ZHRC/HTI Financial Management Training

1. ZHRC/HTI Financial Management Training Session 9: Stores and Supplies Management

2. Learning Objectives • By the end of the session, participants will be able to: • Define the terms “Stores” and “Stores Management” • Describe the importance of Stores Management for a HTI or ZHRC • Describe the basic steps for receiving, accounting, issuance and inspection of stores

3. Introduction: What are Stores? • Stores are goods and supplies that have been purchased by an organization from any source for a specific purpose • Stores include: raw materials, finished products, equipment, furniture and other physical objects of different kinds and description • Stores may be in the form of solid, liquid or gas

4. Tanzania Regulations for Stores • In the United Republic of Tanzania, stores management is governed by the Public Finance Act, 2001 • And its Regulations of 2001, GN 132, published on June 7, 2001

5. What is Stores Management? • Stores management is the system of receiving, ensuring the care and custody of stores, and issuing stores and goods • A key component of stores management is maintaining an accurate inventory of supplies and goods

6. Why is Good Management of Stores and Supplies Important? • Protects the goods and supplies of the ZHRC or HTI • Minimizes the potential misuse or theft • Creates an orderly system for the use of goods and supplies • Provides transparency in the use of goods and supplies • Helps ensure that goods and supplies are used for their intended purposes • Others?

7. Common Sources of Stores • Stores are generally obtained from the following sources, each is covered in more detail in slides that follow: • Completion of the procurement process • Completion of the production process • Goods returned to stores inventory

8. Sources of Stores: Completion of the Procurement Process (1) • The result of a procurement process is the implementation of a procurement contract • When it is a procurement of goods, the contract is called a supply contract • Once the goods in the contract are received, they are inspected by the purchaser for conformance to specifications • When found to conform, they are accepted and kept in the storehouse until used

9. Sources of Stores: Completion of the Production Process (2) • The production process results in finished goods or products • Finished goods are generally kept in finished goods inventories until sold or delivered to the customer • Inventory records are maintained that track the movement of finished goods into and out of inventory

10. Sources of Stores: Goods returned to Stores Inventory (3) • On occasion, the issuance of stores may exceed actual requirements, resulting in the return of the excess to the storekeeper • Sometimes goods are returned to stores inventory after use or as a normal return for loaned items

11. Receiving of Stores • Receiving of materials or stores is an important but often under-rated activity in an organization • It is at the receiving desk that purchasing control documents meet and are matched with the physical materials • Receiving is a critical function for detecting problems or errors in the goods and supplies purchased

12. Receiving Procedures • The typical receiving procedure consists of the following four steps, each of which is addressed in more detail in slides that follow: • Unloading and checking the shipment • Unpacking and inspecting the materials • Completion of the receiving report • Delivery of materials

13. Receiving: Unloading and checking • The number of containers or packages are checked against the carrier manifest or freight documents to verify whether all expected packages have been delivered • All packages are checked externally for damage and the carrier is notified of results

14. Receiving: Unpacking and Inspecting • Three verifications are taken as follows: • The materials and quantity are verified against the seller’s packing list and buyer’s purchase order • The materials are checked to determine whether any damages occurred during shipment • Quality of the delivered goods is verified using the technical specifications included in the purchase documents

15. Receiving: Completion of the Receiving Report • The receiving report is prepared using forms that are usually specific to the organization • For Tanzania Government offices, the receipt voucher is generally used • In other cases, a goods received note is used • Upon completion, the user departments are notified that the goods have been received

16. Receiving: Delivery of Materials • For non-stock items: The materials are delivered by the receiving department to the users who requisitioned the goods • For stock items: The supplies are placed into their locations through the procedures described in the following slides

17. Stores Accounting • Public stores are accounted for using the stores ledgers • The records in the ledgers are kept in respect of quantities and value of all receipts, issues and balances • The ledgers shall be in bound form with each page bearing a printed serial number • Having a stores ledger in a different form must be authorized by the Accountant General

18. Care and Custody of Stores PFR 185 and 186 • Public stores must be kept in safe places and in good condition • An adequate storage facility must be made available • The stock items must be arranged in a manner that permits easy access. Items must be located and kept with due regard to their nature and value • The most expensive and attractive items should be kept under special lock

19. Inspection of Stores (1)PFR 176 and 177 • To ensure that stock items are safely kept, the accounting officer must arrange for regular inspection of stores for which he or she is responsible • The inspection officer must report immediately to the accounting officer in writing any cases of loss, damages or irregularities observed

20. Inspection of Stores (2)PFR 176 and 177 • The accounting officer must take prompt and appropriate action to correct any defects or deficiencies reported • The inspection officer must initial and date all entries checked in the stores records • The inspection officer must physically verify the balances of stocks and submit a report to the accounting officer on the checks made • This is also known as performing a physical inventory

21. Inspection of Stores (3)PFR 176 and 177 • Twice a year, the accounting officer must personally scrutinize the stores accommodation and records in order to satisfy himself or herself that the stores procedures and accounting are adequate and that they provide safeguards against error, loss, damage, waste deterioration or irregularity

22. Issue of Stores (1) • This is the process of physically removing the goods from their storage places and giving them to the ultimate users • The issuance of stores must be recorded in the appropriate documents such as stores ledgers and bin cards • An Issue Voucher or Issue Note is used to record the issuance of stores

23. Issue of Stores (2) • The issue of goods from stores is initiated by the end user when the need arises • However, proper authority must be obtained before goods are physically removed from the store

24. Types of Issue: Issue on Request • There are 4 common ways of issuing goods for internal use: • Issue on request: The user presents an authorized issue note or voucher. The goods are issued immediately after presentation of the issue voucher

25. Types of Issue: Imprest • Imprest issue: This procedure is common in production organizations. A list of material in given quantities is approved to be held in a sub-store or on a production line • At the end of a given period, say a week or month, user prepares a list of consumed materials during the period and presents an appropriate issue document at main store • This will replenish the stock to approved imprest level that was held at the beginning of period

26. Types of Issue: Replacement and Loan • Replacement: For certain items, such as tools and gauges, the operators may be required to present a used article to the storekeeper before a new one can be issued • Loan: This procedure is common where items are required for short periods of use at frequent intervals. Such items may include tools and equipment that are used by different departments. The store keeper controls all items issued on a loan basis

27. Case Study: Stores and Supplies Management

28. Key Points • Stores management is the system of receiving, ensuring the care and custody of stores, and issuing stores and goods. • In Tanzania, stores management is governed by the Public Finance Act, 2001. • Stores Management protects the goods and supplies from misuse or theft and helps ensure they are used for their intended purposes • A periodic physical inspection or inventory of stores is a key component of a stores management system