Accounts and Finance2

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Standard Operating Procedures

Index

Serial No Subject Page No.

1 Accounts and Finance: Nature &

Scope

2

2 Accounts and Finance: Objectives 2

3 Activity Based Information Division 3

4 Financial Accounting Division 3-4

5 Financial Reporting and Analysis

Division

4-11

5 Financial Forecasting and budget

preparing Division

12

6 Conclusion 13

Accounts and Finance Company Name: Meenakshi Polymers

Department Accounts Depts. Date. 30 September 2011

Submitted to Mr. Jai Sethi Page No. 2-14


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1.Accounts and Finance: Nature & ScopeFinancial statements, which consist of a balance sheet, an income statement, and a statement of

cash flows, are used to evaluate the financial condition of an enterprise.

Financial analysis is of particular interest to creditors, potential and current stockholders,

management, government agencies, customers, and labor. Creditors are primarily interested in

the ability of the company to meet its current and long-term debts. Stockholders are more

interested in the present and future profitability of the

enterprise. Management usually focuses on the trend in net earnings and makes decisions

concerning possible changes in the existing capital structure in an attempt to maximize profits.

The Internal Revenue Service might use the financial statements to determine whether the

enterprise is paying its fair share of taxes, while other branches of the government use the

information to study economic trends in the industry. Customers are concerned that the companywill be financially able to maintain a steady source of supply and meet all of its commitments.

Finally, labor might use the statements to formulate realistic (or unrealistic) wage Proposals.

2.Accounts and Finance: ObjectivesTo provide information:

That is useful to present and potential investors and creditors and other users in makingrational investment, credit, and similar decisions.

To help present and potential investors and creditors and other users in assessing theamounts, timing, and uncertainty of prospective cash receipts from dividends or interest

and the proceeds from the sale, redemption, or maturity of securities or loans.

About the economic resources of an enterprise, the claims on those resources, and theeffects of transactions, events, and circumstances that change its resources and claims to

those resources.


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Accounts and Finance Department is divided into 4 divisions. There

are various functional areas in each division where SOPs can be

made.

3.Activity Based Information DivisionThe primary responsibilities of the ABI Division are to:

Provide leadership in the area of cost management Ensure compliance with relevant Managerial Cost Accounting standards Determine and report the costs of achieving internal and external performance goals Manage the ABI program and maintain the Activity Based Information System

(ABIS) infrastructure

Prepare quarterly reports and briefings on cost of operations for executives andprogram managers

Prepare quarterly Statement of Net Cost and supporting notes Provide cost input and analysis for the Annual Performance and Accountability

Report

4.Financial Accounting DivisionSpecific functions are as follows:

Recording transactions and preparing accounts: Recording transactions investment ofcash, receipt of cash, accounts receivables, payment of rent etc; Preparing accounts foreach entry made in journal and finally preparing balance sheets, income statements and

cash flow statements.

Vendor Payments: The program areas will receive notification from vendors requestingshipments of products. These shipments must be invoiced to the vendors for payment.The program areas will be responsible for creating the invoice and sending it to the

Accounting department to process and maintain. The Accounting Department will send

the invoices to the vendors for payment. A database will be maintained in the accountingdepartment keeping track of all invoices and payments received.

Preparing the Invoice:Enter all applicable information as indicated below.

a. Invoice No: Enter the next sequential number for your program area. All programareas will be responsible for assigning their own invoice number. To avoid duplicateinvoice numbers it is requested that the program area enter their department/program

code prior to the invoice number.

b. Invoice Date: Enter the date the invoice has been prepared.c. Page:Enter 1, unless the invoice is on multiple pages.


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d. Sold To: Enter the vendors Name and complete address.

e. Ship To: Enter the address to where the items were shipped.f. Center Number: Enter the programs center number to be charged.

g. Customer PO: Enter the Purchase Order number for the shipment if applicable.

h. Payment Terms: This is a fixed field. It will always be Net 30 Days.

i. Due Date: Should be 30 days from the invoice date.j. Technical Contact: Enter the name the vendor should contact if there are

questions.

k. Telephone: Enter the telephone number of the Technical Contact.l. Ship Via: Enter the shipping method used (i.e. FedEx, UPS, Courier, etc.)

m. Ship Date: Enter the date the products were shipped.

n. Quantity:o. Description: Enter the description of the item(s) sold.

p. Unit Price: Enter the cost of each item.

q. Extension: This is a calculated field. This will record the total for each line. Tab to

enter multiple lines.

r. Subtotal: This is a calculated field. It will total the amount in the Extensioncolumn.

s. Freight: Enter an amount for freight/shipping costs. If there were no costs, enterzero.

t. Total Amount: This is a calculated field. This will add the subtotal and freight

charges together.

Maintaining Invoices1. All invoices and payments will be received in the Accounting Department tomaintain.

2. Monthly the Accounting Department will prepare reports to the program areas

recording all invoices and payments received for the department.

3. An aging report will be attached to the reports.4. Outstanding invoices (over 60 days old), will be put into the collection process.

Accounting will make a request for payment to the vendor via email, mail, or fax. The

program will be copied on this request and no further shipments should be made untilthe outstanding invoice(s) are paid.

Travel Reimbursements - Process travel vouchers for employees upon completion ofgovernmental travel.

Imprest Fund - Reimburse employees for miscellaneous "out-of-pocket" expenses

Travel Support Services - Obtain passports, tickets, visas, etc. for employees going ongovernmental travel.

5.Financial Reporting and Analysis Division:The primary responsibilities of the Financial Reporting and Analysis Division are to:

prepare the financial statements and reports


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coordinate with the Office of Inspector General in planning for, and carrying out, therequired annual financial statement audit

respond to financial statement audit reports and prepare corrective action audit plans prepare monthly, quarterly and annual financial reports for both internal use and

submission to the Department of Commerce, Treasury Department and the Office of

Management and Budget perform analyses of financial reports and data to identify and analyze fluctuations, trends

and unusual variances to provide an accurate reporting of the U.S. Patent and Trademark

Office's financial condition and results of operations

Perform reviews of internal controls.1 step: Preparation of financial statements: Preparing balance sheets, income statement and

cash flow statement for a financial year and then creating reports for further analysis.

Preparation of Ledger: The main accounting record of a business which uses double-entry bookkeeping. It will usually include accounts for such items as current assets, fixed

assets, liabilities, revenue and expense items, gains and losses. Each General Ledger isdivided into debits and credits sections. The left hand side lists debit transactions and theright hand side lists credit transactions. This gives a 'T' shape to each individual general

ledger account.

A "T" account showing debits on the left and credits on the right.

Debits Credits

There are five (seven) basic categories in which all accounts are grouped:1. Assets2. Liability3. Owner's equity4. Revenue5. Expense6. Gains7. Loss


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Balance sheet: In financial accounting, a balance sheet or statement of financialposition is a summary of the financial balances of a sole proprietorship, a business

partnership or a company. Assets, liabilities and ownership equity are listed as of a

specific date, such as the end of its financial year. A balance sheet is often described as a

"snapshot of a company's financial condition".Of the four basic financial statements, the

balance sheet is the only statement which applies to a single point in time of a business'

calendar year.

Assets1. Cash and cash equivalents2. Inventories3. Accounts receivable4. Prepaid expenses for future services that will be used within a year Non-current assets (Fixed assets)1. Property, plant and equipment2. Investment property, such as real estate held for investment purposes3. Intangible assets4. Financial assets (excluding investments accounted for using the equity method, accounts

receivables, and cash and cash equivalents)

5. Investments accounted for using the equity method6. Biological assets, which are living plants or animals. Bearer biological assets are plants

or animals which bear agricultural produce for harvest, such as apple trees grown to

produce apples and sheep raised to produce wool.[17]

Liabilities1. Accounts payable2. Provisions for warranties or court decisions3. Financial liabilities (excluding provisions and accounts payable), such as promissory

notes and corporate bonds

4. Liabilities and assets for current tax5. Deferred tax liabilities and deferred tax assets6. Unearned revenue for services paid for by customers but not yet provided Equity

The net assets shown by the balance sheet equals the third part of the balance sheet,

which is known as the shareholders' equity. It comprises:

1. Issued capital and reserves attributable to equity holders of the parent company(controlling interest)

2. Non-controlling interest in equity
http://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Prepaid_expenseshttp://en.wikipedia.org/wiki/Fixed_assethttp://en.wikipedia.org/wiki/Fixed_assethttp://en.wikipedia.org/wiki/Property,_plant_and_equipmenthttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Intangible_assethttp://en.wikipedia.org/wiki/Accounts_receivableshttp://en.wikipedia.org/wiki/Accounts_receivableshttp://en.wikipedia.org/wiki/Cash_equivalentshttp://en.wikipedia.org/wiki/Investments#Financehttp://en.wikipedia.org/wiki/Equity_methodhttp://en.wikipedia.org/wiki/Statement_of_Financial_Position#cite_note-16http://en.wikipedia.org/wiki/Statement_of_Financial_Position#cite_note-16http://en.wikipedia.org/wiki/Statement_of_Financial_Position#cite_note-16http://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Provision_%28accounting%29http://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Deferred_taxhttp://en.wikipedia.org/wiki/Shareholders%27_equityhttp://en.wikipedia.org/wiki/Reserve_%28accounting%29http://en.wikipedia.org/wiki/Parent_companyhttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Parent_companyhttp://en.wikipedia.org/wiki/Reserve_%28accounting%29http://en.wikipedia.org/wiki/Shareholders%27_equityhttp://en.wikipedia.org/wiki/Deferred_taxhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Provision_%28accounting%29http://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Statement_of_Financial_Position#cite_note-16http://en.wikipedia.org/wiki/Equity_methodhttp://en.wikipedia.org/wiki/Investments#Financehttp://en.wikipedia.org/wiki/Cash_equivalentshttp://en.wikipedia.org/wiki/Accounts_receivableshttp://en.wikipedia.org/wiki/Accounts_receivableshttp://en.wikipedia.org/wiki/Intangible_assethttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Property,_plant_and_equipmenthttp://en.wikipedia.org/wiki/Fixed_assethttp://en.wikipedia.org/wiki/Prepaid_expenseshttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalents


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2 step: Fixed Asset management:

All Fixed Asset must be Recorded in Fixed Asset Register Each Capital Asset must be coded and shall be assigned to Some Department headed by

defined HOD.

HOD must sign on F/A Register to acknowledge the charge of Asset. All unassigned Asset must be headed by Admin Department. Fixed Asset Verification must be done at least twice a year randomly. Every asset must bear a code and sticker bearing asset code. Every asset must go through regular maintenance schedule. Asset can be discarded only by the approval of VP/President. Purchase of every capital asset above Rs. 1,000/- must be approved by purchase

committee.

3 step: Inventory management:

Classifying inventory

Determining inventory Inventory Costing Analysis of inventory

4 step: Cash management:

1. Control of cash flows1.1.InflowsIt is necessary to minimize the interval between the time when cash is received and the time

it is available for carrying out expenditure programs. Collected revenues need to be

processed promptly and made available for use. When tax collection is done by the taxadministration offices (or by Treasury offices) the administrative organization of these

offices may have to be reviewed and their equipment modernized.

1.2.OutflowsFor cash management, the control of cash outflows, which is directly related to

organizational arrangements for budget execution, can pose more difficulties than the controlof cash inflows. However, issues related to cash management should not be confused with

issues related to the distribution of responsibilities for accounting control and administration

of the payment system. The major purpose of controlling cash outflows is to ensure that there

will be enough cash until the date payments are due and to minimize the costs of

transactions, while keeping cash outflows compatible with cash inflows and fiscalconstraints.

2. Centralizing cash balancesTo minimize borrowing costs or maximize interest-bearing deposits, operating cash balances

should be kept to a minimum. In countries where funds are released through an imprestsystem, spending agencies often accumulate idle balances their bank accounts. These idle


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balances increase the borrowing needs of the government, which must borrow to finance the

payments of some agencies, even if other agencies have excess cash.


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5 step: Accounts Receivables Management:


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6 step: Accounts Payable Management:


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7 step: Fund Management:

Start

Cash and Treasury

Management

Minimum level of cash is

maintained at RS 50000

Payment advice to be signed

by President/Vice President

if payment may exceed

25000

All cheques are to be issued

only by payment advice

Withdraw cash from bank if

cash goes below

Stop


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6.Financial Forecasting and budget preparing Division:

This manual provides information concerning the Forecast and Budget Call, along with he detailed

steps to submit your Forecast and Budget data through eReports.

This manual consists of three Sections:

Section A- Guidelines which provide detailed information about the 2010-11 Forecast.

Section B- Guidelines which provide detailed information about the 2011-12 Budget Call, including

how to obtain the necessary tools required for budget submission.

Section C- Provide step by step instructions to aid planners and administrators in the input andretrieval of their Forecast and Budget information from various eReporting Tools.

The following budget principles are meant to provide planners and administrators with a

Common understanding and framework for developing their budget(s):

A. Cost Centre budget for the Division, Faculty, Department or unit should be balanced. This means

that the total expenditures should not exceed the total revenue from all sources. There are twoexceptions to this rule:

If an area has a surplus carry forward available from previous years. In this case, areas may

Overspend its in-year revenue from all sources, thereby drawing down the surplus carry forward.

A. deficit budget submission that was approved in advance by both the Vice-Presidentoverseeing that area.

B. Once a budget is set for the fiscal year it should not be revised based on Actuals. The budgetis an estimate only. Differences between Actuals and Budgets should be explainable.

C. Divisions, Faculties, Departments and units are monitored and evaluated on a bottom-line/net Income basis and are accountable for the use of its own revenue.

D. The budget approval process is authorized via eReports by the AVP or SEO of your Divisionor Faculty.

E. Once a budget is authorized, the Office of the Budgets and Planning will reconcile the CentralRevenue budget and post the budget information into the PeopleSoft Financials system. Postingof the budgets into the PeopleSoft Financials is transparent to the community, but can be

viewed from the eReports Statement of Operations and the Forecast and Budget Call Module onthe next business day.


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7.ConclusionAccounts and Finance is compulsory for organizations for recording, identifying, measuring andcommunicating economic information to permit informed judgments and decisions by users of the

information. This department is very necessary to handle cash and maintain liquidity in theorganization. The purpose of financial accounting statements is mainly to show the financial positionof a business at a particular point in time and to show how that business has performed over a specific

period.

There are two main purposes of financial statements:

(1) To report on the financial position of an entity (e.g. a business, an organization);

(2) To show how the entity has performed (financially) over a particularly period of time.


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Accounts and Finance2

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