Accounting for expendable Items….a necessary evil

April 29, 2021

Many users asked or believed that expendable items need not be taken up in the inventory system or those in the service business where they do purchase inventory for use in the course of delivering their services or job sites in projects accounting

If you look at a recent case where  one of the NPark officer asked for bribe from hat supplier  not all 10,000 units of hats were delivered but the full amount was paid out (Most likely that each hat is issued out to each NPark officers to protect them from the sun during their course of work and likely that it is expendable items, without the need to return.)  Only 5,000 hats were delivered and the delivery was late, which would have incurred a late fee, according to charge sheets.

Assuming each hat conservatively cost SGD10.00 , the total cash outlay would have been SGD100,000 and he asked for a SGD10, 000 bribe, allegedly in return for lying to NParks that the company had delivered 10,000 hats to the statutory board.

The key word here is measure and manage again, against abuse. Management should provide a guide as in the quantum of the value, say example anything more than SGD1,000, for expendable item, to be included in the inventory system, anyone draw out, to who, when, need to be recorded and sign out. A random spot check is needed to ensure that the quantity is almost accurate or let the store keeper know that you are watching.

So the actual lost, for this case alone, could have been SGD50,000 had it gone unnoticed. And we are not talking about those that goes undetected.

It may appear to be administratively expensive, but look at the loss above, for not doing. You do not know how much you lost until it is found out. This will not be the first or last, in any organisation, or your organisation may be next, if you do not have a check and balance in place.

On hindsight, the organisation may want to consider to keep a staff with a full year salary of this amount just to check on the expendable expenses, a necessary evil if the expendable inventory summed up to the millions in each year.

Realtimme Cloud has a good inventory system that is available in the Premium plan , for you to track items for sale and / or items for use in your job costing. You can contact us or whatsApp our sales team for more information +65 8148 8824

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