Regulation 36 — Audit Regulations 2020
Original Rule Text
# 36. Audit of stores and stock
Audit of stores and stock involves verifying that adequate and sound systems and procedures are in place and complied with for:
(1) establishment of the need for procurement of stores; (2) proper assessment of requirement of stores, including, where applicable, determination of reserve stock limits; (3) authorisation of procurement of stores; (4) procurement of stores in a cost-effective manner in accordance with the prescribed systems and procedures; (5) receipt, inspection, custody, issue and accounting of stores including appropriate segregation of duties of personnel and reconciliation of store accounts with books of accounts; (6) verification of physical balances at prescribed intervals, and reconciliation and resolution of discrepancies between physical balances and balances as per the records without delay; and (7) identification of obsolete and surplus stores, their disposal by way of sale and/or transfer to other units, divisions, etc. and accounting of corresponding receipts, or write off after proper investigation.
What This Means
Audit of stores and stock verifies that proper systems exist for the entire lifecycle: establishing the need for procurement, assessing quantity requirements (including reserve stock levels), authorizing purchases, procuring cost-effectively, receiving and inspecting goods, maintaining custody and accounts, periodically verifying physical balances, reconciling discrepancies, and disposing of obsolete or surplus stores with proper accounting.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Verifies need-based procurement — was the purchase actually necessary?
- 2Checks proper assessment of requirements including reserve stock limits
- 3Ensures procurement is cost-effective and follows prescribed procedures
- 4Reviews receipt, inspection, custody, issue, and accounting of stores with proper segregation of duties
- 5Physical verification at prescribed intervals with reconciliation of discrepancies
- 6Surplus/obsolete stores must be identified, disposed of properly, and receipts accounted for
Practical Example
During an audit of a government hospital's medical stores, the audit team finds: (i) 5,000 units of a rarely-used medicine were procured without needs assessment, (ii) physical stock of syringes is 30% less than book balance with no explanation, and (iii) expired medicines worth Rs 20 lakh were not disposed of for two years. Each finding maps to specific checks under Regulation 36 — sub-regulations (1), (6), and (7) respectively.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What does 'segregation of duties' mean in the context of stores?▼
How often should physical verification of stores be done?▼
What happens to surplus or obsolete stores?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.