1. CLASSIFICATION OF MATERIALS HANDLED

IN ORDNANCE FACTORIES

 

Operation of Series of Vouchers

"S" Series

  1. MATERIALS on

"STORE" Charges

[ includes Metal and

Raw Materials for

Manufacturing purpose

including Components

or Process Materials DIRECT INDIRECT

purchased or received MATERIAL MATERIAL

from other sister [For COST ACCOUNTING PURPOSE]

Factories, Tools and

Gauges, General Shop

Stores etc. ]

 

 

b) MATERIALS on "P" Series

"PRODUCTION" Charges

c) STOCK PILE Items "R" Series

(RESERVE STOCK)

d) INVENTORY Items "I" Series

e) DEPOSIT STOCK "D" Series

 

 

 

 

 

 

 

2. MOBILISATION ACTIVITIES

FOR PRODUCTION

IN ORDNANCE FACTORIES

Who places indents ?

To whom it is placed ?

Armed Forces viz. Army, Navy and Air Force Authorities place their demands to the Ordnance Factory Board, Calcutta for supply of various types of products for their use.

In addition to above Class II Extract are placed to undertake payment issue services for Civil Govt., Central Govt. & also for Private firms.

Class III Extract for Inter Factory services.

Class IV for Stock to Factory.

Class V for Capital services.

 

 

Who issues Order to Manufacture ?

To whom orders are placed ?

Ordnance Factory Board, in turn, issues order called EXTRACT to the respective Ordnance Factory to undertake manufacture of the Product and supply to the Indentors.

 

 

 

 

 

Action of the Ordnance Factories on receipt of EXTRACT

PLANNING a) Preparation of Estimate showing Labour, Material

Section and Overhead expenditure for manufacturing the

the Product

  1. b) Allotment of Work Orders

c) Issue of Material Warrant for controlling material

cost as per Estimate

M C O Section Material Planning

PROVISION To initiate procurement/ provisioning of

Section materials as per production programme

STORE Section Receipt and Issue of Stores

PRODUCTION To undertake Production Activities and utilise

Section materials as per Estimate and Material Warrant

 

 

 

 

 

 

 

 

 

 

FLOW CHART OF MOBILISATION ACTIVITIES

DEMAND

( By Army, Navy, Air Force and other Civil Govt.,

Central Govt. organisation and also Private Bodies )

Issue of Extract to Ordnance Factories

by Ordnance Factory Board

Receipt of Extract in Ordnance Factory

[ Planning Section ]

ç

MCO Section ® a) Preparation of Estimate

(Material Planning)

ô

Provision Section ® b) Allotment of Work Order

(Provisioning Action)

ô

Store Section ® c) Issue of Material Warrants

(Receipt & Issue of Store) ô

ô ô

Production Shop Accounts Office

Final Production

Inspection by Inspecting Authority

Taking of Accepted Finished Products on Production Charge

Issue of Finished Products to Indentors

 

 

3. PROVISIONING OF STORES

 

What is the basis ?

A. NECESSITY :

Proposals for provisioning of Stores are based on actual

requirements realistic to the Production Programme taking

into account the Stock in hand, Dues (i.e. Orders placed

earlier for which Stores are still to be received) and Liabilities

(i.e. requirements of materials for meeting the demands).

 

 

B. PROVISIONING PROCEDURE :

For how many months ?

a) Normal Provisioning

Ordinary Indigenous …….. 6 Months’ Requirement

Difficult Indigenous …….. 8 Months’ Requirement

Imported Items …….. 12 Months’ Requirement

 

  1. Emergent Provisioning … 9 Months’ for Non- Stock Pile Items

… 12 Months’ for requirement

including Stock Pile Items

c) Difficult Indigenous .… 6 Months’ Requirement

d) Ordinary Indigenous …. 3 Months’ Requirement

 

 

 

4. STORE HOLDER’S INABILITY SHEET (SHIS)

What is SHIS ?

This is a document on which Store Holder expresses his inability

to supply a store when the stock has gone below a fixed limit, so

that arrangements may be made for procurement of stores. It

shows Stock on date (Ledger Balance), Dues in, Average Monthly

Consumption.

Material Planning Sheet

This document shows Production Programme, Standard

Estimates, Dues in, Liabilities, Net requirement.

 

5. VARIOUS SOURCES OF RECEIPT OF MATERIALS

How Pricing of Stores is done after receipt from different sources ?

SOURCES PRICING OF RECEIPTS

1. Foreign Purchase (FP) Based on rates & terms as indicated in the

Invoice

2. Central Purchase (CP) With reference to the rates in Acceptance

of Tender (AT) by the Central Purchase

Agency

3. Local Purchase (LP) With reference to rates quoted on the

Supply Order

4. Receipt from other OFB priced list where available or

Ordnance priced copy of the Issue Voucher

Factory forwarded by consignor Accounts Officer

(IFD)

5. Receipt from other With reference to Stock Book Rate or

Branches of Defence Priced Vocabulary

Department (OMD)

SOURCES PRICING OF RECEIPTS

 

 

6. Receipt from Govt Invoice Rate

Departments other than

Defence Department (NMD)

7. Receipt from own Factory Actual Cost of Production as per

Manufacture Cost Card

8. Receipt by return of Average Ledger Rate

Surplus, Waste etc

materials through

Return Notes

9. Receipt from Surplus Average Ledger Rate

found on Stock Taking

10. Receipt on account of As per Stock Pile Register / Capital

Block Transfer from Stock Pile/

Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6. PRIMARY DOCUMENTS USED IN ORDNANCE

FACTORIES FOR ACCOUNTING OF MATERIALS

What are those documents ?

 

RECEIPT VOUCHER - is a document through which the stores

received in Ordnance Factories are taken

into "Stock" charge

ISSUE VOUCHER - This voucher is prepared for issue of Store

outside the Factory

DEMAND NOTE - is a document through which Production Shops

place requisition to the Store Holder to supply

the stores as provided in the Material Warrant

RETURN NOTE - Surplus, Waste etc stores are returned by the

Production Shops to the Store Holder through

this document

 

Serial Numbers are allotted to each of the Primary documents for proper

accounting purpose.

 

 

 

 

 

 

 

 

 

 

 

 

  1. USE OF DOCUMENTS FOR MATERIAL ACCOUNTING IN

    2. ORDNANCE FACTORIES / ACCOUNTS OFFICE

     

    FACTORY ACCOUNTS OFFICE

     

    Originating Documents Action to Documents

    Section Generated be taken Affected

    Material Control Material Planning Verification with

    Sheet Production

    Programme,

    Store Holder’s PSL Balance

    Inability Sheet & Dues In

    (SHIS)

    Provisioning Minutes of TPC Audit of Supply Order

    Supply Register

    Order

    Supply Orders

     

    Stores Material Inward Slip Pricing Liability

    And Register

    Posting P S L

    Receipt Vouchers

    P S A

     

    Bill Group Suppliers’ Bills Audit Financial

    And Compilation

    Payment

    Of Bills Asset Register

    Income Tax

    Register

     

     

    FACTORY ACCOUNTS OFFICE

    Originating Documents Action to Document

    Section Generated be taken Affected

    Material Control Inter Factory Verification I F D

    Demand with Register

    Production

    Programme

     

     

    Shops Demand / Return P S L

    Notes Posting

    In

    Stores Issue Voucher P S A

     

     

     

     

    Stock Stock Verification Reconciliation with

    Verification Sheet P S L

    Group

     

     

    STORES Discrepancy Audit with D D

    and reference to Register

    Defficiency P S L

    Voucher and

    S V Sheets P S L

     

     

     

     

     

  2. TENDER PURCHASE COMMITTEE

 

What is the responsibility of the Committee ?

The Committee is constituted for scrutiny of Tenders in respect of purchase of Stores worth more than Rs. 50,000/- and to decide necessity of purchase.

 

What is its composition ?

The composition of the Committee is Multi- Tier depending on the proposal for purchases.

 

Example :

 

Purchase upto Rs. 4 lakhs - Works Manager, Accounts Officer

Purchase from Rs. 4 lakhs - Deputy General Manager, Accounts

to Rs. 10 lakhs Officer

Purchase of Rs. 10 lakhs - General Manager, Jt. C of A /

and above Dy. C of A

 

For Vehicle Factory, Jabalpur

 

Purchases upto 20 lakhs - Jt. General Manager, Jt. C of A /

Dy. C of A

and above Rs. 20 lakhs - General Manager with Jt. C of A

/ Dy. C of A

 

 

 

What is the Role of Finance Member

in a Tender Purchase Committee (TPC) ?

 

  1. Verification of purpose of Provisioning
  2. Verification of Power of Competent authority sanctioning purchase
  3. Verification of Provision of Funds
  4. Verification of Provisioning Procedures
  5. Reasonableness of Value of Purchase
  6. Verification of Payment and other Terms
  7. To ensure Economy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. USE OF CERTAIN IMPORTANT DOCUMENTS FOR

STORE ACCOUNTING IN ORDNANCE FACTORIES

What are those Documents ?

DOCUMENT PURPOSE

BIN CARD It is maintained by the Store Keeping staff of

the Factory in loose leaf Forms for each type

of Store. Receipt, Issue and Balance

Quantities are only recorded in the Bin Cards.

balances in Bin Cards must agree at any time

with the balance as shown in Priced Store

Ledger.

Leaving aside the two types of entries (i)

Nominal Receipt & Issues which appears in

Bin Cards only & (ii) DD Vouchers which

appear in PSL only.

PRICED STORES - Cum Maintained by the Accounts Office jointly

- PROVISION LEDGER with the Provision Section of the Factory.

[ P S L ] Separate Folios in the Ledgers are opened for

each type of Store and Ledger Folio Numbers

are allotted for each type of Stores. Receipt,

Issue and Balance for both Quantity and

Value are recorded in the Ledger.

Why it is maintain ?

Purpose of maintenance are :

    1. To post all the Primary Store Documents
    2. To know the position of Stock Balance at any time for initiating provision action in cases where the balances have reached Ordering/ Danger Level
    3. To indicate the Average Ledger Rate of Store for pricing of Issues from Store Charge

DOCUMENT PURPOSE

AVERAGE LEDGER It is worked out for each type of Store for

RATE [ A L R ] pricing of all Store Issue documents

How Rates are Workedout ?

The Rate is based on the total Value of

Receipts during a month as per Receipt

Vouchers and Opening Value divided by

the total Quantity of Receipts and Opening

Quantity.

When Calculated ?

Average Ledger Rate (ALR) is

calculated at the end of each month

Where it is operative ?

All Issue transactions occurred during the

following month will be priced adopting the

Average Ledger Rate calculated in the

previous month.

How ALR will be operative in case of

Computerised PSL ?

In cases, where Priced Store Ledgers (PSL)

are maintained through Computer,

Average Ledger Rates are calculated after

posting of each fresh Receipt Voucher.

Unorthodox Balance What is an Unorthodox Balances ?

Balances in the Store Ledger which arise

Due to incorrect Pricing/ Posting or Non

Posting of documents are called

Unorthodox Balance.

DOCUMENT PURPOSE

What Types ?

Various types of Unorthodox balances may

occur.

Examples of Types :

Plus Quantity - Minus Value

Plus Quantity - Nil Value

Nil Quantity - Plus Value

Nil Quantity - Minus Value

Minus Quantity - Minus Value

Minus Quantity - Plus Value

Minus Quantity - Nil Value

 

Priced Store Schedule What does it contain ?

[ P S S ]

All the Receipts and Issue Vouchers are

posted in the Schedules after pricing and

codifying the documents according to the

sources of Receipts and Issues.

What purpose does it serve ?

The purpose of maintaining the Schedule

is to Watch the continuity of Receipt and

Issue Vouchers and to ensure that all the

Vouchers prepared by the Factory

Management during a month have been

received in Accounts Office and

accounted for.

Priced Store Account Why it is prepared ?

[ P S A ]

Purpose is to know the closing Balance

of Stock in hand, Total value of Receipts

and Issues value during a month.

To ensure correctness for monthly

DOCUMENT PURPOSE

reconciliation with Priced Stores

Ledger Balances and Volume Control

Register

 

 

Material Warrant What is it ?

It is the medium through which Material

utilisation as per Estimate is controlled

 

What documents are used to draw

materials against a warrant ?

Materials are drawn for manufacture

through Demand Notes and booked

against the particular warrant and

return of surplus, waste materials

through Return Notes are also posted

in the Material Warrant.

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. MAINTENANCE OF PRICED STORES- CUM- PROVISION LEDGER

    2. THROUGH VARIOUS ACCOUNTING PROCEDURE

     

     

    SUPPLY ORDERS

     

    Receipt Voucher Pricing Issue Voucher

     

    Receipt PSA

    Priced Receipt Posting of Quantity in

    Vouchers Material Warrant

    Demand/Return Notes PSL Processing Priced Demand/Return Notes

    Issue Vouchers Material Abstract

    Costing Section

    [ For Posting in Cost Cards ]

     

     

     

     

  2. AUDIT AND PAYMENT PROCEDURES

FOR LOCAL PURCHASE SUPPLIES

 

 

relevant Supply Order

 

 

 

 

12. LINKING OF RECEIPT OF STORES

Why necessary ?

Linking is the process by which it is ensured that Stores

supplied by the Consignor as detailed in the Invoices/ Issue

Vouchers etc. are accounted for and correctly taken into Stock

Charge.

How Linking is carried out ?

Assets and Liabilities Linking

 

Contractor’s Bills Receipt Voucher

 

 

CCO2 Audit & Payment Pricing

 

Reconciliation Asset Register Liability Register

 

 

 

Inter Departmental IFD Issue Linking of

List Voucher Assets and Liabilities

Adjustment For Correction

Voucher in P S L

 

  1. EFFECTIVE INVENTORY CONTROL SYSTEM

 

 

¨ Guidelines For Provisioning Procedure based on the Actual

Requirements as per Production Programme are as under -