Para 2.4.6 — MSO

Audit of stores management 2.4.7. Stores in many cases result in capital remaining locked up for long periods; this may not be justified unless essential. In order to ensure this and effect economies, appropriate stock limits for different categories of stores should have been fixed by Government. Audit may, therefore, see that this has been done and that balances in stock do not exceed the prescribed limits. Audit should also scrutinise cases of purchase of stores without actual need or in excess of requirement, resulting in accumulation of idle stock and consequential loss to the Government. Similarly Audit may look out for cases of purchases less than the actual requirement that might have affected adversely the progress of works and resulted in subsequent procurement at additional cost. It may also be examined whether there has been rush of expenditure on procurement at the close of the financial year or fictitious booking merely with a view to utilising the budget grants.

Audit of write-off/disposal of stores 2.4.6 Irregularities in the disposal of public stores are equivalent to illegal appropriation of public funds, and an audit of moneys expended on purchase of stores cannot, by itself, be complete unless the disposal of the stores is also audited in order to ascertain the final application of the moneys. In auditing the disposal or write-off of stores, the following should be kept in view:

(i) The competent authority should have accorded sanctions for write-off of stores. Any deficiencies in the systems requiring attention should be brought to Government’s notice.

(ii) Maintenance and accountal of unserviceable stores that cannot be utilised by the department responsible for their custody involve waste of labour and space. Retention of stores in excess of probable requirements in the immediate future may also result in loss through deterioration. It should, therefore, be seen that measures are taken to survey and segregate surplus, unserviceable and obsolete stores and to consider their disposal in accordance with the procedures prescribed by Government in this regard.

(iii) Stores are generally procured by departments/divisions for their own use and not for sale. However, when it becomes necessary to sell some surplus stores, this is generally done on receipt of payments in advance against proforma invoices, though sales on credit may be unavoidable occasionally. In such cases, the sale proceeds should have been promptly realised. Instances of proceeds against credit sales remaining unrealised for considerable periods should, therefore, be analysed and commented upon.