Nonproductive Outlays

losses incurred by enterprises, production associations, economic organizations, or institutions through any of the following causes: irrational use of raw materials, semifinished goods, labor, or financial resources; financial mismanagement, accounting error, or contract violation; or failure to observe established procedures for registering and maintaining physical assets and cash balances.

In the narrow sense of the term, nonproductive outlays are expenditures caused by application of financial or credit sanctions against enterprises and organizations. These include fines and penalties paid for freight delays, substandard product quality, or failure to meet contractual obligations; losses incurred because of faulty workmanship; excess expenditures on materials or fuel, which lead to spoilage; or excess expenditures from the wages fund.

The principal cause of nonproductive outlays is poor management. Reducing and eliminating nonproductive outlays open the way to expanded production, reduced cost, and increased returns for enterprises and associations. To achieve this it is necessary to enhance the direct responsibility of every economic manager for prompt fulfillment of plans and assignments, for product quality, for thrifty and intelligent use of cash balances and material resources, for fulfillment of deliveries undertaken jointly with other enterprises, for observance of production discipline, and for reinforcing cost-cutting measures.

Production and office workers alike are held directly accountable for any supply shortages, spoilage, or excess expenditures they have caused. In conformity with governmental regulations, the agencies of people’s control impose fines on those officials whose actions have caused material loss to the state or to cooperative-kolkhoz and public enterprises and organizations. Where criminal actions have led to nonproductive outlays, the agencies of people’s control submit their findings to the appropriate prosecuting authorities.