub-Regional Office. Since Regional andSub-Regional Office is separate accounting unit, booking of remittancesbetween these units will be done in this head only.

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, 2.9 Between AIC No.2-Regional Office and AIC No.2-Branch Office-107010100000006(Payment Side)l 206010100000006 (Receipt Side): ROjSROwill book remittances to Branch Offices in the head-107010100000006 andBranch Office will book under- 206010100000006. Explanation is given in subpara 2.5 above.

Amount booked In heads 107010100000006(Payment Side)j206010100000006 (Receipt Side) must match every month. Non-matching ofamount will represent improper accounting by ROjSRO or BO.

2.10 Between Ale No.2-Branch Offices and Ale No. 2- Branch Offices(Within the region)-10701 0100000007(Payment Side) I206010100000007 (Receipt Side): This head is to be operated when amountis transferred from one Branch Office to another Branch Office within theRegion. Such cases are very rare and therefore the booking of expenditureunder this head requires detailed reasons and name of Branches involved.

Some accounting unit have already booked amount under this headwhich requires immediate scrutiny and rectification.

2.11 Between Hospital Development committee- Improvement of hospitalAlc (B.0) and Alc No.2 R.0-107010100000008 (PaymentSide)I206010100000008 (Receipt Side) - The instruction issued from Hqrs officevide letter no. FA-llj11jMisc. Hosp.Devel. j08jAjcs. V dated 12.03.2009 may bescrupulously followed and rectification for misclassification already made, if any, maybe carried out.

2.12 Between Hospital Development committee- R & M of hospitalAlc (B.0) and Alc No.2 R.0-10701 0100000009 (PaymentSide)I206010100000009 (Receipt Side)-This head is to be used for transferringfund from HDC -R&M Branch Office to ROjSRO Account No.2. This scenario isexceptional, as excess fund is remitted back to Account No. 1 Central through e-challan. Booking under head requires approval from Hqrs. Wrong amount alreadybooked under this head during 2013-14 may be rectified through transfer entry.

2.13 Between Ale No. 2- Branch Offices and Ale No.1- Regional Office-107010100000010 (Payment Side)1206010100000010 (Receipt Side):Now the system of manual challan is totally dispensed with. Hence operationof this head is to be avoided totally. All Branch Offices are required togenerate e-challan under the head -"Between AjC No. 2- Branch Offices andAjC No.1Central-107010100000011 (Payment Side)". Wrong classificationalready made under this head during 2013-14 may be rectified through transferentry.

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2.14 Between AIC No. 2- Branch Offices and AIC No.1-Central-107010100000011 (Payment Side)12060 10100000011 (Receipt Side)-Asexplained in sub-para 2.13 above, this head is to be operated for remitting excessfund to Hqrs.

2.15 Between AIC No. 2- Regional Office and AIC No.1- RO-107010100000012 (Payment Side)- Nowall transfers of fund from Account No.-2 ofAccounting unit is directly made to Account No.1-Central through e-challan andbooked 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 transferentry.

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 theend of the year should be done through e-challan and booked under this head. Afterchallan 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 berenamed 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. Wrongamount already booked under this head during 2013-14 should be rectified throughtransfer entry.

2.17 Between AIC No.2-Regional Office and Alc No.HDCRM.-Branch office-107010100000014 (Payment Side)1206010100000013 (Receipt Side)-This head ismeant 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 explainedin 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 thishead 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 headis to be used for remittances from BO-HDC to Account No.1-Central.

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3. Interest in Account No.-2, HDC-R&M and HDC-Improvements Account:

3.1 Interest credited in Bank Account No-2(ROjSROjESIHjD(MjDjNTAjBOjBO-HDC(R&Mj -Interest earned in Account No.-2is credited by Bank twice a year in the month of June and December. As per earlierinstruction, the amount of interest is to be remitted to Hqrs immediately. Theaccounting procedure of interest earned is that , on receipt of bank statement Iinterest credit information from bank, amount of interest should be taken in CashBook of account No.-2 under the head -Other Interest Incomeor Interest Accrued butnot due ,as the case may be. Next day e-challan is to be generated for remitting thisamount to Hqrs. The e-challan should be created under the head-

• Between A/C No. 2- Branch Offices and A/C No.I-Central-107010100000011 - By the Branch Offices

• Between A/C No. 2- Regional Office and A/C No.l- Central-107010100000013 - By ROISRO IHospital/NTA/D(M)D

• Between AI c No. HDC RM-Branch office and AI 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 HOC-Improvement Account also is remitted toHqrs. The e-challan for remitting the same should be created under the head -Other interest income -302010100000004.

4. Group Savings Link Insurance Scheme (GSLIS):GSLISisself financing scheme in which ESIC contribution is limited to 2 % of annualpremium 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 annualpremium is Rs. 120/- (Rs. 500 pm X 12 months X 2 %). In the month ofDecember, 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 (ForMedical Education A/ c Units)/ 402050200000002 (ForRO/SRO/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 theyear, full amount of quarterly premium payment to LIC will be booked underthe head Employees' Contribution -ESIC-GROUP INSURANCE-Premium paidto LIC-203040100000004 (For All Units).

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,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 otherreasons. Bank credit the amount of such reversal in account No.2. Suchreversal 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-CashBenefit 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 SuperSpecialties Hospital-203080100000005 (Receipt Side)

• Reversal of payment to employees-Salary Payable-203080100000001(Receipt Side)

While making re-payment to the bounced back amount, the concernedhead in which the receipt is booked only is to be used. All such entries areto be done up-to monthly accounts of March only. Full detail shall bemaintained for these transactions.

6. Booking of Super Specialties Treatment expenditure inproper head- It is observed that some hospital accounting units are bookingentire payment to tie-up hospitals under the head - Charges forinvestigations-401010204000003. While booking amount under theseheads, precautionary measures should be taken that amount is booked as pernature of expenditure.

7. Adjustment of Advances to Construction Agencies- Timelyadjustment of advances given to construction agencies against Annual Repair& Maintenance and Special Repair & Maintenance is utmostimportant.Theprogresses of adjustment under this heads are not satisfactory.It is also experienced that even after submission of adjustment bills byconstruction agency adjustment is not being reflected in monthly accounts.Hence due care should betaken for proper adjustment and booking of thesame in monthly accounts. While booking the adjustment bill, full amount ofadvance as per adjustment bill should be booked in Receipt Side in Advanceshead and in Annual Repair & Maintenance / Special Repair &Maintenancein Payment Side.There may be a case for full adjustment or part

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adjustment under these heads. Illustration for each case is given below whereadvance of Rs.2.00 Lakhs was given for Special Repair work:-

i. When bill for entire amount is submitted by constructionagency: -ReceiptSide -Amount advanced to Construction Agencies for special repairs of Officebuildings & staff quarters-106010100000001 Rs. 2.00 Lakhs. PaymentSide-Special Repair & Maintenance charges-202010100000003 Rs. 2.00Lakhs. 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. 2.10Lakhs. Receipt Side -Amount advanced to Construction Agencies for specialrepairs of Office buildings & staff quarters-106010100000001 Rs.2.00 Lakhs.Payment Side-Special Repair & Maintenance charges-202010100000003Rs. 2.10 Lakhs. In this case bill will be passed for payment for Rs.10thousand.

iii. When actual bill is less than the advance gwen: If actual bill is Rs. 1.90Lakhs. Receipt Side -Amount advanced to Construction Agencies forspecial 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 forpayment of Rs.NIL. The construction agency will refund the shortfall amountof 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 ConstructionAgencies for special repairs of Office buildings & staff quarters-106010100000001.

iv. Adjustment of part amount.·-Even if the construction agency has submittedpart bill, adjustment of part amount as explained above should be doneimmediately without waiting for submission of full and final bill.

8. Adjustment of Advances to Employees - Problem of adjustment ofemployees advance arises where the employee is transferred to otheraccounting unit. In this case suspense slip should immediately be issuedalong-with last pay certificate and copy of the suspense slip should also be sentto the transferee unit via e-mail. Accounting entry of this transaction isexplained 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: Allexpenditure which is directly belonging to Medical Education shall be bookedunder Sub-Major Head 4010103 -ESTABLISHMENTOF MEDICALCOLLEGESAND RELATED EXPENDITURE only. If any such expenditure concerning toMedical Education is already booked under sub-major head 4010102, the samemay be rectified in December'2013 monthly accounts through transfer entry.

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... Expenditures which are common for both Hospital and Medical Education maybe booked in Hospital only (4010102). However efforts should be made to

i segregate the expenditure to the extent possible.

10. Miscellaneous Income -309010100000008 / MiscellaneousExpenditure -402010900000014/402070100000004: A huge transactionsare classified under these heads when detailed heads for classifying incomeand expenditure is already provided in the list of Major and Minor heads ofaccounts. All the accounting units are therefore, requested to reconcile theamount booked under these heads and rectify the erroneous classificationmade, if any.In future, a separate statement showing the amount classifiedunder these heads may be furnished alongwith the monthly accounts showingthe nature of income/ expenditure and amount involved.

All accounting units are requested to note these instructions carefullyfor their guidance and compliance. If any further clarifications are required, theFinance and Accounts Branch-I in the Hqrs. Office may be contacted.

This is issued with the approval of Additional Commissioner (Finance).

Deputy Director (Finance)

To

l. TheDirector (Fin)/ Joint Director (Fin)/ Deputy Director (Fin)/ Assistant Director (Fin)of all Regional Offices,Sub-Regional Offices,ESIC Hospitals, NTAand D(M)D,Delhi.

2. Director (Medical) Delhi, Director (Medical) Noida, Insurance Commissioner (NTA)andH.qrs. office.

3. All Regional Director/Director 1/c, SRO/Medical Superintendent, ESIC Hospitals andESIC Medical College, Gulbarga.

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