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SAI (PARA)
Q. What are the general accounting procedures of stores of army?
Ans. The accounting of stores in defence formations is generally done on a
quantitative basis. In the manufacturing establishments, however, the
accounting is also done on a cost to facilitate preparation of annual
production, trading and profit and loss accounts. In store holding
establishments items will be accounted for by quantity and condition. The
store holder in charge will maintain ledgers, account cards, bin cards, or
other records prescribed in the departmental regulations, to account for the
stores, to afford all essential and complete information required for
administrative purposes including maintenance of stock at its proper level.
All transaction in the accounts will be supported by relevant vouchers and
balance shown in the accounts will represent the actual stocks in hand. In
the case of ordnance depots and ASC supply depots, the stores are
accounted for centrally in the depot. (Auth: Para 1 of SAI)
Q. What are the three classes of stores issued from a supply and stores
depot?
Ans. These are as under:
(a) free issues (transfers or final issues, for consumption);
(b) issues on payment; and
(c) issues on loan with or without recovery of hire charges, as permissible
under the rules.
All transactions relating to the issues of any of the categories
mentioned above will be supported by issue vouchers. (Auth: Para 9 of SAI)
Q. Complete the sentences:
(i) Issue vouchers are not required to be signed by the issuing
establishments except those on -----------------------
Ans. (i) payment issue and loan for which hire charges are recoverable.
(Auth: Paras 22 of SAI)
(ii) All vouchers in connection with the issue of stores for internal use of the
depot will be endorsed as -----------------------
Ans. (ii) A-in U. (Article in Use) (Auth: Paras 24 of SAI)
(iii) The cash payment issue section of an ordanance depot stock stores
authorized by -------------- from time to time.
Ans. DOS and published in Army orders. (Auth: Paras 22 & 86 of SAI)
Q. Write short notes on: Payment Issue Stores.
Ans. Ordnance Depots are permitted to issue stores on payment basis to:
(a) Civil Departments/Railways;
(b) Civil Institutions;
(c) Foreign Governments against demands sponsored by the Ministry of
External Affairs;
(d) Overseas indentors;
(e) Officers;
(f) Navy, Air Force MES, Military Farms, Ordnance factories and military
units/formations,
The accounting procedure is laid down in Appendix I (Pg/261) of SAI
(Auth: Paras 30 of SAI)
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Q. When can an Ordnance Depot issue stores on payment to a foreign govt?
Ans. When the Ministry of External Affairs sponsors the demand.
(Auth: Para 30(c) of the SAI)
Q. Issue of samples by an Ordnance Depot to disposal authorities is treated
as loan issue or free issue?
Ans. This is treated as free issue and regular vouchers are prepared and
disposed of in the normal manner. (Auth: Para 33 of the SAI)
Q. Certain Ordnance Stores were returned by a Unit to the Ordnance Depot
as Category E stores insisting that the same may be acknowledged
indicating the category of the stores. Is the Ordnance Depot required to
acknowledge the stores as categorised by the unit?
Ans. In the case of stores returned by units, etc., to the depots, they will be
conditioned with the assistance of technical experts and stores holders as
necessary and accounted for under the condition accepted by the depot. In
these cases, the conditions of the stores will not be shown by the units on
the voucher, but the depots will classify the stores as serviceable, repairable,
unserviceable or doubtful as the case maybe and not the same in red ink on
all copies of vouchers returned to the unit. This will be done in all cases in
which a refund is due to the unit or where the change in conditions is due to
causes other than fair wear and tear. In other cases the conditions will not
be noted. The stores will be brought on charge in the conditions as
classified. It is, therefore, not appropriate on the part of the unit to insist for
the receipt of stores along with the category of the same. (Para 51 of the SAI)
Q. Are the Units/Formations required to submit indents to the Vehicle
Depots for issue of vehicles? If not, on what authority do the Vehicle Depots
issue vehicles to them?
Ans. Units/Formations are not required to submit indents. Vehicles are
issued on the authority of the issue orders and stock transfer orders issued
by the Army Headquarters. (Auth: Para 57 of the SAI)
Q. Certain bus chassis on the charge of an Ordnance Depot are required to
be fabricated by a private company. How will the issue of bus chassis be
accounted for?
Ans. Issue of chassis to a local body builder will not be made on regular
issue vouchers, but on convoy notes only. Final issue of chassis to body
builders located in outside stations will, however, be made on regular issue
vouchers. Appropriate action will be taken to note the transaction in the
vehicle stock summary and the vehicle register, with a view to watch the
return of the chassis after body building. (Auth: Para 59 of the SAI)
Q. An Army unit has returned vehicles to a vehicle depot without Vehicle
Log Books. What will the depot do?
Ans. Vehicle depot should raise a discrepancy and ask the unit to return the
Vehicle Log Book. If still Log Book is not forth coming from the unit, matter
to be reported to the formation HQrs for instituting disciplinary action
against the unit.
The depot should take action to build up the Log Book afresh with all
the information that may be available. (Auth. Para 64 SAI)
Q. An MT vehicle issued from a vehicle depot to an Army unit is filled with
100 litres of diesel at the time of leaving the vehicle. It arrives at the

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receiving unit with 80 litres of diesel, the remaining quantity having been
spent in transit. What quantity of diesel will the receiving unit take on
charge and what are the accounting transactions to be done in this
connection?
Ans. The receiving unit will take on charge the full vouchered quantity, i.e.
100 litres of diesel. The quantity expended in transit, i.e. 20 litres, will be
charged off by means of a certificate issue voucher. (Auth: Para 66 of SAI)
Q. How much POL can be issued to unfit vehicles?
Ans. Up to the approximate quantity required to get them to their
destination. (Auth: Para 72 of the SAI)
Q. What are the functions of Supply Depots? Or, Write short notes on:
Functions of Supply Depot.
Ans. Functions of Supply Depot are:-
(i) To receive articles of ASC Supply when arranged either by central
purchase/local purchase/transfer from other Depots.
(ii) To hold stocks as may be determined from time to time.
(iii)To issue items of ASC to units for consumption.
(iv) To operate ASC bakery and ASC butchery where required.
(v) To hold and issue POL at stations where petroleum platoons do not
function. (Auth: Para 98 of SAI)
Q. What is the Accounting procedure in an ASC depot of packing materials
issued with articles on payment?
Ans. Ordinary packing material issued with articles supplied on payment,
becomes the property of the purchaser who is in liberty to dispose off in any
manner he likes.
If the purchaser decides to return the empty packing material to its
source, it will be treated as surplus and will be taken on charge but no
credit will be offered to him. An issue of packing material on payment, by
itself is not authorized. (Auth: Para 105(c) SAI)
Q. How is the amount on account of payment issue of ordnance stores to an
officer recovered and credited to the government account? Can the demand
be intimated to CDA (O) for recovery?
Ans. The demand cannot be intimated to the CDA (O) for recovery. All such
issues have to be made on prepayment and the amounts realized must be
credited to the Government through the public fund account of the unit and
the treasury receipt sent to the PCDA/CDA through LAO concerned.
(Auth: Para 132 of the SAI)
Q. Write short note on: Vehicle Log Book.
Ans. This book will be maintained for each individual vehicle by the unit on
whose establishment the vehicle is held and should be kept up to date. All
casualties affecting the vehicles regarding the change of ownership, change
of drivers, tests carried, replacement made, monthly kilometres run and POL
consumed for test and static run will be recorded therein. It will accompany
the vehicle into workshops for appropriate entries to be made. This is not an
auditable document but may be referred to by the audit authority for
determining the KPL as fixed by the workshop, checking the workshop
running and POL consumption and correctness of changes of tyres, tubes
and batteries etc. (Auth: Para 141 of SAI and Para 310(v) of ALAM-I)
Q. Write short note on: Car Diary
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Ans. Car Diaries are required to be maintained in the case of all types of
vehicles viz. Staff cars including jeeps, Station wagons, ambulances, Motor
Cycles and load carriers. These are very important auditable documents and
must be properly completed and maintained. Two car diaries will be
maintained for each vehicle and these will be used for alternate quarters till
these are exhausted. It contains the following information:-
(i) The nature of duty of officer using the vehicle.
(ii) All entry made in English.
(iii) Signature of the officer using the vehicle.
(Auth: Para 142 of SAI and Para 310(vii) of ALAM-I)
Q. What points are checked by the LAO while auditing Vehicle Log Book and
'Car Diaries'?
Ans. Vehicle log book is not an auditable document. It will only be referred
to if the need arises for determining KPL etc.
Car diaries will be checked to see that:
(i) The nature of duty is clearly mentioned.
(ii) That entries are made in English
(iii) That the officers using the car have signed in the diary.
(iv) That journeys for private purposes have been shown separately.
(Auth: Para 141 & 142 of SAI and Para 310 (v) & (vii) of ALAM-I, Vol. II)
Q. Is the fact of change of driver required to be recorded in the Vehicle Log
Book?
Ans. Yes (Auth: Para 141 of the SAI)
Q. A Brigadier using a service vehicle (staff car) asks his staff officer to sign
the car diary. Comment.
Ans. This would be in order if the Brigadier was accompanied by the staff
officer while using the car. (Para 142(b) of SAI and Para 310 (vii) (A) (c) of ALAM-I)
Q. How and when is the motor spirit in the tank of a vehicle checked?
Ans. It is checked on the last day of the month by filling the tank to the
maximum capacity and the result is recorded in the car diary.
(Auth: Para 142(f) of SAI and Para 310 (vii) (A) (i) of ALAM-I)
Q. How many times in a month is the diesel in the tank of an MT vehicle
required to be checked, and how is it done?
Ans. MT gasoline/diesel in tank of every vehicle will be checked accurately
on the last day of the month by filling the tank to the maximum capacity or
by draining the tank in those areas where filling to maximum capacity is not
necessary. (Auth: Para 144 of SAI and Para 310(vii)(A)(i), ALAM Part I)
Q. In what terms is the POL consumption of static plants, such as
compressors accounted for?
Ans. In terms of litres (gallons) per hour and not kilometres (miles) per litre
(gallon). (Auth: Para 149(a) of the SAI)
Q. An LAO on his visit to a Military Hospital was informed that the POL
accounts could not be produced for his verification as the hospital was
located in the field area. Comment.
Ans. Individual fighting units including GT coys in an operational/field and
other areas notified as such in government orders are not required to
maintain detailed accounts for vehicles and POL under para 52 of Accounts
Manual (War).
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However, supply depots, and the static formations like hospitals,
reinforcement camps, etc. as distinct from fighting units in the field areas
with mechanically propelled vehicles on charge will maintain regular POL
accounts as given in Para 133 subject to audit checks by LAOs. Therefore,
the plea of the CO for not maintaining the POL accounts and not producing
the same to the LAO is not in order. The LAO may, therefore, report the
matter to the higher authorities. (Auth: Para 150 of SAI)
Q. How the accounting of all rations obtained for troops for a particular
month by a unit from a supply depot is done?
Ans. All rations for troops and enrolled non- combatants entitled to free
rations will be indented for and obtained from the supply depot concerned
and bought to account in the units ration return for the month. The
quantities of ASC items required for payment issues to unit personnel and
to others attached to the unit for purposes of drawing rations on payment
will also be drawn on regular indents from the supply depot and taken on
charge in the month's ration return of the unit. Subsequent payment issues
during the month will also be charged off separately from the ration returns.
(Auth: Para 152 of SAI)
Q. Balances of rations in hand, brought forward at the beginning of the
current month shows surplus food in a unit which the unit intends to adjust
against the deficiencies found in the previous month. Comment.
Ans. This will not be in order. Any surplus found at once be credited to the
Government in the return and deficiencies dealt with by the CFA on loss
statements. (Auth: Para 155 of SAI)
Q. Condemned human food item (biscuits) was pronounced by veterinary
authorities as fit for animal consumption which was issued by a supply
depot to a unit at equal weight to grain. Comment.
Ans. This action of the supply depot is not correct one. It has to be issued at
an equal weight to bran and not the grain. (Auth: Para 156(5) of SAI)
Q. When a complete Army unit moves from one station to another, what
action should it take in regard to rations and ration return, both at the
original station and at the destination?
Ans. When a unit moves from one station to another, the officer
commanding of the outgoing unit will close its ration return showing the
transactions up to the date of entraining, and open a fresh Train Ration
Return for the period of the journey. The closed Ration Return will be got
audited by the LAO before leaving the station, and objections, if any, will
also, as far as possible, be settled on the spot. A list of balances in the
closed Ration Return will be made over in duplicate to the LAO duly signed.
All supplies drawn from the supply depot at the entraining station for the
period of the journey and also those drawn en route will be brought on
charge as receipt in the train ration return on IAFS-1519 and issues made
for consumption by troops during the journey struck off charge. On arrival
at the destination, the train ration return will be closed and the balances of
unconsumed rations will be transferred to the first ration return of the unit
at the new station on regular vouchers. The train ration return will be
retained by the OC unit for local audit. (Auth: Para 159 of SAI)

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Q. The hospital stoppages, recovered by a Military Hospital from the civilian
patients admitted to the hospital under the special sanction of the Officer
Commanding, are being credited to the Regimental Fund. Comment.
Ans. This in not in order. These amounts so realized are to be deposited in
the nearest civil treasury by means of receivable orders to be created to the
Defence Services Estimates. (Auth: Para 164 of the SAI)
Q. What procedure is adopted for recovering Hospitals stoppages/charges
from a civilian patient admitted to an Army Hospital?
Ans. The Hospital stoppages are recovered from Civilian patients in cash at
the rates prescribed from time to time by the Officer Commanding the
Hospital and the amounts realized by him will be paid into the nearest civil
treasury for credit to the Defence Service Estimates by means of a receivable
order. The names are included in the Hospital Stoppage Rolls which are sent
to concern CDA in whose audit area the hospital is situated for necessary
adjustment. (Auth: Para 164 SAI)

Q. A civilian patient was admitted in the Military Hospital for a period of one
month and amount recovered from him was used by the Commandant for
buying certain medicines urgently required but not received from a regular
source of supply. Comment.
Ans. When civilian patients are admitted, the hospital stoppages will be
recovered from them in cash at the rates prescribed from time to time, by
the Officer Commanding the Hospital, and the amounts realised will be paid
by him into the nearest civil treasury for credit to the Defence Services
Estimates by means of a Receivable Order. Therefore, purchase of medicines
by the CO from the patient recoveries made by the CO of the hospital is not
in order. (Auth: Para 164 SAI)

Q. What procedure is adopted for recovering Hospitals stoppages/charges

from a non-entitled person taking treatment from a Military Dental Clinic?
Ans. The AD corps officers give receipts for the amount charged from non-
entitled persons stating therein the nature of treatment rendered. The
counterfoils of such receipts are produced for audit along with the register
which records the treatment of non-entitled persons. (Para 165 (b) of SAI)
Q. What document would the LAO look for in the ration return (IAFS-1519A)
for accounting patient’s diet?
Ans. The following documents will be included in the ration returns:
(i) Ward Diet Sheets.
(ii) Daily requisition for diets and extras.
(iii) Monthly summary of diets and extras.
(iv) Storekeeper’s diet record. (Auth: Para 166 SAI)
Q. Write short notes on: Disposal of Packing Material.
Ans. ASC packing materials on charge of units and formations are
accounted for in the Ration and Forage Return as per ASC Regulations.
Packing material received with AOC Stores will be accounted for by units
under the same nomenclature as it was vouchered. The value of special
packing materials will be accounted for in the ledgers of the units and
formations concerned. MT packing cases and packing materials in hospitals

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are also governed by separate rules. In audit it should be seen that the rules
as applicable are followed meticulously. (Auth: Para 169 of SAI)
Q. Is Embarkation Hqrs responsible for handling the imported ammunitions
and explosives of all the three services? If not, name the agency. Or,
Name the agency which handles imported ammunitions and
explosives for all the three services.
Ans. NASO, Mumbai (Auth: Para 177 of SAI)
Q. Which ledger indicating receipts and disposal of stores by Packages is
being maintained by the Embarkation Commandant/NASO, Mumbai?
Ans. An import transit register showing the receipt and disposal of stores by
packages is being maintained by the Embarkation Commandant/NASO,
Mumbai. (Auth: Para 178 (b) of SAI)
Q. Who is responsible for obtaining the certificate of short landing from the
port authorities and for raising the claim against the Shipping Company?
Ans. The Embarkation Commandant/NASO, Mumbai is responsible to
obtain certificates of short landings from the port authorities and prefer
claims against the shipping agents. (Auth: Para 178 (c) of SAI)

Q. Indicate briefly the procedure in dealing of short landed or damaged

military cargo.
Ans. The procedure in respect of items for military cargo short landed or
damaged is as under. This procedure is applicable to cargo intended for all
the three services handled by Embarkation Commandant and shipped as
under:
(i) Stores shipped on commercial vessels on which freight is payable
are adjustable in India.
(ii) Stores shipped on commercial vessels by various agencies of GOI
on which freight is payable in the country of shipment.
(iii) Defence Ministry items shipped from the UK on which freight is
payable by War Office, Air Ministry, London.
A copy of the claims on account of items short landed/damages will be
forwarded to the CDA in whose area the port is located for watching the
progress of the claim. The amount recovered from the shipping companies
will be credited into the Treasury on MRO and the TR will be forwarded to
CDA of the port. In the case of credits on account of Naval and Air Force
stores also, the TR will be forwarded to CDA of the port who will finally
compile the recoveries to the appropriate receipt under Major Heads I–Army,
II-Navy or III–Air Force, according to the nature of the stores.
(Auth: Para 178 (f) & (g) of SAI)
Q. What are the basic functions of Military Farms?
Ans. The basic functions of the Military Farms department are:
(a) Production of perishable foodstuffs which are included in the ration
scales of the armed Forces. These are milk butter cream, paneer (cottage
cheese), etc.
(b) Provision of dry fodder required for the armed forces, green fodder for its
own requirement and fodder for the operational requirements as demanded
by the ASC.

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(c) Fresh vegetables produced in Military Farm's lands are produced by the
ASC on priority basis. (Auth: Para 191 of SAI)
Q. What are the channels available to the MF for procurement of stores?
Ans. There are three channels available, viz.,
(i) AOC (ii) ASC (iii) DGS&D
The farms department will however make its own arrangements for
procurement of cattle and small livestock to meet the requirements of the
department. Transport animals for the use of the department will also be
processed by them. (Auth: Para 192 of SAI)
Q. What does the Annual Accounts of Military Farms Department comprise?
Ans. The Military Farms being manufacturing concerns run on Quasi
Commercial basis. Their accounts are maintained on a cost account basis as
well as Cash Account basis. The Annual Account comprise of:
Trading and Profit and Loss Account
Capital Account
Balance Sheet
Produce and Disposal Statement
RR Fund Account
Reserve Fund Account
Herd Statistics
Fodder Statement (Auth: Para 193&199 of SAI)

Q. How are the stores supplied by AOC, ASC etc. are priced?
Ans. Stores supplied by AOC, AJC etc. are priced at payment issue rates
published from time to time. The transactions will be treated as cost
accounts transaction. The cost of Military credit notes will also be debited
but treated as cash for budget purpose. (Auth: Para 194 (c) of SAI)
Q. What is the role of Defence Accounts Department in finalization of the
Annual Accounts of Military Farms?
Ans. The Accounts of Military farms are audited by LAOs. The audited
accounts received from various ADsMF and consolidated by DMF and
accounts prepared for the Military Farm Department as a whole on all India
basis. By 15th October DMF renders the accounts to the CGDA along with
copies of Trading Account, Capital Account, Balance Sheet and RR Fund
account of farms. The figures given in the consolidated annual accounts are
checked in CGDA's office from the accounts rendered by various ADsMF,
duly audited by the Controllers of Defence Accounts. The Trading Accounts
of farms which will consist of Trading Account, RR Account and Balance
Sheet is prepared on an all India basis in CGDA's office in prescribed
format. (Auth: Para 199 SAI)
Q. What does the Trading Account of the Military Farms consist of and who
prepares the consolidated account on all India basis?
Ans. The Trading Account of the Military Farms consists of trading account,
Renewal Reserve (RR) fund account and balance sheet. This is prepared by
the CGDA's office. (Auth: Para 199(B) of the SAI)

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Q. Who prices the vouchers in respect of dairy produce supplied by the
Military Farms to army units and formations?
Ans. The Military Farm itself. (Auth: Para 204(a) & 223 (b) of the SAI)
Q. Briefly explain how losses in Military Farms are to be dealt with.
Ans. All losses of stores, dairy produce, fodder, etc. will be dealt with as per
Instructions in FR Part I & II.
All losses of dairy produce, while on charge and in transit, whether
they are to be borne by the State or by an individual, will be valued at the
highest sale rate in force of the farm in which the losses occur. The loss or
weight during the process of manufacture of green grass into hay will be
shown in a conversion statement and no loss statement is necessary.
Animals lost will remain on the books until six months have elapsed
from the date they were reported lost after which a loss statement will be
prepared. Animals subsequently recovered will be brought on charge.
(Auth: Para 208 of SAI)
Q. A court of enquiry finds an individual responsible for the loss of two
buffaloes on charge of a Military Farm. How will the recovery be made?
Ans. Recovery is made as follows:
(i) In the case of form bred animals and purchased animals, which
have calved at least once since purchase – At twice the book value.
(ii) In the case of purchased animals which have not calved since
purchase – At purchase price. (Note below Para 208 of the SAI)
Q. Who prices the following:-
(i) Payment issues of ASC stores to entitled personnel from retail issue shop
Ans. Executives subject to scrutiny by the rep of CDA.
(ii)Loss statements of ASC depot chargeable to State where rates are not
available with depot.
Ans. CDA. (Auth: Para 224(a)(ii) of SAI)
(iii)Issues from Store Depots to Civil Departments
Ans. CDA. (Auth: Para 221 (h) & 222 (c) of SAI)
(iv) Losses of public clothing and equipment chargeable to a JCO.
Ans. Executives subject to scrutiny by the rep of CDA. (Para 224(a) of SAI)
Q. State the payment issue transactions vouchers which are priced by the
unit and depots authorities themselves subject to scrutiny by the LAO
concerned.
Ans. The vouchers relating to following payment issue transactions are
priced by units/depot authorities themselves subject to scrutiny by the LAO
concerned:
(i) Payment issue of ASC stores to entitled personnel from retail issue shops,
unit ration stands, etc.
(ii) Payment issue of AOC stores to officers etc.
(iii) Issue of clothing and necessaries to JCO's OR, NC(E) on payment.
(iv) Payment work orders in RSSD workshops.
(v) Losses of public clothing and equipments chargeable to JCOs, OR and
NC(E)
(vi) Issue of ASC stores issued from supply depot to various services viz. IAF,
Indian Navy and MES.
(vii) Vouchers in respect of Farm Produce etc., will be priced by the farm
authorities. (Auth: Para 223 of SAI)
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Q. State as to who prices the following loss statements:

(i) Loss statements chargeable to state.
Ans. The responsibility of pricing of loss statements chargeable to the state
generally devolve upon the party who initiates the loss statements, i.e. the
depot /unit authorities. (Auth: Para 224 (a) of SAI)

(ii) Loss statements for losses where penal recoveries from individuals are
involved.
Ans. These will be priced by the PCsDA/CDA/LAOs. (Para 224 (b) of SAI)

(iii) Loss statements in respect of ordnance stores where units are not able
to price them.
Abs. Where these cannot be priced even with the assistance of audit
authorities, they will approach only those ordnance depots which are
centrally responsible for the items concerned. (Auth: Para 224 (c) of SAI)

(iv) Loss statements in respect of NIV items of ordnance and MT stores.

Ans. These will be priced by the ordnance depot on which the unit is
dependent. Such loss statements will be forwarded by the units to the
depots through PCDA/CDA concerned. (Auth: Para 224 (d) & 230 of SAI)
Q. Who prices the following types of loss statements?
(i) M.T. stores of Ordnance Depots.
(ii) M.T. stores of units
(iii) ASC stores of units
(iv) Medical stores of Medical depots
(v) Vetenary stores of ASC units
Ans. The loss statements are priced by authorities mentioned below:
(i) Executive
(ii) CDA/LAO
(iii) Executive
(iv) Executive
(v) LAO/CDA (Auth: Para 224 of SAI)
Q. While calculating the free issue rates the departmental charges was
levied and the rates were changed during the course of the year in respect of
items purchased locally. Comment on the propriety of above action with
reference to the manner of fixation of free issue rates of items purchased
locally.
Ans. This is not as per laid down procedure for fixation of free issue rates.
Free issue rates are published annually by PCDA/CDA based on running
contracts or if contracts do not exist, with reference to the average of the
latest purchase rates prevailing in the area or command as case may be.
Departmental charges will not be taken in to consideration while calculating
the free issue rates. The rates once fixed will not ordinarily be changed
during the course of the year. (Auth: Para 227 (a) of SAI)
Q. How is ‘Free Issue Rates’ fixed for items supplied through the ASC?
Ans. ‘Free Issue Rates’ are calculated on the basis of rates in relevant
running contracts or when such contracts do not exist. It is fixed with
reference to average of the latest purchase rates prevailing in area.
No departmental charges will be taken into consideration.
The rates fixed will normally continue for the full year.
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The rates are fixed by the CDA. (Auth: Para 227 (a) of SAI)
Q. How do you regulate refund of cost of Ordnance and clothing stores
issued on payment if they are returned?
Ans. The amount to be refunded will be as follows:-
(a) Stores conditioned as serviceable on receipt back at full vocabulary rate
(b) Stores conditioned as repairable on receipt back at full vocabulary rate
less the estimated cost of repairs
(c) Stores conditioned as unserviceable on receipt back in supply dept. At
10% of the full vocabulary rate or at the scrap value whichever is less.
(Auth: Para 230-A of SAI)
Q. A batch of twelve (12) Parachutes has been received back in ordnance
clothing factory, from the indentors. The vocabulary rate of one Parachute is
Rs.450. The batch is branded as repairable. The repairable cost of one
Parachute is Rs.13. What will be the amount refundable for the entire
batch?
Ans. The amount refundable on entire batch of Parachutes is worked as
follows:-
(a) Full vocabulary rate of entire batch = Rs.12x450 = Rs.5,400/-
(b) Repairable cost of entire batch of Parachutes = Rs.13x12 = Rs.156/-
(c) Refundable cost - (Vocabulary rate - Cost of Repairs) = 5400-156 =
Rs.5,244/-
(d) Refundable cost of entire batch = Rs.5,244/- (Para 230 A (b) of SAI)
Q. What is the free issue and Payment issue rate of vegetables produced in
Military Farm?
Ans. Free issue and Payment issue rate of vegetables produced by Military
Farms will be calculated and based on the production rate of farms/gardens
concerned plus 10% supervision charges. (Auth: Para 233(a-b) of SAI)
Q. When does a court of inquiry to investigate a loss become mandatory?
Ans. Court of Inquiry is mandatory in respect of following losses:
(i) Which require sanction of Government of India for write off.
(ii) Losses due to inaccuracies in previous stock- taking.
(iii) Losses of arms, ammunition and explosives.
(iv) Losses due to theft, fraud, neglect, fire or any unusual occurrence.
(Auth: Para 241 of SAI)
Q. Is a court of enquiry necessary in case of Loss of stores not attributable
to theft, fraud or neglect falling within the powers of Area Commander?
Ans. Holding of court of enquiry will be discretionary in cases of loss of
stores not due to theft, fraud or neglect, where the amount of loss is within
the financial powers of authorities lower than the GOI e.g. the Area
Commander is the competent authority to decide whether or not a court of
enquiry is necessary in individual cases, to the extent of financial powers for
write off of losses delegated to him. (Last sub para of Para 241 of SAI)
Q. Can an authority, competent to write off a loss, use its discretion to
dispense with holding of a court of inquiry if the loss is on account of
neglect?
Ans. Yes, provided the reported loss is for an amount of less than Rs.
10,000. (Auth: Para 241(d) of the SAI)

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Q. A sub-area Commander decides not to hold a Court of Inquiry in a case
of Loss of Stores due to theft worth Rs.9,000. He has not consulted CDA.
What are your comments?
Ans. When reported loss is more than Rs.10,000/-, a Court of Inquiry is
mandatory.
If it is less than Rs.10,000/- holding of Inquiry is at discretion of
prescribed authority. In this case the decision of Sub Area Commander,
issues order as the loss is less than Rs.10,000/-. No need to consult CDA.
(Auth: Para 241(d) of SAI)
Q. In the case of losses of stores in transit, does the consignee bring on
charge the quantity received or that despatched? Is the loss statement
prepared by the consignor or the consignee?
Ans. In the case of losses of stores in transit the Consignee brings on charge
the quantity despatched. The loss statement is prepared by the Consignee.
(Auth: Para 241-245 of SAI)

Q. Briefly explain the purpose of obtaining LAO’s audit report on loss

statement?
Ans. The purpose of obtaining LAO’s audit report on loss statement is to
ensure that:
(i) All losses of stores are subjected to adequate investigation to
determine the cause of loss and the correct amount involved,
(ii) Responsibility is correctly fixed for the loss and remedial measures
and disciplinary action are initiated as necessary,
(iii) The loss is correctly classified as due to/not due to theft, fraud or
neglect, the CFA for its regularisation is correctly determined and
his sanction obtained without undue delay.
(Auth: Para 241-245 of SAI)

Q. What are the basic purposes for which loss statements are prepared by
the units for loss of stores held by them?
Ans. The loss statements are basically prepared by the Units to obtain the
CFA’s sanction for their regularisation and for taking requisite remedial
measures to prevent their recurrence. After the loss statement is approved
by the CFA, the lost stores are charged off from the ledgers on the basis of
CFA’s sanction to complete the ledger accounts.
(Auth: Para 241-245 of SAI)

Q. An apparent loss of stores has resulted from omission to prepare

vouchers for stores disposed off? Is such a loss required to be regularized
through a loss statement? Will it be regarded as a loss due to neglect?
Ans. The loss is required to be regularized through a loss statement, but it
need not be regarded as a loss due to gross neglect. (Para 243(c) of SAI)
Q. What are the different classifications for loss of stores?
Ans. Losses of stores are classified under the following headings:
(i) Losses due to theft, fraud or neglect.
(ii)Losses due to other causes, such as – Fire, Deficiencies in actual balance,
Deterioration, Defective Storage, In Transit, Rain/Storm/Floods, Casualties
in case of animals and Miscellaneous causes. (Auth: Para 244 of SAI)

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Q. How many copies of a loss statement are made and which copy sent to
the CFA for sanction?
Ans. Six copies are made. The original copy is sent to the CFA for sanction.
(Auth: Para 245 of SAI)
Q. In an MT accident the loss is assessed at Rs. 1 Lakh, out of which an
amount of Rs. 20,000/- has been recovered from the individual. For what
amount the sanction of CFA would be necessary? Will there be any change
in case of loss other than MT accident?
Ans. CFA sanction is necessary for the gross amount i.e. Rs. 1 Lakh in
respect of MT accident.
In cases other than MT accident, CFA sanction is for the net amount
i.e. Rs. 80,000/-. (Auth: Para 247 (d) of SAI)
Q. AOC stores held by a unit, which were previously in a repairable
condition, have now become unserviceable and are to be destroyed by
burning. The priced vocabulary rate of these stores was Rs.45,000. For what
amount will the loss statement be prepared?
Ans. 100% of the priced vocabulary rate will be taken for preparing the loss
statement. In other words, the loss statement will be prepared for
Rs.45,000. (Auth: Para 247 (a) of SAI)
Q. An Army vehicle meets with an accident resulting in damage to the
vehicle without the vehicle being downgraded. The cost of making good the
damage, as assessed by the workshop officer, comes to Rs.1,30,000. Penal
recoveries amounting to Rs.50,000 have been made from the concerned
individuals. For what amount should the loss statement be prepared?
Ans. In this case, since down gradation of the vehicle are not involved, penal
recoveries will not be deducted from the amount of loss. In other words, the
loss statement will be prepared for the full amount of loss, i.e. for
Rs.1,30,000. (Auth:Note (ii) below Para 247(c), SAI)
Q. Due to thunderstorm the glass panes of a Defence Building were
damaged to the extent of Rs.1.25 lakh. The court of inquiry was held and it
was found that the loss was due to negligence of the personnel who did not
close the windows/doors and a sum of Rs.25,000 was recovered from those
personnel. For what amount the sanction of CFA would be necessary?
Ans. Sanction of competent authority would be necessary on gross amount
of loss i.e. Rs.1.25 lakh. (Auth: Para 247(d) of SAI)
Q. During stock taking of stores, some items have been found surplus and
some items deficient. How would these be regulated?
Ans. Surplus stores detected during stock-taking must be taken on charge
through the medium of internal receipt vouchers. The deficient items of
stores should be regularised under the orders of the competent authority
and written off and adjusted on the stock taking sheet provided there is no
theft, fraud or neglect involved. (Auth: Para 247(e) of SAI)
Q. Losses of individual items of a dissimilar type detected during stock-
taking in a Supply Depot are treated as separate transactions and written
off on separate loss-statements by the competent financial authority (CFA).
Comment.
Ans. The procedure followed is correct. (Auth: Para 247(f) of SAI)

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Q. Loss of various classes of stores occurred in a unit due to one and the
same incident. Should such losses be written-off on one loss statement or in
separate loss statements for each class of stores?
Ans. Losses of various classes of stores occurred in a unit due to one and
the same incident/cause, e.g. theft, fraud, fire, explosion etc. should be
written off on one loss statement and not in separate loss statements for
each class of stores. (Auth: Para 247(h) of SAI)
Q. Loss of various classes of stores occurred in diffferent unit due to one
and the same incident. Should such losses be written-off on one loss
statement or in separate loss statements for each class of stores?
Ans. Losses of various classes of stores occurred in different unit due to one
and the same incident/cause, e.g. theft, fraud, fire, explosion etc. should be
written off on separate loss statement and not in one loss statements for
each class of stores. (Auth: Para 247(h) of SAI)
Q. Write Short Notes on: Transit Loss.
Ans. Losses in transit are to be treated in the same way as losses in stock
and after investigation are to be categorised as:
(i) due to theft, fraud or neglect; or
(ii) not due to theft, fraud or neglect.
In all other cases of losses in transit, when the stores are in physical
possession of the carrying agency, viz., Railway, private body or a firm, the
losses to the extent that they become irrecoverable from the carrying agency,
will be treated as (ii) above and will be written off. In all other cases the
consignee shall note the discrepancies on the receipt voucher. In no case the
case can be closed until the consignee is asked to make good value (viz.,
Railways) and it is proved that the amount is irrecoverable.
(Auth: Para 248 of the SAI)
Q. Is loss statement required to be prepared in case of loss in transit, which
is accepted in full by the railways?
Ans. No. (Auth: Para 249(a) of SAI)
Q. In a case of loss of stores in transit, the Railway authorities admit the
consignor’s claim in part. How will the loss be regularized?
Ans. The residual loss, i.e. the amount of claim preferred minus the amount
admitted by the Railway, will be treated as store loss and regularized on loss
statement by the financial authority competent to sanction the net amount
of loss. (Auth: Para 249(b) of the SAI)
Q. How do you assess the Damaged Stores in transit against Railways?
Ans. Claims against railways for damages to stores in transit will be
assessed as under:-
(i) The unserviceable stores be handed over to railways, when they have
accepted fully liability. If the MoD decides to retain them, the scrap value
will be credited to Railways.
(ii) Stores damaged, but found repairable on receipt, will be assessed at full
cost of repairs and credited to railways.
(iii)Stores damaged beyond repairing capacity of consignee and which are
considered worth repairing at a work shop will be assessed as in (ii) above,
but cost of transport will be recovered from Railways. (Auth: Para 251 of
SAI)
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Q. Please comment whether in the following cases it is necessary to prepare

loss statements to regularize the shortages noticed in the stores.
(i) Unavoidable losses in the assembly of stores in Ordnance depot etc.
Ans. No loss statement is required. (Auth: Para 254(l) SAI)
(ii) Loss due to fair wear and tear.
Ans. No. (Auth: Para 254(a) of SAI)
(iii) Loss in medical store due to deterioration in stock.
Ans. No loss statement is required. (Auth: Para 254(aa) of SAI)
(iv) Deficiencies in transit of stores received from U.K./other overseas
stations, discovered at the time of the opening of packages at destination
and reported to DGISD, London.
Ans. No loss statement is required. (Auth: Para 254(c) of SAI)
(v) Losses due to unrecovered quantities of expended metals, sand-bags and
barbed wires after use for instructional purpose.
Ans. No. (Auth: Para 254(e) of SAI)
(vi) Destruction of animals incurably injured.
Ans. Animals lost will be regularized on loss statements after six months
from date of loss. These are done under the orders of Sub-area Brigade
Commander or OC Station for destruction. (Auth: Para 254 (an) of SAI)
(vii) Loss of cotton wastage due to drayage upto 10%.
Ans. Losses of cotton wastage due to drayage are permissible upto 3.5%.
Therefore, in this case loss statement is required to be prepared as the loss
of cotton is upto 10%. (Auth: Para 254 (ar) of SAI)
Q. A stockpile of explosives, for which no age limit was fixed, was found to
be unserviceable on test by the inspecting ordnance officer. However, in his
test report, the inspecting officer had mentioned that it could not be said
conclusively that the unserviceability of the stores was not due to
unsatisfactory storage conditions. Is a loss statement required in this case?
Ans. Yes, because it is only when the inspecting officer certifies that the
unserviceability of the stores is not due unsatisfactory storage conditions
that the loss statement is not required to be prepared.
(Auth: Para 254(h) of the SAI)
Q. Are loss statements required when discrepancy due to posting under
wrong head?
Ans. Loss statement not necessary. (Auth: Para 254(s) of SAI)
Q. Is a loss statement necessary in respect of deterioration of Ordnance
Stores held in stock?
Ans. In case, on inspection, serviceable stores are found to be unfit for
issue, no loss statement is necessary provided the deterioration, defect was
not due to lack of suitable accommodation or failure to look after the articles
while in storage. (Auth: Para 254(t) of SAI)

Q. Are loss statements required when wastage of 11% timber due to

degradation while seasoning?

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Ans. Loss statement is necessary, since it exceeds maximum 10% of
degradations of timber. (Auth: Para 254(y) (iv) of SAI)
Q. Are the Defence Service authorities authorised to dispose off Serviceable
and Repairable Surplus and Obsolete Stores under their own arrangements?
Ans. The Defence Services authorities are authorised to dispose of surplus
stores upto Rs. 5000/- in book value of any "Single Category" under their
own arrangements. (Auth: Para 256 of SAI)
Q. How are 'Surplus Stores' defined?
Ans. Surplus Stores are stores which cannot be utilised against present or
anticipated requirements over a period to be determined on the merits of
each case or which are liable to deteriorate by the time they could be issued
in the normal course of events.
The term also includes obsolete and obsolescent stores.
(Auth: Note (a) below Para 256, SAI)
Q. What is an Obsolete Store?
Ans. An equipment or stores is declared obsolete when approval has been
given to its withdrawal from the Services, on any of the following grounds: -
(i) Technical inefficiency to carry out its required and intended role,
and non-justification for its retention in service.
(ii) Its required role has disappeared and it is of no use for any other
role.
(iii) It has been completely superseded by an improved equipment or
store. (Auth: Para 256(b)(i) SAI)
Q. What is an Obsolescent Store?
Ans. An equipment or store is declared Obsolescent when it has been
decided that no further provision of that item will be made because
(i) the prototype of a successor equipment has been formally accepted or
(ii) an equipment or store which is obsolete is required to be retained to meet
tactical/technical or other special requirements. (Auth: Para 256(b)(ii) SAI)
Q. How are 'Surplus Stores' defined?
Ans. Surplus Stores are stores which cannot be utilised against present or
anticipated requirements over a period to be determined on the merits of
each case or which are liable to deteriorate by the time they could be issued
in the normal course of events.
The term also includes obsolete and obsolescent stores.
(Auth: Note (a) below Para 256, SAI)
Q. Is the only way to dispose of surplus stores is through sale to the public?
Ans. No, these could be transferred to other departments of the Central or
State Governments or sold to other Commonwealth and foreign
governments. (Auth: Para 258 of the SAI)
Q. What do you understand by the term 'Priority Indentors' in the contest of
disposal of surplus stores?
Ans. Surplus stores disposed by Defence Service. (Auth: Para 261, SAI)
Q. Identify the following surplus ASC stores meant for disposal as
perishable/non-perishable:
(i) Tinned food shelf life of which is 9 months
Ans. Perishable (Auth: Para 262 SAI)
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(ii) POL with storage life 3.5 years

Ans. Non-perishable (Auth: Para 262 SAI)
(iii) Hygiene chemicals with storage life 2 years
Ans. Perishable (Auth: Para 262 SAI)
(iv) Packing material
Ans. Perishable (Auth: Para 262 SAI)
Q. In what respects is the disposal procedure different when it comes to
salvage and scrap?
Ans. The difference is only that these are reported on auction catalogues for
disposal and not offered to priority indentors prior to their disposal.
(Auth: Para 265 SAI)
Q. What is the periodicity of stocktaking in respect of various items in
AFMS?
Ans. (i) Short Life items :- Quarters = April/June-July/September
Half years = April/Sept.-Oct./March
(ii) Controlled items :- Quarterly
(iii) Valuable and attractive items :- Half-yearly
(iv) All other items :- Yearly (Auth: Para 277 SAI)
Q. How many cycles of stock taking are to be carried out during a stocking
year for POL in vehicle depots.
Ans. 12 cycles. (Auth: Para 280 (b) (v) of SAI)
Q. Who is responsible for physical verification of stock in an Army unit? Can
it be done by Defence Accounts Department also?
Ans. The responsibility for carrying out stock verification rests primarily and
solely on the executive officer concerned. Physical verification of stock may
be carried out at any time by the Defence Accounts Department whenever
such verification is considered necessary by that Deptt. (Para 294 of SAI)
Q. What is the procedure for conducting physical stock verification of Army
units by the Defence Accounts Department?
Ans. Whenever stock verification by DAD has been found to be necessary in
a particular unit/formation, intimation to this effect will be sent by
PCDA/CDA/LAO to the executive officer concerned. On receipt of the
intimation, the OC of the unit/formation will make suitable arrangements
for the verification of the stock by the representative of the DAD. He will
provide the LAO with sufficient departmental assistance for carrying out his
work and will arrange that the store holder or his representative is present
during the process of stock-taking. The result of stocktaking will be entered
by the LAO in the stock verification report, which will be prepared in
duplicate and the initials of stockholder or his representative obtained on
both the copies, as proof of his having accepted the figures. The completed
stock verification report which will show both, the “stores actually held in
stock” and the “ledger balances” as worked out by him (LAO), will be shown
to the OC and his signatures obtained on both the copies of the report. One
copy will be handed over to the OC for record. The OC will arrange for an
investigation of the discrepancy, if any. (Auth: Para 295 of SAI)

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Q. In what condition Blood from Armed Forces Medical College can be
supplied to a poor patient admitted in a civil hospital?
Ans. In exchange for a donor. (Auth: Para 312 SAI)

Q. How many copies of vouchers will be prepared by an indenting unit for

submission of demands on an ASC Supply depot?
Ans. 5 copies (Auth: Appendix 12(a) SAI)

Q. What are the different kinds of losses of stores? Please state as to which
type of losses require mandatory investigation by a court of inquiry and how
are such losses regularized?
Ans. Losses of stores may arise due to various factors. These may be due to
theft, fraud and neglect and without these factors also. There are losses due
to other causes viz fire, deficiencies in actual balances, deterioration and
defective storage. Losses may arise in transit between depot and consuming
units, between one depot and another manufacturing units to depots, and
casualities in the case of animals.
Losses may also occur due to rain/storm/flood etc. Losses may be
loss of stores or even of cash.
A court of inquiry is mandatory in the following cases:
(a) All losses which require the sanction of Govt. of India to write off.
(b) Loss due to inaccurancies in previous stock taking
(c) Losses of Arms, Ammunition and explosives
(d) Losses due to theft, fraud, neglect in case reported loss is not more than
Rs.10,000/-
(e) Losses due to unusual occurrence.
After a court of inquiry, the causes of losses and the responsibility
aspect, if such element is involved, are determined. The proceeding for
regularization of loss through a loss statement are initiated without delay
which is routed through PCDA/CDA for regularization by competent
financial authority. (Auth: Para 241 et. Seq. of SAI)

Q. State as to who is responsible for pricing of following loss statements:

(i) Loss statements chargeable to the state
Ans. The responsibility for pricing loss statements chargeable to the state,
generally devolve on the party who initiates the loss statements, i.e. the
depot/unit authorities. (Auth: Para of SAI)

(ii) Loss statements for losses in respect of which penal recoveries from
individuals are involved.
Ans. There will be priced by PsCDA/CsDA/LAOs. (Auth: Para of SAI)

(iii) Loss statements in respect of ordnance stores where units are not able
to price them.
Ans. Where these cannot be priced even with the existence of audit
authorities, they will approach only those ordnance depots which are
centrally responsible for the items in question. (Auth: Para of SAI)

(iv) Loss statements initiated in respect of NIV items of ordnance and MT

stores.
Ans. These will be priced by the ordnance depot on which the unit is
dependent.
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Such loss statements will be forwarded by the units to the depots
though PCDA/CDA concerned. (Auth: Para of SAI)

Q. Under what circumstances may extra rations be issued to troops? Whose

sanction will be required if such extra rations have to be continued beyond a
period of 90 days?
Ans. On the recommendations of the local medical authorities, the issue of
extra rations at the prescribed scales to troops may be sanctioned when
climatic conditions are specially severe and unusually hard work is being
performed, and commanders are satisfied that the normal daily ration is
inadequate to maintain its recipient in health.
Issues for periods in excess of 90 days in any one financial year will require
sanction of the Central Government. (Auth: Para 159 of SAI)

Q. Explain the procedure for recovery of Hospital Stoppages from:

(i) Service personnel of Armed Forces.
(ii) Other Deptt./Govt., and (iii) Civilian Personnel.
Ans. (i) Service Personnel: - Hospital Stoppage Roll will be prepared by OC
Unit and forwarded to PAO concerned and acknowledgement obtained.
(ii) Other Deptt./Govt.: - Particulars will be furnished to the CDA concerned
for necessary action.
(iii) Civilian: - Special sanction of OC would be taken which will be recovered
in cash and deposited through MRO.
(Auth: Para 164 & 165 of SAI)

Q. How are free issues of bread fixed?

Ans. These are calculated at the end of the year, i.e. after the close of March
(Supplementary) compilation and will be based entirely on the payment
issue rate of flour and other ingredients. (Auth: Para 288 (b) of SAI)

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