overview of stores accounts

BYVINAYAK RAO , I.R.A.S.DY. CAO (C&P)WESTERN RAILWAY HQ,MUMBAI.

OVERVIEW OF STORES ACCOUNTS

PURCHASES BY I. R.

1999-00 RS. 9398 CR.2000-01 RS. 10,835 CR.1999-00 RS. 8601 CR. INDEGENOUS2000-01 RS. 10,373 CR.

INDEGENOUS1999-00 91.5 % INDEGENOUS

PURCHASES2000-01 95.7 % INDEGENOUS

PURCHASES

MODE OF PROCUREMENT

ZONAL RAILWAYS AND PU s PROCURE MOST OF THE MATERIAL THEY NEED. CERTAIN ITEMS ARE PROCURED THROUGH RAILWAY BD., AND DGS&D.

IN 2000-01 48 % WAS PROCURED BY ZONAL RLYS AND PU s, 47 % BY RAILWAY BD. AND 5 % BY DGS&D.

INVENTORY TURN OVER RATIO (TOR)

INV. TOR = VALUE OF BALANCE STOCK– ISSUES DURING THE YEAR –YEAR TOR

–1999-00 10.22%–2000-01 12 %

STORES BALANCES & ISSUES (W/O FUEL)

0

1000

2000

3000

4000

5000

6000

80-81 84-85 90-91 99-00 00-01

I.D.Y.

BAL.P.Y.

INVENTORY TURNOVER RATIO (W/O FUEL)

9

9.5

10

10.5

11

11.5

12

96-97 97-98 98-99 99-00 00-01

%AGE

DISPOSAL OF UNUSABLE ASSETS ON I. R.

DURING 2000-01 RS. 949 CR. WAS REALIZED BY DISPOSAL OF UNUSABLE ASSETS. THIS CONSTITUTES ROUGHLY 10 % OF PURCHASES. SCRAP DISPOSAL

ORGANISATION AT RLY. BD. LEVEL

S .O .

D .D .

D IR

D .D .

JT. D IR

E X . D IR E X . D IR E X . D IR

A D D . M E M B E R (S TO R E S )

M E M B E R (M E C H .)

ORGANISATION AT ZONAL LEVEL

A C O S A C O S

S S O S S O

D Y . C O S I D Y . C O S II

C M M C M M

A C O S A C O S

D Y C O SD E P O T

C M M

C O S

ASSOCIATE ACCOUNTS

A O / F U E L

S A O /IC

A O / S TO R E S TE N D E R S

S A O / S F

A O / S TO R E S B IL L S

S A O / S A L E S

D Y . C A O (S TO R E S )

F A & C A O (W S T)

F A & C A O

FUNCTIONS OF STORES DEPT.PURCHASE, INSPECTION, CUSTODY, ISSUE OF

RLY. STORES; AND CONDUCT PURCHASES IN MOST EFFICIENT,ECONOMIC,FAIR,AND TRANSPARENT MANNER

INVENTORY MGT. & STANDARDIZATIONDEVELOPMENT OF COST EFFECTIVE

MATERIALSCOMPILATION OF STORES BUDGET IN

CONSULTATION WITH ACCOUNTSSATISFY PUBLIC ACCOUNTABILITY AT ALL

STAGES OF TRANSACTIONS[ PURCHASE, ISSUE, SALE]

FUNCTIONS OF STORES A/CS DEPT.

COMPLETE AND INDEPENDENT AUDIT OF STORES TRANSACTIONS

FUNCTIONS OF ASSOCIATE FINANCIAL ADVISOR

MAINTAINING ACCOUNTAL & PASSING BILLS

COMPILE MONTHLY STORES ACCOUNTS AND PERIODICAL RETURNS

STOCK VERIFICATION

IMPORTANT TERMS

MOVABLE SURPLUS

THAT STORES WHICH IS LIKELY TO BE ISSUED IN FUTURE

DEAD SURPLUSTHAT STORES

WHICH IS NOT LIKELY TO BE ISSUED IN FUTURE

IMPORTANT TERMS

STOCK ITEMSWHICH ARE

STOCKED IN STORES DEPOTS

N. S. ITEMSWHICH ARE NOT

STOCKED IN STORES DEPOTS

CONCEPT OF AVERAGE ANNUAL CONSUMPTION

BASED ON THE AVERAGE OF ANNUAL CONSUMPTION OF PAST THREE YEARS

THIS IS VERY USEFUL IN DECIDING THE QUANTITIES TO BE PROCURED

HISTORY SHEET FOR ITEM “X”(FIGURES IN RED INDICATE NO. OF DAYS WHEN ITEM WAS OUT OF STOCK)

DEP. YR-3 AC YR-2 AC YR-1 AC AAC

KTT700 60

838 890

1001226

650

1501103

1056

SBI1400 50

1622

1800

80

2479

2000

40

2246

2116

VETTING OF NON-STOCK INDENTS

REALISTIC ASSESSMENT KEEPING IN VIEW THE CANONS OF FINANCIAL PROPRIETY

SPECS SHOULD BE DETAILED AND UNAMBIGUOUS

USE BIS OR IRS SPECSSPECS SHOULD BE SUCH THAT THEY

DO NOT SUIT ONLY ONE PARTICULAR MANUFACTURER

(CONTD.)

FUNDS AVAILABILITYLAST PURCHASE RATEED/ST/CST/OCTROI HAS TO BE TAKEN

INTO ACCOUNTINDENTS > RS. 40,000 ARE VETTED

BY ASSOCIATE ACCTSINDENTS > RS. 2,000 ARE SIGNED BY

JAG OR HIGHER OFFICER

5 R s OF PURCHASING

RIGHT QUANTITY

RIGHT QUALITY

RIGHT PRICE

RIGHT DELIVERY

RIGHT SOURCES

TYPES OF TENDERS

OPEN / LIMITED / SINGLE

FOR SAFETY ITEMS APPEARING AS RDSO’S APPROVED SUPPLIERS LIST OR GM’S APPROVED SUPPLIERS’ LIST

BULLETIN TENDERS

SCRUTINY OF TENDERS

OPENING OF TENDERSCOMPARATIVE STATEMENT.DETAILS OF ED, ST / CST, PACKING

CHARGES AND CALCULATIONSFIN. IMPLICATIONS OF OTHER

CONDITIONS, e.g. QTY. DISCOUNTS, EARLY PAYMENT DISCOUNT, ETC.

LAST PURCHASE RATESCREDENTIALSPAST PERFORMANCE

CONTD...

CONSTITUTION OF T. C.LATE OR DELAYED TENDERS TO BE

REJECTED

UNSOLICITED OFFERS TO BE REJECTED

NEGOTIATION WITH L1 ONLY

.

SPLITTING

SPLITTING CAN BE RESORTED TO KEEPING IN MIND THE FOLLOWING:

VITAL AND CRITICAL NATURE OF THE ITEM

QUANTITY.DELIVERY REQUIREMENTSCAPACITY OF FIRMSPAST PERFORMANCE

I. R. S. CONDITIONS OF CONTRACT

RISK PURCHASELIQUIDATED DAMAGESBOOK EXAMINATION CLAUSEFALL CLAUSEFORCE MAJURE CLAUSETIME PREFERENCE

PRECHECK OF P. O. AND BILLS

PRE CHECK OF ALL P.O.s > RS. 40,000 IS COMPULSORY

COMPARISION WITH ORIGINAL OFFERS AND TC MINUTES

CHECK BILLS WITH REF. TO P.O. AND ALL THE SPECIAL CONDITIONS MENTIONED THEREIN

PURCHASES (IMPORTED)

BILL OF LADING IS A DOCUMENT GIVING TITLE OF GOODS SIGNED BY A SHIPPING COMPANY OR THEIR AGENTS CONTAINING DECLARATION REG. RECEIPT OF GOODS ( CARGO) CONDITIONS ON WHICH TRANSPORTATION IS MADE AND DELIVERY OF GOODS AT PRESCRIBED PORT

LETTER OF CREDIT

L.C. IS A BANK INSTRUMENT AUTHORISING THE (ISSUING ) BANK ON BEHALF OF THE PURCHASER(APPLICANT) TO PAY A CERTAIN SUM TO SPECIFIED SELLER (BENEFICIARY) PROVIDED THE SELLER SUBMITS THE DOCUMENTS AS PRESCRIBED IN THE LETTER OF CREDIT.

TYPES OF L. C.

REVOCABLE VS. IRREVOCABLE LC

CONFIRMED LC

TRANSFERRABLE LC

REVOLVING LC

STORES SUSPENSE HEADS

PURCHASES INDEGENOUS P 7110PURCHASES IMPORTED P 7120PURCHASES DGS&D P 7130SALES REALISATION P 7140STORES P 7160STOCK ADJUSTMENT P 7180MISC. ADV. (CAP) P 7310

STORES (P-7160)DR. WITH COST OF STORESBY CR. TO:PURCHASE CAP. 7110 OR 7130 FOR

IMPORTED, AND INDIGENOUS ITEMSWMS 7210 FOR W/S MANUFACTURED ITEMSREV./ WORKS FOR STORES RETURNED TO

DEPOTSDTR (7170)MAC CAP.7130 (FABRICATED MATERIALS),ETC.

P 7160 is Credited by cost of stores issued by Dr. to:

Sales (cap.7140) in case of saleWMS (7210) in case of issue to w/shopRev./ Wks allocation for issue to

rev./wksDTR in case of depot transferMAC(7310) for issue for fabricationNOTE:Balance in Cap. 7160 indicates

value of stores held in stock.

SINT (DTR)

OPERATED TO WATCH RECEIPT & ACCOUNTAL OF STORES TRANSFERRED FROM ONE DEPOT TO ANOTHER.

STORES ISSUED DURING A MONTH BUT NOT RECEIVED IN THE SAME MONTH BY THE RECEIVING DEPOT ARE NOTED DOWN IN THE REGISTER OF SINT(DTR)

PURCHASE SUSPENSE

OPERATED TO WATCH PAYMENTS TO FIRMS FROM WHOM MATERIAL HAS BEEN RECEIVED AND TAKEN INTO STOCK BEFORE PAYMENTS ARE MADE.

CREDIT BALANCE IF PAYMENT IS MADE AFTER MATERIAL IS RECEIVED

DEBIT BALANCE IF PAYMENT IS MADE BEFORE MATERIAL IS RECEIVED.

SINT (PURCHASE)

CREDITS TO PURCHASE A/C ARE POSTED FROM RECEIPT ORDER (RO).

POSTING OF SUCH RO s WILL BE DONE IN PRICE LEDGERS ONLY WHEN THE MATERIAL IS RECD. AND ACCEPTED IN ITS NUMERICAL LEDGER. IN SUCH CASES ACCOUNTAL IS DELAYED BEYOND THE MONTH IN WHICH THE RO IS ISSUED. ALL SUCH ITEMS ARE POSTED IN SINT (PURCHASE).

STOCK ADJ. A/C

PT. I

DIFFERNCE IN STOCK- DIFFERENCE BETWEEN GROUND BAL.& BOOK BAL.

PT. II

DUE TO REVISION OF RATES ON ACCOUNT OF DEPRECIATION

STOCK ADJ. A/C (CONTD...)

PT. IIIALL DIFFERNCES

BETWEEN BOOK VALUE AND VALUE REALISED IN AUCTION SALES, LOSSES ON A/C OF LEAKAGE, THEFT, OBSOLOSCENCE, ETC.

REVIEW OF STOCK ADJ. A/C

TWICE A YEAR ON 31.3 AND 30.09

W/SHOP MANUFACTURING SUSPENSE (WMS)

THOUGH IT RECORDS LABOUR COST, MATERIAL COST, AND OTHER MISC. CHARGES INCURRED ON THE WORKS UNDERTAKEN IN RAILWAY WORKSHOPS, STORES FORMS A MAJOR PORTION OF THIS. THUS IT IS AN IMPORTANT ITEM FROM THE POINT OF VIEW OF STORES BUDGET.

OUTPUTS FROM EDP CENTRELIST OF STOCK MASTERLIST OF VOUCHERS WHERE BOOK

AVERAGE RATE (BAR) CHANGES BY > 10 %

DEBIT CREDIT SUMMARY- STORES MONTHLY SUMMARY

DIVISION WISE ISSUES TO REVENUE DEMANDS

TRANSACTION REGISTERCONTROL CLASS LEDGER

WHY DO WE NEED B.A.R.?

THOUGH THERE ARE VARIOUS METHODS FOR PRICING ISSUES SUCH AS LIFO, FIFO,ETC. THE BOOK AVERAGE OFFERS A SIMPLE AND SCIENTIFIC METHOD FOR ALLOCATING VALUE TO ISSUES FROM STOCK.

Book Average Rate (BAR) : AN ILLUSTRATION

O.B.QTYNos.

O.B.RT.(Rs.)

RcptQTY.

RcptRT.

Iss.RT.

Iss.RT.

C.B.RT.

C.B.RT.

500 10 200 11 0 0 700 10.3

700 10.3 0 0 400 10.3 300 10.3

RETURN STORES

STOCK ITEMSIF ITEM IS NOT

OVERSTOCK CREDIT IS GIVEN AT BAR

FOR SECOND HAND MATERIAL AT 1/2 THE VALUE

FOR ALL NON STOCK ITEMS AT APP. SCRAP RATE

DISPOSAL OF SCRAPRECEIPT OF SCRAPPROXY AUCTIONFORMATION OF LOTSLOT REGISTERVALUATION OF SCRAP[NON FERROUS

SCRAP R.P. IS VETTED BY HQ A/CsSALE THROUGH AUCTION, TENDER,

TENDER CUM AUCTION, DIRECT SALESSTAFF SALE

CONTD…

EARNEST MONEY: VALUE UPTO RS. 2000@ 25 % OF VALUE FOR RS. 2000- 10,000@10 % OF VALUE FOR RS. > RS. 10,000TIME PERIOD FOR PAYMENTFOR < RS. 1 LAC 10 DAYS FOR > RS. 1 LAC 20 DAYSFOR > RS. 2 LACS INSTALMENTS CAN BE

GRANTED BY C O S

DIRECT SALE

FREIGHT @5% INCIDENTAL CHARGES @ 2 %DEPARTMENTAL CHARGES @ 12.5

%OVER AND ABOVE.

INVENTORY CONTROL

OBJECTIVES:AVOID BLOCKING OF CAPITALMINIMISE CARRYING COSTMINIMISE HANDLING COSTMINIMISE OBSOLESCENCE

TECHNIQUES OF I. C.

A B C ANALYSISAA CATEGORY- ANNUAL ISSUES >

RS. 5 LACSA CATEGORY - ANNUAL USAGE BET.

RS. 50,000 & RS. 5 LACS[NOT> 3 MONTHS REQ.]

B1 CATEGORY - BET. RS. 25,000 TO 50,000[NOT > 6 MONTHS REQ.]

CONTD...

B2 CATEGORY ANNUAL USAGE BET. RS. 10,000 BUT < RS. 25,000 [ NOT MORE THAN 6 MONTHS REQ.]

C CATEGORY - USAGE < RS. 10,000 P.A.[NOT > 12 MONTHS REQ.]

V.E.D. ANALYSIS

VITAL ITEMS ARE THOSE WITHOUT WHICH EQUIPMENT WILL NOT FUNCTION

ESSENTIAL ITEMS ARE THOSE WITHOUT WHICH EEFFICIENCY WILL BE AFFECTED ADVERSLY

DESIRABLE ITEMS ARE THOSE WITHOUT WHICH EQUIPMENT WILL STILL WORK.

STOCK VERIFICATION

There is a separate cadre of the Stock verifiers (SV s) and Inspectors of Stores Accounts (ISA s). They carry out verification of stock in depots, and with the plant holders in the field / workshops.

The differences detected between the book balances and the ground balance is reported through stock sheets.

Stock verification (contd.)

Disposal of stock sheetsThe stock sheets are discussed by the

controlling officer with the accounts officer and explanations are offered. If these are acceptable, the stock sheets are closed without further action.

If not then action under DAR is recommended against the defaulting staff.

LAST BUT NOT THE LEAST, ….

THANK YOU FOR PATIENT LISTENING

VINAYAK RAO