Godown Reconciliation: Is the Weekly Shortage Reportable?
On 14 August the district excise godown at Ranchi closes its weekly accounts. The stock register shows an opening balance of 180 cases at the start of the week and a receipt of 1,250 cases from the bottling plant on Tuesday; every case holds 12 bottles of 750 ml. During the week 940 cases were issued to licensed retail shops against valid permits. At the physical verification on Saturday evening the storekeeper counts 5,812 bottles on the racks. The breakage register separately records 30 bottles broken during handling, supported by a certificate signed by the godown supervisor. Departmental rules allow an unexplained shortage of up to 0.3% of the quantity issued during the period to be written off by the godown officer; anything above this must be reported to the Assistant Excise Commissioner within 48 hours with a recovery proposal. The godown keeper argues that the difference is too small to bother about, and that he had already informed the supervisor orally about the broken bottles.
1. Reconstruct the week's account and state how much of the difference between the book balance and the physical count is explained and how much is unexplained. Show every step.
Read the worked answer
Step 1 – Book balance in cases
- Opening 180 + receipts 1,250 = 1,430 cases available
- Less issues 940 → 490 cases ought to remain
Step 2 – Convert to bottles
- 490 × 12 = 5,880 bottles as per the register
Step 3 – Compare with the physical count
- 5,880 − 5,812 = 68 bottles short in total
Step 4 – Separate what is explained from what is not
- Certified breakage: 30 bottles
- Unexplained: 68 − 30 = 38 bottles
So 30 bottles are explained and 38 are not. The separation is the whole point of the exercise: the breakage certificate is a document with a signature behind it, while the 38 bottles are an accounting gap with nothing behind it except the keeper's word. If the two were added together and called 'about 68 broken bottles', the certified 30 would be used twice - once as evidence and again as explanation.
2. Apply the 0.3% norm. Does the godown keeper have a defensible case? Also show what would happen if the allowance were wrongly calculated on the total quantity handled.
Read the worked answer
Correct base – quantity issued
- 940 cases × 12 = 11,280 bottles issued
- 0.3% of 11,280 = 33.84 bottles
- Unexplained shortage 38 bottles is greater than 33.84, exceeding the allowance by about 4 bottles
Conclusion: the shortage cannot be written off by the godown officer. A report with a recovery proposal must reach the Assistant Excise Commissioner within 48 hours.
Testing the keeper's argument
- His oral message to the supervisor is not a certificate, and in any case the 30 certified bottles are already excluded from the 38.
- 'Too small to bother about' is not a standard in the rule; the rule fixes a percentage of issues, not a personal impression.
The wrong-base trap
- Total quantity handled = 1,430 × 12 = 17,160 bottles; 0.3% of that = 51.48 bottles, which would comfortably swallow the 38-bottle gap and hide a real shortage.
- The norm is written on issues because loss arises while stock is being moved out under permits, so using the handled figure would be an error that always favours the custodian. Recomputing on the correct base is the first thing a reviewing officer will do.
3. If the 38 bottles are to be recovered at ₹480 per bottle, what is the recovery amount, and what share of the week's issues does the unexplained shortage represent?
Read the worked answer
Recovery
- 38 × ₹480 = ₹18,240
Share of issues
- 38 ÷ 11,280 = 0.003369 → about 0.337%, i.e. roughly 0.34%
Reading the two figures together The loss looks trivial as a percentage - 34 paise in every ₹100 of stock - yet it is still above the 0.3% ceiling. That is exactly why the rule is framed as a percentage of issues rather than as a rupee limit: an 0.34% leak in a godown issuing over eleven thousand bottles a week is a pattern, not an accident, and it will repeat every week until traced. The report should therefore ask for re-verification of issue and transport records and a surprise check, not merely recovery from the keeper, because recovery alone closes the account without explaining the gap.