BACK GROUND Production of military hardware in India commenced with the establishment of Gun Carriage Agency factory (presently known as Gun and Shell factory, Cossipore) in the outskirts of Kolkata by the East India Company in the year 1801. Subsequently more such production entities (i.e. Ordnance and Ordnance equipment factories) were set up, totaling 39 in number, brought under the umbrella of Directorate General of Ordnance Factories and Ordnance Factory Board of Ministry of Defence, Government of India.

What we are now The Military Accounts Department, as it was then called had been looking after the payment and accounting functions of East India Company, to start with, and the British Indian Army later on. It also assumed the role of Cost Accountant within the ambit of the Ordnance Factories. In fact, the Defence Accounts Department is the pioneer of the 'Costs and Works Accountancy' in India on the British model. In later years some of the officers of the Indian Defence Accounts Services had also served as the Chairmen of the Institute of Cost and Works Accountants of India. The factory accounts Organization has all along functioned at the factory and head quarters level while the primary role of cost accounting was discharged by the branch accounts offices attached to each ordnance factory, the overall function of laying down the policy frame work, its monitoring, control and review was carried out besides various day to day payment, accounting and administrative function by the Controller of Army Factory Accounts under Controller General of Military Accounts. This office has taken shape in early 1920's  and has been functioning at Kolkata ever since.  In 1988 the Controller of Accounts Factories was upgraded to Chief Controller of Accounts (Factories) and in April 2000 the office has been re-designated as the Office of the Principal Controller of Accounts (Factories). The Director General Ordnance Factories has been re-organized in '79 as the Ordnance Factory Board for better management and financial control along corporate lines.  The OFB is headed by a Chairman and DGOF with 10 Members including the Member, Finance. The Principal Controller of Accounts (Factories) functions under Member Finance (Ordnance factory Board) functionally and the Controller General of Defence Accounts administratively. The office shifted to its presents premises in February 1985 from the old premises at 9 Chittaranjan Avenue, Kolkata 700072.