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BSNL Accounting

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8/10/2019 BSNL Accounting http://slidepdf.com/reader/full/bsnl-accounting 1/22 L2 : COMMERCIAL PROCEDURES/ASSET ACCOUNTING CONCEPTS Objective The main objective of the company (BSNL) is to increase the tele-density in the country by providing 8!"# la$hs of Telephone connections before %&&-%&#&" 'or this the company needs enormous financial investment besides the internal resources" The other objectives of BSNL are rovide telephone on demand by *arch %&&+ rovide telephone in all villages by ,ecember %&&% aise telephone density to . by %&&! and #! by %&#& rovide Band/idth on demand Build 0ustomers confidence through 1uality and reliable service rovide /orld class telecom infrastructure *obili2ation *anagement and 3ccounting of the financial objects more effectively re4uires s$ill and better accounting system" There have been phenomenal changes in the telecom sector during the recent past and the BSNL is pushed into competitive mar$et along /ith rivate 5perators in providing telecom service" Being a company6 BSNL has to adopt 0ompanies 3ct #!7 and follo/ the scientific 3ccounting System /ith 0lear 3ccounting 0oncept" Accounting Concept The 'inancial Statements of Bharat Sanchar Nigam Limited are prepared under the historical cost convention and on accrual basis in accordance /ith ndian 9enerally 3ccepted 3ccounting rinciples and in accordance /ith the provisions of the 0ompanies 3ct #!7" The salient features of BSNL are enlisted belo/ #" The 3ccounts are prepared under historical convention adopting the 3ccrual method of accounting concept"  %" ,epreciation is calculated under :;ritten ,o/n *ethod<" +" *aintenance of Boo$s of 3ccounts as per 0ompany 3ct on realistic basis" This means that the transactions are recorded in the boo$s of accounts only /hen the actual transactions ta$e place" =" reparation and *aintenance of Separate 3ccounts in 0ash6 T36 ;or$s and 0laims Sections on monthly basis /ith complete supporting schedules"
Transcript
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L2 : COMMERCIAL PROCEDURES/ASSET ACCOUNTING

CONCEPTS

Objective

The main objective of the company (BSNL) is to increase the tele-density in thecountry by providing 8!"# la$hs of Telephone connections before %&&-%&#&"'or this the company needs enormous financial investment besides the internalresources" The other objectives of BSNL are

• rovide telephone on demand by *arch %&&+

• rovide telephone in all villages by ,ecember %&&%

• aise telephone density to . by %&&! and #! by %&#&

• rovide Band/idth on demand

• Build 0ustomers confidence through 1uality and reliable service

rovide /orld class telecom infrastructure•

*obili2ation *anagement and 3ccounting of the financial objects more effectivelyre4uires s$ill and better accounting system" There have been phenomenalchanges in the telecom sector during the recent past and the BSNL is pushedinto competitive mar$et along /ith rivate 5perators in providing telecomservice" Being a company6 BSNL has to adopt 0ompanies 3ct #!7 and follo/the scientific 3ccounting System /ith 0lear 3ccounting 0oncept"

Accounting Concept

The 'inancial Statements of Bharat Sanchar Nigam Limited are prepared underthe historical cost convention and on accrual basis in accordance /ith ndian9enerally 3ccepted 3ccounting rinciples and in accordance /ith the provisionsof the 0ompanies 3ct #!7" The salient features of BSNL are enlisted belo/

#" The 3ccounts are prepared under historical convention adoptingthe 3ccrual method of accounting concept"

  %" ,epreciation is calculated under :;ritten ,o/n *ethod<"

+" *aintenance of Boo$s of 3ccounts as per 0ompany 3ct on realistic

basis" This means that the transactions are recorded in the boo$s of accounts only /hen the actual transactions ta$e place"

=" reparation and *aintenance of Separate 3ccounts in 0ash6 T36;or$s and 0laims Sections on monthly basis /ith complete supportingschedules"

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!" >ffective Budget 0ontrol and 0ollection account *anagement /ithfund flo/ and cash flo/ Statements"

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  7" econciliation of all transactions and posting to correct accounts"

  ." Ban$ reconciliation for both 5peration and collection accounts"

  8" *aintenance of sundry ,ebtors and Sundry creditors accounts"

" *aintenance of ;or$ egisters and 'i?ed 3sset 3ccounts /ithaccumulated depreciation"

#&" reparation of annual accounts /ith general Ledger and supportingschedules"

  ##" reparation of Segmental reports for various services"

The accounting policy is based on accrual method of accounting" This is to saythat the amount pertaining to that particular accounting period alone should be

accounted" Both evenue and >?penditure are to be calculated for a specific 3ccounting eriod instead of ta$ing the entire transactions" 'or e?ample6 aTelephone bill is issued on &#"&!"%&&% covering rental for the period from&#"&%"%&&% to +&"&="%&&+6 the entire revenue billed should not be ta$en intoaccount in the current @ear of accounting (%&&%-%&&+)" The revenue in this caseshould be segregated into three parts6 one for the previous year (&#-&%-%&&% to+#-&+-%&&%) and boo$ed against Arior eriod ncome6 second for the current(&#-&=-%&&% to +#-&=-%&&+) and against the current year revenue and the thirdfor the ne?t year (&#-&=-%&&+ to +&-&+-%&&+) and boo$ed against advancerevenue" The amount boo$ed against A3dvance evenue /ill be accounted inthe ne?t accounting year"

Li$e/ise if there is payment covering t/o accounting periods6 the portion relatingto the current year should be segregated and accounted in the current @ear leaving the Balance for Ne?t @ear 3ccounting and sho/ing it as A re-paide?penses in the current year" ,ues that are liable to be paid for the 0urrent @ear but not paid should be included in the current @ear account itself by debiting thee?penditure head and crediting the Liability head"

Before proceeding to the actual /or$ involved in the sections6 it is very muchnecessary to understand the rules of A,ouble >ntry System follo/ed in the Boo$Ceeping"

Doube Ent!" S"#te$

>very transaction in the scientific accounting system involves t/o persons or t/oaccounts" 5ne receives the benefit and the other issues the benefit" The personreceiving the benefit or the account receiving the benefit is called A,ebtor" Theperson giving the benefit or account issuing the benefit is called 0reditor" Thuseach and every transaction involves T;5 entries" 5ne for ,ebit and the other for 

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0redit" This $ind of recording the transactions in T;5 places simultaneously iscalled ,ouble >ntry System" This ,ouble >ntry System is operated on A9enerally

 3ccepted 3ccounting rinciples (933) and has set of rules for ma$ing entriesinto the boo$s of accounts"

eal 3ccount D ,ebit the 3E0 /hich comes in- 0redit the 3E0 /hich goes out"

ersonal 3ccount D ,ebit the account /ho receives- 0redit the account /ho pays

Nominal 3ccount D debit all >?penditure F losses- 0redit all ncome F gains"

%SNL Accounting St&ge#

 3ccounting is an art of ecording6 0lassifying6 Summarising F nterpreting all

financial events /ith follo/ing objectives  (i) 'or ascertaining gains or losses during the period

(ii) Go/ rofit F Loss made(iii) 3scertaining value of 3ssets F Liabilities as on date of closure of

 3ccounts"(iv) 3mount o/ing by customer E debtors"(v) 3mount o/ed by customerE creditors"(vi) Liabilities of ta?es"(vii) Go/ business stands in comparison to similar business"

Reco!'ing T!&n#&ction# in t(e C&#(/%&n) %oo)#The transaction are segregated in to t/o parts" 5ne in 03SG and the other isN5N-03SG" The 0ash transactions are entered through 0ash boo$ and Ban$boo$" The non-cash transactions are entered through Hournal Iouchers (HI)" Thefollo/ing boo$s of accounts are to be maintained for ma$ing entries of thetransactions"

• 5peration 0ash Boo$ D for recording day to day cash e?penses"

• 5peration Ban$ Boo$ D for recording day to day e?penses by che4ue"

• 0ollection 0ash Boo$ D for recording day to day collection cash and

remittance to ban$ aEc"

• 0ollection Ban$ boo$ D for recording collection by che4ue and transfer toNodal branch"

• Hournal >ntry egister D for recording non-cash transactions

Separate set of boo$s are to be maintained for each ban$ under operation andcollection"

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Reco!'ing Non*C&#( T!&n#&ction+

 3ll the non-cash transactions are entered through Hournal Iouchers (HI) ondouble entry principle" The entries on both debit and credit side should tallyal/ays" No transactions affecting the cash or ban$ balances are entered through

 journals"

Sub#i'i&!" Reco!'#

The follo/ing are the important journals maintained in the accounting units"  #" urchase Hournal  %" Sales Hournal  +" Bills ayable Hournal  =" Salaries ayable Hournal  !" ;ages ayable Hournal

C&##i,ic&tion

 3mong all6 the very important part of a transaction is 0LL3SS'03T5N i"eboo$ing to the correct account code (Gead of 3ccount)" n BSNL /e have major schedules for classifying the revenue or e?penditure6 /hich are further divided into *inor and ,etail head" The schedule indicates the type of transactions li$e capital6 revenue6 etc" the minor code indicates sub-sections of transactions" The detail head is the actual 5BH>0T li$e Salary6 ;ages6 LandBuilding6 0ables6 etc"

Su$$&!i-ing

 3fter recording all cash and non cash transactions on the basis of definedclassification a general ledger is prepared" 5n the basis of resultant figure of this

ledger at the end of the month a Trial Balance is prepared at each primaryaccounting unit" 5n the basis of Trial balances of all units for the /holeaccounting period a profit F loss 3E0 and Balance-sheet get prepared at eachcircle6 as circles are the profit centres in BSNL"

  5n the basis of consolidated Trial Balance of all circles for the /holefinancial period of accounting6 the BSNL head4uarters Ne/ ,elhi (0orporate5ffice) prepare the F Loss 3E0 F Balance Sheet of the year for BSNL"

Inte!p!eting t(e ,in&nci& po#ition

*anagers6 shareholders6 creditors and other interested groups see$ ans/er to

the follo/ing important 4uestions about a firm"• ;hat is the financial position of the firm at a given point of timeJ

• Go/ /as the firm performed financially over a given period of timeJ

• ;hat have been the sources and uses of cash over a given period of

timeJTo ans/er the above 4uestions6 the accountant prepares t/o principalstatements - the balance sheet and the profit and loss account and ancillarystatement6 the cash flo/ statement" The balance sheet sho/s the financial

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position (or condition) of the firm at a given point of time" t provides a snap shotand may be regarded as a static picture" The profit and loss account reflects theperformance of the firm over a period of time" 'inally6 the cash flo/ statementdisplays the sources and uses of cash during the period"

Thus 6.+ %&&nce #(eet : sho/s the financial position of the firm at a given point of time in terms of assets and liabilities"2+ P!o,it &n' o## #t&te$ent : reflects the performance of the firm over a periodof time"+ C&#( ,o0 #t&te$ent# : ,isplay the sources F uses of cash during the period"'or analysing the performance and status of the company these financialstatements are interpretated by /or$ing out various 3ccounting ratios"The /hole process can be e?plained diagrammatically as

 

Reco!'ing C&#( / %&n) T!&n#&ction# in

C&#(/ %&n) %oo)

Reco!'ing1Non*c&#(

T!&n#&ction# in 3ou!n&#

C&##i,ic&tion

4 po#ting in

gene!&*e'ge! 

P!ep&!&tion o, T!i&

%&&nce

P!o,it 4 Lo## Account%&&nce S(eet

Inte!p!et&tion

b"

R&tion An&"#i#

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MANAGEMENT OF STORES AND INVENTORY 

Invento!" M&n&ge$ent 4 Accounting

I$po!t&nt o, Invento!" M&n&ge$ent:

Bharat Sanchar Nigam Limited is engaged in the business of telecommunications" Telecom Sector is highly capital intensive and re4uires ahigh initial investment to develop the infrastructure li$e s/itching e4uipment6transmission systems6 lines and /ires6 cables etc" material forms around 8&K of capital investment for the BSNL" >ven in operating cost of BSNL" =! to !&percent cash outflo/ is on material li$e maintenance stores6 consumables6 loosetools and assets of petty value charged to revenue" >very year BSNL procuresand consumes >ngineering materials /orth #%6&&& 0r" This is in addition tonormal consumable materials li$e paper6 stationary6 petrolEdiesel6 computer andoffice machines replacements etc" hence BSNL has to introduce and implement

all modern nventory *anagement techni4ues" The BSNL /as having inventoriesof the /orth +#6.&+6#!& thousands of rupees as on +#"+"%&&+"5unction# o, t(e M&te!i& M&n&ge$ent

The material management function has the follo/ing responsibilities  (a) rocurement i"e" purchasing of materials  (b) eceiving6 inspection6 storing and issue of materials and

maintenance stoc$ records"(c) 3ccounting- maintenance of priced store ledgers6 accounting ofreceipts and issues of materials /ith values"

  (d) Stoc$ verification  (e) nventory control"

  Go/ the above functions have been organised in BSNL is discussed in thefollo/ing chapters"

De$&n' An&"#i# 4 Sto!e 5o!ec&#ting

The material manager is al/ays in search of techni4ues to correctly assess thestores re4uirement" Statistical decision D ma$ing techni4ues help him6 incorrectly forecasting the material demand" Statistical techni4ues help him incalculating fluctuations in demands6 price variations6 averaging seasonal factors6fi?ing consumption norms and in other areas"

The *aterial *anager should collect the statistics of consumption of variousmaterials over a period of time6 say %= months6 and should calculate*eanE*odeEmedian and standard deviation6 so that an optimum level of stoc$can be maintained regularly" Seasonal fluctuations in consumption6 availability of funds during a particular period6 lead time in getting the materials from the dateof ordering processing time for tenders changes in policy decisions of themanagement6 technological changes and ne/ inventions are some of thereasons for deviation"

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n ,5T6 the consumption during first half of the financial year used to be lo/6 dueto non-receipt of budget allotment of funds and high during second half due tochasing the targets of ne/ connections and rush of e?penditure to avoid lapse of funds" Similarly consumption of construction material and e?ternal plant stores islo/ during Hune to 5ctober /here as maintenance store consumption is high

during the period due to monsoon and occasional floods" 3ll such factors shouldbe ta$en into account /hile analysing the demands"

5o!ec&#t# o, Sto!e#:

The business activities under ta$en today are based on yesterday<s plans andtomorro/<s e?pectations" The inventory or material managers have to forecattheir future activities and ma$e their plans" The top management is interested inlong range planning diversification and e?pansion" The 'inance *anager isconcerned /ith capital budgets6 operating budgets6 cash in flo/s and cashoutflo/s" The management ma$es ambitious plans of e?pansion and demands

ready supply of material and finance can not provide funds re4uired and material*anager has to reconcile /ith the situation" obust common-sense intrinsicanalytical s$ills and high "1 are pre re4uisites in material planning"'orecasts should be both short-term and long-term" 5bviously6 short termforecasts must fit in long term forecast" The factors influencing forecasts includesocial6 economical6 political6 fiscal6 government and technological" The microfactors influencing the forecasts include credit regulations ta?ation policies6budgetary policies6 e?portEimport policies6 licensing policies and inflation" Themicro level policies cover the /or$ing capital6 operating costs6 pricing aspects6management information system6 and reliability of the source of supply"n BSNL6 the SS3s and 3rea 5ffices of *iscellaneous 0ircles li$e rojects6

*aintenance6 Telecom 'actories6 Telecom Store ,epots etc6 compiles storesforecasts every year for the re4uirement during the ne?t t/o years" Theseforecasts are prepared on the basis of re4uirements given by the subordinatefield units engaged in installation6 maintenance6 operations and production"

I'enti,ic&tion o, Sou!ce# o, Supp"

*ismanagement of purchase functions is a fre4uent case of delays in e?ecutingdevelopmental and operational projects" 3t times6 this has lead to costlyinterruptions and sometimes abandonment of re4uirements given by thesubordinate projects" Gence the buyer has to locate6 develop and preserve thesources of supply"Sources of information about the supplies are

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#" 3gent of the suppliers  %" ublicity of the mar$eting departments  +" eriodical visits to industrial units  =" Gandouts of the ,9T, suppliers directories of the ,9SF,  !" @ello/ pages of Telephone ,irectories

  7" 3dvertisements in journals and ne/spapers  ." ndustrial e?hibitions

oints to be considered before selecting a supplier   (a) Technical capacity  (b) ,esign F specifications of the product  (c) 'inancial bac$ground  (d) Ban$ reference  (e) *ajor customers of the supplier   (f) nspection facilities  (g) ;arranty and after sales service

  (h) mage of the company in mar$et  (i) revious performance  (j) 3bility to meet une?pected contingenciesEemergencies  ($) 0apacity for absorbing ne/ technologies  (l) ;illingness to share the information on cost of manufacturing  (m) S and S5 certifications  (n) 0ompany balance sheet and other publications about the product"

Met(o'# o, P!ocu!e$ent

Stores and materials re4uired for the /or$s or administration are received

through purchase orders of the 0entral Gead 1uarters6 0ircle Gead 1uarters609* Telecom Stores etc" in addition to stores received from store organi2ations6direct purchases are also made by the SS3s and other local offices" These localpurchases are made on local en4uiries6 4uotations or tenders" The detailedprocedure for calling for tenders and entering in contracts has been discussedelse/here"The recent delegation of 'inancial o/ers to SS3 heads by BSNL permitpurchase /ithout 4uotation up to s!&&& in each case and purchases /ith4uotation up to s" %!6&&&" The open tender procedure is adopted for thepurchases e?ceeding s" %6&&6&&&"9eneral nstructions governing the purchase of stores

(a) urchases shall be made in the most economical manner inaccordance /ith the definite re4uirements of the public service"

(b) Stores shall not be purchased in small 4uantities" urchase ordersshall not be split up to avoid the necessity of obtaining the sanctionof higher authority"

(c) f possible the >51 (>conomic 5rder 1uantity) formula may beadopted"

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(d) ;here stores are re4uired to be supplied and paid for in a particular financial year6 indents shall not be sent so late in the year to ma$ethe compliance difficult"

(e) urchases are to be approved only by officers /ho are vested /ith'inancial o/ers or by those /ho are authori2ed by higher officers

vested /ith financial po/er to ma$e local purchases"(f) urchases are to be made against the budget provisions Fprovisions made in sanction estimate"

Invento!" St&tu#

nventory status is ascertained by the value of stores on hand for future use" Thisitem is sho/n separately in the Balance sheet";henever material is received and is not immediately allotted for any purposeand $ept in stores amount is classified under nventory" ;hen such inventoriesare transferred to specific /or$6 the value may be transferred to /or$ in progress

under specified estimate and head of account";hen nventories issued to maintenance or repairs6 it may be classified as repair and maintenance e?penditure under /or$ing e?penses"

I, not ,o! #peci,ic pu!po#e

 

6(en I##ue' toSpeci,ic e#ti$&te

  Rep&i! 4  M&inten&nce 16o!)ing

E7pen#e# 8e&'

Thus nventory is a form of e?penditure6 /hich is $ept idle" Therefore hugeamount under nventory for a longer period sho/s poor control by e?ecutivehead"

t is an important area over /hich proper control is demanded"

5i7e' A##et#

6+I+P

Invento!"

I, pu!c(&#e' &#co$pete unit

C&pit& 8e&'

6(en C/R Ree&#e' /In#t&&tion co$$i##ione'

6(enPu!c(&#e'5o! #peci,ic

e#ti$&te

PURC8ASE

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Invento!" Reco!'#

nventory records are numerical accounts of stores received6 issued andremaining in stoc$ /here as priced stores ledgers are valued accounts of storesmaintained in stores accounts section" 3s per general convention Store Ceepersare responsible for maintenance of inventory records /hereas 3ccounts Section

is responsible for parallel 3ccounts records" ;hereas inventory records li$e Bin0ards6 stoc$ registers6 store ledgers cards indicate the 4uantity accounts of stores6 valued accounts popularly called priced store ledgers indicate both the4uantity as /ell as value of stores transactions" 'GB art of FT,epartment specifically states that the >?ecutive 5fficer (li$e 0TS6 3>-stores) isresponsible for numerical accounting of stores and safe custody of the stoc$s/here 3ccounts 5fficer is responsible for maintenance of value accounts"

 3ccounting policies of the BSNL also prescribe the priced stores ledger as one of the important 3ccounting ecord"Iery fe/ instructions on maintenance of nventoryEStores ecords are availableand they are scattered in various manuals li$e stores and /or$shops manual6

nitial 3ccount 0ode FT *anual Iol" and FT 'GB art D " 3ll theseinstructions are very old and mainly deal /ith stores supplied by 09*TS0alcutta and manufactured by the Telecom 'actories" FT *anual Iol highlights about the indents of stores6 store-dumps and stoc$ records of >ngineering 5fficers engaged in construction and maintenance" No/ /ith thedecentralisation of purchase and transfer of 0ircle Store ,epots stoc$ to the0irclesE,istricts6 to be follo/ed in circles and districts also till BSNL adopts andprescribes a scientific and systematic procedure to suit the present needs" Suchprocedure already e?ists in *TNL and similar procedure can be adopted in BSNLunits also" The follo/ing discussion on nventory ecords and priced storesledger is based on the procedure adopted in a modern commercial organisation6

e?isting instructions in erst/hile FTE9*TS organisation and procedures andrecords adopted in *TNL"ndents6 9oods eceived Notes6 goods ssued Notes6 ,aily eports of eceiptsand ssues

Sto!e# In'ent#

>?ecutive 5fficers entrusted /ith the /or$ of construction and maintenance ofassets are re4uired to dra/ the stores from store depots by issuing a re4uisition/hich is popularly $no/n as Store ndent" The follo/ing information should befurnished by the indenting officer in stores indent"

 a" Name of the /or$

  b" Gead of account  c" 0onsignee address or addresses  d" roper nomenclature6 code and rate list number of the article  e" The appro?imate date by /hich stores are re4uired"

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Goo'# Receive' Note# 1GRN

*aterials and goods received are entered in 9oods eceived Note by theeceiving Section or *aterial *anagement Section" The 9oods eceived Notescontain6 interalia reference to purchase order and particulars as to the name of the supplier6 date of supply6 code number and description of goods6 4uantity6

prices6 total value of purchase etc" one copy of 9N along /ith the material ispassed on to stores /here they are $ept in appropriate bins6 dra/ers6 rac$s or other receptacles or stoc$ed at properly mar$ed space in the store room" 0opiesof 9oods received Notes should also be sent to-

  #" Supplier along /ith ac$no/ledged copy of nvoice"  %" 0ashEfinance section of reconciling /ith the bill"  +" Stores 3ccounts ,epartment  =" ,epartment initiating purchase re4uisition"  !" 5ne copy retained in receiving department" 

 3 specimen form of 9oods eceived Note is given belo/9oods received note NoMMMM"" ,ateM",epot code ,epot No""

urchase order No" ,atessued by Supplier< Name F 0odeEL No ,ate nvoice No date

tem

0ode

,escription 1uantity

0hallanned

1uantity

eceived

1uantity

 3ccepted

emar$s

Ce!ti,ic&te# :

#" The Stores have been physically chec$ed and found in good condition"%" the accepted 4uantity have been entered in stoc$ register"+" the purchase is debitable MMMMM""(classification)"=" payments made (i) 5ctroi (ii) 'reight (ii) ,emurrage

SdE- SdE- SdE-eceived by Ta$en to stoc$ by 5fficer E0 of Store ,epot

Goo'# I##ue Note#

'or each issue of stores6 an issue note should be prepared" 3t least si? copies ofssue Note should be prepared and disposed off as follo/s

  #" 5ne copy retained by the depot"  %" T/o copies sent to the Stores 3ccounts Section  +" T/o copies handed over to the carrier of the stores along /ith

goods"  =" 5ne copy sent in advance to the ndenting 5fficer 

The issue notes should be printed in a convenient form and care shouldbe ta$en to include the follo/ing particulars"

  #" Serial number and date of the issue note"

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  %" Name and code of the store depot"  +" ,escription of Stores6 code and ate List number"  =" Name of the unit indenting and consignee details"  !" Number and date of indent"  7" Gead of account"

  ." 1uantity indent and 4uantity issued  8" ate and Ialue"  " Balance in stoc$ after the transaction"  #&" *ode of transport and date of despatch"  ##" 'reight charges paid or to be paid"  #%" 0olumns for ac$no/ledgement by the consignee"  #+" Names F signature of issuing store-$eeping F officer in charge of

the store depot"D&i" Repo!t# o, Receipt# &n' I##ue#+

Store 3ccounts are constructed and priced store ledgers and other sub-ledgersare maintained in Stores 3ccounts Section on the basis of periodical reports

received from store depots or officers in charge of store depots" n store depotsunder 9*TS organisation6 those reports are sent daily in the follo/ing pro forms6one for daily receipts and another for daily issues",aily eport6 datedMMM""for eceiptsEssues onMMMMMM"eceiptsEssues inMM"9odo/nE,epot and accounted for onMMMMM""(date)

9NE9N

Nos"

'rom

To

Total No" of 

Iouchers

Total No" of  

Transactions

emar$s

revious daily report sent under NoMMM"dated the MMMM"for/arded to the 3ccount 5fficer K"""""""""""""These daily reports are supported by the copies of 9Ns F 9Ns issued daily"No/ /ith the circle stores depots brought under the control local SS3s under territorial circles6 separate Store 3ccounts sections should be formed in all SS3s

not only for 3ccounting transactions of circles store depots6 but also receipts of stores by the material management sections of the SS3s and other field units"Bin 0ards6 Stoc$ egisters6 and Numerical 3ccounts of Stoc$5ne of the main functions of the officer in charge of the store depots is tomaintain proper records of receipts6 issue6 adjustments and balances" Natureand e?tent of records to be maintained /ill depend upon the si2e of store depot6types of materials received6 fre4uency of transactions and other circumstances"The record may be a card6 or a folio in the loose lead binder or registers" To

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facilitate the prompt noting of the transaction6 the stoc$ card should be attachedto or in close pro?imity of the bins6 rac$s6 almirahs /here the materials arestored" This record is called BN 03," 3 specimen copy of the Bin 0ard is givenbelo/

BN03, 5' MMM"",>5T  ,escription of *aterial Bin No"  lace"  0odeEate List No Store ledger folio  *a?-level MM" *in-levelMM" ecording LevelM""

eceipts ssues Balance emar$s

9oods

on order 

etc"

,ate 9""No" 1ty" ,ate e4"No"# 9""

No"

1ty"

Bin 0ards the bin cards portray physical movement of stores and indicate thephysical balance at any moment" This facilitates $eeping proper /atch over observance of the prescribed stoc$6 levels and introduction of a system of continuous stoc$ ta$ing"Stoc) Regi#te!#:

n addition to Bin cards attached to bins6 shelves or rac$s6 separate numericalrecords of stoc$ have to be maintained in major store organisations6 /here anumber of store depots and different $inds of a stores are under the charge of an

officer or section" 3 separate stoc$ card or stoc$ register should be maintained bysuch officer or section for each description of article6 bearing a separate code or rate list number" n this card or register each and every transaction of receipt or issue of that article and the balance in stoc$ after each transaction should berecorded" The stoc$ card or page number of the register should also be noted atthe same time on 9oods eceived Note or Store ssue Ioucher" >ach cardshould sho/ the name of the depot6 code and rate list number6 authoriseddescription of the article6 the class of stores under /hich the article is included(li$e 3F6 LF;6 0able6 nstruments etc)6 the ma?imum and minimum balancefi?ed etc"Invento!" 9&u&tion

  Ialuation of stoc$s has to be done on t/o occasions"  ;hile issuing the material for production construction or maintenance"

;hen periodic performance statements are prepared and stoc$s in handare to be reflected in the accounts"

There are many methods of valuation of inventories" These are  (i) ''5 method 'irst in first outO  (ii) L'5 method Last in first outO

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  (iii) Simple 3verage method(iv) ;eighted 3verage method

  Gere under last t/o methods are e?plained out of /hich the adoptedpractice by BSNL is /eighted average method"

Simple 3verage *ethodn this method6 the prices paid for the purchases from /hich issues are made6are averaged and the entire issues are valued at that price" n this e?amplethe average price paid for purchases6 from /hich issues are made is s" "This method is very simple to operate and give reasonably valid figure of issue price"But over a long period it is difficult to monitor the prices and /or$ out theaverage price and apply that price for entire issues" 3t the most averagepurchase can be /or$ed for a month as in the e?ample or for a year if transactions are fe/ in a year" This average is also called periodic average

and the pricing method is called periodic average method" n this method allthe issue of %6!&& 4uantity are valued at s" total issues /ill be s" %%6!&&and value of closing stoc$ /ill be s" =6!&&"

6eig(te' Ave!&ge $et(o'

The simple average method do not consider the 4uantities purchased and isnot practicable for a long or continuous period /hen purchase transactionsare fre4uent and issues have to valued concurrently at the time of transactionitself" t is also reasonable to e?pect the price paid for a large 4uantity to havea comparatively greater /eightage in determining the valuation rate of issues"

To meet this re4uirement6 /eighted average of the prices are ta$en as thebasis6 the /eights being the 4uantities that are brought at these prices" *anyndian organisations6 including BSNL have adopted this method and thismethod is approved both by the Statutory 3udit as /ell as Ta? 3uthorities" The/or$ing of ;eighted 3verage method is as given"

,ate Transaction rocurement

price per unit

1uantity

in units

#&th Han

%&th Han

%+rd Han

%8th Han

+#st Han

eceipt

eceipt

ssue

eceipt

ssue

8

-

#&

-

#6&&&

#6&&&

#6!&&

#6&&&

#6&&&

Ent!ie# in 6eig(te' Ave!&ge Met(o'

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,ate eceipts ssues Stoc$

Han 1ty ate Ialue 1ty ate Ialue 1ty ate Ialue

#&

%&

%+

%8

+#

#6&&&

#6&&&

-

#6&&&

-

8

-

#&

-

86&&&

6&&&

-

#&6&&&

-

-

-

#6!&&

-

#6&&&

-

-

8"!

-

"!

-

-

#%6.!&

-

6!&&

#6&&&

%6&&&

!&&

#6!&&

!&&

8

8"!

8"!

"!

"!

86&&&

#.6&&&

=6%!&

#=6%!&

=6.!&

Total +6&&& - %.6&&& %6!&& - %%6%!& -

n this case the value of issues during the Hanuary is s"%%6%!& /hereas thevalue of stoc$ in hand is s" =.!&"

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,uring the e?ecution of a /or$s6 reports of unserviceable stores in form 30> Dshould from time to time be submitted by the officer D in charge of the /or$ to the,ivisional >ngineer /ho /ill6 if /ithin his po/ers6 pass order about the disposalof these stores6 5ther/ise he /ill submit the report to the ne?t higher authorityfor orders"

Pnder no circumstance the disposal to unserviceable stores is to be delayedunduly" ( ara +78 I5L ) Pnserviceable line stores and tools should be sold to the best advantage6 as ruleat siteQ or at nearest large city lift is e?pected the sales /ill have more proceedsthere"( The items mentioned under Note under para +.% of Iol" can also bedisposed locally)"

E7ception:

,isposal of Pnserviceable ;ireless F adio >4uipment

Pnserviceable /ireless e4uipment cannot be disposed by auction due to thepossibility of some components of transmission e4uipment being used byoutsiders for unauthorised purposes" But small components li$e condensers6registers6 transformers6 etc6 are sent to telegraph depot6 as there may bedifficulty in stoc$ing them" Some components /hich may have some use ful lifeleft but may not find effective use independently6 they can be put to use asreplacements etc"Ta$ing into account all these considerations it has been decided that allunserviceable /ireless e4uipment /hich have outlived their Life and are obsoleteshould be cannibali2ed and useful components available6 be utilised for maintenance purposes" Such materials recovered in nonstandard bits and pieces

/hich cannot be engineered for re-use6 should be ta$en on numerical accountbut /ithout any debit or credit"( ara +.% D 3 FT *an" Iol )

Pnserviceable obsolete and surplus stores ,isposal(i) ;henever store become unserviceable6 obsolete or surplus6 theyshould be declared as such and disposed of under the orders of anauthority competent to sanction the /rite off of a loss caused bydeficiencies and depreciation e4uivalent to their value"

This procedure should be follo/ed both in cases of normal /ear and tear as /ell as in cases /here /ear and tear may be held to be abnormal" Theauthority competent to order disposal should ta$e into account thecircumstances in /hich the store became unserviceable6 obsolete or surplus" ;here the competent authority holds the stores have becomeunserviceable6 obsolete or surplus o/ing to normal /ear and tear6 no4uestion of loss arises";here the competent authority hold that stores have becomeunserviceable obsolete or surplus o/ing to negligence6 fraud etc"6 on the

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prt of individual 9overnment servants6 it /ill be necessary to fi? theresponsibility for the loss and to devise remedial measures to preventrecurrence of such cases" n either case6 the order of the competentauthority declaring the stores in 4uestion as unserviceable6 obsolete or surplus and directing the mode in /hich they should be disposed of /ould

be sufficient to cover the loss to 9overnment6 if any and no separatesanction for the /rite off of the loss /ill be necessary"

(ii) >ach order declaring stores as unserviceable6 obsolete or surplusshould indicate the causes leading to the stores having becomeunserviceable6 obsolete or surplus" 3 copy of each such orders should beendorsed by the 0ompetent authority to the 3udit 5fficer E 0ircle

 3ccountant concerned"

(iii)" t /ill be seen from para (i) above that the sanction for /rite off of loss/ill not necessary /here the stores are bodily present" t is only in such

cases /here the stores are missing (as in the case of fire6 theft etc" ) thatformal sanction for /rite off of losses /ill be necessary"

iv" The term A value of stores A for the purpose of issue of sanction for disposal of unserviceable6 or surplus stores6 /rite off of losses of storesshould be ta$en as (a) boo$ value /here priced accounts are maintainedand ( b) the replacement value i"e" mar$et value ( at the time of issue of sanction for the disposalE /rite off )" 5f a ne/ articles or an article of similar nature6 /here no priced accounts are maintained" The saleproceeds of unserviceable6 obsolete or surplus stores should not be ta$eninto account for determining the value of stores for purposes of issue of 

sanction for disposal of stores"Note:*

(i) The stores are designated Pnserviceable /hen they are not usefulfor the department being beyond economic repairs" (i"e" non-standard6 non

 D stoc$ed6 obsolete and surplus)"

(ii) 5bsolete Stores that are going to be declared as non-standardshortlyQ generally ne/ orders are not to be placed" Ii2"6 non-standard6 nonstoc$ed6 surplus and unserviceable"

(iii) Surplus Stores are called surplus /hen they are in e?cess or 

re4uirement for a specified period c"f" non-standard6 non6 obsolete andunserviceable6 Gere the term does not6 ho/ever6 include serviceablestores found in e?cess of re4uirement for a particular /or$ for /hich they/ere indented for by the ,istrictsE divisions and are brought on to the siteof the /or$"

(iv) Pnserviceable Stores n the >ngineering Branch of the departmentmaterials /hich are found to be unsociable may by divided into t/o

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classes (i) materials /hich are recovered by dismantlement from lines andoffices and are found to be unserviceable6 and (ii) materials /hich becomeunserviceable through lying in stores"

  (ule 8& of 'GB Iol pt )

Recove!e'

Pnserviceable stores ,isposalPnserviceable6 obsolete and Surplus Stores recovered from line and offices arenoted in a register of unserviceable and obsolete stores in 'orm 30>- .+ through/hich their disposal is /atched" ecovered copper /ire6 /hether serviceable or unserviceable is invariably sent to the nearest egional depot for disposal"The 5fficer D in charge of the nstallationE ;or$ should determine /hether therecovered instruments or e4uipments can be repaired economically and reused/ithin his o/n jurisdiction" f6 ho/ever6 the e4uipmentsE instruments are notre4uired /ithin the jurisdiction of the officer concerned6 he should refer the matter 

to his higher authority for use in some other /or$ /ithin the ,ivision concerned" f the e4uipmentsE instruments are not re4uired /ith the ,ivision6 the ,ivision>ngineer (SS3) should ta$e up the matter /ith his Gead of the Telecom 0ircle for use in some other SS3 /ith in 0ircle"f it is ultimately decided by the Gead of the 0ircle the there is no use for thee4uipmentsE instruments in his o/n circle6 although these are economicallyrepairable6 the matter may be referred to the 09*6 Telecom6 Stores6 /ho /illrefer the matter to the Telecom Gead 1uarters6 if necessary" ('or intimating other circles) ;ith each proposal for sanction of disposal of surplus stores a certificatefrom the 09*Ts" Should be recorded the list of stores /ere circulated to Geadsof Telecom" 0ircles and ,istricts and that there is no demand for these"

Sto!e# Sc!&pping Co$$ittee#: 5o!$&tion

 3F temsn the case of 3pparatus and lant of all types recovered from installations or /or$s the recommendations of the 0ircle level Stores Scrapping committeeshould be obtained before they are finally declared unserviceable"The composition of the 0ommittee is as follo/s- 

#" ,irector of Telegraphs6,y" 9eneral *angerQ Telephone 0hairmanor the ,istrict *anager"

  %" ,ivisional >ngineer in-charge of the e?change *ember  area concerned"

 +" 3ssistant >ngineer of Sub-,ivisionalQ *ember  5ffice of the installation concerned"

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Line Storesn the case of line stores6 the ,ivisional >ngineer /ill be the authority competentto declare the stores unserviceable" (ara+.& of Iol )

Sto!e# Sc!&pping co$$ittee#: 5unction#

f the recovered instrumentsEe4uipments are6 in the opinion of the 5fficer incharge of the /or$E installation6 beyond economic repairs and are held to beunserviceable a proper case should be made out and submitted to the StoresScrapping 0ommittee at circle level" The committee /ill consist of the ,irector of Telegraphs (,9*) of the concerned 0ircle (or SS3) as chairmen6 the ,ivisional>ngineer-in-charge as a member and the 3ssistant >ngineer E Sub-,ivisional5fficer concerned as Secretary"The 0ommittee /ill e?amine the recovered instrumentsE e4uipments and decide/hether these should be declared as unserviceable for the purpose of disposal"The cost of repairs6 the assured prescribed life6 the actual period of use and

other relevant aspects /ill be ta$en into account in arriving at the decision"0omponents6 /hich are considered useful6 should be e?tracted locally by theStaff of the local PnitE epair center and these should issued on a numericalaccount over /hich are considered useful6 should be issued on a numericalaccount over /hich a /atch should be $ept" The committee shall meet once int/o months or /henever there is substantial 4uantify of accumulated storesa/aiting e?amination"The Secretary shall $eep a record of the proceedings of meetings and submit acopy of the same to the authority competent for sanctioning the disposal of unserviceable stores in 'orm (30>-)The stores declared unserviceable should be entered in the list of unserviceable

stores in 'orm 30>- and copy of the list sent to the concerned 0ircle 3ccountant (035 F '3 of SS3) after obtaining the sanction of the competentauthority for disposal"

 3fter obtaining sanction of competent authority6 action should be ta$en for disposal of these unserviceable stores under the rules prescribed in FT *anualIol" and the orders issued from time to time and disposal arranged locally"n addition the committee /ill ta$e over the follo/ing function

(i) >?amination and listing of the 4uantity and value of stores held ine?cess of % years re4uirements"

(ii) >?amination of the possibility of utili2ing the items for ,epartmentsuse as substituted is necessary"

(iii) >?amination of the stoc$ list /ith a vie/ the rationalising the typesof stores and reducing the number of si2ed consistent /ithtechnical efficiency"

(iv) n cases /here it is not possible /ithin the 0ircle to utilise thesurplus stores even as a substituted6 the matter /ill be referred tothe 9eneral *anger Telecom6 Stores /ho /ill obtain the order of the Surplus Stores committee for their final disposal"

(ule 8# of 'GB Iol t )

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Co$petent &ut(o!it" to S&nction 1ACE*

'or the purpose of determining the po/ers of sanction of the competentauthority6 the value of the stores /ill be the boo$ value6 if priced accounts areavailable or the replacement value at the mar$et rate6 at the time of issue of sanction6 of a ne/ article or an article of similar nature6 if no priced accounts are

available6 The sale proceeds of the stores /ill be ignored for the purpose of determining the authority competent to sanction the loss"The boo$ value of unserviceable stores recovered from /or$s for /hich originalrate list values are not $no/n6 should be determined by the ,ivisional >ngineer concerned /ho /ill be in a position to fi? the boo$ value by reference to the costof replacement or by reference" 


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