Office of the Principal Controller of Accounts (Fys)

CIRCULAR

OFFICE OF THE PRINCIPAL CONTROLLER OF ACCOUNTS (FYS)

10A, S. K. BOSE ROAD, KOLKATA – 700 001

No. AA/170/L-I/2016-17/Pr.Item Dated:10-03-2017

The Officer- In-charge

Accounts Office

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Subject:ANNUAL ACCOUNTS FOR THE YEAR 2016-17–PRINCIPAL ITEMS

OF PRODUCTION.

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All Branch Accounts Offices are requested to furnish detail statement of Principal Items of manufacture for the year 2016-17 complete in all respect, free from irregularities and lapses noticed during the course of scrutiny of the statementsinprevious years.It is pertinent to mention that the due date of submission of the same i.e.25.05.2017should strictly be adhered to.Please also refer this office letter no. AA/170/L-VIII Dated 19-11-2014 regarding inclusion of the items mentioned in OFB price list while furnishing the data for volume II of Annual Accounts 2016-17.Further, it is also requested that while furnishing report for Principal Items for the year 2016-17, the items mentioned in OFB price list 2016-17 must be included with the same nomenclature duly indicating the EP Coderepeat EP Codeagainst each item (In this connection please refer para 3 of M.O. letter no. AA/170/L-X dated 30-09-2015). It is requested to adhere to the instructions mentioned in the aforesaid letters.

The statement of Principal Items for the year 2016-17 should take care of the following standards:

(I)The CAT PART NO/VOCAB NO/CATALOGUE NO/INDENT NO./EP Code for each item in the statement must be given.

(II)The items pertaining to (i) Principal Service Items W.O. (85.86, 87, 88, 89, 90, 91 & 92) (ii) Principal Civil Trade Items W.O. (80, 81, 82, 83, 84, 93& 94) and (iii) Other items should be exhibited in the statement seriatimi.e. all the Service Items, Civil Trade Items and Other Items should be shown separately under the respective heads and exhibited accordingly in the statement of the Principal Items.

(III)As the cost of Principal Items forms the basis for fixing the price to be charged for future issue to Services/Service HQs. Ministry of Defence are very much concerned about the correctness of such cost. Hence, the following points may be kept in view while submitting the principal Items of Manufacture for 2016-17.

(a) Arithmetical accuracy is to be ensured i.e. sum of element wise unit cost should tally with the total unit cost. Again, total unit cost multiplied by the total quantity produced should tally with gross total cost. Further, the figure in respect of 2014-15, 2015-16 should also be correctly exhibited, and consistent with the previous year’s accounts.

(b) A certificate in this regard is to be endorsed at the bottom of the Statement as follows:

“Certified that the figures appearing in the Statement have been correctly arrived at and in agreement with the data/figures in the relevant statements/Accounts”

15thJune 2017in order to facilitate the work of Finance Division in reviewing and finalizing issue rates for the next year, there should not be any lacunae in the Accounts sent to this Office in the form of inaccuracies/ inconsistency as this will delay submission of the cost of Principal Items to OFB. It may, therefore, please be ensured that the statement of Principal Items is correct and complete in all respect.

(IV)Reasons for variation beyond (±) 10% under each element of cost between estimate and actual of 2016-17 as well as variation beyond (±) 10% between the costs of2014-15, 2015-162016-17 should be explained with specific details. Item-wise reasons along with specific data for cost variations (exceeding ±10%) should be furnished as per the proforma enclosed(Annexure-A).

(V)While forwarding the statement, the effect of abnormal rejection (kept out of production) if any on the cost in respect of affected items should explicitly be shown in the statement. For this purpose the share of unit cost on account of abnormal rejection (kept out of production) relating to concerned item has to be worked out and shown below the concerned item.

(VI)ISSUE PRICE of each of the item must be given positively in the format given under point (IX) of the concerned item.

(VII)A separate statement 8(i) showing the details of item of manufacture which are not included in the list of principal items in respect of your Factory for the year 2016-17 but individually the total cost of which is ₹ 10 lakhs and above should be prepared in the same proforma as adopted in respect of Principal Items of manufacture. The reasons for wide variation in cost, if any, should be furnished in the same proforma as enclosed for Principal Item of Manufacture (Annexure-A). If no such item is produced during the year a “NIL” report must be rendered.

(VIII) It has to be ensured that the UNIT Column must be filled properly and is not shown blank. Further, it is requested to verify the Unit (viz. per no., per pair, per kg, per 1000 No. etc.) given for Individual item with corresponding Qty. Mfg and Total Cost arrived by multiplying the Qty. Mfg with the Unit Cost of the Item.

(IX)A separate statement showing the following information may also please be given along with the statement of Principal Items of Production. The figures must be tallied with the Annual Accounts.

Total cost of production
Total under/over absorbed fixed charges
Percentage of (b) to (a)

The statement of Principal Items should be submitted through e-mail in addition to hard copy along with a CD covering all statements.

(X)The statement of Principal Items of Manufacture (specially mentioning the unit vis-à-vis Issue Price for all the mentioning years in which the item/s is issued/manufactured)should exclusively be prepared in the following format(*EP code must be given):

Sl.
No. / Cat Part No./Vocab No./Catalogue No./Intent No./W.O. No./Description/ Nomenclature of Items/*EP Code / Issue Price / Unit / Qty. Mfg / Total Cost / COST PER UNIT
Material / SMH / Labour / Direct Expen
ses / VOH / FOH / Tool Charge / Packing Cost / Total
2014-15 Actual
Estimate
2015-16 Actual
Estimate
2016-17 Actual
Estimate

(XI) In addition to above, further information in respect of Common Item of Production for the year 2016-17MUST be furnished(specially mentioning the unit in which the item/s is issued/manufactured) in the format given below(If no common item is produced during the year a NIL REPORT must be rendered). If it is not possible to identify the common items produced in your factory, please consult Annual Account Vol-II of the last year (Statement of common items of production)and ensure that the Analysis part of the said item (Direct Labour, Material Cost, SMH etc.) is filled properly and not to be left blank ( Data in respect of other factories may be left blank if no data is available at your end):

PRODUCT:-

Factory / Quantity / Unit / Cost per Unit (In Rs.)
Material / Labour / Direct Expenses / VOH / FOH / Tool / Total
Name of Fy (1) / Actual
Estimate
Name of Fy (2) / Actual
Estimate
Name of Fy (3, if any) / Actual
Estimate
Direct Labour & Material Cost need to be further analyzed in the format as under:-
Name of Fy. / Name of Fy. / Name of Fy.
SMH Per Unit / Estimate
Actual
Direct Labour Rate per SMH / Estimate
Actual
Absolute Value of Direct Labour Per Unit / Estimate
Actual
Absolute value of Material Consumption / Estimate
Actual
Nomenclature of Major Input Material / Source/ Unit / Usage / Rate / Usage / Rate / Usage / Rate
i) / Estt.
Act.
ii) / Estt.
Act.
iii) / Estt.
Act.
iv) / Estt.
Act.

Remarks showing reasons for variations:-

(XII) Analysis in the following proforma in respect of Principal Service and IFD Items contributing to significant profit/loss (exceeding 20% on COP)

Indentor / Description of item / Year / Qty / COP (per unit) Estimate / COP (per unit) Actual / Diff.
(5-6) / Issue price per unit / Diff.
(8-6) / Total Profit
1 / 2 / 3 / 4 / 5 / 6 / 7 / 8 / 9 / 10

Remarks showing specific reasons for significant variation between Estimated and actual COP and reasons in support of high profit/loss.

Remarks must be given with proper reason(s) and not to be left blank. If there is no significant profit/loss, a NIL report must be rendered.

Please acknowledge receipt.

C of A (Fys) has seen.

(Arun Mazumdar)

Dy. Controller of Accounts (Fys)

Copy to:

1.Controller of Finance & Accounts (Fys.),- For kind information & necessary action.

Accounts Office,

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2.The SAO I/C, EDP Section M.O. Kolkata – To upload the circular in PCA (Fys) web site.

(U.K.Nayek)

Sr. Accounts Officer (Fys)

Annexure-A

Reasons of Cost Variation should be supported by the data and explanation on the following lines:-

A.For Labour Cost Variations:
SMH per Unit / Direct Labour Rate per SMH / Reasons for significant (exceeding ±10%) variation between estimated and actual cost of current year and also actual cost variations between current year & previous year
Estimate / Actual / Estimate / Actual
Previous Year
Current Year
B. For Material Cost Variations:
Sl.
No. / Description of major input material / Year / Unit / Source / Usage / Rate / Reasons for significant (exceeding ±10%) variation in Usage & Rate between estimated and actual cost as well as between previous year and current year
Estimate / Actual / Estimate / Actual
C.For overhead cost Variation:
Significant increase/decrease of overhead % leading to cost variation under OH element need be supported with following data and explanation (to be prepared separately for processing sections/Fy. as a whole)
Previous Year
₹ in lakhs / Current Year
₹ in lakhs / Reasons for significant (exceeding ±10%) variation
Budgeted / Actual
Total Production Man Hour (SMH)
Direct Labour Charges
Specific Items where expenditures have increased/decreased significantly

Note:Based on the above data reasons for variations to be explained suitably which will be common for all similar cases/items. Reasons separately for each item in that case will not be required.