CHAPTER 19; Audit of Stores and Stock
CHAPTER 19
Audit of Stores and Stock
315-A. Introductory. The term ‘Stores’ applies generally to all articles and materials purchased or otherwise acquired for the use of Government including not only expendable and issuable articles in use or accumulated for specific pur- poses, but also articles of dead Stock of the nature of plant, machinery, instru- ments, furniture, equipment, fixtures, etc.
316. General. The audit of payments for the purchase of stores is con- ducted according to the rules prescribed by the Comptroller and Auditor Gene- ral in regard to audit of expenditure from the Consolidated Fund of India and of the States.
317. Under the Audit and Accounts Order, 1936, as adapted, audit of Stores and Stock accounts relating to Government Commercial Undertakings devolves on the Comptroller and Auditor General under Para. 13(1) of the Order and is conducted in such a manner and to such an extent as may be prescribed by him. The Comptroller and Auditor General may, with the ap- proval of and shall if so required by the President or the Governor of a State, audit and report on the accounts of Stores and Stock kept in any office or de- partment of the Union or the State and for this purpose the President or the Governor may after consultation with the Comptroller and Auditor General make regulations with respect to the conduct of such audit.
The position in this regard has, however, undergone a change with the coming into force of the Constitution. Article 151 of the Constitution lays down that the Reports of the Comptroller and Auditor General relating to the accounts of the Union and the States shall be submitted to the President or the Governor, as the case may be, who shall cause them to be laid before each House of the Parliament or Legislature. The Reports of the Comptroller and Auditor General must relate to the totality of the accounts of the Union and of the States and thus cover not only expenditure and receipts but also all the accounts of Stores and Stock, as the latter form an important, though subsidiary, part of the accounts.
Irregularity in the disposal of Public Stores is equivalent to an illegal ap- propriation of Public money, and audit of expenditure of money spent on the purchase of Stores cannot, itself be a complete audit of the final applica- tion of the money without the audit of disposal of Stores.
318. Whenever material assets have to be retained for any time in the cus- tody of Government servants, stores accounts have to be maintained. Stores accounts, which are records of all articles brought into and sent out of store, may be either quantity accounts without values or such accounts with values. The general principle which determines which system of accounts will be used is that the former should be employed in the case of stores the cost of which is charged to a final head on purchase or manufacture whereas the latter applies when the cost of the stores is subject to subsequent adjustment.319. The audit of the accounts of Stores and Stock kept in an office or department of Government should be conducted in accordance with the instruc- tions laid down below:-
(1) The audit of stores accounts kept in any office or department of Government shall be directed to ascertaining that the departmental regulations governing purchase, receipt and issue, custody, condemnation, sale and stock-tak- ing of stores are well devised and properly carried into effect, and to bring to the notice of the Government any important deficiencies in quantities of stores held, or any grave defects in the system of control.
(2) As regards purchases of stores, Audit will see that-
(i) these are properly sanctioned, are made economically and in ac- cordance with any rules or orders made by competent authority for purchase of stores required for the public service in parti- cular when stores are purchased from contractors the system of open competitive tender is adopted and the purchase is made from the lowest tenderer unless there are recorded reasons to the contrary;
(ii) the rates paid agree with those shown in the contract or agree- ment made for the supply of the stores;
(iii) certificates of quality and quantity are furnished by the passing and receiving Government servants before payment is made, except where the contrary is allowed by the rules of Government regu- lating purchase of stores; and
(iv) purchase orders have not been split up so as to avoid the neces- sity for obtaining the sanction of higher authority required with reference to the total amount of the orders.
Audit may call attention to cases of uneconomical purchase of stores and to any losses, which may be clearly and definitely attributed to the defective or inferior nature of stores which were accepted and certified to be satisfactory in quality.
(3) Audit should ascertain that the accounts of receipts of stores whether purchased, or otherwise obtained, and of their issues and balances are correctly maintained. Where a scale has been prescribed by Government or other autho- rity for issue of stores of any particular kind, it should be seen that the scale is not exceeded.
(4) Stores, in many cases, represent a locking up of capital, which is not justifiable unless essential. In order to effect economy in this direction Audit will see that the balance in hand does not exceed the maximum limit prescribed by competent authority and is not in excess of requirements for a reasonable period.
(5) Audit should scrutinise sanctions to writes-off of Stores accorded by competent authority and bring to the notice of Government any defect of system which appears to require attention.
9-2 Compt A. G./62(6) The accounting for and maintenance of unserviceable stores which cannot be utilised by the department in whose custody they are kept, involve waste of labour and space. The retention of stores in excess of the probable requirements of the department in the near future may result in loss to Gov- ernment through deterioration. Audit will, therefore, see that measures are taken to survey, segregate and consider the disposal of unserviceable, surplus and obsolete stores in accordance with the procedure prescribed by Government in this behalf.
(7) It is an important function of Audit to ascertain that the articles are counted periodically and otherwise examined to verify the accuracy of the quantity balances in the books. Audit shall not, except when specially autho- rised to do so, assume responsibility for the physical verification of stores, that it has the right to investigate balances of stores, if any discrepancies in the stores accounts suggest that such action is necessary, Audit has, however, to see that a certificate of verification of stores is recorded periodically by a res- ponsible authority that the system of verification adopted by the Executive is adequate and proper, that discrepancies found on stock-taking are properly investigated and adjusted and that, wherever possible, the staff responsible for the verification is independent of the staff which is responsible for the physical custody of the stock or for keeping accounts of it. It should also be seen that wherever practicable, verifiers of stock work directly under the control of Gov- ernment, and not under the heads of individual departments.
(8) Where a priced account is maintained, Audit will see that-
(i) the stores are priced with reasonable accuracy and the rates initially fixed are reviewed from time to time, are correlated with market rates and revised where necessary;
(ii) the value accounts tally with the accounts of works and of depart- ments connected with stores transactions, that the total of the valu- ed account tallies with the outstanding amount in the general ac counts and that the numerical balance of stock materials is recon- cilable with the total of value balances in the accounts at the rates applicable to the various classes of stores; and
(iii) steps are taken for the adjustment of profits or losses due to revalua tion, stock-taking, or other causes, and that these are not indicative of any serious disregard of rules.
(9) The detailed procedure for the conduct of audit of any stores and stock accounts will be such as may be agreed upon between the Government and the Accountant General.
320 to 325-A. Deleted.