Nov 2009

INDEX
Model Answer

SAS PART-II EXAMINATION
NOVEMBER, 2009

PAPERS PAGE NUMBERS
PAPER-V 1-41
PAPER-VI 42-74
PAPER-VII 75-87
PAPER-VIII 88-113
PAPER-IX
(Theory)
(Practical)

114-119
120-126

1
DEFENCE ACCOUNTS DEPARTMENT

S.A.S. EXAMINATION -PART-II

NOVEMBER, 2009

PAPER-V - PRACTICAL (WITH BOOKS)

SUBJECT 'E'- WORKS, STORES AND INTERNAL AUDIT

TIME ALLOWED: 3 HOURS TOTAL MARKS: 100

Notes:-

(1) Only TEN questions should be attempted - FIVE from Section -I
and FIVE from Section -II. Each question carries 10 marks.

(2) Section -I is common to all. Each question will carry 2 parts - One
part theory carrying 3 marks and the other part practical carrying
7 marks.

(3) Candidates permitted to answer questions relating to ARMY or
AIRFORCE or NAVY or FACTORY portion of Section II should
answer any FIVE questions from Sub - section A - ARMY or B -
AIR FORCE or C- NAVY or D - FACTORY. Answer to the
questions to Section - II should be written in a separate Answer
Book.

(4) Reasons must be given in support of the answers. Authority must
be quoted in support of the answers.

SECTION-I (Works Accounts)

(Common for ALL Candidates)

Ques.1. (a) What are the four categories of original works for the administrative
purpose. ?
(3 Marks)
(b) While vetting of Approximate Estimates of an original work in an IFA's
office it was noticed that some items of the nature of special works were
included. Is it permissible ? Under what conditions special works should
not be sanctioned ?
(3 Marks)
(c) A major capital work costing more than Rs. 15 lakhs has been sanctioned
in financial year 2008-09 by the GOC in C of command which was not
included in the Annual Major Works Programme for the relevant financial
year. Is this in order ?
(3 Marks)
2
(d) Who is the competent authority for grouping of buildings for special
repairs ?
(1 Mark)
Ans.1 (a) For administrative purposes original works are divided in the following
categories:

(i) MAJOR CAPITAL WORKS: Original works costing Rs. 15 lakhs or
more

(ii) LOW - BUDGETED CAPITAL WORKS: Original works costing
more than Rs. 2 lakhs but less than Rs. 15 lakhs

(iii) REVENUE WORKS: Original works costing more than Rs. 11 Lakhs
and not exceeding Rs. 2 Lakhs.

(iv) MINOR WORKS: Original works costing not more than Rs. 1 Lakh.
(Authority: Para 5 of Defence Works Procedure, 2007)

(b) Special works are those which are not authorized works i.e. for which
scales are not authorized and are thus not covered under Para 6(a) of
Defence Works Procedure.

The Special Works may be approved only when exceptional local
conditions justify the necessity, or as an important experimental measure.
Therefore, in the instant case Special Works would be permissible if above
conditions are fulfilled.

Special Works should not be approved if the effect would be to introduce a
new practice or change of scales.

(Authority: Para 6(a) and Para 6(b) of Defence Works Procedure,
2007)

(c) This is not in order because in case of a new Major Capital works each
costing Rs. 15 lakhs and more, it has to be included in the annual Major
Works Programme (AMWP) for the relevant financial year of the
concerned service or organization as approved by Government of India.
(Authority: Para 16 of Defence Works Procedure, 2007)

(d) The Garrison Engineer will be the competent authority for grouping of
building for the purpose of special repairs.
(Authority: Para 10 (b) of Defence Works Procedure, 2007)

Ques.2 (a) What do you understand about administrative approval of a work ? Is
administrative approval essential for all kinds of work services ?
(3 Marks)
(b)(i) An engineering officer has committed Government to expenditure beyond
10% of administrative approval amount without obtaining approval of the
CFA. Is this action in order ?
(1.5 Marks)
3
(ii) Explain whether a revised administrative approval is based on actual
completion cost after issue of financial concurrence (FC) ?
(1.5 Marks)
(c) A C.E. has entered in to a contract on a major work of the value of Rs. 10
crore which permits the contractor an advance of 10% value of the contract
as mobilization advance for immediate hiring of the special equipments,
tools and plants to be brought on site. Is this permissible ?
(3 Marks)
(d) Can a CWE fix star rates relating to a contract whether accepted by him or
any higher authority ?
(1 Marks)
Ans. 2 (a) An Administrative Approval is a sanction by the CFA to the execution of a
work at a stated cost. It also states clearly whether the works being
approved are authorized or special. Special items of works will be
specified and reasons for approving the same will be stated.

Administrative Approval is essential in all Original works and special
repairs. However, in case of services other than the original works and
special repairs, the schedule of demands is the only estimate of cost. An
allotment given on this basis implies the administrative approval to the
execution of services to that extant and no further administrative approval
is required. No administrative approval is required for payment of general
charges.

(Authority: Para 31, 39 & 41 of DWP, 2007 and Para 145 of MESR)

(b) (i) This action of the Engineer officer is not in order. It is because the final
cost of any service will not exceed the amount of Administrative Approval
by more than 10%. An officer will take no action which will commit the
government to expenditure beyond 10% of Administrative Approval
amount without obtaining prior sanction of the CFA in the form of
Financial Concurrence (FC), a Corrigendum or a Revised Administrative
Approval.
(Authority: Para 2(h) of DWP 2007)

(ii) A Revised Admin Approval is not based on actual completion cost and
the tolerance limit of 10% as per Para 2(h) will be applicable to revised
Admin Approval also.
(Authority: Para 32(g) of DWP, 2007)

(c) Yes, it is permissible. In case of works to be carried out in remote/difficult
location and/or requiring mobilization of special equipments, tools or
plants, or works to be completed on stringent and compressed time-frame,
the Chief Engineer may include in the tender notice the offer of
mobilization advance to the prospective contractors so as to prevent
avoidable delay in commencement of works after acceptance of contract.
The amount of mobilization advance that can be granted is limited to
maximum of 10% of the value of the contract. The guidelines for interest
to be charged and the method and schedule of recovery and /or adjustment
of such advance in different categories of cases, are issued by E in Cs
Branch time to time with the approval of Defence Finance.
(Authority: Para 47 of DWP, 2007)
4
(d) Yes, a CWE is authorised to fix, before expiry of the period covered by the
contract, as originally executed or as subsequently amended, all star rates
relating to any contract, whether accepted by him or any higher authority.
(Authority: Para 439 of MESR)

Ques. 3 (a) Under what conditions the 'Go Ahead sanction of a work is accorded ?
(3 Marks)
(b) A CFA lower than the Government of India has accorded the 'GO Ahead'
sanction of a work exceeding 20% of the rough cost estimate for the entire
project. Comment on the correctness of above sanction.
(3 Marks)
(c) A GE has not prepared the costed schedules of a work with an estimated
cost of Rs. two lakhs. Explain as to the importance of costed schedules
tendering action and validity of above action of GE ?
(2 Marks)
(d) A work of construction of a Gymnasium Hall at X station was approved in
October 2005 but the actual work is to be commenced in November 2009.
Will this be in order ?
(2 Marks)
Ans. 3 (a) For urgent military reasons delay involved in the issue of administrative
approval can not be accepted, the CFA is empowered to order the
commencement of the work on essential items or required work prior to
issue of administrative approval by according the "GO- Ahead" sanction.
In doing so, however, the CFA should ensure that no accommodation or
facility is constructed in excess of requirements.
(Authority: Para 34 of DWP, 2007)

(b) The action of CFA is not correct. The "GO - Ahead" sanction will not
exceed 20% of rough cost estimate for the entire project made by the
Engineer authorities. The percentage shall not include the cost of
acquisition of land required for the project.
(Authority: Para 34(b) of DWP, 2007)

(c) Schedules of works duly costed and technically sanctioned by the
competent Engineer authority essential to be prepared before tender
documents are issued.

In the case of work estimated to cost less than Rs. 50,000/- the preparation
of costed schedules of works may be dispensed with. It is on the analogy
of the that in case of Minor works costing less than Rs. 50000/- no
approximate estimates will be necessary.

(Authority: Para 41 & 42 (c) of DWP 2007)

(d) This will not be in order. Delay in commencement of the works beyond 12
months would necessitate a revised administrative approval. If an
approved work is not commenced within five years of the date of
administrative approval, fresh approval must be obtained. In the instant
case since the work has not been commenced within five years, fresh
approved must be obtained.
(Authority: Para 31(c) of DWP, 2007 and Para 142 of MESR)
5
Ques.4 (a) What do you understand by deviation orders ? How is the deviation order
different from a n amendment to the contract ?
(3 Marks)
(b) While constructing a new residential building for army officers at Delhi
Cantt, new specifications and material is proposed to be introduced on
grounds of technical and aesthetic reasons after according of
administrative approval ? Is this permissible ?
(3 Marks)
(c) A GE intends to change a portion of an existing building which the has
worn out with a better class under maintenance services ? Can this be
done ?
(2 Marks)
(d) A deviation ordered on a contract entails an increase on the sanctioned
expenditure. Is such a deviation order permissible ?
(2 Marks)

Ans.4 (a) During the performance of works under a contract, material improvements
may suggest themselves which may make it necessary to carry out
deviations on the contract. Deviations on a contract may be authorised
only by the officer who accepted the contract unless such powers have
been delegated. In delegating such powers he will specify the general
nature and financial limits upto which such deviations will be specified.
No deviation will be ordered on any contract if it entails an increase on the
sanctioned expenditure or is beyond the deviation limit specified in the
contract. The deviation orders will clearly state how the deviations are to
be measured and priced. Any additional time allowed will be stated and the
contractor's agreement obtained.

No work that radically changes the original nature and scope of the
contract shall be ordered as a deviation. Therefore, if the basis for the
existing contract is materially affected by the alteration in the design and
the scope, than an amendment to contract would be required to effect the
desired alteration in agreement to the contract. The dividing line between
a deviation and an amendment to contract is thus is on for judgement. An
officer competent to accept a contract is also competent to amend it
provided that contract as amended is within his powers subject to some
exceptions.
(Authority: Paras 435 to 438 and 440 of MESR and condition 7 of
I.A.F.W. - 2249)

(b) Yes this is permissible. While constructing a new building, new
specifications or materials can be introduced if technical or aesthetical
reasons so justify, with the prior approval of the Zonal Chief Engineer
concerned, subject to the condition that this must be within the existing
tolerance limit as applicable and not exceeding 5% of the original
Administrative approval amount.
(Authority: Para 52 (b) of DWP, 2007)

6
(c) Yes this can be done. The replacement of a fitment or portion of a building
by one of better class is an original work, if the existing fitment or the
portion of the building is still serviceable. But it is maintenance service if
it is worn out and requires replacement in any case. Thus in the instant
case, it will be permissible as maintenance service.

(d) Such a deviation is not permissible. No deviation will be ordered on any
contract if it entails an increase on the sanctioned expenditure.

Ques. 5 (a) Why the operational works are needed and how these are different from
normal works in regard to their procedure ?
(3 Marks)
(b) Comment on the following statements from audit point of view :
(i) A formation engineer has entered into a contract to execute an operational
work sanctioned by a division commander.
(2 Marks)
(ii) An operational work has been extended beyond two working seasons.
(1 Marks)
(iii) A residential building in an operational area has been electrified under
operational works.
(2 Marks)
(iv) The monthly statement of imprest account pertaining to cash expenditure
of an operational work for the month of March 2009 was received in the
first week of April 2009 in a regional controller's office.
(2 Marks)
Ans.5 (a) Operational works are generally of temporary nature actually needed for
the conduct of operations for formations directly concerned with such
operations. Works will not be treated as operational works if they can be
dealt with under normal works procedure, without risk to the progress of
operations.
(Authority: Para 1 of Section 1, Addenda -III (on operational Works)
of DWP - 2007)

(b) (i) This will be objected to in audit because formation engineers have to
execute operational works ordered on them departmentally. They can not
execute Operational works through contract.
(Authority: Para 8 of Section-1, Addenda-III(On operational Works)
of DWP, 2007)

(ii) This will be objected to in audit because no operational works should
extend beyond two working seasons.
(Authority: Para 29 of Section - I, Addenda-III (On operational
Works) of DWP, 2007

(iii) This will be objected to in audit because residential accommodation,
whether built or hired, should not be electrified. If considered essential the
work is required to be sanctioned under the normal works procedure.
(Authority: Govt. of India Min of def letters No.
06633/03/WIII/10934/D7 dated 29.9.50 and even No. of 17.8.75)

7
(iv) This will be objected to in audit because the last statement of account
before the close of financial year will be forwarded to the regional
controller by 31 March.
(Authority: Para 64 of Section -I, Addenda-III(On operational Works)
of DWP, 2007

Ques. 6 (a) What do you understand about a work contract. How it is different from a
tender ?
(3 Marks)
(b) A contractor on award of a contract has brought on site the material which
is recycled from a building recently demolished and the material of which
was auctioned. The Engineer in charge of the work has objected on the
material so brought by the contractor. comment whether such material is
permissible under general conditions of a work contract.
(2 Marks)

(c) A contractor has not executed a Standard Security Deposit bond. His
tender has been found most competitive and the accepting officer has
decided to accept the same. Can this be done? If so, specify the conditions
of acceptance and role of AAO, GE in this regard.
(3 Marks)
(d) What is the time limit prescribed for payment of final bills where there is
no dispute ?
(2 Marks)
Ans.6 (a) A Work contract is the one which consists of accepted tender along with
the documents referred to therein. When acceptance thereof is conveyed to
the tenderer it becomes a binding contract. Normally acceptance is
demonstrated by placement of a work order.

A tender is an invitation to an offer as per the terms and conditions there of
and the enclosed documents. An offer based on a tender fructifies in to a
work contract only when it is accepted by a competent authority and a
work order is placed.
(Authority: Chapter I, Definitions, General Conditions of Contracts,
IAFW- 2249)

(b) Such material is not permissible under general conditions of a contract.
The contractor shall provide at his own cost and expense, all materials
required for the works other than those listed in schedule 'B' which are to
be supplied by the Government. All materials to be provided by the
contractor shall be new and in conformity with the specifications laid
down in the contract and the contractor shall, if requested by the Engineer-
in - charge, furnish proof, to the satisfaction of the Engineer- incharge
that the material so comply.

The Engineer- in- Charge shall have full powers to require removal any of
or all the materials brought to the site by the contractor which are not new
and in accordance with the contract specifications or do not conform in
character or quality to samples approved by him.

8
Therefore, in the instant case, the objection by the Engineer in chief is
justified.
(Authority: Condition No. 10(A), General Conditions of Contracts,
IAFW - 2249)

(c) This is permissible. If the accepting officer decides to accept his tender,
the contractor shall lodge with the Regional controller concerned as
security deposit in the prescribed form, the sum as notified by the
accepting officer, with in thirty days of the receipt of the notification of the
acceptance of the tender. Alternatively the earnest money deposited by the
contractor may be converted as part of the security deposit, whenever such
a transaction is feasible and balance shall be lodged by the contractor with
in thirty days of the receipt of the notification of the acceptance of the
tender to the Regional controller. If he does not do so, the same will be
recovered from first RAR payment or from the first final bill.

In case of the contractor who has not executed the standard form of the
bond the AAO will see that they have deposited the necessary earnest
money with MES Officer and also security deposit if work is given to any
one of them. He will also check the amount of security deposit specified in
the contract has been correctly calculated.
(Authority: Condition No. 22 General Conditions of Contracts, IAFW
- 2249 and Paras 82 & 83 of UA Manual)

(d) Payments of those items of final bill in respect of which there no dispute
shall be made as under:-
(a) Contract amount not exceeding Rs. 5 Lakhs - Four months.
(b) Contract amount exceeding Rs. 5 Lakhs - Six months

The period as above shall be reckoned from the date of receipt of the bill
by the GE.
(Authority: Condition No. 66, General Conditions of Contracts,
IAFW- 2249)

Ques.7 (a) Explain briefly the manner in which the RAOs. ensure that the AAOs are
carrying out their duties satisfactorily.
(3 Marks)
(b) A GE has taken tendering action to conclude a furniture contract of the
value of Rs. 20 lakhs for a new building as initial supply of furniture which
was not earlier sanctioned as part of works project. What will be your audit
comments during the scrutiny or contract ?
(3 Marks)
(c) What head is used for Transfer Between MES Officers (TBOs) ? What is
the role of 'E' section for closing this head with a NIL balance every
financial year ?
(3 Marks)
(d) In which statement of Annual Review of MES Expenditure the cases of
covering DOs are included ?
(1 Marks)

9
Ans. 7 (a) During his periodical visits, RAO will, by personal inspection and
supervision ensure that the AAOs are carrying out their duties
satisfactorily. As a primary auditor and financial advisor to the MES
officers, the AAO is charged with certain responsibilities as laid down in
MES Accountant Manual. The procedure observed by him in discharging
his duties and results achieved will be reviewed by the RAO. He should
also scrutinize the objections raised by AAO since his last inspection,
record his remarks against each item and takes notes of the objections
which after discussion with the MES officer, where necessary he decides
not to withdraw.
(Authority: Para 25 of MES Local Audit Manual)

(b) The initial supply of furniture to complete scales is an authorised work
and may be sanctioned either as part of a works project or separately as a
major or minor work as the case may be.

Provision of furniture which does not form part of any work project will be
treated as Original works. Original works costing Rs.15 lakhs or more fall
in the category of Major Capital Works. Such a new work can not be
sanctioned and/or commenced in any financial year unless it has been
included in the annual Major Works Programme for the relevant financial
year of the concerned service or organization as approved by Government
of India.

Besides, three are four essential stages in the sanctioning and execution of
Major Capital Works which will have to be complied with viz. Acceptance
of necessity, Admin. Approval, Appropriation of funds and technical
sanction. Article of furniture for the new building can not also exceed
approved scales as laid down in Barrack and Hospital Schedules or other
Government orders issued time to time except with the prior sanction of G
of I.

The tendering action by GE is not authorised one in absence of the
sanction of a Major Capital Work as per required procedure. Moreover, a
GE has been given power of entering in to contracts through competitive
tenders up to the value of Rs. 15 lakhs only. The GE can issue technical
sanction up to Rs. 15 lakhs and thus is not competent to issue the technical
sanction in this case. Therefore, the tendering action as well as entering in
to the contract by the GE is irregular and in violations of procedures and
regulations.
(Authority: Paras 11, 20 and 24 of OM Part -VIII and Para 229 MES
Local Audit Manual)

(c) The head used for transfer between MES Officers is 0/022/10. This head
must close with NIL balance every year.

The role of E section in this regard is as under:
(a) Link the originating and responding transactions which have been
adjusted during the month by both the UAs with their statements.
(b) Link the previous months transactions with the progress register
maintained for the purpose.
10
(c) Dispatch statement of unlinked items every month to concerned UA for
necessary action.
(d) Pursue vigorously adjustment of unlinked items with the UAs to avoid
accumulation of arrears at the close of the financial year.
(Authority: Paras 85 to 89 of OM Part VIII)

(d) Statement 'D' of the Annual Review of MES Expenditure.
(Authority: Para 127 of OM Part VIII)

Ques. 8 (a) What do you understand about occupation returns and returns of recoveries
? Who prepares these returns and what basic checks are exercised in audit
of these returns ?
(3 Marks)
(b) What specific checks are exercised by the RAO on cash assignment at the
time of his inspection ?
(3 Marks)
(c) Complete the statements given below:
(i) Physical stock verification of securities furnished by the contractors is
conducted in the month of ------------------ annually.
(1 Marks)
(ii) The correctness of rates charged to a contractor for the stores issued by
MES is verified from ------------------------ of contract agreement while
auditing the bills.
(1 Marks)

(iii) The review of allotment of quarters is the personal responsibility of -------
----- at least once in two months.
(1 Marks)
(iv) An audit of Muster Rolls is conducted by the AAO, GE to see that the rate
---------------- allowed is appropriate to the class of labour employed.
(1 Marks)
Ans.8 (a) Occupation returns are prepared on IAFZ- 2170 by the MES authorities for
all officers' quarters on the station pool immediately after handing over the
quarter to the allottee and forwarded the same to AAO, BSO with a copy
to Station Commander. The returns of recoveries are prepared for recovery
of Water and electricity charges etc. from the authorised occupants of
buildings and quarters. These are in the nature of demands and are credited
as revenue receipts.

The occupation returns and the returns of recoveries are prepared by the
Barrack/Stores officer (BSO) and are sent to AAO for incorporation in
licence fee bill.

The general checks on occupation returns involve:

(i) That the return has been prepared on the proper form;

(ii) That the description of the building is correctly given;

(iii) That the columns of return are properly filled in
11

The return of reveries will be checked to see that the amounts of water and
electricity charges and other allied charges have been levied as per
prescribed rates and in accordance with rules on the subject.
(Authority: Paras 169, 177, 178 and 183 of MES Local Audit Manual)

(b) It will be verified that:
(i) a reconciliation statement is prepared every month by the MES officer
between the cash book balance and treasury pass book; in respect of cash
assignments at the non bank treasuries and between the cash book balance
and bank scroll in other cases.

(ii) the amount is drawn from the assignment against audited and passed
vouchers, acquittance rolls, bills etc. and the note of the cash book item
No. and date is kept under the initials of the AAO on the vouchers
themselves to safeguard against the possibility of drawing cash twice
against the same voucher, and

(iii) the cash is brought to account in the cash book promptly in the cash
column on its withdrawal from the bank.
(Authority: Para 39 of MES Local Audit Manual)

(c)(i) Physical stock verification of securities furnished by the contractors is
conducted in month of April annually.
(ii) The correctness of rates charged to a contractor for the stores issued by the
MES is verified from Schedule 'B' of contract agreement while auditing
the bills.
(iii) The review of allotment of quarters is the personal responsibility of RAO
at least once in two months.
(iv) An audit of Muster Rolls is conducted by the AAO GE to see that the rate
per diem allowed is appropriate to the class of labour employed.
(Paras 24(xxiv) & 40 of Office manual Part VIII and Paras 83 & 95 of
MES Local Audit Manual)

12

SECTION -II (Store Accounts and Internal Audit) (A) ARMY
(FOR CANDIDATES OTHER THAN AIR FORCE, NAVY AND FACTORIES)

Ques.1. (a) What are the general accounting procedures of stores of army ?
(3 Marks)
(b) What are the three classes of stores issued from a supply and stores depot?
(3 Marks)
(c) Complete the sentences:
(i) Issue vouchers are not required to be signed by the issuing establishments
except those on -----------------------
(2 Marks)
(ii) All vouchers in connection with the issue of stores for internal use of the
deport will be endorsed as -----------------------
(1 Mark)
(iii) The cash payment issue section of an ordinance depot stock stores
authorized by -------------- from time to time.
(1 Marks)
Ans.1 (a) The accounting of stores in defence formations is generally done on a
quantitive 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 dapartmental 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.
(Authority: Para 1 of SAI)

(b) 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.

(c) (i) Issue vouchers are not required to be signed by the issuing
establishments except than those on payment issue and loan for which hire
charges are recoverable.

(ii) All vouchers in connection with issue of stores for internal use of the
depot will be endorsed as A-in U.
(iii) The cash payment issue section of an ordnance depot stocks stores
authorized by the DOS and published in Army orders from time to time.
(Authority: Paras 22 & 86 of SAI)
13

Ques.2 (a) What are the basic principles of local audit of all store accounts. ?
(3 Marks)
(b) During a recent visit to a unit, LAO has experienced difficulty in obtaining
full and free access to the essential accounts and has thus got serious
doubts on the keeping of the store accounts by the unit reasonably well.
What action the LAO is free to take in performance of duties in this case ?
(3 Marks)
(c) LAO is supposed to carry out an intelligent review of the consumption
pattern of stores during his review of audit of accounts. What important
role he performs while doing so and what is the scope and extent of his
role ?
(4 Marks)
Ans.2 (a) The audit of store accounts is conducted locally by LAO acting under the
orders of the PCDA/CDA. The general/basic principles of local audit of all
store accounts are as under:
(a) that the accounting procedure followed by units and formations does
not differ from that prescribed by the rules or other Government orders
issued from time to time;

(b) that all receipts and issues of stores by units and formations and
transfer of stores between depots and /or consuming units have been duly
accounted for in the store ledgers and returns, etc, of the parties concerned;

(c) that stores issued for consumption or use does not exceed the scales
authorised in Regulations and equipment tables;

(d) that all cases of losses and damages have been dealt with in accordance
with the rules/orders on the subject under the orders of CFA.

(e) that the balance of stores shown in the store ledger etc. does not exceed
the authorised limit and suitable action is taken for the disposal of surplus
or unauthorized stores;

(f) That the stock verification has been carried out at regular intervals and
certified as such on the store ledgers etc.

(g) that no article has been supplied after the necessity for the supply has
lapsed.
(Authority: Para 31 of Army Local Audit Manual Part-I)

(b) If during the recent previous visits or during the current visit, difficulty has
been experienced in obtaining full and free access to the essential accounts
or records, or if during the course of a test check, the LAO feels that he is
seriously "put upon enquiry", he is free to extend the scope of the audit,
using his discretion and judgement as to how this should be done and to
what extent.
(Authority: Para 34 of Army Local Manual Part-I)

(c) In this context, the LAO performs the role of providing financial advice to
the administrative authorities on ways and means of effecting economy in
spending public money and consumption of stores.
14

For this purpose, he should see that the maximum quantities prescribed in
the regulations are not drawn as a matter of course. If he finds that the
issues have been abnormal or that maximum quantities allowed have been
drawn as matter of course, he should enquire personally in the reasons for
the issues and take up the matter with the unit.

The LAO should also ascertain reasons for transfer of large quantities of
stores between depots, units etc. He should satisfy himself that the
transfers were really necessary. Items of financial advice will not be
included in objection statements.

(Authority: Paras 12 to 15 of Army Local Audit Manual Part-I)

Ques.3 (a) What do you understand about losses of stores and cash in the units and
establishments of Army ?
(3 Marks)

(b) Losses of stores are bound to arise due to various factors. However, all
losses of stores shall be subjected to preliminary investigation to determine
the cause of loss and the amount. State as to which type of losses a court of
inquiry shall invariably be held to investigate the loss and how such losses
are regularized ?
(3 Marks)
(c) Explain briefly as to what action is required to be taken in the following
cases of losses:
(i) On stock taking of stores in an unit, some items of stores have been found
surplus and many other have been found deficient by the board.
(2 Marks)
(ii) Many items of clothing stores were pilferaged in transit from Kanpur to
Chandimandir from an Indian Railways goods train.
(2 Marks)
Ans.3 (a) Losses of stores and cash may arise due to various factors in the units and
establishments. 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 casualties in case of
animals. Losses may also occur due to Rain /storm/Flood etc.

Each LAO maintains statistics in respect of losses of stores and losses in
cash coming within the purview of his audit in a register of losses and in a
register in IAF (CDA) 182 respectively.
(Authority: Para 241 & 244 of SAI and Para 22 of Army Local Audit
Manual Part-I)

(b) A court of inquiry shall invariably be held to investigate the loss in the
following cases:
(a ) All loses which require the sanction of Govt. of India to write off.
(b) Loss due to inaccuracies in previous stock taking.
(c) Loss of arms, ammunition and explosives.
15
(d) Losses due to theft, fraud, neglect and fire in case reported loss is 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 proceedings for
regularization of loss through loss statement are initiated without delay
which is routed through PCDA/CDA for regularization by competent
financial authority.
(Authority: Paras 241 of SAI)

(c)(i) When on stock taking, stores are found surplus or deficient, the surpluses
after very through check must be taken on charge and deficiencies shall be
dealt with under the orders of the competent financial authority except in
cases where other specific instructions exist.
(Authority: Para 247(e) of SAI)

(ii) Claims against Railways for value of serviceable clothing stores shall be
assessed at catalogue rates. The losses to the extent that they become
irrecoverable from the Railways will be treated not due to theft, fraud or
neglect and will be written off in accordance the rules on the subject.
(Authority: Paras 238(h) & 248(b) (ii) of SAI)

Ques.4 (a) How the accounting of all rations obtained for troops for a particular
month by a unit from a supply depot is done?
(3 Marks)
(b) Comment on the propriety of action in the following cases:
(i) An Army establishment has overdrawn the ration in a particular month and
it intends to adjust the same against under drawal of ration in the previous
month.
(3 Marks)
(ii) 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.
(3 Marks)
(iii) 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.
(1 Marks)
Ans.4 (a) 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.

16
(b)
(i)
This is not permissible. Underdrawal of rations (including fresh items) in a
month has lapsed to the Government and can not be made good by
overdrawal in the subsequent month.
(Authority: Para 283 (VII) (a) of Army Local Audit Manual Part-I)

(ii) 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.

(iii) 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.
(Authority: Para 156(5) of SAI)

Ques.5. (a) What do you understand about hospital stoppage rolls ? How the hospital
stoppages are recovered in case of civilian patients ?
(3 Marks)
(b) A patient was admitted to the hospital before 14 :00 hours on a day and
was discharged on the same day. Is the hospital stoppage recoverable from
him? If so, how it will be levied on him ?
(2 Marks)
(c) " Extras" in a military hospital have been provided to the patients on
"ordinary diet" by the medical officer incharge. Is this in order ? Explain
the powers of medical officer incharge to this regard.
(3 Marks)
(d) Artifical dentures have been supplied by a military dental centre to other
ranks and Non- combatant (enrolled) at Government expense as a matter of
routine. This has been objected to by the LAO in internal audit. Is this
correct ?
(2 Marks)
Ans.5 (a) Hospital stoppage rolls are prepared on IAFA - 55 for admission into
Military hospital of certain category of cases in respect of which the
recoveries are effected by respective accounting authorities. These cases
are (1) JCOs, Other ranks and enrolled persons when they are treated for
sickness held to be due to their fault, (2) Officers, (3) Civilians who are not
entitled for free hospital treatment and (4) Non- entitled persons.

Hospital stoppages from the civilian patients are recovered as per the rates
fixed by Government of India, Ministry of Defence from time to time. The
recoveries may be affected either their respective accounting authorities or
through deposits in the treasuries.

(Authority: Para 317 of Army Local Audit Manual Part -I)

(b) The hospital stoppage is recoverable from him. A fraction of the
authorised rate of hospital stoppage will be levied and the fraction will be
decided by the OC of the hospital concerned.
(Authority: Para 317 (Note 2) of Army Local Audit Manual Part-I)

17
(c) This is in order. "Extras" are not permissible to patients on "ordinary diet"
but will be issued when the medical officer incharge considers it essential
for patients on other prescribed classes of diets, and also for those on "No
diet".
(Authority: Para 318 (Note 4 ) of Army Local Audit Manual Part-I)

(d) This is not authorised and thus not correct. Dentures can be supplied on
government expense subject to the following conditions:

(i) artificial dentures are essential for efficient performance of the duties
and to prevent a soldier invalidment out of service;

(ii) the solders have to serve for a minimum period of two years on more;

(iii) the dental condition has not been brought about through the soldier's
own fault.

(Authority: Para 334 (B) (b) of Army Local Audit Manual Part-I)

Ques6. (a) State the payment issue transactions vouchers which are priced by the unit
and depots authorities themselves subject to scrutiny by the LAO
concerned.
(3 Marks)
(b) While calculating the free issue rates the departmental charges were 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.
(3 Marks)
(c) State as to who prices the following loss statements:
(i) Loss statements chargeable to state.
(1 Marks)
(ii) Loss statements for losses where penal recoveries from individuals are
involved.
(1 Marks)
(iii) Loss statements in respect of ordnance stores where units are not able to
price them.
(1 Marks)
(iv) Loss statements in respect of NIV items of ordnance and MT stores.
(1 Marks)

Ans. (a) 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.
18

(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.

(b) 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.
(Authority: Para 227 (a) of SAI)
(c) (i) 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.
(ii) These will be priced by the PCsDA/CDA/LAOs.
(iii) Where these can not be priced even with the assistance of audit
authorities, they will approach only those ordnance depots which are
centrally responsible for the items concerned.
(iv) 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.
(Authority: Para 224 (a) (b) (c) and (d) of SAI)

Ques.7 (a) What do you understand about Military Schools ? Explain briefly their
basic objectives.
(3 Marks)
(b) Who is responsible for the preparation of apprehension certificate ? Can a
unit refuse to accept a deserter on the ground that the original copy of the
desertion report is not forthcoming ?
(3 Marks)
(c) A recruit has deserted after enrollment but before joining the unit to which
he was posted. Can he be dealt with for desertion by the unit concerned ?
(2 Marks)
(d) A NCO has committed an offence in respect of a public property causing
loss to the State. Explain the nature of punishment need to be awarded in
this case.
(2 Marks)
Ans. (a) Military Schools are located in Chail (Simla Hills), Ajmer, Belgaum,
Bangalore and Dholpur and are residential institutions run on Public
School lines. These have been established under Ministry of Defence. The
vacancies in the school are distributed amongst the sons of serving and ex-
service JCOs and Ors of the Army, Non Entitled Boys of service officers
19
and civilians and 15% and 7% seats are reserved for schedule castes and
schedule tribes regardless of their position in merit list.

They prepare students for the All India Senior School and Secondary
School of Examinations of the Central Board of Secondary Education and
also for the Entrance Examination to the National Defence Academy.
(Authority: Para 264 of DSR, Vol.I)

(b) The civil police are in all cases responsible for the preparation of
apprehension certificate (IAFD-910) which will be handed over by them
duly completed with the deserter/absentee as proof that the man as is in
fact a military deserter/absentee as shown therein.

Military units will not refuse to accept deserters/absentees merely on the
ground that original copy of the desertion report is not forthcoming.

(Authority: Para 378 (c) of DSR Vol.I)

(c) The recruits who desert after enrolment by the recruiting staff but before
joining the unit to which posted, will be dealt with by the unit concerned
and not by the recruiting staff.

(d) Persons subject to Army Act committing offences involving moral
turpitude, fraud, theft, dishonesty and culpable negligence involving
financial loss of Public or Regimental property will be tried by court
martial or prosecuted before a civil court. Such cases will not be disposed
of summarily or by administrative action. Punishments in such cases will
be deterrent and commensurate with the gravity of the offence.


Ques.8 (a) What are the responsibilities of an intending officer ? What economy
aspects the indenting officer should keep in view while indenting the
demands ?
(3 Marks)
(b) Are the following actions in auction sale permissible:
(i) Individual of a unit made bids for certain items in an auction
sale of the unit and bought some of items.
(3 Marks)
(ii) Commission was paid to government servant who was required
to act as auctioneer in auction sale of unit.
(2 Marks)
(c) Who allots the single officer's quarters attached to messes in bulk to
individual officers.
(1 Marks)
(d) Can a married officer less than the age of 25 be allotted a married
accommodation ? Comment on his entitlement in this regard.
(1 Marks)
20
Ans.8 (a) The indenting officer is responsible that the demands are framed in
accordance with regulations and in the case of expendable stores will
demand such quantity as is necessary, having due regard to any unused
balance in hand. He is responsible for furnishing the supplying officer with
current data and will be liable for value of over issues.

The indenting officer are liable that requirements are foreseen as far as
possible, that indents are framed with economy in accordance with the
instructions given in equipment regulations and instructions to medical
equipment Scales and with regard to the requirements of the service, and
are submitted on due date.
(Authority: Para 864 & 870 of DSR Vol.2)

(b) (i) This is not permissible. No individual of the department or unit
concerned may bid for or buy any article at an auction sale.
(Authority: Para 901 of DSR Vol.2)

(ii) This is not in order. No commission is admissible to a government
servant who may be required to act as auctioneer.

(Authority: Para 901 of DSR, Vol.2)
(c) Single officer's quarters attached to masses will be allotted in bulk by the
station commander to the OC unit in charge of the mess. Allotment to
individual officers will be the responsibility of the OC unit concerned.
(Authority: Para 1014 (b) of DSR, Vol.2)

(d) Officers who marry before the age of 25 years will not be entitled to
married accommodation until they attain that age and will be required to
live in a mess.
(Authority: Para 1023 of DSR, Vol.2)

21

SECTION -II (Store Accounts and Internal Audit) (B) (Air Force)

Ques.1. (a) Please indicate the percentage of audit check required to be carried out in
the following cases:
(i) CILQ Allowance
(ii) Payment Issues
(iii) Credit to Government in Loss Statements
(iv) Railway Warrants
(4x2 Marks)

(b) After the stock - taking has been carried out in respect of item 'X' a
consignee unit has reported a surplus receipt of 'X'. What is the action to
be taken and why ?
(2 Marks)
Ans.1 (a) (i) 33
(Authority: Appendix 1.6(d) AFLAM)
(ii) 33
(Authority: Appendix 1.4(iii) AFLAM)
(iii) 100%
(Authority: Appendix 1.4(iv) (b) AFLAM)
(iv) 5% in detail and other general scrutiny.
(Authority: Appendix 1.8 AFLAM)

(b) Manuscript Register of DR (inward) will be scrutinized to see that
wherever the DR is accepted by the consignor, the adjustment voucher
raised by the logistic officer, agreeably to Para 38, Chapter 10, IAP 1501 is
in order, and a loss statement has been raised wherever necessary. Sanction
of the loss Statement will be watched in the normal manner. Case where a
loss statement is necessary, but has not been raised, will be placed under
objection.
(Authority: Para 131 (ii) AFLAM)

Ques2. (a) Where would the third and fourth line of repair to common - user
vehicles/hybrid vehicles be carried out ? What are the actions involved ?
(5 Marks)
(b) It is proposed to dispatch at MT vehicle from an Air Force unit to Army
Salvage Depot. Offer comments.
(5 Marks)
Ans.3 (a) If, on categorization by the EME, common user vehicles are found to be
requiring third and fourth line repairs (i.e. complete dismantling , overhaul
and rebuilding ) , they are to be transferred from the Air Force to Army
ordnance. This also applies to the Common -user chassis of Hybrid
vehicles, which when transferred to the Army Ordnance for third and
fourth line chassis repairs must be stripped of their specialist equipment
prior to transfer and the specialist equipment remounted by the unit
concerned upon renovated chassis.
(Authority: Para 80 Chapter 20 IAP 1501)

(b) The following instruction are to be strictly complied with while returning
the vehicles to the Army Salvage Depot
22
(a) No vehicle will be dispatched to Salvage Depot by rail except on the
specific authority of the controller of salvage at the Army Command
concerned.

(b) Army Salvage depot have extremely limited facilities for the unloading
of vehicles from Rail wagon and, when such method of transport has been
agreed to, IAF units are to be provide assistance in unloading vehicles if
called upon to do so.

Ques3. (a) State the purpose of auditing Aircraft Servicing Form 700 and maximum
percentage of audit for it. What is the period for which it can be retained ?
(3 Marks)
(b) Where are the regulatory use of IAF Aircraft promulgated ?
(3 Marks)
(c) Who can sanction flights "Errands of Mercy" ?
(3 Marks)
(d) How will passenger/cargo manifesto which are marked "Top Secret" will
be produced to the LAO(AF) ?
(2 Marks)
Ans.3 (a) The quantity of aviation fuel issued to Aircraft will be linked from the
issue vouchers into Form 700 (Air Craft Serving Form) to the extent of
10% of the Internal Issue Vouchers raised during the month selected for
detailed Audit, to see that the quantity drawn as per IAFF (Q) 419 (MoD)
agrees with that recorded on Form 700. Likewise, from the issue of Oil
recorded in the Flight Oil Books, a few case will be selected and linked
into F.700.

Form 700 will be returned, after scrutiny, within a maximum period of 3
days, beyond which they should not be retained.
(Authority: Para 198 and Note -2 Para -198 AFLM)

(b) Orders regulating use of IAF Aircraft are promulgated in AFI 49/71
(Authority: Note under Para 199(viii) AFLAM)
(c) No flight is undertaken as " Errands of Mercy " without the sanction of
Chief of the Air Staff.
Authority: Para 199 (X) AFLAM)
(d) Passenger/Cargo manifesto which are marked "Top Secret" will be
produced to the LAO (AF) personally.
(Authority: Note under Para 200 AFLAM)

Ques 4. (a) What are steps to be taken in case of Loss or Damage to Equipment on
Loan ?
(4 Marks)
(b) An equipment was taken on loan from Unit A, but the borrower returned it
to Unit B. Can unit B accept the equipment ? Give detailed comment.
(4 Marks)

Ans.4 (a) Loss of, or damage to, Air Force Equipment on loan, after satisfactory
receipt by the borrower, should be reported by him to the consignor unit.
23
The borrower is to be requested to furnish particulars of the circumstances
of the loss or damage and whether replacement of the complete article or
components thereof is required.

(b) Yes, unit B can accept the equipment taken on loan by a borrower from
other unit (i.e. unit A). If the articles on loan are returned to a unit other
than unit which made the issue in the first place, they are to be brought on
charge by a certificate voucher prepared in triplicate detailing full
particulars of the consignor . After stock record action has been taken two
copies of the certificate receipt vouchers are to be forwarded to the unit
which made the loan. The latter unit is to give it a receipt voucher number
from its receipt voucher series and endorse it " Return noted in outward
loan ledger and stock Record Cards". Both copies of the voucher are to be
prominent marked " Not for stock Record Action. One noted copy of the
certificate receipt voucher is to be returned to the receiving unit and the
other retained in support of the Loan Ledger.
(Authority: Para 25 Chapter 11. IAP - 1501)

Ques.5. (a) How is the stock of attractive items of Equipment Depots maintained ?
Enumerate the Stock - taking checks to be carried out in respect of such
items.
(6 Marks)
(b) What is the period upto which stock verification is executed for newly
formed units ?
(4 Marks)
Ans.5 (a) In the case of Equipment Depots attractive items will be Stock taken as
under:-

(a) Class 'A' & Valuable and Attractive items - Once a year
(b) Class 'B' items Once in two Years
(c) Explosive items Once in two Years.
(d) Class 'C' stores other than Explosives Once in three years
In addition to the above following stock taking checks are carried out for
Attractive items:-

QUARTERLY - These checks are necessary in respect of units other
than EDs and in UES of EDs.

SURPRISE CHECKS - (a) Stock taking of valuable and attractive items at
more frequent intervals at the discretion of the officer commanding.
(b) SNAP CHECK - At any time as ordered by the Commanding Officer
or considered necessary by the Equipment officer.

(Authority: Para 163 - 164 AFLAM)

(b) Newly formed units are exempted from stock verification during the first
year of their formation provided the Air Officer - Commanding is satisfied
that the resources of the unit do not permit of stock verification during that
year.
24
(Authority: Note under Para 166 AFLAM)

Ques6. (a) What is the procedure for provisioning of recurring items from DGOF ?
What happens if DGOF offers a revised delivery schedule ?
(5 Marks)
(b) Enumerate the time table for taking provisioning review for items to be
processed by DGOF ?
(5 Marks)
Ans.6 (a) Firm demands for recurring items covered by Air Staff policies required
for use during the next four financial years, indicating separately the
quantities required in respect of each year, are to be placed on DGOF
before the commencement of the 4 year period.

Acceptance of the revised delivery schedule offered by DGOF within 2
months. Where the revised delivery schedule indicated by the DGOF is not
acceptable, the indenting officer will refer such cases to the Ministry of
Defence and the Department of Defence Production for decision on
reduction/cancellation on newly placed indents. These case do not require
reference to Ministry of Finance (Def/Air). If, however, the DGOF
indicates a prolonged delivery date beyond the four- year period to which
the indent relates, acceptance of the revised delivery is to be advised to
DGOF after consulting Ministry of Finance (Def/Air).
(Authority: Para 5 & 6 - Leaflet No. 20 IAP 1541)

(b) The following time- table for undertaking provisioning reviews and
placement of indents to be produced by DGOF is to be strictly followed:

(a) The provisioning reviews are to be undertaken from 1st October every
year covering requirements for 54 months (i.e from 1st October to 31st
March of the financial year in which the review is undertaken and the next
four financial years.

(b) By 31st March of the following year, the placing of all indents,
including supplementary requirements, on the DGOF after approval of the
Ministry of Finance (Def/Air), should be completed. Repeat indents for the
same item should not be placed in the same year, except the emergent
requirement.

(c) In the first week of April each year, a certificate is to be rendered to
JS(P&C) with a copy to JS(A), by the Director of Maintenance
Administration about the placing of annual indents on DGOF.

(Authority: Leaflet 20 - Para 13 IAP 1541)

Ques7. (a) Can Air Force or Army Units/formations report deficiencies when
equipment/consignment is collected by authorized representatives ?
(5 Marks)
(b) List the cases under which Discrepancy reports are to be raised from
service sources ?
(5 Marks)
25

Ans.7 (a) No. where equipment/consignment is collected by the authorized
representative of the demanding unit from the unit situated at the same
station or from an outstation units/Depot against a temporary receipt on
IAFF(a) 432, no discrepancy report is permissible.
(Authority: Para 1(b) chapter 10 IAF 1501)

(b) Discrepancy reports are to be raised in all cases in which loss or damage
is:-
(i) Attributable to known or suspected theft, fraud, arson or gross
carelessness.
(ii) One of the series of losses from the same source
(iii) Clearly the responsibility of the contractor.
(iv) of a nature which in the opinion of the consignee, should be brought to
notice.
(v) In excess of 10% of the value of total consignment even though the
value of loss in excess of Rs. 50/- in within Rs. 100/- at units and Rs. 200/-
at Depot/ASPs for aviation stores and for other stores Rs 50/- at units and
Rs. 100/- at Depot/ASPs.
(vi) In excess of Rs 100/- at units and Rs 200/- at Depot/ASPs for aviation
stores and Rs 50/- at units and Rs 100/- at Depot /ASPs for other stores.
(Authority: Para 3(b) Ch.10 IAP 1501)

Ques8. Comment on the following :
(a) An entry in the car dairy, covering journey of 230 km undertaken by an
Air Commodore, has been signed by the driver of the car.
(5 Marks)
(b) Govt. transport has been used for the conveyance of airmen to witness a
cricket match organized by the District authorities.
(5 Marks)
Ans. 8 (a) Signing of car diary by the driver of the car is not correct. Where Senior
officers not below the rank of Air Commander are the users of the staff
cars, the car diary may be signed by their Staff Officers. In no case Car
Diary is to be signed by the drivers themselves.
(Authority: Para 181(b) AFLAM)

(b) Use of Govt. transport for conveyance of airmen to witness sports(cricket
match) organized by district authority is not to be treated as authorised
purpose.
(Authority: Para 181 L (V) AFLAM)

26
SECTION -II (Store Accounts and Internal Audit) (C) Navy

Ques 1 (a) Why is it necessary for the NLAO to hold monthly conferences with his
SOs(A) / AAOs and auditors/clerks ?
(5 Marks)
(b) During his review of the audit carried out by his audit team, the NLAO
noticed that a number of registers/ledgers/accounts maintained by the IN
depots had been omitted to be audited. How will it be ensured that no
registers/accounts maintained by ships/establishments/Depots are omitted
in audit ?
(5 Marks)
Ans.1 (a) It is necessary for the NLAO to hold such conferences to ensure that orders
and sanctions affecting his work issued by the Govt. of India and the
authorities subordinate to them, CGDA's letters and PCDA(Navy) office
orders are correctly applied in audit. All important and doubtful points
arising in the course of local audit will be discussed at these conferences.
(Authority: Para 4 of NLAO Local Audit Manual)

(b) To ensure that no registers/accounts maintained by ships/ establishments/
Depots are omitted in audit, a standard list of such documents required to
be maintained by ships and establishments in his audit area and which he
has to audit, will be made out by the NLAO and sent to CDA(N) for
approval. The list will be kept updated by the NLAO.
(Authority: Para 11, NLAO Manual)
Ques2 (a) The responsibility for carrying out stock verification rests primarily and
solely with the executive authorities concerned . However, please explain
the audit role of the NLAO in regard to stock verification.
(8 Marks)
(b) How are over issues and under issues of victualling store items dealt with ?
(2 Marks)
Ans.2 (a) The NLAO during his periodical visit, will verify that the stock taking has
been carried out as it falls due and that whether provided for the staff
actually employed in verifying stock is independent of the staff responsible
for the physical custody of the stock or for keeping accounts thereof,. He
will further see that:
(xiii) the system of stock taking adopted is adequate and proper.
(xiv) the results of stock taking are recorded in ledgers, account cards or
other prescribed documents by a responsible officer under his dated
credentials.
(xv) Al the discrepancies detected during the stock taking are properly
investigated, that all the surpluses found on stock taking have been
credited to Govt. and deficiencies have been dealt with under the orders of
the competent financial authority and
(xvi) the vouchers received prior to the date of stock taking have not been
brought into the balance after stock taking.

The NLAO will bring to the notice of the local administrative authorities
concerned through the PCDA(N) any cases of failure on the part of the
executive authorities to carry out periodical stock verification or cases of
heavy discrepancies or other serious irregularities noticed in stock taking.
(Authority: Para 75-A NLAO Manual)
27
(b) While under issues are not required to be adjusted by over issues in a
subsequent month, the over issues in a month are required to be adjusted
by under issues in a subsequent month.

(Authority: Para 125(21) NLAO Manual)

Ques.3 (a) What are various categories of Naval stores ? Please also categories the
following items of Naval stores ?
(6 Marks)
(i) Life Floats
(ii) Binoculars
(iii) Timber
(iv) Calcium Chloride
(v) Flags
(b) What is the purpose of stock taking ? Can a stock taker have an access to
Naval store ledger balances during the course of stock taking ?
(4 Marks)
Ans.3 (a) Naval Stores are categorized as under:
(x) Permanent stores
(xi) Consumable stores
(xii) Quashi- permanent stores

Categorization of the given items of stores is as under:

(i) & (ii) n - Permanent stores
(iii) & (iv) Consumable stores
(v) Quashi - permanent stores
(Authority: Article 12, Naval Storekeeping Manual)
(b) The purpose of stocking is to check that the stores held are in agreement
with the balances reflected in the various accounts. The store taker,
however, is not allowed to obtain any information from or have access to
the pertinent Naval store ledgers until the stock taking has been completed.
(Authority: Article 231 & 234.5(h)) Naval Storekeeping Manual

Ques.4 (a) Loss of certain naval store items due to theft, the regularization of which
was required under the powers of the Govt. has been regularized under the
powers of a formation commander on the ground that the theft had taken
place during the time of war. Please comment on the correctness of the
action taken.
(7 Marks)
(b) In the context of Naval stores, what constitutes war reserve ?
(3 Marks)
Ans.4 (a) The action taken is not correct since the losses of stores due to theft fraud
or gross neglect even during war is required to be dealt with in the normal
manner. Hence in the subject case, regularization under the powers of the
Govt. was required.
(Authority: Para 3(g) of Appendix IX of Naval Storekeeping Manual)
(b) War reserve consists of insurance spares and specified quantities of spare
parts and items of consumable and permanent naval stores.
(Authority: Para 1.27 Naval Material Planning Manual)

28
Ques.5 (a) As an IFA, what broad checks will you exercise while vetting a proposal
for placement of a repeat order ?
(5 Marks)
(b) For procurement of stores from abroad, one the essential requirements is
DGQA import clearance. Why is such a clearance from DGQA necessary
and what aspects will be taken into account by DGQA while providing
import clearance ?
(5 Marks)
Ans.5 (a) It will be seen that the firm on whom repeat order is proposed to be placed
has supplied the original quantity satisfactorily. In addition, the following
confirmation should also be looked for:
(j) There has been no downward trend in price
(k) Repeat orders have proposed to be placed within six months of the
original supply order.
(l) Repeat order quantity is not exceeding 50% of the original order
quantity.

(Authority: Para 3.27 and 7.27, Material Management Manual, Part-
III)
(b) In cases of procurements from abroad, DGQA import clearance is
necessary to ensure that the item being indented is not available within the
country. In some cases, the DGQA agency may feel that while the item is
not immediately available within the country, it could be cost effectively
indigenized over the period. A decision to this effort would depend upon
the following:
(x) The period for which the item is likely to be in service
(xi) The annual requirement of the item and its value
(xii) Technologies involved

(Authority: Para 13.8 Material Management Manual, Part- III)

Ques.6. (a) What are the important steps which must be taken before indent is raised ?
(5 Marks)
(b) What does provisioning mean in the context of Naval material
management ?
(5 Marks)
Ans.6 (a) The following steps must be taken before indent is raised:
(v) Determination of need.
(vi) Determination of availability of funds
(vii) Importance clearance, in the case of foreign procurement
(viii) Expenditure angle clearance, in the case of foreign procurement.
(Authority: Para 3.3 of Material Planning Mannual)
(b) Provisioning in the context of Naval material management stands for an
authorization to acquire an item through indenting.
(Authority: Para 3.3 of Material Planning Manual)
Ques.7 (a) Why is it essential to keep the inventory as low as possible ?
(5 Marks)
(b) What are 'Not in Vocabulary' (NIV) stores ?
(5 Marks)
Ans.7 (a) It is essential because of inventory carrying cost. In addition, a large
29
inventory means greater storage space, larger staff, greater transportation
and handling costs as well as greater risks of deterioration and
obsolescence.
(Authority: Para 3.15 of Material Planning Manual.)

(b) NIV items are those items which are not in vocabulary of stores, i.e. the
items that have not been formally introduced and allotted a unique cat part
number in the central approval list of inventory items of the concerned
service/organization, as applicable.
(Authority: Para 1.4.13 of DPM - 2009)

Ques.8 Please comment on the following:
(a) It has been proposed to extend the LC in respect of a foreign contract
whose delivery period has expired.
(5 Marks)
(b) A repeat order has been proposed to be placed under the orders of a CFA
lower than the CFA with whose approval the original order was placed, on
the ground that the total value of repeat order falls within the financial
powers of the lower CFA.
(5 Marks)
Ans.8 (a) The proposed action is not correct as the LC cannot be extended in respect
of a foreign contract whose delivery period has expired. Before extension
of LC, it needs to be ensured that the delivery date of the contract has been
extended and the corresponding amendment in the LC for latest date of
shipment has been made.
(Authority: Para 12.7.1 DPM 2009)
(b) The CFA for placement of repeat order will be determined taking into
account the value of the original order quantity and the repeat order
quantity and not with reference to the value of only the repeat order. Hence
the action proposed is not correct.
(Authority: Para 9.7.22(k), DPM- 2009)

30

SECTION -II (STORES ACCOUNTS AND INTERNAL AUDIT ) (D) FACTORY

Ques.1 (a) Calculate different OT elements payable to a Day Worker 'A' based on the
following information : Total Hours worked in the week 54 hours, Basic
Pay Rs. 4,000, DA Rs. 2,000, HRA Rs. 1200, CCA Rs. 100. How much
OTB would have been paid to him, if he was a Pieceworker?
(3 Marks)
(b) Write short notes on procedure for linking of stores.
(3 Marks)
(c) 240 numbers of an item has been taken on charge through a "S" series
receipt voucher. The basic rate of the item is Rs. 1400 per unit. The ED is
16.25% and VAT is 12.5%. 100 numbers were supplied 30 days after
expiry of delivery period, for which DP extension with LD was granted.
There was a reduction in Ed during extended DP i.e. @ 10.3%. Calculate
the value of stores.
(3 Marks)
Ans.1 (a) OT Pay Hrs = 54 - 44 = 9
OT Bonus Hrs = 54-48 = 6
DOT Hrs = 48-44 = 3
OTP = P/200 x 9 = 185/-
OTB = [ P + 2(DA+HRA+CCA)]/200x6 = 318/-
DOT = [DA +CCA] /200 x 3 = 34/-
OTB if he was a piece worker

= [ P+ P + 2(DA + HRA+CCA)] /200x6 = 348/-
(Para 197 & 199 OM Pt. VI)

(b) (1) Receipts from other Ordnance Factories can be sub-divided into two
classes-
(i) from their stock and
(ii) from their production

Priced copies of the vouchers are forwarded by the Accounts Officer of the
issuing factory. An ID List (in duplicate) is made out by the Br AO of the
issuing factory indicating the number and date of the vouchers and their
amounts. Before issuing the list, the total will be agreed with total in the
PSA issues against the code number of each consignor factory for issues
from stock. Similarly, for issues from " Production" agreement with the
figures in the manufacturing statement will be ensured.

On receipt of the monthly lists, the vouchers received from the AO of the
issuing factory will be checked with details of the vouchers noted on the
monthly list. Missing vouchers will be called for while acknowledging the
receipt of the list. Accounts Officer of the issuing factory will watch with
reference to the office copies the prompt receipt of acknowledgements.
(2) To ensure that-
(i) all issue vouchers relating to inter factory transactions have been
received and properly linked with corresponding receipt vouchers,

31
(ii) all receipt vouchers have been properly linked with the respective
consignor's issue vouchers and
(iii) all the stores in Transit figures have been correctly arrived at

A register for linking Inter Factory receipt is maintained in two parts. In
the first part separate pages are allotted for receipts from each factory.
Priced copies of issue vouchers as and when received from the Accounts
Offices of the issuing factory are noted in the Register. On receipt of the
monthly list, it will be verified that all the vouchers have been received
and the amount of each voucher agrees as per the list. Immediate action
should be taken to call for wanting vouchers and reconcile discrepancies, if
any.
(Authority: 455(d)OM Pt. VI)

(c) For 140 nos. supplied within DP 140*1400= 196000. ED @ 16.25% =
31850. VAT @ 12.50% = 28481.
Value of stores for 140 nos = 256331/-
For 100 nos supplied during extended DP date 100*1400 = 140000. ED @
10.3% = 14420. VAT @ 12.5% = 19303/-. Value of stores for 100nos
=173723/-
LD @ 0.5% per week, for four weeks works to 2%
After deducting Rs. 3474/- from Rs. 173723/- value of stores for 100 nos =
170249/-.
Total value of stores on the supply order before imposing LD is Rs.
426580/-
(Authority: Para 407, 409 OM VI)

Ques.2 (a) Calculate DA% of production shop A from the following data:
Total DA paid for the year 2000-01 = Rs. 30,000
HRA paid for the year 2000 -01 = Rs. 50,000
CCA paid for the year 2000 -01 = Rs. 10,000
Basic wages of the shop = Rs. 45,000
The Basic labour cost of Job X is Rs. 50. How much DA you will levy on
this job cost ?
(1+1 Marks)
(b) Find out cost of production of a thrust cap and work out excess rejection
value.
a. Estimate No. P/123459
b. Work Order No. 40141012 warrant 07040
c. Ordered qty 30
d. Completed 19
e. Rejected qty 11
f. UAR% 30%

Current year expenditure:
Direct material 77482
Direct Labour 5375
ROH 19666
VOH 8070
Total 110593
(3+1 Marks)
32
(c) How is it ensured that no IE overstayed in service beyond the date of
superannuation ? In case of such overstay, what action is required to be
taken ?
(2 Marks)
(d) Explain in full detail the accounting procedure for allocation of DA, CCA
etc.
(2 Marks)
Ans.2 (a) DA Levy = (DA+ HRA+ CCA)/Basic wages x 100
= (30000+50000+10000)/45000x100 = 200%
DA Levy on Job x = Rs. 50 x 200% = Rs. 100/-

(Authority: Para 230 OM Pt. VI)

(b) Abnormal rejection units = 11-(30x30%) = 2
Cost of abnormal rejection = total cost/expected qty x abnormal rejection
qty

= [110593/21]x2
= 10533(KOP)
Cost of production for 19 units = 110593 - 10533
= 100060
Cost per unit = 100060/19 = 5266/-
(Authority: Para 628 & 679 OM VI)

(c) The date of birth shown in the superannuation statement should be
compared with the date of birth shown in the March Check Roll and also
with the previous year's statement. In the case of new names, it should be
compared with LPC/Rolls etc. where pay was drawn. Audit should
proceed from March Check Rolls/LPC etc. to the superannuation statement
and not vice versa.
Discrepancies noticed should promptly be got rectified in consultation with
the administrative authorities and orders of the competent authority called
for in case an individual is retained beyond the age of superannuation or
previous extension of service.
Authority: Para (266) OM Pt. VI

(d) At the beginning of every financial year, a percentage will be worked out
for each section of the factory based on the actual amount paid as basic
wages and dearness allowance, House Rent Allowance and City
Compensatory Allowance. The figures for the pervious year should be
suitably modified taking into account the load position, overtime working
composition of the trade and grade of men employed in that section as
also revision in the rates of DA, HRA & CCA.
(Authority: Para 230 OM VI)

33
Ques.3. (a) Use the following data and work out the issue rates in respect of issues
made on the last working day of the month:
Qty

Value (Rs.)

OB as on
03-03-09
07-03-09
09-03-09
11-03-09
12-03-09
31-03-09
01-03-09
Receipt
Return Note
Issue to shop
Receipt on Nominal Vr.
Receipt from IFD
Issues to shop
2300
500
1000
800
100
200
300
31000
4000
12500
?
1500
3000
?
(2+1 Marks)
(b) Work out the ALR from the details given below in respect of item stainless
steel (per kg) on 31-03-09:

Date Opening Qty(Kg) Value ( Rs.)
01-03-09 30 19,500
09-03-09 10 6,700
30-03-09 20 14,400

(2 Marks)
(c) From the following data calculate the monthly average ledger rate as on
the last day of the month. On 1st of the month, the opening quantity was
13.5 with MA rate of 20 and value of Rs. 270. On 10th , qty 45 was
received with a total value of Rs. 980 taken on charge. On 21st, another
qty 48 was taken on charge with a value of Rs. 1020.
(2 Marks)
(d) Write short notes on Fines.
(3 Marks)

Ans.3 (a) ALR = V1 + V2/Q1+ Q2 where V1 is opening value, V2 is value of
receipts, Q1 is opening qty, Q2 is qty received
Issue rate for 09.03.09 31000 + 4000 + 12500 = 12.50
2300 + 500 + 1000
Issue rate for 31.03.09 (47500 - 10000) + 3000 = 11.81
(3800 - 800) + 200

Transaction dated 11.03.09 is not to be considered for calculation of ALR
since nominal transactions are not taken in PSL.
(Authority: Para 421, 491 OM Pt. VI)

(b) ALR = V1 + V2/Q1+Q2 Where V1 - Opening value, Q1 - Opening qty,
V2 - value of receipts, Q2 - qty of receipts
19500 + 6700 + 14400/ (30 + 10 +20 ) = 676.67
(Authority: Para 421(1) OM VI)

34
(c) On 10th after taking the quantity on stock the total quantity including
opening qty is 58.5 with a total value of Rs. 1250/-. MA rate on 10th
works out to 1250/58.5 = Rs. 21.37 per unit. On 21st after the stock is
taken on charge, the quantity held on stock is 106.5 with a total value of
Rs. 2270/-. Hence, the MA rate from 21st will be 2270/106.5 = Rs. 21.31.
The same MA rate will continue till continue till the last day of the month.
(Authority: Application of Para 421)(i) OM VI)

(d) All persons employed on the industrial Establishments, whether Day
Workers or Piece Workers with the exception of Children below 15 years
of age, are liable to fines under Section 8 of the Payment of Wages Act,
1936. Rules in regard to infliction of fines are:
(i) The incumbents of the following appointments are empowered to
impose fines on persons employed under them:
(a) General Manager
(b) Dy. General Manager/Dy. Manager or Asstt. Manager.
(c) Principal Foreman/Foreman or Assistant Foreman in charge of a
section of a factory.
(ii) Fines may be inflicted for the following acts and omissions on the part
of a person, with the prior approval of the State Government or the
prescribed authority, after giving him an opportunity for explanation:
(a) Breach of Factory Rules.
(b) Drunkenness, sleeping on duty, idling or loitering about.
(c) Negligence, disobedience of expressed order relating to discharge
of legitimate duties, malingering and deliberately delaying
production.
(d) Riotous conduct or any act likely to cause disturbance of peace.
(e) Loosing identification tickets or not producing it when demanded.
(f) Smoking in unauthorized places, interference with any safety
deceives or failure to observer safety instructions.
(g) Willful damage of work in process or to property belonging to
Government.
(h) Distribution of or exhibiting inside Factory area of hand bills,
pamphlets, posters etc without prior permission.
(i) Any conduct prejudicial to the health, hygiene, morals and safety
of other employees in the factory.

(Authority: 252 OM VI, 38 & 39 FAR)

Ques.4 (a) Explain over/under absorption of overheads. What is the accounting
treatment?
(2+1 Marks)
(b) How and why are the Annual Accounts reviewed ?
(5 Marks)
(c) How will you account for all expenses on various labour welfare measures
sanctioned by the GM of the factory ?
( 1 Marks)
(d) Write a short note on subsistence allowance.
(1 Marks)

35
Ans.4 (a) Overheads fixed and variable are budgeted cost centre-wise at the begining
of the financial year by SBC/CBC. The percentage thus worked out is
levied to outturn work orders through labour abstracts. The difference [ the
actual indirect expenses incurred through 01 and 02 series of work orders]
and amount charged to outturn workorders is termed as under/over
absorption of OH. Tolerance limit of UA/OA is + /- 5% beyond which
Accounts Office would go for relevy of hoverheads of production cost.

U/A - amount charged is less than incurred.
O/A - amount charged is more than incurred
U/A leads to reduced COP and increased profit
O/A leads to increased COP and reduced profit
These elements are included in the Profit & Loss A/c of the
Principal Ledger.


(b) The figures in the Annual Accounts should be studied to find out:-
(i) Reasons for change in inventory holdings, work in progress, finished
stock and components in hand as compared with previous year. This study
will help in locating pricing errors, if any, and also enable the Accounts
Office to bring cases of unusual nature to the notice of the management.

(ii) Heavy figures of "Outstanding Assets" and Outstanding Liabilities"
would indicate that proper linking has not been done. By sample check of
a few items of considerable value, say over Rs. 5 Lakhs, the correctness or
otherwise of outstanding figures can be established. If there are huge
payments outstanding for over a year for stores received and accounted for
the case requires review as contractors would not wait for such a long time
for payment. In the case of stores issued /Services rendered to MES
/Navy/Air Force, the outstanding might be due to the fact that proper
allocation has not been done even though punching media might have
been adjusted. Here, proper follow up action to ascertain the facts and to
clear the transaction should be taken. Figures of unabsorbed Preliminary
Expenses, Deferred Revenue Expenditure require review.

In the case of Principal Items of work done, any increase/decrease in cost
of material/labour would require review. The analysis. should be thorough
so that the exact reasons are known. Control of inventory holding is
possible by proper ABC analysis of holding and consumption of material.
The value of surplus , obsolete, waste and scrap items and the value of
disposal would incite the efficiency of the organization in disposing of
unwanted stores.

As payments to staff and officers are made twice in April, once for March
paid in April and the other for April paid in April, utmost care should be
exercised to ensure that the figures are correctly segregated and shown.
The correctness of the liability provide on this account should be checked.

36
In the case of payments to Industrial Employees, proper care has to be
taken to ensure that:-
(a) Disbursement Certificates for the period from April to March have
been received and adjusted. The payment for March is made in April. The
provision of liabilities has to be done correctly as the amounts reflected in
the cash compilation of April will be the amount of net payment due.
Gross wages should be properly ascertained.

(b) In the case of labour employed on minor maintenance, capital work,
punching media for transfer of work from wages head to the relevant head
has been made out. Similarly, unpaid wages is a liability and is not
reflected in the cash compilation. Apart from ensuring that the sum of
Direct Labour and Indirect Labour agree with the figures as per Labour
Abstract, proper ascertainment of the wages payable on the lines indicated
above in necessary.

Proper care has to be taken to ensure that rejection is properly apportioned
in the case of incomplete warrants as on 31st March. Pricing the quantilty
completed on the basis of estimated price without taking into account the
rejections, leads to inflation of Work in Progress (Semi) Figures.

(Authority: Para 867-871) OM Pt. VI)

(c) All such expenses are treated as Factory overheads WO 01/02 series.

(d) It refers to payment made to an employee in lieu of pay and allowances
during the period of suspension. In the matter of grant of subsistence
allowance and grant of pay and allowance on reinstatement, industrial
employees are treated on par with non- industrial Employees with effect
from 10-6-63. Subsistence allowance will therefore be granted to the IEs
under the provisions of Article, 193 Civil Service regulations.

Ques.5. (a) How are materials classified for inventory control ?
(1 Marks)
(b) What is ABC analysis of inventory control ?
(1 Marks)
(c) What is the methology followed while allotting LF number?
(1 Marks)
(d) It is noticed during reconciliation of the PSL and bin card that there is a
difference of 100 quantity more shown in the PSL balance. In the bin card
the 100 numbers are shown as issued on nominal issue voucher. Comment
(1 Marks)
(e) How is stock held by Factory reviewed by Accounts Office ? what
reporting is made thereon ?
(2+1 Marks)
(f) All materials are taken into cost accounts irrespective of the payment.
Comment.
(1 Marks)
37
Ans.5 (a) All materials are classified as fast moving, slow moving and non- moving
items after analyzing all issues of materials from stock over a particular
period.
(Authority: Para 435 - 437 OM Pt. VI)

(b) It is a method of inventory control depending upon the high value of an
individual item or the total value of consumption of an item during a
particular period as per the Factory Management policy.

(c) The LF number consists of 10 digits. The first two digits represent the
volume of the priced vocabulary of the Stores Number of the Ledger, the
next 4 digits represent the folio number of the Ledger concerned and the
last 4 digits denote the sub-number.
(Authority: Para 419 OM Pt.VI)

(d) Nominal transactions are not to be posted in the PSL. Hence the
difference.
(Authority: Sl. No. 25 Appx B to FAR)

(e) Factory Management submits to AO quantitative or Folio wise data of the
stores under the following categories:-
(i) Working Store
(a) Ordinary Stores
(b) Maintenance Stores
(ii) (a) Stores surplus to the provisioning period
(b) Stores declared as surplus

(iii) Waste and Obsolete Stores
(iv) Buffer Stock
(v) Reserve Stock
(vi) Stock Pile

Based on this, Accounts Office will furnish the value of stores under the
above categories periodically to OFB with copy to Finance Division and
PC of A (Fys). This enables the authorities at HQrs to find out whether the
stock balances are at appropriate levels.

(f) Yes.
The important records used for the Accounting of Stores are Bin Cards and
the Priced Store cum-Provision Ledger. All stores accounted through
receipt vouchers and drawn through demand notes are taken to cost
accounts. It will be treated as outstanding liabilities in the store cash
purchase account of the Principal Ledger.
(Authority: Para 414, 496B OM Pt. VI)

Ques.6. Explanation only is sufficient. Authority need not be quoted.
(a) State the difference between Sales Defence A/c and Sales Defence
Receivable A/c.
(1 Marks)
38
(b) Where should the value of finished semi be reflected in the case of
components manufacture ?
(1 Marks)
(c) Where are the previous year's closing balances posted in the new financial
year.
(1 Marks)
(d) Items of expenditure and income compiled in CCO2 are primarily
reflected in which Account ?
(1 Marks)
(e) State the purpose of opening of notional cash A/c
(1 Marks)
(f) Where is under absorption /over absorption of overheads accounted in the
Principal Ledger and Annual Accounts. ?
(1 Marks)
(g) Name the main accounts for commercial format of Annual Accounts.
(1 Marks)

Ans.6 (a) The main difference is that current year's production and issues are
accounted for in the Sales Defence A/c including Profit/loss on issues.
Outstanding assets & liabilities are accounted for thought the Sales
Defence Receivable A/c. Sales Receivable A/c is based on the accrual
concept of financial accounting.
(b) The opening value should be debited and closing value credited to
Manufacture for own factory account along with 10,13 series of work
orders and contra entry to Revenue Outlay A/c and Balance A/c
respectively.
(c) Credit Balance of previous year are debited to concerned account of the
current year with contra entry to Revenue Outlay A/c (Revenue nature)
/Capital Outlay A/c (Capital nature)
(d) Notional cash A/c
(e) The purpose is to generate commercial account. Contra entries to initial
entries made are transferred to Revenue Outlay A/c to make the notional
cash account tally.
(f) Under/over absorption of O/H is transferred from WIP A/c to P & L A/c
and reflected as U/A - Current assets, O/A - Current liability in A & L
statement.

(g) The main accounts in the commercial format are- Proforma Manufacturing
Account, Proforma, Profit & loss A/c and Proforma Balance Sheet.

Ques.7. (a) How are receipts from Production of own factory priced ?
(1 Marks)
(b) What are KODs used in inventory accounting ?
(1 Marks)
(c) What is the course of action to be taken by the consignee factory AO on
receipt of the IFD ID List ?
(1 Marks)
(d) How will the deficiencies in transit to be treated ?
(1 Marks)

39
(e) Calculate depreciation w.e.f. 01-04-2006 from the following data:

Original value of machine as on 01-04-86 1,00,000
Effective life of the machine 20 years
Reconditioning cost on the machine in 2006 1,00,00
(regularized through adjustment voucher)
Extended life of the asset 5 Years from 01-04-06
(2 Marks)

(f) Arrive at the priced value of the following receipt voucher of a CNC lathe:
Value of supply order 1,50,00,000
Erection and commissioning charges 1,00,000
Compiled to compiled to capital head
Civil works 50,000

If the life of the machine is 20 years, what would be annual depreciation
charges ?
(1 Marks)

Ans.7 (a) These receipts should be valued at the cost of production as shown in the
cost cards. In cases where complete costs are not available in time, the
vouchers will be priced provisionally at estimated rates noted in the cot
cards and modified to the extent necessary with reference to any changes
brought to light.
(Authority: Para 409 (E) OM Pt.VI)

(b) KOD 21,29 for plus and minus receipts, KOD 24,26 for plus and minus
issues, KOD 27,42 for plus and minus demand notes and KOD 22,47 for
plus and minus return notes.

(c) On receipt of the list, the issue vouchers received from the consignee
factory will be checked with the details in the list. Missing vouchers will
be called for while acknowledging the receipt of the list.
(Authority: Para 455(D) OM Pt. VI)

(d) The full quantity as vouchered will be brought on charge and a
discrepancy voucher in form IAF(Fac) 144 will be made for the quantity
less received.

(e) Original Value of the asset 100000
Annual depreciation 100000/20 = 5000; residual value Rs. 5000/-
Book value as on 01.01.06 5000
Adjustment voucher for reconditioning of the machine 01.04.06
100000+5000=105000
Depreciation on extended life of five years (105000/5) 21000

40
(f) Value of the asset 1,50,00,000
Add erection & commissioning charges 1,00,000
Civil works 50,000
1,51,50,000
Annual depreciation on the asset = 15150000/20 = 757500
(Authority: Para 745, 762 OM Pt. VI)

Ques.8 (a) A consignor AO intimates the consignee AO that an item issued from his
factory production has been less priced by Rs. 2.5 lakhs during 2006- 07.
He passes on an adjustment to the effect to the consignee through non -
financial punching medium. Comment on it.
(2 Marks)
(b) What action will be effected in the PSA/PSL in respect of the following:
(i) Item A has been wrongly entered as 100 kg instead of 10 kg in respect
of a return note.

(ii) Item B has been priced as Rs. 3,000 per item for 25 nos. instead of Rs.
300 per number

(iii) A receipt voucher qty has been posted with 75 qty instead of 60 qty.

((1 Marks)
(c) Analyse the following date extracted from Asset and Liability Register as
on 01-04-09 and offer comments thereof:
Bill No. S.O. No. Value
(i) LP/001/Fy dt. 5-4-08
(ii) LP/001/Fy dt. 10-4-08
(iii) LP/002/Fy dt. 15-9-08
(iv) LP/003/Fy dt. 16-9-08
001/04/08-09 dt. 1-3-08
001/04/08-09 dt. 1-3-08
010/09/08-09 dt. 1-8-08
010/09/08-09 dt. 1-8-08
1,00,000
2,000
50,000
1,25,000
Receipt Vr. No. S.O.No. Value
(i) S/002 of 2-4-08
(ii) S/007 of 3-9-08
001/04/08-09 dt. 1-3-08
010/09/08-09 dt. 1-8-08
1,02,000
1,75,000

(2 Marks)
(d) As per terms and condition of a Supply Order, steel billets of certain
dimensions and weight 250-260 kgs. approx will be issued free of cost by
the factory to the firm. The firm has to supply 300 nos of finished
crankshaft forging as per stipulated drawing. The price for conversion will
be @ Rs. 24780 per unit. The rejection allowance admissible is 3%. PDC 3
months, IT to be recovered @ 2% plus cess 3%. The firm executed the
order and supplied 300 nos within the DP. QC rejected 12 nos. Calculated
the net amount payable to the firm after standard deductions. (Moving
ALR Rs. 14.868)
(4 Marks)
Ans (a) The system of inter- factory adjustment of costs in respect of issues from
production from one factory to another has been dispensed with effect
from 1.4.78. The difference between the value intimated and the actual
COP will be retained by the consignor in his own books as a variance
account and will be reflected as such in the finished stock account of the
consignor. As per revised principal, ledger, the difference is treated as loss
on issue of finished articles.
(Authority: Para 670(2) OM Pt.VI)
41
(b) Necessary adjustment voucher to be prepared to rectify the correctness and
account for the same in the accounts then open as per provisions of Para
Authority: Para 418 OM Pt. VI)

(c) All stores for which payments are made and book debits received are to be
linked 100%. In this case, the same has not been done, even though both
payments made and receipts were accounted, both remain outstanding in
the books of Assets & liabilities. Such omissions need to be avoided and
prompt linking of stores to be ensured.

(d) Total qty to be supplied by the firm 300 nos. firm supplied the qty nos
(rejection no. reported 12)
Total Value of SO 7434000/-
Payment admissible
Admissible at 3% = 9 nos. = 288 + 9 = 297
Excess rejection by the firm = 291 -288 = 3 nos. ( to be recovered from the
firm)
297* 24780 = 7359660
2% = 147193

3% cess on IT = 4416
Recovery for excess rej = 3x 14868 = 44604
Total recovery = 196213
Net Payment 7359660-151609 = 7163447

42

S.A.S. EXAMINATION -PART-II (NEW SYLLABUS)

NOVEMBER, 2009

PAPER-VI - THEORY (WITHOUT BOOKS)

SUBJECT 'E'- WORKS, STORES AND INTERNAL AUDIT

TIME ALLOWED: 3 HOURS TOTAL MARKS: 100

Notes:-

(1) Only TEN questions should be attempted - FIVE from Section -I
and FIVE Section -II. Each question carries 10 marks.

(2) Section -I is common to all. Each question will carry 10 marls.

(3) Candidates permitted to answer questions relating to ARMY or
AIRFORCE or NAVY or FACTORY portion of Section II should
answer any FIVE questions from Sub - section A - ARMY or B -
AIR FORCE or C- NAVY or D - FACTORY. Answer to the
questions to Section - II should be written in a separate Answer
Book.
-------------------------------------------------------------------------------------------------------

SECTION-I (Works Accounts)

(Common for ALL Candidates)

Ques.1. State how the Monthly Expenditure Return is examined in a Regional
Controller's Office ?
(10 Marks)
Ans. The Monthly Expenditure Return IAF-2251) is received in the office of
the CDA with reference to Para 532 MESR. The first scrutiny is to see the
UA's certificate stating that the expenditure shown therein agrees with the
punching media for the month. It is compared with the last month's MER
to see if the carry forward is done correctly. It will also be seen that the
figures in the Return agree with the printed compilation received from
EDP Section, for that month. The expenditure shown against each major
work will be checked with the Register of Approvals to ensure that the
classification has been done under the proper head of account. It is also
seen that the expenditure against each major work is progressing fairly and
that the expenditure against each major work is progressing fairly and that
cases of excess of expenditure over and above the amount of
administrative approval and sanctioned allotment have been reflected in
the O.I. Statements by the UA
(Authority: Para - 148 OM Part VIII )

43
Ques. 2 (a) When are Earnest Money and Security Deposits refunded ?
(5 Marks)
(b) Can an 'on account payment be made after a contractor has submitted a
final bill under protest ?
(5 Marks)
Ans.2 (a) Earnest Money is refunded to a Contractor when his tender is not accepted.
The refund will be made after verifying that the tender submitted was
bona-fide.

Standing security deposit will be refunded to the contractor on his removal
from the approved list of contractors or when there is a change in
category. In other cases, it will be refunded after the contracted work has
been completed including the period of maintenance, if any.
(b) Yes, "On account Payment" will be restricted to only those items of
payment where there is no dispute.

Ques. 3 What do you understand by Re- appropriation of Buildings ?
(10 Marks)
Ans.3 Re- appropriation of buildings means the use of group of buildings, a
building, or a portion thereof for any other purpose than for which it was
originally constructed. Re- appropriations may be temporary or permanent
and may be intended either for an authorized or for a special purpose.

Re- appropriations of buildings may be categorized as under:

(i) A re- appropriation entailing no alteration and no cost. Such
appropriations may be approved in writing by any of the authorities given
in Table A to MES Regulations irrespective of the capital values of the
building involved. All sanctions accorded by authority lower than
commander Area/Division will be reported to him.

Sanctions for temporary re-appropriations will specify the period for which
the approval will remain in force and must be renewed as required.
However, permanent re- appropriations will be initiated by the Unit
concerned on IAFW - 1831 and on approval, necessary amendments to the
Register of Buildings will be made by the GE.

(ii) A re- appropriation entailing alterations and expenses. This will be
initiated on IAFW - 1831 by the Unit concerned and sent to local
commander and upon his acceptance in principle, the re appropriation
involving expenditure will be considered by the competent authorities as
per the limits laid down for acceptance of necessity in Table A to MES
Regulations. However, all sanctions accorded by an authority lower than
the Commander Area/Division will be reported to him. Each sanction will
state whether the re- appropriation is temporary or permanent and
particular, including expenditure, will be recorded in the Register or
Buildings.

(iii) Re- appropriations involving increase in scales or introducing a new
practice require the sanction of the Government of India . Re-
44
appropriation of MES Inspection Bungalows will be done under
government orders (provided the E in C furnishes a certificate that the
Inspection Bungalow in no longer required as such).
(Authority: Para 155 MESR)

Ques.4 (a) What special checks are exercised by 'E' Section of Controller's Office to
guard against spurious contract documents and fraudulent alterations to
contracts accepted by MES authorities ?
(5 Marks)
(b) What is the basic purpose of measurement of certain works ? Why is it
necessary to prevent delays in the measurement of works ?
(5 Marks)
Ans.4 (a) The special checks exercised by 'E' Section of CDA's Office to guard
against spurious contract documents and fraudulent alterations to contract
accepted by MES authorities are: (i) the contract agreement is in the same
ink and handwriting, (ii) blank spaces are filled in/a line drawn , (iii) rates
are given in words and figures.
(Authority: Para 25 OM Part VIII)

(b) The basic purpose of measurement of certain works is to determine the
amount of payments to Contractors for work done and also to account for
materials received which have to be measured or counted. It is necessary to
prevent delays in measurement of works to ensure prompt payment to
Contractors and it also provides opportunity for false and inflated claims
by Contractors.
(Authority: Para 100 MES Local Audit Manual)

Ques. 5 (a) Explain the procedure followed in MES for ensuring recovery of over
payments from contractors.
(5 Marks)
(b) The GE issues an amendment to increase the rates of a contract concluded
by him. The AAO (GE) objects to this amendment. The GE asks him to
make provisional payment. Please comment.
(5 Marks)
Ans.5 (a) To recover overpayments form Contractors which are pending for over 2
months, the GE will inform the CWE, who will , in turn, inform his other
GEs for recovering the money form other amounts due to the contractor. If
the overpayment is still not recovered within another two months, the
CWE will inform the Chief Engineer. The CE will ask the other CWEs in
the Command and if the money is not recovered within a total period of 6
months from the date it was discovered , the CE will report the matter to
the E- in C, Army HQrs.
(Authority: Para 540 OM Pt. VIII)

(b) The amendment to increase the rates of a Contract concluded by the GE is
unacceptable and the sanction of CWE is required. The AAO is not
required to make provisional payment at the increased rate pending CWE;s
sanction.
(Authority: Para 30 OM Pt. VIII)

45
Ques. 6 Fill in the blanks in the following
(a) No approximate estimate is required for works costing up to Rs.---------
(2 Marks)
(b) Work diaries (IAFW - 2347) will be maintained at site for all work costing
more than Rs. ..................................
(2 Marks)
(c) The Muster Rolls Should be technically checked by ......................... in the
GE's office either before, it time permits, or after payment.
(2 Marks)
(d) When the arbitration award is made rule of Court and the payment is being
made in satisfaction of Court decree, prior allotment of funds as
................... is necessary before making payment.
(2 Marks)
(e) Payments from cash assignment/imprest will be recorded on the
...................... of the cash book daily as disbursements are made.
(2 Marks)

Ans.6 (a) No approximate estimate is required for works costing up to Rs. 10,000
(Authority- Para 143 MESR)
(b) Work diaries (IAFW-2347) will be maintained at site for all works costing
more than Rs. 20,000
(Authority: Para 368 MESR)
(c) The Muster Rolls should be technically checked by teh Surveyor's
Assistant in the GE's office either before, if time permits, or after
payment.
(Authority: Para 124 UA Manual)
(d) When the arbitration award is made rule of Court and the payment is being
made in satisfaction of Court decree, prior allotment of frunds as "Charged
expenditure " is necessary before making payment.
(e) Payments from cash assignment/imprest will be recorded on the credit side
of the cash book daily as disbursements are made.

Ques 7. What action needs to be taken by the GE in the following circumstances ?
(a) When the final cost of the work exceeds the amount of Adm. approval by
more than 10%
(5 Marks)
(b) When the accepted amount of the contract reduces the cost of project
below Adm. approval by more than 15% ?
(5 Marks)
Ans.7 (a) When the final cost of work exceeds the amount of administrative approval
by more than 10% and there is no prospect this excess being met by
savings on other items a revised estimate will be prepared and a revised
administrative approval of the CFA will be obtained.
(Authority: Para 30(a) DWP)

(b) For projects estimated to cost Rs. 1 Lakh or more, when the amount of
accepted contract reduces the cost of project below the administrative
approval by more than 15% then the approved amount for the project will
46
be reduced by the amount exceeding 15% by the CE/CWE within whose
powers the technical sanction for the work falls. The details of reduction
will be sent to the CDA.
(Authority: Para 30 (b) DWP)

Ques.8. Write short notes on:
(a) Contractor's Ledger
(4 Marks)
(b) Construction Account
(4 Marks)
(c) Please bring out the difference between the two
(2 Marks)
Ans.8 (a) All transactions in respect of each contract will be entered into the ledger.
The ledger will be posted as transactions occur and will be balanced
monthly. Even in cases of contracts in which the only payment is the final
payment, a separate folio will be opened. The closing balance of each
contract account will show the amount outstanding, if any, in respect of
each contract. The contractor should be encouraged to examine his ledger
account from time tome and sign in token of his acceptance. He may be
given an extract of the ledger, if require..
(Authority. Paras 491 to 493 RMES)

(b) Construction accounts are maintained by the SDOs concerned for each
work or service for the purpose of progressing and controlling expenditure
under various heads of account. The amount of sanction and allotment as
also the expenditure as and when incurred with sufficient details, liabilities
and expected credits are also shown until adjusted.

The entries are made with reference to duplicate copies of
vouchers/allocation sheets received from AAO GE. The AAO GE will
check the correction of the posting in the construction accounts with
reference to original vouchers in his possession and reconcile the same
with the abstract of receipts and charges.

While the construction account will reflect all the expenditure incurred in
connection with the project including pay and allowances, the contractor's
ledger will show only the payments made and stores and T&P issued to the
contractor and the value of work executed by him.
(Auth: Para 531 MESR, Para 103 UA's Manual, Appx. 1 MESR)

47

Section -II Store Accounts and Internal Audit

(For candidates other than Air Force, Navy and Factories)

(A) Army
Ques1. What are the basic functions of Military Farms ? Briefly explain how
losses in Military Farms are to be dealt with.
(10 Marks)
Ans.1 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.
(c) Fresh vegetables produced in Military Farm's lands are produced by the
ASC on priority basis.

All losses of stores, dairy produce, fodder, etc. will be dealt with as per
instructions in FB 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.
(Authority: 191, 208 SAI)

Ques.2. (a) When is it not necessary to prepare a loss statement for the loss of
medicines in a Medical Store Depot ?
(5 Marks)
(b) Is a loss statement required for the loss of ammunition found unserviceable
on testing before the expiry of shelf life ?
(5 Marks)
Ans.2 (a) It is not necessary to prepare a loss statements for the loss of medicines in
a Medical Store Depot when the loss is not due to faulty storage.
(Authority: ALAM)
(b) Yes. A loss statement is required if ammunition is found unserviceable on
testing before the expiry of shelf life.
(Authority: ALAM)

Ques.3. (a) What use is made by the LAO of the Monthly Man hour Statistical Return
prepared by EME Workshops ?
(5 Marks)
48
(b) What checks will the LAO exercise in post audit of Check Rolls to ensure
that : (i) Payment has actually been made to the individuals; (ii) no
unauthorized alterations are made in the entries in the Check Rolls, and
(iii) payment for the period of leave is in accordance with the leave
actually sanctioned.
(5 Marks)
Ans.3 (a) LAO test checks 10% of the Monthly Man hour Statistical Returns of
EME Workshops by verifying the hours booked in selected section's daily
statements of a particular group with the hours recorded in the summary of
work orders prepared in the compilation group of the workshop.
(Authority: ALAM Part -I)

Ans.3 (b) (i) To ensure payment has actually been made to the individual, the LAO
will verify during post audit of check rolls that a certificate signed by a
Commissioned or a Gazetted Officer to the effect that payments have been
made in his presence, is endorsed on the last page of the Check Roll.

(ii) To ensure that no unauthorized entries are made in the Check Roll, the
LAO will verify that all alterations are duly attested by the executive and
that there are no erasers to overwriting.

To ensure that payment for the period of leave is in accordance with the
leave actually sanctioned, the LAO will link the leave DO II orders 100%
with the Check Rolls.
(Authority: ALAM Part -I)

Ques.4. (a) Explain briefly the meaning of linking and pairing in local audit ?
(5 Marks)
(b) What is the significance of pairing in the context of 'D' and 'E' copies ?
(5 Marks)

Ans.4 (a) 'Linking' means bringing together an entry in a ledger and supporting
voucher to ensure that the entry in the ledger is strictly in accordance with
the voucher.
(Authority: Note below Para 32, ALAM)

"Pairing" means bringing together two documents which are supposed to
be facsimile copies, one of the other, to ensure that they are in fact
identical.
(Authority: Note 1 below Para 51, ALAM)
(b) The significance of pairing is to ensure that the item and quantity stock of
charge by the consignor unit as verified by LAO ( as per D copy) has been
taken on charge by the consignor unit ( as per E copy).
(Authority: Para 40, ALAM)

Ques.5. (a) What procedure should be followed in respect of Rations when a unit
moves out from a station ?
(5 Marks)
(b) What points are checked by the LAO while auditing Vehicle Log Book
and 'Car Diaries' ?
(5 Marks)
49
Ans.5 (a) The unit should close its ration return showing transactions up to the date
of entraining.

The closed Ration Return will be got audited by the LAO before leaving
the station and objections as far as possible, settled.
(Authority: Para 59 of Store Accounting Instructions for Army)

(b) 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 310(iv) of ALAM Pt. I, Vol. II and Para 141 of Store
Accounting Instructions for Army)

Ques.6. (a) What are the different classifications for loss of stores ?
(5 Marks)
(b) When does a court of inquiry to investigate a loss become mandatory ?
(5 Marks)
Ans.6 (a) Losses of stores are classified as under:
(i) Losses due to theft, fraud or neglect.
(ii) Losses due to other causes.
(Auth: Para 244 of Store Accounting Instructions for Army)

(b) 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 or neglect.
(v) Losses due to fire or any unusual occurrence.
(Authority: Para 241 of Store Accounting Instructions for Army)

Ques.7. Write short notes on:
(a) Functions of Supply on :
(5 Marks)
(b) Major Financial and Accounting Irregularities
(5 Marks)
Ans.7 (a) Functions of Supply Depot:
(i) To receive articles of ASC supply when arranged either by central
purchases or local purchase, or by transfer from other depots;

(ii) To hold such stocks as may be determined from time to time;
(iii) To issue items of ASC supply to units/formations for consumption;
(iv) To operate ASC bakery and ASC butchery, where required, and
(v) To hold and issue POL At specific stations.
(Authority: Para 98 SAI)

50
(b) Major Financial and Accounting Irregularities

All serious financial and accounting irregularities from the procedural or
propriety audit point of view are reported to the CGDA, Army HQrs.
Command HQrs. Unit concerned and the Test Audit authorities. This is a
quarterly report from the CDA which is based on such reports from all the
LAOs.
(Authority: Para 19,20 ALAM Pt.II)

Ques.8. What is Returned Stores Sub- Depot and Salvage Sub- Depot ? Bring out
the silent points to be seen in the audit of these Depots.
(10 Marks)
Ans.8 RSSDs receive, sort out and condition clothing, general and technical
stores. They carry out unskilled repairs to all such stores. They disinfect
and wash/dry clean all clothing. They recondition EME stores. After
conditioning, all serviceable stores are forwarded to stock sub- depots for
re- issue. BER stores are disposed of. Account cards are maintained to
show all transactions.

It should be seen in audit that details of all stores received are posted in
Account Cards. The stores conditioned have been written off charge from
the column 'awaiting condition' and the same quantity brought on charge.
unserviceable stores of all types and excess repairable stores, after
conditioning have been passed on to the Salvage Section/Deport and
brought on charge by the salvage section. RSSD workshop job cards are to
be scrutinized. It should be seen through audit that no theft, pilferage takes
place and the stores are accounted for at every stage and economy is
achieved.
(Authority: 212-217 ALAM I Vol. II)

Section -II - Store Accounts and Internal Audit
Air Force
Ques.1. (a) Which of the following categories of losses find a place in the
Appropriation Accounts of the Defence Services:
(i) Aircraft losses in enemy action on Tiger Hill in Kargil.
(2 Marks)
(ii) Losses of aircrafts in Inter command Exercises
(2 Marks)

(b) What audit checks are exercised by an LAO(Air Force) on Certificate
Issue Vouchers and Conversion Vouchers ?
(3 Marks)
(c) Give four instances when Conversion Voucher will be raised.

Ans.1 (a) (i) Aircraft losses in enemy action on Tiger Hill in Kargil will not find
place in Appropriation Account being losses occasioned directly by active
operations/enemy action.
(ii) Losses of aircraft in Inter Command exercise will find place in
Appropriation.
(Authority: Appendix IX Para 2 AFLAM)
51
(b) Certificate issue vouchers will be checked by LAO(AF) to see that-
(a) they are cross- referred to the relevant Certificate Receipt Voucher,
Receipt Vouchers or Issue Vouchers etc, where necessary and that the
strike off action certificate on them is bonafied;

(b) In the case of strike off stores due to enemy action, service accidents
etc. full particulars of the circumstances etc. and orders of higher
authorities wherever appropriate are recorded on them.

Conversion Vouchers will be checked to see that-
(a) the conversion made are genuine and within the generic heading of the
same vocabulary section;
(b) in case of strike off of stores in stock taking holding Establishment
owing to deterioration and the deterioration is not due to lack of suitable
storage accommodation or failure to look after the articles properly in
stores raised to adjust the stores are properly endorsed with certificate from
competent inspecting officers;
(c) the stores have been converted to salvage understanding orders or on
receipt of specific orders from Air Hqrs. wherever necessary, and that the
resultant produce of stores salvaged or broken down reasonably represent
the correct weight brought on account.

(d) Where surpluses/deficiencies have been set off one against the other,
they are true and legitimate as allowed under order and are none out by the
stock taking records.
(Authority: Para 113, 114 AFLAM)
(c) Four instances when conversion Voucher ;is raised are as under:-
(a) To convert the unserviceable stores into salvage.
(b) To support transfer of stores from the charge of one inventory holder to
that of another in a different section of the unit.
(c) To convert the balances of N.I.V items when Command N.I. V
numbers are allotted.
(d) To adjust accounts when the stores are received in a condition other
then in which vouchered.
(Authority: Para -111 AFLAM)

Ques.2. (a) What is the responsibility of LAO (AF) in regard to Payment Issue
Vouchers for stores issued from an Air Force Unit to Flight Cadets ?
(5 Marks)
(b) How is it ensured that the Consignee Army unit gets the stores and Air
Force Unit gets the Credit for these stores ?
(5 Marks)
Ans.2 (a) The following audit checks are to be exercised by LAO(AF) in regard to
Payment issue to flight cadets. It will be seen-
(i) that the quantity of any article issued is not in excess of his personal
needs as covered by the scale of equipment to be maintained ?
(ii) that the price charged for any article or length of material represent the
price given in the Price list of Indian Air - Force Equipment plus
departmental, additional and other charges at appropriate rate as laid down
in the 'Memorandum of Instructions' thereto and that no issue is made of
52
any article for which price is not given in vocabulary;
(iii) that specified articles of clothing, footwear, necessaries etc. are issued;

(iv) that the issue of controlled material does not exceed the specified
Limit and requisite certificate endorsed by the officers to whom issues are
made,
(v) That in the case of restricted issue to married officers, the officers
purchasing the item have certified that at the time of purchase they were
married;

(vi) that where partworn serviceable items are issued, the recovery is made
at the minimum rate of 2/3rd of the vocabulary price plus the departmental,
additional and other charges laid down in Memorandum of Instruction for
rates or at a higher rate where fixed by the logistic officer.

(Authority: Para 93 AFLAM)
(b) The Account officer of issuing Depot/unit supplies three un receipted
priced copies of issue vouchers IAFF(Q) 431 (namely 4th, 5th & 6th copy)
to the consignor LAO. On receipt of three copies of issue vouchers in
respect of Army, the LAO (AF)/ Group Superintendent LAO(AF) will
ensure that the price charged therein are correct. After ensuring in that the
vouchers are indentical in all respect the LAO (AF) Gp. Superintendent
LAO (AF) will indicate on one copy the relevant head of account to which
the cost of the issue made is creditable and the amount involved and then
transmit it to the CDA of the receiving service. The CDA of the receiving
service will prepare a Punching Medium debiting the relevant service
Head of the receiving service by contra credit to the head of account of the
issuing service shown on the vouchers and send a copy of Punching
Medium to the consignor LAO(AF) for his information (citing reference to
the related voucher and the No. & date of communication under which it
was received ) Thus, it is ensured that the consignee Army unit gets the
stores and Air Force units gets the credit for these stores.

Ques.3. (a) Name at least four of the forms to be used when preparing local contracts ?
(4 Marks)

(b) Explain the importance of manuscript registers in fresh ration accounting ?
(6 Marks)
Ans.3 (a) Following forms are to be used when preparing contracts:-
(a) IAFF(Q) 411- Tender Form.
(b) IAFF(Q) 513 - Schedule of tenders.
(c) AF(1) 403 - Schedule Boot and Shoe repairs
(d) AF(I) 157 - Schedule Barrack & Sick Quarters Washing.
(d) IAFF(Q) 518 - Schedule Tailoring
(Authority: Para 11 Ch. 26 IAP 1501)
(b) Manuscript Registers are maintained by Logistic officer where daily
receipt of fresh rations, both obtained directly from ASC depots and
directly from contractors are recorded . Monthly consolidated issue
vouchers issued by ASC Depot/IAFS 1520 received from contractor are
53
checked by the logistic officer from Manuscript Register to ensure total
receipt during the month.

When demanding from ASC depot, Unit logistic officer to place demands
daily on memo form. ASC depot will prepare an issue memo IAFs(1555)
for quantity of each commodity issued on each day. On receipt of the
supply, the logistic officer is to check them against issue memo (FS- 1555)
and sign and return the acknowledgements foil to ASC depot. Form (s)
1555, after recording the receipts in the relevant manuscript Registers
maintained by the logistic officer, will be passed by logistic staff to
Account Staff on daily basis for custody, internal verification and
production to Audit. At the end of the month the ASC Depot will forward
in a consolidated issue Vouchers (IAFZ - 2096) in duplicate, incorporating
all issues on Form S- 1555 for the month to unit. The logistic officer is to
check total issue as shown IAFZ - 2096 with the total receipt as recorded
in Manuscript Register.

When supplies are delivered direct by ASC contractor to the Unit, the unit
concern is to inform the contractor of its daily requirements. Once copy of
IAFS- 1520 is to be complied by the unit to cover supplies over a period of
one month. The contractor is also to maintain a copy of FS- 1520. As and
when deliveries are made to the unit, the quantities are to be entered in the
Form and the Logistic officer is to sign the contractors copy & obtain the
contractors signature on the unit copy. The supplies are to he brought on
charge by the Logistic officer in " Manuscript Register" on the basis of
relevant entry in IAFS-1520. At the end of the month the contractor is to
forward his copy of IAFS - 1520 to the logistic officer. The total deliveries
shown on both copies of IAFS - 1520 are to be checked against the total
receipt as recorded in "Manuscript Register and both copies are to be
rectified and signed by the Logistic officer.
(Authority: Para 16-17 Chapter 34 IAP 1501)

Ques 4. Write TRUE or FALSE (at least FIVE):
(a) Inactive Stock includes equipment which is no longer in current use but
which may be required in an emergency.
(b) Reduction to produce means to break down an assembly to its basic
materials and dispose of the arising as salvage by weight.
(c) Diversion Order is a request by the Command Hqtr. contractor to deliver
equipment to a consignee other than originally specified in the Contract.
(d) The term Airframe includes gliders without engine(s) installed.
(e) Salvage means equipment which has been conditioned as beyond repair
and not fit for further use in IAF.
(f) A substore can be instituted with the prior approval of AOM/AOC- in - C.
(5x2 Marks)
Ans.4 (a) False
(b) True
(c) False
(d) False
(e) True
(f) True
(Authority: Glossary of Terms - IAP 1501)
54
Ques.5. Write short notes on any FOUR:
(a) Initial issues
(b) Special review of Requirements
(c) Dues - in and Dues - out
(d) Review Action Figure (RAF)
(e) Rotables
(f) Item Controls
(4x 2.5 Marks)
Ans.5 (a) Initial Issue - a term denoting :
(a) An issue of equipments, generally to a pre-determined scale, to enable
a new unit to function, or an existing unit to change function or fulfil
specific commitments, or,
(b) The first issue of an item made against authorized scale i.e. initial issue
to recruits.
(Authority: Glossary of terms - IAP 1541)
(b) Special Review of Requirements

On receipt of the revised forecast Factors and the overhaul/Repair plan, the
following action is to be taken by the provisioning Section in respect of
spares and equipment pertaining to the aircraft: -

(a) All items for which dues in exist are to be reviewed immediately, if the
review reveals surplus assets, over and above the requirements for
maintenance during the remaining utilization period of the aircraft, the
procurement agency is to be requested to cancel/reduce the outstanding
indents to the extend to surpluses. Ministry of Defence and Finance
(Def/Air) should be simultaneously informed of the action taken and the
reason therefore.

(b) Rotables for the aircraft, which are included in the current Repair Task
are to be reviewed and the Repair Task reduced to the extent of surplus, if
any. Wherever reduction have been made, the concerned repair
agency/Overhaul Spares Depot is to be instructed to review requirements
of breakdown spare for internal and external arising s on priority basis and
communicate the revised requirements to the provisioning section form
further necessary action.

(c) Revised requirements for major inspections/ overhaul of the air craft
and aero-engines based on the Revised Repair/Overhaul Plan, is to be
likewise obtained from the concerned repair agency/OSD priority for
necessary action.

(d) Thereafter, review of all the remaining items is to be undertaken.

(Authority: Para 5 Leaflet No. 42 IAF 1541)

(c) Dues- in and Dues out

Quantities of equipment due for delivery against indents, supply orders,
RMS Orders or direct purchase sanctions are termed as Dues- in.
55

Quantities of equipment recorded on Provisioning Record Cards or Dues
out card as being the unfulfilled requirements for which stock is awaited.
(d) Review Action Figure (RAF)

A pre- determined stock level, expressed in terms of so many months
requirements. When the depot stock of an item reaches this figure a special
review is undertaken and supplementary indent placed where necessary.
(e) Rotables
These are items which are capable of being repaired and re-used. This term
is used in Air Force to denote those items which

(a) Have hade or are expected to show turnover at the flying units as a
result of normal usage.
(b) Are considered economical to repair for re use and
(c) Which can be replaced by a flying unit and when beyond the capacity
or authority of the flying unit to repair , must be returned to the appropriate
repair agency for repair/overhaul.
(f) Item Control
Control exercised by the provisioning authority on specified items of
equipment. This control also extends automatically to normal issue of any
item for which depot stocks have reached the short stock Figure.
(Authority: Glossary of Terms - IAP 1541)

Ques.6 (a) When is an Equipment vouched as CAT D1 ?
(6 Marks)
(b) Write any two of the decisions the Defect Investigation Report is required
to indicate.
(4 Marks)
Ans.6 (a) Equipment returned for Defect Investigation by Flight/section to logistic
Section is to be vouched as Cat - DI to indicate that the item is subject to
Defect Investigation and Final category will be decided after the Defect
Investigation. The Logistic Section will also vouch such items to OSDs/
BRDs as Cat DI. Such items should be sent complete will all documents
including report on failure of Defect (Form IAFF(Q) 1022 ) pertaining to
the same.
(Authority: Para 93 ch. 22 IAP 1501)
(b) Progress and Production Control Section (PPCS) should allot the Form (Q)
408 a job number from a separate series using the prefix "QR" to
distinguish it from other routine jobs. The final investigation report will
indicate one of the following decisions:
(a) To retain the serviceable item for use in the depot.
(b) To return the item to the unit in serviceable condition.
(c) To retain the item in repairable condition
(d) To sentence the item beyond economical repair.

Ques.7 (a) What is the necessity of register (Form(F) - 1521] ? What are audit points
that will be seen in DRs(Out) ?
(4 Marks)
56
(b) How are discrepancies reported by consignee maintained and how is it
scrutinized ?
(3 Marks)
(c) What is the procedure to be followed in respect of Kit of airmen selected
commission ?
(3 Marks)

Ans.7 (a) The Loss statement register (Form(F) 1521) held by the EA Section is
checked to verify that all loss statements have been entered therein and it
will be seen that all cases under reference to higher authorities are suitably
expedited by that section.

The audit points will be seen in DRs (Out) are that -

(i) They are raised without any undue delay after the receipt of
consignments, indicating particularly-
(a) the date of receipt of consignment at depot/unit,
(b) the date of unpacking thereof and
(c) suitable explanation for the delay, if any, between the date of receipt
and date of opening of the consignment.
(ii) Other instructions contained in chapter 10 IAP. 1501 and in any other
orders issued from time to time for the raising of discrepancy reports in the
case of inland and foreign consignments have been duly complied with;
(iii) Their clearance is suitably watched and expedited.
(Authority: Para 127-128 AFLAM)
(b) Discrepancies reported by consignee are maintained through Manuscript
Register of Discrepancy Report(Inward ) . The register is scrutinized to see
that -
(i) The discrepancies reported by the consignee units are attended to
promptly and cleared expeditiously. Cases where the DR's in is pending
for an appreciable period will be brought to the notice of CO through a
special communication. If effective action is not taken over thereafter, the
matter will be reported to command Hqrs. The consignor LAO will not ,
however, raise formal objection on outstanding DRs in.

(ii) Wherever, the DR is accepted by the consignor, the adjustment
voucher raised by the logistic officer is in order and a loss statement has
been raised. Sanction of Loss Statement will be watch in normal manner.
Cases where a loss statement is necessary but has not been raised, will be
placed under objection.

(iii) Any surplus receipt of equipment reported by a consignee unit is not
charged off the daily cards/stock record cards as a matter of course without
stock taking of the item concerned; and if stock taking had been carried out
already, subsequent to issue, no strike off is allowed.

The DR (in) Register will also be subjected to critical overall scrutiny, to
detect significant features, if any.
(c) Kit of airmen selected for commission is withdrawn and deposited at Air
Force Colleges in the Kit Store on IAFF(Q) 402. On successful
57
completion of training all items of public clothing of the airmen are to be
brought on charge and IAFF(Q) 402 cleared. In case an airmen, who on
being disqualified, revert to the ranks, it will be ensured that he is kitted
with the same set of public and personal clothing which was withdrawn
from him at the time of his selection as a Flight Cadets.
Ques.8. (a) Define Cat B Training Aircraft.
(4 Marks)
(b) Bring out condition, selection and authority for it. Who carries out the
maintenance of such aircraft ?
(6 Marks)

Ans.8 (a) The category Cat 'B' Training Aircraft means a serviceable aircraft at least
upto first overhaul stage but fit for ground instructional training.
(b) Condition - The aircraft in this category would be fully serviceable in all
respects through not air worthy for operational use. The main systems of
the aircraft would be fully serviceable and operable and the aircraft would
be complete to column 7 of Appendix. 'A' or its equivalent.

Selection - The aircraft to be selected for this category is to have maximum
utilization from the date of manufacture. The selection is to be made only
at the time it is actually required to be allotted against the scale of ground
having units.

Authority - Only Air Headquarters is authorized to re - categories a aircraft
from equipment category 'B' to B- Training. This they will do after
judicious inspection of all serviceable aircraft on the fleet strength of the
type under consideration.

Maintenance - Aircraft in this category are to be maintained by training
units in fully serviceable condition. Assemblies and spares required as
replacements are to be obtained in accordance with IAF 1501(Ch.4 Para
54-66)

(Authority: Para 120-122 & 125 Ch. 19 IAP 1501)

58

Section -II - Store Accounts and Internal Audit
(c) Navy

Ques.1. (a) Whose responsibility it is for supplying and arranging delivery of
victualling stores to ships and establishments ?
(3 Marks)
(b) What are the various ledger accounts required to be maintained by a
Victualling Store Officer ? Please indicate the purpose for which these
accounts are maintained.
(7 Marks)

Ans.1 (a) It is the responsibility of the Victualling Stores Officer to supply and
arrange delivery of victualling stores to ships and establishments.
(Authority: Para 3 of Section 3 Indian Navy Victualling Directive)
(b) The Victualling Store Officer is to maintain the following ledger accounts
for the purpose indicated against each:
(i) Provision Ledger - To account for all provisions received and issued.
(iv) Packing Material Ledger - To account for all packing material
received an issued.
(iv) Suspense Ledger - To account for provisions returned and/ or set aside
for survey.
(Authority: Para 1 Part II Indian Navy Victualling Directive)

Ques.2. (a) How will you ensure that a contract/supply order has been issued only by
the authority to do so. ?
(4 Marks)
(b) What action would you recommend as an IFA in a case, where the item
offered by the supplier he is not in a position to either rectify the defects or
offer items conforming to the contracted quality standards ?
(6 Marks)

Ans.2 (a) By verification of the specimen signature borne on the contract/supply
order with the specimen signature received from the CFA.
(b) In the above circumstances, the advice would be to terminate the contract.

Ques.3. (a) Who is the agency that carries out pricing of issue vouchers relating to
issue of Defence Stores to foreign governments ?
(4 Marks)
(b) While carrying the audit of Main Ledger in a Naval Armament Depot,
certain costly items of stores are found to have been charged off by issues
to sections in the depot. Which document will you look for too see that the
said items have been taken on charge by the concerned sections ?
(6 Marks)
Ans.3 (a) To Min of Def.(Fin.)
59
(b) Article - in- ue (A-in-u) Ledger.
(Authority:Para 102 of NLAO Local Audit Manual)

Ques.4. (a) What is the pre condition for a demanding unit to carry out local purchase
of CPV items of stores ?
(4 Marks)
(b) The expenditure against local procurement of stores against a Central
Provisioning (CPV) indent is found to have been debited to a local
procurement Head. Please comment upon the correctness of this booking.
(6 Marks)

Ans.4 (a) NAC from the MO/NSD concerned.
(b) The action taken is not correct. All CPV indents are required to be debited
to the Central Procurement Head of account and not to LP head.
(Authority: Para 3.8, Material Management Manual, Part-III)

Ques.5. (a) The following liquidated damages (LD) clause has been provided in the
draft contract sent to the IFA for vetting:

"In the even of the Supplier's failure to deliver on time, the purchaser , at
his sole discretion and not by way of penalty may deduct from the payment
1% of the contract price of the undelivered stores for each month or part
thereof till the item is delivered , subject to a maximum of 5% of the
contract value."

Do you notice any flaw/defect in the aforesaid proposed clause ? If so,
please elucidate.
(7 Marks)

(b) It has been proposed to accept the offer of L2 vendor on the ground that
the L2 vendor has offered to supply the stores within shorter delivery
period 1 vendor. Please comment.
(3 Marks)

Ans.5 (a) The above clause is defective to the extent that the percentage of
maximum limit up to which LD can be levied is of the value of the stores
not delivered on time and not of the total value of the contract.
(Authority: Para 33 of Appendix A to chapter 6 of Navy Procurement
Manual)
(b) In no case, an offer other than the lowest would be accepted. Hence the
proposal to accept the offer of L2 vendor is not in order.
(Authority: Para 9.9.5, DPM - 2009)

Ques.6 (a) What do you understand by special conditions of contract ? Are they
applicable to all type of contracts ?
(5 Marks)
(b) Item Boot DMS has been proposed to be procured from Ordnance Factory
as it has been developed specially for Defence Services. Will its
procurement form Ordnance Factory as a single source require a PAC ?
(5 Marks)
60
Ans.6 (a) Special conditions of contract are special conditions applicable to specific
tender and contract which can be included on case to case basis and in all
type of contracts. Special conditions of contract are given in Part- IV of
Appendix C, D, & E of DPM- 2009
(Authority: Para 7.1.4 DPM - 2009)
(b) Procurement of goods from Defence PSUs specifically manufactured for
Defence Services are required to procured from concerned Defence PSU
only. Hence such procurements will not be treated as PAC procurements
and as such no PAC is required.
(Authority: Para 2.4.8 DPM 2009)

Ques.7. Please explain the following:
(i) Marine Equipment and Spare parts
(3 Marks)
(ii) On Board Spares
(2 Marks)
(iii) Base and Depot Spares
(3 Marks)
(iv) Insurance Spares
(2 Marks)
Ans.7 (i) Marine Equipment and Spare Parts
The term 'Marine Equipment' covers all equipment used in the Navy, on
board or ashore, other than air equipment and weapon equipment. The
term spares include both equipment and spare parts held in stock. Spare
connote assemblies, subassemblies and components of equipment,
excluding those stocked as naval spares.
(Authority: Para 1.16, Material Planning Manual)
(ii) On Board Spares
On board spare parts are spare parts estimated as required to operate and
maintain a ship during the first year of commission. They are positioned on
board by the Shipyard. These are required to be replenished thereafter
from spare parts stocked in depots.
(iii) Base Depot Spares
B&D spares constitute the spare equipment and spare parts estimated as
required to maintain and repair a ship during the first five years of
commission. They also include insurance spares. These spares are
replenished based on consumption. Spares not included in B&D
provisioning are provisioned and procured when the need for them arises
or is foreseen.
(iv) Insurance Spares
Insurance spares are equipment held in stock to cater for war and other
unexpected damage. These form part of war reserve.
Ques.8. (a) One of the main considerations to be taken into account while provisioning
is obsolescence. Please elucidate.
(5 Marks)
(b) What is the minimum stock level ? How is it determined ?
(5 Marks)
61
Ans.8 (a) Every item used by the Navy will functionally out dated over a period of
time and require to be superseded by an item of more modern concept and
design. In case of some items their very function will disappear over a
period of time. As a result, all items held in stock will eventually become
first obsolescent and then obsolete.
(b) Minimum Stock Level is the level below which the stock of an item should
not be allowed to fall. It expressed as quantity, is determined by the
following :
(i) Annual consumption level
(ii) Category Co- efficient for MSL(CCM)
(iii) Shelf Life in months

62

SECTION -II (STORE ACCOUNTS AND INTERNAL AUDIT) (D)
FACTORY

Ques.1. (a) Find out the cost of production per unit of a Crank case from the details
listed below :
(a) Estimate No. PW/1001200
(b) Work Order No. 401018000 warrant 08040
(c) Ordered qty. 50
(d) Accepted 42
(e) Rejected qty. 08
(f) UAR% 25%
(g) Opening semi:
(i) Direct Labour
(ii) Direct material
(iii) PPL
(iv) FOH
(v) VOH

161984
1144194
Nil
578899
179582
(h) Expenditure during the year:
(i) Direct Labour
(iii) PPL
(iv) FOH
(v) VOH
293465
1890783
5961289
1103244
546705
(i) Previous Year COP:
(i) Direct Labour
(iii) PPL
(iv) FOH
(v) VOH
484741
10354509
4160328
1813031
808848
(5 Marks)
(b) (i) How will you account for loss of labour due to waste of time, inefficiency
and poor workmanship in costing ?
(1 Marks)
(ii) Will it be included in the normal cost of the job ?
(1 Marks)
(iii) How will you treat such loss beyond the limit indicated in the standard
estimate ?
(1 Marks)
(iv) How will you account for this production loss in the Annual Production
Account ?
(1 Marks)
(v) How can you set a "standard" for labour hours ?
(1 Marks)
Ans.1(a) Labour (op semi + exp + PY COP ) 940190
Material ( OP Semi + exp + PY COP ) 13389486
ppl (op semi + exp + PY COP) 10121617
FOH ( op semi + exp + PY COP) 3495174
VOH ( op semi + exp + PY COP ) 1535135
TOTAL COP 29481602
63
Probable output with 25% UAR 14 units, actual output 42, rejection 8
(within UAR)
Cost per unit 29481602/42 = 701942.90
42 NOS. absorbs the total expenditure as excess rejection value is nil in
this case.
OFB circular No. 31/P(c) dated 20.09.1990 & 21.01.2003

( b) (i) It will be treated as " unavoidable loss" as provided for in the
corresponding estimate for the respective production job within the
permissible limit based on part experience in production.
(ii) Yes.
(iii) It will be treated as " Production Loss"
(iv) This loss will be included in the credit side.
(Authority: Para 679(ii) OM Pt. VI)
(v) Through proper time and motion study, the labour operations required for
performing a particular job are determined, which are initially declared as
provisional estimate. After three months of continuous production activity,
this is to be converted into a standard estimate.
Ques.2. (a) A gang of piece workers in a factory produced 6000 nos. in Jan. 2000. The
piecework rate is Rs. 250 for 100 items. Calculate the earnings of the
gang and piece work profit of each worker of the gang based on the
following data:
Worker Basic Pay Scale of pay Attendance
A Rs. 2600 2550 - 3200 22
B Rs. 2800 2650 - 4000 23
C Rs. 4000 3050 - 4590 20
D Rs. 3000 2550 - 3200 24
(5 Marks)
(b) Carry out variance analysis per unit cost in respect of Bearing on the
following cost data:
Actuals Estimated
Direct
Labour
18430 15300
Direct
Material
170075 210080
PPL 11000 10000
FOH 54700 42840
VOH 23240 18360
TOTAL 277445 296580
(3 Marks)
(c) Write short notes on Inspection Notes and PL Card.
(2 Marks)
Ans.2 (a) Notional time wages
A 2550/26 x 22 = 2158
B 2650/26 x 23 =2344
C 3050/26 x 20 = 2346
D 2550/26 x 24 = 2354
Total Time wages = 9202
64

Piece work earnings of the gang = 6000/100x 250 = Rs. 15000/-
Piece work profit of the gang = 15000- 9202 = 5798/-
Piece work profit % Output/Input -1 = 15000/9202-1 = 63%
Piece work profit @ 63% of individual notional time wages is to be
distributed as follows:
A 2158 x 63% = 1360
B 2344 x 63% = 1477
C 2346 x 63% = 1478
D 2354 x 63% = 1483
(b) As per provisions of Para 629 and 630 of OM VI, the Br AO should carry
out detailed scrutiny of details obtained in the closed card. Necessary
variance analysis is to be carried out element wise respect to the unit cost,
wherever variation is more than 10%. In the instant case , both direct
labour has increased by 20.45% and direct material has decreased y 19%
over the estimated cost.
The labour cost variation is presumably due to effect of VI CPC
implementation. Reduction in material cost may be due to decrease in
price of input materials, particularly steel. After watching the price trend in
respect of material over a longer period, revision of the material estimate
may be considered if decrease in prices is sustained. However, no revision
in labour cost can be envisaged as effect of pay commission is a one time
occurrence.
(Authority: Para 629 & 630 OM Pt. VI)
(c) As and when the manufacture of articles is completed, they will be
inspected by the Inspection Section or the Work Inspection as the case
may be. The detail of articles inspected, quantity accepted and quantity
rejected are shown in the Inspection Note or Departmental Advice Note
(IA FO - 1937). In the Ammunition Factory, Kirkee and leather factories,
this is called an 'O' voucher. This is used for all articles (including
components) manufactures in factory. One copy of the Inspection Note
will be sent to the Accounts Office from which the quantity accepted is
posted on the Receipt side and quantities rejected, if any will also be
posted under the column " Rejection" of the Production Ledger Card [IAF
(Fac) 39]. One production card should be opened for each item/warrant
simultaneously with the opening of the cost card and columns of the cards
filled in strictly in accordance with the heading provided in the cost cards.

Extract numbers should be entered in the production card as soon as
the relevant extract is received and any addition or alterations to the extract
should also be noted therein. Issues are posted from the Production Issue
Voucher.

Ques.3. (a) List any five points that are essential for planning and control of
manufacturing components.
(5 Marks)
(b) Enumerate the procedure for opening of cost card, posting of expenditure
in the cost card and closing of cost card.
(5 Marks)
65
Ans.3 (a) 1. There should be proper planning and effective control over production
/procurement of various components required for final assembly of
products.

2. In assembly line manufacture, final assembly of a product would remain
incomplete due to non- availability of even one or more of the
components. This entails undue delay in completion of the warrant and in
some cases loss to the state.

3. Absence of proper planning and un- coordinated production also leads
to heavy accumulation of components in some cases.

4. The programme of production of components in the own factory or
procurement of the components from sister factories against IFDs should
be so planned as to have a built up stock of components for three months
requirement at least to ensure continuity of production and to avoid any
hold up in the final assembly stage. For this purpose it is necessary for the
management (Planning and progress Section ) to make out a programme
for manufacture/procurement of the comp0onent based on their
requirement with reference to the orders for the main stores on hand and
take action for placing warrants in their own factory or IFD on the feeder
factories well in advance to ensure regular flow of the components.

5. It would also be necessary to conduct concurrent review of the progress
of production of the parent warrant vis- a vis progress of the
production/procurement of components relating to it, at least for the main
item of production.

6. It would also be required to be seen whether there is accumulation of
some components due to increase /unmatched rate of production on the
one hand and shortage of certain other components on the other hand,
creating bottlenecks in the final assembly.
(b) Opening of Cost Cards

Cost cards by warrants will be maintained in the Local Accounts
Office in IAF(Fac) 95. For this purpose, Cost Cards will be opened
immediately after a warrant is issued. Particulars regarding Extract
Number, Quantity ordered, Work Order/Warrant Number, nomenclature of
material and estimated cost under different elements of cost will be filled
in. Opening of the cost card will be authorised by the section officer. In the
case of warrants which are carried forward from the previous year,
opening value of semi different elements of cost as well as the estimated
cost of items will be filled in.

Posting in Cost Cards
Accounts Office generates monthly abstracts in the month/2nd month
following that of the account to which they relate:

(i) Labour and Overhead Abstract
66
(ii) Material Abstract
(iii) Transfer Voucher/Allocation Abstract
(iv) Component abstract

The Accounts office will post from the abstracts into the relevant cost
cards, figures relating to each warrant. In posting from the abstract into the
cost cards, priority will be given to:

(i) Warrants completed during the month
(ii) Running warrants in respect of which the GM of the factory
requires progressive figures of expenditure every month

Closing of Cost Card

The list of warrants completed during a month is to be received by the
Costing Section by the 10th of the following month. As soon as the list of
warrants completed during a month is received in Costing Section,
necessary action in the following manner should be taken to close the Cost
Cards:-
(i) The first step is to obtain from the labour and Material Sections
respectively the completed shop copies of Manufacture and 'Material
warrants' duly paired with Accounts copies. These copies will be annexed
with relevant cost cards.

(ii) In the case of warrants running from the previous year it should be
ensured that the cost card has been debited with opening semi, if any.
Replacement Warrants and warrants for tools and gauges manufactured on
the parent workorder with sub-numbers will similarly be annexed with
respective cost cards and all enclosed to the cost card for the parent Work
Order. It should be ensured that the details of all expenditure recorded
against a warrant should be available when a warrant is finally closed, no
matter how long a warrant has been running. The original cost card of the
past year /years in regard to a warrant closed in the current year should be
available. Accounts Officers are to ensure that cost cards for all carry
forward warrants for any year are available.

(iii) The class of cost wise expenditure debited to the work during a year
by Section and month separately and the class of cost wise values of the
opening semi, if any, will be cross- totalled and reconciled. The total
figures under each element of cost appearing in the cost cards for
replacement and tool and gauge warrant will be brought forward and
debited separately to the cost card for the parent Work order. All the debits
viz. the opening semi, expenditure during the year, cost of replacement,
tolls and gauges charges by class of cost will be cross totalled and
reconciled.

(iv) At the end of the year, in the case of running warrants, the value of
closing unfinished semi should be priced and deducted from the total
expenditure element- wise to determine the cost of production of
completed articles.
67

(v) It should now be determined whether any avoidable rejection has
occurred in the warrant. The amount of avoidable rejection should be
calculated in accordance with the principle and deducted from the
expenditure recorded in the cost card. The amount deducted will be
excluded from Production Account.

(vi) The normal cost of production of the articles completed will be
arrived at by excluding the difference mentioned in (v) above from the
total cost of production inclusive of the cost of rejections. The unit cost of
production will then be worked out under each element of cost by dividing
the normal total cost by number of articles completed.

The cost per unit thus arrived at on closure of each cost card will be taken
for variance analysis with reference to the estimated cost determined as per
the standard estimates.

Ques.4. (a) What are the objectives of the process to study cost as and when it is
compiled ?
(3 Marks)
(b) What is the procedure to regulate payment when a supplier supplies
quantity in excess of what is stipulated in supply order ?
(4 Marks)
(c) How are spot payment bills and audited before payment ? How are they
accounted for ?
(2 Marks)
(d) How is difference between cost of production and value of issue on a Civil
Trade order with loss is treated in Annual Accounts ?
(1 Marks)
Ans.4 (a) The object of the review is to spot out
i. Heavy rejections
ii. Delay in documentation such as delay in preparation of demand notes in
some cases, return notes in many cases
iii. Considerable delay in inspection leading to accumulation items
iv. Delay in either issue or preparation of 'P' issue vouchers
v. Non- clearance of warrants even when production is complete or almost
completed
vi. Cases of substantial variation between actual and estimated as revealed
by the expenditure recorded even when a warrant is running.
vii. Cases where expenditure on tools has not been properly
recorded/allocated
(b) (a) Acceptance of supplies in excess/short of the quantity ordered will not
be held to be modification in the conditions of a contract provided that the
value of the excess/short supply does not exceed 5% of the original value.
For acceptance of supplies in excess /short of 5% of the original value, the
competent authority will be determined by the value of the original order
plus the excess /short value. This does not refer to contract made on "As
required Basis. "
68

(b) GMs may allow price increase up to a ceiling of 5% of the contracted
price. This may be allowed if-

(i) Alternative course of making risk purchase arrangements is either not
practicable or would adversely affect production, and
(ii) The increase claimed by the party is due to factors beyond their
control. The increase should not be allowed as matter of routine and 5% is
the maximum limit.

(c) The general directive regarding purchase of components for which
capacity has already been created in Ordnance Factories for production is
that clearance should be obtained from the Ordnance Factory Board. To
meet immediate requirements when the item is used by more than one
factory, the factory initiating the purchase against their own requirements
should inform sister ordnance Factory/Factories using stores regarding
price at which order has been place. Last purchase price paid by factory or
sister factory for the item will be taken into consideration before
placement of new orders. When orders are placed by GMs to meet
emergent requirements for which OFB has placed orders, care will be
taken to ensure the orders are not placed with defaulting firm.

(d) Price differential may be allowed at the discretion of OFB with the
concurrence of Member (Finance) in respect of contractors placed on
different sources for the supply of identical stores. This should not exceed
10% in special cases.

(e) General Managers may enter into contracts for fabricating /processing
of raw materials /stores including purchase of machined components and
semi- fabricated items such as forgings, castings etc. up to the limit
specified in relevant Govt. order.

(f) In respect of fixed price contracts, OFB can accept increase upto 66-2/3
percent of the Contract Price. Normally as a principle no price increase
should be accepted, but in exceptional cases negotiations could be done
and the final decision taken by OFB.
(c) In regard to bills for Spot Payment, Cheque would be issuable only against
bills preferred by the GM on behalf of the contractor duly supported by the
proposed Supply order. The relevant supply order should invariably be
audited before the bill prepared for the proposed Spot Payment is admitted
and Cheque is handed over to GM of the concerned factory. As and when
the cheque, is issued, it will be entered into the "Register of Payments to
Contractors in the usual manner. These advance payments are noted in the
Demand Register. Factory Authorities will forward covering bill from the
contractor duly receipted for the amount of cheque and indicating other
usual particulars e. g. reference to the Supply Order, description of stores,
unit of quantity, total quantity of stores delivered, rate and total cost duly
certifying the receipt of the stores in good condition. In cases, where
Receipt Vouchers do not accompany such receipted bill, it should be
69
ensured that they are received within a reasonable time. Case of unusual
delay should be brought to the native of the Factory Management at the
appropriate level and discussed in the Liaison meeting.
(Authority: Para 389(e) OM Pt. VI)
(d) Treated as Cash loss as per 721 (B)
The profit or loss is calculated with reference to the total volume of civil
Trade done by a factory in a year.

Ques. 5. (a) Saturday bonus under Factories Act is also paid to a piece worker
separately.
(True/False)
(b) A maintenance worker attached to product in section gets incentive bonus
than a maintenance worker attached to non- production section.
(True/False)
(c) Will you admit " guarantee pay" to a day worker ?
(Yes/No)
(d) Material cost is the major element of cost in Ordnance Factory.
(True/False)
(e) The General Manager of the Factory directs stores manager to issue two
tanks to the Army for urgent trial through Demand note. Is it correct ?
(True/False)
(f) "P" issue vouchers should be prepared for all issues from production.
(True/False)
(g) A new foreman of the Factory demands production materials from store
section by presenting issue voucher. Is it correct ?
(Yes/No)
(h) The foreman of a Production shop asks unskilled workers attached to the
shop to remove all production rejection material for direct disposal to a
contractor. Is it correct ?
(True/False)
(i) In a Tender Purchase Committee Level III, Dy. General Manager of the
Factory compares Average Ledger Rte obtained from Local Accounts
Office with the contractor's rate for awarding the contract on the ground
that the contractor's rate is below the Average Ledger rate. However the
Local Accounts Office objects to this and he refuses to approve that case
for placement of supply order saying that comparison is not on like to like
basis. Is he correct ?
(Yes/No)
(j) Some materials purchased from different supply sources at different prices
are accounted for in a single ledger folio.
(Yes/No)
Ans.5 (a) False
(b) True
(c) No
(d) True
(e) No
(f) True
(g) No
(h) No
70
(i) Yes
(j) True

Ques.6. (a) What position does the following indicate and what remedial action is to
be initiated ?
Ledger folio no. 62010010001
Item Filter
Stock position as on 31-03-09
Qty held
500 (-) 20000
1000 nil
nil (-)5000
nil 10000
(2 Marks)
(b) From the following data make
out an analysis:

(i) Water pump LF 62100200301
Qty Value
Opening balance 01-03-06 600 30000
Issue on 21-03-06 50 2500
Receipt on 30-03-09 100 4000

(3 Marks)
(ii) Rod LF 62300200101
Qty Value
Opening Balance 01-03-08 200 320000
Qty held as on 31-03-09
(after stock verification)
200

320000

(1 Marks)
(c) What kind of loss statements are prepared in respect of the following:
(i) Losses occurring in transit upto the port of disembarkation in India for
which supplier refuses to make good the loss.
(1 Marks)
(ii) Article taken on charge in unpacked condition as per marking in the
packages but found deficient at the time of actual issue.
(1 Marks)
(d) Write a short note on Trade test.
(2 Marks)

Ans.6 (a) These are unorthodox balances arising in the ledger due to store
documents not being promptly priced and posted chronologically. This is
also due to non- posting of receipt documents in the chronological order
over the issue documents. Necessary counter adjustments either to receipt
or issue, which were necessary, were not made.
(Authority: Para 425 & 426 OM Pt. VI)

An unorthodox Balance Register (as per Sl. No. 16 Annexure "A" ) should
be maintained wherein all file unorthodox balances should be noted. The
unorthodox balances recorded in the register - should be reviewed
71
promptly and adjustment documents as necessary made out every month
and certificate to the effect furnished to the Stores Section of C. C. of A
*(Fys) through the monthly Progress Report (Proforma B). As the Bin
balance is reflected on the reverse of each documents reconciliation
quantity should be effected by calling for the Bin card as balance as per
Bin Card can never be a minus figure.
(b)(i)

On carrying out careful review of stores held on charge, it is noticed that in
spite of the Water pump not being drawn for three years, a fresh receipt
has been recorded with as meager utilization on 31.03.09. This is clear
case of procurement of an items aft it has become a non - moving item.
This may b objected to on the grounds of procurement of particular stores
not required for production for a period of three years.

(ii) The case of Rod to be taken up with factory management with an advice to
utilize the slow moving item on priority and explore possibility of
utilization for liquidation.
(Authority: Para 437 OM Pt. VI )
(c) (i) Cash loss
(ii) Store loss
(Authority: 477 & 478 read with 476 OM Pt. VI)
(d) Promotion to a higher grade in the same trade or transfer to a different
trade as also appointment as a tradesman will be subject to passing the
prescribed trade test. For this purpose a trade test board will conduct test
as per details of specifications approved by the OFB for each trade and
grade.
Labour representatives from industrial employees appointed as observers
will be treated as on duty for the time spent by them in the meetings of the
board held during the normal working hours. If the normal working hours
are exceeded during a trade test board meeting, the time spent will be
similarly treated and overtime allowance etc. if admissible under the
departmental rules governing overtime pay, provided however, the rate of
overtime allowance will not exceed normal time rate.

The pay of the workman for the period he undergoes trade test or acts a s
an observer will be charged to WO 01/00010/00.

(Authority: Para 286-288 OM Pt. VI)

Ques.7. (a) Categories the following expenditure of overhead as fixed or variable and
indicate the work orders to which these are to be booked:
(i) Repairs to electrical installation.
(ii)Payment of incentive bonus of IEs
(iii) Superannuation charges
(iv) Tools for general shop use
(4x1= 4 Marks)
(b) What action will be taken in the following cases:
(i) Pricing receipt voucher on receipt from sister factory
(1 Marks)
(iii) Loss of cheque issued to a private party
72
(3 Marks)
(iii) Difference in the quantity of an item as per Priced Store Ledger and
Bin Card
(2 Marks)
Ans.7 (a) (i) Fixed 01/00027/00
(ii) Variable 02/00007/00
(iii) Fixed 01/00009/00
(iv) Variable 02/00019/00
(Authority: Para 567-581 OM Pt. VI)
(b) (i) These are valued as per priced copies of vouchers. If these are not
received in time, they should be valued provisionally at the latest receipt
rate or on estimated rate.
(Authority: Para (409) (F) OM Pt. VI)
(ii) In cases where Cheques are reported as lost, intimation should be sent
to the banker under 'Registered Post/Ack. Due' to stop payment of the
cheque. On receipt of intimation from the Bank, Accounts Section should
be addressed for confirming that the cashed cheque has not been received.
After this, fresh cheque will be issued to the contractor on receipt of
Indemnity Bond duly scrutinized by the factory authorities. Indeminity
Bond is not necessary in the case of cheque issued in favour of Govt.
Departments/Bank. The payee should furnish a certificate stating that he
has not received the cheque alleged to have been lost and that it will be
returned to the drawer if found.
(iii) In the case of discrepancy between the Priced Store Ledger balance
and the actual stock, a discrepancy voucher on IAF(Fac) 144 for the gross
loss will be prepared and posted in the ledger with a view to keeping the
ledger balance always and at any time in agreement with the physical
ground balance. The discrepancy will subsequently be investigated and
settled. Pending settlement of the discrepancy, the Discrepancy Voucher
should be entered in the objection Register and watched. if on final
settlement a loss settlement is necessary, the loss statement portion
IAF(Fac) 144 will be completed and written off or sanctioned for the net
loss.

Ques.8. (a) From the following data determine the outstanding asset after linking.
Towards supply of 100 numbers of a particular item an advance payment
of 15% of the total value is made to the tune of Rs. 15,00,000 in June,
2006. In Aug 2006, 25 numbers of the item have been received and taken
on charge thorough receipt voucher. The receipt voucher has been priced
for Rs. 25,00,000.
(2 Marks)
(b) In the above example, what is the value of outstanding liability ?
(1 Marks)
(c) A demand note for an item drawn on out turn work order was wrongly
priced at Rs. 100 per unit for 50 units instead of Rs. 1000 per unit. What is
the course of action to be taken.
(2 Marks)

73

(d) List any five additional items of expenditure/income recently incorporated
in the Revised Principal Ledger package so as to facilitate generation of
Commercial Accounts.
(5 Marks)
Ans.8 (a) In linking, out of the 15% advance payment made for 100 numbers of the
item the amount, pertaining to 25 numbers will be cleared and the value
remaining under outstanding asset against the particular item will be Rs.
11,25,000/-
(b) Liability will also be cleared to the extent the asset is cleared. Here the
asset cleared works out to Rs. 3,75,000/. So the value of outstanding
liability will be (2500000 - 375000) Rs. 21,25,000/-
(c) A plus adjustment to be made on KOD 27 under the out turn work
order/warrant on which the original demand note was drawn for the
difference in value ( 50* (1000-100 = 45000/-) and posted in the
PSA/PSL.
(Authority: Para 421 and 429 OM VI)
(d) Liability side
(i) Railway siding charges remaining unpaid
(ii) Water & electricity charges unpaid
(iii) Advances received on A/c of Excise duty
(a) For services rendered on Payment (MHA & Export)
(b) For Civil Govt. Deptt/PSU (Others Central Govt. Deptt., State
Govt/UT, PSU & State Police)
(c) For Private Indentors
(iv) Advances received on a/c of Sales Tax/VAT
(b) For Civil Govt. Deptt/PSU ( Others Central Govt. Deptt., State
Govt/UT, PSU & State Police)
(v) Amount of Sales Tax Remaining unpaid
(vi) Amount of Excise duty Remaining unpaid
(vii) Govt. Contribution to NPS for March to be paid
(viii) Security Deposit remaining unpaid
(ix) Earnest money deposit remaining unpaid & LD recovered but under
litigation
(viii) GM's Public Fund A/c
(ix) Advances received for services to - Army
Navy
Air Force
ODD
Asset side
(i) Central Excise Duty paid but not realized from parties
(ii) Sales Tax paid but not realized from parties
(iii) Electricity Duty excess paid
(iv) Un recovered Excise Duty from customers
(a) For Services rendered on Payment (MHA & Export)
(b) For Civil Govt. Deptt/PSU (Others Central Govt. Deptt., State
74
Govt./UT, PSU & State Police)
(v) Un recovered Sales Tax/VAT from customers
(b) For Civil Govt. Deptt/PSU (Others Central Govt. Deptt., State Govt.
/UT, PSU & State Police)
(vi) Un recovered Festival Advance
(vii) Advances Deposit on Electricity & others
(viii) GM's Public Fund A/C balance
(ix) Advances received up to the current year for services to be rendered in
the ensuing year.
(x) Security Deposit remaining unpaid
(xi) Earnest money deposit remaining unpaid & LD recovered but under
litigation

75
DEFENCE ACCOUNT DEPARTMENT
SAS EXAMINATION - PART-II (NEW SYLLABUS)
NOVEMBER, 2009
PAPER-VII - THEORY (WITHOUT BOOKS)

SUBJECT: FINANCIAL MANAGEMENT, IFA SYSTEM AND ELEMENTS OF LAW

Time Allowed: 3 Hours Max. Marks: 100

Notes:

1. In all, candidates are to attempt 10 questions 4 question out of 6 questions
from Section-I, 3 question out of 5 questions from Section -II and 3
questions out of 5 questions from Section-III

2. Each question in Section - I, II and III carries 10 marks.

3. Answer to question in respect of each Section should be written in one
place.

Section -I (Financial Management)

Ques1. What are the types of cases in which advance payment to suppliers can be
made as per GFR- 2005 ? Enumerate conditions/limits attached with the
same. Also, state competent authority who can relax the ceilings.
(10 Marks)
Ans.1 Ordinarily, payments for services rendered or suppliers made should be
released only after the services have been rendered or supplies made.
However, it may become necessary to make advance payments in the
following types of cases:-
(i) Advance payment demanded by firms holding maintenance contracts for
servicing of Air - conditioners, computers, other costly equipment, etc.
(ii) Advance payment demanded by firms against fabrication contracts,
turnkey contracts etc.

Such advance payments should not exceed the following limits:-
(i) Thirty percent of the contract value to private firms;
(ii) Forty percent of the contract value to a State or Central Government
agency or a Public Sector Undertaking; or
(iii) In case of maintenance contract, the amount should not exceed the
amount payable for six months under the contract.

Ministries or Departments of the Central Government may relax, in
consultation with their Financial Advisors concerned, the ceilings
(including percentage laid down for advance payment for private firms)
mentioned above. Further, while making any advance payments as above,
adequate safeguards in the form of Bank Guarantee, etc. should be obtained
from the firm.
(Authority: Rule 159 of GFR 2005)

76
Ques2. Define the following:
(a) Bid Security (Earnest Money Deposit ( EMD)
(b) Performance Security
(c) Buy Back Offer
(d) Limited Tender Enquiry
(e) PAC Tendering
(2x5 Marks)

Ans.2 (a) Bid Security:
To safeguard against a bidder's withdrawing or altering its bid during the
bid validity period in the case of advertised or limited tender enquiry, Bid
Security (also known as Earnest Money) is to be obtained from the bidders
except those who are registered with the Central Purchase Organisations
(DGS&D etc), National Small Industries Corporation (NSIC) or the
concerned Ministry or Department. The bidders should be asked to furnish
bid security along with their bids. Amount of bid security should ordinarily
range between two percent to five percent of the estimated value of the
goods to be procured. The exact amount of bid security, should be
determined accordingly by the Ministry or Department and indicated in the
bidding documents. The bid security may be accepted in the form of
Account Payee Demand Draft, Fixed Deposit Receipt, Banker's Cheque or
Bank Guarantee from any of the commercial banks in an acceptable form,
safeguarding the purchaser's interest in all respects.
(Authority: Rule 157 of GFR- 2005)
(b) Performance Security:
To ensure due performance of the contract, Performance Security is to be
obtained from the successful bidder awarded the contract. Performance
Security is to be obtained form every successful bidder irrespective of its
registration status etc. Performance Security should be for an amount of fice
to ten percent of the value of the contract. Performance Security may be
furnished in the form of an Account payee Demand Draft, Fixed Deposit
Receipt form a Commercial bank, Bank Guarantee from a Commercial bank
in an acceptable form safeguarding the purchasers interest in all respects. It
should remain valid for a period of sixty (60) days beyond the date of
completion of all contractual obligations of the supplier including warranty
obligations.
(c) Buy Back Offer:
When it is decided with the approval of the competent authority to replace
an existing old item(s) with a new and better version, the department may
trade the existing old item while purchasing the new one. For this purpose, a
suitable clause is to be incorporated in the bidding document so that the
prospective and interested bidders formulate their bids accordingly.
Depending on the value and condition of the old item to be traded, the time
as well as the mode of handling over the old item to the successful bidder
should be decided and relevant details in this regard suitably incorporated in
the bidding document.
Further, suitable provision should also be kept in the bidding document to
enable the purchaser either to trade or not to trade the item while purchasing
the new one.
77
(d) Limited Tender Enquiry:

Limited Tender Enquiry may be adopted when estimated value of the goods
to be procured is up to Rupees Twenty - five Lakhs. Copies of the bidding
document should be sent directly by speed post/registered post/courier/e-
mail to firms which are borne on the list of registered suppliers for the
goods in question.

The number of supplier firms in Limited Tender Enquiry should be more
than three.

Also, Purchase through Limited Tender Enquiry may be adopted even
where the estimated value of the procurement is more than Rupees twenty-
five lakhs, in the following circumstances.
(a) The competent authority in the Ministry or Department certifies that
the demand is urgent and any additional expenditure involved by not
procuring through advertised tender enquiry is justified in view of
urgency. The Ministry or Department should also put on record the
nature of the urgency and reason why the procurement could not be
anticipated.
(b) There are sufficient reasons, to be recorded in writing by the
competent authority, indicating that it will not be in public interest
to procure the goods through advertised tender enquiry.
(c) The sources of supply are definitely known and possibility of fresh
source(s) beyond those being tapped, is remote.
(e) PAC Tendering:
Certain items, particularly equipments, are the propriety product of a
manufacturing firm. Such items are only available with that firm or their
dealers, stockiest or distributors as the detailed specifications are not
available for others to manufacture the item. Situations may also arise
when, for standardization of machinery or ensuring compatibility of spare
parts with the existing sets of equipment, as per the advice of the competent
technical expert, goods and services have to be obtained from a particular
source. In such situations, a Propriety Article Certificate (PAC) may be
issued to the original equipment manufacturer (OEM) and items procured
on PAC basis from that particular firm or its authorized dealers, stockists or
distributors. While PAC is issued only in respect of the concerned OEM,
the item may be bought from any dealer, stockist or distributor specified in
that particular PAC on the basis of the information provided by the OEM,
provided the purchase is accompanied by a proper manufacturer
certification. PAC once issued will be valid for two years from the date of
issue unless cancelled earlier by the CFA.
(Authority: Rule 4.5.1 of GFR- 2005)

Ques.3 Mention the instances in which tenders may be ignored and rejected straight
away as per DGS &D manual ?
(10 Marks)
Ans.3 The instances in which tenders may be ignored and rejected straight away
as per DGS&D manual are as follows:-
(i) The tenders received after due date and time of tender opening (Late
78
Tenders);
(ii) It is an unsolicited offer i.e. offer from tenderer other than those asked
to quote against LTI/SIT. These can be considered for acceptance only in
exceptional circumstances in consultation with the finance.
(iii) It is in the form of letter head/FAX/Telex/Telegram.
(iv) It is from, stockist(s) or agent(s) without indicating details of the
manufactures.
(v) It is from agents without proper authorization from the manufacturers.
(vi) It is from agents quoting for imported stores but they are not enlisted
with DGS&D under Compulsory Enlisted Scheme of Ministry of Finance.
(vii) It is not accompanied with Earnest Money in case the firm responded
is not registered with DGS&D/NSIC.
(viii) It does not indicate delivery period by which supplies can be made or
delivery offered is vague.
(ix) It does not indicate the terms of delivery.
(x) It is ambiguous with regard to any of the essentials i.e. the items being
offered, prices quoted and the period of delivery.
(xi) Tender samples as required in the enquiry conditions have not been
submitted by the due date.
(Authority: Para 9.3.7 of DGS &D Manual)

Ques.4 Who is competent authority for grant of extension of delivery date in DGS
& D procurements and what are the conditions for the same ? What are the
points to be considered in cases where downward trend in prices is
indicated, while granting extension of delivery date in procurement against
DGS&D rate contract? Also mention the amount of liquidated damages
applicable for the said extension?
(10 Marks)
Ans.4 The purchase officer within whose powers the value of the Acceptance of
Tender falls will be competent to consider requests for extension and to
decide whether the extension of time should be given. Such extension in
delivery period will be given by the competent purchase officer by
reserving the right of the purchaser to levy liquidated damages for delay and
with denial of increase in price, taxes, duties etc. taken place during the
extended period. These are called R/R and denial clauses.

Further, when there is downward trend in prices, advantage thereof should
be taken while considering the request of the contractor for extension of the
delivery period. The following actions should be taken.

(a) Where the lower trend in prices is such that it can be legally recovered
then the pre- estimated damages against the higher priced Acceptance of
Tender, then the delivery period should be extended with R/R and Denial
Clauses.

(b) In case the amount of the pre- estimated damages does not cover the
total cost differential on account of lower trend observed, then the lower
price should be counter offered to the firm. Where there is a range of lower
price available, the competent purchase officer in consultation with Finance
will determine the price to be counter offered to the firm keeping in view
the rate at which the maximum quantity has been covered, the delivery
79
which the maximum quantity has been covered, the delivery schedule,
capacities of lower quoting firms etc.

(c) In case the firm does not accept the lower price the contract may be
cancelled and action taken to repurchase the stores as per conditions
governing the contract. In case the firm agrees to the lower price counter
offered, the delivery period will be extended without liquidated damages
and R/R and denial clauses.

The Liquidated Damages applicable for extension of Delivery period, if
any will be @ 2% per month subject to maximum of 10%.
(Authority: Para 12.13,12.16 of DGS &D Manual & clause 14.7(1) of
DGS&D form No. 68 (Revised)

Ques.5 Explain foreign Payment procedure in brief.
(10 Marks)
Ans. 5 The payment will be made by RBI/SBI for credit to the particular account to
the Foreign Bank as per the terms of the contract and the amount of
payment will be intimated to the PCDA (HQrs), New Delhi by the Banks
concerned by means of Debit Advice." The Debit Advice will show the
amount paid in foreign currency vis-a-vis rate of exchange and the amount
in rupees, towards telex charges, commission charges, amount towards bank
charges, transit interest etc. On receipt of Debit Advice, PCDA(HQrs), New
Delhi will call for the invoices " in respect of letter of Credit Cases" from
the Service HQrs for scheduling the same to consignee CDA. The Debit
advices should be checked, to ensure particularly that the rate of Exchange
adopted is correct. The amount is compiled by preparing a Punching
Medium to the respective expenditure Head of Account as indicated in the
sanction letter.
In respect of Bank transfer cases also the adjustment will be carried out
as per the debit advices received from the RBI/SBI on the same advices as
above.

Where payment has to be made through letter of credit action to open
letter of credit in favour of named party will be taken immediately on
receipt of requisite Govt. sanction/authorization letter and after verification
of release of foreign exchange by the Ministry of Defence (Fin). A letter of
credit is to be opened in accordance with the contents of the Govt
sanction/authorization letter and payment terms of the contract agreement.
(Authority: Para 20 of OM - XII)

Ques.6 Explain in brief the demand for grants? How many demand for grants are
there in Min. of Defence for Defence Services only? Name them.
(10 Marks)

Ans.6 The estimates for expenditure for which vote of Parliament is required
shall be in the form of Demand for Grants.

Generally, one Demand for Grant is presented in respect of each
Ministry or Department. However, in respect of large Ministries or
Departments, more than one Demand is presented . Each Demand normally
80
includes provisions required for a service, i.e. provisions on account of
revenue expenditure, capital expenditure, grants to the State and Union
Territory Governments and also Loans and Advances relating to the service.
The Demand for Grants shall be presented to Parliament at two levels.
The main Demand for Grants are presented to Parliament by the Ministry of
of Finance, Budget Division along with the Annual Financial Statement
while the Detailed Demands for Grants, after consideration by the
"Departmentally Related Standing Committee" (DRSC) of the Parliament,
are laid on the Table of the Parliament by the concerned Ministries
/Departments, a few days in advance of the discussion of the respective
Ministrie's/Department' Demands in that House.

There are six (6) no. of demand for grants in Min of Defence, Five (5)
on Revenue Account and one (1) on Capital Account. The same are given
as under:-

Demand No. 21 - Defence Services, Army(Major Head - 2076).
Demand NO. 22- Defence Services, Navy (Major Head - 2077)
Demand No. 23 - Defence Services, Air Force (Major Head - 2078)
Demand No. 24 - Defence Ordnance Factories ( Major Head - 2079)
Demand No. 25 - Defence Services, Research & Development
(Major Head - 2080)
Demand No. 26 - Capital Outlay on Defence Services ( Major Head - 4076)
(Para 3.18 & 3.19 of IGGA, Appx C to Defence Service Estimates. )
81

Section -II (IFA System)

Ques.1 Special Financial Powers to Army Commanders has been given for
procurement of Stores of Ordnance origin for CI Ops /IS Duties /Siachen
Glacier/ aid to civil authorities. Please state the items which cannot be
procured out of these Special Financial Powers ? How much is the
allotment made out of Army Commander Special Financial Powers under
Head 110(C) to GoC in Cs Northern, Eastern & Western Commands.
(10 Marks)
Ans.1 The List of Items not to be procured out of Army Commander Special
Financial Powers is as under:-
(a) Computers, peripherals, ancilliaries etc procedurable under the IT head,
Minor Head 110(H) will not be procured under the special financial
powers.
(b) Medical stores and equipment will not be procured except as provided
for procurement out of minor head 800(B) under Army Commander
Special Financial Power.
(c) Items classified to be of capital nature, expenditure whereon is
compilable to Major Head 4076, Sub Major Head 01- Army will not be
procured.
The amount allotted out of Army Commander Special Financial powers
under Minor Head 110(C) is as follows:

Northern Command --- Rs. 100 Crores
Eastern Command --- Rs. 50 Crores
Western Command --- Rs 9 Crores.

(Note 12 of Schedule XXI (A&B), Note 1(a) to Schedule XXI (A) &
Note 1 to Schedule XXI (B) of GoI, MoD letter No. A/89591/FP-
1974/D(GS-1) dt. 26.07.2006)

Ques.2 What is the procedure for execution of projects out of Tele Adm.
Grant(TAG) under delegated financial powers?
(10 Marks)
Ans.2 The sponsoring/formation will initiate the statement of case for the project
included in the Priority Procurement Plan(PPP) for the particular year. The
Statement of case will include the details of the poject, existing
arrangements, benefits likely to accrue with implementation of the project
showing the estimated cost of expenditure based on LPP/market
survey/budgetory quote duly indicating the CFA based on estimated cost.
The QRS for the project should be vetted by the competent technical
authority. The file for the proposal will be submitted to the concerned IFA
for obtaining the concurrence for acceptance of necessity. After obtaining
the concurrence of IFA for acceptance of necessity, the proposal will be
put up to appropriate CFA in terms of powers delegated vide Schedule XX
to GoI, MoD letter dt. 26.07.2006 for obtaining approval of AON. The
draft tender enquiry (DTE) will also be prepared incorporating all the
General/standard terms and conditions as per DPM/GFR/SOP(TAG). The
82
Bids for the project will be invited on two bid system i.e Technical bid and
Commercial bid. The DTE for the project needs to be vetted by the IFA
before issue.

After vetting of DTE by IFA, the tender enquiry is issued to registered
dealers or an adverttisement is being published in the newspapers based on
the tendering prcess i.e. LTE/OTE.

On submission of bids the vendors, the technical bids are opened. TEC
evaluates the bids and submits their report to CFA for acceptance. After
acceptance of TEC report by CFA, the commercial bids of techinically
qualified bidders is opened by a tender opening board. The Tender
Opening Board prepares the CST. The CST is vetted by IFA/rep of IFA.

After that the PNC/CNC for the project is convened. The proposal is
submitted to IFA office for financial concurrence based on
recommendations of PNC/CNC. The proposal is submitted to appropriate
CFA after financial concurrence of IFA for Expenditure angle sanction.

The supply order is issued to the firm after sanction is issued by the CFA.
After, delivery of the stores, the contingent bills for the project is submitted
to the paying authority for their further necessary action.
(Authority: SOP for TAG)

Ques.3 (a) What would be the criteria for determining the CFA in a works proposal
which includes both authorized and special items of works ?
(4 Marks)
(b) What is the time limit for approval of urgent works initiated under Go
Ahead sanction in terms of provisions of Defence Works Procedure ?
(3 Marks)
(c) What is the financial limit upto which Stn. Cdr. can sanction a work
proposal in consultation with IFA/CDA ?
(3 Marks)
Ans.3 (a) In determining the CFA, in a case where the project includes both
authorized and special items of work the criterion shall not be the financial
powers for the authorized items of work alone. In such a case, therefore, if
the estimated cost of the total of the special items of work exceeds the
financial powers of the CFA for those items, the administrative approval
shall be issued by the CFA under whose powers the items of special items
of work fall.

(b) The urgent works initiated under Go - Ahead sanction in terms of
provisions of the Defence Works Procedure will be subsequently got
approved under appropriate CFA Powers within a period of six months.

(c) The Stn Cdr has not been delegated any Power to sanction the work
proposal in consultation with IFA/CDA. He has inherent powers to the
tune of Rs 5 Lakhs for authorized work and Rs 50,000 for special works.
(Authority: Note 3,6 & Sl No. 6,7 to Schedule XVIII of GoI, MoD
letter No. letter No. A/89591/FP-1/1974/D(GS-1) dt. 26.07.2006)

83
Ques.4 (a) What are the criteria for classification of an item to be procured as capital
in nature?
(4 Marks)
(b) What are the powers presently delegated to service Hqrs. for procurement
of an item capital in nature and who can exercise those powers in Army,
Air Force & Navy respectively ?
(4 Marks)
(c) Whether the above delegated financial powers for capital can be exercised
with IFA consultation or otherwise ?
(2 Marks)

Ans.4 (a) The item to be classified as capital in nature must meet the following twin
criteria:
(i) The cost of the equipment should be more than Rs 10 Lakhs,
and
(ii) The life span of the equipment should be more than 7 years.
(b) The powers delegated to services HQrs for Capital Procurement is Rs 50
Crores and same is exercised by Vice Chief of Army Staff in Army, Vice
Chief of Naval Staff in Navy & Deputy Chief of Air Staff in Air Force.
(c) These powers should be exercised in consultation with their accredited
IFAs only.
(Authority: (a)(b)(c): Schedule XXIII to RDFP- 2006(Army) as
amended, Schedule 1 to RDFP- 2006 (Air Force) as amended &
Annexure 9 to RDFP - 2006 (Navy) as amended by GoI, MoD letter
No. 470 /Dir(Acq) /07 dte. 28.07.2008

Ques5. (a) What is the financial limit above which purchases in Army will be made
on the advice of TPC involving IFA or his rep as a member ?
(3 Marks)
(b) What would be the composition of such TPC and sanction level of that
procurement ?
(3 Marks)
(c) Whether the requirement of TPCs also applies to procurement of
equipments made against DGS&D Rate Contracts or other Rate Contracts
finalized by various authorities and who will be Direct Demanding Officer
(DDOs) in these cases for placement of supply order against rate contracts.
(4 Marks)
Ans.5 (a) All purchase in Army exceeding Rs 5 Lakhs in value will be made on the
advice of the Tender Purchase Committee to be constituted by the CFA
and will include the IFA or his rep as a member. The composition of the
TPCs in conformity with the foregoing will be specified in relevant SOPs
/AIs
(b) The general composition of the TPC/PNC will be as under:-
(i) Rep of CFA,
(ii) Technical Rep,
(iii) User Rep &
(iv) Rep of IFA
(v) Any other co-opted member, if required.

84
Further, the TPC/PNC will only be a recommendatory body for
Procurements which will be sanctioned at the next higher level by the
CFAs in the Services (with or without IFA concurrence as per delegation
of Financial powers. )
(c) The requirement of TPCs does not apply to procurement of
equipments/items made against DGS&D Rate Contracts or Rate Contracts
finalized by the nominated Services authorities or DGAFMS under their
delegated powers. All CFAs delegated financial powers to incur
expenditure as indicated in various schedules will be direct demanding
officers for placement of orders against DGS&D rate contracts to the
extent of the respective financial powers and in respect of the items for
which the financial powers and in respect of the items for which the
financial powers have been delegated.

Authority: (a)(b)(c): Para 6 & 7 of GoI, MoD letter No. A/89591/FP-
1/1974/D(GS-1) letter dt. 26.07.2006

85

SECTION-III (ELEMENTS OF LAW)

Ques.1 Who is liable to be punished under Minimum Wages Act and what are the
penalties under the Minimum Wages Act, 1948 ?
(10 Marks)
Ans.1 An employer who (i) pays to any employee less than the minimum rates of
wages fixed for that employee's class of work, or less than the amount due
to him under the provision of this Act; or (ii) contravenes any rule or order
made under Minimum Wages Act, is liable to punished under Minimum
Wages Act.

Any employer who falls into above criteria, shall be punishable with
imprisonment for a term which may extend to six months, or with fine
which may extend to five hundred rupees, or with both, provided that in
imposing any fine for an offence under this section the court shall take into
consideration the amount of any compensation already awarded against the
accused in any proceedings.
(Authority: Section 22 , Minimum Wages Act -1948)

Ques2. Define negotiable instrument. Explain in brief the kinds of negotiable
instruments ? Also explain the meaning of "Holder in due course."
(10 Marks)

Ans.2 A " Negotiable Instrument" means a promissory note, bill of exchange or
cheque payable either to order to bearer.

Promissory Note: A " Promissory Note" is an instrument in writing (not
being a bank - note or a currency -note) containing an unconditional
undertaking signed by the maker, to pay a certain sum of money only to, or
to the order of, a certain person, or to the bearer of the instrument.

Bill of Exchange: A " Bill of Exchange" is an instrument in writing
containing an unconditional order, signed by the maker, directing a certain
person to pay a certain sum of money only to or to the order of, a certain
person or to the bearer of the instrument.

Cheque: A " Cheque" is a bill of exchange drawn on a specified banker
and not expressed to be payable otherwise than a demand and it includes
the electronic image of a truncated cheque and a cheque in the electronic
form.

Holder in due Course: The " Holder in due Course" means any person
who for consideration became the possessor of a promissory note, bill of
exchange or cheque if payable to bearer, or the payee or indorse thereof, if
payable to order, before the amount mentioned in it became payable, and
without having sufficient cause to believe that any defect existed in the title
of the person from whom he derived his title.
(Authority: 13(1) , 4,5,6,9 of Negotiable Instruments Act, 1881.)

86
Ques.3 (a) What are the categories on which Administrative Act, 1985 does not
apply ?
(5 Marks)
(b) As per Administrative Tribunals Act, 1985, what is the jurisdiction of
Central Administrative Tribunal ?
(5 Marks)
Ans.3 (a) The provisions of Administrative Tribunal Act, does not apply to:-
(i) Any member of the naval, military or air force or of any other armed
forces of the Union.
(ii) Any officer or servant of the Supreme Court or of any High Court (or
Courts subordinate thereto)
(iii) Any person appointed to the Secretarial Staff of either House of
Parliament or to the Secretarial Staff of any State Legislature or a House
thereof or, in the case of Union Territory having a Legislature, of that
Legislature.
(b) The Central Administrative Tribunal shall exercise, on and from the
appointed day, all the jurisdiction , powers and authority in relation to:-

(a) recruitment, and matters concerning recruitment, to any All India
Service or to any Civil Service of the Union or a civil post under the Union
or to a post connected with defence or in the defence services, being in
either case, a post filled by a civilian;

(b) All service matters concerning:-

(i) a member of any All India Service; or
(ii) a person appointed to any civil service of the Union or any civil post
under the union or
(iii) a civilian appointed to any defence service or a post connected with
defence and pertaining to the service of such member, person or civilian in
connection with the affairs of the Union or of any State or of any local or
other authority within the territory of India or under the control of the
Government of India or of any Corporation (or society ) owned or
controlled by the Government.

(c) All service matters pertaining to service in connection with the affairs of
the Union concerning a person appointed to any service or post whose
services have been placed by a state government or any local or other
authority or any corporation or society or other body, at the disposal of the
Central Govt for such appointment.

Ques4. In terms of Indian Contract Act, 1872, what agreements are contracts ?
Who are competent to enter into contract ?
(10 Marks)
Ans. 4. All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void.

Nothing herein contained shall effect any law in force in India, and not
hereby expressly repealed, by which any contract is required to be made in
writing or in the presence of witnesses, or any law relating to the
registration of documents.
87

Every person is competent to contract who is of the age of majority
according to the law to which he is subject, and who is of sound mind and
is not disqualified from contracting any law to which he is subject.
(Authority: Section 10, 11 of Indian Contract Act, 1872)
Ques5. Explain the main features of sale and agreement to sell as per the Sales of
Goods Act, 1930. Also, explain how contract of sale is made ?
(10 Marks)
Ans. 5. The main features of sale and agreement to sell as per the Sales of Goods
Act, 1930 are as follows:-
(i) A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in goods to the buyer
for a price. There may be a contract of sale between one part
owner and another.
(ii) A contract of sale may be absolute or conditional.
(iii) Where under a contract of sale the property in the goods is
transferred from the seller to the buyer, the contract is called a
sale, but where the transfer of the property in the goods is to
take place at a future time or subject to some condition
thereafter to be fulfilled, the contract is called an agreement to
sell.
(iv) An agreement to sell becomes a sale when the time elapses or
the conditions are fulfilled subject to which the property in the
goods is to be transferred.

Contract of Sale how made: A contract of sale is made by an offer to
buy or sell goods for a price and the acceptance of such offer. The contract
may provide for the immediate delivery of the goods or immediate
payment of the price or both, or for the delivery or payment by
installments, or that the delivery or payment or both shall be postponed.

Subject to the provisions of any law for the time being in force, a
contract of sale may be made in writing or by word of mouth, or partly in
writing and partly by word of mouth or may be implied from the conduct
of the parties.
(Authority: Section 4 & 5 of the Sales of Goods Act, 1930)

88

S.A.S EXAMINATION- PART -II (NEW SYLLABUS)

NOVEMBER, 2009

PAPER-VIII ( QUALIFYING PAPER)

SUBJECT : OFFICE COMMUNICATION

Time Allowed: 3 Hours Max. Marks: 150

Notes:

1. This is a qualifying paper only in which a candidate has to compulsorily
secure 60 marks. Marks secured in this paper will neither be counted in the aggregate
marks nor will be added in total marks secured in other papers.

2. Four (4) questions are to be answered by the candidates out of 6 questions.

3. Question No. 1 is compulsory carrying 40 marks. 5 and 10 marks are reserved
for title and summary of points respectively and 25 marks for precis proper.

4. Question No. 2 is also compulsory carrying 40 marks.

5. Candidates are to attempt 2 questions out of questions set at Serial No. 3 to 6.
Each question carries 35 marks, the total being 70 marks (35 x 2).

Ques1. Make a precis of the letters placed at APPENDIX - I to VI. Also suggest a
suitable title and give a summary of points. (40 Marks)

Appendix - I to Appendix - VI to Question No. -1

Office of the CGDA, West Block-V, R.K. Puram, New Delhi - 110066

Pr. IFA Wing

Sub: Local procurement by Ordnance Units.

Local purchase of Ordnance Stores authorized in the inventory of Ordnance echelons
is carried out from local registered suppliers to meet the urgent requirement of
unit/formations after taking NAC from mother depots. The financial powers of Ord as
well as other CFAs are laid down in Schedule - XII of the Delegation of Financial
Powers (Army) 2006. A difference of opinion has occurred between Army HQ,
DGOS and this office in regard to the exercise of financial powers delegated to OC
DOU/OMC/ADOS HQ Arty Div for local purchase of ordnance stores under Sl. No.
41 of Schedule XII(C). The issue is discussed blow for suitable clarification by the
Ministry.
89

2. Bills on account of local purchase of ord stores submitted by 33 Armd DOU,
16 and 24 Inf DOU have been objected to by PCDA(SWC) with the following
observations.

(i) Supply orders have been placed for more than Rs. 50,000 viz beyond the
financial powers of CO DOU as laid down in Schedule XII(C). Therefore,
ex- post facto sanction of next higher CFA is required.

(ii) Repeat orders have been placed more than once and in excess of 50% of
the quantity in the original supply order and also in cases where option
clause has been incorporated. This being in contravention of Para 5.11 of
DPM 2006, sanction of GOC - in - C is required as per Rule 178 FR Pt.I
being a procedural lapse.

3. As regards placing of repeat order, mentioned at Sl. (ii) above, the objection of
PCDA(SWC) has been accepted by DGOS, who has stated that necessary instructions
in this regard will be issued to the units concerned.

As regards the issue listed at Sl.(i) above, the views of Army authorities are as under:

The financial powers of CO DOU are subject to the ceiling of Rs. 50,000 per item per
day. As the items in one supply order are of different nature, the condition of Rs.
50,000 per item day has not been breached. Therefore, the purchase is well within the
powers of CO DOU.

(ii) It has been contended by the DGOS that as per remarks given against item No.
34(a) of Sch. XII of MoD letter No. A/89591/FP-I/1974/2006/D(GS-I) dated 26th
July, 2006 to the effect that the monetary limit will apply to purchases made per
single item at any one time, the powers have to be considered with reference to a
single transaction of a particular item. This would in effect mean that a single
transaction of a particular item on a particular day should not exceed the defined
financial powers of CFA. Accordingly a bill containing details of more than one item
and adding up to an amount exceeding the defined. CFA powers for a transaction per
item per day should not be construed as a bill exceeding the CFA;s powers so long as
the amount of each item included thin is within the ceiling of delegated power.

4. With reference to above, it may be mentioned that the said remarks in Sch. XII
are specifically for purchase under Sl. 34(a) of Sch. XII (C) viz. for OC AFMSDs and
are not for other items of the Schedule. No such specific remarks have been annotated
against Sl. 41 of Sch. XII(C) under which powers have been delegated to OC DOU.
Further, according to Para 13 of MoD letter date 26-7-2006 ibid, the financial powers
contained in the schedule, are in respect of each transaction and may cover one or
more items within the financial powers specified. Therefore, the powers delegated to
Ord CFAs under Sl. No. 41 of Schedule XII(C), would be in respect of each
transaction . Further, vide note below SL No. 6 to 12 of Schedule XII(C), a
transaction has been defied as "The value of all orders placed on supplier on a
particular date of all the articles based on that day or anticipated number of days
requirements. Where more than one supplier is involved, the transactions with each
90
supplier will be treated as single transaction. If, however, the purchase of one item of
ration scale is to be made form more than one supplier, the aggregate value of all
orders of that items, placed on a particular date will be taken together for the
determination of the CFA". Further, in accordance with Para 12 of the detailed
guidelines for exercise of delegated financial powers (referred to in Para 4 of the
Government letter dated 26-7-2006 and reproduced as Appendix thereto) the
monetary limit which has been set in each case extends to each separate sanction.

5. In this context DGOS vide letter dated 6th September, 2007 ibid has
mentioned that local purchase procedure followed is in terms of DGOS Technical
Instructions 014 and 038. According to DGOS TI 014 (para -3) and 038 [para 3(a)],
financial powers of the officers for local purchase will be for any one article or a
number of similar articles purchased at the same time. In our view, DGOS Technical
instructions being in the shape of Standard Operating Procedure based on specific
Government orders/instructions, these are to be updated to be in consonance with
latest Government orders on delegation of financial powers. Accordingly, this office
is of the view that as the financial powers delegated under MoD letter dated 26-7-
2006 ibid, are being invoked for procurement of stores, the extant conditions
governing the exercise of the financial powers as per para 13 of the letter ibid, are to
be followed unless otherwise specified.

6. The above position was clarified to DGOS with the advice to take up the case
with MoD for insertion of specific remarks against Sl. No. 41 of Schedule XII(C)
specifying that the procedure as per DGOS Technical instructions (014 & 038) will be
followed and specifically the monetary limit will apply with reference to purchases
made per single item at any one time and not for each purchase transaction.

7. DGOS vide letter No. A/28324/OS-IB Dated 27-12-07 has not accepted our
advice. It has been mentioned in Para 2 of letter ibid that the financial powers of
Ordnance as well as other CFAs for local purchase of stores as laid down in Schedule
XII refers to purchase of any one items or any number of similar items purchased at
one time as mentioned in Rule 147 of FR Pt. I Vol. Hence, it has been contended that
the view of Pr. IFA that this clause in remarks column against Sl. No. 34(a) is
applicable to AFMSD CFAs and not to Ord CFAs at Sl. No. 41, is not correct.

8. In the above context, it may be pointed out that wherever the revised/enhanced
powers are to be exercised as per the existing instructions/orders, a specific mention
to such orders/instructions has been made in the relevant schedules. For example
notes under various serials in Sch. XII(A), XII(D), XIII(B), XIV(C), XX and XXII
etc. refer wherein references to existing procedures as per different Army
Instructions/Govt. letters have been made for exercise of the revised powers given in
the schedules to Government letter of July 2006. No such specific reference for
continuation of the existing procedure prescribed under DGOS Technical instructions
has however, been made against Sl. No. 41 in Sch. XII(C) of Delegation of Financial
Powers. As pointed out by the DGOS, Rule 147 FR Pt. I Vol. I provides that the
delegated powers contained in Schedule XII thereof in case of local purchase of stores
are for purchase of any one article or any number of similar articles purchased at one
time. However, the financial powers contained in the revised Schedule XII, as per
Delegation of Financial Powers, July 2006, are in respect of each transaction and
cover procurement of one or more items within the financial powers specified.
91
Accordingly the provisions of Rule 147 FR Pt. Vol. I, it is considered are no more
applicable with the issue of revised orders under para 13 of MOD letter No. A
/89591/FP-I/1974/2006/D(GS-I) Dated 26-7-2006. In this connection para 4 of the
Government letter ibid also clarifies that the exercise of financial powers will be
governed by existing orders and instructions on the subject as amended by
Government from time to time, and instructions/guidelines contained in the Appendix
thereto as also those given in the notes in the schedules.

9. In view of above, the matter is referred to MoD(Fin) for confirmation that in
that in absence of a specific mention against Sl. No. 41 of Schedule XII(C), the
monetary limit will apply to purchases of any number of similar items purchased at
one time and that the exercise of delegated powers on 'per item' basis is not in order.
Alternatively, necessary amendment to the Delegation of Financial Powers will have
to be issued by adding a note against Sl. No. 41 to the effect that these powers are for
each item in case the provision contained in DGOS TI 014 and 038 referred to above,
is to be continued.

Pr. IFA has seen.

Sd/-

Jt. CGDA(IFA)
---------------------------------------
Shri Amit Cowshish, IDAS,
Addl. FA & JS
Min. of FA & JS
Min. of Defence (Fin.)
South Block, New Delhi -11
-----------------------------------------------------------

UO No. PIFA/Gen Corr./IFA(Army/O) Vol. II dated 31-1-2008

Copy to :

(1) PCDA(SWC)
Khatipura Road, Jaipur.................. In continuation of this office letter No.
even dated 4-10-2007. Copy of DGOS letter dated 27-12-2007 referred to above is
enclosed.

(2) Jt. CGDA AT-I (Local) ............................... Do..............................

(3) DGOS, MGO Branch,
IHQ of MoD (Army),
New Delhi - 110011

For information, please.

Sd/-

Jt. CGDA(IFA)
92
Appendix -II

Ministry of Defence (Finance)

Sub: Local Procurement by Ordnance Units.

Office of the CGDA had sought confirmation vide U.O. No. PIFA/Gen.
Corres./IFA(Army/O) Vol.II dated 31-01-2008 that in the absence of a specific
mention against Sl. No. 41 of Schedule XII (C) of the Ministry of Defence letter No.
A/89591/FP-1/1974/2006/D (GS-I) dated 26th July 2006, the monetary limit
mentioned therein would apply to purchases, of any number of similar items
purchased at one time and that the exercise of delegated powers on per item basis is
not in order It had also been suggested that in the event the powers are to be exercised
on per item basis, the aforesaid Government letter would need to be amended by
adding a note against Sl No. 41 to the effect that these powers are for each item, as
mentioned in DGOs TI 014 and 038.

2. The matter has been examined in the light of the relevant orders and the
correspondence exchanged between CGDA's office and DGOs. As per Sl. No. 41 of
the aforesaid Government letter, OC DOU/OMC/ADOs. HQ Arty. Div. can exercise
powers upto Rs. 50,000 and Rs. 14,000 in respect of local purchase and cash purchase
of stores respectively. These powers are exercisable without consultation with the
IFA. There is no other stipulation in the remarks column against Sl. No. 41. However
, Para 13 of the aforesaid Government letter provides that the financial powers
contained in the schedules are in respect of each transaction and may cover
procurement of one or more items within the financial powers specified. The said Para
further provides that the purchase order would not be split in order to bring them
within the delegated financial powers of a lower CFA and that the exercise of the
financial powers would be subject to availability of funds in the sanctioned budgetary
allotment under the relevant Budget head. This would evidently imply that each
transaction, irrespective of whether it is in respect of one item or more than one time,
should be within the financial limit of the delegated powers.

3. Even Para 147 of Financial Regulations Part - I Vol. I provides that an
officer's financial powers in the matter of local purchase of stores extends to the limits
up to which power to purchase any one article, or any number of similar articles
purchased at one time, are laid down in Schedule XII of Appendix II Part I Army.
Para 3 of DGOS IT No. 014 (Revised ) as well as Para 3(a) of DGOS TI 038 ( Issue
1) provides that the officers, specified in the said paras, will exercise financial powers
detailed below in respect of local purchase of any one article or a number of articles
purchased at the same time. Prima facie, these provisions cannot be interpreted so as
to mean that the existing powers can be exercised in respect of each item separately
even when a number of items are being purchased at the same time, and probably
through the same supply order. However, it would appear from MGO Branch letter
No. A/28324/OS - I B dated 27th December 2007 addressed to Principal IFA that the
practice so far has been to exercise the powers with reference to each item separately,
even when a number of items are purchased at the same time and under the same
supply order.
93

4. The powers of local purchase as laid down in FR are not new. The DGOS
Technical instructions, which are being relied, upon by MGO's Branch to justify
exercise of powers with reference to each item separately, are also not new. In fact,
the provision of FR and Technical instruction are the same and in the absence of any
remarks in the Government letter of 26th July 2006, these very provisions are being
cited by MGO's Branch to argue that the powers are exercisable in respect of each
item separately. Therefore, it would be desirable to ascertain how these are
exercisable in respect of each item separately. Therefore, it would be desirable to
ascertain how these powers were being exercised in the past, as also what stand is
being taken by other Regional Controllers. This is important, as it may not be
appropriate to decide the issue in a manner that restricts the extent of powers being
exercised by the CFAs for the past several decades. CGDA;s officer may please
ascertain the position in this regard from the Controllers and clarify as any final
decision in teh matter must take into account the position as it obtains on the ground.

Sd/-

Addl. FA(A) & JS

Jt. CGDA(IFA)
---------------------------------------------------------------------
MoD(Fin) ID No. 1188/Addl FA(A) dated 1st May, 2008
94
Appendix-III

Office of the CGDA, West Block - V, R.K. Puram, New Delhi- 110066
Pr. IFA Wing

Subject: Local Procurement by Ordnance Units.

Reference: This Office UO NO. even dated 31-1-2008 addressed to Shri Amit
Cowshish, Addl. FA(A) & JS and copy endorsed to AT Wing among others.

A Copy of MoD(Finance) ID No. 1188/Addl FA(A) dated 1-5-2008 in response to
this office reference cited above is enclosed herewith.

2. Before taking final decision in the matter, MoD(Fin.) vide Para 4 of letter ibid,
desires to ascertain how these powers were being exercised in the past, as also what
stand is being taken by other Regional controllers. It is therefore requested that the
position in this regard may kindly be provided by AT wing for taking up the matter
further with the MoD(Fin.)

Pr. IFA has seen.

Sd/-

Dy. IFA

Jt. CGDA(AT-I)

No. PIFA/Gen Corr/IFA (A/))/Vo;.II dated 11th June, 08

95

Appendix-IV


Subject: Local Purchase by Ordnance Units.

Reference: Your UO No. PIFA/Gen Corr/IFA (A/O) Vol-II dt. 11-6-2008

The practice being followed by various Regional Controllers have been
obtained. It is seen that divergent practice are being followed by Regional Controller's
offices with various interpretations. PCDA(NC) Jammu, PCDA(WC) Chandigarh,
CDA Guwahati and CDA Jabalpur are regulating financial powers with reference to
an item, or group of similar items, purchased at the same time, whereas PCDA(CC)
Lucknow, PCDA (SWC), Jaipur, CDA(Army) Meerut, CDA Patna and CDA
Secunderabad are regulating powers on per transaction basis.

In this connection Audit Wing of HQrs. have further stated that:

(i) The contention of DGOS that financial powers are applicable for purchase of
single item at any one time on the basis of remarks under note 34(a) of schedule XII
of MoD letter of July 2006 is not tenable. as these remarks apply only to Serial No.
34(a) viz. Medical Stores.

(ii) Para 13 of Govt. letter of July 2006 promulgating the delegation of financial
powers provide for includision of more than one item in a transaction, specifying that
the transaction, with one or more items, cannot exceed the financial powers of the
competent authority.

(iii) As per Note 5 of Schedule XII(C) it is laid down that limit for direct purchased
apply to the value of each article or class of similar articles purchased at any one time.
These provisions have apparent contradiction with Para 13.

Since divergent practice being followed in the filed are not uniform and there seems
to be room for genuine confusion among interpretations of different provisions of the
Govt. letter. Accordingly it is felt MoD(Fin) will have to take a fresh look at this issue
to determine one standard approach.

Sd/
Dy. CGDA(AT)

Pr. IFA Wing (local)
UO No. AT /IX/9047- 2007(PC) Dated 17/2/2009
96
Appendix -V


Pr. IFA Wing

Subject: Local Purchase by Ordnance Units.

Reference: This Office letter of even no. dated 31-1-2008 and 11-6-2008 and your
ID No. 1188/Addl. FA(A) dated 1-5-2008

The position in regard to practice followed in various offices or
Regional Controllers for local purchase Ordnance Stores under Sch. XII of delegation
of financial power dt. 26-07-2006 to decided the term CFA in ibid schedule was
called for as for directions vide MoD (Fin) ID No. dt. 01-05-2008.

2. The practice being followed by various Regional Controllers have been
obtained. It is seen that divergent practice are being followed by Regional Controller's
officers with various interpretations. PCDA(NC) Jammu, PCDA(WC) Chandigarh,
CDA Guwahati and CDA Jabalpur are regulating financial powers with reference to
an item, or group of similar items, purchased at the same time, whereas PCDA(CC)
Lucknow, PCDA(SWC), Jaipur CDA(Army) Meerut, CDA Patna and CDA
Secunderabad are regulating powers on per transaction basis.

3. In this connection Audit Wing of HQrs. have further stated that :

(i) The contention of DGOS that financial powers are applicable for purchase
of single item at any one time on the basis of remarks under note 34(a) of
schedule XII of MoD letter dated 26-7-2006 is not tenable, as these
remarks apply only to Serial No. 34(a) viz. Medical Stores.
(ii) Para 13 of Govt. letter of delegation dated 26 July 2006 promulgating the
delegation of financial powers provide for inclusion of more than one item
in a transaction, with one or more items, cannot exceed the financial
powers of the competent authority.
(iii) As per Note 5 of Schedule XII(C) it is laid down the limit for direct
purchase apply to the value of each article or class of similar articles
purchased at any one time. These provisions have apparent contradiction
with Para 13 of mentioned Govt. letter dated 26 July, 2006

4. Keeping in view, the above MoD (Fin) is requested to confirm whether in the
absence of a specific mention against Sl. No. 35 to 41 Schedule XII(C), the monetary
limits will apply to purchase of an item or any number of similar items at one time.
Alternatively, in case the provision contained in DGOS Tech instruction 014 and 038
is to be continue necessary amendments to the delegation of financial powers may be
97
considered for issue by adding astrik against Sl. No. 35 - 41 to the effect that these
powers are for each time item.

Pr. IFA has seen.

Sd/
Dy. Jt. CGDA(IFA)

Sh. Amit Cowshish, IDAS
JS & Addl. FA
Min. of Defence (Fin.)
South Block, New Delhi
--------------------------------------------------------------
No. PIFA/Gen Corr/IFA(O) /Vol. -II dated 27-3-09

98
Appendix-VI


Pr. IFA Wing

PIFA/Gen. Corr/IFA(O)/Vol.II Instruction No. of 2009
Dated 26-5-2009

To

All PCsDA/CsDA/IFAs(Dedicated and Nominated)/RTC

Subject: Local Purchase of Ordnance Stores.

Local Purchase of Ordnance Stores

A view was taken by DGOS regarding local purchase of Ordnance Stores by various
depot CFAs that the powers delegated vide Sl. No. 41 of Schedule XII(C) have to be
considered in the light of single transaction of particular item. DGOS TI No. 14 &
038 stipulates that financial powers will be for LP of any one article or a number of
similar articles purchased at the same time. Further as per Note 5 under Schedule
XII(C) the limit for direct purchase applies to the value of each article or class of
similar articles purchased at any one time. However, Para 13 of Gol, MoD letter dt.
26-07-2006 stipulates that the financial powers contained in the Schedules are in
respect of each transaction and may cover procurement of one or more items within
the financial powers specified. Thus the provisions of DGOS TI and Note 5 under
Schedule XII(C) have apparent contradictions with Para 13 of Govt. letter on revised
Delegation of Financial Powers dt. 26.07.2006

2. Hence, the matter was referred to MoD (Fin.) for clarification. MoD(Fin) vide
ID No. 1655/Addl. FA(A)/09 dt. 08-05-2009 that considering the rule positions
stipulated in Rule 147 of FR Pt.- I, 1983 & Note (i) and (ii) thereunder and Note (4)
under Schedule XII(C) to Gol, MoD letter dt. 26-07-2006, the monetary limits at Sl.
No. 35 - 41 of Schedule XII(C) will apply to purchase of an item or any number of
similar items at one time.

Sd/-

Jt. CGDA(IFA)
99
Ans. 1

Title:- Local Purchase of Stores - Clarification on

Summary Points

1- A view was taken by DGOS that financial power delegated vide Sl. No 41
of Sch XII(C) relates to purchases made per single item at any one time.
2- DGOS TI 014 & 038 stipulates that financial powers will be for LP of any
one article or number of similar articles purchased at the same time.
3- Para -13 of Govt letter dated 26th July 2006 stipulates that financial
powers contained in the Schedule are in respect of each transaction.
4- Thus, these provisions have apparent contradiction with Para 13 of Govt.
letter.
5- Pr. IFA were of the view that DGOS TI 014 & 038 are in the shape of SOP
and require to be updated on the basis of revised delegation of financial
powers.
6- Pr. IFA advised DGOS to take up the matter with MoD for insertion of
specific remarks against Sl. No. 41 of Sch XII(C) as per provisions of
DGOS TI 014 & 038, which was not agreed to by DGOS.
7- DGOS also not agreed with the views of Pr. IFA that remarks against Sl.
No. 34(a) of Govt, letter are applicable to AFMSDs only.
8- The matter was referred to MoD(Fin) by Pr. IFA for clarification.
9- MoD has mentioned that neither the FR nor DGOS Technical Instructions
are new, as such the practice being followed in the past by Regional
Controllers may be obtained.
10- After ascertaining the views of Regional Controllers it is revealed that they
\were following the divergent practice.
11- Pr. IFA intimated the same to MoD(Fin) duly mentioning the views of
Audit Wing.
12- MoD clarified that the monetary limits at Sl. No. 35-41 of Schedule XII(C)
will apply to purchase of an item or any number of similar items at one
time.

100
PRECIS

A local purchase bill submitted by 33 Armed DOU was objected by
PCDA(SWC) on the ground that the bill of Rs. 50, 000/- is beyond the financial
power of CO DOU, as per Schedule XII(C) of MoD letter dated 26th July, 2006.
Army authorities were of the view that financial power of CO, DOU are subject to the
ceiling of Rs. 50,000/- per item per day. DGOS contended that as per remarks given
against item NO. 34(a) of the Sch XII of MoD letter dated 26th July, 2006, monetary
limit will apply to purchase made per single item at any one time. Accordingly, a bill
containing detail of more than one item and adding up to an amount exceeding the
defined CFA power for a transaction per item per day should not be construed as a bill
exceeding CFA's power. Pr. IFA were of the view that remarks against Sl. No. 34(a)
of Sch XII is applicable to OCs, AFMSD only and no such remarks are mentioned
against Sl. No. 41 of Sch XII under which powers have been delegated to CO DOU.
Further, according to Para -13 of MoD letter dated 26th July, 2006, financial powers
contained in the schedule are in respect of each transaction and may cover one or
more items. Therefore, the financial powers delegated to Ordnance CFAs under Sl.
No. 41 of Sch XII(C) would be for each transaction and not for ingle item at any one
time.

DGOS vide letter dated 6/9/2007 has mentioned that local purchase procedure
is being followed in terms of DGOS Technical Instruction No. 014 & 038, which state
that financial powers of the CFAs are for any one article or a nukber of similar articles
purchased at the same time. Pr. IFA were of the view that the above instructions are
in shape of SOP based on specific Govt Orders/ Instructions and thus require to be
updated keeping in view of latest delegation of financial powers under MoD letter
dated 26th July, 2006. Therefore, DGOS was advised to take up the matter with MoD
for insertion of specific remarks against Sl. No. 41 of Sch XII(C) as per DGOS TI 014
& 038 but the same was not agreed to by DGOS. They have mentioned that financial
powers delegated under Sch-XII refers to purchase of any one item or any number of
similar items purchased at one time as mentioned in Rule-147 FR Pt. -I DGOS has
also not agreed with the views of Pr. IFA that remarks against Sl. No. 34(a) of Govt.
letter ibid are applicable to AFMSDs and not to Ord CFAs at Sl No. 41.

Accordingly the matter was referred to MoD(Fin) by Pr. IFA for confirmation
that in the absence of a specific mention against Sl. No. 41 of Sch. XII(C), the
monetary limit will apply to purchases of any number of similar items purchased at
one time and that the exercise of delegated powers on per item basis is not in order.
Alternatively necessary amendment to the Delegation of Financial Powers will have
to be issued by adding a note against Sl. No 41 to the effect that these powers are for
each item in case the provisions contained in DGOS TI 014 &038 is to be continued.

The case was examined by MoD(Fin) and they have mentioned that there is no
stipulation in the remark column against Sl. No. 41, however, Para -13 of MoD letter
provides that financial powers contained in the Schedule are in respect of each
transaction and may cover procurement of one or more items. MoD has further
mentioned that Para - 147 of FR Pt. I provides local purchase of stores upto financial
power limits to purchase any one article or any number of similar articles purchased at
101
one time. The same provisions are also contained in DGOS TI 014 & 038. These
provisions can not be interpreted so as to mean that existing powers can be exercised
in respect of each item separately even when a number of items are being purchased
at the same time through the same supply order. However, it would appear from MGO
letter 27th Dec, 2007, that the practice so far has been to exercise the powers wrt each
item separately, even when a number of items are purchased at the same time and
under the same supply order. MoD further mentioned that provisions under FR &
DGOS Technical Instructions are not new and in fact provisions in both are same but
in the absence of any remarks in MoD letter dated 26th July 2006, these very
provisions are being cited by MGO's Branch to argue that the powers are exercisable
in respect of each item separately. Therefore, MoD has mentioned that it would be
desirable to ascertain how these powers were being exercised in the past and what
stand is being taken by other Regional Controllers. As such, Pr. IFA was requested to
obtain the practice being followed by the Controller this regards.

Accordingly, Pr. IFA took up the matter with Audit Section of CGDA for
obtaining the practice being followed by other Regional Controllers. After
ascertaining the views of the Regional Controllers, Audit Wing have mentioned that
these offices are following divergent practice. They have further stated that (i)
remarks under note 34(a) of Sch XII are applicable to Medical Stores only (ii) Para -
13 of Govt. letter of July 2006 specifies that the transaction with one or more items,
can not exceed the financial power of the CFA and (iii) as per Note-5 of Schedule
XII(C) the limit for direct purchase apply to the value of each article or class of
similar articles purchased at any one time. Thus, there is apparent contradiction of
these provisions with Para -3 and, therefore, MoD will have to take a fresh look at this
issue to determine one standard approach.

Accordingly, the practice being followed by the various Regional Controllers
were apprised to MoD(Fin) by Pr. IFA vide their UO dated 27th March 09 duly
intimating the above views of Audit Wing. Pr. IFA has requested MoD to confirm
whether in the absence of a specific mention against Sl. No. 35 of 41 Schedule
XII(C), the monetary limit will apply to purchase an item or any number of similar
items at one time. In case, the provisions contained in DGOS TI 014 & 038 are to be
continued , necessary amendments at Sl. No. 35-41 of delegation of financial powers
may be considered.

The above issue was examined by MoD. Pr. IFA vide their Instruction No. 7
dated 26/5/09 circulated the decision of MoD(Fin) to all concerned clarifying that
considering the rule position stipulated in Rule 147 FR Pt. I & Note (i) and (ii) there
under and Note (4) under Sch XII (C) to Govt. letter date 26th July 2006, the
monetary limit at Sl. No. 35 - 41 of Sch. XII (C) will apply to purchase of an item or
any number of similar item at one time.
102

2. Shri X a Defence Civilian was admitted to an non - CGHS recognized private
hospital in Pune for treatment of Osteoporosis even though a Govt. Hospital and few
CGHS recognized hospitals which provide treatment for Osteoporosis were located
nearby. The individual justified his treatment in the private hospital in Pune on
grounds of emergency and cited this as the ground for not taking prior permission
from the Head of the Department/CGHS dispensary. On a reference to Dy. Director,
CGHS, it was clarified by him that the disease was not of an emergent nature and the
hospital was also not a CGHS recognized hospital. The medical claim of the
individual for Rs. 20000 was disallowed by CDA's office on the ground that the
ailment was not emergent as advised by the Dy. Director, CGHS and the individual
had not availed treatment from the Government/CGHS recognized hospitals available
nearby. Against this order, the individual has filed an OA No. XXX/2008 in CAT,
Mumbai for reimbursement of his medical claim alongwith penal interest.

As the dealing SO(A), please prepare a draft counter affidavit, based on the facts on
the mentioned above.
(40 Marks)

Ans. BEFORE THE CENTRAL ADMINISTRATIVE TRIBUNAL, MUMBAI
COUNTER AFFIDAVIT

(On behalf of the Respondents)
in
OA. No. XXX of 2008

IN THE MATTER OF:

SHRI ............................ APPLICANT

VERSUS

UNION OF INDIA & OTHERS ....................... RESPONDENTS

Affidavit of Shri AAA, IDAS, aged about ......... yrs, son of Shri BBB.

I, the above named deponent, do hereby solemnly affirm and respectfully state as
follows:

1- That the deponent is presently working as a Dy. Controller of Defence
Accounts in the office of the Principal CDA(Navy), Mumbai and is well acquainted
with the facts of this case and is competent to file the present affidavit on behalf of the
respondents.

103
REPLY ON MERITS:

2- The contention of the applicant that he is entitled to the reimbursement of the
full amount of Rs. 20,000/- by way of medical expenses is not tenable and hence
denied. The disease of osteoporosis as ascertained from the Dy Director, CGHS is not
of emergent nature and hence taking treatment in a private hospital on grounds of
emergency is not justified, particularly when a few other Govt. hospitals and CGHS
recognized hospitals which provide treatment for the same disease are also located in
the vicinity of that area. In fact, the individual did not follow any of the procedure for
getting his case referred to an appropriate hospital and instead took the treatment in a
private unrecognized hospital on his own and hence the medical reimbursement is not
admissible under Medical Treatment Rules of the Central Govt. The OA, therefore,
deserves dismissal on above grounds.

PRAYER:

3- In view of the aforesaid facts and submission, the OA is devoid of merit and is
based on untenable grounds and hence is liable to be dismissed with cost. It is prayed
accordingly.

RESPONDENT

THROUGH

(GOVT COUNSEL)

Station Mumbai
Dated, 2009

VERIFICATION:

Verification at Mumbai on this ................... day of .................... 2009 that the
contents of the paragraph 1 and 2 are true and correct to the best of my knowledge
and the remaining is believe to be correct as per legal advice received.

RESPONDENT

3. Shri 'X' Sr. Auditor serving in a DAD Sub Office, after obtaining the due
approval of Head of the Department, underwent an open heart surgery at Escort Heart
Institute and Research Centre Limited, New Delhi at an estimated cost of Rs. 2.0
lakhs. An advance of Rs. 1,94,400 was granted to the individual. The individual
submitted a final bill for Rs. 2,65,000. Out of this , Rs. 1,68,160 were admitted. There
were some more bills submitted by the individual and after adjustment of which, a
sum of Rs. 24,940 were due from the individual. The office issued an order to recover
the balance dues in monthly installment @ Rs. 2,000 from his salary of Rs. 4,695.
104
Aggrieved by this, the individual filed a civil writ petition bearing No. XXXX/2002 in
the Delhi High Court seeking direction to the Deptt. for reimbursement of the medical
expensed in full as the hospital was recognized hospital under CGHS, and also for
stoppage of monthly deduction from his salary.

The case was decided on 12-5-2008 in favour the petitioner and the Hon'ble Court
directed the respondent to pay medical expenses in full, less amount already paid. The
Court has also directed to give the credit of Rs. 6,000 deducted from his salary. The
Hon'ble Court has also directed that out of total assessed cost of Rs. 10,000, Rs. 5000
should be paid to the petitioner and rest amount of Rs. 5,000 will be deposited with
Delhi High Court Legal Service Committee in view of the fact that the respondent
continue to act contrary to the judgment delivered by the court and unnecessary
burden the docket of the Court and causes un convenience to its employees/patients.
The orders of the Hon'ble of the Hon'ble Court were to be implemented within two
months from the date of the order.

Draft a UO Note, from HQrs Office, to Ministry of Defence (Fin) requesting to
examine the matter and accord their approval for implementation of the orders of the
Hon'ble Court or otherwise.
(35 Marks)
Ans.

OFFICE OF THE CONTROLLER GENERAL OF DEFENCE ACCOUNTS
WEST BLOCK-V, R.K. PURAM, NEW DELHI - 110066

Sub: Implementation of Delhi High Court Judgment order dated 12/5/2008 in WP
No. XXXX filed by Sh. 'X' Sr. Auditor.

The case under consideration is regarding implementation of Delhi High Court
Judgement Order dated 12/5/2008 for reimbursement of medical expenses incurred by
Sh. 'X', Sr. Auditor for open heart surgery at Escort Heart Institute & Research Centre
Limited, New Delhi.

The facts of the case in brief are as under.

2- Sh. 'X' Sr. Auditor, serving in the office of Dy. CDA(XX), underwent medical
treatment for open heart surgery at Escort Heart Institute & Research Centre Limited,
New Delhi after obtaining the due approval from the Head of the Department .

3- The medical expenses likely to be incurred for open heart surgery were
initially estimated to Rs. 2.0 lakhs and an advance to the tune of Rs. 1,94,400/- was
granted to the individual. Finally the total expenses amounting to Rs. 2,65,000/- was
incurred during the said operation whereas the Department had approved only Rs.
1,68,160/-. There was some further amount also passed and the balance amount due
from the individual was stated to be Rs. 24,940/-

4- Consequently, the office passed an order to recover the above dues in monthly
installment @ Rs. 2000/- from his salary of Rs. 4,695/-

105
5- The individual filed a civil writ petition bearing No. XXXX/2002 in Delhi
High Court seeking direction to the respondent for reimbursement of full amount
incurred towards medical expenses since the said hospital is a recognized hospital
under CGHS and prayed for further relief by stoppage of monthly deduction from his
meager salary. However, an Interim relief was granted in favour of the petitioner
against deduction of the amount.

6- The case has been decided on 12/5/2008. The Hon'ble High Court has directed
the respondent to pay the full medical expenses of the petitioner as per the bill raised
by the Escort Hospital amounting to Rs. 2,65,000/- less the amount already paid of
Rs. 1,94,400. The petitioner should also be given the credit for the deduction from
salary made to the extent of Rs. 6000/- which should be reimbursed to the petitioner.
The needful is required to be done within a maximum period of two months wef
12/5/2008.

7- It is also directed by the Hon'ble Court that out of total assessed cost of Rs.
10,000/-, Rs. 5000/- should be paid to the petitioner and the rest amount of Rs. 5000/-
will be deposited with the Delhi High Court Legal Service Committee in view of the
fact that the respondent continue to act contrary to the judgment delivered by the
Hon'ble Court and unnecessary burden the docket of the Hon'ble Court and cuases
inconvenience to its employees/patients.

8- Ministry of Defence (Finance), DAD Coord is requested to Kindly examine
the matter and accord their approval for implementation of Delhi High Court Orders
dated 12/2/2008 or otherwise.

-------Sd------
Dy. CGDA

Ministry of Defence (Finance)
DAD Coord, South Block,
New Delhi
-------------------------------------------------------------------------------
UO NO. AN/XXXXXXXXX/Court Case/X Dated .......... /6/2008

Ques.4. Shri 'X' a Senior Auditor working in a DAD office in New Delhi met
with a railway accident while commuting between Delhi and Meerut via Train Shuttle
Service. As a result of the accident, his left leg was amputed and he also sustained
serious crush injuries in right leg and ankle. Shri 'X' Sr. Auditor who had been
serving in Delhi for the last 4 years is to superannuate in the year 2012. He
represented to CGDA, through proper channel, for his transfer to Meerut on the
ground of his disability.

Draft a DO letter from the PCDA, New Delhi to Jt. CGDA(Admin.) recommending
the case of Shri 'X' for a posting to Meerut on compassionate grounds.
(35 Marks)

106
Ans.4.

Smt. AAA,IDAS DO No 59014/XXX/AN....
Principal CDA O/o PCDA
Place
Date

Dear

I am forwarding herewith an application, submitted by Sh. 'X', Sr. Auditor,
A/c No............................ serving in this office since 5/9/2006 regarding his transfer to
Meerut on compassionate ground.

2- Shri 'X' is a resident of Meerut and has been commuting daily between Meerut
and Delhi by train. The individual met with an accident on 9/9/2008 while returning
from Delhi and he sustained grievous injuries. As a result thereof, his left leg had to
be amputated upto his knee. He also sustained serious crush injuries inthe right leg
and ankle.

3- The individual has now become a physically challenged person due to the
accident and is not in position to commute to Delhi. Moreover, only three more years
are left in his service, his date of retirement being 30/4/2012.

4- Taking into consideration all these facts and the physical/medical condition of
the individual, I strongly recommend his case for a posting to Meerut. I, therefore,
request you to kindly consider his case sympathetically at an early date.

With....

Encl - as above yours

( )

Shri.................................., IDAS
Jt. CGDA(AN)
Office of the CGDA
West Block -V,
R.K. Puram,
New Delhi - 110066

5. In one of the Controller's organization in Delhi, it was noticed by the
Controller that applications for leave on medical grounds submitted by employees
(Gazetted or Non Gazetted ) were supported with medical certificates and fitness
certificates given by the Registered Medical Practitioners (RMP), which was contrary
to the provisions contained in Rules 19 CCS (Leave ) Rules - 1972 (Appendix -'A')

107
Draft a circular from Dy. CDA(AN) to all officers in charge of the Sections drawing
attention to these lapses and advise them to ensure strict compliance of the laid down
rules while dealing with such cases.
(35 Marks)
EXTRACT OF RULE 19 OF CCS (LEAVE RULES)

(APPENDIX - 'A' to Q. No. 5)

Grant of leave on medical certificate to Gazetted and non- Gazetted Government
servants.

An application for leave on medical certificate made by:

(i) A Gazetted Government servant, shall be accompanied by a Medical
Certificate in Form 3 given by a doctor in a Central Government Health Scheme
Dispensary if such a Government servant is a Central Government Health Scheme
beneficiary or by a Government Hospital or by an Authorised Medical Attendant if he
is not a Central Government Health Scheme beneficiary and by an Authorized Doctor
of the private hospital recognized under Central Government Health Scheme or
Central Services (Medical Attendance) Rules, 1944, in case of hospitalization or
indoor specialized treatment in respect of any particular kind of disease like heart
disease , cancer, etc. for the treatment of which the concerned hospital has been
recognized by the Ministry of Health and Family Welfare.

Provided that the Gazetted Government servant who is a Central Government Health
Scheme beneficiary, if at the time of illness, is away from Central Government Health
Scheme or proceeds on duty outside the Headquarters will produce Medical
Certificate or Fitness Certificate in Form 3 and Form, as the case may be, given by an
Authorized Medical Attendant.

(ii) A non- Gazetted Government servant, shall be accompanied by a Medical
Certificate in Form 4 given by a Central Government Health Scheme Dispensary if
such a Government servant is a Central Government Health Scheme beneficiary or by
Government Hospital or by an Authorized Medical attendant if he is not a Central
Government Health Scheme beneficiary ; and by an Authorized Doctor of the private
hospital, recognized under Central Government Health Scheme or Central Services
(Medical Attendance) Rules, 1944, in case of hospitalization or indoor specialized
treatment duly approved by the competent Authority in respect of particular kind of
disease like health disease, cancer, etc. for the treatment of which the concerned
hospital has been recognized by the Ministry of Health and Family Welfare.

Provided that the non- Gazetted Government servant who is a Central Government
Health Scheme beneficiary, if at the time of illness is away from Central Government
health Scheme area or proceeds on duty outside the Headquarters will produce
Medical Certificate or Fitness Certificate in Form 4 or Form 5 as the case may, be
given by an Authorized Medical Attendant available within a radius of eight Km from
his residence or place of temporary stay outside his HQrs and also in the
circumstances when the he finds it difficult to obtain Medical certificate or Fitness
certificate from a Doctor in a Central Government Health Scheme Dispensary or an
Authorized Medical Attendant.
108
Ans.

CIRCULAR

No.AN/XXXX/Vol
O/o The CDA
New Delhi
Date

To,

The office in charge
Section

Sub: GRANT OF LEAVE ON MEDICAL CERTIFICATE TO GOVT
SERVANTS GAZETTED & NON GAZETTED.

Agreeably to provision contained in Rule 19, CCS(Leave) Rules, 1972, an
application for leave on medical grounds made by a Govt. servant (Gazetted and non
Gazetted) who is a CGHS beneficiary, shall be accompanied by a medical certificate
in form 3 or 4 given by a doctor in Central Government Health Scheme Dispensary or
by a Govt. Hospital or by an AMA recognized under CS(MA) Rule, 1942, if he is not
a CGHS beneficiary. Further, if a Gazetted Govt. servant who is a CGHS beneficiary,
if at the time of illness, is away from CGHS area or proceeds on duty outside the
Headquarters will produce Medical Certificate in Form-3 and Form-5 as the case may
be given by an authorized Medical Certificate. However, in case of a non Gazetted
Govt servant who is a CGHS beneficiary & if at the time of illness is away from
CGHS area, will produce MC or FC in Form 4 & 5 as the case may be, issued by an
AMA or an RMP if there is no AMA available within a radius of 8 Kms from his
residence or place or duty.

It has, however, been observed that Gazetted and non Gazette Govt servants
who are CGHS beneficiaries and if at time of illness are away from CGHS area, are
not submitting MC/FC in Form 3 & 5 respectively as mentioned above. They are
submitting MC/FC issued by Doctors other than CGHS or AMA for regularization of
leave as a matter of course, which is contrary to the provisions contained in Rules.

I have, therefore, been directed by the Competent Authority to direct all
officers- in charge of the Sections to ensure that MC/FC submitted by the individuals
satisfy the provisions of rules laid down above for regularization of leave on medical
grounds. It may be brought to the notice of all staff and officers that henceforth
MC/FC for regularization of leave for medical reasons are submitted on proper
proforma and strictly as per provisions of the leave Rules, failing which their request
for regularization of leave on medical grounds shall not be accepted.

(--Sd--)
Dy. CDA(Admin)

109
6. Electricity bills for the office portion of the Official Residence of C-in-C,
SFC, located at No. 4, Sunehari Bagh Road, New Delhi, were received fro payment in
one Controllers' s office from Director (Works) , Agrami HQr, SFC, Delhi Cantt. The
expenditure is debitable to Major Head 2077 (Navy Minor Head 112 JS, Code Head
695/11 and has been sanctioned by the MA/C in C in consultation with IFA.

On scrutiny of the bills for the office vis- a vis the residential portion of Official
Residence of C- in - C, it was observed that average monthly expenditure on
electricity bill for the last four months viz. Dec. 2008 to March 2009 for residential
portion is about Rs. 1077, whereas the expenditure on office portion is a staggering
Rs. 7432 (Appendix -'A' ). The bills were returned to Director of Works seeking
clarification on the above (Appendix -'B')

Draft an Office Note seeking orders from PCDA that the reply subitted by Agrami
HQ, SFC (Appendix -'C') is inadequate and that bills may be admitted in audit till
points raised regarding (i) area of office portion, (ii) area of residence, and (iii) list of
electric appliances fitted in office portion etc. are clarified.

(35 Marks)

APPENDIX 'A' 'B' AND 'C' TO QUESTION NO,.6

(Appendix 'A)

Details of Electricity Bills:
Month of Bill Payment made by the
office or Residential
portion
Payment made from
Public - Fund for office
portion
December 2008 Nil Rs. 5827
January, 2009 Rs. 3588 For 12/2008 &
1/2009)
12717
February 2009 Rs. 327 Nil
March 2009 Rs. 393 Rs. 11184 (For 2/2009 &
3/2009)
Total Rs. 4308 29728

110
(Appendix - 'B')

Agrami HQ SFC
Delhi Cantt.
New Delhi - 110010
Dt. 24 June, 2009

SFC/1004/1/C- in - C
DCDA
Office of the PCDA
New Delhi - 110011

Payment of Electricity Bills in respect of Office portion of the Residential
Accommodation of C-in- C, SFC

1. Refer of your letter No. 22023/1/2K/Nodal/CPWD dated 03 Jun, 09

2. 4 Sunehari Bagh is nominated as the official residence of Commander - in -
Chief (C-in-C) of Strategic Forces Command(SFC) (equivalent to the Vice Chiefs of
the services) since 2003. The entire Command House is divided into three portions i.e.
residential , official (external security area and offices) and servant quarters and three
separate electricity bills are received and payment is made accordingly.

3. CFA has accorded a sanction to pay the electrical bills of the official portion
(external security area and offices) of the residence under the Major Head 2077
(Navy), Minor Head 112 JS, Code Head 695/11 on the lines of the payment made for
the official portions of Vice Chiefs and CISC's official residences. To regularize the
proper electrical consumption of each portion, separate electronic meters have been
installed by NDMC. The official portion includes the external area which has the
security lights covering the area of appx. 1100sq. yards. C-in-C. SFC also travels
extensively on temporary duties on an average of 7-10 days in a month. During these
days the residential portion is used only for maintenance and clearing purpose thus
having no electrical consumption almost for of the month. It is also emphasized that
the official portion is very frequently visited by the senior officers of Tri services and
HQ SFC during the late hours and the week ends.

4. The electricity bills are charged as per the electrical consumption (readings )
of each meter. Further to this, the servant quarter's electricity bill of appx. Rs. 1500 is
also cleared by C - in -C on monthly basis.

5. In view of the above, you are requested to reconcile and make the payment of
the official bill for the month of June 09 as per the enclosed contingent bill.

Lt. Col
DA to C in C

111
Appendix -'C'

Office of the Principal Controller of Defence Accounts

No. 22023/1/2K/Nodal/CPWD Dated: 03.06.09

To,
Director (Work)
Agrami HQ SFC
Delhi Cantt. 110010

Sub: Payment of Electricity Bills in respect of Office portion of the Residential
Accommodation of C-in-C, SFC.

This office is responsible for payment of electricity tariff bills, in respect of
the office portion of the residential accommodation of C -in- C, SFC at No. 4
Sunehari Bagh Road, New Delhi

2. However, during scrutiny of the electricity bills before payment, for the office
portion vis- a- vis the residential portion at No. Sunehari Bagh Road, New Delhi, It
has been observed that whereas the average monthly expenditure on payment of
electricity bills for the last four months (Dec. 2008 to March 2009) for the residential
portion is around Rs. 1077 , the expenditure on the office portion is a staggering Rs.
7432. This office is of the view that, the expenditure on the office portion and the
residential portion at No. 4 Sunehari Bagh Road, New Delhi should have been exactly
the opposite amounts indicated above.

In view of the above, it is requested that the matter be examined further. The area of
the office portion in the residence may be indicated along with the authority for the
same. Also, the lost of electrical fittings /appliances in the office portion may be
furnished. It may also please be indicated whether separate meters have been installed
for the residential and office portions. If not, the basis /method of apportioning the
expenses may be indicated.

4. An early action in the matte is requested as the payment for the next cycle will
be made only after a reply has been received from your office.

Pr. CDA has seen.

Sd/-
Dy. Controller of Defence Accounts
112
Ans.

OFFICE NOTE

No. 22023/I/2K
Date 7/09

Sub: Audit of Electricity bills for the office portion of residential accommodation of
C- in-C, SFC

Agrami HQrs, SFC, Delhi Cantt is making payment of electricity bills in
respect of office portion of the official residence of C-in-C, SFC located at No. 4
Sunehari Bagh Road, New Delhi, out of Major Head 2077(Navy), Minor Head 112J,
Code Head 695/11. The allotment of fund for the expenditure are being placed at the
disposal of HQrs SFC by HQrs. IDS. The expenditure has been sanctioned by MA/C-
in-C consultation with their IFA.

2. During examination of electricity bills in respect of office portion of the
official residence, submitted by Director(Works), it is noticed that average
expenditure on electricity bills on residential portion for the last 4 months is arround
Rs. 1077/- whereas average expenditure of electricity bill on office portion is Rs.
7432/-. The payment made on the residence portion by the officer and payment made
from the public Fund for the office portion during the last 4 months is placed below
for perusal please.

Month of bill Payment made by the
office for Residential
Portion
Payment made from
Public Fund for Office
Portion
December 2008 Nil Rs. 5827/-
January 2009 Rs. 3588/- (For 12/2008 &
1/2009)
Rs. 12717/-
February 2009 Rs. 327/- Nil
March 2009 Rs. 393/- Rs. 11184(For 2/2009 &
3/2009
Total Rs. 4308/- Rs. 29728

3. From the detail mentioned above, the expenditure incurred on payment of
electricity bills of the residential portion does not, prima facie, seem to be logically
correct. Factually the expenditure on electricity bills of the residential portion should
be higher than that of official portion. As the expenditure of electricity bills of the
official portion is to be borne by the Govt. The case was taken up with Director
(Works), Agrami, HQSFC, Delhi Cantt vide this office letter of even NO. dated
03/06/09 to ascertain the following points before admitting the bills in audit:

(i) Area of office portion in the official residence and the authority in support
of the same.
(ii) A list of electrical billing & appliances in the office portion.
113
(iii) Whether separate meters are installed for residential & office portion. If
not, basis/method of apportioning the expenses.

4. In response to this, the reply submitted by Director (Works ) vide their letter
date 24/6/09 is placed below for perusal please. From the detail mentioned into the
said letter it is found that the reply is incomplete on the following grounds:

(i) The area of office portion together with the numbers of room in the
residential accommodation has not been indicated.
(ii) The list of electric appliances /fittings in the office portion has also not
been furnished.
(iii) The electricity consumption for residential portion is stated to be nil for
almost of the month due to frequent travel of C- in-C but the reason for
not applying the same condition with official portion, has not been
clarified by Director(Works).

Director (Work), vide their letter cited above, has also mentioned that the
servant quarter's electricity bill of appx Rs. 1000/- to Rs. 1500/- is also being cleared
by C-in-C on monthly basis. However, copies of electricity bills of the servant
quarters has not been furnished/enclosed.

5. In view of the above, if agreed to, it is proposed that the matter should again
be taken up with the Director(Works ) for seeking clarifications on the points
mentioned in Para-4 above, before admitting the bills for electricity submitted by that
office in audit.

Submitted please.

AAO

GO

PCDA
114
Defence Accounts Department
S.A.S. Examination Part II (New Syllabus)
NOVEMBER, 2009

PAPER IX - THEORY PORTION

SUBJECT: FUNDAMENTALS OF ELECTRONIC DATA PROCESSING

Time Allowed: 1 Hours Max. Marks : 60

Note:-

(1) This is a qualifying paper only. Marks secured in this paper will neither be
counted in the aggregate marks nor will be added in total marks secured in other
papers. The paper has two parts - Theory portion and Practical portion.
(2) Candidates are to answer 6 questions out of 8 questions from this portion. Each
question will carry 10 marks. All answer should be specific and concise.
(3) Question Paper for Practical portion is separate. However, while computing
marks for the paper, the marks obtained in Theory portion shall be combined together.
(4) Candidates are to secure 30 marks to qualify from this portion.
___________________________________________________________________

Ques.1 Explain the following: (2 x 5 = 10 Marks)

(a) Analog Data and Digital Data

(b) a Bit, Byte, word, nibble

Ans.1 (a) Analog Data:- The signals, which we send each other to
communication, are data. Our daily data have many forms: sound,
letters, numbers, and other characters (handwritten or printed),
photos, graphics, film; All these data are in their nature analog, which
means that they are varied in their type. In this form, they are
unusable in a PC. The PC can only process concise, simple data
formats in digital form only. Such data can be processed very
effectively.

Digital Data:- The PC is an electronic unit. Therefore, it can only
deal with data which are associated with electricity. That is
accomplished using electronic switches, which are either off or on.
You can compare with regular household switches. If the switch is
off PC reads numeral 0. If it is on, it is read as numeral one.

(b) Bits:- Each 0 or 1 is called a bit. Bit is an abbreviation of the
expression binary digit. It is called binary, since it is derived from the
binary number system:
115

0 1 bit
1 1 bit
0110 1 nibble or 4 bit
01101011 1 byte or octet or bit

Bytes:- byte is made of eight bits.

Word:- A group of bites representing data or instruction that from the
basic information unit of computer is called Word. A Word may be
formed using two or more bytes.

Nibble:- The most common four bytes combination is known as
nibble.

Ques.2 Name five:
(2x5=10 Marks)
(a) Output Device

(b) Storage Device

Ans.2 (a) 1. MONITOR
2. PRINTER
3. PLOTTER
4. CODER
5. ROBOTIC STRUCTURES

(b) 1. FLOPPY DISKS
2. HARD DISK
3. ZIP DRIVE
4. CD/DVD
5. Flash Drives

Ques.3

Select the correct answers for the following:
(2x5=10 Marks)
(a) In a floppy disk which is write-protected:
(i) New data can be recorded over previously stored data.
(ii)New data can be recorded only on vacant track and sectors.
(iii)New data cannot be written.
(iv)Old data cannot be read.

(b) Rearranging of data in a sequence is called:
(i) Updating
(ii) Editing
(iii) Batching
(iv) Sorting

(c) Which of the following unit of a computer is responsible for addition,
subtracting, multiplication and division?
(i) Control Unit
116
(ii) Working Storage
(iii)Arithmetic and Logical Unit
(iv) None of these

(d) Data items are generally classified into which type of Codes:
(i) Numeric
(ii) Alphanumeric
(iii)Character
(iv) All of these

(e) Which of the following is not a hardware:
(i) Magnetic Tape
(ii) Floppy drive
(iii)Keyboard
(iv)Mouse
(v)Program

Ans.3 (a) c. New data cannot be written.
(b) d. Sorting
(c) c. Arithmetic and logical Unit
(d) d. All the above
(e) e. Program

Ques.4. Expand the Following:
(2x5=10 Marks)

(i) FTP

(ii) HTTP

(iii) WWW

(iv) MPLS

(v) VPN

Ans:4 (i) File Transfer Protocol

(ii) Hyper Text Transfer Protocol

(iii) World Wide Web

(iv) Multiple Protocol Label Switching

(v) Virtual Private Network

117
Ques.5. (a) How will you enable or disable the Windows Firewall?
(5 Marks)

(b) How will you see the RAM size of Your PC?
(5 Marks)

Ans.5 (a) Following steps will be taken to enable or disable the Windows
Firewall -

1. Click on start
2. Click on settings
3. Click on Control Panel
4. In the Control Panel select Windows Firewall
5. Select the General Tab in the Windows Firewall
6. Select on for enabling and off for disabling the Windows
Firewall

(b) Following steps will be taken to find out the RAM size of the PC.

1. Click on start
2. Click on settings
3. Click on Control Panel
4. In the Control Panel select Systems
5. Select the General Tab in the Systems
6. Here RAM size of the PC will be displayed at the end.

Ques.6. (a) What is recycle bin in the Windows OS? Can you store a file directly
in the recycle bin?
(5 Marks)

(b) How will you find all the word documents stored in your PC?
(5 Marks)

Ans.6 (a) Whenever a file, or folder, or shortcut is being deleted from Windows
disk drive it isn't completely erased from the disk; instead, the system
moves it into the Recycling bin. To retrieve something that has been
mistakenly deleted, simple double click on the Recycle Bin, find the
item, and move it somewhere out of the trash can. Recycling bin can
be emptied by right clicking on it and selecting the "Empty Recycle
Bin" item. Be aware that once the Recycling Bin is emptied, there is
not Much can be done to retrieve the files that used to be in there.

We can't store a file directly in Recycle Bin.

118
(b) Following steps will be taken to find all the word documents
stored in PC:-

1. Click on Start
2. Click on Search
3. Click on "For Files and Folders"
4. In the search window click on "All files and folders
5. Type *.doc in the text box
6. Click on the search button

Ques.7 What is a Search Engine? Mention three Popular Search Engines
being used over Internet.
(10 Marks)

Ans.7 A search engine is an information retrieval system designed to help
find information stored on a computer system. The search results are
usually presented in a list and are commonly called hits. Search
engines help to minimize the time required to find relevant
information.

The most public, visible form of a search engine is a Web search
engine which searches for information on the World Wide Web.

Search engines provide an interface to a group of items that enables
users to specify criteria about an item of interest and have the engine
find the matching items. The criteria are referred to as a search query.
In the case of text search engines, the search query is typically
expressed as a set of words that identify the desired concept that one
or more documents may contain. There are several styles of search
query syntax that vary in strictness. Some text search engines require
users to enter two or three words; other search engines may enable
users to specify entire documents, pictures, sounds, and various forms
of natural language. Some search engines apply improvements to
search queries to increase the likelihood of providing a quality set of
items through a process known as query expansion.

crawler,
harvester,
Import

query response

The list of items that meet the criteria specified by the query is
typically sorted, or ranked. Ranking items by relevance (from highest
resources
search engine
119
to lowest) reduces the time required to find the desired information.
Boolean search engines typically only return items which match
exactly without regard to order.

To provide a set of matching items that are sorted according to some
criteria quickly, a search engine will typically collect metadata about
the group of items under consideration beforehand through a process
referred to as indexing. Alternatively, the search engine may store a
copy of each item in a cache so that users can see the state of the item
at the time it was indexed or for archive purposes or to make
repetitive processes work more efficiently and quickly.

Popular Search Engines:
1. Google Search
2. Yahoo Search
3. MSN Search.

Ques.8 What measures would you suggest as preventive measures to make
your system secure in a Network?
(10 Marks)

Ans.8 Following preventive measures may be taken for securing the system
in a networked environment:

Physical Security: To ensure that the access to the system is
not given to the unauthorized persons.
Environment Security: To ensure safety from the disasters like
Fire, Water, Short circuit of power sources
Access Security:
o Boot password policy
o The user id and password policy to open the system
o Time out password may also be provided
o The log for the system log in are to be regularly
checked.
Application security:
o Authentic software usage
o Anti Virus
o Anti-spam
o Anti-phishing
o Windows firewall
Disaster Management
o Regular backups in external media
o Proper storage of backup media

120
Defence Accounts Department
S.A.S. Examination Part II (New Syllabus)
NOVEMBER, 2009

PAPER IX - PRACTICAL PORTION

SUBJECT: FUNDAMENTALS OF ELECTRONIC DATA PROCESSING

Time Allowed: 1 Hours Max. Marks : 40
Note:-
(1) This is Practical portion of Paper-IX.
(2) Answer any two questions. Each question carries 20 marks. Candidates are to
secure 20 marks to qualify from this portion.
(3) Enter ROLL NUMBR ON THE LEVEL OF THE FLOPPY given to you. All flies
created by you as a part of this examination must be copied on the floppy in the
following manner:-
Created a MAIN FOLDER with your ROLL NUMBER as the folder name.
Create three folders within the main folder with the names as Q.1, Q.2, Q.3. All
answers must be saved in the respective folders, with the files names as given in
the question. One folder would remain blank as candidate has to answer only
two of the three questions.

(4) On the Answer Books supplied to you, write your ROLL NUMBER, questions
answered by you and names of the files copied by you in the floppy mentioned above.
The name of the file must be indicated question-wise.

(5) Marks secured in Practical Portion shall be added in the Theory Portion of the
Paper.
_____________________________________________________________________

Ques.1. Type the following text:

Business Excellence Model Details:-

Criterion 1: Leadership

How leaders develop and facilitate the achievement of the
mission and vision, develop values required for long-term success and
implement these via appropriate actions and behaviors, and are personally
involved in ensuring the organisation's management system is developed
and implemented.

Sub criteria:

(1) Leaders develop the mission, vision and values, and are role models of
a culture of excellence.
(2) Leaders are personally involved in ensuring the organization's
121
management system is developed implemented and continuously
improved.
(3) Leaders are involved with customers, partners and representatives of
society.
(4) Leaders motivate, support and recognize the organisation's people.

Criterion 2: Policy & Strategy

How the organization implements its mission and vision via a clear
stakeholder-focussed strategy, supported by relevant policies, plans,
objectives targets and processes.

Sub criteria:

(1) Policy and strategy are based on the present and future needs and
expectations of stakeholders.
(2) Policy and strategy are based on information and performance
measurement, research, learning and creativity related activities.
(3)Policy and strategy are deployed, reviewed and updated.
(4) Policy and strategy are developed through a framework of key
processes.
(5) Policy and strategy are communicated and implemented.

Apply the following formatting to the text typed above:

(i) The Heading should be Times New Roman 18 Points, Bold, double
Underlined and Centred. .

(ii) Space after the Heading should be 24 points

(iii) Rest of the document should be Verdana with 12 points.

(iv)All paragraphs to be fully justified.

(v) In each paragraph first line should be indented by 0.5 cm.

(vi) The document should be on 1.5 spacing.
(vii)The sub-heading "Criterion 1 and Criterion 2) should be Times New
Roman 14 points, Left Aligned and single underlined.
(viii) Sub-Criteria to be Bold Verdana with 10 points and left aligned.
(ix) 1,2,3,4 etc numbering to be replaced with suitable bullets.
(x) The bullet should be positioned at 0.5 cm indent and for text position
tab should be 0.75 cm and indent should be 0.75 cm.
(xi) The document should be set on an A4 size paper with 1.25", 1.25", 1"
and 1" Left, Right, Top and Bottom margins.
(xii)Save the document as Answer "1.doc".

122
Ans.
Business Excellence Model Details

Criterion 1: Leadership
How leaders develop and facilitate the achievement
of the mission and vision, develop values required for long-
term success and implement these via appropriate actions
and behaviors, and are personally involved in ensuring the
organisation's management system is developed and
implemented.
Sub criteria:
Leaders develop the mission, vision and values,
and are role models of a culture of excellence.
Leaders are personally involved in ensuring the
organisation's management system is developed
implemented and continuously improved.
Leaders are involved with customers, partners
and representatives of society.
Leaders motivate, support and recognize the
organisation's people.

Criterion 2: Policy & Strategy
How the organization implements its mission and
vision via a clear stakeholder-focused strategy, supported
by relevant policies, plans, objectives targets and
processes.
Sub criteria:
Policy and strategy are based on the present and
future needs and expectations of stakeholders.
Policy and strategy are based on information and
performance measurement, research, learning
and creativity related activities.

123
Policy and strategy are deployed, reviewed and
updated.
Policy and strategy are developed through a
framework of key processes.
Policy and strategy are communicated and
implemented.

Ques.2 Make a presentation utilizing the following data:

Lab Director : 10 lakh
Chief Controller : 50 lakh
SA to RM : 15cr
Raksha Mantri : 50 cr
Finance Minister : 100 cr
CCS(CC on Security) : 200 cr

Do the following in the presentation:

(i) The Title of the Presentation should be "Financial Powers for Project
Sanction".

(ii) Second Slide should carry the table as depicted above.

(iii) Third slide should have a bar diagram reflecting the table x-axix
should be functionary name and y-axis should be financial power in lakh.

(iv) Apply slide Design of your choice.

(v) Save the presentation as Answer 2.ppt.

124
Ans.

Financial Powers for Financial Powers for
Project Sanction Project Sanction

200 200 cr cr CCS(CC on Security) CCS(CC on Security)
100 100 cr cr Finance Minister Finance Minister
50 50 cr cr Raksha Raksha Mantri Mantri
15 15 cr cr SA to RM SA to RM
50 50 lakh lakh Chief Controller Chief Controller
10 10 lakh lakh Lab Director Lab Director

125
10
50
150
500
1000
2000
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Lab
Director
Chief
Controller
SA to RM Raksha
Mantri
Finance
Minister
CCS(CC on
Security)

Ques.3. (a) Make the following Spread Sheet:

Sl.
No.
Month Basic Pay Grade
Pay
DA Gross
Pay
GPF
Subscription
Net
Pay
1
2
3
4
5
6
7
8
9
10
11
12
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
12200
12200
12200
5400
5400
5400
5400
5400
5400
5400
5400
5400
5400
5400
5400
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

13 Total

Do the following utilizing the in built formulae functions/your own
formulae function relating to the data above:

(i) Calculate the DA @ of 26% of the sum of column C and D at the
Column E for first three months.

(ii) Calculate the Basic Pay for the months July onward by accruing
increment @ of 3% of the Basic Pay + Grade Pay.

126
(iii) Round of the New Basic Pay to the nearest figure of 10.

(iv) There is an increase of 3% in DA from the month of July. Calculate
the DA at the Column E for remaining months.

(v) Round off the DA to the nearest rupees.

(vi) Calculate the Gross Pay at the column F for all the months by adding
the Columns C, D and E.

(vii) Calculate the net pay at column H by deducting GPF Subscription
from the Gross Pay.

(viii) Calculate the Total Basic Pay, Grade Pay, DA , Gross Pay, GPF
Subscription and Net Pay At the Row 13.

(ix) Make the heading row and total row Bold.

(x) Save the document as Answer "3.xls".

Ans.
Sl.
No.
Month Basic
Pay
Grade
Pay
DA Gross
Pay
GPF
Subscription
Net Pay
1 Apr 12200 5400 4576 22176 2000 20176
2 May 12200 5400 4576 22176 2000 20176
3 Jun 12200 5400 4576 22176 2000 20176
4 Jul 12730 5400 4714 22844 2000 20844
5 Aug 12730 5400 4714 22844 2000 20844
6 Sep 12730 5400 4714 22844 2000 20844
7 Oct 12730 5400 4714 22844 2000 20844
8 Nov 12730 5400 4714 22844 2000 20844
9 Dec 12730 5400 4714 22844 2000 20844
10 Jan 12730 5400 4714 22844 2000 20844
11 Feb 12730 5400 4714 22844 2000 20844
12 Mar 12730 5400 4714 22844 2000 20844
Total 151170 64800 56154 272124 24000 248124

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