Introduction
1. Optimum performance and financial ability of the Department has to be
reviewed periodically, for that, the analysis of Expenditure Coverage Ratio
and Operating Ratio need to be attempted as narrated in the succeeding paras.
2. The financial performance of a circle can be improved by achieving Revenue
Targets and Controlling the Expenditure within the allotment under relevant
Heads of Accounts. Economy instructions issued by the Ministry of Finance
from time to time on ceiling items have to be followed strictly.
3. The Department has attempted a formula (Expense Coverage Ratio) to know
the financial performance of the Department. The ECR in percentage terms
refers to Revenue Receipts (RR) for every hundred rupees of Working
Expenses (WE), Higher the ECR the better the financial performance.
4. The ideal operating ratio should normally be 1:1 for our Department. Analysis
of financial performance needs to be made, reviewed on monthly basis and
brought to the notice of the Head of the Circle to improve the financial
performance.
Expense
Coverage Ration
a) It shows how much expenditure is covered by the revenue earned by that
unit. Value can be less than 100 or more than 100. If < 100: revenue is less
than expenditure. (Loss) & If > 100: revenue is more than expenditure.
(Profit)
b) Is a measure to ascertain the profitability or loss of the Unit.
c) If each unit earns as much as it spends, deficit can be wiped out.
d) Puts focus on unit level profitability.
e) Helps sensitize staff towards earning potential of each office
To
achieve the ideal Operating Ratio/ Expense Coverage Ratio
a) By controlling/minimizing the revenue expenditure,
b) By achieving revenue targets and preventing the revenue pilferages,
c) By maximizing the revenue collections/recoveries from other organizations for the services rendered to them,
d) By properly implementing the opportunities of new schemes/services introduced from time to time.
e) Optimum utilisation of Human resources
f) Introduction of new products and services and perform performance audit after six months of its roll out and take remedial action
g) Set proper vigilance and arrest avoidable frauds
h) Arrest losses
i) Share and fix individual target on products relating to agency services etc.
j) Booking of revenue and expenditure in proper Head of Account.
k) To keep watch over pilferage of revenue.