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                    ORIENTATION COURSE FOR AAO / SO (A)

                             SERVICE MATTERS


   1.     Confirmation
   2.     Retirement
   3.     Retirement Procedure
   4.     Confidential Report

       Service matters normally relates to Confirmation, seniority
termination of service of temporary Government servants, Extension and re-
employment, regulation of Pay on re-employment, review for retention in
service / premature retirement, resignation, Retirement and voluntary

       CR, promotions, proforma promotions, Petitions to President, Change
of name, Date of birth and its subsequent alteration Permission under CCS
(Conduct) Rules, Enforcement of Service Bond or quitting service, service
book, posting of husband and wife in the same station are Personal matters
relating Govt. servants.

       The officer, dealing with service/personal matters should be well
conversant with latest rules and orders on subject. They should be impartial.
delay in processing the case should be avoided, Correctness of data /
information relating to the case should be scrutinizes properly to ensure that
there is no room for any mistakes / errors.

      The dealing officer should not divulge classified or secret

      Consequent on issue of Govt. orders, with effect from 1/4/88
confirmation will be made only once in the service in the entry grade,
Confirmation de-linked from the availability of permanent vacancies in the
grade. Therefore, an officer who has successfully completed the probation
period may be considered for promotion

     Fitness for confirmation will be determined by the Departmental
Promotion committee, and the confirmation orders issued based on DPC
recommendations when the case is cleared from all angles.


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                    ORIENTATION COURSE FOR AAO / SO (A)

       When recruitment rules do not provide any probation period to the
post to which the officer has been promoted,(based on the confirmation in
the entry grade after following DPC procedure), the officer thus promoted to
the grade will enjoy all the benefits that are available to the officer
confirmed in that post.

      When probation period is prescribed for the higher post, the
appointing authority should assess the performance of the officer and
declare him fit to cross the probation period or otherwise revert to lower
post if his performance is not satisfactory. Rigorous screening of
performance is necessary as confirmation is done only in the entry grade.

      As a result of introduction of one time confirmation as the entry
grade, lien to hold substantive post has undergo change.


Direct Recruits

      Determined by the order of merit in which they are selected for

      If the confirmation is done in the entry grade on the order different
from the order of merit for some reason or other, seniority shall follow the
order of confirmation and not the original order of merit. This procedure is
applicable to only regular appointments and not for the appointments made
on adhoc basis.

DPC Procedure for confirmation: - The confirmation zone is intimated
by the CGDA New Delhi. A seniority list is prepared. Departmental Promo-
tion Committee consisting of officers as per the guidelines issued by CGDA
New Delhi is formed. Disciplinary certificate in respect of each member of
the staff falling under confirmation zone is obtained from all concerned (i.e.
Branch AOs/MO). Fitness for confirmation is determined by the DPC with
reference to last 3 years confidential reports. The DPC will record their
recommendations in the adjudication statement as well as in the Board
Proceedings. Orders of confirmation are issued after acceptance of the
communicated to the person concerned. In case any Disciplinary vigilance
case is pending or contemplated or any criminal case is pending in the court,
the recommendations of the DPC should be opened on finalisation of the


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                    ORIENTATION COURSE FOR AAO / SO (A)

disciplinary cases and implemented if the person is fully incinerated.
Otherwise, the case should be placed before the next DPC for review, it
should also be ensured that confirmation orders / promotion orders or not
effected during the currency of penalty period. The above procedure is
normally followed in promotion cases also. However, in promotion cases,
the posts are classified into selected at non selected post. For selected post,
bench mark is given as per ACR grading and the performance evaluated by
the DPC, as per the Procedure contemplated in Govt. orders, Non-selected
post, fitness is determined by DPC, based on seniority cum-fitness duly
rejecting the unfit cases, Normally last 5 years ACRs are the basis for
determining the fairness, The last 2 years ACRs should be free from
adverse. In the proceeding three year. If one ACR is adverse, performance
should be evaluated based on whole service records. Sealed cover
procedure is applicable in respect Disciplinary cases / criminal cases
pending or contemplated against the person concerned.


Due Date of Retirement
Group A                                                         60 years of age.
Group B                                                               -do-
Group C                                                               -do-
Group D                                                               -do-

      Retirement is effective from the afternoon of the last day of the month
in which age of superannuation is attained.

      An employee whose date of birth is 1st of the month, he shall retire
on the last day on the preceding month.

       The day of retirement on superannuation will be deemed as a working

       In case of premature / voluntary retirement the day of retirement will
be treated as a nun-working day in all other cases it will be a working day.

      In a Govt. servant retiring on superannuation should formally
relinquish charge of office on the afternoon of that day itself even if it
happens to be a closed holiday.


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                    ORIENTATION COURSE FOR AAO / SO (A)

Type of Retirement

1. Retirement on superannuation.                         60 years of age.
2. Voluntary retirement.                                 on completion of 20/30
                                                         years qualifying service
3. Premature retirement.                                 on completion of 30
                                                         years of service,50/55
                                                         years of age.
      Terminal benefits i.e. pension/DCRG/Commutation etc. will be
regulated as per CCS (Pension) Rules.

      Resignation entails forfeiture of past service. No terminal benefits
will he admissible, Resignation to take-up employment applied through
channel in order Govt. Deptt, or PSUs are to be treated as technical
resignations and may be allowed such benefits as admissible under CCS
(Pension) Rules


Retirement becomes necessary in the following cases.

1. Reduction in the number of pest or reorganization
2. Closure of the Organisation.

Order of Retirement

1. First adhoc employees.
2. Working on ty basis from other Deptt.
3. Purely ty or officiating grade.
4. QP Govt.-servants.
5. Pt. Govt. servants.

       Detailed procedure contemplated in GOI DPAR OM No.28001/1/75
Estt (D) dated 2B/B/78.

      The employees declared surplus are transferred to surplus cell in
DPAR who will find redeployment to the employees declared as surplus.
The service records are forwarded to Surplus Cell, Surplus cell maintains
the service book: for the period of 6 months duly authorising Pay &


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                    ORIENTATION COURSE FOR AAO / SO (A)

Allowances. After deployment the SB sent by surplus cell to Deptt. where
they are redeployed, If no employment could be found within 6 months,
such employees transferred to pension establishment. The employees
redeployed will not get the seniority over the employees of the Dept in
which redeployed. They are however eligible for pensionary awards, for the
full period of qualifying service including the service rendered in the earlier

Confidential Report

       Merit as reflected in the confidential reports is generally recognised
as the main criterion for deciding the cases for confirmation, promotion,
review for premature retirement etc. It is therefore very important in the
interest of efficiency of the service that the reports are written with the
greatest possible care so that the work, conduct, character and capabilities of
the officers reported upon can be a accurately judged by the officers writing
ACRs. Periodicity is 1st April to 31st March.

       However, MTCR should be written in respect of staff members who
have completed more than months service under one reporting officer. If the
period is less than 3 months, CR need not be initiated but a certificate
stating that the officer reported upon has not served under' any reporting
officer more than 3 months should be furnished.

      If the reviewing officer is transferred out or retired, accepting officer
may review and accept.

      If the accepting office under whom the officer reported upon has not
served more than 3 months he may suitable endorse the CR accordingly.

       If the reporting officer retired, he may write the ACR as Reporting
officer. Officer retired cannot review or accept CRs after retirement from

      In case reprimand or warning issued to the officer reported upon
during the period, the reporting officer should specifically mention in the
CR as to whether any improvement is noticed as a result of issue of such
warnings / reprimand.

      The integrity column, should be left blank: if any disciplinary' case /
criminal case is pending or contemplated against the officer reported upon


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                    ORIENTATION COURSE FOR AAO / SO (A)

with a secret not indicating the details of the case, As a result of follow up
action, if the doubtful integrity is confirmed, the integrity column should be
completed and the adverse integrity to be communicated to the officer

      Irregularity in attendance should be reflected in the CR if the officer
reported upon availed post sanctioned leave (other than MC) for More than
10 spells or more than 30 days at one time. The leave sanctioning authority,
while post sanctioning the leave should place on record his displeasure and
the same should be communicated to the person concerned before reflecting
the same as adverse in the CR.
      Adverse remark in the CR should be communicated to the person
concerned within one month from the date of acceptance of the CR.
Acknowledgement should be obtained and recorded, The extract of the CR
should be given to the person. Name of the reporting / reviewing officer
should, not be mentioned in the Extract of CR.

       The affected person is allowed to represent against adverse remarks in
the CR within one month, to the next higher authority who has accepted the
CR. If the representation is rejected, one more representation against the
rejection is allowed. No further representation is normally allowed.

       If the competent authority passed an order for expunge / of adverse
remarks, the CR. should be properly endorsed and signed by an appropriate
officer quoting the order of the competent authority.

       While submitting the representations to the competent authority for
consideration of the case, the views of the reporting reviewing and
accepting officers on the representation should also be mentioned in 1he
office not for the proper appreciation of the case.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                 GOVT. SERVICES

Authority for creation of post and release of vacancies

      C G D A is the authority to D A D for creation of posts and release of
vacancies. Vacancies are released for filling taking into account the
following facts.

       (i) Arising of vacancies in various posts consequent on promotion of
       staff to higher grade, Resignation from Service, Retirement, and
       Termination etc.
       (ii) Due to increase of Work load
       (iii) Starting functioning of New Office / Project.

Appointment Authority

      C G D A, New Delhi is the appointing authority in respect of Class
"A" and "B" Officers.
      So far as Class "C" and "D" are concerned, Controllers of Defense
Accounts have been delegated as appointing authority.

Method of Recruitments

      For Class I Officers, U P S C sponsors the names of candidates who
have come out successful in the examination held by them to the C G D A,
New Delhi. On the basis of vacancies require, to be filled. C G D A appoints
I D A S Officers on completion of their probations period.
     The C G D A also fills vacancies of Class I post partially by
promoting Class "B" Officers on recommendation of the Departmental
Promotion Committee.
Class "B" Officers are generally promoted from Class "C" posts.

Recruitment of Class "C" and "D" Post

      Action for recruitment of Class "C" and "D" posts are taken by the
Controllers of Defence Accounts on receipt of release of numbers of
vacancies of the various posts by the Controller General of Defence
Accounts, New Delhi.

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                    ORIENTATION COURSE FOR AAO / SO (A)

Class "C' Posts: -
      Recruitments are made for the grades of Auditor, Clerk, Junior
Stenographer, E D P Machine Operator, Staff Car Driver etc.
      Recruitment for Auditors, Clerks and Junior Stenographers are made
through Staff Selection Commission. On receipt of release vacancies, the
Controllers of Defence Accounts place their requisition the Staff Selection
Commission furnishing various categories of Staff viz. vacancies reserved
for S C, S T, Ex- Service Man, Physically Handicapped etc. and unreserved
       On receipt of the requisitions, the Staff Selection Commission
Authority forwards the Dossiers of the Candidates category wise. The
Dossiers on receipt are verified by the Controllers of Defence Accounts and
ascertain their suitability for the posts / Services as well as also ascertain
whether they fulfill all the conditions for the posts. In order to consider
further their eligibility in serving Govt. Offices, Character and Antecedents
are got verified from the Civil Administrative Authorities and No Objection
for their Employment in Govt.. Offices are obtained from them. On receipt
of Character and Antecedents duly verified from the Civil Authorities, the
candidates are advised to obtain Medical Fitness Certificate for serving in
Govt. Offices from the Competent Medical Authority.
      For the posts of E D P Machine Operator, Employment Exchange
Authorities are requested to sponsor the names of suitable candidates having
knowledge in E D P System. Candidates sponsored by the Employment
Exchange Authorities are required to appear 'Test / Interview' and the
sucessessful candidates are offered appointment on the basis of merit in the

       Staff Car Drivers who are having experience and license in Motor Car
Driving are appointed through Employment Exchange on the same method
as in the cases of E D P Machine Operator.
Recruitment of Group "D" Staff in Peon, Chowkidar, Farash are made
through Employment Exchange.

Concessions in Govt. Service Recruitment Rule

      Certain concessions ate provided in Govt. Services Recruitment Rule
on the basis of Orders/ Instructions issued by the Govt. of India from time to
time. The concessions are as follows:


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                      ORIENTATION COURSE FOR AAO / SO (A)

a)     S C: - 15 % of the total vacancies are kept reserved for filling through
              S C Categories, 5 Years upper age relaxation is also granted to
              them on their appointment.

b)     S T: - 7 ½% of the total vacancies are kept reserved and 5 Years
              upper age relaxation is allowed.

c)     Ex-Service Man:- 10 % of the total vacancies are kept reserved. The
            total period of service rendered by the candidates in Defence
            Service is reduced from the present age of the candidate to
            ascertain that their age is within the permissible limit of 25

d)     Physically handicapped: 1% of each for who are blind, deaf-mute,
             Orthopadically handicapped etc are kept reserved. 10 Years
             upper age relaxation is allowed.

Compassionate Appointment

(i)    To whom applicable: -

       (a) To the Widow / Son / Daughter or near relative of a Govt.
       servant who dies in harness including death by suicide, leaving his
       family in immediate need of assistance, when there is no other
       earning member in the family.
       (b) In exceptional cases when a Department is satisfied that the
       condition of the family is indigent and is in great distress, the benefit
       of compassionate appointment may be extended to the Son / daughter
       / near relative of a Govt. Servant retired on medical grounds before
       attaining the age of 55 Years except the category of Group "D" Staff
       and in cases of Group "D" Staff before attaining the age of 57 Years.

(ii)   Eligibility:

       (a) Compassionate appointment to be made only against direct
       Recruitment quota.
       (b) The candidates represented for appointment should be Suitable for
       the post applied in all respect under the provisions of the Recruitment


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                    ORIENTATION COURSE FOR AAO / SO (A)

       (c) Recruitment of possessing requisite educational qualification may
       be relaxed temporarily at the lowest level i.e. Group "D" or L D C
       post in the exceptional circumstances where the condition of the
       family is very hard provided such relaxation is permitted up to a
       period of two years beyond which no relaxation of educational
       qualification will be permissible and the services is liable to be
       (d) Where a Widow is appointed on compassionate ground, to a
       Group "D" post, she will be exempted from the requirement of
       educational qualification.
       (e) In deserving cases, where there is an earning member in the
       family, but if the Department is satisfied that the family of the Govt.
       Servant is in distress and the family is not maintained the said earning
       due to large numbers of members in the family, compassionate
       appointment is granted in such cases as is very special case.


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                    ORIENTATION COURSE FOR AAO / SO (A)

       Whenever complaint against a Govt. servant is received about the
commission of an offense, a preliminary enquiry should be conducted. The
appropriate disciplinary authority need not necessarily conduct this enquiry.
An officer other than the disciplinary authority may conduct this. This is
held mainly for the purpose of collection of facts in regard to the conduct
and work of the Govt. servant in which he may or may not be associated. At
this enquiry all available evidence and relevant documents should be
collected. During the course of such an enquiry the individual against who
compliant has been received should normally be given opportunity to say
what he may have to say about the allegation against him to find out if he is
in a position to give any satisfactory information or explanation, which may
render any further investigation unnecessary.

       The investigation report along with preliminary evidences collected
should be sent to appropriate disciplinary authority by the Investigating
Officer. The investigating officer should not give any opinion or
recommendations for consideration by the disciplinary authority. On receipt
of the Investigating Report, the-disciplinary authority should examine the
case and come to the conclusion as to whether a prima facie case exists of a
certain offense/ misconduct/ misbehaviour/ dereliction of duty. If there is
prima facie evidence of commission of an offense beyond reasonable doubt
for initiation of criminal proceedings, he should do so. If on the other hand,
prima facie evidence is based only on preponderance of probability, then
departmental proceedings may be necessary. The departmental action may
be initiated not only for the violation of CCS (Conduct) Rules but also for
perverse conduct not covered under Conduct Rules.


       After collection of full facts and its evaluation, it is found that the
Govt. servant has committed misconduct; the disciplinary authority should
decide whether formal disciplinary proceeding should be instituted under
CCS (CCA) Rules for minor or for major penalty. The disciplinary authority
should keep in mind that the disciplinary action and the quantum of
punishment are to be commensurate with the gravity of the offense alleged
to have been committed by the Govt. servant. Major penalty proceedings
should normally be initiated for misuse of official position, disclosure of
classified.-information, misuse of official position, failure to maintain


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                    ORIENTATION COURSE FOR AAO / SO (A)

integrity etc. At his stage itself, the competent authority would decide
whether the Govt. servant should be suspended or otherwise. If in the
opinion of the competent authority that the presence of the charged Govt
.official in the office would hamper the investigation, he may be suspended
pending inquiry. The charge sheet should be served to the charged officer
within 3 months of his suspension. The charged officer will be allowed to
appeal against the suspension within 45 days of his suspension provided the
reasons for „ the suspension indicated in the suspension order. If the reasons
are not indicated in the suspension order, he should file his appeal within 45
days of receipt of charge sheet. The charged officer is eligible for
subsistence allowance as admissible under rules during the period of
suspension. The appellate authority may confirm or set aside the suspension
order according to the merits of the case.

       Court of Inquiry is not mandatory in minor penalty cases. However in
major penalty cases, court of inquiry should be convened. Disciplinary
authority while appointing Inquiry Officer should take into consideration the
seriousness of the offense and also the status of the accused officer. An
officer who is sufficiently senior to the officer whose conduct is being
inquired into should conduct the inquiry. The officer who has conducted the
preliminary investigation should not be appointed as Inquiry Officer.
Similarly, the officer who is the principal witness in the case should not be
appointed as Inquiry Officer. A presenting officer will also be appointed for
conducting the inquiry. On finaliasation of Disciplinary case, the Inquiry
Officer will submit his report indicating the charges that have been
sustained and the have not been established. A copy of the Inquiry Report is
to be given to the in-charge officer for submitting his representation if any.
The appellate authority would examine the representation and pass an order
by confirming / modifying or set aside the penalty accordingly to the merits
of the case.


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                    ORIENTATION COURSE FOR AAO / SO (A)



    For promotion of harmonious elation between employees and the
    For securing maximum Co-operative of the employees to achieve
     greater efficiency.

To Whom Applicable

    Applicable to all central Govt. civilian employees except
    Group A officers
    Group B officers other than central secretariat and other compatible
     services in HQs organisation of the Govt.
    Officers in industrial establishments in managerial capacity and
     supervisions drawing pay exceeding Rs. 2000/- pm
    Employees of the union territories
    Police Personnel

                       Composition of National Council

- Official Side
- Total Members -25         Including cabinet secretary, secretaries of
                            Ministries of Home, Labour, Communication,
                            Defence, Finance (Deptt.of Expdr.) and Ministry
                            of Railways

                            All members nominated by the Govt.

- staff Side
- Total Members -60         Members nominated            by   recognized     unions,

- Chairman of the National Council - Cabinet Secretary
- Staff side represented by electing ITS leaders
- Both sides (official /staff sides) may appoint ITS own secretary


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                    ORIENTATION COURSE FOR AAO / SO (A)

Standing Committees under National Council

          - Standing Committees for Industrial Employees.
          - Standing Committee for Non-Industrial Employees.

Periodicity of Meetings

-Ordinary Meetings          -At lease one in four months-Notices to members
                            15 Days before meeting.

- Special Meetings          - Chairman on his own on at the request of
                            members can call for special meetings.
                            Notice 10 days before meetings.
                            Quorum should be 1/3 on both sides.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                Procedures for meetings of National Council

    Members sends explanatory memorandum to the secretary staff
     side/official side eight weeks before meeting.
    Secretary place the item before chairman for approval for inclusion in
     the agenda.
    Points not included in the agenda communicated to the member
     concerned with the reason for non-inclusion.
    Agenda for ordinary meeting circulated 30 days before the meeting-
     special meeting for notice and agenda circulated together.
    Items outside agenda can only be taken up with the permission of the
    Minutes circulated after approval by the council.

                             Departmental Council

    Functions at the Hqs of the departmental /Ministry.
    Official side 5 to 10 members with the head of the
     ministry/department as chairman –others members nominated by the
    Staff side 20 to 30, members depending on the strength of the
     employees-      members       nominated      by      the    recognized
    Matters relating to the departmental only discussed.
    Periodicity and conducting of business similar to national council.

                            Regional Office Councils

    Composition of staff/Official side members based on the strength of
     the employees.
    Council deals with regional/local problems.
    Periodicity of the meeting at lease once in 2 months.

                     Membership in Council (Staff Side)

    Employees on the effective strength can become a member.
    Govt. may permit an Ex-employee as a member.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                            Compulsory Arbitration

    Pay & allowances, weekly hours, leave etc. could not be settled by the
     council referred to arbitration
    No individual cases are referred to.
    Matters first referred to DPT. DPT refer to Attorney General. Staff
     side/official side present then views-opinion of the AG is final and
     binding on the both sides.
    If decided for arbitration- Home Ministry on behalf of national
     council refers the case to secretary- Min. of labour references to board
     of arbitration.
    Govt. finalize the terms of references to the board with in four weeks.
    Board will consists of 3 members – one drawn from the panel of 5
     members submitted by official side-one drawn from the 5 members
     submitted by the staff side-independent officer appoint as chairman
     by min. of labour.
    Award delivered by the board binding on both sides.
    Award may be modified by the Govt. with the approval of parliament
     in the national interest.
    Arbitration award orders issued by govt. can not be modified for three
     years unless otherwise specified or modified by mutual agreement.

                 Facilities for Attending JCM Meetings
    Members are eligible or TA/DA special CL etc. as per laid down rules
     for attending the JCM meetings.


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                    ORIENTATION COURSE FOR AAO / SO (A)


       Suspension means temporary deprivation of one's office or post.

       Suspension pending departmental enquiry is not a punishment nor put
an end to the service of the Govt. servant as per Article 311(2) of the
Constitution. During suspension pay is reduced Suspension may cause a
lasting damage to the reputation of the Govt. servant even if he is ultimately
exonerated. The relationship of master and servant doest not ceases. He
continues to remain duty bound to follow the lawful directions of his
superiors. The lien to the pt. post is retained.

      There is no need to give an opportunity to the Govt. servant before
suspension as per Article 311 of the Constitution. The power of suspension
should be exercised sparingly and for the valid reasons and hot for
extraneous consideration.


      Under Rule 10(2) of CCS (CCA) Rules 1956, a Govt. servant shall be
deemed to have been placed under suspension by an order of appointing
authority in the following cases.

       (a) if he is derterminee3 retained in custody whether an criminal
charge or otherwise for a period exceeding 43 hrs. Preventive detention
under any law and wrest for debt would come under the purview of Deemed
       (b) in the event of conviction, of an offence he it sentenced to a
term of imprisonment exceeding 48 hrs. If a Govt. servant arrested and
released on bill after 48 hrs of detention, he will be deemed to have been
       The 48 hrs will be computed from the commencement of
imprisonment after the conviction and the, intermittent period of
imprisonment if any shall be taken into account.
       (c) Penalty of dismissal, removal or compulsory retirement
awarded as a result of Departmental enquiry and the same set aside on
appeal by appellate to authority.
       (d) Penalty of dismissal, removal compulsory retirement set aside
by court of law.


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                    ORIENTATION COURSE FOR AAO / SO (A)

      Govt. servant while under suspension, and if any other disciplinary
proceedings commenced against him, the competent authority may, for the
reasons to be recorded in writing, may continue the suspension until the
termination of all or any such proceedings.
       Suspension order should not be made on oral orders but should be in
writing. The competent -authority should verify his competence before
passing suspension order in order to avoid being declared such order as
illegal in the event of Govt servant challenging the order of suspension.
      Deemed suspension order takes effect automatically without the
formal order. Though the validity of deemed suspension is not affected due
to non-issue of formal orders, it is desirable that such orders are made for
the purpose of administrative order.
       The Govt. servant should inform his office about his detention/arrest
Date of Effect

       (a)    Date of detention-in the case of detention for a period
              exceeding 48 hrs.
       (b)    Date of conviction-for an offence and sentence to a term of
              imprisonment for the period exceeding 48 hrs.
       (c)    The date of Original order of penalty of dismissal/
              removal / compulsory retirement imposed by the competent
              'Discipline Authority.    '

       Suspension order should be given effect when the individual is
present in office. If he is on leave, the suspension order should be given
effect on reporting of duty.


Suspension order will be in force until revoked by the competent authority.
Suspension order cease when criminal proceedings terminate by
acquittal/discharge by the court suspension should not be continued beyond
the minimum period for which it is essentially required. Prolonging
suspension due to delay in Inquiry would smack malafide.


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                    ORIENTATION COURSE FOR AAO / SO (A)


       In deemed suspension cases the disciplinary authority should make
arrangements for getting the results very promptly and take action thereafter
without delay under Rule 19 (i) of CCS (CCA) Rules 1965 or revoke the
suspension, if it is, not decided to continue the same with a view to taking
further departmental action.

Review of suspension

       Disciplinary authority should review the suspension at periodic
intervals viz. once in 3 months to see whether continued suspension in each
case is really necessary. In appropriate cases, if the investigation is likely to
take mole time, it should be considered whether the suspension order should
be revoked and the officer permitted to resume duty. If the presence of the
officer is considerered detrimental to collection of evidence etc., or is likely
to tamper evidence, he may transfer on revocation of the suspension order.
      The order of review of subsistence allowance at the end of 3 months
from the date of suspension, incidentally gives the concerned authority an
opportunity to review merely the subsistence allowance and also the
substantive question of suspension itself.


      Competent authority may revoke the suspension at any time; this is
done in the following circumstances in deemed suspension cases.

       (i) In arrest and detention cases, it is decided not proceed further
against the Govt. servant, by filing a charge sheet in the court.
       (ii) Appeal/revision against acquittal in higher court fails.
       (iii) Acquittal in trial court and it is not proposed to go on appeal in
higher court.
       The order of revocation of suspension will take effect from the date of
its issue. When it is not practicable, the date of effect of revocation should
be specified in the order of revocation.


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                    ORIENTATION COURSE FOR AAO / SO (A)

1.     Appointing Authority as defined in Rule 2(a) CCS (CCA) Rules.
2.     Any authority to which the appointing authority is subordinate.
3.     Discipline Authority as defined in Rule 2 (g)-of CCS (CCA) Rules.
4.     Any authority to whom powers have been delegated by the President
       by general or special orders.
      Suspension made by the lower authority should be intimated to the
appointing authority. In case of deputationist the appointing authority would
be from the Borrowing Deptt. He should intimate the fact to the authority of
the Lending Deptt.
      The suspended officer should not change the HQs with out prior
permission of the competent authority. The competent authority may change
the HQs in the Public Interest. Where the employee is on bail and the court
has imposed some restrictions on the movement-of the person, the
competent authority should take into account the court directives, while
changing the HQs.
Appeal Against suspension
       The charged officer can file an appeal against the suspension order. In
the normal disciplinary cases, the reasons for suspension are indicated in the
suspension order itself. The charged officer should file appeal within 45
days. In contemplated disciplinary cases, the reasons for suspension should
be intimated to the charged officer immediately on finalisation of charge
sheet viz. 3 months from the date of suspension and thereafter, the charged
officer can submit the appeal within 45 days. The competent authority
would examine the appeal and issue speaking order by confirming the
suspension order or rejecting the same, according to the merits of the case.
      For Gp. C and Gp-D, Head of the Department will be the competent
authority. Gp.-A and B Cases, the Minister In-charge will be the competent
      In fully exonerated cases, the period will be treated as duty for all
purposed. In other cases, the competent authority will decide the extent up
to which the period will count as qualifying service.


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                    ORIENTATION COURSE FOR AAO / SO (A)


      Before terminating the-charged officer, the suspension should be
revoked and one-month notice or pay in lieu to be given before issue of
termination orders.


       DPC will decide the fitness with reference to the CCR Grading. The
recommendations will be kept in -seal cover. On finalisation of disciplinary
case, the individual is fully exonerated, the seal cover will be opened and
the recommendations will be acted upon. In fit cases, the individual will be
promoted according to his turn with notional seniority. If any penalty is
awarded including Censure, the next DPC will review and recommend the
date of promotion. The same procedure will be followed in confirmation
cases also Periodical review of sealed cover cases should be carried out.


       No bar. But will be promoted on finalisation of disciplinary cases in
fully exonerated cases, promotion will be effected on, due date. In other
cases where penalty is awarded, the promotion will be effective only after
expiry of penalty period.

Rate of Subsistence allowance

       A suspended official is entitled for the first three months of
suspension to subsistence allowance of an amount equal to leave salary on
half pay: with appropriate Dearness and Compensatory allowances.
Review should be, carried out after three months and subsistence allowance
can be increased by 50% if the delay is not on the part of the charged
officer. If the delay is on the part of the charged officer, it can be reduced by
50% or less.

       HRA, CCA appropriate to the subsistence allowance may be paid.

      The charged officer should furnish non-employment certificate in
every month.


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                    ORIENTATION COURSE FOR AAO / SO (A)

Conveyance Advance
       Already sanctioned will not be paid during the suspension period.
     HRA can be paid subject to production security in the form of
mortgage bond from the two permanent Govt. servants.

Children Education Allowance:

       Children Education Allowance Admissible
       Admissible to family members
Recoveries from Subsistence Allowance:

Permissible recoveries: - IT, House Rent and allied charges, Re-payment of
loans and advances, CGHS, CGEIS
Optional: - PLI, Co-operative dues, GPF advance.
Non-permissible recoveries: - GPF Subscriptions, Court attachment,
recovery of loss of Govt. money to be recovered from the person concerned.
With the Official's written consent: - PLI     Premier,                Co-operative
stores/societies dues, refund of GPF advances.


 RTC KOLKATA                            83.00                                  22

                    ORIENTATION COURSE FOR AAO / SO (A)

                             PERSONAL CLAIMS

1.     The type of personal claims are:

     Reimbursement of tuition fees, C.E.A. claims, Reimbursement of
medical claims, TA/DA, LTC, Temporary advance and withdrawal from
G.P Fund.

Reimbursement of tuition fees - is applicable to all Govt. employees
irrespective of the pay limit. The assistance is admissible only if the child
(children) studies (study) in a recognised school. If husband and wife are
Central Govt. employees, the assistance will be admissible to one of them
only. The age-limit of the child should be between 5 to 20 years. Assistance
is not admissible for the child if studying more than 2 years in the same
class; it is admissible for a child who is receipt of scholarship. If the Govt.
employee ceases to be in service due to any reason, assistance will be
admissible till the end of the academic year in which the event takes place.

C.E.A - is admissible to a Govt. employee @Rs.50/- per month per child for
primary, secondary and higher secondary classes when he is compelled to
keep his child to a station other than his duty station and subject to the
condition that there is no school of requisite standard.

Re-imbursement of Medical Claims-

      Reimbursement of medical claim is admissible when a Central Govt.
employee falls ill beyond the CGHS area and gets the treatment from the
A.M.A. This is also admissible if the treatment is from any Govt. hospital
and referred by the AMA of the Area where the patient falls ill.
      Medical advance is also admissible for in-patient treatment in a
recognised hospital.

TA/DA - is admissible for (i) Permanent transfer and (ii) Temporary duty
outside the HQrs station.

       When a Central Govt. employee is transferred to other station at
public interest, he is entitled to get apart from TA and Daily allowance, the
road mileage, lump sum transfer grant, packing allowance, entitled amount
for transporting the personal effects.


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                    ORIENTATION COURSE FOR AAO / SO (A)

TA/DA on tour - is admissible when a Central Govt. employee is detailed
in public interest to any place of duty. TA is entitled to him as per gradation
of the employee as in TA Rules, He is also entitled to DA for halt at the
outstation at the entitled rate as applicable for the city', In addition he is
entitled to journey DO Road mileage to and fro is also admissible.

L.T.C - A Central Govt. employee is entitled to Home Town LTC once in
every year or once in a block of two years as the case may be. In this case he
has to touch his Home as declared and notified in his Service Book.

      He is also entitled to LTC for anywhere in India once in a block of
four years provided he surrenders one Home Town LTC block of two years.

Temporary advance and withdrawal from GP Fund - Govt. employee
may take advance from his GP Fund accummulation in connection with
certain happenings. This is admissible 50% of the accummulation and
repayable in maximum of 36 installments.

       Withdrawal from GP Fund can be done if he has completed 20 years
of service subject to a maximum of 3/4th accummulation.

      Withdrawal can also be made after completion of 15 years of service
in connection with purchase of land for construction of a house and / or for
meeting expenditure towards construction of his house.

H.R.A - is admissible when a Central Govt. employee resides in a rented
house and also for a Govt. employee who resides in his own house but
incurring some expenditure towards up-keep and maintenance of his house.
This is admissible according to the rate of city of his duty.

C.C.A - A Central Govt. employee is entitled to CCA at the prevailing rate
of the city of duty.

O.T.A - is admissible to the` non-gazetted employees for the work to be
completed in public interest within a certain period. This is admissible at
entitled rates over and above the normal time of work.

Advance for purchase of Bi-cycle - Non-gazetted Govt. servants whose
Basic Pay plus DP plus stagnation increment does not exceed Rs.7500/- pm.
are eligible. Amount of advance is Rs.1500/- or the anticipated price
including sales tax whichever is less.


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                    ORIENTATION COURSE FOR AAO / SO (A)

Table Fan advance – Group 'D' employee living in a house provided with
electricity and a plug point, and not having a fan in the house. Anticipated
price, limited to Rs.1000/- is less is given as advance.

Festival advance - Non-gazetted employee whose basic pay plus DP plus
stagnation increment does not exceed Rs. 12,450/- p.m. is entitled to festival
advance for a sum of Rs.1, 500/-.


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                    ORIENTATION COURSE FOR AAO / SO (A)


       To sum up the writing on entitlement of pay and allowances, it may
be stated that the section Officers (Accounts) being on supervisory duty,
have to pay vital role to scrutinize the entitlement of pay and allowances and
compulsory as well as terminal/ casual recovery of demands against any
particular employee with reference to the demands noted in the Demand
Register (s) and Rules/ Orders on the subject.

     The Section Officer (Accounts) should scrutinize to see that:-
     (1) The Pay and allowances in respect of the employees have been
drawn as per sanctioned strength.

     (2) The categories of the employees for whom Pay and allowances are
drawn are authorised.

      (3) The last charge has been linked and remarks to that effect have
been recorded in the next/ current charge and the last charge has also
accordingly been remarked.

       (4) In case of new name(s) is/ are found in the current/ next charge,
the relevant Part II Office Order/ D O II/ F O II has been linked.

      (5) In case of "Transfer in" - entitlement through Last Pay Certificate
has been verified.

      (6) In case of "Transfer Out" - His name has been deleted from Pay
Roll with proper authority.

      (7) Basic. Pay for each individual/ employee has been drawn correctly
with reference to the appropriate scale of pay.

      (8) Increment has been drawn in time and relevant Periodical
Increment Certificate has been enclosed with the Pay Roll.

      (9) In case of increase of pay due to fixation/ refixation of Pay,
relevant Part II Office Order has been consulted and remarks to that effect
have been recorded on the Pay Roll against the affected employee.

       (10) Leave Part IT Orders have been consulted while drawing Pay.


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                    ORIENTATION COURSE FOR AAO / SO (A)

      (11) In case of Suspension - The affected employee's pay bill has
been drawn separately.

      (12) In case of retiring employees - Pay Bills are to be drawn
separately and not with other Regular Employees for the last 3 (Three)

      (13) Dearness Allowances has to calculate with reference to the
percentage declared by the Govt.

      (14) House Rent Allowance and City Compensatory Allowance are to
be drawn as per city rate.

       (15) Further, while drawing H R A, it is to be seen as to whether he
occupies Govt. accommodation or not. If occupies Govt. accommodation,
he is not entitled to House Rent Allowance.

      (16) Non practicing allowance (NPA) - Entitlement as per rule on the

       (17) Special Compensatory Allowance, Remote Locality allowance,
Risk allowance - Drawn at the rate applicable for the areas and entitlement
as per Govt. Orders.

       (18) Stagnation Increment: If any employee stagnates for more than 2
years at the maximum of the scale, he is entitled to one stagnation increment
for each of 2 years of stagnation but not more than 3 stagnation increments.
Periodical Increment Certificate for stagnation increment has been prepared
in the normal manner like normal increment.

      (19) Any other entitlement, if sanctioned, has to be scrutinised with
reference to the relevant authority.

       (20) Then the Gross entitlement has been arrived at.


      (1) Compulsory recoveries, like, General Provident Fund, Group
Insurance, Professional Tax etc. have been recovered correctly.
      (2) Any other demand with reference to Demand Register has been


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                    ORIENTATION COURSE FOR AAO / SO (A)

     (3) Total deduction / recovery has then been arrived at and Net
Payable amount struck.

       All the columns of the Pay Bills have been totaled and cross tallied.

       Pass order has been given with reference to the Summary Total.

     Punching Medium has been prepared correctly and Cheque Slip
where necessary has been prepared correctly.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                          PURCHASE PROCEDURE

       Purchase is an important administrative function in the maintenance
of an office as an office or a production unit to keep, producing items for
which it is set up. In relation to office it is expenditure or purchase out of
office contingency or I&M grant and in relation to production unit it is
purchase out of purchase grant for stores.

      2. While discussing the purchase procedure it may be stated that these
follow the pattern that a common man of ordinary prudence would observe
for making purchases for his own or for his family. These are briefly:-

       a) Need:      Whether the purchase is really necessary

       b) Fund:      Whether necessary money is available for making the

       c) Price:   Weather the price being demanded or charged is
       d) Quality: Whether the quality of item being purchased is
                   satisfactory / guaranteed and compatible with the price

      3. Similarly for any purchase or for that matter any expenditure from
public fund, the standards of "Financial Propriety" as laid dawn in Rule 6
FR Pt.-I trust be kept in view and satisfied. These standards are: -

       (i) Every public officer should exercise the same vigilance in. respect
of expenditure incurred from public money, as a man of ordinary prudence
would exercise in respect of expenditure of his own money.
       (ii) The expenditure should not be prima-facie more than the occasion
       (iii) No authority should exercise its power of sanctioning expenditure
to pass an order, which will be directly, or indirectly to its own advantage.
       (iv) The amount of allowances much as travelling allowances granted
to meet expenditure of a particular type should be so regulated that an
allowance is not on the whole a source of profit to the recipient.
       (v) Public money should not be spent for the benefit of a particular
person or section of the community.

       4. Now coming to the actual purchase procedure it may be stated that
it starts from "Need", i.e. before resorting to purchase necessity for the


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                    ORIENTATION COURSE FOR AAO / SO (A)

purchase has to be established and accepted by the authorities concerned.
For purchases out of office contingency the necessity is communicated by
the user sections / officers to the Administration Section. The
Administration Section examines these proposals from (a) necessity angle
(b) authorisation and (c) availability of fund. Once these conditions are
satisfied and it is decided to resort to the purchase all items of similar nature
will be clubbed and purchases will be done as per the following procedure.
      5. For any purchase in Govt. department or for execution of any work
action has to be initiated for obtaining tenders. The tenders are of the
following types:
       a) Open or advertised tender.
       b) Limited tender i.e. direct invitation to a limited number of firms.
       c) Single tender i.e. invitation to one firm only.
       d) Negotiated tender i.e. through negotiation with one or more firms.

      6. (a) If the estimated value of the articles to be purchased is Rs.
50,000/- or above, open tender system should be followed by inviting
tenders through Indian Trade Journal and where necessary by advertisement
in news papers through DAVP (Directorate of Advertising and Visual

      (b) Limited tender system may also be adopted subject to the
conditions in Para 36 of Annexure to Rule 102 (1) of General Financial
Rules where the estimated value of demand is not less than Rs. 50,000/-.

      (c) Single tender system is followed for purchase of items of
proprietory nature.

       7. The notice inviting tenders should contain the following
       a) Particulars regarding tender documents.
       b) Conditions of tender offer-.
       c) last date for issue under forms and receipt of sealed tenders.
       d) Name of authority who has the right to accept the tenders, and
       e) Date and time of opening tenders.

       8. a) All the sealed tenders received should be kept in the safe custody
of the officer who has invited the tenders.


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                    ORIENTATION COURSE FOR AAO / SO (A)

       b) Tenders submitted after the due date and time specified in -the
tender enquiry should not be accepted. But these should be kept as "late
tender" and may be examined by the "Tender Purchase Committee", to
arrive at a decision to "Retender", "Price negotiation" etc., if need for the
same in felt.

      9. The tenders should be opened by a board of officers at the
prescribed hour of the date and place in presence of the tenderers who may
attend the tender opening.

      10. After opening of the tenders a comparative statement will be
prepared by the same board, record its recommendations and submit to the
competent authority for accepting the tender.

       11. In case the lowest tender is not accepted the reasons are to be
recorded in writing and prior approval of next higher authority is obtained
for accepting a higher tender.

      12. At the factory level all purchases above Rs. 50,000/- in each case
are considered by a Tender purchase Committee. There are four levels of
T.P.C. as shown below depending on the value of the tender. Association of
"Finance representative" i.e. Local Accounts is mandatory in all such TPCs.

Level         Chairman              Accounts member                     Value
I             G.M                   CF&A (Fys) /JCF&A(Fys)              Exceeding
                                                                        20lakhs upto
                                                                        50 lakhs.

II            Jt. G.M               JCF&A/ DCF&A/                     Exceeding 10
                                    ACF&A                             lakhs upto
                                                                      20 lakhs.

III           Dy. G.M               DCF&A/ ACF&A / AO                 Exceeding
                                                                      4 lakhs upto
                                                                      10 lakhs.

IV            W.M                   A.O                              upto 4 lakhs.


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                    ORIENTATION COURSE FOR AAO / SO (A)

      13. While scrutinizing the tenders by TPC / Board of officers the
following important points should be kept in view.

       (i) What is the last purchase price?

       (ii) Whether the lowest rate now obtained compares reasonably with
the last purchase price taking into account the normal escalation in prices.

      (iii) Whether the rate is prima-facie abnormally high or low. In both
cases it should be treated as "Freak Rate" and rejected and if necessary
suggest retendering.

      (iv) What is the time / place / mode of delivery offered in the lowest
tender and whether the same conform to requirement.

       (v) The capacity of the firm in supplying the material has been
established /verified.

       14. Once the tenders are considered and finalised by the board of
officers / TPC after due examination and accepted by the competent the
successful tendered should be intimated about the acceptance of his under
and supply order / work order for supply of stores / execution of work
respectively should be placed on him.

      15. The supply order should be specific in regard to stores to be
supplied. Qty., rate, total value, time, mode, place of delivery, mode of
payment etc. as the S.O. would form the basis of all future dealings with the
contracted party and contesting in Court of Law if necessity arises.

      16. On receipt of stores against a store these should be checked as to
its quality, specification etc. with references to the supply order and
endorsed s such in the bills / challans etc. The stores so received should be
taken on charge and endorsement to that effect be made in the bill before
forwarding it to the payment section. The payment due against the supply
order should be made thereafter promptly and in any case as per terms of
payment as stipulated in the supply order.

       17. While the above general rules and procedures are applicable to all
purchases there are some special provisions in respect of purchase of certain


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                    ORIENTATION COURSE FOR AAO / SO (A)

(A) Purchase of Typewriter

      Purchase of typewriters should be within the approved scale and the
order for Purchase should be placed only on the firm holding DGS&D rate

(B) Local Purchase of Stationery

      Stationery is required to be supplied by Govt. Stationery Depot.
Local purchase can be resorted to within the delegated powers only after
obtaining NAC from the Stationery Depot. Purchases should be made from
Consumer Co-operative Stores / Samavayikas / Super Bazars etc.

(C) Local Purchase of Furniture

      Can be purchased locally by the Head of Departments / offices
(Within their delegated powers, under the Delegation of Financial Powers)
Rules subject to the observance of general policy of according purchase and
price preference to the products of Cottage and Small Scale Industries.
Certain items like Steel Racks, Steel Chairs, Steel Stools, Steel Desks, Steel
Shelves and Steel Almirahs are exclusively reserved for small-scale sector.

(D) Repair to Typewriters

       (i) Heads of Departments are authorised to incur expenditure on
servicing, maintenance and repair and replacement of parts of typewriters in
their own and subordinate offices to the extent of powers delegated to them.

      (ii) Repairs etc. should be entrusted to the dealers authorised by the
DGS&D / Govt. of India Stationery office, Calcutta and the charges for
spare parts should be at the rates approved from year to year.

      (iii) Servicing contract may be entered into at the approved rates
and in other cases Heads of Departments may enter into necessary contracts
on competitive basis.


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                    ORIENTATION COURSE FOR AAO / SO (A)


        18. Contract is recognised mode for obtaining supplies and services
in Govt. while contract is concluded for obtaining stores the requirements of
which is regular it is generally concluded for works Services. While
concluding contracts the following basic and guiding principles must be
        a) All contracts should invariably be in writing.
        b) Quantity of work to be done or material to be supplied and time
with in which the work or the supply is to be completed should be
specifically mentioned.
        c) Terms of contract should be precise and definite.
        d) The standard form of contract is generally adopted.
        e) The contracts entered into should not involve any uncertain
        f) Contract should be signed by both the parties to the contract before
commencement of work
        g) Wherever considered necessary an escalation clause for statutory
increase in prices / duties etc. should he provided in the contract.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                   TA/DA AND LTC Rules and Regulation
1. Introduction:
      Travel assistance on one form or the other is a very old practice. It is
as old as the civilized society itself. Like any Commercial organisation,
Govt. also has drawn up several compensatory and concessional schemes to
its employees.
2. Compensatory Scheme like TA/DA:
       Details may be found in the Annexure - A.
3. Concessional Scheme like Leave Travel Concession:
       Details may be found in the Annexure- B
4. Role of SO (A)/ Supervisor (Accounts) in Defence Accounts Deptt, when
dealing with TA/DA and LTC claims:
       (a) TA/DA:
       SO (A) should ensure that: -
       (i)     The sanction accorded by the competent authority for grant of
               TA/DA is in the public interest.
       (ii)    The expenditure is not more than the occasion demands.
       (iii)   The entitlements worked out are strictly as per the orders issued
               by Govt. from time to time.
       (iv)    The claim does not give any unintended benefit to the claimant.
       (v)     The payment of advance and its liquidation is watched through
               demand registers.
       (b) LTC:
       SO (A) should ensure that: -

       (i)     The claimant has not been paid for the same block, for the
               same member an a previous occasion.
       (ii)    The claim has been countersigned by the Controlling Officer.
       (iii)   The prescribed certificates have been furnished.
       (iv)    The entitlements have been worked out correctly.
       (v)     The payment of advance and its timely liquidation is watched
               through demand Registers.
       (vi)    The claim has been preferred with in the time limit.


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                    ORIENTATION COURSE FOR AAO / SO (A)

                                                                Annexure- A
                                     TA / DA

I.     TA/DA on (Tour):

       An employee is entitled to:

       (a) Rail fare as per his entitled class or plane fare (for Officers
       whose pay is Rs.16, 400/- and above).

       Note. - Officer's whose pay is Rs.12, 300/- and above can travel by
       plane if the distance involved is more than 500Kms. and the journey
       cannot be performed overnight by direct train/direct slip coach

       (b)    Daily allowance as per the prescribed rate.

       (c)    Mileage allowance.

II.    TA/DA for Local Journeys:

       (a)    Mileage Allowance.

       (b)    50% of admissible DA at ordinary rate.

III.   TA when deputed for Training:

       (a)    An employee undergoes a course of training in India is entitled
              to draw TA & DA as below:-

              i) When boarding /lodging not provided:-
              First 180 days ……………… Full DA
              Beyond 180 days ……………Nil

              ii) When boarding and lodging facilities exist:
              First 30 days …………………Full DA
              Next 150 days. ………………Half DA
              Beyond 180 days …………… Nil


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                    ORIENTATION COURSE FOR AAO / SO (A)

       (b)     Beyond 180 days:
               There is option to draw TA as on transfer
               TA plus DA for the first 180 days.

       (c) No TA/DA for training at the Hqrs. irrespective of the distance
       between normally duty point and the training centre.
IV.    TA on Transfer:

       Transfer TA is from residence to residence and comprises the
       (i)     a composite transfer grant equal to one month's Basic Pay plus
               Dearness Pay where the distance between the two station is
               more than 20 Km
       (ii)    actual fares for self and family for journey by rail/steamer/airs
       (iii)   road mileage for journey by road between place not connected
               by rail.
       (iv)    cost of transportation of personal effects from residence to
       (v)     cost of transportation of conveyance possessed by the
       (vi)    additional fare to self for both onward and return if he has to
               leave his family behind due to non availability of Govt.
               accommodation at the new place of posting.

NOTE: - No TA if no change of residence is involved.

V.     TA on retirement:-

       Same an on transfer including lump sum composite transfer grant.
       Travel by air is also admissible.

VI.    Quit same by Resignation, dismissed or removed from service
       No TA/DA etc.

VII. TA to the family A the deceased t the selected place of residence:

       Entitled to TA/DA etc., as per the entitlement of the employee prior
       to his death


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                    ORIENTATION COURSE FOR AAO / SO (A)

VIII Conveyance allowance to handicapped employees:

       Blind employees and orthopedically handicapped employees are
       entitled to 5% of their pay subject to a maximum of Rs.100/- per

IX.    TA for medical attendance and treatment:
       (a) For employees: - Actual rail fare plus DA for journey time. No
DA for halt.
       (b) For family members: - Actual rail fare if journey is by rail.
Actual bun fare limited to half the road mileage admissible to employee if
journey is by road. No DA -for journey/halt.
       (c) Attendant/Escort: - Only one escort/attendant is entitled to TA
entitled to TA as per family members for journey both ways.
       TA as above will also be admissible if it becomes necessary for the
escort to travel again to fetch the patient and if so certified.


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                      ORIENTATION COURSE FOR AAO / SO (A)

                        L T C (leave Travel Concession)

1.     Introduction: -

       LTC was first introduced sometime in 1956. Its main object was to
enable an employee to visit his hometown and family. The concession was
first restricted to 90% of the fare beyond an initial distance; then it was
increased to 100% and now from June 1985 the assistance is extended to the
entire distance including the initial distance. From 1974 all employees are
also allowed to visit any place in India once in a period of four years.

2.1    Home Town Concession:

      The concession to hometown is allowed once in a block of two
calendar years. The block is counted from 1956-57 and the current block is

2.2 This concession is admissible to members of the family also, who are
eligible to avail the concession independently.

Note: - If the employees family is away from his HQs, he can avail LTC for
self only once in every year to visit his family. The employee who avails
this concession will loose the right for self and family to visit anywhere in
India during the block of 4 years.
3.1    Eligibility:
      (1) All employees who have completed one year's continuous
service on the date of journey.

       (2)    Eligible to self and member of family.

4.1    Quantum of Leave Travel Concession:

       (1) Journey by rail - Train fare as per the following entitlement
       will be admissible.


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                      ORIENTATION COURSE FOR AAO / SO (A)

                           Shatabdi               Rajadhani
   Pay Range                                                        Other Trains
                           Express                 Express
 Rs. 16,400 and
                        Executive Class          AC First Class    AC First Class
  Rs. 8000 to
                         AC Chair Car              AC 2-tier          AC 2-tier
  Rs. 16,399
                                                                     First Class/
   Rs. 4,100 to
                         AC Chair Car              AC 3-tier         AC-3 tier/
    Rs. 7,999
                                                                    AC Chair Car
Below Rs.4, 100          Not Entitled             Not Entitled      Sleeper Class

4.2        Journey by Road:
       Bus fare as per following entitlement, where public transport systems
with vehicles running between fixed points at regular intervals and charging
fixed rates exists provided the place is not connected by rail.

 Sl No.              Pay Range                          Entitlement
                                           Actual fare by any type of public bus,
      1.        Rs. 8,000 and above
                                               including air conditioned bus
                                           Same as at (1) above with exception
               Rs. 4,100 and above but
      2.                                    that journey by air-conditioned bus
                 less than Rs. 7,999
                                                   will not be permissible
      3.          Below Rs. 4,100                 Bus fare by ordinary bus

4.3        Journey by Air: -

       Not permissible as a general Rule, but can travel         where               an
alternative means of travel is either not available or is more expensive.

4.4    Journey by Ship:-
       Entitlement will be restricted for journey by ship undertaken on
4.5        Journey by other means like pony/elephant/camel etc.:
           Entitlement will be restricted at the same rate as for journey on
5.1        Advance of LTC:
           80% of the amount admissible.


 RTC KOLKATA                             83.00                                 40

                    ORIENTATION COURSE FOR AAO / SO (A)

Note: -       As per CCS (LTC Rules 1988 - 80%)
              As per GFR - 90%
              This anomaly is under reference to Govt.

5.2    Forfeiture of Claim: -

       (i)    Where no advance is drawn: - If the claim is not preferred
with in one month of the date of completion of the return journey, the entire
advance will 'be recovered in one lump sum. Thereafter if the claim is not
preferred with in three months of completion of the return journey, the claim
will be forfeited.

6.1    LTC to visit our place in India: -

      This concession is available to all Govt. servants who have completed
one year's continuous service. This concession is available once in every
block of 4 years.

6.2. The conditions for eligibility, the quantum                of concession etc.
are the same as that of 2 years hometown LTC.

6.3 The employees who normally avail LTC for hometown (2 year
blocks) and LTC for anywhere in India (4 year block) should surrender on
LTC for home town during a block of 4 years to become eligible for LTC.
In other words for example: -

      During the block years of 1990-93 the employee can avail
      (i)    Two home town LTC during 1990-91 & 1992-93; or
      (ii) One home town LTC during, either 1990-91 or 1992-93 and
one 4 years LTC to anywhere in India.

6.4    4 year LTC for family members:

      The members of the family of a Govt. servant can avail 4 year LTC
for anywhere in India independently; they may visit any plate in India any
time during the block jointly or separately.


 RTC KOLKATA                            83.00                                  41

                    ORIENTATION COURSE FOR AAO / SO (A)


      The service book is a record of, a Govt. servant's entire service
showing particulars of appointment, promotion, reversion, transfers,
appreciation, punishment, increments, scale of pay drawn as also E.L/HPL
availed and credited and also the nominations for GPF, CGHS, and DCRG

       Prior to 1970 the service record in, r/o all non-gazetted employees
was maintained in service books and for gazetted the same was on loose-
leaf cards (HGS).

       Since 1970 the record of service of all gazetted and non-gazetted
Govt. servants are to be maintained in service books that too by heads of
office and in case of Heads of office by Head of Department.

      Service book in appropriate form in r/o all Temporary/permanent
employees who likely to be employed exceeding one year will be
maintained under rules laid down in CSR/FR and kept under lock & key.

      The service book should bear the personal number allotted to each
employee Entries regarding promotion/reversion rates of pay & allowances
leave etc of the individual as notified in office orders will be posted in
service books as events occur.

       All such entries are required to be attested by                        section
officer/Accountants subject to observance of following conditions:

       (a) Entries relating to pay fixation, increment etc should be based
       on orders approved by gazetted officer.
       (b) Attestation will not be           made by SO (A)/Accountant in
       r/o entries in his own service book.

      The entries in service book will also be got attested by individual
concerned concluding those on outstations once in two years, further service
books should be made available. For group 'D' who are not sufficient literate
the entries will be explained to them by the officer concerned before
obtaining thumb impression in service book.


 RTC KOLKATA                            83.00                                  42

                    ORIENTATION COURSE FOR AAO / SO (A)

       The details furnished by the statement in the nomination made for
Death Gratuity / Retirement Gratuity should be endorsed in the service book
over signature of gazetted officer.

      The family details furnished by the Govt. servants under family
pension scheme 1964 duly countersigned by gazetted officer should be
posted in his service book.

       Original certificate of SC/ST at the time of appointment issued by
District Magistrate etc should be kept separately noted in service book and a
Certified True Copy given to individual concerned.

      Complete leave account of EL/HPL etc is to be maintained in the
service book and entries are required to be attested by Section Officer (A)

      When an employee is transferred out of organisation the service book
is to be brought update and got audited by LAO concerned before its

       The request of change in date of birth should not be entertained
except where a clerical mistake has been committed. Transfer entry in
service book will only be made if it necessitates forwarding of service book
to another office/station. An index card is maintained in service book
wherein details of all transfers and appointments held by individual are
recorded. The service book gill not is returned to the individual on
retirement/resignation/discharge from service. However, a copy of it may be
supplied to him on payment of copying fee Rs. 5/-

                          SERVICE BOOK CHECK

       25% of current service Books of civilian serving with unit will be
selected for audit within each period of twelve months.
       Corrections have been duly attested.
       Fixation of initial pay on recorded in the service book is correct.
       Period allowed to count for increment of pay is correct.
       Joining time taken on transfer is correct.
       Entry regarding serving it other department is noted.


 RTC KOLKATA                            83.00                                  43

                    ORIENTATION COURSE FOR AAO / SO (A)

        Entries regarding leave, promotion, pay, medical examination on
initial appointment is to be recorded in service book. Service book is to be
shown to the employees once in 5 years and his signature obtained similarly
a certificate that service has been verified w. r. t paid pay bills is also
required to be recorded in service books.

      When a Govt. servant is sent on deputation the service book is not to
be transferred to them but retained by the CDA/Office from where he was
deputed and on whose proforma strength he is born. However, the extract of
service book proforma enclosed or skeleton on service book may be sent to
borrowing department or it may open a new service book on the base of
extract for the deputation period and the same may be returned to lending
department when deputation is over.

      If all essential documents nominations etc are complete in the service
book all the pensionary dues specially in r/o deceased employee are
processed speedily when the family of deceased are in very much in need of
financial help.

      The month up to which published causalities in DO II have been
noted in service book should be ascertained as also the position verified of
qualifying service of an employee on completion of 25 years of service.

       It has been stipulated to para 5 of Min. of Fin. OM No.F7 (6)/EV/58
Dt. 9.3.69 that by end of April each year every head of office shall furnish
to his next superior officer a certificate to the effect that service rendered by
all members of his office during preceding financial year have been verified
and certificates of verification recorded in respective service books.


 RTC KOLKATA                            83.00                                  44

                    ORIENTATION COURSE FOR AAO / SO (A)

                       HOUSE BUILDING ADVANCE

Eligibility: - All Permanent Official. Officials with at least 10 Years'
              continuous service
Purpose: - Acquiring a Plot and constructing a house thereon.
           Constructing a new house.
           Enlarging living accommodation in an existing house owned by
           the official. Purchase a Ready Built Flat.
Amount: - 34 times of Pay (Basic Pay +Dearness Pay+ NPA+ Stagnation
          Increment) or Rs 7.50lakhs whichever is less
Cost Ceiling: - Cost of the house should not exceed 134 times of Pay (as
            above) subject to maximum Rs 18lakhs & minimum
            Rs.7.50lakhs. This may be relaxed up to 25 %.
            Only one advance is admissible during entire service.
Condition: - 1) The officials should not have availed of any loan or advance
            for the purpose from any other Govt. Source, Housing Board
            etc. If such loan availed of he may also avail of House Building
            Advance for repayment of such loan in full as per rule.
              2)The title of the land should be clear.
              3) Original Sale Deed is required.
              In Case of Ready Built Flat

              1) The House/ Flat should be newly built.

              2) It is to be acquired on out right purchase basis.

              3) Government Servant gets the right to mortgage the House/
              Flat in favour of President if India.

              4) The total cost of Flat does not exceed the cost ceiling limit.

              5) The cost of the House/ Flat has not been already paid.

              6) An attested copy of a letter from the Seller of the Flat to the
              effect that subject to settlement and payment of the price, he is
              in a position to hand over the vacant possession of a clearly


 RTC KOLKATA                            83.00                                  45

                    ORIENTATION COURSE FOR AAO / SO (A)

            distinguishable Flat to the applicant within a period of two
            months from the date of this letter
Recovery: - 180 installment for Principal amount and 60 installments for
            interest accured thereon. In case of construction, after 18
            months from payment of first installment, in case of Ready
            Built Flat, recovery will commence from the Pay for the month
            following that in which the advance is taken. The entire amount
            of advance together with interest is repayable in 20years.

Adjustment of a Portion from Death Gratuity / Retirement Gratuity

      A portion, of the advance / or interest may be left to be adjusted from
the Retirement / Death Gratuity.


 RTC KOLKATA                            83.00                                  46

                    ORIENTATION COURSE FOR AAO / SO (A)

                       General Provident Funds (GPF)

1. Applicability. - The GPF Rules are applicable to those Central
Government employees who have been appointed on or before 31-12-2003.

2.     Eligibility- Temporary Government servants after continuous service
of one year, re-employed pensioners and permanent Government servants
shall subscribe to GPF compulsorily. Temporary Government servants may
subscribe to GPF even before completion of one year's service.

3. Amount of subscription.- A sum (in whole rupees) as fixed by the
subscriber, subject to a minimum of 6 per cent of emoluments and not more
than his total emoluments.

4. "Emoluments" means pay, DP, leave salary and any remuneration of the
nature of pay received in Foreign Service, does not include DA.

NOTE.- Whole or part of the bonus amount (ad hoc or productivity linked)
may be deposited in the Provident Fund.

5. Minimum subscription- should be fixed with reference to the
emoluments on the 31st March of the preceding year and in the case of new
subscribers to the emoluments on the date of joining the Fund.

6. Enhancement / Reduction- Subscription may be increased twice and/or
reduced once at any time during the year.

7. Suspension of subscription - Subscription to the fund shall be stopped
during suspension and at the option of the Government servant during leave
on half pay, leave without pay and dies-non. Proportionate subscription to
be recovered for the period of duty and any leave other than HPL/EOL.

8. Recovery to be stopped 3 months before retirement on
superannuation-No subscription should be recovered during the last three
months of his service.

9. Interest- As applicable from time to time.

10. Nomination - A subscriber can nominate one or more persons
conferring the right to receive his GPF amount in the event of his death. If


 RTC KOLKATA                            83.00                                  47

                    ORIENTATION COURSE FOR AAO / SO (A)

more than one person is nominated, the amount or share payable to each
should be indicated clearly. A subscriber may at any time cancel a
nomination by due notice and send a fresh nomination. A subscriber having
a family can nominate only members of his family. Subscriber having no
family     can      nominate       any    person/persons,      including      a
Company/Association/Body of individuals/a Charitable or other Trust or
Fund. Subject to its validity, a nomination/notice of cancellation takes effect
from the date of its receipt by the Accounts Officer.

NOTE- A nomination submitted to the Head of Office is valid even if the
subscriber dies before it reaches the Accounts Officer.

11. Family: –

"Family" includes wife/wives except judicially separated wife, husband
(unless expressly excluded), parents, a paternal grandparent when no parent
is alive, children (including adopted children), minor brothers, unmarried
sisters and deceased son's widow and children. A ward under the "Guardians
and Wards Act, 1890", who lives with the Government servant and to whom
the Government servant has given through a special will the same status as
that of a natural child, will also be treated as a member of the family


 RTC KOLKATA                            83.00                                  48

                    ORIENTATION COURSE FOR AAO / SO (A)

                     Contributory Provident Fund (CPF)

Applicable to those Central Government employees who have been
appointed on or before 31-12-2003

The rules for GPF and CPF are the same, except for the following

1. Admission to the Fund- Every non-pensionable Government servant is
to compulsorily subscribe to the Fund.

2. Amount of subscription- Any sum (in whole rupees) as fixed by the
subscriber subject to a minimum of 10 per cent of emoluments and not more
than his emoluments.

3. Contribution by Government- Government's contribution at the
percentage prescribed (10 per cent) to the subscriber's account on the 31st
March of each year. For any period the subscriber does not subscribe, there
will be no contribution from the Government also. Government's
contribution will be rounded off to the nearest whole rupee (fifty paisa
counting as the next higher rupee)

4. Advances and Withdrawals. - 3 months' pay or half the amount of
subscription and interest thereon at credit, whichever is less, in the case of
normal advance/withdrawal. No such limit, in the case of special advance/
withdrawal. Recovery in not more than 24 equal monthly installments if
within 3 months' pay and 36 installments, if it exceeds 3 months' pay

5. All other matters- No difference except that the corresponding CPF
Rules have to be referred to.


 RTC KOLKATA                            83.00                                  49

                    ORIENTATION COURSE FOR AAO / SO (A)

             Deposit Linked Insurance (DLI) Revised Scheme

When a GPF/CPF subscriber dies after having put in five years' service, the
person receiving the Fund balance will be paid an additional amount if the
balance at credit had not fallen below the under mentioned limits at any time
during the 3 years preceding the month of death:

   GPF (V Pay Commission scale)                    CPF (Pre-revised scale)

If the subscriber     Minimum           If the subscriber Minimum
was holding a         monthly balance has held for the     monthly balance
post in the scale     during the period greater part of    during the period
of the maximum                          the aforesaid
of which is                             three years a post
                                        the maximum of
                                        the pay scale of
                                        which is
 Rs. 12,000/- or                           Rs.4000/- or
                        Rs. 25,000/-                         Rs. 12,000/-
      more                                     more
                                            Rs.2900/- to
   Rs. 9,000 to
                        Rs. 15,000/-         Rs.3999/-        Rs. 7,500/-
   Rs. 9,000 to                                 Rs.1151 to
                         Rs. 10,000/-                                Rs. 4,500/-
    11,999/-                                    Rs.2899/-

Below Rs 3500/-          Rs. 6,000/-        Below Rs.1151/-          Rs. 3,000/-

2. The additional amount will be equal to the average balance in the account
during the period of 36 months proceeding the month of death, subject to a
maximum of Rs. 60,000 in the case of GPF subscribers and Rs. 30,000 for
CPF. The maximum limit is to be applied after arriving at the average of 36
months and not at every stage.

3. The balance for March every year and for the last month of the three-year
period will be inclusive of interest.


 RTC KOLKATA                            83.00                                  50

                    ORIENTATION COURSE FOR AAO / SO (A)

4. In the case of CPF, `balance' and `average balance' would mean only
employee's subscription and interest thereon.

5. Payments will be made by Accounts Officer, (Head of Office in the case
of Group „D‟) without formal sanction and in whole rupees, fraction being
rounded to the nearest rupee.

6. In the case of persons appointed on tenure basis/re-employed pensioners,
service rendered from the date of appointment/re-employment, as the case
may be, only will count.

7. This scheme does not apply to persons appointed on contract basis.

8. Admissible on death after the working hours of the last working day but
before 12 midnight as this will be treated as "death while in service".

9. In the case of missing employees, payment can be made to the nominee/
legal heirs after expiry of a period of seven years following the month of
disappearance of the subscriber on production of a proper proof of death or
a Decree of the Court that the employee shall be presumed to be dead as laid
down in Section 108 of the Indian Evidence Act.


 RTC KOLKATA                            83.00                                  51

                    ORIENTATION COURSE FOR AAO / SO (A)

1. Agencies of Payment              i) Treasuries
                                    ii) Public Sector Banks
                                    iii) Defence Pension Disbursing offices of
                                    iv) Post Office Kathua - J & K
                                    v) Pay & Accounts, Office in Delhi,
                                    Pondichery, Bombay
                                    vi) Embassies in Foreign Countries.

2. Documents for payment            i) Pension Payment Order issued by Chief C
                                    D A (Pension) Allahabad, C D A (Navy)
                                    Bombay & DCDA (AF) Delhi Cantt.
                                    ii) Pension Certificate
                                    iii) Photographs, marks of identification,
                                    specimen signature etc.

3. Reimbursement                    i) Treasuries, Pay & Accounts offices claim
                                    through Accountant General and CCDA (P).
                                    Reimburses them monthly / quarterly
                                    ii) Public Sector Banks & Post Office get
                                    our Defence Accounts at RBI Nagpur
                                    debited daily and get credit from R B I.
                                    iii) DPDOS draw money on defence
                                    cheques against cash assignments placed in
                                    their favour and book against Defence

4. Mode of Payment                  Monthly on the last working day & lump
                                    Sum payments on due dates

5. Submission of                    Treasuries / Banks etc. send their
   Pension Account                  pension payment vouchers monthly to
                                    CCDA (P) Allahabad for audit.

6. General Revision                 where there is a general increase in pension
                                    by Govt. circulars are issued and every
                                    affected pensioner is paid accordingly e.g.
                                    Dearness Relief.


 RTC KOLKATA                            83.00                                  52

                    ORIENTATION COURSE FOR AAO / SO (A)

7. Identification                   Annually every pensioner is to furnish a life
                                    certificate and on first payment full
                                    identification is made with reference to the
                                    particulars provided by the Pension
                                    Sanctioning Authority. The pensioner has
                                    also to furnish non - employment, non -
                                    remarriage, marriage certificates as the case
                                    may be.

8. Record of Disbursement           The P D A (Pension Disbursing Authority)
                                    keep a detailed record in the register i.e.
                                    check Register and every payment is noted
                                    here. In addition record of payment is also
                                    made in the Pension Certificate of every
                                    pensioner which is in his / her possession.
9. Transfer of Pension              A pensioner has full choice to get his/her
                                    account transferred by applying to hairs
                                    present FDA without involving CCDA (P)

10. Power of Attorney               A pensioner can authorise a Bank by giving
                                    him a valid power of attorney even in India
                                    and also outside India by opening a Non -
                                    Resident - Indian (NRI) account.

11. Joint Notification              Where family pension is jointly notified in
                                    the PPO along with Service / Retiring /
                                    Disability / Superannuation pension, widow
                                    / widower of a pensioner can produce the
                                    death certificate and start getting family
                                    pension from the PDA.
12. Arrears of Pension              If a pension is not drawn for 12 months, an
                                    arrear claim with explanation for non -
                                    drawal by the pensioner is required for
                                    allowing arrears by the competent authority.
                                    This also applies when a pensioner changes
                                    his nationality
13. Stoppage of Pension             Competent Authority can stop due to over
                                    payment / misconduct etc.


 RTC KOLKATA                            83.00                                  53

                    ORIENTATION COURSE FOR AAO / SO (A)

I.     Record Management:

     Records denote source of information.
     Management means to keep such records in such a manner/system
which can be easily traced it out.
       Objective - to keep alive the image of the organisation regarding
ruling and decisions

II.    Activities involved in Records Management: -
      Records are tools of management, memory of an organisation and
source of information. The main activities involved in Record Management
cover the system of recording, retention, retrieval and weeding of Records;
Maintenance of up-to-date list of Regulations and manuals taking into
account of all amendments issued from time to time. Maintenance of
Records is of a paramount importance since the effectiveness of decisions,
which ultimately reflects the image of the organisation on the quality of its
resources and information.
       For proper functioning of the office administration, the Role of
records Management therefore plays a vital role.
2.     Classification of Records:
       The records may be classified into following categories:-
i) Class 'A': - Records of value for administration purpose.
ii) Class 'B': Records, which may be required for future references are
preserved for a limited period.
3.     Stage of Recording:
      Files should be recorded after action on the issues considered thereon
has been completed. However, files of a purely ordinary nature containing
papers of little reference or research may be retained for a limited period.

4.     Procedure for Recording:
      The file as and when the action on the issues considered to have been
completed, the initiating officer/dealing man should close the file and record
the same in the following manners


 RTC KOLKATA                            83.00                                  54

                    ORIENTATION COURSE FOR AAO / SO (A)

       i) Appropriate classification on the file to be indicated in Class: 'A' or
'B'. The retention period to be indicated on the file cover and if the same are
required to be destroyed after the limited period, the year of destruction to
be specified on the file cover.
      ii) Indexing of Files - An 'Index Head' No. is allotted to each files for
an official searching for the file. An Index Register is maintaining for the
       iii) In case of important files require for urgent reference, Index slips
are issued detailing therein the Index No. etc. for easy location of the file as
well as recording in the Index Register in cases where files are issued. The
date of return of the file is all watched.
5.     Precedent Book:
       Every section will maintain a Precedent Book in the prescribed form
for keeping note or important rulings and decisions having a precedent value
for ready reference.
6.     Record retention schedule:
      To ensure that files are neither prematurely destroyed nor kept for
records longer than necessary, it is required to follow the schedules of
periods of retention for records as specified in O.M. Pt. II.
7.     Custody of Records
       i) Recorded files should be kept serially arranged in the Section/
Offices and conveniently after 1 or 2 year of closing the files, they should be
forwarded to the Departmental Record Room.
       ii) The Departmental Record Room personnel will allot Index No. of
each file and note the same in the Index Register.
       iii) A Record Review Register will also be maintained by the Record
Room for review of retention/destruction of the files in case on the expiry of
specified retention period.
8.     Requisitioning of Records
       i) Recorded files will be issued to the Officer/departments only on
receipt of Requisition steps signed by the competent authorities,
       ii) The requisition so received will be recorded.
       iii) On return the requisition file will be restored to its lace and
suitably noted the fact. The requisition slips will also returned to the
authority, which issued it.


 RTC KOLKATA                            83.00                                  55

                    ORIENTATION COURSE FOR AAO / SO (A)

III.   Up dating of Codes/Manuals/Instructions/Order etc.

      Prompt action on any amendments to the Codes/Manuals/Rules etc.
issued by the Govt. of India/Ministries/Heads of the office from time to time
and correction steps issued in these regards are required to be taken and the
Codes/Manuals etc. are required to be amended accordingly.
      Image and efficiency of the Department will depend on prompt action
for updating the Codes/Manuals etc., which will render the Administrative
Authority for decision of any cases.

IV. Role of supervisors of Record Section

       i) To keep a watchful eye over Receipt of letters received from
various sources and distribution thereof promptly.
       ii) To keep a watch of purchase of Stationery items and its main-
tenance thereof which will feed all the Sections.
       iii) Promptitude of action to be taken relating to the corrections of
Codes Manual/regulations/orders and prompt distribution thereof.
       Supervisors should take initiative in this regard for upkeep men of the
Section as well as the organisation.
       iv) To keep watch over despatch of letters received from various
       Pay prompt attention to 'Speed Post' strict confidential urge important
D.O./letters to be sent as quickly as possible detaining person to the Post
Office and supervisor should see that work has be done and receipt of the
'Post Office' pasted in the Register properly.


 RTC KOLKATA                            83.00                                  56

                    ORIENTATION COURSE FOR AAO / SO (A)

       Termination of Services of Temporary Govt. servant

       The services of a Temporary Govt. Servant shall be liable for
termination at time by a notice in writing given either by the Govt. Servant
to the Appointing authority or vice versa.

       The period of such notice shall be one month.

      Provided that the service of such a Govt. Servant can be terminated
forthwith & on such termination the Govt. Servant shall be entitled to claim
a sum equivalent to the amount of Pay plus allowances for the notice period
at the same rates at which he was drawing them immediately before the
termination of his services or, as the case may be, for the period by which
such notice falls short of one month.

       Rule 5(1)(a) & (b) of CCS (TS) Rules 1965

       Distinction between letter of Resignation & Notice under Rule--5: -

       Notice under Rule-5 is an exercise of the right conferred by statutory
rules enabling a Temporary Govt. servant to cease performance of his duties
automatically on the expiry of the prescribed period of notice. Whereas the
letter of resignation requires acceptance by the competent authority, which
order to become effective. As such, if a Temporary Govt. servant submits o
letter of resignation in which he does not refer Rule-5 (1) of CCS (TS)
Rules 65 or does not even say that it may be treated as notice of termination
of service, he can relinquish his post only when the resignation is accepted
& he is relieved of his duties.

      When action is taken under Rule-5 to terminate the services of a
temporary Govt. Servant, the order of termination, which should be-: passed
by the appointing authority, should not mention the reasons f or such

       Ordinarily when a Govt. Servant is actually in service, there would
not be any difficulty in serving the notice on him personally or tendering in
the presence of some other officer, if he refuses to accept the same. In cases
where it is apprehended that service is likely to be evaded e.g. when the
officer is on long leave, service should be terminated forthwith with an offer
to pay a month's salary in lieu of notice as provided in the Rules.


 RTC KOLKATA                            83.00                                  57

                    ORIENTATION COURSE FOR AAO / SO (A)

       Reopening of cases of Termination of Service under Rule-5: -

      Where a notice is given by the Appointing authority terminating the
Service of a Temporary Govt. servant, or where the service of a Govt.
Servant is terminated either on the expiry of the period of such notice or
forthwith by payment of Pay plus allowances, the competent authority on ii
s own motion can reopen the case after making such enquiry as deemed fit:

       (i)   confirm the action taken by the appointing authority.
       (ii) withdraw the notice,,
       (iii) reinstate the Govt. servant in service,, or
       (iv) make such other order in the case as it may consider proper
       provided that in exceptional circumstances, which may be recorded in
       writing, no case be reopened under this sub-rule after the expiry of
       three months:

       (a) from the date of notice, in case notice is given,
       (b) from the date of termination of service, in case where no notice
       is given.

      Where a Govt. Servant is reinstated in service under above clause, the
order of reinstatement shall specify:

       (i)   the amount of or proportion of pay & allowances , if any, to be
paid to the Govt. Servant for the period of his absence between the date of
termination of his services and the date of his reinstatement, and
       (ii) whether the said period shall be treated as period spent oar duty
for any specified purpose or purposes.

       Extension & Reemployment:
       (1) Where the services of a Govt. Servant beyond the age of his
superannuation are required in the same cadre post, which he is holding at
the time of superannuation, then such retention shall be treated as Extension
of Service.
      (2) Any proposal for retaining the services of Govt. Servant in the
present cadre beyond the age of normal superannuation in a post different
from the one, which he was holding at the time of superannuation, should be
strongly discouraged. If, however, such retention is for, very exceptional
reasons considered to be unavoidable, the same shall be treated as


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     Employment after Retirement: - Commercial Employment means any
employment which is not under a body corporate wholly or substantially
owned or controlled by the Central Govt. or State Govt.
      (1) A retired Group- A Officer cannot accept any commercial
employment before the expiry of two years from the date of his retirement
without the prior permission of the Central Govt. If he does so or commits a
breach of any condition, it shall be competent for the Govt. to declare that
he shall not be entitled to the whole or such part o f pension and for such
periods as may be specified in the order after affording the pensioner
concerned an opportunity of showing cause against such declaration.
       (2) No Officer, who, while in service, belonged to Indian Revenue
Service or who, having been a member of any other Central service Group
A retired from a post under the Department of Revenue & Insurance in the
Ministry of Finance, shall set up practice, either independently or as a
partner of a firm relating to Income Tax, Custom, Wealth Tax, Central
Excise etc. before the expiry of two years from the date of his retirement,

       (3) Group B Officers are not required to take the prior permission
of the Govt. for accepting commercial employment within two years of
retirement. However, they should give intimation in this regard to the
concerned Ministry/Deptt. Under which they served last before their
       Employment under a Government outside India:

       If a pensioner who was o Group A Officer immediately before his
retirement wishes to accept any employment under any Govt. outside India,
he shall obtain prior permission of the Central Govt. for such acceptance
and no pension shall be to the pensioner who accepts such an employment
without proper permission in respect of any period for which he is so
employed or such longer period as the govt. may direct.

      Retired Group 'A' Officers are required to furnish half yearly
declaration about acceptance non-acceptance of commercial employment
within two years from the due of their retirement and also about acceptance
/non-acceptance of any employment under any Govt. outside India


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                    ORIENTATION COURSE FOR AAO / SO (A)

                        FINANCIAL COMPILATION

What is Financial Compilation?

Financial Compilation is Financial Accounting.


      The traditional justification of accounting was derived from the
stewardship concept of enterprise: every item of income land expenditure
had to be scrupulously recorded and supported by evidence of bonafide
transactions. The accountant‟s sole purpose and responsibility was to protect
the owner's Capital against fraud and errors. The emphasis was on honesty
and faithful recording.

Development of Accounting as an Aid to management decision making

      As industry grew and required increasingly large and complex
organisations with management responsibility dispersed accounting
developed a new purpose namely to aid management decision-making.

     Financial accounting mainly conforms to budgetary control to see that
expenditure is within the allotment.


       Budgets are now almost universally adopted for the control and
monitoring of performances. A division of the total organisation into
activity and responsibility centres is made and budgets of output / income
and expenditure (by major heads of account) are laid down for each centre.
The actual performance is then compared with the budget, analysed and
corrective action taken.

Member Finance (OFB)Finance Re-organisation at HQrs

      Re-organised financial management in the Ordnance Factories,
Finance and Accounts set up is headed by the Member (Finance). In the
Headquarters he has under him 3 Groups headed by the Chief Controller of
Accounts (Fys), the Controller of Finance and the Chief Internal Auditor.
These 3 Groups discharge the distinct functions of Accounting, Finance and
Internal Audit.


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                    ORIENTATION COURSE FOR AAO / SO (A)

At Factories

      In the Factories the Finance and Accounts functions are jointly
performed by the Local Accounts Offices.

Budget Formulation in OFB and control

       In the reorganised OFB set up Budget formulation has been made the
responsibility of Member (Finance) Annual Budget is prepared by the
Budget Section of Finance Division by careful scrutiny and consolidation of
the periodical Budget Estimates received from various Factories. The
Revenue Budget (for Stores-Purchase, etc.) is drawn with reference to the
production targets. Capital budget is based on schemes already approved or
likely to be sanctioned during the year. Progress of expenditure against
Budget allocation is closely monitored by the Budget and is also discussed
periodically in Board meetings.

Separation of Budget-Self Financing - Pricing and Estimates

      The recent separation of Budget from the Army has brought into the
fore several new priorities in financial management. Separated budget
serves to focus attention on the factories as self-financing units. So      an
accurate system of realization of the cost of issues to Army' is now of great
importance. This calls for a reliable method of pricing Army issues on the
basis of accurately estimated costs. It has, therefore, to be ensured that the
Standard Estimates are accurate, realistic and are properly updated.


       There is an increasing demand in Ordnance Factories that the
Accounts should provide an indicator to show performance and
achievements in commercial terms. Thus, the Accounts Officer may now be
called upon to prepare pro-forma Profit and Loss Accounts based on the
figures of issues and other incomes, Salaries, Purchases etc. The surplus
/deficit in the proforma Account may then serve as the measure of financial

MIS-Financial Review

      Review of expenditure and monitoring of financial performance is
another crucial area of financial management. For this purpose, Finance


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                    ORIENTATION COURSE FOR AAO / SO (A)

Divisional HQrs prepares a Quarterly Financial Review Report based on
Financial Activities reports from the various LAOS which are consolidated
and commented upon by C Cof A (Fys). The Review Report submitted by
the Finance to the O F Board highlights special features such as downward
trend in production, inventory trends, etc.

Financial Compilation Purpose

      The purpose of the financial compilation may be summed up as

       1. To bring / to account / all transactions of expenditure and receipts.

       2. Prompt booking of receipts and expenditure to appropriate heads of

       3. Quick feed back on expenditure actually incurred for the purpose
       of budgetary monitoring and control.
FINANCIAL COMPILATION- how it is generated?

     For an idea as to how the receipts and expenditure are brought into
account, it is necessary to understand the set up Govt. accounting

       The Accounts of Central Govt. are kept in 3 parts:
       Part I: Consolidated fund of India.
       Part II: Contingency fund of India.
       Part III: Public Account of India.

In Part I of the account there are two main divisions namely:-

(i)  Revenue {consisting of Sections for 'Receipts Heads (Revenue
Account)', and 'Expenditure Heads (Revenue Accounts)'}

(ii) Capital, Public Debt, Loans etc. {Consisting of Sections for Receipt
Heads (Capital Account) Expenditure Heads (Capital Accounts) and Public
Debts Loans and advances etc.}

      The first division deals with the proceeds of taxation and other
receipts classed as revenue and the expenditure met there from.


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                    ORIENTATION COURSE FOR AAO / SO (A)

       The Section 'Receipt Head (Capital Account)' in the second
division deals with receipts of a Capital nature, which cannot be applied as a
set off to Capital Expenditure.

       The Section 'Expenditure Head (Capital Account)' in the second
division deals with expenditure met usually from borrowed funds with the
object either of increasing concrete assets of a material and permanent
character or of reducing recurring liabilities. It also includes receipts of a
Capital nature; intend to be applied as set off to Capital Expenditure. The
section 'Public Debt' and Loans and advances etc., of the second division
comprises loans raised and their repayment by Govt. such as 'Internal Debt'
'External Debt' of the Central Govt. and loans advances made (and their
recoveries) by Govt. The section also includes certain special type of heads
for transactions relating to "Transfers from consolidated Fund to the
contingency Fund and Inter-state settlement".

       In Part II of the Accounts shall be recorded transaction connected
with the contingency Fund set up by the Govt. of India under Art.267 of the
       In Part III of the Account, the transcations relating to Debt (other than
those included in Part I),' Deposits', Advances, Remittances and Suspense
are recorded.

      Within each of the Division /Sections, transcations are grouped into
sectors under which specific functions or services are grouped.

      The Sections or sub-divided into Major Heads of Account. In some
cases, the sectors are, in addition, sub-divided into sub-sectors before
Division into Major Heads of Accounts. The Sectors shall be distinguished
by a series of letters of the Alphabet separately for the "Revenue Receipt"
section, the "Revenue Expenditure" section and for the sectors included in
the remaining Sections/Divisions each major head is allotted a code number

Major, Minor, and Detailed Heads

      Main unit of classification in the accounts is Major Head. This is
divided into Minor Heads each of which shall have a number of subordinate
heads generally known as Sub-Heads. The Sub-Heads are further divided
into "Detailed Heads". Sometimes Major Heads are also divided into "Sub-
Major Heads" before their further division into Minor Heads.


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                    ORIENTATION COURSE FOR AAO / SO (A)

       The Sectors Major Heads, Minor Heads, Sub-Heads and Detailed
Head together constitute a five-tier arrangement of the classification
structure of Govt. Account.

       The detailed classification of account heads used in Govt. Account up
to the stage of minor heads is given in the list of Major and Minor Heads of
Account of Central and States - Receipts and Disbursements Published by
the comptroller of Auditor General of India. The heads of classification
operated upon in the Defence Services Accounts are shown in the pamphlet
of Revenue, Debt and 'Remitance Heads' and ' classification Hand Book' of
Defence Services - "Receipts and Charges" which are published by the
Controller General of Defence Accounts.

How financial transactions are brought to Accounts: -

       The compilation of accounts of receipts and expenditure is done
mechanically on the Computers. For this purpose the necessary details
available in bills and vouchers etc., are codified in a document called the
"Punching Medium". These punching media are forwarded to EDP Section
in the office of the PC of A (Fys). The information available in the PMs are
fed into the computer and at the end of each month printed compilation are
generated and sent to all concerned. A copy of the compilations in magnetic
media is sent to CGDA, New Delhi for inclusion in All India Compilation.

       As one of the basic functions of financial Management is budget and
Budgetary Control, Financial Compilation by rendering prompt information
on compiled accounts helps in determining the health of an Organisation.
Without the aid of Financial information generated through the process of
"Financial Compilation" it will be impossible to determine the financial
viability of on organisation.


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                    ORIENTATION COURSE FOR AAO / SO (A)



      A Punching Medium is an extract of certain data pertaining to a bill /
voucher written in the form of numerical code number for the purpose of
preparation Financial Compilations required by the Executive and
Accounting Authorities to watch the compiled actual for Budgetary Control
and Projection.

Purpose / Salient features:

      The Salient features of P M as derived from the above definition are
as under
      i) Contain data pertaining to original documents i.e. bill/ vouchers etc.
      In otherwise, it is prepared for journalizing the primary entries.

       ii) Contain data in the form of code number as Defence Services
       detailed accounting is done mechanically on Computer.

       iii) Generate financial compilations required to determine financial
       viability of an organisation and for Budgetary Control and future

Class of Voucher (P M): -

       Different classes of vouchers and their use are as under: -

i) Class of Voucher - 1 (Cash Voucher) - This is used where Cheque is to be
issued in settlement of any claim.

ii) Class of Voucher - 2 (Transfer Entries) - This is used for fresh
adjustment of transactions and also for rectification of previous

iii) Class of Voucher - 3 (I D Schedules - Civil) - This class of P M is
used for adjustment of items originated in the books of Civil Accounts

iv) Class of Voucher – 4 (Abstract of Receipts and Charges) - To prepare
abstract of receipt and charges relating to MES / BROs.


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                    ORIENTATION COURSE FOR AAO / SO (A)

v) Class of Voucher -   5 (Cash Account) - This is used by formations
drawing cheque against cash assignment.

vi) Class of Voucher - 6 (Railway Bills) - This class of P M is used in
dealing with Railway bills relating to conveyance charges on Warrants /
Military Credit Notes etc. This is mainly used by PC of A (Fys)

vii) Class of Voucher - 7 (Allocation Sheet) - This is used mainly by PC
of A (Fys) Organisation to allocate transactions compiled by other CsDA on
their behalf.

viii) Class of Voucher - 8 (I D Schedules - Defence) - This class of
voucher is used in Accounts Section of a Controller's office while
responding D I D Schedules.

ix) Class of Voucher - 9 (M E S Transactions) - this is used for
adjustment of payment made by the Main Office of Controller's Office in
respect of M E S formations.

Format of Punching Medium

      The P M (except for class 3 and class 8 vouchers) are prepared for
each class of voucher on I A F (C D A) - 336. While class 3 voucher is
prepared on I A F (C D A) - 646, the class 8 voucher is prepared on I A F (C
D A) - 338 A.
The prescribed format is as under:


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                    ORIENTATION COURSE FOR AAO / SO (A)

                                                         I A F (C D A) - 336

                            PUNCHING MEDIUM

Month          CDA        Section   Class of Vr       Vr.No
Classification              Receipt               Classification           Charge
Code Code
                     (+) R (1)      (-) MR (2)           (+) C (3)        (-) MC (4)

Detailed analysis of the column / data: -

       It will be seen from the above format that the P M contains in the
form of code number the following data. The necessity / importance of the
data is noted against each:

i) Month: -          The month's account in which the transaction is

ii) CDA: -           The code number of C D A in whose area the transaction
                     occurs. C D A- wise code Nos. allotted by the C G D A
                     are furnished in the enclosed Annexure - 'A'.

iii) Section: -      The Section / Office which deals with the classification
                     is noted. The respective Controllers allot the section
                     codes. With reference to Section Code Nos. the
                     compilation activities including fictitious / incorrect
                     operation of transaction on the part of Sections can be
                     ascertained and referred to them.

iv) Class of Vr :- To indicate the kind of Vr. in which the item appears.

v) Voucher No :- The serial distinguishing number allotted to the, voucher.
                 Ordinarily the voucher Nos. of each month in each class
                 of Vr should run concurrently commencing from 00001.
                 This avoids duplication.

vi) Receipt / :-     Amount operated indicates whether a receipt,
Charges              minus receipt, charge and minus charge. Minus receipt /


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                    ORIENTATION COURSE FOR AAO / SO (A)

                     Charge columns are provided to compile transactions
                     relating to deduction from Receipt / Charge.

vii) Classification:- Classification is done by two types of codes i.e. R D R
                     Codes (main code starts with Zero - 015 etc), and
                     Service Codes (main code starts with a figure - 805 etc).
                     While Service Codes are published in C H B (D S), the R
                     D R Codes are incorporated in the Pamphlet of R D R
                     Heads published by the C G D A. Unit code is also
                     prefixed to the classification codes (operated above
                     classification codes). Unit code consists of 6 digits. This
                     is operated to indicate the Unit / Formation to which the
                     transaction relate. Unit codes are published by the
                     Executive Authorities in respect of Unit / Formations
                     under them. In some accounting circles unit of control
                     codes are also operated with unit codes to classify
                     transactions in details.

Detailed Analysis of Classification Codes

        The classification code consists of seven digits and divided into 3
parts by inserting strokes. The first two digits are known as category codes.
It indicates whether the transactions relate to R D R or Service Heads. For
all R D R Codes category prefix should be '00'. For Service Heads category
code should normally be '01'. But different category codes i.e. 04. 13, 16
etc. as incorporated in C H B (D S) to indicate the source of procurement of
purchased items / category are also operated. The next three digits are main
codes and indicate the nature of transaction / minor heads (i.e. 805 - Pay
Allowances - Ordnance Factories). The rest two digits are sub - code
relating to the main code used to indicate further details of main transactions
(i.e. 805 / 01 - Pay & Allowances - Officers - Ordnance Factories).

Points to be remembered
       If the main code (middle three digits) starts with Zero (015 etc), the
proceeding one i.e. category must be Zero (00 / 015 etc). On the other hand,
if the main code starts with a figure (i.e. 805 etc), the proceeding one must
be a figure (i.e. 01 / 805 etc).


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                    ORIENTATION COURSE FOR AAO / SO (A)

Entries in the P M and Balancing:

       Except Voucher Number all the common data viz. month, C D A,
Section and class of Voucher. should be entered first, the next columns that
should be filed in are the classification and amount. When all the data
relating to a transaction are recorded in the P M, the amounts on each side
of the account should be totaled up separately and recorded in the P M for
reconciliation. The total / net total recorded in the P M should tally / agree
as under if the allocation has been done correctly. Otherwise, the P M
should be viewed as unbalanced and rectification requires.

       a) Plus Receipt with Minus Receipt.
       b) Plus Charge with Minus Charge.
       c) Plus Receipt with Plus Charge.
       d) Minus Receipt with Minus Charge.

      After the P M has been prepared as indicated above they will be
checked as per prescribed procedure by the SO (A) / AAO/ AO before
signature. The complete P M are then numbered and sent to the respective
EDP / DDP Centre for preparation of Printed Compilations

Importance of Correct Compilation:

        P M is the primary document based on which Consolidated Financial
Compilations i.e. Book Compilation of R D R Heads and Analysis of All
India Defence Services Receipt and Charges are printed. These compilations
are the tools in the hands of the Executive and Accounting Authorities to
watch and control the progress of Expenditure and to frame Budget
Estimates. Therefore, utmost care and caution are necessary to ensure that
Receipt and Charges are classified under correct code heads and operation
of fictitious / erroneous code heads are avoided at all cost.


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                      ANNEXURE "A"
Designation of Controller / Office                                        Code No
Controller of Defence Accounts, Patna                                          00
Controller of Defence Account., (Pensions), Allahabad                          01
Controller of Defence Accounts (Officers), Pune                                02
Controller of Defence Accounts Central Command, Meerut                         03
Controller of Defence Accounts Southern Command, Pune                          04
Controller of Defence Accounts (Other Ranks), South, Bangalore                 05
Controller of Defence Accounts Western Command, Chandigarh                     06
Controller of Accounts (Factories), Calcutta                                   07
Controller of Defence Accounts (Air Force), Dehradun                           08
Controller of Defence Account: (Navy), Bombay                                  09
Joint Controller of Defence Accounts (Funds), Meerut                           10
Controller of Defence Accounts (Other Ranks), North, Meerut                    11
Controller of Defence Accounts Northern Command, Jammu                         12
Zonal Office (Pension Disbursement), Madras                                    13
AO DAD Min. of Defence, New Delhi                                              14
Controller of Defence Account, (Canteen Stores Dept), Bombay 15
Controller of Defence Accounts (Head Quarters), New Delhi                      16
Controller of Defence Accounts (Other Ranks), Central Nagpur                   17
Controller of Defence Accounts, Madras                                         18
Controller of Defence Accounts (Research &. Development) New Delhi             19
Controller of Defence Accounts (Pension Disbursement), Meerut                  20
Controller of Defence Accounts, Guwahati                                       21
Controller of Defence Accounts, Lucknow                                        22
Controller of Defence Accounts (Border Roads), New Delhi                       23


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Fictitious Code Heads Types, Impact and necessity for Rectification

       Code Heads which have not been provided for in the RDR Pamphlet
and CHB of Defence Services Receipts and Charges are treated as
Fictitious. As per standing Instructions R D R Fictitious Codes are allowed
to stand and Service Head Fictitious transferred to 7502061 under
intimation to the compiling Sections for eventual rectification by operating
correct Code relieving Suspension Code Heads (7502061) in the case of
Service Heads and the Fictitious R D R Heads which have allowed to stand
will be cleared by operating correct Heads. In most of the cases the Code
Heads operated treated as Fictitious because of wrong side operation i.e.
Receipt Side Code taken to Charges and vice versa. e.g. 0180201 is a
Receipt Code operated under Charges being Fictitious taken to 75 / 020 / 61
which to be cleared subsequently by the compiling Section by booking to
proper Code for which the transaction is meant for. Similarly in the case of
R D R Fictitious say 0001561 Charge Code operated under Receipt.

       This was retained for rectification. In all these erroneous operation the
quantum of Expenditure / Receipt which ought to book remained under
valued affecting Budgetary Control and other Allied Accounting formalities.
In order to avoid these complications it is very much necessary to take
corrective measure to clear Suspense and R D R Fictitious and to ensure not
to recur such errors in the Compilation.

The prescribed format is as under: -

                                                  IAF- (C D A) - 336

                            PUNCHING MEDIUM

Month       CDA           Section    Class of Vr   Vr. No

Classification              Receipt   Classification                    Charge
Code                                  Code
                 (+) R (1) (-) MR (2)             (+) C (3)             (-) MC (4)



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                     ORIENTATION COURSE FOR AAO / SO (A)

                        LABOUR ACCOUNTING


Reading through this Chapter you will come to know:

-       Working hours of an Ordnance Factory.
-       Procedure for marking attendance
-       Mustering of attendance on Saturday; Saturday "Bonus" Pay.
-       Daily audit of Muster Roll in Accounts Office.
-       Day Workers and Piece Workers - how they are paid.
-       Different elements of Wages entitled to Industrial Employees and
        their calculation.
-       Overtime; Departmental OT up to 48 hours; Factory OT beyond 48
        hours; Extra payment for working at night; Treatment in Cost
-       Scrutiny of Wage Roll before authorization.
-       Agreement Form of Labour.
-       Disbursement Certificate.
-       Labour Abstract - Link between Financial (0002) and Cost Accounts
        (Job wise Cost Card).
-       Entitlement of Leave - Peculiarities, their treatment in Cost Account.


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                    ORIENTATION COURSE FOR AAO / SO (A)

    Mustering of attendance of Industrial Employees - Audit there of

Blowing hooter controls the opening and closing of gate of a factory. The
gate of factory is opened half an hour before the time fixed for
commencement of work in the Factory and closed at the fixed time. This
means if the factory is working from 7.30 A.M. the gate will open at the
sound of the hooter at 7.00A.M and will be closed at the sound of the hooter
at 7.30A.M.

Workers entering into the Factory by that period will remove metallic disc
(ticket) from the board placed near the gate. These tickets they will deposit
in the box at the shop.

After closing of the gate say at 7.30A.M the representative of the gate office
(Labour Bureau) prepares a list of tickets not removed from the board.

The gate is then opened and latecomers are allowed to enter the gate up to
one hour i.e. up to 8.30A.M. No one is normally allowed to enter after that
time without the special sanction of the General Manager. The latecomers
are required to deposit their tickets in the respective boxes at the gate
specially provided for the purpose to record the particular hour at which a
latecomer is admitted. The representative of the gate office prepares a list of
ticket. Numbers who have entered late indicating the time of late, this
indication of late is 0-15 minutes, 15-30 minutes, 30-45 minutes, and 45-60

Thus two sets of documents are generated at the gate Casualty memo/
Presentee- memo, late memo.

After the individual reported in the shop and deposited his ticket; the shop
also prepares another list of individual reported (without indication of any
time). This document is also sent to Labour Bureau for cross checking with
the two documents mentioned earlier.

Muster Roll in IAFO 1367 Outer 12367- A inner is prepared from the
casualty memo. For marking in the attendance one hour is divided into 4
equal parts. If an IE is present for the whole day he is marked „I‟. Late for
periods of 0-15 minutes is marked as 31/32, that for 15-30 minutes is
marked as 30/32 and so on. If an IE is absent for the whole day he is marked


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If the factory is working on overtime, the overtime noted indicating
individuals detained in overtime and hours of overtime worked are prepared
by the shop JWM and handed over to Labour Bureau. It is also marked as
1/32 for every 15 minutes worked on O.T vertically below the attendance of
the day.

Men who take short leave are granted leave passes by the JWM of the shop.
Those leave passes are deposited at the gate and handed over to the Labour
Bureau. Part Leave is generally granted in terms of quarter of an hour.

This muster roll along with the leave passes, Over Time note of the previous
day and into casualty report and late memo of the current day are to reach
Accounts office every day in the morning and as such also called Morning

Audit in Accounts Office (daily):

 On receipt of the muster roll from the Labour Bureau, the present day‟s
attendance should be checked with reference to casualty memo/ presently
memo, late memo. The previous day‟s attendance to be checked with
reference to leave passes, overtime memos. Discrepancy if any to be
reported through the discrepancy report. Alteration if any can be made by
Labour Bureau with proper alteration. The auditor of Labour Section must
initial in the muster roll in token of having audited the same.

The daily totals of the attendance will then be recovered by Accounts
Officer in IAF (FAC) 74, 74(A) or 74(B)

At the end of week) Accounts Officer will verify correctness of the
progressive total of the weekly attendance.

The weekly total of the attendance, overtime hours, bonus hours, night shift
hours etc., will be also copied in the Accounts copy of attendance
mentioned earlier.

At the end of the month: On receipt of the muster roll on the day following
the close of the month in the Accounts Office, the total number of days
attended by each worker, overtime worked by each worker, bonus hours
admissible to each worker, total night shift hours worked by each worker as
mentioned in the muster roll will be checked with reference to the record


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maintained by Accounts Office in IAD (FAC) 74. This will than become the
input for preparation of Wage Roll.

Mustering on Saturday as distinct from other working days

Under Factory Act 1948, no adult worker in a factory is required to work
more than 48 hours in a week. The total normal working hours in a week in
the Ordnance and Clothing Factories have however been fixed at 44 %
hours excluding intervals for recess. The difference between 48 hours and
44 ¾ hours i.e. 3 ¼ hours has been viewed as Saturday Bonus.

If an I.E. is absent for the whole the Saturday, he is not entitled for this
benefit of Saturday Bonus but if present for part of a day his attendance will
be as under.

        Present on Saturday for hours.              Booking attendance.
                      1                                   17/32
                      2                                   21/32
                      3                                   25/32
                      4                                   29/32
                     4¾                                     1

Different element of Wages entitled to Industrial Employees

Wages payable to Industrial employees for any wage period will include:

   1. Duty pay at basic monthly rate (for day workers) based on
      attendance or Duty pay at basic monthly rate and an element of
      profit (for piece workers) calculated on the basis of input hours.

   2. Other elements of pay e.g. Idle Time Pay, Over Time Pay, Leave
      Pay, Holiday Pay, Injury Pay and Segregation Pay etc.

   3. Certain allowances like DA, HRA, CCA, Transport allowance at the
      prescribed paid down by the Govt. under different rules.

   4. Overtime bonus, Night Shift Allowance, Night Shift Bonus,
      Incentive Bonus (for Maintenance works only) and other
      remuneration payable under rules


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   5. Duty pay at basic monthly rate is also called time wage in respect of
      D. W. This is because the day workers are to be paid on time basis
      without regard to output.

As per wage act 1936 , the per day wage of a day worker is basic pay rate/
total number of days the workers is supposed be present in a month i.e. N-
(S+H) where N stands for No. of days in the month, S number of Sundays
and H number of holidays.

    Total Duty Pay = Basic rate of Pay x No of days actually present
excluding Sundays and holidays
                      N– (S+H)

Piece workers in an Ordnance and Equipment Factory are entitled to
payment for the holidays in a month. Thus daily rate of pay of Piece
workers are calculated as –

                           Basic Rate of Pay
Piece workers are entitled to the monthly wage based on number of articles
produced during the month. The same is evaluated as under.
From the piecework cards received in Accounts office the actual hours of
output produced by the individual or gang piece worker is determined.

In case of individual piece worker the input hour is calculated as:

  (N –S – ST) x 8 + ST x 4       3      Hours

where N stands for total number of days in a month ; S for Sundays in the
month and ST the number of Saturdays in the month of the individual is put
on overtime the hours spent in overtime is als0 added up to the input hours.

Thus the input hours =        (N –S –ST) x 8 + ST         x 4 3       + OT Hours
Worked                                                       4

Profit % is worked out as Output Hours on basis of PW Card x 100 %
                                       Input Hours


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In case of gang piece worker the total input hours of the gang is arrived at
by adding the input hour of each individual worker of gang and the output
hour is calculated as the total hours on the basis of the PW Card. The profit
% of the gang is calculated as under:

                        Output Hours of the gang - 1         x 100 %

In case of PW the amount of profit is calculated on the basis of notional
time wage determined on the basis of minimum of the scale of pay. Thus
notional time wage of an individual is worked out as

   Minimum of the scale of pay x number of days present              +
                        (N –S)

Minimum of the scale of pay x OT hours worked.

Amount of profit is calculated as

Notional time wage x Profit % (subject to a maximum of 75 %)

A separate element called incremental pay is allowed to PW, which is
calculated as Incremental Pay =

Difference between Actual basic monthly rate of Pay – Minimum of the
scale of pay X Number of days present.

If a worker works partly as day worker and partly as piece worker during a
wage period; he will be considered as piece worker for the entire wage
period and will be entitled to holiday pay for the holiday (s) falling within
the wage period; irrespective of whether the holidays is in the part when he
is a day worker or piece worker.


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Other Elements of Pay

a) Overtime Pay - If workers are deployed on work outside the normal
working hours or on a Sunday or a paid holiday the same is termed as
overtime work. However, Sunday for which a compensatory off is arranged
within three days immediately before or three days immediately after will be
treated as a normal working day and not as a overtime work. If the work
done on Sunday is not treated as work done on normal working day; work
done on Sunday should be treated as overtime and taken into account in
computing the total hours for overtime irrespective of whether
compensatory off is given or not. Payment of overtime under departmental
rate will arise when a workman works beyond the normal working hours of
the Factory i.e. 44 ¾ hours on Saturday.

Payment under section 59 of factory Act 1948 arises for work done beyond
9 hours a day and 48 hours a week.
The total overtime hours worked will be divided into overtime hours worked
under departmental rule and under factory Act.
Overtime work under departmental rule is thus the difference between the
actual times of OT worked less the hours of OT under Factory Act.

Calculation of OT Wages

              Day -workers under departmental rule: -
              Up to 9 hours a day or 48 hours a week: -

           Hourly rate of O.T. is calculated as –

        (a) (P+TA + SFA) + (DA + CCA)

        (b)   (P +TA + SFA) +2 D
        P where stands for Basic rate of monthly pay and D stands for all
        allowances other Transport allowance and small Family norms

        (P + TA + CCA) is booked to the job concerned while


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                    ORIENTATION COURSE FOR AAO / SO (A)

        (a) DA + CCA

        (b) (P + TA + SFA) + 2D         are booked to different work order to
                   200                  avoid inflation of cost of articles
                                        manufactured in overtime hours.

Piece Workers’ Departmental Overtime

Up to 9 hours a day and 48hours a week-

(P +TA+ SFA)
Out of it Min Basic Pay
200 per hours is included in the Notional time wage as O.T. time wage and

 (P –Min of Pay Scale) + TA + SFA                per hour is paid of difference of
OT wage.

Piece Workers under Factory Act

For each hour of overtime in excess of 9 hours a day 48 hours a week an
amount equal to Min. of pay scale /200 multiplied by the Number of hours
worked is added to nominal time wage as OT wages.

        b) An amount equal to (P +TA + SFA – Min. of Pay Scale)/ 200 x
       No of hours worked is paid as difference of OT wages.

       c) An amount equal to 1.25(P + TA + SFA) + 2 x D x No. of
      hours worked, is 200 paid as Overtime bonus booked to a different
      code to minimize the burden on production during OT hours.
      Where P stands for Basic monthly rate of pay and D stands for all
allowances except TA and SFA.

Night Shift and benefits given to IES for working in Night Shift

A Night Shift represents the hours worked between the termination of day
shift and the normal working hour of the next day. Industrial employees
working on night shifts are eligible for night duty allowance on the basis of


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weightage of 10mts for every hour of night duly performed between 2200
hrs and 0600 hours excluding the hours of overtime worked within that
period and also period of recess falling in that period.
For example if the night shifts is from 20-00 hours to 6-00 hours with 1-
hour recess between 23-00 hrs to 00-00hrs. Then Night duty allowance will
be admissible for the period, (8-1-1)=6 hours where 8 hours is the duty
between 22-00 hrs to 6-00 hrs, 1 hour is the rest time in that period and 1
hour is the OT falling within that period.

For calculations of weghtage less than half an hour should be ignored
whereas half an hour and more should be considered as one full hour. The
rounding off of fraction of an hour shall be made with reference to actual
hours of night duty performed in a month.

Piece workers who perform overtime work under departmental rules in the
night shift will be paid an extra half hour termed as Night Shift bonus.

The formula for calculation of NDA (Night Duty Allowance and night shift
bonus are as under)

NDA: -

Calculation of Leave Salary

Leave salary is calculated on the basis of monthly rate of basic pay
admissible to the worker before proceeding on leave. The daily rate of pay
is calculated on the basis of formula laid down for calculation of basic time

As the element basic pay of an IE during a month is divided into different
elements as explained above; there is every likely hood that sum of all these
elements when rounded off may exceed the actual monthly rate of pay or
may be less than the actual of monthly rate of pays. Care should be taken to
ensure that individual is paid neither less nor more.

Calculation of Dearness Allowance, HRA, CCA

For calculation of dearness allowance of a month first the DA full days is


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DA full days = Number of days present + Leave with full days, injury
paydays + holidays (for piece workers). If a worker is present for part of a
day he should be considered to be present for the full day for this purpose.

DA half days = Number of days of half Pay Leave during the month.

DA amount =DA (Percentage) basic Monthly rate of pay x (DA full days+.5x DA half
days) 100 N - (S +H) for day worker and (N-S) for Piece Worker

HRA & CCA and Transport Allowance

HRA amount and CCA amount are calculated as full DA.

Hospital Leave and Injury Pay

Industrial Employees are entitled to injury pay for the period spent in hospital
when to authorize by the General Manager for any accident while on duty.
This amount is calculated on the basis of basic rate of monthly wage, as
calculated above depending on whether he is a DW or PW. This amount
however will be deducted from the compensation, if any, paid under workmen
compensation Act. All allowance like DA, HRA, CCA, TA is also admissible
on the pay.

Small Family Allowance

Industrial employees who have undergone necessary medical treatment to
maintain small family and have followed the conditions stipulated under rules
are entitled to small family allowance when so ordered by the General

Small Family Allowance is an allowance admitted at the rate as stipulated in
the Govt. Order. It being a type of allowance no other allowance is admissible
on the amount.

Under Factory Act 59, Small Family allowance is treated as a part of basic
wage and as such is considered for calculation of OT rate of IE up to 48 hours
as well as beyond 48 hours.


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Transport Allowance

Industrial Employee like other Central Govt. employee is entitled to Transport
Allowance at the rates paid down in Govt. Orders. These being an allowance
no other allowance like DA, HRA, and CCA are calculated on this amount.

Industrial Employees who are physically handicapped and whose extent of
disability exceeds 40 % are entitled to Transport Allowance at double the
normal rate prescribed under rules.

This being a type of allowance no other allowance is admissible on it Under
Factory Act 59 transport allowance has been clarified as the basic wage and as
such is taken into account for calculation of OT rate up to 48 hours and
beyond 48 hours.

Incentive Bonus

The following categories of day worker (other than un- skilled worker) who
are deployed on maintenance work of machines in a shop, gas plants, stream
generation, compressed act supply plants, Industrial under supply Plant,
electrical power supply plants, (irrespective of whether these plants are
situated inside the factory or not) are entitled to a separate element of wage
called Incentive Bonus.

Incentive bonus is calculated on the basis of percentage, Incentive bonus
percentage may be either 50% of the average profit of a section (when the
service of an IE can specifically to the benefit a section) or 50% of the
average PW profit of all PW of the Factory for that month.

Amount of Incentive bonus will be calculated as:

Basic monthly rate of pay x No of days present x Incentive bonus % as stated
         {N – (S + H)}
Note while PW profit amount is calculated on the basis of Min. of Pay of the
revised scale of Pay. Incentive bonus is calculated on actual basic pay of the
revised scale


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                    ORIENTATION COURSE FOR AAO / SO (A)

Sand Blaster, Welder, Risk Allowances

Industrial Employees who are working in hazardous sections and are working
in a close proximity to furnaces are entitled to risk allowance at the rates laid
down by Govt. orders. Similarly, Industrial Employees who are performing
the hazardous job of sand blasting, Welding are also entitled to a special risk
allowance. The rates of this allowance are also laid down in Govt. orders.
The amount of these allowances is also calculated on the basis of attendance
in a month.

The amount of Risk Allowance

= Risk allowance Rate x No of days for which dearness allowance is
   (N –S) or N – (S + H)

Scrutiny of wage roll before authorization

When the Wage Roll was prepared manually each element of wages were
calculated manually. The help of Facit / Calculator like machines were taken
for speedy addition, multiplication, division. The accuracy of the preparation
was ensured before release of the role by the following steps:

    Review of primary document by Section Officer to the extent he deems
     fit and subsequently by Accounts Officer.
    Calculation of each element (basic rate & amount) to the extent of 3 %
     by Section Officer and subsequently to the extent of 1 % by Accounts
    Pay entitlement of the industrial employees to the extent of 1/6 th of the
     total number of Industrial Employees by the Section Officer.
    Each page to be cross-totaled locates any totaling mistake.

The checks mentioned above were very important to ensure accuracy. At that
time in the preparation of Wage Roll of a section only the dealing auditor of
the section and the section officer were responsible in handling in data.

After computerization of the wage package a third entity is computer and their
operators are also involved in the wage preparation. Moreover, the program
logics are not visible to the user i.e. the Auditor of labour section. As such


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these audits have become more important. As present the audit of roll before
payment are to be carried out in the below mentioned steps.

       a) To verify the entitlements: - EDP Section will print out a report
       called “Change PIS” which indicates individual-wise, file- wise
       changes effected in the IE‟s Master in computer between 8th of the
       previous month and 1st day of the current month. This report will be
       received in two copies. On receipt of the same the same should be
       checked with the different Factory Orders received from the factory
       Management, Periodical Increment Certificate etc. to verify the
       correctness of changes effected by EDP. As the number of changes in a
       month is very small, it should be 100% audited by Auditor as well as
       Section Officer/ AAO, changes if any, are to be noted on the reported
       and one copy returned back to EDP Section for further necessary

EDP Section will print out a report called “Change Pay” which indicates
individual wise list of change in the entitlement by comparing the same work
last month. This should be compared with “Changed PIS” as amended to
verify that Pay has been changed for only those individual whose change in
PIS have been authorized by Labour Section. If the two are not matching EDP
section should be asked to reprocess wage roll.

     b) To verify accuracy in calculation: - This consists of two parts –

     i)     to verify the different inputs has been properly taken.
     ii)    To verify that the rate of element of wages are properly calculated
            by computer.

     (i) To verify the inputs. : - Data sheet like attendance supplementary
     attendance when field in are to be totaled page wise and column – wise.
     The same is to be prepared in two parts stationery. One part is to be
     handed over to the EDP Section for data entry whiles the other to be
     kept in the section for verification by section officer with reference to
     primary documents.

     EDP section prints out check list of in the same page format of data
     sheet and also indicates the column where page total done manually
     does not agree with the total done by computer. The same may be due
     to wrong totaling or wrong data entry. That page to be 100% checked


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     to rectify the error and one copy of checklist with due authentication
     should be handed over to EDP Section for necessary action. When the
     wage roll is generated another statement called “Earning Summary” is
     also generated and handed over to Labour section. In this report the
     total in each element viz. duty days, OT days, OTB days etc are shown.
     This should be checked with the total of the attendance as shown in the
     checklist of attendance as amended. If the two tallies it is established
     that the Wage Roll is prepared on the basis of authorized attendance

     (ii) To verify the rates: - The print out of “Pay Register or Pay Slip” is
     also received in Labour Section. These two reports indicates rate for
     each element of wage admitted to individual.

     At least one case of each scale / grade / trade to be selected and the rate
     as well as amount of wages calculated to be verified by Auditor /
     section Officer. This will establish that the system (Program) has been
     formulated correctly.

     Once all these checks are exercised the Master Roll should be passed
     for payment for the gross amount by Accounts Officer. When the
     Account Officer is on leave / out of station the senior AAO / Section
     Officer is allowed to pass the roll provisionally subject to
     countersignature by GM of the Factory. The master rolls so passed by
     AAO / SO (A) are subject to post audit by Accounts Officer on his
     return. Under this arrangement no responsibility devolves on the
     General Manager as the correctness of the master rolls signed by him.

Audit of Supplementary Bill

Previously supplementary bills were priced and passed for payment
manually by Labour Section. Supplementary bills are generally due to.

          i)     Change in entitlement from retrospective data.
          ii)    Late regularization of leave.
          iii)   Belated sanction of overtime.

Change on entitlement from retrospective data

The claim preferred by the Factory are data entered by EDP Section and a
check list showing the months drawn pay, due pay, attendance as is in the


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                    ORIENTATION COURSE FOR AAO / SO (A)

record of EDP section is printed out. The same is printed in duplicate copy
and handed over to Labour Section. Auditor /Section Officer / Accounts
Officer must exercise check in amount O/o on that document with reference
to hard copy of records maintained in Labour Section. The same to be
authenticated for pricing by Labour Section indicating whether separate
supplementary bill to be printed or the same to be included in the next
months pay as miscellaneous earning. The bill in main priced and bill along
with due drawn statement is handed over to labour section. The same to be
compared with the authenticated copy before pass for payment of the bill.

Late regularization of the leave and other OT

Data in the standard format to be forwarded to EDP Section. The same has
total verification as indicated in case of attendance is to be carried out.
Computer verifies whether payment on this account has already made or
not. It prices the leave pay and other elements of wages on the basis of basic
rate of pay as in the record of EDP for the month to which the leave is
related. Audit checks as indicated for regular Wage Roll are also to be
carried out by Auditor/ section officer / accounts officer of Labour Section.


Procedure followed in case of Industrial Employees payment

REQUISITION: Advances are paid by Accounts Officers attached to
Factories to the Head of Formations on requisition based on the estimate on
probable amount required during the month for payment to Industrial
Employees .For this purpose, cheques in payment of requisition for advance
will be normally issued by Accounts Officer one or two days before the
actual date of disbursement .The reasonableness of the advance claimed
should be checked with reference to anticipated payments based on past
actual and present trends .These advance will be recorded in a Demand
Register and adjusted on receipt of Disbursement certificate from the officer
concerned after due checks thereon as laid down in Disbursed Certificate.

Agreement Form of Labour
The Accounts Officer will make out an Agreement Form of Labour (IAF-
13) in duplicate in which the total amount passed for payment will be
entered section wise. This will be forwarded to General Manager of the


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Factory, who will return one copy duly completed to show the amount
actually paid, un-disbursed wages, license fees recovered, income tax,
provident fund recoveries and other deductions. All supporting schedules
and documents will be forwarded along with the Agreement form of Labour
so as to reach the Accounts Office by the 10th of the 2nd month following
that to which the transaction pertains.
Monthly Disbursement certificate (IAFO 1929) is prepared by the Factory
for Industrial Employees who are paid out of advances obtained from the
local Accounts Officer. The payment side shows (1) the total amount passed
for payment in Master Roll. (2) Deductions made there from; (3) the net
payment payable and actual disbursed. Arrear wages paid and also the
payment through supplementary bills on account of discharge are also noted
therein. The receipt side of the certificate shows (1) Advance received from
the Accounts Officer and sums, if any, drawn on Emergency Cash
Requisition and also (2) Any receipt for un-disbursed wage remitted by
money order. The difference between the receipt and payment represents
un-disbursed amount, which is required to be recorded on the payment side
of the Disbursement Certificate and both sides balanced. The Treasury
Receipt for the un-disbursed amount along with Disbursement Certificate
duly supported by requisite schedules be sent to Accounts Office on or
before 10th of the 2nd month following.

Financial Punching Media will be prepared in adjustment on Treasury
Receipt and recoveries noted in the Disbursement Certificate viz. License
fee, hospital stoppages, fund recoveries etc. the original copy of the
Punching Media will be sent to EDP Section of Main Office of the PCA
(Fys) Kolkata. The relevant demands outstanding in the Demand Register
should closely watched and necessary action taken for prompt settlement
where necessary.

Audit of Disbursement Certificate

   1. Deduction will be checked with relevant schedule.
   2. License Fee recoveries shown in Disbursement Certificate checked
      with rent Rolls.


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   3. Total amount of deduction as noted in Disbursement Certificate will
      agree with the total deduction shown in the Agreement Form of
   4. Amount payable as shown in the disbursement Certificate is checked
      with the total amount shown as payable in the Agreement Form of
      Labour should agree.
   5. The arrear wages paid as shown in the Disbursement Certificate will
      be verified with the list as well as with the entries in the Absentee
      Payment Register.
   6. The amount of un-disbursed wages which can be worked out from the
      details of the Disbursement Certificate will be checked with grand
      total of Absentee Payment Register to see that they agree (maintained
      by Cash Office)

Absentee Payment Register
Absentee Payment Register s are maintained separately for each section for
each month in the loose leaf form in the Factory Cash Office in which all
the amounts remaining un-disbursed on the Regular Pay day are noted and
so also the payment made there form.

Points are to be verified.

   1. Entries in the Register have correctly made from the Acquaintance
   2. The total of column „Amount Due‟ on each sheet are written both in
      words and figures.
   3. The register should be initiated by the audit against each payment
      which has been attested by the Factory officer.
   4. The grand total agrees with the amount shown as un-disbursed wages
      in the Agreement Form of Labour.

Cost and Financial Accounting
Cost Accounting

Costing has been designed as classifying recording and appropriate
allocation (code wise, expenditure wise ie. for which expenditure is
incurred) for determination of costs of production or services and for the
presentation of suitable arranged data for purpose of control and guidance of
the Management.


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                    ORIENTATION COURSE FOR AAO / SO (A)

Financial Accounting
Financial Accounting consists of recording classifying (i.e. code wise,
expenditure wise such as wages, material purchase, contingency etc.) and
analyzing every transaction. More important aspects of Financial Accounts
is preparation of Budget, Planning Control and Decision Making)
Financial Accounting of Labour Charges
The Pay Head of Industrial Employees is 54/ 805/ 003. To have detailed
idea of expenditure, unit controls have been allotted for Overtime Pay,
Educational assistance etc. The Pay Head will be charged with entire
amount while paying any advance or adjusting any debit / credit accounted
for in the Disbursement Certificate. Similarly, the Pay Head will be credited
as minus charge with the entire amount while adjusting any Treasury
Receipts for amounts deposited against the advance drawn. The amount of
unclaimed wages is not charged to the Pay Head in the Financial Accounts
although the same is fully charged in the Cost Accounts. The difference
between Cost and Financial Accounts represented by the unclaimed wages
is treated as outstanding Liabilities.
Cost Accounting Aspects

The different Productive / Service Sections will issue Day / Piece Work
Cards in the prescribed Forms to workmen showing the work to be done by
any individual or gang in order to make payment to Industrial Employees in
a particular month. In case of Day Workers who are continuously on the
same type of Indirect Work Order, no Day Work Card is necessary but
details of men so employed and the Work Order concerned (Type of Work)
on which they are employed are to be furnished by the section concerned to
the Accounts Office (for preparation of Allocation Sheet)

      Day Work Card will be prepared periodically for each Day Worker
and submitted to Accounts Office. Cards will show the Ticket Number,
Name of the Worker, Rate of Pay, Work Order and Warrant Number on
which he was employed on each job.

Labour Punching Medium

For booking of payments pertaining to Leave Pay, Holiday Pay, Overtime,
Bonus DA etc. the Accounts Office prepares Labour Punching Medium

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showing the Section Code, Work Order Number and the total amount. All
these Punching Media relates to Indirect Work Orders only.

Leave to Civilian Industrial Employees

 Leave to Civilian Employees are governed by (1) Departmental Rules and
(20 Factories Act 1948)

Provisions regarding Industrial Employees leave under Departmental rules
are available in „The Civilians in Defence Services (Industrial Employees)
Leave Rules 1954‟ which has been reproduced in Office Manual Part –VI.
The salient features of the rules as it stands today after being amended from
time to time are as follows:

          1. Under Departmental Rules an IE is entitled to EL with wages at
             the rate of 30 days for each completed year of service
             irrespective of the number of years of service subject to the
             condition that during the a ailment of such leave the intervening
             holidays shall also count towards such leave (DOPT No. 12012/
             1/ 97 Estt. (Leave) dated 20.07.98.-reproduced in PCA (Fys),
             Kolkata Part–1 Office Order No .AT/ 29 dated 24. 9.1998).
          2. Leave to Industrial Employees is credited only with reference to
             completed year of service. Therefore, advance credit of leave is
             not admissible.
          3. An Industrial Employee can accumulate maximum 120 days of
             EL and he is also entitled to leave encashment up to 120 days.
             M of d No. 11 (3) /92 / D (Civ-II) dated 12.09. 2000
          4. If a Govt. servant governed by the CCS Leave Rules 1972.ie.
             NIE is appointed / transferred to an Industrial Establishment,
             the authority competent to grant leave shall suo-moto issue
             order granting cash equivalent to leave salary.
          5. An Industrial Employee on appointment /transfer / promotion if
             appointed to a NIE post may be allowed to carry forward the
             balance of leave both EL and HPL at his credit on the date of
             such appointment / transfer/ promotion etc. The leave so carried
             forward shall first be exhausted before the leave in Non
             Industrial is availed of.
          6. Leave Salary for the period of leave so carried forward shall be
             as would have been admissible had he taken the leave on the
             Esstt. A separate account of leave so carried forward shall be


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          7. Under Factories Act. 1948 Section 79 provides that every
             worker who has worked for 240 days in a Factory during a
             calendar year shall have leave with wages at the following rate.

                 (a) For an adult one day for every 20 days of work and
                 (b) For a child (both Artisan. / messenger Boy) one day for
                     every 15 days of work.
                     The leave so admissible shall be exclusive of all

          8. Maternity leave to female IE has been enhanced to 135 days
             from existing Period of 90 days with effect from 24.9.99 vide M
             of D No.11/97/D (Civ-II) dated 24.11.99.
          9. An Industrial Employee must exercise option to choose whether
             to he wants to be governed by Departmental Rules or Factories
             Act. 1948.
Service Book is a document in Form ATC –4 where a Govt. servant‟s from
the date of his appointment till the date of his retirement, all the service
particulars including the Date of Birth, Date of Appointment, Grade/ Post,
as well as Educational qualification and permanent Home Address,
Identification Mark, Family details are noted.
Entries regarding promotion and reversion, rates of pay and allowances,
leave etc. of individuals, as notified in Office Order/ Factory Order will be
made in Service Book as events occur. All such entries (other than entries
made in page 1 of the Service Book and entries relating to the leave account
which form part of the Service Book) will be attested by the concerned
Audit of Service Book
Twenty five percent of the current Service Books of the Civilian
Establishments serving with Units and formations will normally be selected
for test check with each period of approximately twelve months; if
periodical visits made, the percentage of check will consist of seeing that –
         a) the period allowed to count for increment of pay is correct
            particularly where broken periods are concerned e.g. in the case
            of annual increment, verify that the total of broken periods
            amounts to 12 months.


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                    ORIENTATION COURSE FOR AAO / SO (A)

         b) In the case of individuals who are rendered service in other
            departments paid estimates other than those of the Defence
            Services an entry is made regarding the amount of leave earned
            by them under those departments and that a reference is quoted
            to the communication under which the information was
            furnished by the office of the CDA (IAO 595 of 1937)
         c) The leave credited to the leave account during the preceding
            four years or since the last verification of leave, if such
            verification has already been made previously be the internal
            cell according to the extent orders and leave taken was correctly
         d) The entries in pay columns in Service Books will be verified
            with reference to the office copies of relevant pay bills.
NOTE: In the case of Civilian Establishment transferred from one Unit/
Formation to another it will be ensured that the entries in their Service
Books up to date of transfer are checked before the transmission of their
Service Books to the new unit.
Service Book of Individuals nearing Superannuation
The Service Book of all individuals who are due to retire within three years
following the date of audit will be included in the selection for test check
within the percentage stated.
Record or Service Book Test Checked
In order to ensure covering all the grounds systematically, a complete record
will be kept of all Service Book „test‟ checked each year. The Service
Books checked should be endorsed to show the date up to which the entries
made in the Service Book have been checked and initialed by the testing
official concerned.
During any „audit‟ in each year, the posting into all Service Books effected
Part-II Factory Order issued during one month should be verified.
In addition to the above, the following points should also be checked.
            1) Date of Birth.
            2) Date of Appointment with the age prescribed for Govt.
            3) Verification of Pay Column.
            4) Annual Increment.
            5) Entitlement of LTC, Family details of LTC.


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                       MATERIAL ACCOUNTING

A thorough reading of this Chapter you will come to know: -

-       Material Planning Sheets (MP Sheets).

-       Store Holder Inability Sheets (SHIS).

-       Different types of Tenders.

-       Tender Purchase Committee.

-       Post Audit of Supply Order.

-       Delegation of Financial powers to General Managers.

-       Types of Receipts & Issues of Stores & their accounting.

-       How payment made is linked with material received.

-       Priced Store Account & Priced Store Ledger.

-       Procedure for IFD transactions & Stores in Transit.

-       Sale Accounting Procedure.

-       Reserve Stock Pile Item.


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Material Costs constitute the most controllable costs in the Ordnance
Factories set up. Labour Costs are relatively fixed, as the labour force is
permanent and on scales determined centrally by the Government. It does
not normally vary, though in times of heavy workload, overtime can
increase its cost somewhat. But this impact is compensated by increase in
value of production, thereby resulting in the per unit cost being relatively
stable, even lower at times. But material cost can directly impact on the
overall cost per unit.

Material management consists of
      (1) Purchase at the optimum prices.
            This involves purchases at the
      -      Right Time, i.e. when the prices are just right. This is
            especially true of commodities like Steel, Copper etc. which
            are cyclical in nature as far as prices are concerned also, it must
            be ensured that the purchases do not result is an abnormally
            large idle inventory.
      -     Right Sizes: Today, CNC machines optimize cutting sections
            from a large sheet. Thus, in making garments, for example,
            they layout the patterns so that minimum wastage is there.
            Buying the cloth in right width can maximize economy. Similar
            considerations hold for purchase of Steel or Copper sheets.
      -     Right Quality: Specifications must be just appropriate; neither
            too poor nor too rich (why?).
      -     Right Prices: This comes about by ensuring that adequate
            competition is there among reliable suppliers. This is the main
            role of the Finance Reps. In the factors above are not important
            for them; it is only that responsibility for those is shared by the
            executive authorities equally.
      (2) Timing the purchase so that minimum average inventory given
            the circumstances is held. Inventory of materials held in store
            represent non-value adding costs. Ideally, no inventory should
            be held. But in the real world, this results in situations where
            some material goes out of stock, resulting in entire production
            grinding to a stop, even though salaries, fixed expenses etc. are
            being incurred. Hence, some inventory is necessary to be held.
            Scientific formulae are there which give the maximum,
            minimum and re-order levels of inventory. For critical stores,
            "insurance" stockpiles also should be there.


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       (3)     Developing the right vendors and sources.
              Since the size of the minimum idle inventory depends upon the
              lead time (i.e. time taken for supplies to come), having capable
              and reliable suppliers is very important. In an open tender,
              though very low rates are sometimes realized, the reliability of
              vendors is open to question. In an effort to secure orders,
              vendors sometimes over extend themselves and cannot fulfill
              the orders. It is important to realize that seemingly lower price
              can have disastrous consequences for production if the vendor
              is not reliable. Vendor development is thus a very important
              aspect of the procurement process. Vendor development can be
              achieved by aggressive registration, pre-qualification,
              encouraging new vendors through trial orders, progressively
              increasing in size etc.

Once the materials are purchased, the role of maintaining proper accounts
begins. It is the job of the Accounts Office to ensure that:

       1)     all materials paid for are actually received and accounted for in
              the Factories. Anomalies in this show up as "Outstanding
              Assets" and "Outstanding Liabilities", which must be
              constantly monitored and linked, to bring them to zero. Only
              then would this objective be realized. This process would also
              ensure that pricing errors are rectified in time.

       2)     all issues from the store are accounted for properly and in time.
              Priced Store Account (PSA) is a macro account generated by
              the computer, which gives the overall amounts for a month.
              Priced Store Ledger (PSL) is a detailed, item wise account.
              Both these accounts will not give the right picture if all
              Demand Notes, Return Notes floated in a month are accounted

       3)     all issues are charged to appropriate manufacturing warrants.
              Costs will be distorted if there is a mistake and these are
              charged to the wrong warrants or to the wrong code heads.
              Material Abstracts must, therefore, be comprehensive (i.e.
              cover all issues etc.) and correctly posted so that Cost Cards
              reflect the reality. Wrong depiction in Cost Cards would
              obviously lead to wrong interpretation and wrong managerial


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Material Planning Sheet

i) Prior to Computerization of Factories – This is a report generated by
the DPS and OFB on the basis of input data received from Factories
concerned regarding opening balance of Stock, Estimates for materials
requirement, punched cards containing information relating to primary
documents related to Stores- Receipt Voucher, issue Vouchers, Demand
Notes, Return Notes, Adjustments Vouchers. Based on these inputs and 4
yearly production programme computerized Material Planning sheets were
prepared by OFB and sent to each factories at the beginning of the 4 years
for subsequent action of provisioning.

Objective: - Objective of this report is that it can become an essential tool
for preparation of material budget at the Boards level as also it can be used
as a control mechanism for verifying the necessity for procurement of any

Essentials - (i) Standardization of product code (10 digits). First two-digit
vocabulary section, next three-digit factory unit code and last five digits
serial number of folios.
             (ii) Standardization of item code for all materials in the Factory
             (iii) Preparation of standard estimates for articles produced in
the Factory.
             (iv) Work out output- consumption ratio of the raw materials to
the ultimate furnished product.
           (v) Opening balance, drawal, purchase information.

Methodology for establishing Output- consumption ratio –

Let us consider a Factory is producing an final product A by assembly of
three components A1, A2, A3. Each of this has two sub component
represented by A11, A12, A21, A22, A31, A32. Each of sub-component for
its   manufacture     needs    three    raw     material   represented    by A111,
A112,A113,A121,A122,A123,A211,A212,A213,A221,A222,A223,A311,A312,A313,          A321,
A322, A323..


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                    ORIENTATION COURSE FOR AAO / SO (A)

Thus it is identified that for production of Store A18, different raw materials
are necessary.
Let for production of item of A, the number of component needed for A 1,
A2, A3.ie.2, 3, 2 respectively.
For production 1 article of A1, say number of A11 & A12 required after 3 &
4; same also for A2 & A3. Then the number of articles of sub-components
required for production of 1 number of A is A11  6, A12  8, A21  9, A22
 12, A31  6, A32  8.
If the raw materials requirement for production of each sub-component if in
the ratio of1: 2:3 then the raw material requirement for production of 1
number of A will be -

A111 6        A121  8         A 211  9       A221  12        A 311  6            A
321  8
A11212        A122 16        A212 18         A222 24       A312 12        A322
A11318        A123 24        A213  A223                      36              A313
               18 A322            24

This cascade diagram is as follows -

Actual requirement of raw material for the next year production is worked
as -

                             A111 A121             A 211 A221   A 311  A 321
(Qty of Production Planned) x A112  A122             A212   A222 A312 A322
                             A113 A 123            A213   A313   A313 A322

The same Principal is followed for each item of final product say B, C …
Now the total requirement of raw material A111 is calculated as.
A111 required for item A + A111 required for item B + A111 required for item C.
ii) After computerization of Factories: - The vocabulary number is allotted
by OFB and 1 year in advance production plans are intimated to GMs.

GMs with the same principal workout material requirement on both direct
&indirect material and arrive at the value of material requirement. This
becomes the basis for projection of budget estimate to OFB.


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After clearance of budget by OFB at the time of procurement of an article of
raw material a MP Sheet for that article is enclosed for audit of requirement.
These sheets contain the following information.

         (i)    Item Code (ii) Item Description (iii) MP Sheet No. & Date
                (iv) Required For production of items (OFB Vocabulary
                code) (v) Production Plan for the item (vi) Estimate number
                (vii) Output –consumption ratio (viii) Total Qty required (ix)
                Qty required for next six months (x) Qty on stock (xi) Qty for
                which order has already been placed (dues) (xii) Net quantity

Audit of MP Sheet: - At the time of taking action against any proposal for
procurement the MP Sheet is to be audited to justify the need. While doing
that it is to be ensured that there is a control mechanism for detecting the
progress of MP Sheet once prepared through the system.

    M P Sheet should be numbered.
    There should not be any blank number without the knowledge of
    M P Sheet prepared on any article must be reflected with the status in
    Subsequent M P Sheet on the same article.
    There should be proper control mechanism to ensure that M P Sheet
     is not, Prepared for original raw material at the same item for the
     alternative item.
    Balance in hand is shown correctly.
    Dues bin are shown correctly.

Advantage of System
It has more relation to the coming year‟s production plan than on the
previous year‟s history.
Any change in the estimates affected by revision in estimate can be
promptly reflected in the provisioning action.

Disadvantage of System

Audit never feels comfortable, as the Output- consumption ration worked
out by computers is not visible.


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If suitable checks are not in built into the system may lead to over-
Ordnance Factories do not have specific production plan, it goes on
SHIS – The full form is Store Holder Inability Sheet. The name itself
specifies that in same is prepared by the store holder while proposing for
any procurement. This can be merely termed as Store Holders proposed
justification for procurement. It contains stock in hand, dues, average
consumption, liabilities in sight and hence requirement to meet this
liabilities. The requirement for next six month is calculated on the basis of
the formula.
  6 x Total consumption during the last 12 months
Audit of SHIS
SHIS when received in Accounts Office is to be verified by the section to
               The SHIS is not duplicated.
               Qty of stock in hand is shown correctly in the inability sheet.
               Average monthly consumption noted on the SHIS is correct.
               Figures of dues shown in the SHIS are correct
Comparison between MP Sheet & SHIS

              M P Sheet                                     SHIS

1) Prepared on the basis of future          1) Prepared on the basis passed
plan                                        experience consumption.
2) Can take care of any change in the       2) No scope for estimating such
tune of production associated with          changes.
revision of estimate.
3) The figure Output–consumption            3) All the figures appearing are
rate shown cannot be audited.               auditable.
4) Pro-active action on provisioning        4) Only action can be taken when the
can be taken                                stock goes beyond ordinary level.
5) Faster process but need more             5) Slow process but completely
control on the system.                      structured.
6) No audit % has been fixed yet.           6) % of audit is laid down in


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                     ORIENTATION COURSE FOR AAO / SO (A)

Post Audit of Supply Order with particular reference to TPCs.
After receipt of SHIS duly vetted by LAO, PV Section of Factory initiates
procurement action. The system of tendering resorted to are (i) Open
Tender, (ii) Limited Tender and (iii) Single Tender.
Open Tender – Open or Advertised Tender is resorted to where the value is
large, sufficient time is available for finalization of tender and where and
where competition is considered necessary.
Limited Tender – This method is used where the demand is very urgent,
likely sources are known and advertisement is not expected to widen
competition. Issue of TE is restricted to the registered, established and
successful suppliers of past repute on the approval of the Chairman of the
appropriate TPC and Finance Member.
Single Tender – Issued for items of propriety nature where it is definitely
known that there is only source of supply.
Tenders received in response to T Es are opened on due dates of opening in
the presence of the tenderers or their authorized representatives. Then the
Comparative Statement of Tenders (CST) is prepared. Based on the price
quoted, level of TPC is decided below.
               i) Value up to Rs. 50,000/-               No TPC
               ii) Value up to Rs. 4 lakh                TPC Level -IV
               iii) Value beyond Rs. 4 lakh              TPC Level -III
                    up to 10 lakh
                iv) Value beyond Rs. 10 lakh             TPC Level -II
                v) Value beyond Rs. 20 lakh              TPC Level -I
                   Up to Rs 50 lakh
These are the Factory level TPC. For purchases beyond Rs.50lakh, there are
separate levels of TPC in Ordnance Factory Board level. TPC recommends
the placement of order on the basis of deliberations made and duly
considering the following factors:
       (i)     Whether the Ordnance Factories have got the capacity to
               manufacture the item and if so, the justification for purchase
               from outside.
       (ii)    The most economic price consistent with quality and
               conforming to specification.
       (iii)    Last purchase price and the justification for higher rate, if any.
       (iv)    Delivery schedule vis–a-vis rate of consumption.
       (v)     Reliability of the Firm based on past performance.


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                      ORIENTATION COURSE FOR AAO / SO (A)

          (vi) Whether the competition is adequate in case of LTE.
          (vii) Unusual Terms and Conditions, if any, made by the tenderer.
In addition to above, the role of Finance Member is to bring in financial
expertise in the decision making Finance Member brings out financial
implications and repercussions of exercise of any financial power and
availability of alternatives if any.
When the decision is arrived at, minutes of TPC is made and get signed by
all the Members of TPC.
Based on the recommendation of the TPC, Provision (PV) Section places
the Supply Order in the prescribed standard Forms on the Firm
recommended by the TPC. Thereafter, the Supply Order along with
Tenders, CST and all other concerned documents are received in the
Accounts Office for post audit.
Following points are seen during audit of Supply Order: -
   (i)       That the purchase is authorized.
   (ii)      Quantity ordered and specification conforms to the requirement as
             shown in the SHIS and as recommended by the TPC.
   (iii)     Utmost publicity is given.
   (iv)      Adequacy or otherwise of competition, whether all the past
             successful suppliers have been included in TE.
   (v)       Whether the lowest offer has been accepted and if not, whether the
             justification for accepting the offer other than lowest is noted on
             the CST.
   (vi)      Rates accepted compare favourably with LPR.
   (vii)     Rates, taxes and duties have been clearly and separately indicated.
   (viii)    Terms and date of delivery have been clearly specified and are in
             conformity with rate of consumption.
   (ix)      In case of Single Tender, PAC is enclosed.
   (x)       Successful tenderer is in the approved list and has not been black
   (xi)      Preference as to price, if any, is covered under existing orders.
   (xii)     Debitable Head of Account is clearly indicated.
   (xiii)    Amount of Security Deposit is clearly indicated and if waived, the
             orders of CFA.
   (xiv)     Whether the Firm has asked for advance payment.
   (xv)      Standard Forms are used with adequate risk purchase and
             arbitration clauses.


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                              GOVT OF INDIA
                           MINISTRY OF DEFENCE
                           10-A, S. K. BOSE ROAD
                             KOLKATA –700001

Order No. 400/ BS                                 Dated: 06 September 2000.

Subject: - Delegation of Financial powers to General Managers and other
officers of the Ordnance Factories

      In accordance with the “Note” in Annexure to GOI, Ministry of
Defence, Depts. Defence Production and Supplies, New Delhi letter No.PC-
1 to 2(2)/96/D(Fy-1)/99/D (Prod) dated 30/11/99 issued with the
concurrence of Integrated Finance ( MOD), the Chairman and DGOF, in
consultation with Member(Finance) has been authorized to decide the
extent of delegation of powers to General Managers and other functionaries
based on functional requirement.

       Pursuant to the above, Ordnance Factory Board has approved the
delegation of enhanced financial powers to General Managers and others
as indicated in Annexure –1 to this letter with immediate effect subject to
the guidelines listed in Annexure –II. These orders will supersede all
previous orders on the subject in respect of the items mentioned in the
Annexure-1. The areas not covered in this letter would be regulated in
accordance to Board Secretariat No.353/ BS dated 12-07-88. Whether the
existing powers of the GMs are higher, the same higher powers will

       The extant orders on procurement as laid down in Material
Management, Financial regulations and the CVC guidelines issued from
time to time are to be strictly followed. Special care may be taken to ensure
that the high value investments conform generally to the guidelines issued
by the MOD (Enclosed at Annexure –III for ready reference).

      All powers will be exercised by the Competent Authority in
consultation with local Finance and Accounts and will be strictly subject to
availability of funds.


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      This issue with the concurrence vides Financial            Division UO. No
1133/FNM –II dated 25/08/2000
Enclo: 09

                                        Ordnance Factory Board

All General Managers


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                       HOW ACCOUNTED FOR

This write up is meant to apprise the trainees the system/ procedure
followed and documents used in Stores Accounting in the Ordnance
Factories. The accounting of Stores must be given considerable importance
as more than two-third of the cost of production in Ordnance Factories is
accounted for by the cost of material.

Materials in Ordnance Factories are classified under two Major Heads:-

        (i)     Materials on Store Charge.
        (ii)    Materials on Production Charge.


Raw materials are obtained by the Factories by one of the following means:-

    (i)      Foreign Purchase.
   (ii)      Central Purchase through a Central Authority.
   (iii)     Local Purchase by the General Manager of Factories.
   (iv)      Supplies from other factories.
   (v)       Supplies from other branches of Defence Department
   (vi)      Supplies from departments other than Defence.

Apart from the above the following internal transactions of the Factories are
also accounted for as receipt.

(i)        Receipt from the production of own Factory.
(ii)       Receipts from the returns to the Store Section of surplus materials,
           waste etc
(iii)      Receipts from surpluses found at Stock taking in the Factories.
(iv)       Receipt on account of transfers from Capital assets
(v)        Miscellaneous receipts from sources other than above as estate
           produce etc.


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The Store Section of the Factory issues material for the following purposes:

       (i)       Issues to manufacturing Shops.
       (ii)      Issues to other Factories.
       (iii)     Issues on payment to other Govt. Departments etc.
       (iv)      Issues to other branches of Defence Department.
       (v)       Issues on account of Sale by auction.

Beside the above the following transactions of the factory are also
accounted for as issues.

         (i)       Loss of Stores-in-Transit.
         (ii)      Loss of Stores on Charge.
         (iii)     Loss of Stores due to causes other than above.
         (iv)      Transfers to Capital.
         (v)       Miscellaneous.

M.I.S. is prepared for almost all receipts in the Factory. The MIS is
converted in to a receipt voucher by allotting a No of the respective Series
to which the Store pertains. Issues from the factory go-down or Stores to
Shops/ Sections are done through Demand Notes. Any returns of such stores
to go-down are done through return notes. Issues to any other concern are
done through Issue Vouchers.
All the primary documents i.e. Receipts Vouchers Issue Vouchers, Demand
Note, Return Note etc. are sent to Accounts Office through EDP duly
allotted Sl. Nos. On receipt of these primary documents in the Accounts
Office these are entered in to Schedules for different classes of documents
(viz. Schedule of Receipt Voucher, Schedule of Issue Voucher etc.)
These documents are then priced in the Accounts Office as follows:-

(i) MIS/ CRV (Local Purchase)  Price quoted on Supply order
(ii) Department other than Defence  Price quoted on the Issue
      Receipt from other Ord. Fys.   Vr. of the supplying deptt.
(iii) Other branches of Defence  Stock Book or priced vocabulary rates
(iv) Own Fy. Manufacture            At actual cost of production.


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 (i) D/ Notes and R/ Notes                     Monthly Average Ledger Rate.
 (ii) Sale Voucher                             At Sale rate.
 (iii) Loss Statement
      (Other than transit)             Average Ledger Rate
 (iv) Loss of Sores- in – transit    Rate at Which connected receipt
                                                  Voucher is priced
 (v) Payment Issue                 (i) Average Ledger Rate (ii) Plus 5%
                                    Addl. Charges plus 5% addl. Charges
                                                On (i) + (ii)

The receipt and issue vouchers after pricing are entered in to the monthly
Priced Store Account (PSA) under different Codes for different sources of
receipts and issues. Similarly, the value of Demand and Return Notes is
entered in the PSA to arrive at the net receipt and net issue. Thereafter, these
are added with the closing balance of the previous month to arrive at the
total raw – material inventory at the end of the month.

Receipt and Issue Vouchers are thereafter sent to Material Ledger Section
for posting in the Priced Store Ledger (PSL) maintained and operated jointly
by the Provision Section of the Factory and Material Ledger Section of the
Accounts Office Demand and Return Notes are received by Material Ledger
Section directly from Factory and after pricing on the basis of Average
Ledger Rate are posted in the PSL. The Receipt Vouchers are required to be
posted in the PSL first and then the Demand and Return Notes.

Every month control total of the PSL (Volume wise) is required to be
reconciled with the closing balance of the PSA. At the end of the financial
year, the extracted balance of each item of the PSL must agree with the
closing balance of the consolidated PSA for the year.


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In the case of all Stores for which payments are made/ book debits are
received / priced copies of issue vouchers are furnished, hundred percent
linking has to be done. Linking consists of two parts. :

   (i) Linking payments with receipt vouchers. Unlinked items represent
        payments made for which receipt vouchers are awaited. These are
        called „Outstanding Assets.
   (ii) Linking of Receipt Vouchers with “Payment made”. Where the
        unlinked vouchers represent” Stores received “for which payments
        are to be made. These are called “Outstanding Liabilities.”

Through the medium of linking registers maintained in the Material Section
of Accounts Office for each category of receipt–FP, CP, LP, IFD etc. it is
ensured that all stores invoiced to the factory and all Stores for which
payment has been made have been received and accounted for. This is done
by posting the details of bills/ invoices and receipt / issue vouchers in the
linking registers.


A priced Store Account detailing the receipt and Issue transactions from
stock in each month under the various heads specified in Forms IAF (FAC)
–15 for Receipt and IAF (FAC)- 16 for issues is prepared by
Material Section every month after generation of Computerised PSA report
for the concerned month and submitted to the Costing Section by 15 th of the
month following for the purpose of posting in Principal Ledger.

PSL generated every month from Computer details item code wise
(concerned for the material dealt with) transactions of all receipts and issues
showing UOQ (Unit of Quantity), Opening Balance, details of Receipt
Voucher, Return Note or Adjustment Receipt Vouchers for receipt
transactions and Demand Notes, Issue Voucher or Adjustment issue
Voucher for issue transactions, narrate, closing balance etc. Work order No.,
Warrant Nos. is given for the materials drawn on DN or returned on RN are
shown against the concerned transaction.

At the end of the year a Consolidated PSA and PSL are also generated
through Computer containing all transactions pertaining to the year.


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For preparation and maintenance of PSA/ PSL one itemmast.dbf file be is
maintained in Computer showing stock position of every material indexed
item code wise, value of stock etc. The file has 50 fields like Record Code,
Factory Code, UOQ, Bin Qty., PSL Qty., Moving Average (MA) Rate,
Value of Stock, Description, PSA Code etc. For the purpose of pricing of
receipt vouchers other than I.F.D.a Supply order Master or SOMASTER.
dbf file is also maintained having 51 fields like Record Code, Fy Code,
SONO, SODT, item code, UOQ, Ord Qty., Due date, Bas rate, SOVAal,
TPCC dt (TPC Clearing date), PR Rate (Pricing Rate), EDPer, CDPer,
Disper (Discount Per), LD etc. For pricing of Receipt Vouchers pertaining
to IFD a file called IFDRATE. Dbf is maintained keeping rates of different
items of material from OFB list or Issue Vrs. Received from Consignor
factory, a file called IFDLINK.dbf is also maintained having details of Issue
Vouchers received from Consignor. Besides these files IFD Master, Vendor
master, Security Deposit Master (SDMASTER) are also maintained in
Inventory Package.
Receipt Vouchers (IAFZ- 2096) is prepared by Factory for stores to be
brought in charge of Factory Stock. For Stores received from outside
Factory, a material inward slip is prepared to show full particulars of stores
and the result of their examination by the Inspection section. Accordingly
no separate receipt voucher is prepared for the same where MIS is prepared.
Receipt Voucher No is given on the MIS. Receipt Voucher or MIS is
received in M Sec. Of AO and watched through Priced Store Schedule for
continuity. At the end of the month after checking all Receipt Vouchers are
received in AO as per skeleton list same are handed over to EDP Section for
Data entry. Similarly IFD receipt vouchers are also sent to EDP section for
same purpose.

Likewise, Issue Vouchers received from the factory are also entered in the
schedule of vouchers to watch continuity and sent to EDP section at the end
of the month. Receipt Adjustment Vrs, (If any) is also forwarded to EDP


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Demand and Return Notes received from Factory are entered in serial nos.
in the register of schedule of demand and return notes (IAF (Fac-37) to
watch the receipt of all Demand and Return Notes issued by the factory. All
DN/RN received by M section thus scheduled are dispatched to EDP section
by 5th of the following month.


All the data pertaining to Receipt Voucher, Issue Voucher DN/RN are
entered in the respective file and a checklist is generated to examine that
there is no error in the entry or duplication or Missing of voucher is there.
Special attention is paid to see that the UDQ, PSACD entered is correct. In
some factories data are captured from factory source.


For pricing of Rt. Vrs. Other than IFD Rt. Pricing (SO) bar of Update menu
is selected. In case of any error, re-pricing may also be done in the system
after revising the necessary entry.

Similarly for IFD Rt.Vrs. We select interactive receipt voucher Pricing
(IFD) option of Update menu pad of main menu.

Before pricing of Rt. Vrs. New folios for new items of materials are to be
appended in item master file.

Pricing of Demand & Return Note and Issue Vouchers are made through
system w.r.t. Average Ledger Rate (ALR i.e. V1+V2/Q1+Q2)

For any Rt.Vr.Adjustment data entry is made in a file called RTAJ file
giving previous value, Original Value, Difference of Value, previous
voucher No etc. After running a programme PSL check the system
automatically creates a file for Issue Adjustment of concerned DN/RN.

PSL ENTRY AND validation checks option in „Transaction Menu‟ pad of
Main Menu is selected for Validation Check. On selection of the same „File
Type‟ option is chosen and appropriate file type out of Receipt Issue,


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Adjustment & Skeleton is checked for validation. Output report ERRREP,
TXT is generated for taking corrective action.


PSL entry and Validation Checks option in Transaction menu pad of Main
menu is selected. On selection of this option File Type, PSL Check & exit
option is activated. PSL check is selected and Invsys asks for concerned
Receipt Transaction, DN/RN/Issue Transaction file and Adjustment file
name (ISSADJFL) and year month of PSL. Entering the same PSL is
checked. Rejected Transactions are found out through a report ERRFLTXT.
The reasons for rejection of such documents are scrutinized and corrective
action is taken.


The system verifies the sequence of documents with reference to the Bin
Page Line Number. The BPLN maintained in the Master is taken as the 1 st
number after which transaction sequence is checked. A message comes
while checking PSL “Document Missing” is indicative of a sequence no.
that is not available in the transaction file. The document that is missing can
be traced out from Bin Card w.r.t. the BPLN.


PSD Update menu of Update Menu pad of main menu is selected for the
same, Invsys then asks for year &month of PSL and whether Binder wise
Ledger Report necessary. On entering the same Opening Balance of PSL for
the month is shown on the screen. This OB should be checked with CB of
earlier month. Then an option comes in the screen whether to allow
Unorthodox Balance. If „NO‟ is selected rejected issue transactions in PSL
check is separately kept in a temporary file. If „YES‟ are selected system
prices all transaction with ALR. User looks into unorthodox Balance later.

A report called Moving Average Rate Variation Report of PSL module of
Report menu is generated to see whether MA Rate in respect of any item
varies more than +/- 10%. This is indicative of possible errors in pricing of
Rt. Vr. And merit checking before further processing.

All PSL Update is completed the output report PSLREP.TXT is generated.


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For generation of PSA M-Section of AO examines a report on Priced Issue
Voucher generated by Computer and prepares “Adjustment for PSA only
which will have no effect on the closing balances computed in the PSL
process but require a change while exhibiting the figures code -wise in the
PSA. Such adjustment may arise because PSA code used earlier for
transaction was erroneous and needs correction or where Profit/ Loss on sale
requires shown separately

Difference between book value and sale value  Plus to Loss Code (Issue)
Loss occurring in transaction  Minus to Sale Code (Issue)

Difference between Sale value and Book value  Plus to Sale Code (Issue)
Profit occurring in transaction  Plus to Profit Code (Rt)
Necessary data entry for adjustment for PSA only is made in PSAADJ file
then PSA option of PSL submenu of Report menu is selected for PSA
generation. Invsys asks certain information like month and year of last PSL
month and year of PSL, Receipts upto the end of last month and whether we
wish to add adjustment for PSA only etc. on entering this information last
CB of PSA comes in the screen. After verification of the same with last
months report „Entry‟ key is pressed for PSA creation. Output report
PSAREP, TXT is generated.
IFD Transaction in Ord. Fys.
The full form of IFD is Inter Factory Demand. There are various sources of
receipt of material in the Factory which are : (i) Trade sources.(ii) Receipt
from other Factories,(iii) Receipt from non military Department or from
other Defence establishments etc. So IFD transaction is one of the sources
of procurement of material in Ordnance Factories.
On planning of yearly Production of a Factory, the Factory will prepare
requirement of material for the planned production activities. Then they will
try to ascertain the source from where the material to be procured. As per
the existing rule they should first try to get the material from sister Factories
and then from trade source to maintain the quality of Production .So on


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ascertainment of material, which can be procured from sister Factory. They
will float demand to other Factories. The document prepared for placing
demand is IFD –Inter Factory Demand. Two copies of the IFD will be
received in Accounts Office of the Intending Factory. Who after post audit
will pass on one copy to, Indentee Factory Accounts Office for record &
watch the supply. So, IFD is a type of extract or may be called as authority
for undertaking production in the supplying factory.

Types of IFD transactions

There are two types of IFD supply: (1) supply from Production, (2) Supply
from stock. So Issue Voucher serial will accordingly vary with series of “P”
or “S” as the case may be.

Placing of IFD Receipt Vouchers

Receipt vouchers related to trade supply are priced with reference to supply
orders. But in case of IFD transactions the only source of evaluated
document are Issue Vouchers received from Accounts Office of supplying
factory. So receipt vouchers are priced with reference to price Issue
vouchers of the supplying Factory. Factory management of recipient is
quoting issue voucher no, date & supplying factory concerned to link the
issue value and price the Receipt vouchers correctly.
Linking of IFD transaction
On receipt of Issue vouchers from supplying factory are noted in a Register
Factory wise with Issue Voucher no., Date, Quantities, & Value. So
according the quoting of factory & issue Vouchers No. on Receipt Vouchers
the receipt transaction can be linked easily and clear the out-standings at
Receipt sources. The issuing factory is also sending an ID list monthly &
then yearly from which the correctness of posting can easily be ascertained
& corrected. The unlinked items will be considered as SIT- (Stores in

Stores in transit (SIT)

The Accounts office of recipant Factory in the following Format prepares a
yearly statement of IFD transaction


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                 ADD                                         LESS

Stores in transit   Stores received       Stores for which
on 1st April        from other Fys        Receipt               Stores in transit
                    during the year       Vouchers              on 31st March
                    as per ID list        Prepared

Stock     Prod      Stock      Prod       Stock       Prod      Stock       Prod
        (i)                 (ii)                  (iii)                 (iv)

Various types of errors and increase of SIT

As per instruction or rule Receipt Vouchers on IFD transactions are required
to be prepared but following types of problems are normally seen.

        i)     Non receipt of Issue voucher at management end.
        ii)    Back loaded material returned on regular voucher.
        iii)   Discrepancies in quantities and delay in settlement.
        iv)    Delayed action for keeping stock holding at lower side.
        v)     Wrong documentation by supplying factory & delay in

Asset / Liabilities on IFD transaction

As per system outlined in linking inter factory transactions there much not
be unlinked items but in actual the picture is quite different. The major
reasons for arising of such situation are stated in previous Para. So the
unlinked items are supposed to be asset at the end of a year, i.e. material
issued but not yet Accounted for and no liabilities should arise. In
exceptional cases liabilities also arises when Issue vouchers are not received
at Accounts Offices but on the basis of copy of issue voucher with the
Railway Receipt the factory management prepares Receipt vouchers In SIT
however only net asset is being shown.


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Store Accounts

SNo     Dr. side                          Amt             Cr. Side

1       To store in hand as on 1st                1         (a) By stores issued to
        April                                                    shop less return
                                                            (b) By issue to NMD for
                                                                 Prod. Of army
2       To cost of stores taken on                2       By sale of stores.
        Charge during the year.
3       To stores received from                   3       By stores issued to
        Def. Department                                     1. Army
                                                            2. Navy
                                                            3. AF
                                                            4. Other Def. Department
4          (a) To     transfer    for             4                a) By            stores
               capital A/C                                              transferred     to
           (b) To transfer for stock                                    capital A/C.
               pile                                                b) By            stores
                                                                        transferred     to
                                                                        stock pile
5       To stores received from                   5       By stores issued to other Fys
        own Fy manufacture
6       To IFD stores                             6       By issue on payment
7       To profit on scale of stores              7       By misc. issues
        (a) Normal (b) Abnormal
8       To surplus at stock taking                8       By actual Losses
                                                          a) Loss of scale of stores
                                                           (i) Normal, (ii) Abnormal

                                                          b) loss of stores on charge
                                                          i) Theft/Fraud or neglect
                                                          ii)Deficiency in actual
                                                          balance not due to theft/fraud
                                                          iii) Other causes
9       To other adjustments                      9       By other adjustment

10      To Misc Receipt                           10      By closing Balances as on
                                                          3lst March.


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The store A/C is actually the exhibition of position of stock holding of a Fy.
On beginning 7 closing of a year with exhibition of various receipts sources
& issues to various parties including sales. The best ways of compiling of
stores A/C is compilations of PSA (Rt & Issue) first and from therefore
compile the store A/c.


In the Ordnance Factories surplus stores and waste stores are sold through
auction. The Factory management as well as Accounts authorities controls
the entire mechanism of sales jointly.

Such stores, which are sold to external agencies, are categorized under
following broad head
      1)    Waste product
      2)    Scrap
      3)    Surplus Stores
      4)    Obsolete Stores

WASTE PRODUCT: The stores which are beyond economical repair and
which cannot be utilized in any alternate way are categorized as waste
product viz. Coal dust, ashes, metal residues etc.

SCRAP: The item scrap means stores beyond economical repair
unserviceable waste stores, which have been utilized and have served their
purpose and have been condemned under proper authority to be of no use
except as scrap.

SURPLUS STORES: This are stores which can not be utilized against
present for anticipated requirement over a period to be determine on the
merit of each case or which are liable to deteriorate by the time they could
be used in the normal course of events.

OBSOLETE STORES: These are the stores, which have been declared
surplus due to obsolescence. Such store usually arises due to sudden
cancellation of orders by the indentor for specific job order, which is unique
and cannot be utilized otherwise.


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Having determined the surpluses they will be disposed of by transfer to
other factories, defence services, priority indentors and/or by sell to private
parties. A reserve/guiding price for such stores will be fixed which are
usually at book value plus the packing and incidental charges incurred plus
5% of the sale value. In case of transfer of surplus stores and waste products
to any priority indentors free of charge 2% of the book value of the stores
should be levied for the incidental charges to cover packing, loading,
cartage charges etc. Such incidental charges will not be recovered if the
priority indentors make arrangements.

Reserve prices are fix by the factory management with the concurrence of
LAO. If there is any disagreement meeting factory management and LAO
the case should be referred to DGOF for decision. Reserve price should be
fixed not more than 2 days before the auction. The above price should make
known to the auction supervisor of the date of auction itself, half an hour
before the auction. All concerned officers including Accounting Officers
connected with the fixation of reserve price and the auction supervisor must
treat such price as strictly confidential.

The Accounts representative deputed to attain the auction should note
description of store, quantity, rates of highest bidder in accounts copy of the
auction list and should sign the factory copy for surplus with supporting
document. He should intimate the details to the concerned CDA. Similar
action will be taken on receipt of auctioneer's commission bill.

A sale register and a sale account are operated and is audited with
supporting details. The sell account receipt the CDA concern for stores sold
in auction by DGS&D and sale release order receipt from factory
management will be checked in respect of quantity, value, purchases etc.
The -correctness of amount booked in the CCO-2 will be verified for sale
value, sales tax, excise duty with reference to the register and adjustment
should be carried out immediately.

On receipt of approval full details are noted in the Sales Register, MRO
received for Security Deposit is adjusted and noted in the Security Deposit
Register, MRO received for sale value is adjusted for sale value, sales tax
etc. after verification of monthly statement. The MROs are forwarded to
Accounts Section of the Office of the PCA (Fys) in the normal manner.
Action to pay dues on account of sales tax/excise duty to the relevant


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authorities should be taken on receipt of contingent bill from the factory. All
the sale proceeds will be reflected in the Cash Compilation Statement viz.
Deduct head under "Revenue Expenditure" for realization on account of
"Sale of Scrap" and revenue head for receipts for realization on account of
sale of surplus stores.

In the case of stores disposed by DGS&D, credit for sale proceeds are
passed on by the PAO concerned to the CDA concerned depending on the
location of auction. The credits are compiled to the final factory head of
account and the sale accounts are forwarded to Store Section, who allocated
the amount to the respective factories and forward the sales account to the
concerned Accounts Officer for linking. On receipt, the sale accounts are
linked by the A.O.


Strategic items of stores while are very difficult to procure in case of failure
of normal supplies are classified as Stork Pile Items. A reserve of such
stores is built up separately from working stock in order to meet the
demands of future production in case of failure of normal supplies.

All expenditure for stockpile items will be meet from major head 130A -
Defence Capital Outlay. This is a capital head and though stockpile items
are purchased from capital head, they differ from capital assets, as they are
stores items intended for future production.

The following accounting procedure is followed:
The factory will maintain a separate Bin Card for each of these items. The
ledger group of Accounts Office should maintain a separate Store Ledger
known as Capital Store Ledger. This ledger like the Priced Store Ledger will
also be located in the Provision Section in order to afford facilities of quick
reference to the management.
A separate series of vouchers under R series will be operated upon in each
and every transaction.

The value of Stock Pile Items should be reconciled with the figures of CCO-
2 through a linking register.


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Separate Schedule for R series Receipt and Issue vouchers will be

No depreciation will be charged, no Priced Store Account need be prepared
monthly a subsidiary Account to Capital Asset Account viz. Capital Asset
Account - Stock Pile should be maintained in the Principal Ledger.


The factory with prior approval of the OFB should use no stockpile item. As
and when reserve materials are required to be used in production, they are to
be first transferred from and to the reserve stock and working stock should
be meet only on transfer voucher. The turn over of reserve items, if and
when ordered from time to time by the OFB/DGOF should likewise be
made on transfer voucher.


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                           COST ACCOUNTING

After completing this Chapter you will be able to understand:

       -      Types of Extracts.
       -      What is a Warrant?
       -      Work Orders & its purpose.
       -      Standard Estimates - their pricing & re-pricing system.
       -      Cost Card - What does it contain?
       -      Posting of actual figures from various tabulations in the Cost
       -      Semi - Concept, Necessity, Pricing & final treatment in Cost
       -      Working out of abnormal rejection cost
       -      Arriving out Cost of Production and analysis of variances.
       -      Overheads Accounting - Definition, Classification, Collection,
       -      War Insurance Charge
       -      Allocation and apportionment of Overheads: Step Ladder
       -      Fixation of Budgeted Overheads; Central Budget Committee &
              Shop Budget Committee.
       -      Reconciliation between Financial Accounts & Cost Accounts: -
              Principal Ledger - Purpose.
       -      Capital Assets


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An Extract is the authority for the manufacture of an article in a Factory. It
is issued by OFB to enable the Factory to undertake manufacture in respect
of all out turn Work Orders and certain Indirect Service Work Orders. One
Extract is placed for one Work Order. Copies of all Extracts as well as
amendments relating thereto will be received in the Accounts Office direct
from OFB or through the Finance Division, OFB, if they relate to Army,
Navy, Air Force, MES or Stock Orders.


Extracts are divided into the following classes:

Class I              For Army Orders           and miscellaneous             services
                     like repairs for Navy and Air Force

Class II             For Payment Services

Class III            For Inter Factory Demands
Class IV             For Stock

Class V              For Capital Services

Open Extracts

Before the commencement of each financial year, open extracts for various
services pertaining to all classes of extracts are issued to the Factories by the

An open Extract is a general authority for Factories to carry out
miscellaneous and petty services falling under Classes I, IV and V for which
specific sanction of the OFB is not required in each individual case.

An Open Extracts allotted for Class II, the General Manager can carry out
work of Payment Services in each case up to the limit of his financial power
without asking separate Extracts to the OFB. Similarly, a

Class III Open Extract is sufficient authority for a Factory to undertake
manufacture, repair or other work for sister Ordnance Factories on receipt of


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an Inter Factory Demand (IFD) received from other Ordnance Factories
without further reference to the OFB.


It is an authority for undertaking manufacture of an article by the Productive
Shop/Section. The General Manager of the Factory issues it. Work Office of
the Factory issued Warrant to the respective Manufacturing Sections to
undertake the job. It contains Material to be used and operation wise
Trade/Grade of labour to be employed to complete the article to be
manufactured. A Warrant Number is of five digits, e.g. 0000/0, where the
fifth digit denotes as under:

              0 for Main Warrant Number
              1 for Extra Labour demployed as per NRR
              2 for Extra Material drawn as per NRM
              3 for Replacement Warrant for excess rejection
              4 for Additional number of the existing warrant

Duration of Warrants

Normal duration of Warrants for work other than Capital Works (New or
Repair) is Six months only. Approval for further extension may be obtained
from DGOF
Action Taken by Accounts Office on receipt of Warrant
A warrant is received by Costing Section of Accounts Office & issued by
Works Office of the Ordnance Factory. A warrant contains two parts:

               Manufacturing Warrant
               Material Warrant
Manufacturing Warrant contains the following:
               Original Authority for doing the work i.e. Extract Number

                 A Relevant Estimate Number
                 Description of the Work
                 SWO Number
                 Quantity of work to be done
                 Operation to be performed


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                 Trade & Grade of Labourer to be employed
                 Time required for operation
                 Hourly Rate of the operator
                 Total amount of Basic labour required

Material Warrant contains the following:
               Nomenclature of the materials required for the product to be
               Ledger Folio Number of the material
               Unit of the material e.g. Kg, Litre, Meter etc. in codified
               Quantity of material required
               Remarks
Costing Section, on receipt the Warrant, will enter in the Warrant Register
and open Cost Card as well as Production Ledger Card of the item to be
manufactured. The manufacturing part of the warrant will be then forwarded
to Labour Section for checking and payment of Piece Work / Day Work
Cards & posting of primary documents on it. Similarly, Material Warrant
will be sent to Material Section [Ledger Group) for checking the
admissibility of the material drawn/return as per given in the Warrant &
finally posting of Primary documents i.e. Demand Notes & Return Notes
etc. on it. Costing Section will also watch the completion of the Warrant
through Warrant Register.
No Cost Card as well as Production Ledger Card will be open for Indirect
Series of Work Orders.
On completion of a Warrant, Costing Section will call back Accounts Copy
of the Warrant from Material and Labour Section respectively and pair with
the completed Shop copy. These will be attached with the relevant Cost
Card for scrutiny of variances and arrive out the Cost of Production as well
as actual Unit Cost of the Product.
Work Orders
A Work Order is a codified list consisting of nine digits and represents for
which service is to be rendered by its first two digits, nomenclature of the
subject store to be manufactured by next five digits and last two digits will
indicate the code number, of the shop/section who will undertake the
manufacture. Where a operations is passed through various shop/section for
completion of the manufacture the last two digits in the case will be 00.


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Work Order Serial
       01     For Fixed Charges
       02     For Variable Charges
       03     For Process Material
       04     For Capital Services
       05     For Repairs & Conversion
       06     For Cost of Packing
       08     For Conversion of Timber
       10     For Manufacture for Stock of article other than Standard
              Packages and Component of Out turn Orders
       11     For Manufacture of articles for Stock for eventual utilization in
              issue to Trade
       12     For Manufacture for Stock of Standard Packages
       13     For Manufacture for Stock of Components of another Orders
              including Ammunition
       40     For Manufacture of Components for Except Orders
       41     For Manufacture of PPL Items
       50     For Educational Orders
       51     For Expenditure for NCC Organization
       60     For Development Orders
       70     For Issues/Services to Inter Factory Demand
       80     For Payment Services to private Civil Inventors
       81     For Payment Services to members of permanent Establishment
       82      For Payment Services to all Central Govt. departments except
       83      For Payment Services to State Govt. and Union Territories
              (other than State Police)
       84      For Services to Foreign Governments
       85      For Services to Air Force
       86      For Services to Navy
       87      For Services to R&D Organisation
       88      For Services to Inspection Organization
       89      For Services to MES
       90      For Services to Army
       91      For Services for presentation purposes to MOD
       92      For Services to other Defence Departments
       93      For Services to MHA
       94      For Services to PSU & Autonomous Bodies
       96      For Services to State Police/ State Police of Union Territory


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In the above Series of Work Orders, the "01" and "02" Series are known as
Indirect Series of Work Orders. Rest of the Work Orders represents Direct
Series of Work Orders.

Pricing of Estimates
In Branch Accounts Offices it is the primary duty of the Accounts Office to
ascertain the cost of the materials/items produced in the Factory. This job is
being dealt with in the costing system of the Branch Accounts Offices.
To ascertain the expected requirement of labour and material operation for a
particular item of production is called Estimation. Therefore from the
central point of view in utilization of material and labour, Estimates are
playing a vital role. In Ordnance Factories for each item of product an
estimate of the item is prepared by the Management wherein how much
material is to be processed for production of 1 or 100 items is shown with
scraps to be recovered and how much will be loss in process. In labour side
they will exhibit labour operation details in each section through which the
material will pass to convert it to a finished good. It will show the item
required for each operation and total rate for the operation and total rate for
the operation (total time X hourly rate)
On receipts of the Estimates in Accounts Office, the pricing of the same is
done twice in a year. The rates of the material provided in the Estimates are
supplied by the Material/Labour Section, which is maintaining item-wise
material accounts (folios) and labour rates are checked by the Labour
Section with reference to Schedule of Rates. In this connection it may be
noted that for each operation a time study of operation is done by Factory by
employment of the worker on the job and after providing 25% profit
element and fatigue allowances of time for grinding and of machine etc. an
hourly rate is arrived at which after vetted by Accounts Office finds place in
the Schedule of Rates. On completion of above formalities the Accounts
Office will levy incremental benefit percentage and then D.A percentage on
each Section and also levy the Overhead Charges both VOH and FOH on it
at predetermined percentage. On the top sheet of the Estimate the summary
have to be prepared showing the Material Cost, Labour Cost of each Section
& VOH & FOH Cost of each Section. In each Section a NR percentage is
shown, to provide allowances to Shop that up to that limit rejection may
occur in process of operation. In the Summary Sheet of Estimate therefore


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NR allowances also been added to arrive at the total Estimated Cost of the
When a new item is proposed to be produced in a Factory Provisional
Estimate is prepared. On standardization of the item the Estimate also
standardized after minor modification as per actual requirement.
On standardization of Estimate, the Estimate plays an important role in
controlling the expenditure as on the basis of these Estimates provision of
labour and material operation is made in Warrants (Material Warrant &
Manufacturing Warrants respectively) which is the limitation of the labour
employment or drawal of material for the Batch Production.
Each Warrant against a certain Work Order is a authority for undertaking
production of a batch. Against each Warrant a Cost Card is opened in
Accounts Office to watch production of a batch.
Information available in the Cost Cards
       (1)     Authority for Production i.e. Extract No or IFD No.
       (2)     Work Order No and Warrant No.
       (3)     Quantity Ordered.
       (4)     Estimate No(s).
Source of Postings
       (1)     Labour Abstract: This is prepared / printed on the basis of
               PW/DW Cards after levying DA on pre-determined percentage.
               This forms the actual labour charge. On these labour charge
               variable & fixed overhead charges for the Warrant is also
               levied at pre-determined percentage.
             (2) Material Abstract is prepared / printed from the primary
                 documents called Demand Notes and Return Notes.
When a Cost Card is opened the monthly expenditure against the warrant
from Labour and Material Abstract is posted Section-wise. On taking the
labour payment for full quantity ordered against a Warrant. On such
declaration the Accounts Office will undertake closing of the said Cost
Card. They will prepare Estimated Cost of the Warrant with reference to the
Estimate and review the drawal of material and labour operation taken to
identify the variation, if any, with reasons. They should also scrutinize


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whether any extra material is drawn or any extra operation is taken. This
scrutiny is to be exercised with reference to provision of Warrant.
The staffs concerned then record the reasons for variation in the Cost Card
and sent it to Factory Management for their information if variation is above
Semi Concept
In the process of Production it is not expected that all the items placed on
pipeline will be completed within the running financial year i.e. within 319t
March of a year. So the question of ascertainment of cost of the item in
pipelines i.e. incomplete articles and No since completed against the
Warrants not declared closed by the Management within the financial year
arises. On 31st March the Management will take the stock taking at each
Shop floor to identify the items still on pipeline and will record in a
Statement called Semi Statement and forwarded the same to the Accounts
Office for evaluation. Accounts Office will verify the correctness of the
record and will get it modified by them if any wrong is detected. Then the
Accounts Office will evaluate the Semis well before the closing of the
accounts of the year, with reference to drawal position and labour payment
taken and will segregate thus arrived at cost of the incomplete items to be
shown as Unfinished semi. An example is shown below:

    Wt No.0011010               Quantity ordered           Quantity accepted

Section         Labour       Material           VOH        FOH           Total
01               100          5000              300        200           5600
02               100                            200        100            400
Value of          200          5000             500         300           6000
Completed         150          3000             300         150           3600
Value of
                   50          2000             200         150           2400


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Cost Abstract:
Cost Abstract is the codified printout of primary documents. It is printed
monthly showing the Work Order, Warrant No nature of document etc.
Nature of Cost Tabulation:
It is printed from PW Cards, DW Cards, Allocation Sheet, Labour Punching
Medium I, II, and III. It also shows Sections in which cost occurs.
Material Abstracts:
It is printed from Demand Notes and Return Notes, Adjustment vouchers.
Against each entry document no nature of document are also shown. Return
Notes are exhibited as minus.
T V Abstracts:
When the cost is transferred from one Work Order to another Work Order,
the same is exhibited in this abstract
Subsidiary Abstract:
SVC-Sectional Variable Charges, It is printed from collection of figures
from Labour, Material Abstracts and also from Overhead Allocation against
02 Series of Work Orders.
SFC-Sectional Fixed Charges, It is equally printed in respect of 01 Series of
Work Orders.
Master Cost Cards (MCC)
It is a Work Order summary of tabulation printed quarterly from above three
main Abstracts.
PRINCIPLES OF                 COST         ACCOUNTING:              OVERHEADS
 Definition: Overhead Charges constitute a Class of Cost, which cannot be
directly charged to the Product. To arrive at a true Cost of the Product it is
essential that a proper system of accounting of charges incurred by the
Service Sections or by the Production Section itself in the shape of
supervision, security, welfare, power, steam water are collected and
distributed to the Products) of the Shop. Service Charges of the above
nature, which are common to all the Production Sections but cannot be
charged directly to the output of that Section/Shop, are called Indirect
Charges or Overheads.


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Classification of Overhead Expenses: Under the existing system,
Overhead Charges arising in Ordnance and Ordnance Equipment Factories
are classified into Variable and Fixed categories, the former being recovered
in full against Production and the latter at predetermined percentages after
deduction of the War Insurance Charges and certain expenditure which are
kept out of Production Cost.
In Cost Accounting, Overhead expenses, which are in sympathy with the
load of the Factory, are classified as `Variable' and these expenses, the
magnitude of which would depend upon policy decision and generally
remain constant irrespective of the load/volume of Production are classified
as `Fixed' Charges.
Item of expenditure classified as Fixed and Variable are detailed in `01' &
'02' Series of the Syllabus of Work Orders respectively. At present there are
55 Work Orders under `01' Series and 26 Work Orders under `02' Series.
Collection of Overhead Expenses: The first step in the accounting and
allocation of Overheads is their Departmentalization. The Overhead
expenses (whether Variable or Fixed) pertaining to each Manufacturing
Centre (Cost Centre) are collected together so that the Overhead Charges for
each Shop may be charged to the output of that particular Shop or Cost
Centre. The Overhead expenses incurred for a Shop may be incurred either
by that Shop or by other Shops on its behalf as service rendered with a view
to collecting together both these types of expenditure, last two digits of `01'
& `02' Series of Work Order numbers are used to indicate the
Manufacturing Centre/Shop for which expenditure is incurred.
The Shop or Section in a Factory may be Productive or Non Productive
(Service) or both. The total Variable Expenditure for the Factory plus such
portion of Fixed Overhead Expenditure as is chargeable to the output has to
be charged to the out turn of the Factory. With a view to obtaining correct
allocation of Costs, the Overhead Expenditure pertaining to any Production
Shop in any cost period is to be charged to the Production of that Shop
during that period. The overhead expenses of Service Shops are allocated to
the Production Shops in proportion to the service rendered by the former to
the latter or any other predetermined basis.
Estimation and Fixation of Overhead Percentages: Before the
commencement of each financial year, estimation of Direct Labour, Fixed
and Variable Expenses for Production, Non-Production (Service) Section is
made keeping in view the Production Programme for the ensuing year by
the CBS (Central Budget Committee) with General Manager as Chairman


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and DGM/WM and Accounts Officer as Member. This Committee decides
percentage for levy of Fixed and Variable Overheads for the financial year
for different Production and Service Sections. Review of actual expenditure
with reference to the Estimates is also done by the Shop Budget Committee
on receipt of the monthly Mechanized Tabulation known as SVC (Sectional
Variable Charges) and SFC (Sectional Fixed Charges) Statements. In the
case of Fixed Charges, charges not required for current Production are to be
assessed and deducted from the Estimated Fixed Overhead Charges. The
charges so deducted represented War Insurance' Charges.
Levy of Overhead Charges: The expenditure under '01' and '02' Series of
Work Order are allocated to the various jobs by changing predetermined
percentages on 'Direct Labour. These percentages vary from Shop to Shop.
The difference between the actual expenditure and those levied at
predetermined percentages is called Unabsorbed Fixed and Variable
Charges. If the actual are more than the amount levied, then there is under
absorption. If the levied amount is more than the actual, then there is over
absorption. These under/over absorption should not exceed (+) or (-) 5%. If
so, the difference should be charged to the production by relying it overall
the work orders in proportion to the value of Direct Labour.
Variable Charges - Distribution of: The Variable Charges are to be
estimated for each quarter of the year separately Shop wise and Work Order
wise and thereafter aggregated for the year as a whole. As a result, budget
figure for each quarter will be available against which actual should be
compared and analyzed after estimating the Variable Charges of each
Section, the percentage as decided by the Management and Accounts
Officer are distributed/charged from one Service Section to another
Service/Production Section.
Accounting of Variable Overhead Expenses: Accounting of Variable
Overhead Expenses involves two phases viz. (I) collection of actual variable
expenditure for each Shop or Cost Centre monthly for each Costing Period
and (ii) charging to each job executed during the Costing Period. After the
collection of Variable Charges the amount thereof chargeable to Production
i.e. the leviable amount is to be determined.(For this purpose, the items of
expenditure, such as abnormal losses/profits on sale of surplus stores, losses
relating to surplus stock, etc. are deducted from the actual Variable
Budgetary Control of Variable Overhead: With a view to exercising a
control over the Variable Overhead Expenses with reference to the
Budget/Standard set in advance, the actual are compared to have the


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efficiency of budgeting. For this purpose monthly Statements of Variable
Overhead Expenses should be critically examined against particular
quarter's budgetary provisions and suitable action taken on controllable
items by the Shop Manager. The General Manager should place quarterly
analysis of variations and action taken thereon before the SBC for review.
Normal variations against each item should range between (+) or (-) 5% of
the budgeted provision.
War Insurance Charges: The maximum installed capacity of a Factory to
meet the requirement of the Services in times of War is assessed on the
basis of working 2 Shifts of 10 hours each per day for 25 days per month in
the case of Batch Operation Plants and 3 Shifts of 8 hours per day for 22
days per month in case of Continuous Chemical Process Plants. Before the
commencement of year, the capacity which will not be required for the
year's Production Programme, should be identified in terms of man and
other facilities and the cost of such capacity determined. These costs should
be treated as `War Insurance Charge' and deducted from the intimated Fixed
Overhead Charges of the Factory for the year. After segregating the cost of
surplus capacity not actually required for the current Production Programme
and also the charges required to be kept out of production under the extant
orders, the balance of Fixed Overhead Charges should be chargeable to the
year's Production based on the Estimated Direct Labour Charges. This will
ordinarily be operation for the whole year.
Accounting and levy of Fixed Overhead Expenses: Accounting of Fixed
Overhead Expenses also involves two phases viz. (I) collection of Fixed
Charges and (ii) Charging them to jobs. The total Fixed Charges Work
Order wise for a year in respect of each Shop/Section will first be estimated
based on actual Fixed Charges for the previous year only taking into
account known/ foreseeable charges on account of increase/ decrease in the
incidence of Fixed Charges. From this, deduction is made for `War
Insurance Charges' and certain other items to be kept out of production to
arrive at the estimated for each Production Shop and share of Service and
Non-Production Sections will form the basis for the leviable charges. The
percentage of leviable Fixed Charges is determined with reference to the
Direct Labour Charges Section wise (Production/ Semi Production) for the
year as a whole.
At the end of the year, the difference between the chargeable Fixed Charges
and actual levied amount should be shown as Under/Over absorbed Fixed
Charges provided the same does not exceed (+) or (-) 5% of the Chargeable
amount. If it exceeds, the difference will be charged to Production by re--


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levying the difference overall the Work Orders in proportion to the value of
Direct Labour.


STORE        A        B          C      TR       TR        X        Y        Z

 5000      1500      250     750       500       200    9000      3000 7000
 5000      100       150     200       150       100    1000      1300 2000
           1600      400     950       650       300    10000     4300 9000
           1600       -      200       200       100     400      300   400
                     400     1150      850       400    10400     4600 9400
                     400      50        50        -      100      100   100
                             1200      900       400    10500     4700 9500
                             1200      100        -      500      300   300
                                       1000      400    11000     5000 9800
                                       1000       -      400      400   200
                                                 400    11400     5400 10000

                                                 400     5700     3600     4000

                                                 100      200      150      250

At the end of each financial year, the actual Stock will be taken by the
Factory of the unused materials and part finished works of all running
warrants. Full list is made showing the stage of manufacture against each
item, quantity of materials drawn against warrant but found either in part
finished conditions or unused. The Statement will also show `the Extract
Number, Work Order Number & Warrant Number.
The Semi Statement will be verified with reference to Manufacture and
Material Warrants, Warrant Registers, Cost Cards and Production Ledger
Cards as to establish the correctness of the quantity shown therein and the
discrepancies found in the Semi Statements would be sorted out jointly by
the Accounts representative with the Factory Management within 15th


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The evaluation of Work in Progress should be completed by the end of
When no article have been found completed in a particular Warrant, the
whole expenditure appeared in the relevant Cost Card will represent the
amount of Work in Progress of the Warrant. The Semi Statement will show
the amount incurred against such Warrant and need not to be valued
The total value of the Semi manufacture under each Work Order and
Warrant will be posted in an Abstract and will be credited in the relevant
Cost Card under each element of Cost. A Master Summary will also be
prepared showing the value of the Work in Progress under each element of
cost Work Order wise.
Total value of the Semi Statement for all the Warrants against each Work
Order will represent the value of Work in Progress of that particular series
of Work Order. Thus the total value of Semi as on 31st March will be
credited to the Work in Progress Account by debiting The Balance Account
and thereby exhibiting the balance as "Assets" in the "Statement of Assets &
Liabilities" of the Factory.
In the following year, this asset will represent Work in Progress as on 1st.
April of the year.
Check exercised by the Accounts Office
       1.     Costing Section
              Scrutiny with reference to Warrant Register to ensure that all
              incomplete Warrants have been included
       2.     Material Section
              Verify with reference to the posting in the relevant Material
              Warrants that the quantities of Material shown are correct and
              the Materials were priced at the same rate in which
              corresponding Demand/Return Notes on bulk drawal were
       3.     Labour Section
              Verify with reference to the posting in the relevant
              Manufacturing Warrants that the operation shown as performed
              are correct and pricing of these operations are at correct rates.


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       4.     Costing Section
              Final scrutiny with reference to the Cost Cards and Production
              Ledger Cards and will levy DA and Overheads percentages for
              preparation of Abstract of Semi in respect of each Work Order
              and Warrant for working out the Cost of Production.
Cost Card by Warrants will be maintained manually in the local Accounts
Office in prescribed Proforma. For this purpose Cost Card will be opened
immediately a Warrant is issued. Particulars regarding Extract No., Quantity
ordered, Work Order/Warrant No., Nomenclature of the item to be
manufactured and element wise Estimated Cost will be filled in. Opening of
the Cost Card will be authorised by the Section Officer. In the case of
Warrants which are carried forward from the previous year, opening value
of the semi under the different element of cost as well as the estimated cost
of items will be filled in.
Posting in the Cost Card
Posting in the Cost Card will be done by the Auditor concerned of Costing
Section from the following monthly Abstracts received from EDP Centre:
      Material Abstract
      Labour Abstract
      Overheads Abstract
      Transfer Voucher Abstract
      Component Abstract

Closing of Cost Card
When Warrants will be declared
Costing Section from the following monthly Abstracts received from - EDP
      Material Abstract
      Labour Abstract
      Overheads Abstract
      Transfer Voucher Abstract
      Component Abstract


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Closing of Cost Card
When Warrants will be declared completed, a list showing the names of
Warrants along with completed Shop copies will be received in Accounts
Office. Costing Section will called for the Accounts copies both
Manufacturing as well as Material Warrants duly filled in from Labour and
Material Sections respectively and paired with the completed Shop copies
and tagged up with the relevant Cost Card for taking necessary action to
close them.
To ascertain the actual Cost of Product as well as unit element of Cost and
Unit cost of product it is very much essential to close a Cost Card.
Moreover, any variation in element of cost should be critically analyzed
while closing a Cost Card so that the same could be taken into the notice of
Factory Management to take remedial action for future production of the
In the case of Warrants running from the previous year it should be ensured
that the Cost Card has been debited with opening semi, if any. Replacement
warrant and Warrants for Tools & Gauges manufacture on the parent Work
Order with sub numbers will similarly be annexed with respective Cost Card
and all enclosed to the Cost Card for the parent Work Order. It should be
ensured that the details of all expenditure recorded against a Warrant should
be available when a Warrant is finally closed, no matter how long a Warrant
has been running. The original Cost Card of the past year/years in regard to
a warrant closed in the current year should be available.
The class of cost wise expenditure debited to the Work Order during a year
by section and month separately and the class of cost wise value of the
opening semi, if any, will be cross totaled and reconciled. The total figures
under each element of cost appearing in the Cost Cards for replacement and
tool and gauge warrant will be brought forward and debited separately to the
cost card for the parent work order. All the debits viz. The opening semi
expenditure during the year, cost of replacement, tool and gauges charges by
class of cost will be cross-totaled and reconciled.
It is also to be determined whether any avoidable rejection has occurred in
the warrant. The amount of avoidable rejection will be calculated and
deducted from the expenditure recorded in the Cost Card. This amount will
be excluded from Production Account of the Factory.


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Comparison of Actual Cost and Estimated Cost
The element wise actual cost of a product may vary from its estimated cost.
If the variation is more than (+/-) 10%, the reasons for variation should be
done critically.
Generally variation may occur due to following reasons:
Variation in Labour Cost
Due to
   change in DA%
   Rejections
   Replacement
   Performance of more or less operations
   Wrong preparation of Piece Work Cards
   Wrong pricing of Piece Work Cards
   Deployment of other Trade/Grade of Labour as well as Day Worker
      instead of Piece worker
   Changes in method of manufacture
   Wrong posting in Cost Card
   Wrong assessment of Semi
   Use of NRRs
Variation in Material Cost
Due to
   Rejection and Replacement
   Change in Average Ledger Rates
   Wrong preparation of Demand/Return Notes
   Wrong pricing of Demand/Return Notes
   Wrong pricing/posting of Transfer Vouchers
   Wrong assessment of Semi
   Costly materials drawn
   In lieu material drawn
   Material drawn through NRMs
Variation in Overheads Cost
Due to
         Variation in labour cost as explained above
         Variation of percentages of overheads
         Wrong posting in Cost Card
         Wrong assessment of Semi

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Analysis of Expenditure and Elements of Cost
The expenditure incurred in manufacture is classified under three main
categories viz.
       (a) Wages paid to Industrial Workers
       (b) Materials
       (c) Other Expenses
In relation to Product Costs, the expenditure falling under the above three
categories are further classified as DIRECT and INDIRECT expenditure.
For the purpose of Costing, Wages are analyzed into DIRECT LABOUR
Similarly, Materials are analyzed into DIRECT MATERIAL Cost and
Other Expenses, the bulk of which represents Salaries paid to Supervisory
Staff and Administrative Personnel fall under the category of INDIRECT
Indirect Labour, Indirect Material and other Indirect Expenses together
constitute the Overhead Expenditure of the Factory.

While the Direct Labour Expenditure and Direct Material Expenditure
incurred in the manufacture of each product can be measured accurately and
charged direct to each, job, the Overhead Expenditure representing the cost
of various production and administrative services incidental to Production
can not be charged directly to each job such expenditure being common to
all production activity is apportioned to the cost of each job as equitable as
possible following certain well recognized cost accounting principles
By means of the above type of analysis, the cost of each article
manufactured in the Factory is compiled under three elements of Cost viz.
(i) Direct Labour, (ii) Direct Material and (iii) Overheads.
Abnormal Resection in Manufacture
For the purpose of ensuring effective cost control and cost comparison, the
cost of any abnormal rejection in manufacture is treated as an item not
chargeable to the normal cost of production of an article and is, therefore,
shown as a separate item in the Production Account.


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The normal rejection inherent in the manufacture of an article will be
Included in the relevant estimate for the manufacture and all rejections
beyond the percentage provided for in the estimate will be regarded as
avoidable rejection and the amount of avoidable rejection cost will be
written off on Loss Statement after necessary investigation. The loss
statement will be regularized under the power of General Manager or OFB
as the case may be. The cost of rejection up to the maximum percentages as
authorized in the Standard Estimate will be included in the Cost of
Production and that beyond the maximum percentage provided in the
estimate shall be excluded from Production Account of the Factory and
regularized as loss. There may be a number of Warrants at the end of each
financial year where only a part of the quantity ordered has been completed.
For the purpose of Production Account, the cost of completed quantity of
each such warrant will be worked out by including the cost of actual
rejections up to the quantity at the maximum prescribed percentage of
unavoidable rejections, if any and will ultimately be merged with the Work
in Progress and carried over to the next year. All avoidable rejection losses
requiring regularization will be categorized as Store Losses. The
consolidated figure of such losses formally written off will be reflected in
the Appropriation Account for the year. Each case of loss due to rejection
beyond unavoidable rejection percentage will be examined on its merit and
categorized either as due to theft, fraud or neglect OR not due to theft, fraud
or neglect in accordance with Rule 162 of FR Part I. Rejection losses may
be written off by the competent financial authority as under:

Rejection losses not due to theft fraud or neglect
1) General Manager                  up to Rs.10, 000 irrespective of the
                                    percentage of rejection
                                    Up to 50% of the unavoidable percentage
                                    irrespective of the amount involved

2) Ordnance Factory                 up to Rs.50,000 irrespective of the Board
                                    percentage of rejection
                                    Up to an additional 100% of the
                                    Unavoidable percentage of rejection
                                    Irrespective of the amount involved
All other cases, the sanction of Government of India will be required.


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Rejection losses due to theft, fraud or neglect
1) General Manager          Rs.5, 000
2) Ordnance Factory         Rs.30, 000
All other cases, the sanction of Government of India will be required.
Capital Assets in a factory are classified under three main heads:
       i) Building
       ii) Machinery
       iii) Other items
The items falling under Building are;
              (a) Industrial Building i.e. Building within the four walls of the
              FY whether used for Production or Non-production purposes
              any factory sections (except offices) outside factory walls.

              (b) Non-industrial Building i.e. office outside the Fy. Perimeter
              wall, Hospitals/ M. I. Room, Staff Club etc., and
              (c) Residential Buildings

Machinery (including air-cooling plants), Steam lunch barges ,
Locomotives, Railway Wagon, Station Wagon , Motor lorries, Weighing
machine, Sewing machines, Furnaces
Other items
Other items are water or gas lines, openly visible lines filter units (filter
plant for water supplies) incinerators, railway lines and railway sidings (if
installed and or maintained by Fys), Tube wells, Remington Accounting
Machines etc., Lands, and Roads. Drains, Telephones Chimneys, Electrical
installation, Leveling site, Jetties, Steel furniture & fitting, Computer etc
The Accounts of Capital Assets in the Fys are maintained in two Block
Registers on IAF (FAC) 77 by Accounts offices, One for Building items and
other for Machinery items.


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Block Register shows:
       1)     The original purchase value.
       2)     1st. Year Depreciation
       3)     Opening balance of the Book Value of the Capital Assets.
       4)     Addition during the year.
       5)     Reduction during the year, including Annual Depreciation
       6)     The closing depreciated book value at the end of the year.

(A)    Preparation of original documents is `M' Series Receipt Vr For
       Machine 'B' Series Receipt Vr. For Building
(B)     Pricing of Receipt Vrs. 'M' Series Rt. Vr. will price with reference to
       Supply order rate or invoice rate. The price of the machine will also
       includes the following (a) Custom duty in case of foreign purchase (b)
       transportation charges.(c ) Sea freight charges in respect of imported
       stores 'B' Series Receipt Vouchers will be priced with reference to
       actual expenditure statement ( ABC Statement ) or Administrative
       approval cost.
(C)    Separate schedule will be maintained for Capital item ` M ` Series
       Rt.Vr. will be posted in the schedule for machinery items while 'B'
       Series Rt. Vr. will be posted in the schedule for Building items.
(D)    Vouchers both 'B' and 'M' Series will be posted in the Block register
       Section wise, Machine for which no shop or section has been
       mentioned to be posted in the suspense section of the Block Register.
       Machine for which shop or section if allotted will be directly posted
       to particular section / page of the Block Register.
(E)    Reconciliation is necessary between the Block Register and schedule.
(F)     Building depreciation will be worked out taking the life of 60 years
       and charged in straight-line method.
(G)     Machine items when installed are to be depreciated at the rates
       provided in the Govt. Order charging of the depreciation will be in the
       straight-line method. Depreciation charges so worked out will be
       charged to the cost of production and for this purpose allocation sheet
       is prepared by the A.0. Showing the work order no to which the
       depreciation charges will be accounted for while preparing Annual


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       Accounts, depreciation is shown as credit item of Capital Assets
(H)    Value of Capital series Receipt Voucher will represent as liability
       while the amount appeared.
The compilation of Accounts of receipts and expenditure of the Army, Navy
and Air Force including Ordnance Fys is done mechanically on the
computer. For this purpose the necessary data available in the original
vouchers etc. are codified in a document known as the "Punching Medium".
The Punching Medium which is the primary document for generation of
financial compilation contains the following particulars –

Month              -Identified by two digit code
CDA                -Code No. of the Controller 07 for P C of A (Fys)
Section            -Code number of Section/Accounts Office compiling the
Class of Voucher -I to VIII
Voucher No.        -5-digit Number starting from- 1
Classification Code-To indicates the detailed code head.

Receipt, Minus Receipt, Charge, Minus Charge -
To denote the amount compiled. The codification system adopted in the Fy
organization is a detailed one. The system provides for 6 figures on the top
and seven figures at the bottom as indicated below

               001101                           C (3)               MC (4)

The first three digits on the top are meant for unit of control, the next three
digits indicate Fy codes and the seven digit code denotes the detailed
classification code. The unit control code is operated along with the
classification code for specifying the nature of transactions. The unit control
code 001 denotes pay of all Gazetted Officer serving the factory.
The list of unit control heads to be prefixed to classification code heads have
been circulated by Accounts Section vide circular no. A/11/0102/XV dated


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Great care has to be taken in making out the Punching Media as these forms
the basis for financial compilation as well as adjustments for cheques drawn
on various treasuries, receipts deposited through MRO etc.
The classification codes for different types of transactions are provided in
the 'Classification Hand Book' Defence Services (for Service Heads) and
pamphlet of Revenue, Debt and Remittance Heads (for RDR Heads).
How financial transactions are brought to Account
The sections in MO and Br. AOs responsible for making payments
adjustments prepare PM at time of passing the bills. The Punching media
are sent by Br. AOs to the local EDP Section for data capture in the
prescribed format and the data file after validation is forwarded to EDP
Section of MO for generation of weekly and monthly compilation as per
time schedule fixed for each year. The data entry of PMs pertaining to MO
is done at the MO, EDP Centre. After merging the data files received from
all the Br. AOs, monthly compilation is generated. The data is also sent to
CGDA, EDP Centre for inclusion in All India Compilation.

Some of the Important Sub-Compilation and its use
       1.     Code-wise Compilation - This shows Month-wise booking
              against each code head for the Fy. organisation as a whole,
              used in EDP Section.
       2.      Book Compilation - This shows monthly and progressive
              bookings against each code. Used by Accounts Section and
1. Sectional Compilation - Bookings made by the Sections/Br. AOs during
the month are shown in this compilation, sent to all the compiling Section
for reconciliation and confirmation of correctness of bookings.
2. GPF-DAD Statement (Non-DAD Statement) - Audit Sections reconcile
the amount as per this compilation with reference to GPF Schedules.
3. RDR Head Compilation - User Accounts Section, MO.
4. Cash compilation (CCO-2) (Summary Details sent to All Br. AOs
Accounts Section, Stores Section, Pay Section, 'T' Section of MO.
The CCO-2 Compilation shows the booking Voucher-wise for each
factory/formation. It helps management to have latest expenditure figures
under different heads and to have effective budgetary control. The CCO-2
compilation includes booking made by different sections in MO and Br. AO


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on behalf of a factory e.g. the TA bills passed by `T Section for payment is
directly booked to the concerned Fy code by the `T Section.
Expenditure already compiled to All India Compilation by the DAD Cell
attached to the four PAOs at Kolkata, Delhi, Bombay and Madras on
account of Central purchase of Stores and by the DAD Cell attached to
embarkation Hqrs. At Bombay and Madras for custom duty are brought into
the CCO-2 compilation by re-allocation through Class - VII Voucher
prepared by Stores Section on receipt of details from the concerned paying
authority. Similarly, the expenditure on account of MES works expenditure
are compiled to the Fy code head by the Regional CDAs and the Account
Section reallocate the expenditure in the CCO-2 compilation.
Steps required to be taken for ensuring error-free Compilation
   1.     The entries made on the PM must be clear and legible.
   2.     The operation of Fictitious classification codes as well as wrong
          Fy/unit control code must be avoided
   3.     The Rt. Side total and the Charge side total of PM must tally to
          balance the PM.
   4.     To avoid backlog of vouchers, it must be ensured that the data file
          is sent to MO by the fastest mode of communication now available
          to ensure its receipt in MO by the scheduled date.
Important areas of Concern
Issues to Army, Navy and AF and other departments are made by debiting
the issue codes of Army, Navy and AF etc by Contra -Credit to Fy. Code
Head. Separate codes have been provided for identifying the nature of stores
issued both on the Fy and Army side. It is observed that Br. AOs are not
correctly debiting/crediting the appropriate issue code though such mistakes
are on the decline. Most care must be exercised while preparing PMs for
issue transactions to avoid any mistakes since the amount compiled in such
PMs are in Crores and any error is viewed seriously. The detailed codes are
given in the CS No. 41/98 issued to classification handbook, Defence
The cost of each article manufactured in the factory is compiled under three
elements of cost
      (i)    Direct Labour
      (ii) Direct Material
      (iii) Overheads


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Orders for production are placed on the shops in the shape of manufacture
and material warrant in the shape of batch or quantity. The warrant along
with the standard estimates forms the main instrument for control over
utilisation of labour and material on an individual job or batch. This also
forms the basis for compilation of cost.
Warrant is the authority for utilisation of labour and drawal of materials.
Expenditure incurred under the elements of cost viz. Labour, material,
variable overheads and fixed overheads are collected warrant-wise. Cost
Cards by warrants will be maintained in the Local Accounts Office. Cost
Cards will be opened immediately a warrant is issued. Particulars regarding
Extract Number, Quantity ordered Work Order / Warrant Number,
nomenclature of material and estimated cost under different elements of cost
will be filled in. Postings are made on the Cost Cards warrant-wise from
Labour, Material and Transfer Voucher Abstracts and Component Abstracts
wherever applicable.

Accounting of Labour Charges
The primary cost accounting documents used for the collection of labour
expenditure by jobs and various indirect work orders are as mentioned
       (i)     Piece Work Card
       (ii)    Day Work Card
       (iii)   Allocation Sheet
       (iv)    Labour Punching Media
Piece Work Cards
PW cards are prepared on completion of production and certified as
accepted by shops for claiming payment.
The PW Cards show
       (1)     Ticket No. of Piece worker or gang piece work No.
       (2)     The W.O. and Wt. No.
       (3)     Description of work performed
       (4)     Quantity accepted
       (5)     Operation hours admissible


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The PW cards are initially priced on average hourly rate of the Fy and the
difference between Actual Wages paid and card value is levied through
DOP and increment percentage.

Day work Cards
For Day Workers who are paid by attendance the Shops prepare. DW Cards
showing T. No. of workers, W.O., Warrant and time spent on job.
Normally one card is prepared for each week.
For workers who are continuously engaged on the same job throughout the
month, the shops prepare a monthly allocation sheet instead of DW cards.
Labour Punching Media
For booking payment pertaining to leave pay holiday pay, Overtime Bonus,
Dearness and other allowances in Cost Accounts the AO prepares Labour
PM showing Section Code No., WO No and total amount. All these PM
relate to indirect work orders only. A file containing piece work card and
Day work and Labour PM is generated by the wage roll package which is
used as an input by the Costing Package to generate Labour Abstract, SVC,
and SFC.
Accounting of Material
Primary Documents: - Demand Notes, Return Notes, Receipt Vouchers,
Issue Vouchers and Transfer Vouchers. The stores authorized for drawal as
per material abstract are drawn on Demand Note and any excess stores
returned through Return Notes. The Demand and Return Notes of a month
after validation and pricing are posted in PSL and a file containing DN/RN
generated by Inventory package. This file is used as an input for generating
material abstract using the costing package.
The material abstract is a tabulation in which the expenditure incurred
against each WO and Wt. is shown Demand/Return Note-wise and also the
net total against each WO/Wt. The net expenditure for each warrant is
posted in Cost Card pertaining to concerned warrant.
Overhead Expenses
Overhead expenditure may be defined as expenditure, which are not directly
related to production but are expended for providing various facilities and
services incidental to production.
These are indirect expenditure and comprised of expenditure on account of
indirect material, indirect labour and other charges. Since such cost cannot


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be directly allocated to production these are apportioned on a fixed
percentage. As such, at the beginning of the financial year sub-budget
committee fixes VOH and FOH leviable for each section. This percentage is
levied on direct labour while generating Labour Abstract.
Closing of Cost Cards
The list of warrants completed during a month is received by the costing
section and necessary action is taken to close the Cost Cards. The unit cost
of production will be worked out under each element of cost.
At the close of the financial year the total cost so arrived under different
series of work order constitute the total cost of production for the factory.
This cost is compared with the estimates separately provided for each W.O.
(element-wise) and the variation beyond 10% under each element is suitable
explained. Apart from this cost arrived at as per cost compilation is
compared with Financial Compilation and reconciled as per procedure laid
down in Chapter-X of O.M. Pt - VI Vol. II.
Production Account –
        (i)     is a ledger account compiled by Branch Accounts Officer(s)
                and consolidated by PCA (Fys), Kolkata.
        (ii)    Figures under Debit and Credit items are compiled by taking
                into account the various transactions of revenue expenditure
                and revenue receipts affecting cost of production of articles
                produced during a financial year.
        (iii)   Is debited with the value of opening unfinished semi (WIP),
                direct labour, Direct Stores and Overhead Charges.
        (iv)    Is credited with certain relief to Overhead charges viz. Rent,
                Rates, Electricity and Water Charges recoverable, Unclaimed
                Wages lapsed, Sale proceeds of machinery, closing value of
                unfinished semi (WIP), Cost of avoidable rejection (KOP) and
                Cost of Production.
        (i)     Certain transactions which are not revenue in nature viz. Book
                Value of Discarded Assets, Sale proceeds of machineries etc.
                are also accounted under Production A/c but impact of which
                are finally kept out of production.


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                    (ii)   Certain profit and losses not generated out of the production
                           process viz. Profit/Loss on Sale of Surplus, Obsolete Stores,
                           Stock-pile items etc. are also initially accounted under
                           Overhead element of Production A/c but kept finally out of
                           Production Cost.
             Documents/ Information required for Compilation of Production Account –

Sl            Name of document                                         Remarks
1       Un finished Shop Semi               Semi Statements are prepared by Fy and priced by
        Statements showing                  LAO after reconciling with the relevant cost and PL
        Work Order, Warrant-wise            Card. Semi value are to be worked out series-wise and
        details of shown for the            Labour payment and material element-wise.
        quantities lying as unfinished
        condition as on 31St March.
2       Inspection Notes/ Production        Prepared and submitted by Fy. Accounted through
        Vouchers (P. Vr)                    Production Ledger (P.L.) Card by LAO. COP is worked
                                            out on the quantities passed in inspection. Value of
                                            Avoidable Rejection is calculated taking into account
                                            rejection quantities appeared in P.L. Card (duly
                                            reconciled with concerned warrant) and deducting the
                                            permissible quantity as per NR% provided in the ESTT/
3       Production Estimates                Prepared by Fy and priced by LAO taking into account
                                            the updated rates.

4       Shop copy and Accounts copy         Wts. Are floated by Fy transactions are posted both by
        of Warrants (both Material and      Fy & LAO. After completion, Shop copies of completed
        Manufacture).                       Wts are received from Fy. By LAO. Posting into the
                                            Cost Card and P.L. Card are required to be verified with
                                            the postings made in Wts.

    5   4Cost Abstracts viz. Labour         Cost Abstracts are generated in EDP by LAO based on
        with Overhead Abstract              the primary documents received from Fy. (Viz. PW/DW
        Material Abstract T.V.              Card, Material Demand/Return Notes Transfer Vrs. etc.)
        Abstract     (including             and some documents generated by LAO viz. (Labour
        Foundry/ Process T.V. or            Cost Punching Mediums, Overhead Allocations,
        allocations Master Cost Card        Foundry/Process T.V./Allocation) etc.
        Tabulation (M.C.C.)


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6   Manufacturing A/c- Statement        Compiled by LAO monthly showing Rent, Rates,
    "B"                                 Electricity and Water Charges etc. recoverable,
                                        recovered etc.

7   Priced Store Account (PSA) -        Compiled by LAO monthly summarizing the receipt and
                                        issue transaction of material category (PSA Code) wise
                                        took place during the month.
                                        One summary is also prepared showing value of Opening
                                        Stock of material, value of total receipts and issues of
                                        material and value of closing stock of material as on the
                                        closing day of the month.

8   Cash Compilation (CC02)             Compiled by PCA (Fys), Kolkata showing Fin. Code
                                        wise Expenditure/Receipt. A statement showing major
                                        (important) items appearing under Dr/Cr. entries visa-a-
                                        vies source of receipt of input data item-wise are shown
                                        in Annexure - A enclosed.


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                                PRODUCTION ACCOUNT

                                                                      ANNEXURE - `A'
           Debit Item

      Particulars                  Source of Figure                                  Remarks
1 Work-in           Should be equal to the value of work-in               Figure should also agree
    Progress     As progress      on 31st March shown                     with the opening value of
    on 1.4.         against Cr. item-3 of Previous                        WIP shown in work-in-
                     year's Production Account (Closing                   progress A/c of Principal
                    balance of previous year to be brought                Ledger.
                    forward as opening WIP)
2 Direct Labour Total value of labour expenditure (other       Figure should agree with the
                    than expenditure of 01 & 02 series)        total Direct Labour
                    appeared in Labour and T.V. Abstracts      expenditure shown in the
                    pertaining to the year of account.         Debit side of work-in
                                                               progress A/c of Principal
3   Direct Stores  Total value of      Material     costs      Figure should agree with the
                   booked under Direct series (i.e. other than Total direct material
                   01 and 02 series) as      tabulated in      expenditure shown in Debit
                   the summary of Material and T.V.            side of work-in-progress A/c
                   Abstract for the year.                      of Principal Ledger.
4   Overhead       Total expenditure incurred on account of    Figure should agree with the
    Charges        Pay & Allowances etc. in respect of         supervision charges shown
    (A)Supervision employees and officers (other than          in the debit side of Overhead
    Charges        IEs) and booked under class of cost 14      expenses A/c of Principal
                   against `01' series work order.             Ledger.
    (B)            Total expenditure appeared in CCO-2         Figure should agree with the
    Transportation under Financial code808/02 (amount          transportation charges shown
    Charges        should also be booked under Cost W.O is Debit side of Overhead
                   01/00030/00).                               Expenses A/c of Principal
    (C)            This figure should normally agree with that Figure should agree with the
    Miscellaneous shown          against W.O. 01/00037/00      relevant item appeared under
    Charges        Incidental &        Misc.                   Dr. side of O.H. Exp. A/c in


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    (a)Contingent      Exp. (less amount charged direct).

    (b) Cost of        Figure intimated by the PCA (Fys) and
    DGOF               appeared under cost W.O. 01/00027/00               -Do
    (i)    Effective
    (ii) Non-
    (c) DAD            Figures should agree with the Share                Figure should agree with the
    Charges            intimated by PCA (Fys), Kolkata on                 amount shown against W.O.
    (i) Accounts       account of Central Administration                  01/00028/00 (Central
    (ii) Internal      (Accounts) plus Expenditure of Local               Administration        (Fys))
    Check              Accounts Office (percentage of distribution        and01/00029/00          (Fy.
                       set accounts of Internal check is 80% &            Account Office.
    (d)                As worked out by LAO in superannuation Figure should agree with the
    Superannuation     charges Register adopting the rates           amount booked under cost
          Charges      intimated by PCA (Fys) Kolkata.               W.O. 01/00013/00
    (f)   Indirect     Summarized net figure of Labour               This figure should agree
    Labour             expenditure appeared against '01' and '02'    with the total labour
                       series in Labour Abstract and T.V. Abstract Expenditure appeared in IE
                       (i.e. Dr. - Cr. W.O.)                         Statt.
    (g) Indirect Summarized net value of Material                    This figure should also agree
    Stores             expenditure appeared against '01'& '02'       with the total amount
                       series work order in Material Abstract & T. appeared under Material
                       V. (i.e. Dr. - Cr.                            Column of IE Statt.
Note: -Total of Indirect and Direct Stores should agree with Cr. item 1(a) & 1(b) of Store A/c.


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    (D) Depreciation          As worked out and calculated by             Figure should agree with the
    Charges                   LAO in the Capital Block Register           amount booked under cost
    (a) Depreciation          (sum of depreciation amount of all          W.O. 01/00018/00 for other
                              capital assets other than land).            items01/00019/00 for
                              Depreciation to be worked out               Building01/00034/00      for
                              adopting Straight Line Method.              Machinery01/10034/00

    (b) Book Value of      Sum of book value lying in Capital    Figure should agree with the
    Discarded Assets       Block Register in respect of items    amount appeared under
                           sold/discarded as on the date of sale cost
                           transaction.                          W.0.01/00050/00
      Note - Amount shown against 4(D) (a) & 4(D)(b) should agree with the amount appeared
under cost W.O. No. 01/00050/00
    (F) Losses:            Amount appeared in PSA                Amount should agree with
    (a)                    Against PSA Issue code 76             losses
    Surplus Stores         - do -77
    (b)                    -do- 78 & 79
    Obsolete Stores
    (c) Waste & Scrap      -do- 70 to 74
    (d) Loss of            -do- 68 to 69
    Stores on Charges
    (e)Others losses on
    (H)                    Amount of FOH levied (based on        Amount should agree with
    Over- absorbed FOH pre-determined          percentages) in   the summary of IE statement
                           excess of leviable FOH [ i.e.         (01 series)
                           incurred FOH (Dr. - Cr. W.O.) less
                           KOP less watt insurance charges if
    (I)                    Amount of VOH levied (based on        Amount should agree with
    Over- absorbed VOH predetermined           percentages) in   the summary of IE statement
                           excess of leviable VOH [i.e. Incurred (02 series).
                           VOH (Dr. - Cr W.O.) less KOP

           Note: - Over/under absorption both for VOH and FOH must be within ± 5%
           limit. If actual exceeds 5% limit, course of Re-levy to be taken


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                                         CREDIT ITEMS

Sl Particulars                Sources of Figure                                 Remarks
 1 Relief of Overhead Charges
   (a) Misc. Credit –

    (i)   Rent       &    Rates Amount compiled in Manufacturing                Figure should agree
    Recoverable                 A/c Statt. B. Amount should also be             with Cr. item of OH
                                booked under Cost W.O.                          Exp. A/c in) principal
                                01/00125/00                                     Ledger.
    (ii) Elec. & Water Charges Amount compiled in Manufacturing                          -do-
    recoverable                 A/c Statt. B. Amount should also be
                                booked under Cost W.O.
    (iii) Unclaimed Wages AS intimated by Fy. Management                                  -do-
    Lapsed                      Amount to be booked under W.O.
    (iv) Sale proceeds of Amount worked out by AO with the                                -do-
    Machinery                   entries of sale Reqr. Of Machinery
                                Amount recovered should be
                                compiled under Fin. Code
                                01/922/35 (deduct code).
                                Amount should also be booked
                                under 01/00151/00
    (d) Profit on sale of       Amount appeared in PSA against                            -do
    (i) Surplus Stores          Rt. Code.
    (ii) Obsolete Stores        PSA Rt code 21, 25, 119 PSA Rt.
    (iii) Waste and Scrap       Code 22
                                PSA Rt. Code 23, 24
                                Amount of profit to be booked
                                under W.O. 01/00131/00
    (g)                         Amount booked under                             Fig. Should agree
    Care & Custody of Stock     cost W.O. 01/00046/00

                                                                                With concerned Cr.
                                                                                item of OR Exp. A/c
                                                                                in Principal Ledger


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    Deptt. Stores utilized on        Sum of process and Found                   Fig. Should agree
    Indirect work orders                                                        with
                                                                                the amount posted
                                     Materials booked under'01'                 against Dr. item of
                                                                                Misc. charges A/c of
2                                    and '02' series W.Os appeared              Principal Ledger.

                                     against class of cost 22, 28


3   Work-in-progress as on 31St      Sum of WIP value worked by LAO             Fig. Should agree
    March                            for all the Cost Cards inclusive of        with the closing WIP
                                     process/Foundry WIP. Fig. Should           value shown in work-
                                     agree with the sum total of semi           in-progress A/c of
                                     Statt. Prepared by Fy and priced by        principal ledger.
4   Under absorbed fixed             Excess of leviable FOH over levied Amount should be
    charges                          amount.                            agreed with the
                                                                        summary of IE Statt.
                                                                        (01 series).
5   Under absorbed variable          Excess of leviable VOH over levied Amount should agree
    charges                          amount.                            with the summary of
                                                                        IE Statt. (02 series)


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6   Cost of Production               Sum of cost of production worked           Amount should agree
                                     out by LAO for all the articles            with sum of Cr. Item
                                     completed during the year. Figures         2 to 6 of WIP A/c
                                     should agree with total COP of all         (showing     indentor
                                     the Cost Cards. Amount                     wise      cost     of
                                     Should agree with the grand total of       production).
                                     COP shown in 10A and 10B Statt.
                                     Showing cost of outturn.
7   Cost of Rejection (KOP) Sum of cost of Avoidable Rejection                  Fig. Should agree
                            worked out for all the warrants/Cost                with the amount
                            Cards involving excess rejection                    shown in Cr. side of
                            (i.e. in excess of normal rejection                 WIP A/c or Dr. side
                            percentage)                                         of P&L A/c in
                                                                                principal ledger.

         Note - Cost of rejection (KOP) is required to be worked out by LAO on
         receipt of completed Wts. From Fy where quantity shown as rejected
         (reconciled with P.L. card) exceeds normal rejection provided in Wt./Estt.

         An idea about Principal Ledger maintained in the Branch Accounts
         Office of Ordnance Factories
         Principal Ledger is maintained out side all financial accounts by the
         concerned Accounts Officers for the purpose of preparing the consolidated
         Manufacturing Accounts viz. Production Accounts, Finished Stock
         Accounts and Capital Accounts and arriving at the cost of Production of
         articles manufactured in the factory.
         The different heads in the principal ledger are so arranged as to provide
         information required for the compilation of the consolidated Manufacturing
         Account and also for effecting reconciliations of the figures compiled in
         Cost Accounts.
         The following heads of Accounts (Total 30) are at present maintained in the
         Principal Ledger: -
         1.     Custom Duty A/c.
         2.     Stores Cash Purchase A/c.
         3.     Stores Supplied by other Factories A/c.
         4.     Transportation Charges Account.
         5      Stores A/c.


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6.     Sale of Stores (Surplus obsolete & Waste) A/c.
7.     Issue of Stores on Payment A/c.
8.     Wages A/c.
9.     Supervision Charges A/c.
10.    Misc. Charges A/c.
11.    Misc. Credit A/c.
12.    Overhead Exp. A/c.
13.    Work-in-Progress A/c.
14.    Rent, Rates, Water and Electricity charges Recoverable A/c.
15.    Payment Services A/c.
16.    Manufacture for Own Fy. Stock A/c.
17.    Services to other Fys.A/c.
18.    Services for Capital Asset A/c.
19.    Manufacture for the Army A/c.
20.    Profit and Loss A/c.
21.    Capital Assets A/c.
22.    Proforma Capital Asset A/c.
23.    Capital Assets Stock Pile A/c.
24.    Cash Ledger A/c.
25.    Preliminary Exp. A/c.
26.    Deferred Revenue Exp. A/c.
27.    O/s Asset A/c.
28.    O/s Liabilities A/c.
29.    Capital Outlay A/c.
30.    Balance A/c.
Posting into Principal Ledger are generally made month wise, For which
transactions are first need to be journalized based on the data available from
the following documents compiled monthly.
       i) Priced Store A/c (Showing For better appreciation copy of
       Issues and Receipts of PSA for 4/91 in r/o M & S. Fy Stores) and
       Journal Entries there of
        ii) Cash compilation (Showing Copy of Summary Sheet of 0002
       Receipts and Expenditure for 4/91 in r/o M & S. Fy., and compiled)
       Journal Entries prepared
       iii) Cost tabulation
       iv) Manufacturing A/c -Statement A & B.
Specimen posting of figure / data under Dr. and Cr. entries of various ledger
accounts based on the Journal entries prepared


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 In addition to the postings made based on the monthly documents, some
postings have also to be done annually in respect of transactions like
Superannuation Charges (Cost debit), Cost of free ration etc.to D.S.C. Share
of Central Administration charges both for Fy and Accounts, Cost of unpaid
telegrams, Share of Cost of Ordnance Factory News etc. Information /data
on such transactions can only be made available at the year-end.
Principal Ledger is required to be closed annually. For which balances of
each head of account (other than Balance A/c.) are struck at the year end
and transferred directly or finally through Subsidiary account(s) to the
Balance A/c. Dr. balances of Balance A/c. represent Assets while Credit
balances exhibit liabilities of the Factory as on the closing day of the year
and sum of all such Dr. entries should tally with sum of all the Cr. entries of
Balance A/c. Such agreement of totals of Dr. and Cr. side of Balance A/c.
proves the arithmetical accuracy of postings made into various heads of
accounts of Principal Ledger.

Reconciliation of Cost and Financial Accounts
Vouchers, through which financial transaction takes place, are classified in
accordance with the budget heads they pertain to and a consolidation of
such financial compilations with details are sent monthly to each Branch
Accounts Office. These transactions are journalized by Dr. or Cr. to Capital
Outlay A/c. and posted in the Principal Ledger.
On the other hand, expenditure on labour, Material and other charges
compiled to Cost of Manufacture through Cost documents like D.W. and
P.W. Cards. Demand/Return Notes, Allocation Sheets etc. are all posted in
Principal Ledger to the debit credit of the respective Subsidiary accounts
like Wages accounts, Store A/c, Supervision charges A/c. Misc. charges
A/c. etc. to be finally transferred to the Work-in-Progress A/c. and there
from to the Capital Outlay A/c.
Thus figures from both ends are finally booked to Capital outlay A/c. and
the fact that all expenditure which has appeared in financial compilation has
been incorporated in Cost Accounts is automatically verged by Capital
Outlay A/c. which balances to itself.
Computerised Wage Packages
1. In 1997 it was decided that such Accounts Office in Factory Organisation
should have own Computer center. Accounting function of the Accounts
offices would be done using those computers. Accordingly three phase
actions were taken up (i) Setting up EDP Centre at each branch Accounts


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Office (ii) In house development of three Accounting packages - Wage,
Inventory, Costing (iii) In house development of manpower in computer.
 By 1998 the computer centers were set up and software packages were
developed by the three Nodal team for implementation. The packages are at
different stages of implementation in different offices.
2.    Wage Package: - This package aimed at standardization in the
process of calculation of wage of Industrial Employees working in
Ordnance Factories within the framework of rules on the subject.
2.2 For implementation of package; the following master database are to
be created at the beginning and subsequently are to be maintained. They are
(i) IE Master       (ii) Leave Master (iii) Deduction Master (iv) Code
Master (v) Warrant Master.

2.2.1 IE Master: - This master contains personal information about each
Industrial Employee which has bearing in calculation of his entitlement.
Some field like, home state, bank name, bank A/c no. are also provided to
expand the scope of the package to audit of LTC bills; payment by Cheque
etc. The main source of creation of this master is the service book of
individual employee. In case Factory management has already created
Personal Information System in magnetic media; data from that source may
be captured in the IE Master database format. The same should be audited
100% with reference to Service book before implementation of the package.
Few cardinal fields which need special attentions are DOB (date of birth),
IE - Type (1 for on strength; 0 for out of strength) Fund-AC No (Fund
Account Number) CGEGIS.Dt (date of entry to CGEGIS), Prs-Scl-cd
(Present Scale Code). Basic-Pay, Spl-Pay, Per-Pay, DNI (Date of next
increment) Ph-handcd (Physical handicap Code), HRA-Adv (HRA
admissibility), R/A-Adm (Risk allowance admissibility)
2.2.2 Code Master (codefl.dbf) This master is created by the package
development team where every aspect like, scale, grade, trade, educational
qualification, state, town, Factory, penalty type , earning code, deduction,
penalty ground etc., have been codified. Further maintenance scope has
been left with the implementation centers to suit their local requirements.
This master is used by the program in each of its validation stages.
2.2.3 Leave Master: - This master is to capture the balance of leave by
direct data entry from the leave balance register maintained by Factory.
Subsequent maintenance of this master will be done through the package.
The initial figures entered into the master are subject to 100% audit by


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Internal Audit while audit of service book. Status of audit is also to be
2.2.4 Warrant Master: - This master is created by transfer of data from
costing package. The intention was that wage package can even run on stand
alone PC.
2.2.5 Deduction Master: - This master is designed to capture details of
advances paid to IE and subsequent recoveries thereafter. This master may
take the place of maintenance of demand register both for long term & short
term advances. The master may be created by transfer of data from Factory
management (as prior to computerization recoveries were made by Factory
Management). Correctness of the entries may be verified with reference to
Demand register maintained by Accounts Office.
2.3 The following are the transaction files created by Accounts Office
every month on the basis of source documents received as shown.
      (A) (i) Prom-dbf (ii) Penal.dbf (iii) Smp.dbf (iv) Rdtout.dbf
       (v) Fojoin.dbf
       - Factory order issued during the month.
      (B) PIC.dbf - Periodical Increment Certificate.
      (C) AttFy.dbf - Monthly Acquitance Roll.
      (D) Cardtrans.dbf - OPW / GPW Card.
      (E) Gangdtts.dbf - Gang transfer memo of Section.
      (F) Levtms.dbf - Leave Factory Order
      (G) Syatt.dbf - SARS.
2.4 Other than IPW / GPW Card details other informations are received
in Accounts office in hard copy. As such IPW / GPW Card details can be
captured by transfer of data from Factory computer but other informations
are to be captured by direct data entry.
2.5 The activity in the EDP Centre for calculation of wage may be
divided into three parts. (i) Pre-payment week activity (ii) Payment week
activity (iii) Post payment week activity
2.5.1 (a) Prepayment Week Activity:- During this period the transaction
data base needed for maintenance of Master as mentioned in A & F of para
2.3 are created and validated. Corresponding Master are updated with the
validated transaction.
2.5.2 (b) Payment Week Activity: - On the first day of the month the
changed status of personal Information System in comparison to last
month‟s status is generated and handed over to manual group for checking


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and authentication. Once this is audited the entitlement audit is complete
and processing of rate of each element of wage is started. During this period
transaction details as mentioned in B.C.D.E.G of para 2.3 are captured,
validated and processed.
Outputs generated during this period are profit statement. Profit summary,
pay slip, pay bill, earning summary, recovery summary

2.5.3 (c) Post Payment Week Activity: - During this week transaction
details for SARS & Cost PM are captured, validated and processed.
Different master like, Demand Master, History Master are updated during
this period. Outputs generated during this period are recovery schedule,
supplementary payment bills (not related to current wage period), and
generation of different MIS.
2.6 Validation Checks are provided in two different stages. In the data entry
screen validation checks are provided for each field and in case of any
invalid entry the cursor is not allowed to proceed with out proper validation;
the reason for invalidation are also displayed in the screen. Batch validation
programs are also provided in the package to validate data, which is
captured by transfer of data from other computer.
2.6.1 Nature of validations is of two types (i) by exact matching (ii) by
range matching. When the exact valid value of any field can be predicated
as per manual the nature of validation checks provided is exact matching.
As for example in the data entry screen of PIC, the values in each field can
be exactly predicted hence validated with the corresponding value in the IE
Master. Same is the case of validation of PW Card with warrant. There are
cases where the exact value is not known like, OT hour, OTB hour, NSA
hour, NSB hours etc. In those cases a logical range check has been
provided. The purpose of the range check in the validation is to avoid skip
of key during data entry. In those cases the accuracy in the input can only be
ensured by 100% auditing of check List. The checklist of Factory orders,
attendance, supplementary attendance, cards, and deduction will fall under
this category. The package does not allow to process record unless the file is
made free from error.
2.7 The main objectives of the package are (i) to be make accurate
payment is IEs with least possible time (ii) to furnish necessary management
information regarding payment (iii) to create necessary database of payment
for further (iv) to standardize the whole work.


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2.8 After implementation of the package the time for processing of data
has been reduced and in many factories the data of date of payment to IEs
have been advanced. Many non standard practices have been removed.
After implementation of the package the Accounts Offices now have
necessary tools to control the amount of requisition to GMs.

2.9 In the manual system many control audit was not feasible because of
shortage of manpower. As machine has now taken care of the major strain
of calculation the available manpower can now be directed towards
management audit i.e. necessity audit or adequacy audit. As the package is
now standardized necessary system audit package can be developed
2.10.1 DO‟s:-
      i) after creation of master the same to be 100% audited with reference
      to authenticated hard copy e.g. Service Book in case of IE Master.
      ii) After creation of transaction file the same to be validated and
      checklist printed and reconciled.
      iii) EDP should process data in transaction file only after the same is
      authenticated as correct Audit Section.
      iv) Change PIS output to be printed each month and 100°6 audited
      with reference to Factory Orders.
      v) Before authorization of payment it is to be ensured that hours
      shown in the earning summary tallies with the checklist total as
      amended; change pay output exhibits the same information as is
      generated by change PIS.
2.10.2 Don‟ts:
      i)    Correction in master by directly using it.
      ii)   Make shortcut by avoiding validation loops to save time.
Limitation: - Wage package so developed has the following
Shortcomings - No provision has been made for calculation of productivity
link bonus.
No provision has been made for fixation of pay and calculation of arrear.
No provision has been made for calculation of pay on more than one rate of
pay or more than one entitlement which takes place due to promotion in the
middle of month or occupation / vacation of quarter in the middle of the


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Inventory Package
The package was developed with an aim to provide reliable, accurate and
timely information on material available in the factory. This standardized
package will become the most effective tool for material management and
will be the guiding tool for Finance representative in the TPC.
The Inventory Package is divided into number of module (a) Supply Order
module (b) Inter Factory Demand module ( c) Priced store ledger module
(d) Assets and Liabilities module. The modules are not totally independent.
For implementation of the package, the following master databases are to be
created at the beginning and are to be subsequently maintained. They are (1)
Itemmast.dbf ( Stock item master file ) (2) SO Master.dbf ( Supply Order
master ) (3) Vendmast.dbf ( Vendor Master ) (4) SDMaster.dbf ( Security
deposit master) (5) LiabMast.dbf (Outstanding liability file for Store
transactions ) (6) Assetmas.dbf ( Outstanding Store Asset master) (7) IFD
Mast.dbf ( Inter Factory Demand Master (8) IFDRate.dbf ( IFD rate master)
(9) Codemast.dbf ( Details Codes).
Itemmast.dbf:- This master is maintained item code wise. All informations
available in the priced store cum provisioning ledger are also available here
except the details of transactions. This master on a cut off date to be created
by transfer of data from Factory computer to avoid duplicate data entry. The
balances, average ledger rates, last transaction data. Bin page line numbers
are to 100 % audited with reference to manually maintained PSL before
actual switch over.
In the manual system MCO division of the factory were making the initial
entries in the PSL sheet before entering into the folder. In the present set up
Factory EDP is opening new record in the Item master on the basis of
information furnished by MCO division. As no print out of such
transactions are available in Accounts Office; the only way to maintain the
master is to collect data from the Factory on the new folios opened during a
month and append the same in the Master.
S.O.Master.dbf:- This master is maintained for capturing supply order
details. The master may be initially created by transfer of data from factory
master. The same to be 100% audited with reference to supply orders
maintained by Accounts Office.
For subsequent maintenance of the master the new S.O.details may be
captured from Factory database and after necessary audit validation with
reference to hard copy of SO received in Accounts office may be appended


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in the master. Any revision in the existing S.O. may, however, be carried
out by using the screen of the package.
Vendmast.dbf:- This master is maintained to codify information about the
vendors. This master may be created by transfer of data from factory
management. Its subsequent maintenance may be carried out by using
screen of the package.
SDMaster.dbf:- This master contains all no information about the scrutiny
deposits held by the Accounts Office. The master can be created by data
entry from security deposit register maintained by Accounts Office.
Subsequent maintenance can also be done by direct data entry.
Liabmast.dbf:- This master contains details of outstanding liabilities.
Master can be created by data entry from the Liability register maintained
by Accounts Office. Subsequent maintenance however can be done using
Assetmas.dbf:- This master contains details of outstanding assets. The
Master can be created by data entry from the Asset register maintained
manually. Every month the details of bills passed are to capture.
IFDmast.dbf:- This master contains details of the IFDs placed by the
Factory on other factories. This master can be created by data entry from the
IFD register maintenance manually.
IFDrate.dbf:- This master contains details of rates of IFD items on the
basis of which receipt vouchers of the factory are to be priced. This master
is created on the basis of OFB rate list.
The transaction files IFDRTVr.dbf, Rtvrfl.dbf, files IFDRTVr.dbf,
Rlvrfl.dbf. Ofrfl.dbf, dnrnfl.dbf, issvrfl.dbf, nominal dbf, are created every
month by transfer of data from Fy. Management. The data so received are to
be validated by using validation programs in the module. The outputs are
subject to 100% audit with reference to hard copy of documents before
processing in the package.
The receipt vouchers when received in the EDP Section are validated and
priced using S.O. module (IFD module for items of Inter Factory demand).
Demand notes and issue vouchers are validated and priced using priced
store ledger module. At the end of the month PSL and PSA are generated
with various important management reports dike Slow moving Non-moving
report, obsolete scrap waste report, un-priced receipt voucher listing report,
store in transit report.


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Bills of contractors as and when passed are also entered in the Asset master
and by using Asset & Liability linking module the outstanding assets and
liabilities report, balance sheet etc., are generated.
Nature of validation provided are validation with exact clause in Item Code,
Unit of Quantity, PSA Code, S.O.Number, SO date, SO serial number, IFD
number, IFD date, Bin quality BPLN.
The package allows to process data from a file containing error records only
the error results are not processed.
The main objective of the package is to correct accounting of stores with
minimum lead-time and standardize the principal of accounting.
After implementation of the package the lead-time for preparation of PSA
has been reduced Branch Accounts Offices are in a better position to render
management information.
Still there is a lead-time of 15 to 45 days in reflection of documents in the
Accounts. Factory Management is very critical on this issue. The proposal
for updation of PSL once in a week is under consideration. This will enable
to reduce the lead-time. Linking of assets with liabilities can not be 100°x6
implemented as (i) details of very old outstanding assets and liabilities are
not available (ii) MIS number is not available in case of advance payment
(iii) In case of Spl. Payment Adjustment bills are not prepared by the
Factory Management.


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The main Ordnance Depots functioning presently are:
Central Ordnance Depots                           Ordnance Depots
COD Delhi Cantt                                   OD Shakurbasti
COD Agra                                          OD Allahabad
COD Cheokki                                       OD Talegaon
COD Kanpur                                        OD Calcutta
COD Malad, Bombay                                 OD Avadi
COD Dehu Road
COD Jabalpur
In addition, FODG and their detachments are also functioning in some
Functions of the Army Ordnance Corps include provision of major and
minor equipment and their spare parts ammunition general stores and
clothing to meet the requirements of the Army. They are alto responsible for
provisioning common user items required by other Services and Para
Military Forces.
       Class A-      Includes all major and minor                 equipments     and
       Class B-      Items of general stores and clothing
Taking provisioning action in respect of Class 'A' Stores is the responsibility
of Army HQrs. In respect of Class 'B‟' Stores, responsibility for
provisioning is that of the Central Ordnance Depots, Deputy Director
General of Ordnance Services (GS&C), Army HQrs. Standing Directive of
Provision Review of Class-B Stores arc issued by DGOS.


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5.  BASIS FOR PROVISIONING, TYPES OF                                  PROVISION
The Provisioning Reviews carried out by the Depots and at Army HQrs
form the basis for initiating provisioning action in respect of the various
items of Ordnance Stores
Periodic Review: This review is carried out in respect of all items, as per
specified periodicity. The review will be throughout the review period to
cover all the items, on the basis of a fixed Programme drawn.
Intermediate Review: This re view may become necessary due to Initiation
of review action slip and prompted by dues out audit. Intermediate review is
carried out before the date of next periodic review.
Special Review: This review takes place whenever additional liabilities
arise or to meet any special commitment or circumstances.
The basic purpose of these provision reviews is:-
       (a)    work out accurate maintenance figures based on experience and
              other relevant factors.
       (b)    asses the detailed liabilities for the maintenance report
       (c)    take procurement action to cover the deficiencies revealed on
              provision review; and
       (d)    assess     surpluses      and      initiate  action    for their
Ordnance Depots are primarily responsible for storage and supply of
ordnance stores to the Services and issues on hire, loan and payment.
The major activities of the Ordnance Depots to achieve the above maintain
objective include provision of Class „B‟ storage, receipt issue of storage
preservation, accounting, stock taking of all items of Ordnance Stores.
Their activities also include repair and modification to certain types of
equipment. These Depots have several sub-depots headed by Deputy
Comdt. Sr. Provision Officers and Administrative Officers. The various
activities mentioned above are performed by those Sub-Depots
With the growing emphasis on the need for re-orienting the role and
approach to internal audit to cover both the traditional regulatory audit and
efficiency audit, there is need for each functionary of the audit team to
realize and achieve, to the maximum possible extent, the slightly revised


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objective/charter. This would necessitate the LAO and all his staff members
to be fully trained and equipped with 'the requisite know1edge and expertise
so that they are able to meet the objective fully. The essential pro-requisites
in such a situation are inter-alia, as follows: -
       (a) a complete and thorough knowledge of the organizational set
       up of the Depot, the chain of responsibility, the role and the
       responsibilities assigned to the depot, the types of stores equipment
       etc. stored, authorized to be hold and handled by the depot, the
       various sub-depots in the depot and their functions, location of the
       various store holding sections, the manpower strength of the depot
       and its sub-division, the total budget allocated and handled by .the
       depot under the various important heads, the trend of procurement
       and movement/turnover of the items in the depot etc. etc.
       (b) The various main items of resources like land, buildings,
       equipment, vehicles etc. authorized and held by the depot for the
       operation and, maintenance of the depot and manner and the extent to
       which these are utilized.
       (c) A thorough knowledge of the various orders and instruction
       issued by G.O.I. and Army Headquarters from time to time affecting
       the functioning of the depot, its role, the equipment/stores      held
       and handled by the depot, changes in the manpower strength of the
       Depot etc… etc…
       (d) A through knowledge of the various audit system and
       procedures affecting the depot and its working and a very clear
       understanding of rational and purpose behind these systems and
       procedure as also the objectives of carrying out audit.
       (e) A through knowledge           of various reports and returns and
       other accounting documents which a required         to be submitted by
       the depot to the LAO together with a clear Perception of the purpose
       of each one of these reports/documents and the importance of the
       significance of the same
       (f)    A through knowledge of the various systems and Procedure
       prescribed in the various DGOS technical interactions relating to
       provisioning review, procurement, stocking, accounting, issues,
       disposal of a unserviceable stock, obsolete/surplus store, stock
       verification and regularization of discrepancies etc. in addition to the
       various provisions in this regard as prescribed in the “Store
       accounting Instructions” etc.


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The detailed procedures for accounting of the various items of stores in the
depot are prescribed in the “Store accounting Instructions” and other orders
issued from time to time. Similar detailed instructions and procedure for
carrying out Local Audit in the depots are content in the relevant of the
Army Local Audit Manual Part-I, Vol: I, II, III and other audit instructions
issued by the CGDA from time to time. While all these procedures,
Instructions will be complete with during local audit, in the context of the
enlarging role of Internal Audit to make it more effective and responsive to
the changing requirements, it may not be adequate to restrict the local audit
literally to receive liking and issue audit alone. It is necessary to go beyond
this perimeter to identify and establish further linkages with overall
provisioning, stocking, distribution etc. Only such exercise would enable
internal audit to have better appreciation and come forth with significant and
workable suggestion in the form of financial advice, which may lead to
substantial economy, and savings, which are being anxiously looked
forward to by Services.
In this background the following further guidelines are prescribed for useful
nothing and complaints by all concerned while carrying out their local audit
functions in the ordnance depots. As mentioned above these guidelines are
supplement to these already contained in the “Store Accounting
Instructions”. Local Audit Manuals other instructions are not in
suppressions thereof.
It should be ensured that there is no duplication in the maintenance of
Account cards for each item. In other words, only one account card should
be maintained for each item, so that the provisioning of stores based on
these cards is realistic and does not lead to over provisioning/under
It should be seen from that the stores received in the depot from the
supplier/another depot etc are taken on charge promptly and reflected in the
account card without delay. Any cases coming to notice where undue delay
has occurred in taking stores on charge should be enquired into especially
because in such event there is changes of ever provisioning if the
provisioning reviews of that item had been completed in the meanwhile
banned on the stock position as per account cards, which are not updated.


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It should be scrupulously ensured that copy No.4 & 5 of all issue vouchers
floated by depots are received promptly and there is no case of large number
of vouchers yet to be received. If such a situation exits, the matter should
receive immediate attention and remedial action taken with depot.
After ensuring that all vouchers have been received for the month and after
proper reconciliation, these should be scheduled to the concerned LAOs‟.
Scheduling should be current at all times.
Vouchers relating to Payment Issues should attract special attention and
these vouchers along with other requisite documents should be forwarded to
the Main Office of the CDA for raising necessary claims for realization of
the dues from other departments/ parties etc. All such payments issues cases
should be maintained at the level of the LAO.
In respect of the issues to units in the forward areas who are on war system
of accounting and where no audit is completed, it should be scrupulously
ensured that copy No. 2 of the issue voucher has been received back from
the consignee unit duly receipted.


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REGISTERED                                        NO:
                                                  OFFICE OF THE


SUBJECT: Loss statement bearing No. ---------------                     Dated-------
         for Rs. ------ in respect of--------

REFERENCE: ----------

      The subject Loss statement is forwarded herewith in triplicate/
quadruplicate duly scrutinized with our following audit remarks.

2.     The facts of the case are explained in the Statement of case, which are
2.     The facts of the case explained in the Statement of case have been
       perused and we have the following comments to supplement.
3.     The Loss has been categorized as due to/not due theft/ fraud/ neglect.
3.     The Loss has been categorized as not due to theft/fraud/neglect.
       However the same is not agreed to in audit and the loss is viewed as
       attributable to theft/fraud/gross neglect for the following reasons:
4.     In terms of ----------------- with reference to the value of loss and the
       above categorization the sanction of ------------if obtained would be in
       order to regularize the loss as cash loss/store loss, due to/not due to
4.     As the value exceeds the powers prescribed for lower authorities in
       Schedule to Appendix I to FR Pt. I Vol. II, Sanction of Govt. of India
       if obtained would be in order to regularize the loss as Cash Loss/Store
       Loss, due to/Not due to theft/fraud/gross neglect.
5.     Before regularizing the loss the following points may please be taken
       care of and a feedback furnished to this office for appreciation by


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6.     An ink signed copy of the Sanctioned Loss statement may please be
       forwarded to this office immediately after issue of sanction by the
       CFA for our reports and records.

7.     The time frame prescribed by MOD vide their No. ID NO.17
       (1)/32/SN 68/D (W-II) DT. 26/6/91/ARMY HQRS. E.-IN-C‟S
       BRANCH NO.A/00202 /68/ E2 (WPC) DT.11/9 / 91 for various
       stages in regularization of loss may be kept in mind before

                                           ACDA/DCDA (FA)/
                                           LOCALAUDIT OFFICER/
                                           REGIONAL AUDIT OFFICER



                                           SR.ACCOUNTSOFFICER (FA)/
                                           LOCAL AUDIT OFFICER/
                                           REGIONAL AUDIT OFFICER


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LAOs/RAOs would prescrutinise loss statements and render final Audit
report to the CFAs (Including departmental authorities at HQ Command and
below) in respect of all losses up to the financial powers of Brigade/ Sub-
area Commander specified for the units/formations concerned to which the
loss pertains.
All Loss statements prepared by MES authorities and which are falling
within the financial powers of MES Departmental authorities viz.,
GE/CWE/CE as per items 8(a), (b), (c) of Table `B' of RMES will be
scrutinized by the LAOs/RAOs and audit report rendered by them to the
appropriate CFA.
All statements other than those indicated above are required to be forwarded
to CDA through LAO/RAO for their scrutiny and rendition of final audit
report to the appropriate CFA.



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(i)      The amount to be shown on loss statements shall be the value of the
         stores lost. In case of damaged or stores in changed condition, the
         estimate / actual repairs shall normally be reckoned.
(ii)     In the case of AOC stores for change in condition, the following
         formula shall be applied
         priced vocabulary rate where there would be final
         destruction/disposal of the item 90% in other cases.
         FROM SERVICEABLE TO REPAIRABLE: Estimated cost of the
         repairs (which will not normally be resorted when the cost exceeds
         50% of the priced vocabulary list).
         FROM REPAIRABLE TO UNSERVICEABLE: 50% if the stores
         are to be destroyed; otherwise 40%.
(iii)    In the case of damaged property the assessed cost of damage shall be
         determine by the CFA.

(iv)     MT Vehicles involved in accident: -The cost of making good
         the damage as assessed by the Workshop officer and as confirmed by
         the Board/Court convened to investigate the accident shall be cost..
         Where down gradation of the vehicle is involved, the penal recoveries
         will be taken in to account for determining the net loss, which would
         actually be written off. As exception to the general rule that CFA is to
         be determined with reference to gross loss to be arrived, after taking
         to account penal deductions/recoveries, in the above case of MT
         accidents, the net value will determine the CFA,. The Loss statement
         will be priced as per, Appendix `A' to A.O 37/76. In respect of all
         losses (except those due to MT accidents referred to above), the net
         value of loss is to be determined after deducting recovery, if any from
         an individual whether such recovery is in the nature of penal
         deduction or otherwise and it will be written off by the competent
         financial authority to be determined with reference to the gross loss.
(v)      Loss discovered at one check during periodical stock taking/ loss due
         to reconditioning or reclassification by Inspectors of stores during one
         examination - treated as one transaction. Each such transaction will be
         dealt with on a separate loss statement. In supply and store depots


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       having continuous stock taking losses of individual items of
       dissimilar type discovered at stocktaking, shall be treated as separate
       transactions for the above purpose.
(vi)   In the case of Loss of stores in Supply/Store Depots etc., due to
       deterioration in storage the loss statement requiring write off action at
       Command Hqrs and above will be routed to Command Hqrs through
       the Scientific Officer, Inter Service Stores Preservation Organization,
       for scrutiny and comments before putting up the statements requiring
       write off action below command level.

1.    Delay report in triplicate date wise up to the date of submission to
Audit, indicating the various stages through which the loss statement has
2.     Statement of Case prepared in a narrative form bringing out full facts
of the case must conform to A.O 315/73 AS AMENDED BY A.O 416/74.
3.    Copies of court of inquiry proceedings (or orders of the CFA
dispensing with the court of inquiry as the case may be) including the
4.    Recommendations of all intermediary authorities up to the level of the
penultimate CFA must be obtained and enclosed as audit report will be
rendered only to the ultimate CFA. The recommendations should clearly
bring out the categorization of loss as due to or not due to theft, fraud or
neglect and also the CFA who would write off the loss.
NOTE: Loss Statements for losses due to theft, fraud or neglect and those
due to outbreak of fire will be submitted through staff channels to Hqrs
Southern Command, accompanied by proceedings of the Court of Inquiry
convened by Staff. Immediate Formation commanders will endorse their
recommendations regarding write off of loss prior to submitting the loss
statement to Hqrs Southern Command. Loss statements will be scrutinized
by the CDA immediately before they are submitted to the appropriate CFA
for regularization. After passing through all the normal channels & with the
remarks/recommendations of the intermediate formation commanders, the
loss statement will routed through the CDA for his comments and
transmission to the CFA. (PARA 6&7 OF SCO 41 QMG'S BRANCH)


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5.   Copy of the follow up instructions / orders on corrective/ remedial
measures taken must be attached.
 6.    Police investigation report in case civil police was involved in the
investigation of loss.
7     In case the loss is due to rejection of railway claim, a summary of
action taken to get the claim accepted by the Railway and also the details of
RR and the date on which the railway claim was preferred. In case the claim
has been rejected being "Time Barred", responsibility for the delay must be
fixed by a staff court of inquiry. Copies of related correspondence must be
attached with the Loss statement and suitably incorporated in the Statement
8.    In the case of MES Losses, check list as laid down in AHQ E-in-C'S
Branch letter No.A/03900/ESP-I(LOSSES/FE0 DT. 28/1/91 shall be placed
on the left hand inner side of the loss statement duly signed by the OC/GE.
9     Loss statements for irrecoverable amount of rent and allied charges
from private parties must indicate as to how the amount against security
deposit lodged by them has been adjusted. This aspect shall invariably be
incorporated in the Statement of Case.
10   Details of penal recoveries wherever involved and recoveries
completed should be enclosed and suitably incorporated in the SOC.
11. In respect of damages/losses due to natural calamities such as storm,
earthquake etc., a certificate to the effect that all losses in respect of all the
buildings etc, in the station on account of the same cause have been
included in the loss statement and no other statement has been I will be
prepared should be endorsed by the GE on all the copies of the Loss
statement. The loss statement should also be accompanied by
Meteorological report from the nearest meteorological office.
12. In case of transit loss, copies of correspondence exchanged between the
consignor and the consignee and also the carrying agency are to be enclosed
to have proper appreciation of the case in audit.
13. In case of ASC articles condemned in Supply Depots, as unfit for issue
to troops or animals, on account of deterioration, destruction certificate from
the concerned authority is to be attached (PARA 129 (h) OF ASC


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14. The authorities concerned should explain briefly the facts of the case
and the reasons why a particular action has been taken. Where the
disciplinary action taken is considered adequate this should be stated. If in
any particular case it has not been possible to take adequate action, the
reasons why this has not been possible should be indicated. In other words,
sufficient facts should be given to satisfy audit that whatever action was
reasonable or possible has been taken. It is not enough as is sometimes
done, to reply that the administrative authorities have followed legal advice,
because that can only lead to audit taking for further details and
(APPENDIX `A' TO A.O 539157)
Where audit authorities wish to satisfy themselves about the adequacy of
disciplinary action in cases of loss they would ask for a factual note on the
lines indicated above. But if in any particular case they consider it essential
to see the actual court martial or court of enquiry proceedings, the senior
audit officer of the command or Service concerned would make a request to
that effect. The proceedings would then be sent to him personally.
(APPENDIX `B' FO A.O 539157)


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While trying to use this by copying this to another file and editing to your
needs, please take note of the following:

      (i)Item No1 to 11 and item 27 to 30 are common points, which
may be applicable for all types of loss statements.
      (ii) Item No 12 to18 are peculiar to MT accidents.
      (iii)Item No19 to 21 are peculiar to Transit Losses.
      (iv)Item No 22to 26 are peculiar to damages/Losses on account of
      Natural Calamities like storm, earthquake etc.

The items included are only a selective list/illustrative list. This may be
modified/amended/added/deleted according to needs of the situation.


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REGISTERED                                               NO:
                                                         OFFICE OF THE
SUBJECT: --------
REFERENCE: ---------
      The subject Loss statement bearing No. ---------------------------------
dated ------------for Rs. ------ received vide your letter cited above is
returned herewith, with the following remarks.
       1.     The Statement of case is not prepared in accordance with Para
              2 of A.0 315/73.
       2.     The remedial measures taken to prevent recurrence of similar
              losses in future have not been brought out.
       3.     The delay report showing the progressive stages of the loss
              statement from the date of occurrence to the date of submission
              to this office has not been enclosed/updated.
       4.     The court of inquiry proceedings including the Original have
              not been enclosed to the loss statement.
       5.     The reasons for not holding/delay in holding the court of
              inquiry may be clarified with supporting documents with
              reference to A.0 51/81.
              (ii)The circumstances under which the Court of Inquiry could
              not be held have not been brought out in the Statement of Case.
       6.     The gross loss of Rs.       in this case is viewed as due to /not
              due to theft/fraud/neglect.
       7.     In terms of sanction of would be required to regularize the
              loss. However as seen from the documents enclosed, sanction
              of lower CFA has been sought for.
       8.     The loss statement may be routed through staff channels and
              remarks/recommendations of all intermediary commanders up
              to the level of………may please be obtained and enclosed to
              the loss statements along with the original.
       9.     The loss statement is to be priced in terms of A.0 37/76.
       10.    Loss Statement is to be enfaced indicating whether the loss is
              due to or not due to theft, fraud or neglect.
       11.    The SOC and loss statement has been submitted without
              getting the pricing checked by LAO/CDA/AAO (GE).


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       12.    The documents may be arranged in separate folders duly
              marked `Original', `duplicate' ` triplicate' etc. All original
              documents are to be placed in the original folder and attested
              copies are to be placed in other folders.
       13.    Technical Inspection Report, Accident Report and the
              Statement showing the cost of damage and assessed cost of
              repairs in respect of the MT vehicle involved in the accident
              duly signed by the Competent Technical authorities has not
              been enclosed in original.
       14.    A copy of the Part II order publishing the disciplinary action
              may please be enclosed.
       15.    Please state whether any damage to civil property or loss of
              civilian life has occurred due to the accident.
       16.    Please state whether any suit has been filed to recover the cost
              of damage from the owner of the civil truck in terms of SAO
              12/s/65. If so the present position of the same may please be
       17.    The TE No. and month in which the TR was adjusted may be
              ascertained and intimated.
       18.    Please confirm that there was no damage to the fuel tank in the
              accident. The cost of fuel lost is to be incorporated in the loss
       19.    The original book value of the vehicle has not been indicated in
              the loss statement.
       20.    Attested copies of correspondence relating to the loss
              exchanged between the consignor/consignee/Railways may be
              enclosed to have proper appreciation of the case.
       21.    Please state whether a railway claim was preferred in terms A.0
              378/73. If so please confirm whether the railway claim has
              been adjusted and the details of the same may please be
              intimated, inter-alia citing reference to this office
              communicating if any.
       22.    In terms of note (iii) under Para 105 of RAOS since the seals of
              the wagon were intact the deficiencies in stores detected on
              termination of transit can be attributable only due to neglect on
              the part of the consignor or consignee. As such the loss is to be
              categorized as Loss due to neglect.
       23.    All the buildings in a station affected by are to be consolidated
              for preparation of the loss statement. Hence a statement from
              the GE may please be obtained stating that all the buildings


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              affected by have been surveyed and included in the loss
       24.   Report from the meteorological center indicating the weather
              details have not been enclosed in original.
       25.    The statement showing the cost of damages and assessed cost
              of repairs and also assessed cost of retrieved materials has not
              been enclosed duly signed by the GE and verified by the
       26.    The cost of retrieved materials is to be deducted from the gross
              loss to arrive at net amount of loss requiring regularization as
              per Para 597 RMES. The loss statement may please be priced
       27.    If no material could be retrieved a certificate to this effect may
              please be obtained from the GE and enclosed with the Loss
       28.    The Loss Statement is treated as due to theft/fraud/gross
              neglect for the following reasons: -
       29.    The following documents may please be enclosed while
              resubmitting the loss statement.
       30.     Please clarify the following points for appreciation in audit.
       31.    While resubmitting the loss statement the time limits for
              regularization of loss prescribed in MOD ID No.17 (1)/32/SN
              68/D (W-II) DT. 26/6/91 /Army HQRs. E-in.-C's Branch No.
              A/00202/68/E2 (WPC) DT. 11/9/91.
                                       LOCAL AUDIT OFFICER/
                                       REGIONALAUDIT OFFICER
                                    SENIOR ACCOUNTS OFFICER
                                    (FA)/LOCAL AUDIT OFFICER/
                                    REGIONAL AUDIT OFFICE


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POINTS TO BE KEPT IN                            MIND      WHILE        DECIDING
There are two types of categorization namely:
       (i)     categorizing the loss as Cash Loss or Store Loss and
       (ii)    categorizing the Loss as due to or not due to theft, fraud or
               gross neglect.
While categorizing the loss as Cash or Store Loss, one cannot be guided
merely by common sense or probabilities as substitution where orders
clearly specify the type of categorization required. For example in the case
of imported Steel, where the supplier refuses to accept the responsibility for
transit loss the loss will be categorized as Cash Loss in terms of Para
1127(b) of RAI, even though one may feel logical to categorize the same as
Store Loss.
The categorization of Loss i.e. due to or not due to theft fraud or neglect will
be carefully analyzed. The following principles are to be borne in mind
while determining the categorization in audit.
(a) The views of audit should be independent and need not necessarily be
influenced      by      the     recommendations         of  Intermediary
authorities/Board's/Court of Inquiry's opinion or findings. However the
disagreement must be substantiated in the audit report.
(b) The absence/transfer out/retirement of persons found responsible for
the loss cannot determine the categorization of loss. The fact that some of
the officers who were guilty of fraud or irregularities have been demobilized
or have retired and have thus escaped punishment should not be made a
justification for absolving others who are guilty and who still remain in
(c) The categorization does not depend on the fixing of responsibility of
loss. It would depend solely on the facts and circumstances of the case,
which have to be studied before rendering the audit report, and basis of
categorization where the views of executives are not agreed to must be
brought out in the audit report.
(d) In the case of transit losses of Ordnance Depot, while rendering audit
report, note (iii) to Para 145 of RAOs which stipulates that when the goods
are dispatched by the consignor through clear RR and the seals of the wagon
are found intact any discrepancy between the quantities dispatched by the
Consignor and the those received by the Consignee must be categorized as


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                    ORIENTATION COURSE FOR AAO / SO (A)

Due to neglect either on the part of consignor or consignee, will be kept in
mind. There are no provisions in the Rules or Regulations prescribing the
categorization of loss in such cases. The Rules only stipulate that the
Consignee will initiate the regularization in such cases. Therefore it may not
be tenable to accept the contention that the Consignors have not accepted
the discrepancy or that the responsibility for the loss could not be fixed and
consequently the loss has to be categorized as loss not due to neglect.
Categorization of loss cannot be taken as conditional to identifying or fixing
(e) The abstention from or delay, if any in taking appropriate action
before or after the loss must be carefully examined and it must be analyzed
and established as 0 whether or not such abstention or delay resulted in or
contributed to the loss. The categorization of loss would be determined
accordingly. (EX Delay in preferring claims against the Railways leading to
non-acceptance of claim; belated action on increase in rates of ASC items
resulting in under recovery from customers.)
(f)   It is also worth examining in audit as to whether in respect of similar
losses in the past, remedial measures were suggested and have not been
acted upon by the Executives thereby leaving opportunity for such losses to
occur again. Such considerations can also influence the nature of


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                        INTERNAL AUDIT REPORT
The function of audit is not only to a measure of financial performance of
Defence and allied services to whom DAD providing audit cover, but it is
also seen as an indication of Internal Audit efforts. It is therefore necessary
to bring to the notice of the Top Management about all incidence cones in
the entire field of Defence. Expenditure or selected fields, where
extravagance is more likely to occur, should he pointed out which may bring
economy/financial savings to the stage. Mis-appropriation of Govt.
provision should be detected and pointed out at the earliest.
This report should contain items of importance & significance, which has
come to the notice during the hall year, which merits attention of the highest
echelons of Min of Defence & Service Headquarters. Report should contain
items relating to economy suggestions such as cases relating to potential
reduction in expenditure as a result of IFA's angle in the proscribed format.
Reporting of very important cases must be very clear, vivid, lucid and final
as a one time measure and must bear assent of executive authorities for
inclusion in the IAR.
While preparing write up on the irregularities to proposal for inclusion in
the IAR, following aspects should be kept in view: -
       (a)    The proposals are supported by details viz voucher, amount
              involved and copy to relevant communications exchanged.
       (b)    The issue raised is quite significant.
       (c)    The issue raised has been accepted in writing up by the
              executive authorities and comment of DAD offices in the
              assessment of irregularities etc.
       (d)    All outstanding cases of IAR should be reviewed and their
              replies are to be obtained from the concerned units are
              submitted to the CDA.
Few cases studies as example are enclosed for examination of the cases of
nature extended to cover entire fields of Defence expenditure or selected
It is rendered Half-yearly i. e. March and September (HYE)

Some specific points on which proper attention and case should be devoted
for detection of serious and important audit objections, are mentioned


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       (1)    Hooking of expenditure in excess of allotment.
       (2)    Splitting up of sanctions as to bring it which in the powers of
              the authority.
       (3)    Holding of stores in excess of its authorization.
       (4)    Costing errors.
       (5)    Non-verification of stocks, monthly, quarterly, Half-yearly and
       (6)    Stores charged off from ledgers not tally with the issue
       (7)    Non-credit of stores
       (8)    Non-maintenance / production of auditable documents.
These reports will he rendered half yearly to the CODA by the CDA who in
tern transmit the same to the Defence Secretary.


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Sl    Name of       Brief Particulars of objections          Monetary            How/When
N      Unit                                                   Value               detected
1         2                    3                  4                                   5
     Garrison      INSTRUCTION              Rs.1550915/-                     Detected during
     Engineer(I)   EXPENDITURE DUE TO Position as on                         Internal Audit of
     Factories     PAYMENT OF PAY & 1/03 to 8/05                             store
     Ishapore      ALLOWANCES       TO    8                                  accounts of GE
                   (EIGHT) IDLE MT/DRIVERS                                   Ichapore      (Now
                   WEF 1/2003 TO 12/2003 AS                                  GE(I)           Fys
                   PER           ENCLOSED                                    Ichapore for the
                   ANNEXURE „A‟                                              period from 10/02
                                                                             to    03/03     and
                      Pay and allowances of 11                               placed (under Pt-II
                   (Eleven) MT/Driver is being                               objection) item no
                   paid wef 01/2003 as against                               29 under our letter
                   actual holding of 3 (Three)                               no:
                   vehicle. This has resulted in                             LAO/BKP/Audit/
                   huge infractions expenditure                              GE(I) ISH dated
                   due to payment of 8 (Eight) idle                          10/02 to 03/03
                   MT/Driver wef 1/03 to 8/05                                dated 14.08.03

                     GE Ishapore (Now GE (1)
                   FY Ishapore )is authorized for
                   10 (Ten) vehicle (other than
                   Motor Cycle), out of which 6
                   (Six) vehicles were discarded
                   under CWE(P) Kolkata letter
                   No. 4035/B00/ E4 dt 21/1/03
                   and 1 (One) vehicles is attached
                   to GE Barrackpore since
                   11/2001. Only 03 (Three)
                   vehicle remain with the


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                         Ledger No UA/BKP/108 P/ 124 to 131

Ser No    Transfer vr. No. Quantity                   Transfer
          & date           cement                     From to
  (a)     05/TV/86/BR      640 Bags                   Maint. Job no. KSA/SPEC/R-23 02-
          dt.21.03.03                                 service 03(1/463/01) minor work
  (b)            -do-      550 Bags                   -do-     Job no. KSA/BKP/LB/06 of 02-
                                                               03 Major work (1/902/36)
  (C )            -do-          660 Bags              -do-     Job no. KSA/BKP/LB/09 of 02-
                                                               03 Major work (1/902/36)
  (d)     05/TV/87/BR           2006 Bags             -do-     Jobno.KSA/BKP/SPEC/R11
          dt 22.03.03                                          02-03 (1/463/01) minor work
  (e)     05/TV/89/BR           256 Bags              -do-     Job no. CAL/NOIC/Rev/02
          dt 31.03.03                                          minor works 1/651/02
  (f)     05/TV/90/BR           57 Bags               -do-     Jobno.BA/BKP/Min/works/05
          dt 31.03.03                                          of 02-03 minor work (1/452/00)
  (g)            -do-           76 Bags               -do-     JobNoBA/BKP/Min/works/04
                                                               of 02-03 minor work (1/452/00)
  (h)     05/TV/92/BR           185 Bags              -do-     Job no.BA/BKP/min/works/12
          dt 31.03.02                                          of02-03      Minor      works
                         Total 4430 Bags


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Ser   Name of       Brief particulars of objection           Monetar How and when                 Action
No.   Unit                                                   y Value detected                     taken
1.    GE         IRREGULAR BALANCING OF                               The irregularity is         Reply is
      Barrackp           BUDGET BY GE                                 detected during             awaited
      ore      443 Bags of cement have been                  Rs       the course of               from GE
               transferred       from maintenance            6,91,080 audit of store              Barrackp
               service to majori/minor works on the          (Rs.156 account of GE                ore
               order of GE Barrackpore at the fag            x 4430 Barrrackpore for
               end of financial year 2002-2003 (as           Bags)    the period from
               detailed in the enclosed Appendix,                     10/02 to 03/03
               `A') which are still lying un-utilised                 and      objection
               there in. On enquiry the specific                      raised vide letter
               reasons for which such huge quantity                   No.
               of cement transferred could not be                     LAO/BKP/Audit/
               stated.      Thus it is presumed that                  GE BKP/10/02 to
               cement so transferred at the fag end                   03/03 dt 07-08-03
               of financial year is only to balance
               the     OE's     budget     which    is
               highlyirregular and grass violation of
               financial discipline. Further, out of
               above quantity of cement so
               transferred~ 256 Bags has been re-
               transferrrd again from minor works
               to ' Maintenance service just after
               one      month      vide     vr.    No.
               05./TV/93/BR/dt 3.5.03. This also
               indicates that cement initially
               trmsfemed to minor work on 31.3.03
               (vide vr. No.05/TV/89/BR dt.
               31.3.03) is only due to balance the
               budget i.e., either to avoid Laps of
               funds or for payment of works bills.
               Cement being short life stores,
               storage for such a long period (since
               3/03) might have resulted detoriation
               and become unfit for uffization.
               GE BKP has been requested to
               regularize the above irregular
               tramacticm under oho order or CFA.


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                         ORIENTATION COURSE FOR AAO / SO (A)

                       LAO (A) BARRACKPORE

 Sl.     Name of        Brief particulars of objections   Monetary   How detected
 No        Unit                                            value
01     Station Hqrs A sum of Rs 3,66,777=57 on Rs.366777.57 Detected during
       Barrackpore account of rebate charges, Socurity             cash inspection
                    Deposit, Rent etc. Collected direct            of public funds
                    from the private Paties of Defence             account       of
                    area of Barackpore has been                    Station
                    accounted for the Regimental Funds             Headquarters
                    of Stn HQ Barrackpore instead of               Barrackpore for
                    dopositing the same into Govt                  the period from
                    treasury (Pub Fund A/C) which is               4/91 to 3/92 and
                    irregular, and thus placed under               placed     under
                    objection for regularization. Inspite          objection vide
                    of several pursuance, the amount               Annexure “A”
                    has yet been deposited into govt.              enclosed.
                    treasury. The matter was taken up
                    with M.O. Patna vide our letter NO
                    LAO/BKP/41/AR dt 9.8.93 which
                    has been responderd vide MO Patna
                    DO letter No dated FA/1/MAR/6/93
                    & 7/93 dt 7/9/93.

                                                          LAO (A) Barrackpore


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                            ORIENTATION COURSE FOR AAO / SO (A)

                   INTERNAL AUDIT REPORT FOR THE MONTH OF 11/2002
                               LAO (A) BARRACKPORE
Sl No    Name                   Brief particulars of objections           Moneta       How           Action
         of unit                                                          ry value   detected         taken
 1      GE          Contract for fencing work costing Rs. 1.99 Lakhs Rs.1.99 Detected             An extract
        Barrack     concluded along with other works (Special repair- lakhs        during         of reply
        pore        Bldg No 43 to 46, into Community Motivation hall               internal       given by the
                    at Kanchrapara vide CA No. CWE/BKP/12/97-98 for                audit for      BKP under
                    Rs 14.16 Lakhs to be completed with in 20.1.98. But            the period     his letter
                    a portion of fencing work could not be completed by            from 4/99      no.
                    the contractor due to dispute in boundary line at              to 9/99        5009/266/E
                    Northern side ever after giving an extension up to             vide LAO       5 dated
                    28.2.98. The matter was taken with Station HQ                  (A) BKP        22.6.2000 is
                    Kanchrapara & GE Barrackpore Vide AGE BR                       letter no.     enclosed
                    Kanchrapara letter No. 868/97-98/110 dt 13-1-98 and            LAO
                    No. 868/KPA/97-98/129/E8 dt 12-3-98 for settlement             /BKP/GE-
                    of the dispute. But the dispute in question could not          BKP/4-
                    be settled by them.                                            9/99 dated
                    Unfortunately, pending completion of said disputed             (Objection
                    portion of fencing work, AGE BR Kanchrapara has                no.19)
                    issued a satisfactory completion certificate to the
                    contractor exempting the disputed portion of fencing
                    work vide his No. 868/97-98/122/E8 dt 4.3.98 and
                    accordingly GE Barackpore has also issued
                    satisfactory completion certificate vide his
                     No. 80011/12/97-98/84/E8 dt 4.3.98. Based on
                    completion certificate of GE Barrackpore, final bill
                    bearing Vr No, 10/0421 dt 27-2-98 for Rs.14,
                    61,184.80 in r/o above work has been released and
                    paid to contractor on 11.5.98.
                    The purpose for which contract for said fencing work
                    was undertaken has been defeated due top non-
                    completin of a portion of fencing of work. The
                    expenditure incurred on fencing work, thus caused
                    enfractuous expenditure to the state.
                    As the dispute arose after carrying out major portion
                    of fencing work, audit is in a view that entire process
                    of above contract was defective due to laxity of
                    executive authorities.

                                                                     LAO (A) Barrackpore


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                                                     Date: 4.11.2002


       The Scale of LPG to be issued to personnel below officers‟ rank is
95gms per head per day. Formation Commanders, not below the rank of
Divisional Commander, have been delegated powers to authorize increase
not exceeding 50gms of LPG per head per day, over and above the laid
down scale, for short periods not exceeding six months, for valid reasons. If
such an increase is considered inescapable in excess of six months
continuously, sanction of the Government will be necessary. Army
Instruction No. 29/88 refers. (29/99)
2.     Headquarters 14 Inf. Div had sanctioned additional 50gms of LPG per
man per day to the Units of Inf. Div from 1, 6.99 to 30.11.98 followed by
sanctions for the period from 1.1.99 to 30.6.99, 15.7.99 to 14.1.2000,
1.2.2000 to 15.7.2000 and 1.12.200 to 30.4.2001. This has resulted in
additional drawls of LPG of about 65953kgs costing Rs.7.34lakhs.
3.      It is evident from the above that the period of each sanction accorded
by Hqrs 14 Inf. Div was kept within six months by giving short periods of
technical break in between the two sanctions to avoid the sanction of the
higher CFA i.e. the Government of India in this case. The sanctions issued
by 14 Hqrs Inf. Div therefore need to be regularized under Government
orders. Other Units/Formations at the same station have been also to adhere
to the LPG drawls norms, besides ensuring regularization of the irregularity,
AHQrs may also issue necessary instructions down the line to ensure
compliance of the instructions contained in Army Instruction No. 29/08 in
letter and spirit.

                                                         C.D.A. (Army)


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      Under the provisions contained in Para 1 of Defence Works
Procedure 1986, that no work will be sanctioned unless it is considered
essential to the effective functioning of the Defence Services. The
accommodation constructed has to be used only for the purpose for which it
has been approved and that the re-appropriation may only be done if a
building has been declared surplus to the requirement.
2.     A Defence building constructed in March, 1997 for Garrison
Engineer (Air Force), Trivandrum as part of the other than married
accommodation for Hqrs Southern Air Command Southern Air Command
(U), at a cost of Rs.4.75 crores was re-appropriated for Kendriya Vidyalaya
immediately after its completion, even without taking any formal re-
appropriation orders from the competent authority, The Garrison Engineer
(Air Force) for whom the said building was constructed, was accommodated
in the newly constructed building for Command Works Engineer(Air Force)
without obtaining formal orders of the competent authority for its re-
appropriation. In November 2001, the sanction for the provision of deficient
accommodation for Garrison Engineer (Air Force) as accorded and the work
is stated to be in progress. In reply to the points raised in audit, Command
Works Engineer (Air Force) has stated that the re-appropriation orders for
the said building in use of Kendriya Vidyalaya will be obtained from the
HQrs. Southern Air Command (U) and that the accommodation has given to
the Kendriya Vidyalaya as a welfare measure.
3.    It will be seen from the above that the accommodation, which was
built for the Garrison Engineer (Air Force) Trivandrum, has been re-
appropriated from the date of its completion in gross violation of the orders
on the subject, even without taking the formal orders for its re-appropriation
from the competent authority. The matter needs looking into and
regularization under Government orders.

                                                                     CDA Chennai


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                HOLDING OF TYRES

      It was noticed during audit of Mechanical Transport Section in
respect of Gun and Shell Factory, Cossipore that 20 numbers of tyres
costing Rs.2.00lakhs, procured for 12 ton truck, were lying unutilized in
Mechanical, Transport Godown for a longtime. These Tyres do not appear
to have been accounted for in the stock register maintained by Mechanical
Transport Section. The 12 Ton trucks for which these tyres were procured
had been disposed off in 1993. In reply to the point raised in internal audit,
Factory Management had contended that the tyres are decade old, and found
during pulling down of the old Mechanical Transport Garage. This is
indicative of poor inventory controls
2.   Immediate action is required for regularization of infructuous
expenditure under the powers of the Competent Financial Authority.
3.    The matter stands reported to the Ordnance Factory Board.

                            Principal Controller of Accounts (Fys)


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       It was noticed during the audit of stamp account of Heavy Vehicle
Factory (HVF), Engine Factory (EF) and Ordnane Clothing Factory (OCF)
Avadi that rebate @ 3% which is allowed by the Postal authorities, on the
total value of postage franked through the Franking Machines, had not been
credited to the Government account (Public Fund Account) nor the same
was adjusted in the payment released to the Postal Department while
releasing payment for postages. The 3% rebate allowed by the Postal
authorities in respect of above three Ordnance Factories was availed of in
cash from Postal authorities which worked out to Rs.1.13 lakhs, as per
details given below during the period December 1997 to December 2001
and the same was distributed to the staff every year without passing the said
transactions through the Public Fund Account Cash book.

Name of          Franking               Period          Annual rebate 3% of
  the           machine No                                 franked value
factory                                                 (amount in Rupees)
 HVF         TN/34/0014 87-            3.12.97 to              75049
 Avadi             97                   15.12.08
 OCF            313728                17.11.98 to                24952
 Avadi                                  10.11.01
 EFA          TN/34/0057-98           16.12.98 to                13315
 Avadi           (Model                 15.03.01
                                         Total                  113316

2.    Thus, the amount which should have been credited to Govt.
account has been mis-appropriated and distributed amongst the staff
which is irregular and require investigation and recovery from the
concerned staff members.
3.    In response to the point raised in audit, General Manager, Engine
Factory has initiate action for recovery of Rs13, 315/from the concerned
individuals. But the Managers, Heavy Vehicle Factory and Ordnance
Clothing Factory have expressed their inability to recover the amount from


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                 ORIENTATION COURSE FOR AAO / SO (A)

the staff and as such the same would require regularization as cash loss
under the orders of Competent Financial Authority.

4.     The matter stands reported to the Ordnance Factory Board.

                                   Principal Controller of Accounts (Fys)



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       The rate of licence fee in respect of classified Government quarters
were revise wef 1.7.1999 under Government of India, Ministry Urban
Development OM 18011/2/98-POL-III Dated 29.6.99 and the same was
circulates under Ordnance Factory Board letter No. 1001/QR/LF/A/W
Dated 31.3.2002.

2.     It was notice during the scrutiny of licence fee bills that the rate of
licence fee in respect of classified Government quarters in Factory Estate at
Ambernath has not been revised wef 1.7.99 contrary to Government orders
dated 29.6.99 non recovery of a sum of Rs.9.29 lakhs for the period from
1.7.99 to 30.9.2002 from the concerned occupants of the classified
accommodation. Inordinate delay in effecting recovery of revised Licence
fee from the occupants of Government quarters may lead to loss on account
of transfer/retirement/death etc of such occupants

3.    The matter needs to be looked into immediately and action taken to
recover the revised licence fee including the arrears for the period
commencing from 1.7.1999. In case any of the amounts has become
irrecoverable, the same will require regularisation as cash loss under the
orders of Competent Financial Authority.

4.     The matter stands reported to the Ordnance Factory Board.

                                    Pr. Controller of Accounts (Fys)


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       Under the agreement concluded on 12th January 1995 with the
Tamilnadu Electricity Board by the Heavy Alloy Penetrator Project, Trichy,
the Electricity Board was to supply electrical energy to the said project at
HT with a recorded maximum demand of 3500 KVA per month at the rate
of Rs.150 per KVA, The rate was enhanced to Rs. 300 per KVA from
January 2002. As per the terms and conditions of the agreement, the
payment of electricity for the maximum contracted demand of 3500 KVA
per month is required to be made at the normal rate of Rs. 300 per KVA. If
however the consumption goes beyond the maximum contracted demand of
3500 KVA, the excess consumption is to be paid at double the normal rate
as penalty charges i.e. 600 per i.e. KVA.
2.     The consumption of electricity of HAPP Trichy was reviewed for the
years 2000-01 and 2004-02 and it came to light that the consumption was
far less than the maximum contracted demand of 3500 KVA for which the
payment was being admitted as per terms and conditions of the contract
agreement. The maximum monthly consumption of electricity during the
year 2000-01 was 3280 KVA which came further clown to 3160 KVA
during 2001-02 against the maximum contracted demand of 3500 KVA.
This has resulted in excess payment for certain quantity of electricity which
was not in fact consumed during the: month by the project.
3.     Keeping in view the trend of consumption every month, the factory
management was advised to take up the issue with Tamilnadu Electricity
Board to revise the maximum contracted from 3500 KVA to 3300 KVA.
The Factory Management accepted to the advice and, accordingly, the
contract with Tamilnadu E1ectricity board was revised bringing down the
maximum contracted demand to 3300 KVA from 3500 KVA. This has
resulted in a recurring saving of Rs.7.20 lacs per annum.

                                          Pr. Controller of Accounts (Fys)


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A few examples: -                                               Annexure-B

l.     The working of hospitals by comparison between the costs of diets,
       extras, etc;

2.     The railing or Back-railing of stores (by examination of counter-foils
       of Credit Notes)

3.     Use of Government transport;

4.     The cost of M.E.S. maintenance and repairs;

5.     Working of contracts, both A.S.C. and M.E.S.;

6.     Critical examination of the practical working from the financial point
       of view of various measures introduced by Government;

7.     General scrutiny of Part-II orders units (this may disclose matters on
       which financial advice may usefully by tendered to administrative

8.     Condemnations of equipment, etc. in different units of the same arm
       of the service;

9.     Scrutiny of estimates and expenditure pertaining to large works or
       projects with a view to seeing whether there have been material
       modifications or deviation from the sanctioned estimates;

10.    If the accounts for the month of March of any G .E.‟s office or the
       statement of cheques issued during march received from it, indicate
       an unusual and serious xx rush of payments towards the enclose of
       that month, the section should investigate the causes and the effects of
       the rush and hurried payments which it must have involved to enable
       us to project the same as an item of our Internal Audit Report. The
       copy of the format is enclosed for your ready reference.

                                                             Sd xxxxx
                                                       Jt. CGDA (Systems)

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Copy to :

       The IFA

       With reference to para 7 above, the report may please be submitted by
       the due date.

                                                             Sd xxxxx

                                                       Jt. CGDA (Systems)


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Major Financial and Accounting Irregularities
The Controllers will prepare quarterly reports on the Major Financial &
Accounting Irregularities , (Short form MFAI Report) dealing with the
matters rating to units and formations for the Command as a whole, for the
quarters ending June, Sept., Dec. and Mar. each year, by the 20th of the
month following of the quarter. The following types of irregularities will be
included in the report:
(a)    (i) Cases involving irregular maintenance or non maintenance of
       accounts which, in. the personal opinion of the CDA, have serious
       (ii) Cases in which the value of financial irregularities or loss
       involved is Rs.1lakh or more in each case. Besides, Controllers may
       at their discretion include cases which disclose loopholes for fraud,
       dcfalication etc, regardless of the financial limit referred to above.
       (iii) Cases of serious irregularities which cannot be translated into
       financial terms, but which, in the personal opinion of the Controller,
       should be brought to the notice of Army Commanders/Air Head-
       quarters/Naval Headquarters, D.G.O.F. (in the case of factories) and
       Administrative Heads of Departments/Organisations (in other cases).
(b)    Apart from cases of financial irregularities coming to the notice of
       Controllers through audit processes in the main office and Local
       Audit Offices/sub offices and reports from the administrative
       authorities, special attention should be paid 'to the following items:
       (i) Utilisation of plant and machinery for the purpose for which it was
       purchased and installed.

       (ii) Identification of slow moving and non moving items of stores in
       Depots/Stores holding formations.
       (iii) Deterioration in the condition of stores due to unduly long,
       inadequate storage.
       (iv) Defective planning and implementation of projects involving
       significant investments high-lighting, in particular, major deviations
       from original time and cost targets.

It is important that every case requiring inclusion in the report should be
included therein promptly and without undue loss of time. Whenever, there


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is an abnormal delay either in the detection of an irregularity or in its
inclusion in the MFAI Report after its detection, the reasons therefore
should be reported to the C.G.D.A. either through the report itself or
simultaneously with its submission.
The MFAI Report will be rendered in two parts viz. Part- I and II, specimen
proforma I and II reproduced at annexure `B' &'C' to this chapter.      Part I
is for indicating Fresh Irregularities and Part II for irregularities reported
previously but still remaining outstanding. Both the parts have been divided
into two sections each viz., Sections 'A' & 'B'. Section `A' is for indicating
cash irregularities and Section '13' for stores irregularities.
So far as the old items included in Part II are concerned. Besides giving the
item nos., and the month of the reports in which the items were originally
included, a gist of each item in brief should also be given, inter alias.
indicating the latest position, for readily drawing the attention of the
authorities concerned. The separate report for the month of April each year
which was hither to fore rendered to CGDA need not be furnished, as the
quarterly reports will be endorsed to CGDA.
The reports will be addressed and copies endorsed to parties concerned in
the following manner.
       (a) In the case of Army units/formations, the reports will be
       addressed to GOC IN C command by name with copies to Area/Sub
       Area Commander enclosing' items pertaining to their areas.
       (b) Controllers of Defence Accounts (Air Force) and (Navy) will
       address the reports to Command Headquarters.
       (c) Reports in respect of D.G.O.F, DGNCC, DGR & D, DGQA &
       BR.DB and Inter-services organisations, etc., will be addressed to the
       departmental     heads,    with    copies     to     the    concerned
       Laboratories/Establishments together with items pertaining to them.
       The forwarding letters of the reports should invariably be signed by
       the CDA or by the MCDA in the absence of the CDA.
       (d) Copies of all reports will be endorsed to the CGDA
       SR.D.D.A/Deputy/Assistant D.A.D.S.

The reports should be drawn up and edited with the greatest care so as to
achieve the object for which they have been introduced.
The narration of each item in the report should be brief, self contained and
lucid and should clearly bring forth the nature of irregularity, the extent of
its seriousness, the amount involved, the precise point at which failure is
revealed and reference to the relevant rules and orders etc. The narration

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should also indicate inter-alia all the action taken till the time of reporting
(both at command level and at the CDA's level), so that wherever necessary,
instructions could be issued by Government straight away to the Service
Head. Quarters       etc, when such cases are reported to them. The
following points should also be explicitly mentioned in the narration of each
case of irregularity, wherever necessary:
       (i) Whether the irregularity has come to light during percentage audit
       and/or during process of check over selected items, or whether it is a
       case of erroneous certification by the executive; and
       (ii) The precise point at which and the extent to which failure on the
       part of the executive is revealed.
Cases which in the personal opinion of the Controller are so-important or
significant, as to be reported to the Ministry of Defence/Service Hqur/
Ministry of Defence (Finance) , will be included in Part II separately for
cash and stores. [Reproduced at annexure (C) to chapter 17) Nil report wilt
also be indicated. All other cases will be included in Part I of proforma I.
The narration in part I of the report should be concise and to the point,
highlighting the specific nature of the irregularity in order to effectively
draws the attention of the concerned authorities. The narration should not
normally exceed 2 pages.
Note: Items in the MFAI Reports which are subsequently included in the
CGDA's Certificate appended to the printed Appropriation Accounts will be
formally taken out of the MFAI Reports, but pursued to finality in the
normal course.
In order to enable action being initiated by the CGDA and by authorities at
Armed Forces Headquarters/Administrative Authorities concerned in cases
referred to in the preceding paragraph, full particulars of the action already
taken at Headquarters Commands or by the CDA and the nature of action
suggested for consideration at CGDA's level, will also invariably be
indicated. Copies of relevant correspondence that has passed on at
Command level, etc, will -also be enclosed for information.


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                                 ANNEXURE `A'
                                                           Office of the CDA
                                                           Dated ………….

The GOC IN C (by name)

       Sub: Quarterly report on Major Financial and Accounting

The report on the above subject for the quarter ending ...................
...................... is enclosed for the favour of information and necessary
Part I section       (A) :            case irregularities fresh items (nos....)
Part I section       (B) :            stores irregularities fresh items (nos.......)
Part II section      (A) :            cash irregularities, items already reported
but-still outstanding (nos............),
Part II section      (B) :            stores irregularities items already reported
but still outstanding. (nos..................)
Cases of other irregularities noticed in audit have been reported to
concerned-authorities as necessary.

                                         Controller of Defence Accounts

Copy to:

(1)    The CGDA, West Block V, Wing III RK Puram, New Delhi-110066
(2)    The Director of Audit (Defence Services)
(3)    Headquarters.........................................................................together
       with details of items shown in the margin.

                                                                             Dy. C.D.A.


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         Office of the C.D.A...................................................................................
         Report on Major Financial and Accounting Irregularities for

                                   Part I section `A'-Cash Irregularities

S.No. Name     Particulars            Financial       Periods         When       was       Latest position
      of the of                       effect          of              the                  of the case Rem
      unit/for irregularity                           accounts        irregularity         indicating      arks
      mation                                          affected        first noticed        action taken so
                                                                      in audit, and        far by the
                                                                      to whom it           lower
                                                                      was reported         authorities
  1       2               3                 4               5               6                     7          8

                                   Part I section `B'-Stores Irregularities

S.No. Name     Particulars            Financial       Periods         When was             Latest position Rem
      of the   of                     effect          of              the                  of the case     arks
      unit/for irregularity                           accounts        irregularity         indicating
      mation                                          affected        first noticed        action taken
                                                                      in audit, and        so far by the
                                                                      to whom it           lower
                                                                      was reported         authorities

  1       2               3                 4               5                 6                     7             8

                                                            Dy. Controller of Def Accounts


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ANNEXURE „C‟                                                                PERFORMA II

Office of the C.D.A...................................................................................
Report on Major Financial and Accounting Irregularities

                            Part II section `A'-Cash Irregularities

                   List of case already reported but still outstanding

S.No.          Name of the    Item no.   Brief gist of Latest                                 Remarks
               unit/formation and the    the            position
                              Quarter of irregularities
     1                2            3           4            5                                       6

                          Part II section `B'- Stores Irregularities

                   List of case already reported but still outstanding

S.No.          Name of the    Item no.   Brief gist of Latest                                 Remarks
               unit/formation and the    the            position
                              Quarter of irregularities
     1                2            3           4            5                                       6

                                                      Dy. Controller of Def Accounts


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                                                   MFA1 Fresh items for Q.E.3/04

CDA (BR) New Delhi
                       Part I Section 'A' Cash Irregularity
                       114 RCC 35 BRTF Project Beacon
It was noticed during the internal audit that inadmissible payment to the
tune of Rs.9.25lakhs was made on account of SCRLA to GREF personnel of
1) 4 RCC, which requires regularization under the orders of Govt. of India.
CDA Chennai
                       Part I Section 'A' Cash Irregularity
                           CE (Navy) Visakhapatnam
An agreement was made with Tamilnadu Electricity Board (TNEB) on
13.7.95 for Contracted Maximum Demand (CMD) of 250Q KVA assuming
the total of demand within that range in r/o INS Kattaboman, Thirunelveli.
The agreement was further revised on 26.1 1.99 and CMD reduced to 2000
KVA. A Board of Officers recommended further revision of CMD from
2000 KVA to 1450 KVA and got the approval by TNEB. The payment had
to be made for the C.M.D. or the actual consumption whichever was higher
as per the agreement. Whereas, the actual consumption was much less than
the contracted demand which resulted in heavy extra payments to TNEB. A
sum of Rs.2,.20,000/- in 1/2002 and Rs.l10, 000/- in 4/2002 was paid to
TNEB for reduction of CMD as one time payment and forwarded to CWE
(N) Chennai on 18.4.2002. During May 2002, MES authorities suggested to
the Unit whether reconsideration of the downward revision was required in
this case. Tile Unit initiated the case with Hqrs. ENC for maintaining status
quo of 2000 KVA without considering the fate of payment already made to
TNEB. After reconsideration a decision was taken by the Unit to finalize the
agreement for 1450 KV_A in Nov. 2002 and it was executed on 27.8.03.
The avoidable delay between the time of deposit of the amount to TNEB
long back and finalization of the agreement, which was due for reducing the
CMD to 1451) KVA, has caused extra expenditure of Rs.12.31lakhs.


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CDA Secunderabad
                       Part I Section 'A' Cash Irregularity
                       1. 15 Corps Zonal Work Shop
                                   C/o 56 APO
During the course of audit of Imprest Account No. 7892 for the month of
February' 2002 pertaining to 15 Corps Zonal Work Shop c/o 56 APO, PAO
(ORs) EME had observed that CML of Rs.600/- was exceeded and a
balance of Rs.4, 50,050/-on 28.2.2002 was spent on 5.3.2002 instead of
depositing into treasury and re-drawal on CR. Hqrs. 31 Sub-Area ordered a
one-man investigation. It was found by the one man investigation that the
C.M.L. was exceeded correct procedure was not being followed and that
cash to Bank transactions were different from those mentioned in the Bank
Statement etc.
Pr.CDA (SC) Pune
                   Part -I Section 'A' Cash Irregularity
  2 of 03-04 CA No CERD/PSN/01 of 2003-04 of CE R&D Secunderabad
                and to be executed by GE (1) R&D Pashan
The case is about a separate contract agreement for protection of
Arboriculture assets from wild animals. Arboriculture work was to be
sanctioned by CFA either as a part of the main work project or
supplementary to it. Thus concluding a separate contract for protection of
Arboriculture assets from wild animals was not found in order.

CDA Bangalore

                       Part I Section 'A' Cash Irregularity
                         1) ASC & College Bangalore

The case relates to the sanctioning of works in piecemeal to bring within the
powers of lower authority. The Commandant ASC & C Bangalore
sanctioned Special Repairs to various BSDs at ASC & College through four
Admin Approvals at the total cost of Rs.50.34lakhs. This was objected by
the CDA as the total cost was beyond the power of the Commandant ASC &
C and requested the unit to obtain sanction of the appropriate CFA Hqrs
Southern Command for the works as a whole.


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                            Military School Belgaum

This irregularity is about 6 individuals who had been appointed newly w.e.f.
3/02 and 4/02 without the clearance of screening committee. An individual
has already resigned from the service.


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                                                       MFAI Report for Q.E.6/04
CDA (R&D) Banagalore
                    Part 1 Section 'B' Store Irregularities
    l)      Defence Avionics Research Establishment (DARE) Bangalore
It was noticed during the pre-audit of supply orders that Rs.2.13crores was
spent from the Buildup Budget of Defence Avionics Research
Establishment (DARE) during the month of March 2004 alone and
Rs.1.90crores was spent separately during the same month under different
projects handled by DARE which was considered as 'breach of financial
propriety'. The expenditure of Rs.2.13crores during March 2004 represented
43% of the total buildup budget of Rs.5 cores for the entire year. A total of
40 supply orders were placed. Out of these 38 supply orders representing
95% were less than Rs.5 lakhs without CDA's representation. In addition, 31
supply orders were released during the month under different projects
amounting to Rs.1.90crores. The value of the above 71 supply orders
released during March amounted to Rs.4.03crores. The above supply orders
included one on M/S Acers India Pvt. Ltd for Rs.40, 51,700 for purchase of
100 personal computers under the DGS&D rate contract. No TPC was held
nor CDA representative associated in the purchase to examine the
acceptance from necessity angle. The Purchase Management Document
2003 states that quantity for procurement in r/o Computer items should be
restricted to meet the present needs only as there is an all round downward
trend in computer prices. Hence, purchase of 100 computers was an
irregularity to meet the present needs as the total strength of DARE was
only 107 officers. Further, the DARE had already concluded A.M.C. for
2003-04 for 128 computers. From records, it is seen that DARE had already
procured 130 computer systems/PCs during the last few years. The lab was
advised thorough investigation and regularization.
   2) Defence Avionics Research Establishment (DARE) Bangalore
The Defence Avionics Research Establishment (DARE) Bangalore ordered
Works Technical/Stores Building under DAWN Project for Rs19.25Lakhs
on M/s Three Engineers, Bangalore during March 2004. The following
irregularities were noticed: -

         a)    The subject Civil Works had been ordered following the
         procedure laid down in Para 1.4 of Purchase Management Document
         2003, which does not include Civil Works.


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       b) The Civil works had been ordered by placement of 'Supply Order',
       which is inappropriate. The payment terms specified were 30%, 30%
       and 40% and 'delivery period' specified was 31.3.04 for supply order
       dated 10.3.04. Since Civil Works have many peculiar features, it is a
       violation of the procedure for carrying out such works.
       c) Since payments for civil works are to be regulated with reference
       to measurement of the works executed, it can't be ensured that
       payment was related to the work done.
       d) The work carried out by a private agency rather than a
       Departmental one/MES required justification and regularization under
       the orders of Competent Authority.
       e) The entire cost of Civil Work was being booked to LP funds
       allotted to DARE under Major Head 2080, Defence Services. The
       creation of a capital asset under Local Purchase Head was not in order
       and hence required to be regularized under the sanction of Govt. of
CDA Chennai
                      Part I Section 'A' Cash Irregularities
                              AGE (1) Tirunelveli
It was noticed during the local audit of store accounts for the period of
10/92 to 3/93, that two Military Credit Notes pertaining to AGE (I)
Vijayanarayanam Tirunelveli had been lost. The loss was to be dealt with as
loss of Public Money and had to be attributed to negligence of duty, Board
of Officers was convened on 6.5.2003, which sought certain clarifications
from P.C of A (Fys) Kolkata. The case required regularization and Staff
Court of Inquiry had to be convened by staff authorities for the
regularization of loss. In addition, the reasons for the seemingly
unwarranted delay in initiation of the loss statement required thorough
investigation for fixing up responsibility and suitable remedial measures for
monitoring the progress of finalization of such losses at all levels.
CDA Jabalpur
                  Part I Section 'B' Store Irregularities
          MTR (1 STC) Jabalpur (under Hqr. M.B. Area. Jabalpur)
During the Test check of clothing accounts of the Unit, it was noticed that
the clothing item such as Jacket Combat, Trouser Combat, Coat Combat,


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Shirt Poly OG and Trouser Poly OG were issued in advance to the recruits
undergoing basic Military Training of 19 weeks. During the training period,
Khaki Cotton Shirts and trousers and Jersey Pullovers were only issued to
the recruits and not the other clothing items, which will be issued after the
completion of the Military Training. As these Items could riot be used
during the training period, the pre issue of these clothing Items has resulted
in wasting of their life without use and also counts for subsequent
replacement. This resulted in an extra expenditure of Rs.59, 81,503/- which
requires regularization under the orders of the Govt. of India.
PCDA (AF) Dehradun
                     Part I Section 'A' Cash Irregularities
                 (Rendered to AOC-In-C Hqrs. TC Bangalore)
                             AF Station Yelhanka
The case is about the irregular payment of hiring of Bulldozer for leveling
of land during the period from 1/99 to 6/2002. Out of 721 acres of land in
technical area, the payment had been made on hourly basis for hiring of
bulldozer for leveling of 192.05 acres during the period.
The following irregularities have come to light during the audit: -
       1)    Leveling of land is not covered under the authorized items
       under Flight Safety head, which is irregular.
       2)     The work for leveling of land was commenced in the month of
       Jan 1999; the Unit had called for quotations only in the month of
       October 2000. Payment was made to the contractor from 18.1.99 to
       16.7.00 @Rs.370/- per hour, from 2.8.00 to 31.1.01 @Rs.375/- per
       hour and from 5.9.01 to 22.6.02 @Rs.260/-. Commencement of work
       before finalization and approval of the rates has resulted into an
       irregular expenditure.
       3)     The period of hiring was 55 hrs whereas the bulldozer was
       hired for total 1724 hrs for the leveling of land.

       4)    The work service come under the purview of MES, where the
       authorities had expressed their inability to procure special tools and
       plants in the absence of trained Manpower at their end and not for
       undertaking the work services.
      5)    The proposal should have been submitted at the beginning for
      the approval of appropriate CFA considering the vast area of land


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      planned to be leveled. However, the work service had been split to
      bring it within the financial powers of HQ command.
     6)      As the expenditure has been incurred for leveling of 192.05
     acres of land it is considered that the payment should have been
     released only on completion of the work. The irregular expenditure of
     Rs.5,61,273 for leveling of land under Flight Safety Code Head
     required regularization under Govt. Orders

                       Part I Section 'B' Store Irregularities
         (Rendered to AOC-in-C Hqrs SWAC Gujrat) 1/41 Wing AF

The case relates to the irregular procurement of computer papers. The unit
placed a supply order for the supply of 1000 reams of computer papers
costing Rs.8, 07,800/
The following irregularities were noticed at the time of audit:
       1)     No CFA sanction was obtained for the purchase of computer
       2)    The procurement of the papers was in excess of the
       requirement of the unit. It was already holding 580 reams of papers
       3)     The unit transferred the surplus papers to various other units on
       rising of the objection. Since the procurement of papers was made
       without obtaining CFA sanction and was in excess of unit
       requirement, the matter should have been brought to notice of
       command Hqrs before transferring surplus paper to other unit
       4)    It was also observed that an overpayment of Rs.800/- had been
       made as the supply order was placed for Rs.8, 07,800/- whereas as per
       delivery chalan the payment claimed by the firm was Rs.8, 08,600/-
This requires Investigation and regularization under the orders of Govt. of


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                                                       MFAI Items for O.E. 09/04
CDA Bangalore
                       Part I Section 'A' Cash Irregularity
                         1811 PNR COY, Delhi Cantt.
The case is about the loss of imprest money while in transit from Bank to
Unit. The financial effect is Rs.1,41,000/-. The money was snatched by two
persons on a scooter from the JCO on cash duty while he was returning on
his bicycle from the Bank after withdrawing the cash. The Court of Inquiry
was ordered on 6.9.2003 but proceedings are yet to be received causing
delay in regularization of loss.
PCDA (SC) Pune
                       Part I Section 'A' Cash Irregularity
                        1 of 04/05 GE (R & D) Pashan
The case relates to the contracts which were concluded without the prior
approval of Command Chief Engineer as required under AHQ, E-in-Cs
Branch letter No.A/00231 /VIP/E2 dated 18.3.97 for conclusion of manning
and operation contracts. No contracts are to be concluded for any such work
where the tradesmen are available to execute the work. GE (R & D) Pashan
concluded three contracts on account of manning and operation in respect of
sweeper and pipe fitter. In the case of two of the above contracts sanction of
Chief Engineer R&D Secunderabad had been obtained and in the third case
sanction was awaited. CDA insisted for approval of Command Chief
Engineer as per E-In-C Branch letter quoted above. Further the contracts
were concluded for the provision of sweeper, which since not coming under
the tradesmen was not the duty of MES to provide sweeper services to units.
It is the duty of Station Commander to provide the services of sweeper.
Thus accepting the above tenders Govt.is going to incur extra expenditure.
The financial effect is Rs.14, 35,607/-

           1)      2 of 04/05 GE Dehu Road CA NO.GE (D) /21 of 02-03

During scrutiny of a contract agreement it was seen that the rates and
amounts had been scored/amended for upward revision but the contractor
had not amended the column No. 7 of Sch A (amount) which resulted in the
increase of amount of contractor by Rs.66000/- Further it was observed that


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the contractors total initially came to Rs.704190/- But after the corrections
the contractor further corrected the total amount as Rs.753694/which had
been subsequently encircled by the tender opening officer. It is therefore not
understood when the contractor had not corrected/amended the column No.7
of Sch 'A' how he arrived at the figure of Rs.753694/-. The contractor has
also not scored his originally quoted amount of Rs.704190/-. It possibly
meant that quoted amount/rates had been got changed by MES authorities
after opening the tender.
CDA Patna
                      Part 1 Section 'A' Cash Irregularity
                     2) HQ, Bengal Area Alipore, Kolkata
A contract amounting to Rs.6.29 lakhs was awarded to Maruti Enterprises
for conservancy services without calling for competitive tender, which is
highly irregular.
PCDA (AF) Dehardun

                       Part I Section 'B' Store Irregularity
                                    1)     9Wing AF
The case is about the non-utilization of costly equipment valuing Rs.4a.93
lakhs, which was observed during the audit of store accounts. The
equipments were procured for providing stabilized power supply of various
ratings to HTF (Halwara Tech Right) i.e. to carry out first and second line
servicing/repair activity on MIG aircraft. As verified from the SIB the
equipment were received during December 2000, March 2001 and January
2002 and were brought on charge In October 2003 after a considerable long
period. It was stated that the installation had to be done by Firm
representative only. The Board proceedings for assessing the requirement of
work services for procurement and laying of wires/cables and other
components for installation of special power were completed on 4.9.2000 at
an estimated cost of Rs.1.90 crores which required Admin Approval from
Govt. of India. However, the equipment were received at station and as the
work was not released, HQ WAC accorded Go ahead sanction for the
execution of subject work services for Rs.33.01 lakhs through MES in Dec
2001 which was completed on 31.10.03. This includes both installation of
one 500 KVA transformer and internal cabling of two hangers and lab. The
warranty period for the equipment was 12 months from the date of receipt of
the consignment and the equipment were received In December 2000,
March 2001 and January 2002 and were not installed yet. Due to delay in


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execution of work services, costly equipment were lying unutilized till date.
The defective planning which led to non-utilization of costly equipment
thereby blocking Govt. money required regularization sanction of the Govt.
of India.
CDA Chennai
                       Part I Section 'A' Cash Irregularity
                               1)     OD Avadi Chennai
The case is about the non-accounting of Tanks costing Rs.5.62 crores. The
irregularity was noticed during the audit of store accounts of Vehicle Sub
Depot for the half year ended 4/03 to 9/03. 3 tanks (T-72) out of 126 have
not been taken into ledger account. In reply to the objections raised by LAO,
the OD authorities confirmed that neither the HVF Avadi nor the Tank BA
Nos. mentioned in the (edger account have been received. As the Issue
Voucher was prepared by HVF authorities before hand and on receipt of the
IVs, OD Avadi reps have noticed many defects and intimated to HVF for
rectification. Even after rectification, certain defects were again noticed and
subsequently rectified. This resulted in delay in final classification and the
tanks were taken on charge only after final classification. Two tanks are yet
to be collected by the O.D. authorities. The case reveals (i) preparation of
Invoices before hand and delay in receiving the same in O.D. even after a
lapse of year and a half, (ii) booking of expenditure to Army Head without
actual dispatch, (iii) manufacture of defective tanks and (iv) clearance of
such tanks in inspection.

                                    1) 231 Transit Camp

This case relates to the unauthorized holding of vehicle by the Unit, leading
to unauthorized expenditure of Rs. 1, 53,769/-. The irregularity was noticed
during the Local Audit of Store Accounts of 231 Transit Camp. The Unit is
holding a Maruti Gypsy Car, which is unauthorized. As per Para 282 (iii) of
Army Local Audit Manual Part I Vol-II and 123 of Stores Accounting
Instructions, it is the duty of the units to ensure that Unit Holdings are
within the authorized scale. This avoidable expenditure to the tune of
Rs.l, 53,769/- requires regularization under the orders of the Govt. of India.


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CDA (CSD,) Mumbai

                       Part I Section 'B' Store Irregularity
                                        1) CSD HO
As per JS and Addl. FA to GOI, MOD whenever internal procedures
relating       to      the     trading      activities    of      CSD        are
streamlined/changed/rationalised the same should invariably be carried out
with the concurrence of IFA/CSD. Inspite of the above, new
guidelines/procedures were issued by CSD without the concurrence of CDA
(CSD) office. The matter was brought to the notice of CSD HO. The F and
A Branch of CSD assured to comply with this requirement in future. It has
however been noticed that CSD HO is still issuing policy related circulars
like (i) relating to imposition of penalty for non-supply of the quantity as per
local purchase orders and (ii) regarding market survey without the
concurrence of CDA (CSD).


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                                                   MFAI Items for Q.E.12/04
PCDA (WC) Chandigrah
                       Part I Section 'A' Cash Irregularity
                            DDE (WCZ Chandigarh
During the cash inspection of DDE of HQ (WC) Chandigarh carried out on
10.8.2004 for the period 24.6.2003 to 10.8.2004, the following irregularities
were detected. In the credit side, as on 10.8.2004 in the Bank reconciliation
statement is seen that there are credits worth Rs.240343/- in Bank but not
reflected in the Cash Book. This includes an amount of Rs.93901 on
account of Adhoc Bonus drawn in 10/97 but not debited by the Bank.
Another amount of Rs.55451 pertains to CPWD Elect wing Chandigarh
released by PCDA (WC) Chandigarh in April 99 but not paid till date. The
details of remaining 32 items totaling Rs.90991 /- are not available. In the
debit side, there are debits of Rs.113551 /- which includes Rs.50, 000/-
debited by the bank in a court case in 5/95 for which no sanction from CFA
appears to have been obtained for charged expenditure. Rs.16,000/- on
account of GPF/Final withdrawal have been debited twice, Rs.2301 /- less
credited by the Bank in 7/2004, 8 items totaling Rs.15,163/- have not been
credited by the Bank but amount stands paid. The financial effect is up to
the tune of Rs.126792/- (Excess credit)
PCDA (CC) Lucknow
                       Part I Section‟B‟ Store Irregularity
                                1)    TKD Unit Babina
It was noticed in internal audit that OC Tankodrome unit procured
stores/equipments for Rs.4, 08, 21,460/- from Electronics corporation of
India Ltd. Hyderabad for Tankodrome Project scheduled to be functional in
Jan 1989. As the procured stores were not functional, the stores were not
taken on charge and the project was abandoned. Apart from cost of stores
amounting to Rs.3.74 crores, a sum of Rs.5.38 crores has also been incurred
on a/c of civil works. The entire amount of Rs.9.12 expended is treated as
infructuous which requires regularization under the orders of Govt. of India.


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CDA Jabalpur
                       Part I Section 'A' Cash Irregularity
                             1)     Supply Depot. Gwalior
It was observed during the cash inspection of LPG (DC) Account of supply
Depot Gwalior that 60% of the commission from sale of payment issue of
LPG is not being accounted for in the Public Fund Account. Only 40% of
the DC commission is accounted for as in case of free issue of LPG and the
balance 60% of the commission of payment issue LPG is retained in the
payment issue LPG account as Regimental Fund, which is not in accordance
with the procedure contained in Govt. of India. The financial effect is
PCDA (AF) Dehradun
                       Part 1 Section 'A' Cash Irregularity
                                17 F.B.S.U. (A.F)
Air Hqrs accorded Administrative Approval for provisioning of MT and
MTR & S section at Air Force station (17 FBSU) Tiruvandrum for
Rs.100.11 Lakhs. The subject work also included a special item of work i.e.
equipment for Modern Servicing Garage (M.S.G.) amounting to Rs.3 lakhs
which were to be executed by the users. Accordingly a requirement was
made to Air Hqrs by Hq. S.A.C., I.A.F. for local procurement of M.S.G.
equipment as the supply through service sources was not available and
installation of M.S.G. was under progress. Subsequently Air Hqrs. advised
Hq. S.A.C. I.A.F. to procure M.S.G. equipment locally under the delegated
financial powers after observing proper logistic procedure.
In pursuance of the directions of Air Hqrs, HQ. S.A.C. I.A.F. floated T.E.
on M/S ELGI for 8 M.S.G. equipments treating them as proprietary items.
However, there was a variation in the quotation furnished by the firm in
response to the T.E. of the Unit i.e. rates for two items were not quoted.
Further for purchase of other two items sanction was accorded by A.O.C.-
in-C Hqrs. S.A.C. I.A.F. as the cost thereof was beyond the powers of O.C.
self accounting Unit i.e. above Rs.40,000/-. The remaining items were
purchased under the powers of O.C. self accounting Unit. All these items
costing Rs.2, 33,941 /- have been received and brought on charge by the
Unit authorities.
The following irregularities have been noticed in the above procurement
valuing Rs.2, 33,941 /- during audit of relevant Cash Account Voucher:-


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       i)    As M.S.G. equipment is part of the-major works sanction given
       by the Air Hqrs, the items should have been procured by following
       the works procedure and treated as a single item. Further, the
       equipment should have been procured under Appendix-II (Part III-
       F.R. Part I) being a scaled item with the concurrence of I.F.A. One
       sanction should have been obtained for the entire amount of Rs.2,
       33,941 /
       ii)    A.O.C/O.C. (Self-accounting Unit) has the power of
       procurement of stores upto Rs.5000/- on Single Tender basis without
       I.F.A. concurrence.
       iii) Further, there was variation between the tender enquiry and the
       iv) Incidentally the M.S.G. equipment is available with two firms
       namely M/S ELGI, Coimbatore and M/S Tecale Unit New Delhi. As
       such tendering to one firm is irregular.
CDA (R&D) Bangalore
                       Part I Section 'B' Store Irregularity
                      1)    Gas Turbine Research Estt (G.T.R.E)
During audit of Stores Accounts from 4/2003 to 9/2003 it was observed that
loan issues of large number of stores were made to various Defence
Organizations/Private Firms from 1993-94 onwards. As on 30.6.2004 a total
of 591 items were outstanding. Out of which 197 items amounting to Rs.3,
88, 67,074/- were issued to Private vendors. In absence of proper
documentation, following procedural irregularities have been noticed: -
       1)     No monetary value of stores issued during 1993-94 to 2000-01
       is found entered in the ledger
       2)   Loan issues from 2001-2004 alone work out to Rs.4.74 crores
       which include Rs.3.88 crores issued to Private vendors
       3)     Necessary Bank Guarantee, Indemnity Bond and risk insurance
       for safeguarding Govt. Interests have not been produced by the Lab
       for verification.

            2)     Centre for Artificial Intelligence and Robotics (CAIR)
During audit of store accounts for 9/2004 it was observed that 835 Items of
stores costing Rs.5.40 crores (approx) were struck off ledger charge without

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following proper procedure. Out of which stores worth Rs.5.25 crores have
been sent to Salvage Depot, Chennai and stores worth Rs.0.15 crores have
been destroyed locally without associating Finance Member as required vide
D.R.D.O. Hqrs. Letter no.DPRM/CPO/89501 /Disposal dated 4.3.93.
CDA (BR) New Delhi
                       Port I-Section 'B' Store Irregularly
                             535 SS & TC 42 BRTF
It was observed during the review of store account of the unit for the period
4/2001 to 9/2001 that Bitumen Emulsion Qty 6.280 MT received in
damaged condition was replaced by the contractor nor regularized under the
order of Competent Financial Authority. It was also observed that loss of
13.758 MT of Bitumen due to leakage at Dett. Dulabari location during
transit from 535 SS & TC to 97 RCC was not regularized. A court of
enquiry was convened and DGBR's recommendations were that the cost of
Qty 6.280 MT amounting to Rs.1,18, 086/- on account of short delivery
from contractor be recovered from the final bill of the contractor and loss of
MT Bitumen Emulsion due to leakage amounting to Rs.2,20,217/- be
written off and borne by the State. Thus, it requires regularization of loss
statement and recovery from contractor.
Pr. C of A. (Fys) Kolkata
                       Part I Section 'A' Cash Irregularity
                                 1)     OF Muradnagar
It has been reported by AO, OF Muradnagar that 92.56 Acres land of Ord.
Fy. WWA Estate Muradnagar was leased out to WWA for agricultural
purpose Q Rs.400/- per acre per annum. No land can be leased out/licensed
for the agricultural purpose as per Para 12.1 of MOD letter. However, in the
above order it is quoted that the renewal of lease agreement which is already
in existence prior to issue of the above order can be made for a further
period of 5 years, provided that the lease agreement was concluded with
registered Co-operative Societies run by the Fy. Employees or their spouses
and in such cases the licence fee is to be determined by the DEO of the
locality. The licence fee for the land for agricultural purpose was fixed by
DEO Meerut as Rs.1000/- per acre per annum. However, the land is still
being used by WWA for a further period of lease of five years without the
sanction of competent authority on payment of licence fee as per old rate of
Rs.400/- per acre per annum. Request has been made to OFB for according
necessary sanction in favour of WWA for leasing out the said land for a


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further period of five years in two spells w.e.f. 10.8.95 to 9.8.2k and 10.8.2k
to 9.8.05 for reducing the L.F. rate from Rs.1000 to Rs.500 per acre per
annum or enhancing the previous rate of L.F. by 25% w.e.f. 1.4.2k in the
interest of Fy employees. As the lease agreement has neither been finalized
under the sanction of G of I nor the L.F. is being recovered from WWA, it
resulted in loss of Govt. revenue of Rs.55536/- per annum. The financial
effect involved for the entire period works out to Rs.5.55 lakhs, which
requires recovery from WWA and regularization of the case under the
sanction of MOD.

CDA Chennai

                       Part I Section 'A' Cash Irregularity
                               1)    Area Hqrs, Chennai

The case is about the loss -of concession vouchers pertaining to the Area
Hqrs, which have been lost during transit and was placed under objection by
LAO (A) Chennai during the audit for the Q.E.6/97. The loss of forms will
be dealt with as loss of public money and requires Govt. sanction for
regularization of loss due to neglect. Despite the availability of clear
Instructions for regularization of the loss of concession vouchers, the same
was not followed. The Area Hqrs. had stated that the holding of staff court
of Inquiry was not appropriate at the belated stage, as the personnel
involved have been posted out/discharged from service. Thus the case
requires investigation and regularization under the orders of Govt. of India.


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                                                   MFAI Fresh cases for O.E. 9/03
PCDA (CC) Lucknow
                       Part-I Section „A' Cash Irregularity
                                1)     CWE Allahabad
During the review of reports on CP Vrs it was observed that 67 CP Vrs,
amounting to Rs.7200474/- were outstanding since I 97 for clearance. It was
noticed that 13 supply orders against which the stores were supplied, saw
been signed by EE/DCWE (B/R) while functioning as CWE Allahabad were
found to be fake as copies of these supply orders were not available with
them although Railway Receipts were received by them. . The stores
received were not brought on charge. The firm filed a Civil Suit in High
Court of Allahabad against the recovery impose on them and the High Court
ordered to maintain status quo trill finalization of departmental enquiry. As
a result of this, disciplinary action was also initiated against EE DCWB
(B/R). The officer was exonerated as charges against the officer could not
be proved/established and also no other officer could be held responsible for
placing these fake supply orders. The Govt. counsel advised against filing a
Civil Suit for the recovery of the cost of stores in view of the circumstances
of the case. It is, therefore a case of infructuous expenditure/Cash Loss
which requires regularization under Govt. orders. This item has been
included in the IAR for H. Y. E 12/03 also.
                       Part I Section 'B' Store Irregularity
                              1)    AMC C & S Lucknow
It was observed during the souse of audit that a large no. of clothing items
had been charged off from clothing Ledger by alteration in the quantity,
which appears to be unauthorized in the ledger and in CIVs. The quantity
charged off was found to be in excess to actual issue as mentioned in the
nominal roll and the summary in support of CIVs. Stock: verification had
also been carried out without any remarks regarding irregularity. The
financial effect was Rs.295240/-, which requires regularization under the
orders of Govt. of India.


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CDA Chennai
                       Part I Section 'A' Cash Irregularity
                          65) GE 881 EWS Ezhimala
The case is about the under recovery of License fee from SBI, Ezhimala. As
per Govt. of India MOD orders, special licence fee is chargeable from
Nationalized Bank occupying Govt. buildings but for occupying
229.09mt.sqrs area of Govt. building, SBI, Ezhimala was being charged a
nominal fee of Rs.150 per month. This fee was fixed by Board of officers of
Hqrs SNC Kochi in 12/88. The standard Licence fee has undergone revision
many times, but the licence fee for SBI remained fixed at Rs.150/- per
month. CWE advocated for non-levying of special licence fee by saying that
building has not been let out for business purpose as it is 60-70 years old,
building was not constructed as per MES specifications and is small in size.
The AAO (GE) pointed out in his SIO report that relaxation can not be
given until there is a specific sanction from GOI. The decision of non-
levying special Licence fee is incorrect as Banking activity is a purely
Business activity. This has been reported to GE CWE Ezhimala, EC
(NAVAL) Ezhimala, DG (NAVAL) New Delhi. This has led to loss of
revenue to state, which requires investigation and regularization under
orders of CFA.
                              67) GE (I) Fort Kochi
This case relates to irregular payment to a contractor by taking back steel on
a foreclosed contract. A contract was given to a contractor for provision of
type 'B' KV School at INS Dronacharya at an initial cost of Rs.429.45 lakhs
and was subsequently amended to Rs.336.42lakhs. On foreclosure of
contract 45 MT of steel was taken back by the MES tom Contractor and an
amount of Rs.7.41lakh was credited to Contractor's account. The
justification finished was that it has been mentioned under Para 2 of
condition no.57 of LAFW 2249 that the contractor shall also be allowed a
reasonable payment for any expense sustained on account of labour and
material collected which could not be utilized.
In the audit of the unit it was painted out that sources from which MES can
obtain stores does not include taking back stores from contractor. This is
outside the scope of RMES Fund is a new practice due to misinterpretation
of miles which needs regularization under the orders of G.O.I. Condition
No.57 of IAFW-2249 can be only interpreted to cover reasonable payment


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on a/c of expenses which are incidental to holding the material on site till
removal from site. The interpretation cannot be applicable for the payment
for actual cost of material. The procedure adopted due to incorrect
interpretation of the condition of contract has resulted in a new practice,
which requires investigation and regularization under G.O.I.
PCDA (AF) Dehradun
                       Part I Section-'B' Store irregularity
                                 1)     HQSWAC (U)
The case is about the irregular procurement of Photocopier Paper. It was
observed during audit of Central Purchase Vouchers regarding subject
transaction that an amount of Rs.12, 21,284.00 was claimed-by M/s Delhi
Paper Products Co. Pvt. Ltd. for 11000 reams instead of 1100 reams of
photocopier paper against supply order. The PAO has wrongly paid an
amount of Rs.11, 61,888.00 to the firm against the said bill. The transaction
was placed under objection advising the unit to ge the refund of excess
amount of Rs. 10, 26,000/- paid to the firm on a/c of extra 9900 reams of
photocopier papers. Instead of getting back the refund of the amount paid
excess, the unit had received an additional quantity of 9900 reams of
photocopier papers, which were not demanded from the firm. The excess
quantity was subsequently distributed to various other units. The
expenditure was beyond the powers of C.O. of the unit.This irregularity
requires investigation and regularization under Govt. orders.
                                    2)     4 Wing AF
The case relates to the discrepancies in SSRC's (Clothing). During the audit,
it was noticed that:
       1)     Discrepancies in the quantity struck of charge as per SSRC's
       and the issue vouchers and also a similar number of quantities shown
       in IN/IV were used to struck of charge of different sizes of same
       items in various SSRC's.
       2)     Premature issue of clothing items in various SSRC's
       3)     Tampering and manipulating the entries in SSRC's to cover the
       over issue/irregular issues, which were not in accordance with the
       entries in CIVs/Ivs.
       4)    It was found fiat 176 nos, of Parachute were brought on charge
       twice by logistic section resulting in a surplus of 176 nor. of the
       item. In this connection, it may be mentioned that allotting of two


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       different EX/RV Nos. for one IV no is highly irregular. The
       discrepancy was not detected by the unit authority even during the
       periodical stock taking. A COI was convened for investigating the
       irregularities and findings.
PCDA (WC) Chandigrah
                      Part I Section 'A' Cash Irregularities
                              1)    DEO Jalandhar Cantt
The case relates to the payment of enhanced compensation and measuring
3018K 17M was acquired and Special Land Acquisition Collector gave his
award granting compensation @ 70,000/- per acre for chahi land, Rs.
32000/- per acre for Barani/Banjar and Rs. 1,20,000/- per acre for Abadi
Land. Landowners were not satisfied with the SLACs award and filed
application in the court of ADJ Jalandhar who, in order, enhanced the
compensation @ Rs. 85000/-per acre for the disputed land. UOI filed appeal
in Punjab & Haryana High Court against the ADJ award, which stayed the
execution on the condition that half of the amount under award should be
deposited in the court. Meantime, UOI filed the SLP against the High Court
order. Supreme Court passed the orders that respondent's are permitted to
withdraw only 50% of the amount after furnishing security and the
remaining 50% shall remain deposited with the court and leave granted. The
request for release of cash assignment amounting to Rs. 14, 34,970/- which
includes Rs. 1,91,438/- for the period 12/98 to 9/2001 @ 15% pm 450271/-
was received from Dte DE (WC) Chandigarh after 4 years and 10 months
from the date of orders of the Supreme Court, and was released by office of
the PCDA (WC) Chandigarh for the same amount. No action was taken by
the DEO to implement the judgment of the Supreme Court, which shows
negligence on the part of the executive authorities resulting in excess
payment of interest of Rs.1,91,438/-. This item has been included in LA.R
for H.Y.E. 12/03 also.


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CDA Guwahati
                       Part I Section 'A' Cash Irregularity
                               1)    GE Guwahati
                                    GE Umroi
                                  GE 859 EWS
This case is about the contracts, which has been concluded without
obtaining admin. approval. The contracts have been concluded under Sub
head 'C' treating the work as petty repairs for which admit approval is not
required. However, para 260 RMES clearly states that the replacement and
renewals costing up to R.1 lakh will be treated as ordinary repair and
chargeable to Sub head'C' and those costing more than Rs 1 lakhs will be
financed from Sub head 'D' Special repair, and as per para 125 RMES
Special repair is treated as work for the purpose of admin approval but will
be budgeted from maintenance head. In this regard, the conclusion of
contracts GEs for repairs replacement costing more than Rs.I lakh without
obtaining admin. approval is viewed as irregular.
PCDA (SC) Pune
                       Part I Section'A' Cash Irregularity
                           1)     CE (R&D) Secunderabad
During the scrutiny of CST of the contract agreement, it is noticed that M/S
Southern Builders had quoted Rs. 48,27,775.35 which was lowest and was
also within the estimated cost of work i.e., Rs.60 lakhs was not accepted
whereas re-invitation of tenders was directed by CE (R&D) Secunderabad
without giving any specific reason for retendering. On 2nd call M/S Indarjit
Singh & Sons tender who had quoted Rs, 66, 26.105.29 had been accepted
being the lowest after discount, the accepted amount works out to RR
65,92,974,76.By accepting the second call the , Govt. in going to incur an
extra expenditure of Rs. 17,65,199.41 which is to be regularized as cash loss
under sanction of Govt. of India.


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                                       MFAI Fresh cases for Q.E. 12/03
CDA (BR) New Delhi
                      Part I Section 'A' Cash Irregularities
                                1)     19 BRTF Dantak
The case relates to the irregular hiring of equipment by CE (P) Dantak. In
terms of Govt. of India, BRDB No. P.231 (10) BRDBIBWA/94/Delegation
dated 23.3.95 DGBR in consultation with the CDA (BR) can hire equipment
for a period of six months from a Govt. Deptt/PSU and for hiring from a
Private agency, prior approval of the Govt. if India is required. A memo of
Terms (MOT) was signed between Comdr. 19 BRTF and Executive Engr.
Road Division, Tata Hydro. Project Authority CTHPA) for hiring a new
BD-65 Dozen for accelerating the progress of cutting work on approach
road to THEP Power House. This was signed on 3.5.99 even before the
Approval-in-Principal accorded by the CE (P) Dantak and was
communicated to HQ. 19 BRTF, whereas they both didn't have the authority
to hire, the equipment without approval of DGBR/ Govt. of India. The MOT
was amended on 23.2.2000 increasing the hiring rates and extending the
period of hiring up to 31.3.01, without obtaining the sanction from CFA.
HQ CE (P) Dantak forwarded a statement of case HQ DGBR, seeking
sanction for hiring of Dozen. The fact that the Dozer was being hued since
1999 was not indicated and was sent by HQ DGBR for concurrence of CDA
(BR). But CDA (BR) advised DGLR to obtain the approval of Govt. if India
and IFA (BR).
                                   2) HO DGBR
The case is about the unauthorized retention of TATA Sumo attached on
trial basis with DGBR. A proposal for procurement of 5 TATA Sumo
vehicles was approved by the T) GPR can Sept. 1996, and it was also
decided to conduct trial evaluation of one vehicle at Delhi, by TA
Directorate of HQ DGRR. It was to be returned to the firm after completion
of the trial nut of 10,000 Kms. One TATA Sumo was received by IQ DGBR
on 12.9.96 and after the vehicle had run for 11,220 Kms. the final trial
report was submitted by the Board of officer detailed to evaluate the
performance of the vehicle. The vehicle was retained with HQ DGBR that
trial can be considered as complete only after comparison, of the parameters
of the vehicle with Jeep Mahindra. The vehicle was finally returned on
14.9.02 after it had already run for 1,97,790 Kms. DGBR was advised to,
regularize the expenditure incurred on the unauthorized retention of TATA


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                 ORIENTATION COURSE FOR AAO / SO (A)

Sumo by getting expost facto sanction of G.O.1 on ale of pay and
allowances of Driver, POL consumed and expenditure incurred on repair
and maintenance of vehicle. But no action was taken by them. The DGBR
has again submitted that the record was kept properly by maintaining KM
cards and Car Diaries. Retaining of the vehicle for a period of more than six
years for trial evaluation was irregular and expenditure incurred on
employment of drivers, fuel and repairs was unauthorized. This needs
regularization under the orders of Govt. of India.


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                 ORIENTATION COURSE FOR AAO / SO (A)

                      ANNUAL AUDIT CERTIFICATE
Controllers will submit annually to the C.G.D.A. so as to reach him by 1st
September each year,       the certificate as laid down- in paras--535 and 541,
Defence –Audit Code. They may make in the certificate any
reservations/qualifications considered necessary as a result of test checks
exercised by them. The consolidated Audit Certificate published in the
Appropriation Accounts of the Defence Services will be taken as a guide by
Controllers. The instructions contained in Para 535 el. seq., Defence Audit
Code should he complied with by Controllers while submitting the
certificate. Details in support of qualifications/reservations made by
Controllers in the certificate will be furnished by them in the relevant
proformae as prescribed in Annexure "D" to "K" to this chapter. Although
the proformae have been prescribed for rendition of details in respect of
certain common type of qualifications/reservations, Controllers are only to
make use of such of those proformae as are necessitated by the result of
their test checks. In case it becomes necessary to make any
qualifications/reservations other than those for which proformae ''D" to "K"
have been prescribed, Controllers will invariably furnish details in support
of such qualifications/ reservations.
The Controller's certificate for a year should embrace all the expenditure
contained in the accounts of that year and should also depict as a whole the
correct results of internal audit conducted by the Defence Accounts
Department vis-à-vis the entire field of Defence expenditure. Cases in
which ex-post-facto sanction of the Government of India has been refused
for any item or items of expenditure already incurred and any special
features or major changes introduced during the period covered by the
certificate, will also be included in the body of the certificate. The
certificate, which should be signed by the Controller (J.C.D.A. if holding
independent charge) and only in his absence by the next senior officer "for
the C.D.A./J.C.D.A.", subject to post approval by the C.D.A./J.C.D.A.,
should be self-contained, Comprehensive and precisely worded. In cases of
reservations or qualifications made in the certificate, a few specific and
glaring instances in support of each such reservation or qualification should
be furnished separately as an Appendix. The relative position (i.e., extent of
improvement or deterioration noticed) as compared to the immediately
preceding years in regard to certain important features of accounting such as
state of accounts, position of stock verification, outstanding on account of
payment issues, etc. should also be brought out in the certificate proper,
duly supported by necessary details which should be furnished separately


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In respect of items of unauthorized expenditure or irregular issue of stores,
etc., if any, for which Government. Sanction is awaited and the audit
certificate in respect thereof cannot consequently be given, a statement
should be appended to the certificate giving full particulars of all such items,
the head of accounts in which they are included, the precise circumstance in
which the expenditure was incurred or the stores were issued prior to the
receipt of Government sanction etc. Information regarding the relevant
authority under which, or the reasons for which, Government sanction is
necessary and the action taken to regularize the expenditure in each case
will also be invariably in eluded in the statement. Only those transactions
whose monetary value exceeds Rs.50,000 in each case and which normally
require the sanction of the Government of India prior to their occurrence
e.g., items involving extra/irregular expenditure, transactions like
unauthorized provision of free conveyance, extra issue of rations, stores,
etc., need be included in the above mentioned statement. Cases of actual
losses of stores, building, etc., for which sanction of Government, where
required, has inevitably to be accorded ex-post facto will not be included
therein, as these will find a place in the statements of losses of stores or
cash, as the case may be. Similarly, cases where ex-post-facto sanction has
been refused by the Government of India will not be included in the
statement, as they are to be included in the body of the audit certificate.
Cases of serious irregularities detected in internal audit will be listed in a
separate annexure to the AAC furnishing brief particulars of the nature of
irregularity when it was detected and the action taken subsequently.
The following points should be carefully observed in the preparation of the
statements referred to above: -
        (i) The narration of each item should be self-contained and
complete giving full particulars of the expenditure and indicating clearly the
circumstances, so far known to the controller at the time of rendition of the
certificate, in which the payment was made or the expenditure incurred in
the absence of the necessary Government orders.
       (ii) In cases where full particulars are not available at the time of
rendition of the audit certificate, it should be indicated in the remarks
column against the item that they are being obtained or will be furnished
later when the case is routed through them for furnishing an audit report
while applying for the requisite Government sanction for the expenditure.
Note: Amount enhanced from Rs.5, 000 to Rs.50, 000 in the light of Para 542 as
amended vide C.S. No. 22 of 83 Defence Audit Code.
      (iii) In cases, however, where there has been delay on the part of the
executive in answering the objection and or/in furnishing the reasons for


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                 ORIENTATION COURSE FOR AAO / SO (A)

incurring the expenditure in the absence of or prior to the receipt of the
Government sanction therefore, the item should be so annotated in the
statement and such items should also invariably be exhibited in the quarterly
report on the Major Financial and Accounting Irregularities. In case the item
had already found a place in the report on the Major Financial and
Accounting Irregularities, a reference to the item number in the report on the
Major Financial and Accounting Irregularities should be cited.
       (iv) The following basis will be adopted for reporting outstanding
on account of payment issue of stores supplied/services rendered (including
hire charges of tools and plants) and rent and allied charges etc.
              (a) Payment issue of stores supplied/services rendered
              (including hire charges of tools and plants) - Issues made upto
              the 31st March outstanding on the 30th June.
              (b) Rent and allied charges-Rent bills issued upto the end of
              February outstanding on 30th June.
              (c) Outstanding audit objection - Objections issued upto            the
              31st March remaining outstanding on the 30th June.
NOTE: 1. Statement showing outstanding on account of payment issue of
stores supplied/services rendered (including hire charges of tools and plants)
and rent and allied charges should give an analysis of the outstanding party
wise and year wise and also indicate briefly the reasons for the outstanding
under each category as well as the steps taken to liquidate the same. The
breakup of the details of rent and allied charges (outstanding will be
rendered service wise) (i.e. separately for Army, A.F. and Navy).
NOTE: 2. the number of cases where the amount of outstanding on
account of payment issues and rent 'etc. exceeds Rs.50, 000 in each case of
private individuals/institutions and 1.00 lakh in other cases and is remaining
outstanding for more than a year should be mentioned. The details thereof
will be furnished in performs as prescribed in Annexure 'N-I' and 'O'
receptivity to this chapter.

NOTE: 3. a copy of the statement on account of rent and allied charges
together with the corresponding statement alluded to in Note 2 above will
also be endorsed to CHGS Branch, E-in-C Branch and D.F.A. (W).
      (v) In cases of non-linking of issue vouchers/CRVs./Vouchers not
produced for audit etc., the total number will be indicated in the, body of the
      certificate. Particulars of the more important cases involved will be


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given in the statements attached to the Annual Audit certificate, indicating
inter-alia, the reasons   for the non-linking of the CRVs with the issue
vouchers, non-Production of vouchers etc.
       (vi) In cases of non-maintenance/improper maintenance/ non-
production of accounts the statement enclosed to the Annual Audit
certificate should contain full details of the irregularity, such as the name of
the Unit, the particular account and the period involved, the precise nature
of the irregularity (in the case of improper maintenance OF ACCOUNTS)
and information whether the irregularity has since been set right at the time
of submission of the certificate.
       (vii) The number of Important cases of expenditure under
OBJECTION EXCEEDING Rs.50,000 in each case of private
individuals/institutions and 1 lakh in other cases where sanction of
Government of India is required and which were enumerated in the previous
years. Appropriation Accounts but are still awaiting regularization will also
be mentioned and details furnished in the proforma prescribed in Annexure
"P" to this chapter.
     (viii) Cases of losses awaiting regularization for more than one year
and where the amount involved are substantial enough to require sanction of
Government of India will be exhibited in the proforma prescribed in
Annexure “Q” to this Chapter.
Where it has not been possible to include any items of unauthorized
expenditure actually incurred in or relating to a year in that year's certificate
already rendered to the C.G.D.A owing to delay in their detection or due to
other causes, the items affected should be dealt with as follows:
       (a) If the unauthorized expenditure continued even in subsequent
       year/years for which an audit certificate has not yet been rendered, the
       entire period to which the expenditure relates and the total amount
       involved (including that for the previous year/years) will be shown in
       the statement appended to the certificate to be rendered for that year.

       (b) In cases where the entire expenditure relates only to previous
       years, the period and the amount involved, etc. will be shown
       separately in the certificate of the year in which the unauthorized
       expenditure was first actually brought to light, in the form of an
       Annexure to the regular statement of the year.


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Items of expenditure awaiting regularization under orders of and/or which
may be regularized by competent financial authorities lower than the
Government of India are not required to be exhibited in the statements
appended to the audit certificate.
In respect of stock-verification carried out by the administrative authorities,
a self-contained explanatory note giving the general position and results of
stock-verification during the year should be appended to the audit certificate
for that year. This not should inter-allia, contain information regarding the
number of units/formations in which stock-verification was either not
conducted at all or was incomplete; whether or not it was subsequently
conducted or completed; whether the result of stock-taking revealed a
satisfactory state of affairs the particulars of units in which the position was
unsatisfactory and whether the discrepancies between ground and book
balances were considerable and if so, their extent and their value; and such
other information as will enable a complete appreciation of the stock-taking
carried out during the year as a whole.
NOTE: Cases of non-verification/partial verification of stock where the
delay involved in the completion of stock verification for the financial year
etc is only of a few days need not be included. Only clear cases of non-
verification of sock need be reported. In cases of partial stock-verification
the No. of items not verified and the proportion they bear to the total
number of items required to be verified should also be indicated.
In order to enable the C.G.D.A. to render an audit certificate in respect of
the "Special grants-in-aid" made to Cantonment Boards, the accounts of
which are not susceptible to test audit by the D.A.D.S., the Controllers
concerned should include in their certificate a separate Para, on the
following lines:-
       "I also certify that the expenditure met from special Grants-in-aid
       granted to Cantonment Board from the Defence Services Estimates
       has been audited under my direction and that the conditions on which
       the grants have been made have been or are being fulfilled/have not
       been or are not being fulfilled in the following respects”.
       (To be mentioned in the certificate)
In respect of items of expenditure which are not audited by the Defence
Accounts Department e.g., expenditure on Q.M.G's installations (like flour
mills); expenditure incurred by the High Commissioner for India (U.K );
expenditure incurred by the Director General of Supplies and Disposals on
the purchases of stores for the Defence Services (including purchases by


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India Supply Mission Washington) a suitable note should be inserted at the
foot of the audit certificate to the effect that the certificate does not cover
such items.
The certificate should also he qualified suitably to indicate that losses of
stores (as distinct from cash losses which are to be regularized under the
normal rules in F.R. Part 1) due to enemy action and destruction by our own
forces owing to operational necessity, as also losses of sorts due to abortive
air-drops and those occurring in units and formations on war system of
accounting etc, in respect of which no formal regularization is necessary
under existing rules have not been included therein.
After despatch of the certificate to the C.G.D.A., a copy of the certificate
and its appendix will be shown by Controllers to the Deputy Assistant
Director of Audit/Assistant Audit Officer, Defence Services concerned, to
enable the Test Audit authorities to ensure that all cases of expenditure (I)
held under objection for want of Government sanction and (2) which ex-
post-facto sanction of the Government of India has been refused have in fact
been included in the C.G.D.A.'s certificate.
To facilitate the preparation of the annual audit certificate, a register will be
maintained in cash audit section of a controller's office and by each local
audit officer, showing items of the nature referred to above placed under
objection and the subsequent progress of the objections with notes or the
final orders issued.
Controllers will submit to the CGDA periodically progress reports duly
supported by detailed statements in respect of all items included in the
Annual audit Certificate as indicated below: -

                                                                Date on which due
                        Nature of Report                        to reach CGDA's
       Position of cases included in the annual audit
                                                                     15th Nov.
 (a)   certificate as on 30th September

       Position in respect of the same as on
(b)    31 December                                                   20th Jan.

       Further progress in respect of the same as on
 (c)   31st March of the succeeding year                             15th May


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Items of expenditure reported through the Annual Audit Certificate which
requires the sanction of the Government of India will be reviewed by the
Controllers on receipt of necessary sanction and their settlement or
otherwise communicate to the CGDA as early as possible separately in each


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                 ORIENTATION COURSE FOR AAO / SO (A)

       Detailed Instructions for the Preparation of Annual
                         Audit certificate
While preparing the Annual Audit Certificate the following instruction and
tire contents of the various circular on the subject issued by the C.D.A. and
the C.G.D.A. will be kept in view:-
(i)    Certificate proper:
       (a) The certificate proper should, as far as possible, be rendered in
       the form in which it has been printed in the Appropriation Accounts.
       Any other particulars considered necessary for communication to the
       C.D.A. should be furnished in the form of note in the margin or
       separately inclusion iii the memo, forwarding the certificate.
       (b) 1f an unqualified certificate cannot be given it should be
       qualified on broad lines. The qualification should he substantiated by
       citing important cases so as to make the certificate self contained and
       comprehensive. Specific instances in support of the qualification
       should also be given separately.
       (c) The relative position as compared with the immediate
       preceding years in regard to certain features such as state of accounts,
       position of stock verification. Outstanding (in account of payment
       issues, outstanding issue vouchers for audit, In linking of 'E' copies of
       vouchers, etc. should be brought out in the certificate proper and
       should invariably be supported by details which ,should be separately
       furnished, so as to given an idea at a glance of the extent of
       improvement or deterioration noticed.
       (d) A separate Para in respect of the accounts of Special Grants in
       aid made to make Cantonment boards will be included in the Annual
       Audit Certificate on the lines indicated in Chapter VII “On accounts
       of Cantt. Funds".
(ii)   Statement of items awaiting Govt. sanction.
       (a)    This statement should include only those items which require
       Govt. sanction and not those which can be default under orders of the
       lower authorities. It will be in turn parts: -
       1.   Statement showing items of expenditure incurred in tile
       accounts of the year to "which the audit certificate relates in respect


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                 ORIENTATION COURSE FOR AAO / SO (A)

        of which Government sanction is awaited. If tile unauthorized
        expenditure contained even in the subsequent year/years for which an
        audit certificate has not yet been rendered, the entire period to which
        the expenditure relates and the total amount involved (including that
        for the previous year/years) will be shown in this statement.
        2.    Statement showing items of expenditure incurred during
        previous years in respect of which the required certificate cannot be
        given for want of Government sanction.
               (a) Items of losses of stores building etc which require the
        sanction of the Government of India and find a place (after sanction
        by the CFA) in the statement of losses will not be included in these
        statements. Transactions which formally require the sanction of the
        Government of India, prior to their occurrence, viz. items involving
        extra/irregular expenditure, transactions like unauthorized free
        conveyance, extra issue rations stores, etc. will, however, be
        including therein.
              (b)     Only items of expenditure of Rs.50.000/- and above
        placed under objection for want of the sanction Govt. of India will be
        included in the statements.
               (c)     Cases in which ex-post-facto sanction of the
        government has been refused will be included in the body of the
        certificate proper and not in these statements.
               (d)    The circumstances in which the payment was made or
        expenditure incurred without obtaining government sanction will be
        clearly stated in the statement. In cases where full particulars are not
        available at the time of rendition of the certificate, it should be
        indicated in the remarks column against the item that they are being
        obtained and will be furnished later.
(iii)   Units whose accounts could not be audited:
        The following particulars in respect of such units will be furnished
        (a)   name of unit/formation
        (b)   period of accounts
        (c)   reasons for non auditing the accounts
        (d)   whether the accounts have since been audited.
(iv)    List of more important cases in which consignees of Defence Service
        Stores could not in practice link the items actually receives against


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                 ORIENTATION COURSE FOR AAO / SO (A)

       particular consignments notified as having been dispatched to them
       and wherein it could not also be verified in audit that the stores were
       satisfactorily brought to account by the consignees;
       The list will be prepared under the following headings:
       (a)    name of consignee unit/formation.
       (b)    name of consignor unit/formation.
       (c)    number and date of issue voucher of consignor.
       (d)    details of stores (quantity etc) included in the issue voucher.
       (e)    details of stores brought cm charge by the consignee.
       (f)    details of stores not linked or not brought on charge in full or in
       (g)    approximate value of stores mentioned at item (f) above, if
       (h)    the reasons for failure to such linking such as non receipt of
              consignors vouchers or wrong identification of stores.
       (i)    the difficulties, if any experienced by the authorities at the
              consignee's end to carry out the linking and- the remedial
              measures considered necessary.

Note: -     In addition to the above mentioned particulars regarding more
important cases the total number of unlinked voucher will he mentioned in
the list.

(v)    (a)    Non-production
       (b)    Non-maintenance, and
       (c)    Improper maintenance of account
       Particulars in respect of the above will be mentioned under the
             following headings:
       (A) Non production of accounts
              1.     Name of unit/formation.
              2.     Name of account and period for which accounts were not
       (B) Non maintenance of account
              1.     Name of unit/formation
              2.     Period of account.
              3.     Name of particular account not maintained.


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                 ORIENTATION COURSE FOR AAO / SO (A)

              4.     Latest position in each case whether subsequently
                     maintained, if so, from which date;
              5.     Comparative position, viz. number of units and accounts
                     affected last year should also be shown.
        (C) Improper maintenance of accounts
              1.     Name of unit/formation.
              2.     Period of account.
              3.     Name of particular account not mentioned properly.
              4.     Particulars in respect of which account, was
              5.     Latest position in each case stating whether subsequently
                     set right.
              6.     Comparative position in regard to previous year should
                     also be shown in the certificate.

(vi)    Stock Verification
        A self contained explanatory note giving the general position and
        results of stock verification carried out during the year will be
        submitted in the form of a note to Annual Audit Certificate. The stock
        verification note will be in two parts, one in respect of Army unit /
        formations and the other for M.E.S, and sustained by factual data on
        the following points:
        (a) Name of units/formation in which stock verification was either
        not conducted at all or was incomplete.
        (b) Whether the results of stock taking revealed a satisfactory state
        of affairs or unsatisfactory
        (c) Whether the discrepancies between ground and book balance
        were considerable and if so, their extent and value.
Note: - A copy of the note will be endorsed to the Os. C. of all the units and
formations the stock verification of which has been commented upon,
so that the Os. C. May have any opportunity to challenge, if they do not
agree with any facts/remarks made therein.
(vii)   Unauthorized use of Government Transport:
        A statement showing specific instances of unauthorized use of
        government transport under the following heading will be submitted
        along with the annual audit certificate:


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                 ORIENTATION COURSE FOR AAO / SO (A)

       (a)    Name of unit/formation.
       (b)    Details of transport used unauthorized.
       (c)    Period of use.
       (d)    Type of vehicle used.
       (e)    Mileage runs.
       (f)    Purpose for which used.
       (g)    Action taken for regularization.
(viii) Items of outstanding payment issues for which debits could not be
       raised against state departments for want of receipted copies of
The approximate number and value of vouchers outstanding for raising
debits against each category, viz. Civil, M.E.S, Air-Force etc. will be
furnished as an annexure to the Annual Audit Certificate. Information
regarding the action taken to obtain the wanting vouchers and number of
items cleared so far with monetary value in each case will be mentioned


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                 ORIENTATION COURSE FOR AAO / SO (A)

Mileage Card
1)     The various columns of the Mileage Card have been properly
       completed with reference to the Car Diaries.
2)     The distance run as shown in the Car Diary agrees with that shown in
       Km. Card.
3)     The Kilometer reading of all vehicles has been checked at least once
4)     MT Gasoline/Diesel issued to the vehicles on day to day basis as per
       POL Retail Issue Voucher (IAFZ-220) part-II (Revised) has been
       accounted for in the Mileage Card.
5)     The Mileage Card is signed monthly by the Unit Commander or an
       officer nominated by him.
6)     Authorized Kilometer per litre as enfaced by EME Workshop is
Vehicle Log Book
It contains the particulars of vehicle stay in the EME Workshop and nature
of repairing from time to time including change of tyres/tubes. For this
purpose the IAO auditing the account of EME Workshop will as a test
check, take extract of certain entries in respect of certain vehicles from the
relevant records of EME Workshop for verification in to the Vehicle Log
Authorized KPL is enfaced by EME Workshop authorities.
Premature down gradation of vehicle is recorded in the Log Book and are
factually correct

                   AUDIT OF MT AND POL ACCOUNT
                    IN ARMY UNITS & FORMATIONS

1)     The vehicle held on charge is entered in Unit Vehicle Register (IAFZ-
2)     The Number of vehicles held are not in excess of those authorized in
       Unit PE/WE.
3)     Transfer of vehicle from one Unit to another is under the orders of
       Army HQrs.
4)     Stock taking is to be carried out every year.
5)     POL Stock Ledger is an important document wherein Receipt & Issue
       of POL items are recorded.


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                 ORIENTATION COURSE FOR AAO / SO (A)

6)     Stock has not been held in excess of normal requirement.
7)     POL charged off as issued to vehicle agrees with that taken on charge
       in mileage card against the vehicle concerned.
8)     Oil & Lubricants charged off in the ledger as issued to Unit's vehicles
       are in accordance with the authorized proportion.
9)     Monthly Stock Verification has bee endorsed.


Car Diaries are maintained for all vehicles.
The purpose for maintaining the Car Diary: One book for every quarter. To
ensure that the nature of duty performed, places, distances covered, POL
drawn are for bonafide Government duties.
For non-duty journey: normal rules as notified in Govt. orders are to be
charged. Misuse of TPT is liable to be charged with an offence under Army
Petrol is filled on last day of the month and result recorded in car diary in
Red Ink.
                     A UDIT OF HIRED TRANSPORT
Transport indent and order Form IAFZ-2150 will be used for transport hired
from civil sources and service transport hired out to organization like MES,
MF and civil departments. The following points should be borne in mind:
1)     The requisition signed by Commissioned / Gazetted officer indenting
       for the transport will bear under his signature, his name and initial in
       block letters.
2)     Whether the applicant is entitled to the provision of conveyance
       (free/on payment) duly sanctioned by the competent authority.
3)     The nature of duty should be clearly stated in transport indent.
       Expression like “Government Duty” or on “as required basis” or
       “Headquarters‟ duty” is vague and has not been used.
4)     Paid transport indent received by the LAO'S from the
       PCDA/CDA/JCDA will be linked with the Hired Transport Register
       maintained by the Unit who prefer the claim from the CDA.


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                 ORIENTATION COURSE FOR AAO / SO (A)

Function & responsibilities: A Salvage Sub-Depot or a Salvage Section of
the RSSD functions in an Ordnance Depot is responsible for the receipt,
storage, accounting, breakage and final disposal of all unserviceable,
obsolete and surplus serviceable stores of small value except –
1)     Small Arms, Machine Guns and Components thereof.
2)     Ammunition and Explosives including drill and dummy stores.
3)     When there is no RSSD, the Salvage Depot functions as a Sub-Depot
       of an Ordnance installation. The above functions apply with
       necessary modification to the Salvage Sub-Depot also.
When valuable stores (those which have particular sale value) are received
complete with major components and can easily be identified as such, these
are accounted for under "Generic Heads" both in number and weight viz.
blankets and sheets are accounted for in number and weight, while metals
are accounted for by weight only. The lists of “Generic Heads” are given in
Part-I, Annexure "A" of the "Salvage Section/Sub-Depot and Disposal of
Store Procedure".
When surplus, unidentified and obsolete stores of small value are received,
they are accounted for under generic heading. They will be stored and
accounted for under broad groups/headings such as MT Tools, MT
Components, Condensers, and Valves and so on. The grouping of the stores
is to be done in a rational manner consistent with similarity and utility of
items. These stores will be accorded the same treatment as for serviceable
surplus stores and will not be merged with similar stores held in salvage in
unserviceable conditions.
Valuable repairable un graded stores are also accounted for under generic
Unwanted repairable stores received from the stock groups/sub-depots will
be accounted for under the individual catalogues / part No.
Stores not valuable and those which are valuable but are received in an
incomplete condition and as such are saleable in scrap only and accounted
for under the designation and accounting unit authorized in the salvage


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                 ORIENTATION COURSE FOR AAO / SO (A)

MT vehicles are accounted for in numbers only. Engine No. and Chassis
No, of each vehicle is shown against each vehicle.
Salvage stores are issued to Army, Navy and Air Force Unit including TA,
NCC Units with the approval of Officer-in-Charge Salvage Section/Sub-
MT Components and assemblies from Class-VI vehicles have been issued
on demand to EME Workshop.
No issues of unserviceable vehicles, chassis and engines have been made to
any Military establishment except when authorized in their PET/WET.
Free issues to Ordnance Factories, Military Farms, Lands & Hiring Services
and NCC Units has been authorized by Director of Ordnance Services with
the concurrence of the Ministry of Defence (Finance), the payment issue
rate notified by Ministry of Defence (Finance) being endorsed on the issue
Issues to MES Units have been made on payment by Book Debit as
authorized by DOS with the concurrence of Ministry of Defence (Finance)
by whom the payment issue rates will be notified.
Issues made to the following categories have been authorized by the DOS
with the concurrence of Ministry of Defence (Finance) and treated on
payment by Book Debit at the payment issue rates as notified by the above
authority and that a copy of the voucher showing the cost of the stores and
the details of packing and other incidental charges incurred has been sent to
PCDA/CDA with a copy of the relevant release order through LAO: -
(a)    Sale to other Govt. Department, Central or State such as Railways,
       Post & Telegraphs and Police.
(b)    Sale to Hospitals and Philanthropic Institutions, if demands are
       sponsored by Central, Provincial or State Governments.
(c)    Sale to Educational and Scientific Institutions where demands are
       sponsored by Central, Provincial or State Governments.
(d)    Sale to nominated parties for use of Governments.


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                 ORIENTATION COURSE FOR AAO / SO (A)

The number / quantity and nomenclature of the stores charged off stock
records (Accounts Cards and Ledgers) are the same as shown in Release
Order issued by Brigade Command Headquarters and in Sale Account
(IAFA-58) received from the Depot concerned.
RSSD functions inside an Ordnance Depot for the purposes to receive sort
out and condition the following stores received by them both from the Stock
Group of the Depot as well as from the Unit and formations.

       (a) Clothing
       (b) General Stores
       (c) Technical Stores including MT with exception of the following:
              -     Ammunition and Explosives
              -     Ammunition Empties
              -     Ammunition Packages
              -     Vehicles and
              -     Vehicle's Assemblies
Carryout repair of all such stores which do not require the services of skilled
workshop technician.
Disinfect and wash or dry clean stores requiring such treatment within the
capacity of the RSSD.
Arrange with EME for the initial conditioning of all items which are the
responsibility of EME.
Forward immediately all serviceable stores to the appropriate stock sub-
depots or depot holding such stores for re-issue.
Hold those stores which will be required by EME Workshop until called for
of the repairs.
Dispose all stores which are unfit for economic repair or are not required to
be repaired. Manufacture such items of stores as may be authorized from
time to time by the Commandant/COO of the Ordnance Depot.
Maintenance of Loan & Hire Registers in respect of stores issued on loan/on
hire by the Ordnance Depot.


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                 ORIENTATION COURSE FOR AAO / SO (A)

Repair of those items of the QM Stores of the depot which are within the
capacity of the RSSD.
Accounts Cards consisting of simple record of `Receipt', `Issue' and `Stock
Balances' for the stores held in the RSSD are maintained.
In addition to the general rules laid down in Chapter I to III of this Manual
and those prescribed for the audit of the Account Cards of Ordnance Depot,
the following points will also be looked into:
Receipts : All the stores received in RSSD on Receipt Voucher etc. have in
the first instant posted in the Account Card under sub column to be
conditioned of `Receipt', column and that normal accounting procedure of
`Receipt' and `Issue' has been followed.

 Conditioning: The stores conditioned have been written off charge from the
column `Awaiting Condition' and the same quantity/number brought on
charge according to condition shown in the conditioning Form as
serviceable/repairable/unserviceable in the respective column of the
Account Card.
Issue of Unserviceable Stores: Unserviceable stores of all types of
repairable stores which are surplus to requirement, have after conditioning,
been passed to salvage section/sub depot on the relevant Conditioning Form
and brought o charge by the Salvage Section.
Repairs in RSSD Workshop: The repair of stores which RSSD Workshop's
responsibility has been regulated by the use of job cards allotted a serial
number from a register maintained for the purpose.
Stores sent to RSSD Workshop for repair are not struck off charge from the
Account Card until received back duly repaired. When the repaired stores
are struck off charge from the "Repairable Column" of the Account Card
and are taken on charge as `Serviceable' and `Unserviceable' and
unserviceable stores are struck off charge on transfer to salvage section on
the same job card.
Repairs by Contractors : Stores issued to contractors for repair and those
received back duly repaired have been struck off and taken on charge, in the
relevant Account Card and entries to this effect made in the Contractor's


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                 ORIENTATION COURSE FOR AAO / SO (A)

Register of "Repairable Stores" maintained for the purpose by Repairable
Store Disposed Section.

All the stores issued to the contractor have been received back.
Manufacture of stores in RSSD Workshop: Work order for the manufacture
of stores have bee duly authorized by the Commandant/COO/OD.
Separate Work order register have been maintained for each workshop and
separate case opened for each work order in which the original copy of the
work order and all documents relating to it have been filed.
Receipted copy of completion notice (IAFO-1300-A) on which the
manufactured stores were sent to the stock sub-Depot has been received
from the depot and necessary steps taken to ensure that the stores have been
brought on charge by the receiving stock depot.
Estimated form (IAFO-2579) in respect of each work order of manufacture
of stores has been prepared.
Expense Stores: Accounts Card have been opened for each item normally
stocked in the `Expense Stores' on IAFZ-2645 in alphabetical order within
each vocabulary section
Normal accounting procedure has been followed.
Simple `Receipt' ad `Issues' register have bee maintained on the prescribed
forms and posted up to date.
The stores issued on expense vouchers have been correctly charged off the
relevant account card and taken on charge in the register of expendable store
maintained by each workshop.
Stock Taking: Triplicate copy of the stock taking sheet along with one copy
of AFG1049 (regular loss statement) has been received in the LAO's office
after one month from the date of stock taking regardless of the fact whether
the discrepancies have been settled or not in order that suitable action has
been taken by the LAO to expedite settlement of the discrepancies.


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                 ORIENTATION COURSE FOR AAO / SO (A)

                         AUDIT OF VEHICL DEPOT
Function and responsibility of Vehicle Depot
Vehicle Depots are primarily responsible for storage and supply of all
categories of mechanically propelled vehicle to the services.
The major activity of the Vehicle Depot to achieve the above mentioned
objective includes receipt, issue, storage, preservation, accounting and stock
Various Accounting Forms used by Vehicle Depot for stock held on charge

       (i)     Vehicle Depot               - lAF0 2706 -Non -expendable
       (ii)    Vehicle Register            - lAF0 2678
       (iii)   Vehicle Stock Summary       - 1AF0 - 2676
       (iv)    Kit Store                   - IAFO 2698
       (v)     POL Stocks                  - lAF2 2109
Maintenance of Documents
The following documents will be maintained for accounting of vehicle and
kit in vehicle Depot:-
       (a)    Vehicles
              Vehicle Stock Summary -              TAFO - 2676
              Vehicle Register      -              IAFO - 2698
       (b) Kit                      -              Stock Accounts Card.

Guidelines for Effective Local Audit
As both the conventional Regulatory Audit as well as Efficiency cum
Performance Audit/ Audit for value of money are necessary, there is need to
slightly reorient DAD role & approach to Local Audit.
Various checks prescribed in the Manual & Codes will continue to be
carried out till modification, if any made.
Side by side it is necessary to concentrate on more important areas/
activities where subscribed Savings are possible to be achieved or the
objectives could be achieved at a lesser cost without compromising on
quality/ requirement.


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                 ORIENTATION COURSE FOR AAO / SO (A)

Audit of Store Account of Vehicle Depot
The audit of store Accounts of vehicle Depot. Will be conducted in
accordance with the general audit instruction laid down in chapter I and II of
ALAM Part I and the detailed procedure prescribed for the audit of the
corresponding accounts of Ordnance Depot and consuming units.
In addition, the points mentioned in the succeeding paragraphs will be
specially observed in auditing these accounts:
Vehicles are accounted for in Vehicle Stock summary & Vehicle register.
The daily receipt and issue transactions in a vehicle depot will be recorded
in a daily statement of receipt/ issues (IAFO -2741) which are the primary
documents from which the stock records are posted.
In addition to normal check of receipt & issue entries, it will be seen that –
(i)   Separate Daily Receipt and Issue Returns have been prepared for'!
      Vehicle, 'B' Vehicle, specialist Vehicle, cased vehicle and chassis and
      numbered in separate series.
(ii) Various columns in Vehicle stock summary & Vehicle Register have
      been correctly posted and closing balances of vehicles arrived at on a
      certain date in stock summary and in vehicle register agree.
(iii) Engine No., Chassis No. BA/ W.D. numbers have been correctly
      entered in the vehicle Register. In the case of Vehicle/ Chassis
      received from the trade, Units such time as B.A. Nos. are allotted,
      Vehicles/ Chassis have been taken on charge by Chassis and Engine
(iv) No vehicle has been issued without Issue Order/ Transfer Order
      issued by the Controlling Authority which, in the first instance is
      AHQ M.C.O Branch, who make bulk allotment of fit vehicles to
      Command HQ, who which therefore becomes the Controlling
      Authority for issue of the allocated vehicles.
(v) Each Issue Order or Stock Transfer Orders is limited to the issue of
      one make/ Type/ class of Vehicle to any one unit.
(vi) No chassis to Body- builders has been issued without the authority of
      issue orders from Army HQ.
(vii) The principle of issuing the oldest vehicle in stock first has been
(vii) The issue of chassis to local Body- builders has been made on convoy
      notes and to Body-builders located in outside station on regular issue


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                 ORIENTATION COURSE FOR AAO / SO (A)

(ix)   "Charges in the condition" of stock vehicle while in storage will, if
       certified by the EVE Inspector as not due to theft, fraud, neglect, want
       of proper maintenance, or lack of suitable storage accommodation
       only be adjusted by means of adjustment vouchers and the stock
       vehicle reclassification done.
(x)    "Changes in Condition" attributed to pilferage of parts or neglect of
       any kind should be treated as losses and dealt with under the general
       rules in FR Part I.
Adjustment of Cost of Vehicles to MES, Air Force and Navy
Issue of Vehicles to MES
The LAO of the consigner vehicle depot forwards the copies of the issue
voucher to AAO GE (MES) concerned and the LAO of the consignee for
the verification of credit of the vehicle in the books of the consignee
received copy of the voucher are scheduled by him to CDA (Army) Meerut
for verification of adjustment of cost of vehicles in the half-yearly statement
rendered to him by Army HQ. duly priced by DFA (O).
The cost of vehicles returned by MES will also be adjusted in the same
manner on half yearly basis.
Issue of vehicle of Air Force, Navy and Military Forms Departments:
2 (Two) copies of the issue vouchers are forwarded by the consigner to
consignee for acceptance. On receipt of the acceptance, one copy(receipted
copy from consignee) will be sent by the LAO of the Consignor Vehicle
Depot to the LAO of the consignee for verification of credit in the books of
the consignee and onward acceptance, one copy(receipted copy from
consignee) will be sent by the LAO of the Consignor Vehicle Depot to the
LAO of the consignee for verification of credit in the books of the consignee
and onward transmission to the PCDA/CDA concerned i.e. CDA(AF),
CDA(N) or Regional PCDA/CDA of the forms as the case may be, the
PCDA/CDA will after linking the details of the vouchers with the statement
forwarded by the respective Branch Headquarters, adjust the debit on
account of the cost of vehicles received by him half yearly except in the
case of Military Forms in which case the adjustment will be carried out


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                 ORIENTATION COURSE FOR AAO / SO (A)

                   AUDIT OF POL IN VEHICLE DEPOT
(a)    POL has been accounted for as under
       (i) Bulk POL stock on the standard ledger IAF2 - 2109
       (ii) Containers in the POL on IAF2 - 2286-A
(b)    Distribution of containers has been shown on the reverse of IAF2-
(c)    The stock of POL does not exceed that based on the normal rate of
       issue for the particulars Vehicle Depot and approximately 8 days
       maintenance stock including reserve for any known commitment.
(d)    In the case of incoming vehicle, the quantity of POL vouchered by
       units has been brought on charge & the quantity used in transit (viz.
       the difference in quantity drained & quantity vouchered) has been
       charged off by mean of a CIV. It will be further seen that the quantity
       charged off through CIV is reasonable taking into account the
       mileage covered by the vehicle in transit by road.
(e)    The fuel required for movement of vehicles inside the vehicle depot
       has been issued against each B.A numbers and the quantity issued has
       been posted in ledger.
(f)    All M.T Gasoline Vehicle (Class I to V1I) have been drained of M.T.
       Gasoline on their being placed in their storage location except such
       class I & II vehicles are required for immediate issue.
(g)    Fuels recovered for vehicle after refueling have been returned to the
       POL Store & brought to account by bulk CRV at the end of each
       working day.
(h)    Bulk issue of oil & lubricants have been made to maintenance teams
       in different parts & the daily consumption has been written off charge
       by means of CIV prepared at the end of each day giving B.A. WD
       numbers maintained.
(i)    Issues to depot. Transfer have been made in bulk on IAF2 - 2206,
       separate copy being prepared for the total quantity issue each day.
(j)    Bulk issues to convoys have been made in containers on IAF2-2206
       (part 1) (to be used as a CIV) each voucher being endorsed with
       reference to the connected movement order, convoy note number.
(k)    M.T. Gasoline issues have generally been based on the following
       (a) Transfer of stock between vehicles Depot by road-- As on required
       (b) Unfit, road delivery - 9 liters per vehicle.


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                 ORIENTATION COURSE FOR AAO / SO (A)

Issue by rail
Vehicle dispatched by rail will have a maximum 2 liters in case of Motor
Cycle and 9 liters in case of B' Vehicles; 45 to 55 liters will be issued in
case of issue of 'A' vehicles by rail.
(l)       When vehicles are sent to base workshops, the petrol has been
          drained off from the tank before handing over the vehicle to
(m)       M.T. Gasoline sent along with vehicle in dependant station workshop
          or workshop companies have been accorded for in the log book with
          the appropriate details in support.

(i)       Stock taking has been carried out according to periodicity mention

                                            Half yearly viz. on the last days of
Vehicles                                    the months of March and September
                                            of each calendar year.
Kits & Equipments
       (1) Bulk items of equipments of Half yearly as in case of vehicles.
           stock vehicles, items of
           vehicle's kits, Tire, Tubes
           and Batteries.

       (ii) POL                             Monthly

(ii)      Stock taking has been completed within a period not exceeding 6
          (Six) working days and the actual dates of stock taking notified in
          depot orders, Part-I.

(iii)     The stock census sheet pertaining to certain vehicles will be screened
          against the related vehicle's log books to ascertain as to whether log
          book exist for all the vehicles shown on the stock census sheet and
          that particulars, such as classification etc. shown in the latter agree
          with those shown in the log book. Whether classification differs, the
          classification given in the log book has been taken as correct.


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                 ORIENTATION COURSE FOR AAO / SO (A)

(iv)   Entries made in the reconciliation progress register are correct an up
       to date and that discrepancy between book balances and ground
       balances have been investigated and adjusted within one month of the
       date of stock taking.

(v)    When similar surpluses and deficiencies have been adjusted against
       each other, the number and date of the original voucher in which the
       mistake occurred have been quoted in term of rule 474 (iii) (b) FR
(vi)   No adjustment of discrepancies discovered on stock taking has been
       made on stock taking sheet unless under the orders of

(vi)   (a)    The amount of loss falls within their financial powers
       (b)    The stock taking sheet has been pre-scrutinized by the LAO.

(vii) The stocking sheet submitted to the LAO for pre-scrutiny has been
      crossed-referred with the corresponding serial number of losses/
      surplus from the register of losses/surpluses respectively and
      supported by :-

       (1)    A certificate to the effect that no theft, fraud or neglect is
              involved and that change in condition of stock vehicles while in
              storage is not due to theft, fraud or neglect, want of proper
              maintenance or lack of suitable storage accommodation.
       (2)    Precise of the case supporting the discrepancy where ever
              necessary together with any radical action to prevent

(viii) Regular loss statement has been prepared on A.F.G.-1049/l.A.F.0.
       2715 in respect of:
       (a) Loss        beyond      the    financial  powers     of    the
       (b) Losses involving theft, fraud or neglect even though they fall
             under the financial powers of the commandants/C.O.O./O.O

(ix)   Changes in condition attributed to pilferage of parts or neglect of any
       kind, have been investigated by court of enquiry pin-pointing
       responsibility for the incidental loss and have been covered by loss
       statement duly sanctioned by the C.F.A.


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                 ORIENTATION COURSE FOR AAO / SO (A)

(x)    The discrepancy report register in respect of vehicles has been
       maintained, received by depot Account Officer, programming action
       taken as under and that discrepancy reports have been finalized within
       2 (Two) months except when court of enquiry have been necessary or
       where claimed against railway are involved:

       (a)    If no reply is received from a unit after the lapse of 21 days of
              dispatch of the discrepancy report, reminder will be sent.

       (b)    If no communication is received within 14 days after the issue
              of reminder, the case will be referred to the HQ Area/Sub-Area
              concerned, with a copy to unit

       (c)    If no reply received from Area/Sub-Area within 1 (one) month
              of the reference to the discrepancy report, a reminder will be
              sent, a copy being endorsed to the Brigadier, Ordnance/Head
              Quarters, Command concerned.


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                 ORIENTATION COURSE FOR AAO / SO (A)




1.  IMPART        BASIC     KNOWLEDGE         ABOUT      CORPS     OF    EME    AND



         (a) EME
         (b) ORD


3.       CONCLUSION.








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•     INSPECTION, REPAIR, PROOF AND TEST,                     CONVERSION        AND

•    DISPOSAL   ACTION   IN   RESPECT  OF   UNWANTED                            AND




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                 ORIENTATION COURSE FOR AAO / SO (A)



                                  FIELD AMBULANCES.

                                           ENGINEER, SIGNAL,
                                           MECANISED BATTALIONS.

(c).   UNIT WORKSHOP OR                    -AD REGIMENTS & ATGM
       ONE TO ONE WORKSHOP                 BATTALIONS.


                                           & PARACHUTE.

(b)    DIVISION                            -EME BATTALION.

(c)    CORPS                               -CORPS EME BATTALION.


       (a)     CORPS ZONAL WORKSHOP.


       (a)     ARMY BASF WORKSHOP.



2.     CADs.

       (a)  DEALS WITH AMMUNITION, EXPLOSIVES                           AND     NON



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                 ORIENTATION COURSE FOR AAO / SO (A)

3.     CVDs.



4.      ODs.




                     OVERHAUL COMMITMENTS

7.     ABOD/FOD.



8.     FADS.

       (a) DESIGNED TO MEET THE AMMUNITIONREQUIREMENTS                            OF



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                 ORIENTATION COURSE FOR AAO / SO (A)

9.     AMN COY.



10.    VEH COY.             DESIGNED TO HOLD 450 FIT AND .400
                            INCLUDING MOTOR CYCLES AND TRAILERS.

                            CORPS WHICH IS NOT BEING SUPPORTED
                            DIRECTLY BY A FOD, FAD OR ABOD.

                            AMMUNITION LESS VEHICLES                  FOR     CORPS
                            TROOPS ONLY.

13.    DOU



                     ARMS AND ESSENTIAL EQUIPMENT.
                     TO DIFFICULT TERRAIN.


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                 ORIENTATION COURSE FOR AAO / SO (A)


SER               LEVEL                   EME                   ORD
 1      ARMY HEADQUARTERS            MGO DGEME        MGO DGOS
 2      COMMAND
                                     MG EME           MG AOC
  3                                                   DD OS
        CORPS LEVEL                  DD EME
  4                                                   CO DOU
        DIV LEVEL                    CO EME BN
  5                                                   OIC TSS (ARTY, DIV
        BRIGADE LEVEL                OC WKSP
                                                      TPS WKSP)
  6                                  OC LRW/
        BN LEVEL                                                  -
                                     IC URO


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                 ORIENTATION COURSE FOR AAO / SO (A)







           C.   ISG, MS, CES / VKL / TOTE



4.       CONCLUSION.






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                 ORIENTATION COURSE FOR AAO / SO (A)







          C. WHETHER TO MANUFACTURE                    PART    AND     WHERE      TO


          B. SPARE PARTS
          C. TOOLS
          F. MANPOWER
          H. FACILITIES



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          A. PLANNING
          D. DISPOSAL

                                        PART IN STOCK WHEN NOT
                                           HIGH        MEDIUM         LOW
                                            (A)           (B)          (C)
COST OF NOT VTAL       (V)                 50%           75%          95%
PART     IN ESSENTIAL (E)                     -           50%          75%
REQUIRED    DESIREABLE (D)                    -             -          50%





                 I. INITIAL FILL (IF)
               III. OVERHAUL SPARES (O)




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                 ORIENTATION COURSE FOR AAO / SO (A)


             MMF) IS ESTABLISHED.



          (i)     TECHNICAL
          (ii)    NON TECHNICAL

                                                                          Mchk 041607


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