Internal Check as Regards Stores

Internal Check as Regards Stores

Stores is a place were different kinds of materials, consumables, spare parts are kept under the control of a person known as a storekeeper. The storekeeper maintains and has control over the materials kept in stores. He maintains a ledger known as Stores Ledger where he accounts quantity and value of materials received, issued to production department and maintains balance of materials left in the stores. Every organization has to maintain the stores of different kinds of materials like, finished goods, semi- finished goods and raw materials in a proper way. Stock of goods kept in the Stores Department should be properly protected against pilferage, theft or misappropriations. Hence a proper system of internal check in relation to stores must be given careful attention.

The system of internal check to be introduced in respect to materials is as follows:

1. Location of Stores: Stores should be located at a convenient place and should have proper facilities so that goods may not be misplaced, misused or wasted.

2. Receipt of Stores: The Stores Department on receiving the goods in stores should prepare a Goods Received Note in triplicate. One copy of the note should be sent to the Purchase Department, second copy to the Accounts Department and the third copy will be retained by the Stores Department. The particulars of the goods received should be entered in the note.

3. Preservation of Stores: Stores should be properly preserved; the following are the points to be noted in this regard.

·           A separate place should be earmarked for each type of stores.

·           All items in stores should be serially numbered and the place where they are to be kept also should be numbered.

·           Entries relating to stores, such as, receipts, issues and balance of stores should be recorded in the bin cards. Such bin cards should be kept hanging on the places where stores are reserved.

·           A responsible officier at frequent intervals should check the stores and should also compare the bin cards with the stores ledger.

·           At regular intervals stocktaking should be conducted. Differences if any noticed between the actual stock and the balance of stock as shown by the books should be properly adjusted after obtaining sanction from the higher officials.

4. Issue of Stores: The following system should be adopted for issuing stores:

·     Stores should be issued only against proper requisition slip received from the department. The requisition slip should be signed by the responsible person of the department.

·           Issue of stores should be made only by an authorized person. The Stores officer should be seated near the gate so that all the issues should be made under his supervision.

·           When materials or stores are returned from the job or department, it should be properly accounted in the Materials Return Note.

·           When materials or stores are transferred from one department or job to another entry should be made through the Materials Transfer Note.

·           Proper instructions should be given to the gate-keeper not to allow any materials out of the factory without obtaining permission from the storekeeper.

5. Recording: When materials are issued under the material requisition slip from the department, the requisition slip should be sent to the stores accounts section for recording. At frequent intervals the bin cards should be checked and compared with the entries in the stores records.

Books and Documents to be Vouched: (1) Bin Card, (2) Stores Ledger, (3) Goods Received Note, (4) Material Requisition Slip, (5) Material Transfer Note, (6) Material Return Note.

Records to be verified by the Auditor

Auditor should check entries relating to stores with the following records:

1. Bin Card: Maintained by the Storeskeeper in Stores Department.

2. Stores Ledger Account: Maintained by Accountant in Accounts Department.

Example

On 5th July 2016, received 1000 units at Rs.10 each vide Goods Received Note No.121 On 15th July 2016, issued 100 units vide Material Requisition No.78