SOP Library
SOP NO:
FS-FA07
(List of Exhibits/Attachments)
Missi
on
:
Finance and Administration
Area:
Financial Services (FS)
Activity:
Financial Accounting (FS-FA)
Title:
Revised SOP on Accounting for Empty Sacks
Date Approved/Issued:
09/14/1994
Date Effective:
09/14/1994
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
A. Nature of Empty Sacks
Empty sacks are warehousing supplies used as containers for grain stocks which may be made of plastic, jute or JPC of varying sizes and capacities. Empty sacks are classified according to type (i.e. jute, plastic, JRM), capacity (in kg.) and condition, brand new and second hand (serviceable, unserviceable).
B. Control of Empty Sacks
1. All MTS transactions must be properly documented. For documentation procedures of MTS transactions (e.g. procurement, milling, dispersal, drying etc.) please refer to the SOP on Revised Stocks and MTS Documentation and Reporting System.
2. All accountable officers of NFA who have been issued MTS accountabilities shall be issued accountable forms - Empty Sack Receipt/ Empty Sack Issues for use in the operational activities of NFA and shall be required to liquidate their MTS accountabilities with the issuing SGOO - Warehouse Supervisor II immediately after each operation. Should they fail to do so, the SGOO-WSII shall send a written demand to the accountable officer after five (5) working days from termination of operation. The SGOO-WSII shall send a written demand for the liquidation of MTS accountabilities of concerned accountable officer at least twice with an interval of five (5) working days. If, despite repeated demands the accountable officer still fails to liquidate, the SGOO-WSII shall report in writing the non-compliance by said personnel to the Provincial Manager and COA Auditor who shall immediately conduct examination of the MTS accountability of the personnel in question.
3. All unserviceable/outmoded MTS inventories for disposition shall be covered by an Inventory and Inspection Report (IIR) duly approved by the authorized official. The total book value for the MTS recommended for disposal shall be indicated in the I & I Report. Please refer to the Implementing Guidelines on MTS Disposition for Policies and Procedures Regarding MTS dispositions.
4. A bi-annual inventory of MTS shall be conducted by the provincial office. The inventory count shall be done during the months of March and September each year simultaneous with the inventory count of stocks. An inventory count of Stocks and MTS Report shall be submitted by the Provincial Office to the Regional Office not later than April 21 and October 21 for the inventory count of March and September, respectively. The report shall include the actual inventory on hand and per book and condition of stocks/MTS per warehouse. A Consolidated Inventory count of Stocks and MTS Report shall be submitted by the Regional Office to IAS, copy furnished DAS/DMO not later than April 26 and October 30 for the inventory count period of March and September, respectively. The report shall contain the actual inventory on hand and per book and the condition of stock/MTS per province per region.
C. Valuation of MTS
Brand new Empty sacks issued to Procurement Team Leaders, Millers, Banks, Farmer - borrowers, etc., shall be valued at the prevailing average unit cost at the time of issuance. However, receipts of empty sacks (return of unused MTS previously issued) from the said entities shall be valued at the same cost of their issuance.
D. Costing of Empty Sacks
1. The method to be used in determining the unit cost of empty sacks shall be the moving weighted average. The unit cost at moving average is computed as follows:
Cost of Beginning Inventory + Cost of Acquisition
Average Unit Cost = ------------------------------------------------------------------
Quantity of Beginning Inventory + Quantity Acquired
2.
MTS Subsidiary Ledger (Exhibit 1) per classification (Jute and Plastic)
shall be maintained by the Accounting Section to reflect quantity and cost transactions.
E. Accounting Treatment
1. Chart of Accounts
Empty sacks recording shall adopt the following account titles and codes :
8-72-600 Semi-Expendable Supplies, Container and Property
600.20
Empty Sacks with Warehouse Supervisors
This account shall be used to record transactions regarding the Empty Sacks under the accountability of Warehouse Supervisors. The MTS Report shall serve as the Subsidiary Ledger to monitor the MTS accountability of each Warehouse Supervisor per MTS type/classification.
600.21
Empty Sacks with Other Officers/Employees
This account shall be used to record Empty Sacks issued to and receipts from other officers/employees during procurement, drying, milling and other operational activities. The MTS Report of the officer/employee shall serve as the Subsidiary Ledger to monitor the MTS accountability of each officer /employee per MTS classification.
600.22
Empty Sacks with Other Agencies
This account shall be used to record Empty Sacks issues to and receipts from Other Agencies/borrowers during procurement and other operational activities. A Subsidiary Ledger account shall be set up to record/monitor the MTS accountabilities per agency per MTS type/classification.
600.23
Empty Sacks with Miller Contractors
This account shall be used to record Empty Sacks issues to and receipts from Miller Contractors. Subsidiary Ledger accounts for individual millers shall be maintained to record/monitor the MTS accountability of each miller contractor.
2. Expenses incurred in the dispersal of MTS shall be charged to operating expense - warehousing activity if transfer of MTS is within the provincial office (warehouse to warehouse).
If transfer of MTS is from one province to another province either within the region or outside the region, dispersal expenses shall be charged to operating expense - dispersal activity.
Freight and other incidental expenses incurred from the issuing warehouse to port of receiving province shall be to the account of issuing province. Expenses incurred from port to warehouse of receiving province shall be for the account of receiving province.
3. Brand New Empty sacks actually used as containers for grains milling and polishing shall be charged to inventory cost and subsequently be capitalized to palay, rice, corn or other cereals. MTS used in other activities shall be treated as operating expense. No empty sacks expense will be recorded for the use of second hand empty sacks.
4. A revaluation of MTS inventory cost based on its condition shall be taken up by the Senior Accounting Specialist in the books. For this purpose, the following policies shall prevail :
4.1 A periodic reclassification of empty sacks under the accountability of NFA accountable officers shall be done to coincide with the semi-annual inventory count of stocks and MTS during the months of March and September each year. This shall be undertaken by a team composed of the Regional Engineer as head, Asst. Provincial Manager (APM)/SGOO-POO, Accounting representative, Sr. Calibrator, SGOO-WS II and COA representative as observer.
4.2 A
Reclassified Empty Sacks Inventory Reconciliation Report (RESIRR)
shall be prepared by the SGOO-WS II immediately upon reclassification. The
RESIRR
shall be submitted to Accounting Unit for reconciliation with the book balances.
4.3 Balances reflected on the
RESIRR
shall be reconciled with the Empty Sacks Report and book balances by the Sr. Accounting Specialist. Appropriate adjustments to proper accounts shall be effected to tally the same.
4.4 A journal voucher shall be prepared by the Sr. Accounting specialist every time a reclassification is conducted to take up the cost adjustment from brand new to reclassified outmoded/unserviceable MTS in the books. The quantity shall be transferred from brand new to its appropriate classification.
6. Empty sacks found unserviceable or lost in the hands of agencies/entities authorized to borrow MTS shall be charged to the account of the concerned MTS borrower at the prevailing replacement cost based on the Schedule of Replacement Costs at the time of default for all types of MTS as prepared by the Operation Planning Division of the Department for Marketing Operations and approved/issued by the Management. A billing to this effect shall be prepared by the Accounting Unit immediately upon discovery. Billing of MTS determined to be unserviceable shall be based on the approved Inspection and Inventory Report (IRR). Payment of the billed amount must be made by the concerned MTS borrower within ten (10) days upon receipt of the billing, otherwise an interest of 12% per annum shall be charged.
Restitution in kind may be accepted, subject to conformity with the NFA standard specifications for purchase of locally manufactured MTS to be determined by the Inspection Team. For this purpose, policies and procedures as per existing SOP on Inspection, Testing and Evaluation of MTS purchased and delivered to NFA shall be followed. Restitution in kind shall be in accordance with the quantity recomputed based on the prevailing replacement cost at the time of default.
The SGOO- Provincial Operations Officer shall have the responsibility of officially informing the agency/entity borrowers for the above stated conditions before actual issuance of MTS.
F. Pro-forma Journal Entries
1. Receipt of Brand New MTS from purchase or transfer based on ESR :
DR : MTS Inventory - Warehouse Supervisor xxx
CR : Appropriate Account xxx
2. Receipt of Second Hand MTS (from drying, milling, remilling, mending, bagging, rebagging, as container of dried stocks/imported rice, as by products container by borrower and others) based on ESR :
Memo Entry - enter quantities in the MTS Subsidiary Ledger
3. Issuance of Brand New MTS (for drying, milling, re milling, mending, bagging, rebagging, as container of dried stocks, as by products container, reconditioning of imported rice and others) to other Accountable Officer/Miller/Other Agencies based on ESI :
DR : MTS Inventory - Other Officers/Other Agency xxx
CR : MTS Inventory - Warehouse Supervisor xxx
4. Issuance of Second Hand MTS to other Accountable Officers/Millers/Other Agencies based on ESI :
Memo Entry - enter quantities in MTS Subsidiary Ledger
5. Issuance of brand new MTS for the following transactions based on ESI shall be recorded as follows:
a.
Procurement of Palay:
DR : Operating Expense-Procurement-Palay
MTS Expense xxx
CR : MTS Inventory with Warehouse Supervisor xxx
b.
Procurement of Corn:
DR: Inventory Cost-Procurement-Corn
MTS Expense xxx
CR: MTS Inventory with Warehouse Supervisor xxx
c.
Milling
ESI:
DR: MTS Inventory with Miller Contractor xxx
CR: MTS Inventory with Warehouse Supervisor xxx
DR: Inventory Items for Sale xxx
Local Rice (W in P + 1C)
DR/CR: Inventory Cost - Local Rice xxx xxx
CR: Work in Process - Milling xxx
CR: MTS Inventory with Miller Contractor xxx
d.
Remilling
ESI:
DR: MTS Inventory with Miller Contractor xxx
CR: MTS Inventory with Warehouse Supervisor xxx
WSR
(Remilled Rice):
DR: Operating Expense Warehousing - Rice
MTS Expense xxx
CR: MTS Inventory with Miller Contractor xxx
Milling - MTS Expense
6. Issuance of MTS for receipt of by-products based on WSR/ESI :
DR : Operating Expense - Warehousing Activity - Empty
Sack Expenses xxx
CR : MTS Inventory - Miller Contractor xxx
The cost of MTS used as containers of by products shall be charged to empty sacks expense. The content shall be taken up as memorandum entry.
7. Return of unused/excess brand new MTS previously issued for use as containers of dried stocks based on ESR :
DR : MTS Inventory - WS II xxx
CR : MTS Inventory - Other Officers xxx
* For second hand MTS - Memo Entry - Enter quantities in MTS Subsidiary Ledger
8. Reclassification of MTS from Brand New to Second Hand (Mendable, Unserviceable, Serviceable, Outmoded) based on
RESIRR
:
DR : OE Warehousing - MTS Expense xxx
CR : MTS Inventory - WS II xxx
The corresponding quantity of Brand New MTS will be reduced and transferred to quantity of MTS - Second Hand, Serviceable, Unserviceable, Outmoded.
9. Issuance of Brand New MTS to borrowers based on ESI :
DR : MTS Inventory - Agency Entity Borrower xxx
CR : MTS Inventory - WS II xxx
10. Return of filled sacks from borrowers based on WSR :
DR : Operating Expense - Procurement Activity
- MTS Expense xxx
CR : MTS Inventory - Agency Entity Borrower xxx
11. Return of unused brand new MTS by borrowers based on ESR :
DR : MTS Inventory - WS II xxx
CR : MTS Inventory - Agency/Entity Borrower xxx
Note : The cost of MTS issued to borrowers shall be monitored thru their individual subsidiary ledgers. The cost to take up MTS returns shall be the same cost taken up when issued.
*For second hand MTS - Memo Entry - Enter quantities in MTS Subsidiary Ledger
12. Disposition of MTS thru burning or pallet matting pile cover, dumping, based on approved IIR and ESI :
Memo Entry - enter quantity in the MTS Subsidiary Ledger
13. Disposition of MTS thru Donation based on approved IIR and ESR :
Memo Entry - Enter quantity in the MTS Subsidiary Ledger
14. MTS Issuances to/Receipts from Pallet Matting :
Memo Entry - Enter quantity in the MTS Subsidiary Ledger
15. Receipts of MTS from Fillers :
Memo Entry - Enter quantity in the MTS Subsidiary Ledger
16. Receipt of Donated MTS
Memo Entry - Enter quantity in the MTS Subsidiary Ledger
17. Receipt of brand new MTS as payment or replacement for lost ones
DR - MTS Inventory - Warehouse Supervisor II xxx
CR - Appropriate Receivable Account xxx
G) Books of Accounts
1. Journal entries pertaining to empty sacks transactions shall be reflected in the following books of accounts :
1.1
Voucher Register Journal (VRJ) -
transactions pertaining to MTS purchases based on duly processed and approved disbursement vouchers.
1.2
Advice Register Journal (ARJ
) - transactions pertaining to MTS dispersal based on duly processed and approved Debit/Credit Advices.
1.3
Collection and Deposits Journal (CDJ
) - transactions covering sale of MTS based on official receipts issued.
1.4
General Journal (GJ
) - transactions pertaining to MTS issues to/receipts from procurement, milling, drying, MTS borrowers, etc. based on duly processed and approved journal vouchers.
2. A subsidiary ledger for each accountable officer other than the SGOO (WS II); e.g. Millers and borrowers, shall be maintained by the Accounting Unit. The accounting copy of the
Daily MTS Inventory Report
shall serve as the subsidiary ledger record of the Accounting Unit to monitor MTS accountability of each SGOO (WS II).
H. Trial Balance Reporting
The Monthly Trial Balance shall be supported by the
Schedule of Inventories - MTS
showing a listings of all types of MTS inventory based on condition. The
Schedule for Inventories - MTS
shall reflect the beginning balances, transactions during the month and the ending balances for each type of MTS. Likewise, the volume or quantity of MTS per type/condition shall be reflected in the Trial Balance to facilitate the reconciliation of MTS variances.
I. Reporting in the Statement of Obligation Incurred (SOI)
Purchase of MTS although not an expense shall be reported in the SOI so that it would match with the allotment to be issued by Budget Division. Inventory Cost - MTS or Operating Expense - MTS Expense shall no longer be reported in the SOI as these transactions are only reclassification/adjusting entries as far as budget/funding is concerned.
III. RESPONSIBILITIES
IV. FLOW CHART
Top Page
EXHIBITS
MTS LEDGER CARD (Jute/Plastic)
Daily MTS Inventory Report
Schedule of Inventory - MTS
Reclassified MTS Inventory Reconciliation Report (Resirr)