Para 2.4.6 — MSO (Audit)
Original Rule Text
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.
- 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 stores records
What This Means
Irregularities in disposing of government stores are as serious as misusing public funds, so audit of purchases is incomplete without also checking how stores were disposed of. Auditors verify that write-offs were properly sanctioned, surplus and unserviceable stores were promptly surveyed and disposed of per Government procedures, and that sale proceeds from credit sales were collected on time. Additionally, appropriate stock limits should be fixed and maintained to prevent capital from being locked up in excess inventory or stores being purchased without actual need.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Disposal irregularities are equivalent to illegal appropriation of public funds
- 2Write-off of stores requires sanction from the competent authority
- 3Surplus and unserviceable stores must be surveyed, segregated, and disposed of per Government procedures
- 4Sale proceeds from credit sales must be promptly realized; long-outstanding amounts must be reported
- 5Stock limits must be fixed; purchases without need or in excess of requirements resulting in idle stock must be flagged
Practical Example
Auditors examining a defence establishment find that 2,000 obsolete uniforms worth Rs 15 lakh were written off without sanction from the competent authority. They also discover that Rs 8 lakh from credit sale of surplus furniture to another department has remained unrealized for over two years. Further, the store accounts show that paint worth Rs 5 lakh was purchased in March just to exhaust the budget grant, and most of it remains unused. All three issues are raised as audit observations.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why does audit treat disposal irregularities as seriously as fund misappropriation?▼
What is 'rush of expenditure' and why is it flagged in audit?▼
Can stores be sold on credit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.