SOP Library

SOP NO: 2K7-09-004

Mission: Stabilization

Area: Grains Marketing (GM)

Activity: Warehousing (GM-WH)

Title: Implementing Guidelines on the Suspension of the Tolerable Allowance (TOLA)

Computation for the total Weight Loss (TWL) Equation using instead the individual Factor Method to
be Granted to NFA Stock Accountable Officers for their Palay Stock Accountabilities Starting October
1, 1997 and Onwards

Date Approved/Issued: 09/04/2007

Date Effective: 09/04/2007

Digest:

The suspension of the TOLA computation for the Total Weight Loss (TWL)
equation per ODAFA No. 2K6-06-015 dated 23 June 2006 as approved by the
Administrator pending the result of its systems review by the National Tolerable
Allowance Committee (NTAC) has in effect reverted the computation of TOLA for
palay stock accountabilities to the individual factor method with modification for
transactions starting October 1,1997 and onwards.

The TOLA computation, however, cannot be implemented with modification due

to the lack of data on the expected moisture content (MC) variation for stored
palay.
 The National Tolerable Allowance Committee (NTAC) on its August 24,2007
meeting issued resolution number 07-13-132 adapting instead the long method of
TOLA computation based on individual factor method as indicated in the Manual
on TOLA Factors and Methodologies of SOP No. GM-WH13 re: SOP on the New
Computerized Stock Examination and TOLA Computation approved on April
22,2003 which are being applied to palay stock accountabilities prior to October
1,1997.

1. With the suspension of the TWL equation, all cases of palay stock
accountablilites of SAOs/WSIIs handled starting October 1,1997 onward shall be
granted with TOLA using the individual factor method instead of the TWL.

2. The individual TOLA factor method as contained in the Reference Manual on

TOLA Factors and Methodologies shall be used in the TOLA
computation/recomputation for palay stock accountabilities as follows:

a. Moisture Content (MC) Variation/Shrinkage Allowance

b. Insect Infestation (Controlled or Uncontrolled)
c. Rodent Infestation
d. Bird Infestation
e. Scale Variance
f. Scale Error
g. Spillage/Outside Piling Loss
h. Mechanical Drying Loss

The TOLA for MC variation/shrinkage allowance, insect infestation under controlled

condition, rodent and bird infestation shall be automatically granted. However, TOLA
for insect infestation under uncontrolled condition, scale variance, scale error,
spillage/outside piling loss and mechanical drying loss shall only be granted
whenever applicable or when an appeal is filed by the SAO/WSII.
3. A recomputation of TOLA using the individual factor method shall only be made
on palay stock accountabilities previously computed using the TWL euqation
under the following conditions/situations:

3.1 Automatic Recomputation

Automatic recomputation shall be made on the following instances:

a. Those cases computed with TOLA using the TWL equation but still with
the RTAC for verification by the SAO/WSII;

b. Those with pending/unresolved appeals; and

c. Those cases already verified by the SAO/WSII but no demand letters

were issued yet either by management and/or the Commission on Audit
(COA).

3.2 With requests for recomputation

A recomputation shall only be made upon written request of the SAO/WSII

on the following instances:

a. Those cases with issued demand letters for shortages using the TWL
method;

b. Those who are paying shortages thru installment basis for shortages
using the TWL method;

c. Those who had settled/paid their shortages using the TWL method; and

d. Those with on-going investigation for failure to settle shortages using the
TWL method.

4. The Modified New Computerized TOLA Computation System shall be installed in

the Regional Offices which will replace the existing system. The system includes
the following:

4.1 TOLA Methodologies

a. Statements of Receipts and Issues with TOLA Computations

b. Summation of Net Weight and Numerical Product
c. Computation of Average Period of Storage (X)

4.2 Computation/Recomputation for Individual TOLA Factors

 a. Computation of TOLA for MC Variation/Shrinkage Allowance
b. Computation of TOLA for Controlled Insect Infestation
c. Computation of TOLA for Rodent Infestation
d. Computation of TOLA for Bird Infestation

5. Methodologies and procedures in the computation/recomputation of TOLA for

palay stock accountabilities are the following:

5.1 Computation of TOLA for MC Variation

The TOLA for MC Variation is computed to account for the weight loss in
stored grains due to reduction of moisture content from the initial MC
(receipts) to final MC (issues). The MCs as indicated in the warehouse
documents (WSRs/WSIs), excluding in-warehouse and drying transactions,
are considered to derive the following:

a. Computation of the weight of moisture per WSR/WSI

b. Computation of the average MC1 and MC2
c. Computation of %Y (shrinkage loss)
d. Computation of TOLA for MC Variation

Where:

a. Weight of moisture = net weight (nkg) x moisture content (MC)

b. MC1 = average MC of palay stocks for receipts

MC2 = average MC of palay stocks for issues

Ave. MC1 or MC2 = Grand Total (GT) Net Wt. (nkg) of Moisture (Receipts or
Issues) GT Net Wt. (nkg) of Receipts or Issues

The average MC1 or MC2 is derived if all warehouse documents

(WSRs/WSIs) indicate MC readings within the acceptable range of 10.2%-
14.0%. An MC higher than 14.0% maybe considered if the SAO is allowed
by management to procure and accept wet stocks.

c. Computation of %Y (shrinkage loss)

%Y = (MC1 -MC2) / (100-MC2) x 100

d. TOLA due to MC Variation is computed on the hereunder formula:

TOLA = Q x (%Y/100)

Where:
Q= GT Net Wt. (nkg) of Receipts
Shrinkage Allowance or Shrinkage Estimation Protocol (protocol number
11)

The Shrinkage Allowance is computed and granted in lieu of the derived

equation/formula of TOLA due to MC Variation under the following
situations/conditions:

v One or more MC readings in any of the WSR/WSI is/are missing or not

available from secondary documents (i.e., Purchase Receipts, LARs,
QUASARs, stockbook, COA working papers).

v One or more MCs readings is/are doubtful. An MC is considered doubtful

if it is not within the acceptable range of 10.2%-14.0%. An MC higher than
14.0% maybe considered if the SAO is allowed by management to
procure and accept wet stocks.

The regression equation for Shrinkage Allowance is:

% Y = 0.88 + 0.0033X (in days)

TOLA is computed on the hereunder formula:

TOLA = Q x (%Y/100)

Where:

Q = total quantity handled (receipts) per year

% Y = is the % shrinkage loss

X = average period of storage in days (per year)

To determine X, the formula used is:

SNP (Issues) SNP (Receipts)

X = ------------------ - ---------------------
SNW (Issues) SNW (Receipts)

Where:

The summation of numerical product (SNP) is the yearly total derived

from
the following:
 w computation of the Numerical Equivalent (NE) for receipt (WSR)
and issue (WSI): and
w the corresponding values of the beginning (receipts) and ending
(issues)stock inventories.

NE = the equivalent no.of days reckoning from January 1 of

the year of transaction to the date the stock is
received/issued. (Note: add 1 day if it is on a leap year)

NP = net weight (nkg) received/issued per WSR/WSI x NE

The summation of net weight (SNW) is :

Ÿthe total actual quantity (nkg) received/issued per year; and

Ÿ the corresponding values representing the beginning(receipts) and

ending (issues) stock inventories.

5.2 Computation of TOLA for Insect Infestation

The TOLA for Insect Infestation is either granted for Controlled or

Uncontrolled Condition per NFA-TRDD-Technology Package-99004. The
TOLA for Insect Infestation due to Controlled Condition shall be
automatically granted. However, TOLA due to Uncontrolled Condition shall
only be granted if the SAO/WSII filed a request for recomputation/appeal for
reconsideration with the required certification/reports submitted within the
prescribed period and evaluated/resolved by the RTAC as required per SOP
No. GM-WH13.

The formulae/equations are as follows:

Controlled Condition % Y = 0.0029811 X (in days)

Uncontrolled Condition % Y = 0.0067066 X (in days)

TOLA = Q x (%Y/100)

Q = total quantity handled (receipts) per year

5.3 The TOLA for Rodent and Bird Infestation shall likewise be
automatically granted.

The TOLA for Rodent Infestation per NFA-TRDD-TP-93002 is computed in

the hereunder formula/equation:
 TOLA = 3.2468 nkg per day

The TOLA for Bird Infestation per NFA-TRDD-TP-93003 is computed based

in this formula/equation:

TOLA = 0.2929 nkg per day

5.4 Additional TOLA due to scale variance, scale error, spillage/outside

piling loss and mechanical drying loss shall be granted whenever
applicable and upon filing of a request or an appeal for additional TOLA by
the stock accountable officer with the required certification/reports submitted
within the prescribed period setforth per SOP No. GM-WH13.

6. The Reg’l Office TOLA Working Group (ROTWG) which is headed by the
Regional Accountant and under the supervision of the Asst. Reg’l Director as
the Chairman of the Reg’l Office TOLA Committee (RTAC) shall continue to be
responsible in the conduct of computation/recomputation of TOLA for palay
stock accountabilities. Further, the RTAC shall still be responsible to
evaluate/deliberate/resolve cases of requests / appeals filed by the
SAOs/WSIIs.

7. The result of TOLA recomputation shall be furnished to the stock accountable

concerned through the Provincial Office under its jurisdiction copy furnished
the Provincial Accounting Section and COA. The result of TOLA
recomputation shall supersede previous communication/s issued, if any. It shall
be acknowledged received by the stock accountable officer concerned. If the
stock accountable officer is no longer in service, the result shall be sent through
mail with return card by the Provincial Office for record purposes. The
acknowledged copy or return card shall be forwarded to the Regional Office for
monitoring and control purposes.

8. If the shortage is fully covered/offsetted by the individual TOLA factor method as

a result of the recomputation, any amount, therefore, shall be refunded to the
SAO/WSII who had previously fully settled/paid his shortage. However, in
cases where shortage is not yet paid/settled in full, any additional TOLA shall be
applied to the remaining amount of shortage, and any excess amount shall
either be refunded or upon the written consent of the SAO/WSII to be applied to
his/her other warehouses/cases shortages.

9. If the shortage is not yet offsetted as a result of recomputation, a demand letter

shall be issued to the SAO/WSII without waiting for COA’s audit following SOP
no. FS-GP20 re: Revised SOP on the Payment of Grains and MTS Shortages of
NFA Stock Accountable Officers approved on January 27,2006. A demand
letter shall be re-issued based on adjusted amount of shortage if a previous
demand letter has been issued based on TWL.
10. Adjustment in the books shall follow previous accounting entries set forth in
SOP No. FS-GP20.

11. The IAD, TRDD and MSD shall be jointly responsible for the formulation,
installation of the Modified Computerized TOLA Computation System and the
conduct of briefing/training of personnel for its implementation nationwide.

12. All other provisions of SOP No. GM-WH13 re: The SOP on the New
Computerized Stock Examination and TOLA Computation apporved on April
22,2003 and SOP No. FS-GP20 re:
Revised SOP on the Payment of Grains and MTS Shortages of NFA Stock
Accountable Officers approved on January 27,2006, consistent with this
guidelines shall continue to be enforced and effective.

13. This supersedes Memorandum’06 AO No. 2K6-10-039 dated 02 October 2006

and approved by Administrator Gregorio Y. Tan, Jr. on 30 October 2006.

Date Approved: September 4, 2007.

NTAC
RESOLUTION NO. 07-13-132 S. 2007

A RESOLUTION TO SUSPEND THE IMPLEMENTATION OF THE TOTAL

WEIGHT LOSS (TWL) METHOD OF COMPUTING THE TOLERABLE
ALLOWANCE (TOLA) USING INSTEAD THE INDIVIDUAL FACTOR METHOD TO
BE GRANTED TO NFA STOCK ACCOUNTABLE OFFICERS FOR THEIR PALAY
STOCK ACCOUNTABILITIES STARTING OCTOBER 1, 1997 AND ONWARDS

WHEREAS, SOP No. GM-WH13 entitled SOP on the New Computerized Stock
Examination and TOLA Computation approved on April 22, 2003 by the
Administrator provides that the individual TOLA factor method shall be applied to
transactions before October 1, 1997 and the TWL shall be applied to transactions
starting October 1, 1997 and onwards;

WHEREAS, some NFA stock accountable officers, in particular those assigned in

Region 3 and 4, oppossed and appealed for the retroactive implementation of the
TWL and requested for a review of the TWL application for palay stock
accountabilities;

WHEREAS, the TRDD on its memorandum TRDD-TRD-04-52 dated August 6, 2002

stated that the objectives of the TWL method is to come up with a shorter or a
simple way to compute for the overall TOLA to be applied for each accountability
without jeopardizing the accuracy of the loss caused by each individual factor;
WHEREAS, the TWL study did not provide the information as regards to the degree
of the contribution of each loss causing factors to the total amount of computed
TOLA, in which case, it can neither be concluded nor assumed that the accuracy of
the loss caused by each individual factor was not jeopardized.

WHEREFORE, PREMISES CONSIDERED, the Administrator approved the

suspension of the implementation of the TWL method of computing TOLA for palay
stock accountabilities pending the result of the TWL systems review by the NTAC
per suspension order ODAFA No. 2K6-06-015 dated June 23, 2006.

RESOLVED AS IT IS HEREBY RESOLVED by the National Tolerable Allowance

Committee (NTAC) on its August 24, 2007 meeting the following:

That the long method of TOLA computation based on individual TOLA factors shall
be used instead of the Total Weight Loss (TWL) method;

That the individual TOLA factors as indicated in the Manual on TOLA Factors and
Methodologies of SOP No. GM-WH13 entitled SOP on the New Computerized Stock
Examination and TOLA Computation approved on April 22, 2003 by the
Administrator are as follows:

Moisture content (MC) variation/Shrinkage Allowance

Insect infestation
Rodent infestation
Bird infestation
Scale variance
Scale error
Spillage/Outside piling loss
Mechanical drying loss

That the TOLA due to MC variation, insect, rodent and bird infestation shall be
automatically granted with the TOLA due to scale variance, scale error,
spillage/outside piling loss and mechanical drying loss to be granted whenever
applicable;

That the methodologies for the different equations/formulae in computing the

individual TOLA factors applied to palay stock accountabilities prior to October 1,
1997 shall continue to be enforced thereafter including the use of the approved
TRDD matrix of TOLA for MC Variation;

That palay stock accountabilities which have been computed with the TWL method
shall be recomputed using the individual TOLA factors; and

That an implementing guidelines shall be prepared and a revised/enhanced

computerized system shall be installed in the field offices to operationalize the
TOLA computation/recomputation for palay stock accountabilities.
RESOLVED FURTHER, that the NTAC shall continue to monitor the implementation
of this undertaking in order to ensure compliance of all concerned.

NATIONAL
TOLERABLE ALLOWANCE COMMITTEE

(SGD) ROMEO B. JIMENEZ ERNESTO D. ESPINOSA CRESTITUTO C.

MANGAOANG
Officer-in-Charge, IAD Department Manager, MSD Officer-in-Charge, TRDD

(SGD) ARLYN F. RELAMPAGOS REYNALDO F. RIVERA

JOSE D. CHUA
Department Manager, DAS Department Manager, TSD Asst. Dept.
Manager, AO

(SGD) ATTY. SATURNINO R. ROLA, JR. ATTY. RAFAEL T.

FLORES
Department Manager, EIPD Department Manager, DLA

(SGD) CONRADO DL. IBANEZ

Actg. Asst. Adm. OAAS
Concurrent Dept. Mgr. DMO

(SGD) PEDRO S. HERNANDO, JR.

Deputy Administrator, ODAFA
Chairman, TAC