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Transcript of Draft Finance Manual_Costing
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Haryana Vidyut Prasaran Nigam LimitedCosting Manual
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TABLE OF CONTENTS
S. No Section HeadPage
Reference
1.1 Introduction 3
1.2 Objectives and Policies 3
1.3 Preparation and Review of Cost Performa D 4
1.4 Preparation and Review of Cost Performa F 10
1.5 Preparation of Performa C 14
1.6 Templates & Formats 19
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1.1 INTRODUCTIONHVPNL is required to maintain Cost Records as per the Performa suggested vianotification number G.S.R. 913(E) dated December 21, 2001, also called as Cost
Accounting Records (Electricity Industry) Rules, 2001.
Costing manual for HVPNL sets out the principles and practice of costing to be appliedin preparation of these Cost Records. It is a guiding factor to allocate cost for core aswell as non-core activities of the business.
1.2 OBJECTIVES AND POLICIES
Objectives
To facilitate preparation of Cost records prescribed by law from time to time
Policies
a) Cost records should be prepared and maintained as per prescribed guidelines bylaw from time to time;
b) Preparation of Cost records should be within the timelines prescribed by law(currently 90 days of closure of Financial Year);
c) Costing should be done on full absorption basis to identify the full cost;
d) Costing process should be transparent with a clear Audit Trial
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1.3 Preparation and Review of Cost Performa D
1.3.1 Process Summary
Input Output Key Controls KPIs for MIS Report
Trial Balance for all units andHVPNL
Statementshowing Power Transmitted for the year
Performa D for last financial year
Performa D asper Cost
AccountingRecords(ElectricityIndustry) Rules,2001
Approval of PerformaD by Chief Accounts Officer (CAO)
Reconciliation of Performa D withFinancial Statements
Instances of delayin preparation of Performa D
Other ReferenceDocuments
Notification G.S.R. 913(E) dated December 21, 2001, also called asCost Accounting Records (Electricity Industry) Rules, 2001
Automated Activities Preparation of Performa D in ERP environment on the basis of books of accounts
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1.3.2 Process Flowchart
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1.3.3 Process Narrative
The activities of Preparation & Review of Cost Performa D for financial year are given below:
S. No Activities including controls Responsibility
Receipt of Trial Balance
1 Trial Balance for all units and HVPNL is received from A&R Section within 60 days of closure of financial year.
Accounts Officer
Grouping of Ledger codes to Cost Account Heads
2 On the basis of TB ledger codes, Trial Balance for allunits are grouped under below mentioned Cost AccountHeads:
Sale of Power
Wheeling of Power
Other Income
Fuel Cost
Repair & Maintenance Sub Stations
Repair & Maintenance Transmission Repair & Maintenance Others
Wages/Salary & Benefits
Admin Overheads
Insurance
Loss Sales of Fixed Assets
Investments Diminution of Value
Other Debits/Written Off
Grant to HTTS (Capital or Revenue)
Rebate Wheeling
Prior Period Debits/Credits
Depreciation
Interest Working Capital or Others
Interest Capital Projects
Table given below explains an example of grouping of
Section Officer
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S. No Activities including controls Responsibility
Ledger Heads under Repair and Maintenance for allunits into Cost Account Heads.
Ledger HeadTrial
BalanceCode
CodeDescription Cost Account Head
Repair andMaintenance
74.1 Plant andMachinery R&M - Sub-Stations.
74.2 Building R&M - Others.
74.3 Civil Works R&M - Others.
74.4 Hydraulic Works R&M - Others.
74.5 Line S/C NetworkR&M - Transmission
Lines.
74.6 Vehicles R&M - Others.
74.7 Furniture/Fixture R&M - Others.
74.8 Office Equipment R&M - Others.
74.9 O&MY/BARRAGE R&M - Others.
(Refer AS.1 for all the Trial Balance Codes to be grouped)
Allocation of Expenses
3 Expenses grouped in Step - 2 are allocated to belowmentioned sections:
Generation
Transmission
Civil Works
Admin
Services
(Refer AS.2 Allocation of expenses under various
heads)
Basis of Allocation will be as follows
Particulars Description Basis of Allocation
Sale of Power Income Actual
Wheeling of Power Income Units Transmitted
Other Income Income Actual
Fuel Cost Expense Actual
Section Officer
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S. No Activities including controls Responsibility
Repair & Maintenance Expense Actual
Wages & Salary Expense Actual
Admin Overheads Expense Actual
Insurance Expense Actual
Loss Sale of fixed assets Expense Actual
Investment Diminution in value Expense Actual
Other Debits Written off Expense Actual
Rebate Wheeling Expense Units Transmitted
Prior Period Debits/ Credits Expense Actual
Depreciation Expense Actual
Interest W/ Capital & Other Expense T/ Cost Depreciation
Interest Capital Projects Expense N/F Assets
Preparation and Review of Performa D
4 The calculated values for Transmission in Step 3 areplotted under Cost Information head in the PerformaD. Previous years values are obtained from PerformaD for previous year.
Section Officer
5 The Quantitative Information is mapped in the Performa
D from following documents: Statement showing Power Transmitted for financial
year
Information on Length of Transmission lines fromProjects Department.
Previous Years Performa D.
Section Officer
6 Independent review is performed to assess thecorrectness of cost as per Performa D, by matching itwith consolidated Trial Balance for all the XEN.
(Refer AS.3 for Reconciliation Statement of Performa D with consolidated Trial Balance of all
XEN)
Senior AccountsOfficer
7 In case of any variation with the consolidated TrialBalance, the same is reviewed and explained.
Senior AccountsOfficer
8 Final Performa D is a uthorized by Chief AccountsOfficer.
Chief AccountsOfficer
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Responsibility Matrix
Activity DescriptionSectionOfficer
AccountsOfficer
Sr. AccountsOfficer
Chief AccountsOfficer
Grouping of Ledger codes to Cost Accountcodes
Initiate Review Authorize
Allocation of Expenses
Initiate Review Authorize
Preparation andReview of PerformaD
Initiate Review Review Authorize
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1.4 Preparation and Review of Cost Performa F
1.4.1 Process Summary
Input Output Key Controls KPIs for MIS Report
Performa C, Dand E for thecurrent year
Trial Balance for HVPNL
Performa F asper Cost
AccountingRecords(ElectricityIndustry) Rules,2001
Approval of PerformaF by Chief AccountsOfficer (CAO)
Reconciliation of Performa F withFinancial Statements
Instances of delayin preparation of Performa F
Other ReferenceDocuments
Notification G.S.R. 913(E) dated December 21, 2001, also called asCost Accounting Records (Electricity Industry) Rules, 2001
Automated Activities Preparation of Performa F in ERP environment on the basis of books of accounts
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1.4.2 Process Flowchart
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1.4.3 Process Narrative
The activities of Preparation & Review of Cost Performa F for the financial year are given below:
S. No Activities including controls Responsibility
Receipt of Cost Performa C and D
1 Cost Performa C and D for the current year arecompiled.
Accounts Officer
Allocation of expenses to Core/ Non - Core Activities
2 If HVPNL is manufacturing any other product(s) or isengaged in other activities in addition to generation,transmission, distribution or supply of electricity, theparticulars relating to utilization of materials, labor andother expenses in so far as they are applicable to suchother products or activities shall be categorized asexpenses on Non Core activities.
Separate Trial Balance is prepared for Core activities aswell as Non Core activities.
Section Officer
Preparation and Review of Performa F
3 The values of Core activities from Performa C, D and Eare plotted in the Performa F along with the values for Non Core Activities segregated in Step 2.
Section Officer
4 The basis of allocation to Core/Non Core Activities isalso documented in Performa F.
Section Officer
5 Independent review is performed to assess thecorrectness of cost as per Performa F, by matching it with Trial Balance.
(Refer AS.4 for Reconciliation Statement of Performa F with Trial Balance )
Senior AccountsOfficer
6 In case of any variation with the Trial Balance, the sameis reviewed and explained.
Senior AccountsOfficer
7 Final Performa F is authorized by Chief AccountsOfficer.
Chief AccountsOfficer
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Responsibility Matrix
Activity DescriptionSectionOfficer
AccountsOfficer
Sr. AccountsOfficer
Chief AccountsOfficer
Allocation of expensesto Core/Non Coreactivities
Initiate Review Review
Preparation andReview of Performa
F
Initiate Review Review Authorize
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1.5 Preparation and Review of Performa C
1.5.1 Process Summary
Input Output Key Controls KPIs for MIS Report
Performa C for the previous year
Trial Balance of BBMB andIPGCL
Performa C asper Cost
Accounting
Records(ElectricityIndustry) Rules,2001
Approval of PerformaC by Chief AccountsOfficer (CAO)
Reconciliation of Performa C withFinancial Statements
Instances of delayin preparation of Performa C
Other ReferenceDocuments
Notification G.S.R. 913(E) dated December 21, 2001, also called asCost Accounting Records (Electricity Industry) Rules, 2001
Automated Activities Preparation of Performa C in ERP environment on the basis of books of accounts
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1.5.2 Process Flowchart
Trial Balance of BBMB andIPGL reviewed by A&R by
Accounts Officer
On the basis of TrialBalance, grouping is doneas per cost accounts head
by section officer
Cost of generation of electricity is computed
independently for BBMBand IPGCL and cumulative
for HVPN
Performa C is prepared asper cost of Generation as
computed by Section Officer
Independent review toassess the correctness of
cost as per Performa C bymatching it with Trial
Balance by Senior AccountsOfficer
In case of any variation withthe Trial Balance, the sameis reviewed and explained
Final Performa C isauthorized by Chief Accounts Officer
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1.5.2 Process Narrative
The activities of Preparation & Review of Cost Performa C for the financial year are givenbelow:
S. No Activities including controls Responsibility
Receipt of Trial Balance
1 Trial Balance of BBMB and IPGCL is received from A&RSection within 60 days of closure of financial year.
Accounts Officer
Grouping of Ledger codes to Cost Account Heads
2 On the basis of TB ledger codes grouping is done as per Cost Account Heads:
Material/ Fuel Cost
Direct Wages
Stores and Spares
Repair and Maintenance
Insurance
Depreciation Administrative Overheads
Interest and Finance Charges
Section Officer
Computation of Cost of Generation
3 Cost of generation of electricity is computed as per thetable below. Cost of generation is computedindependently for BBMB and IPGCL and cumulative for HVPN. Further, cost of generation is also computed Per Unit of power generated.
ParticularsFuel Cost
Add: Direct wages and salaries Add: Stores and spares Add: Repair and maintenance Add: Depreciation Add: Administrative overheadLess: Common pool saleLess: Prior period income
Section Officer
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S. No Activities including controls Responsibility
Less: Miscellaneous incomeCost of generationSelling expensesInterest and finance chargesTotal cost of generation
Preparation of Performa C
4 Performa C is prepared as per the cost of generationcomputed in Step 2.
Section Officer
Review of Performa C
5 Independent review is performed to assess thecorrectness of cost as per Performa C, by matching itwith Trial Balance.
Senior AccountsOfficer
6 In case of any variation with the Trial Balance, the sameis reviewed and explained.
Senior AccountsOfficer
7 Final Performa C is authorized by Chief AccountsOfficer.
Chief AccountsOfficer
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Responsibility Matrix
Activity DescriptionSectionOfficer
AccountsOfficer
Sr. AccountsOfficer
Chief AccountsOfficer
Allocation of expensesto Core/Non Coreactivities
Initiate Review Review
Preparation andReview of Performa
F
Initiate Review Review Authorize
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1.5 Templates and Formats
Description Frequency Preparer Reviewer Approver Template
Grouping Chart Yearly SectionOfficer Accounts
Officer Sr. Accounts
Officer
Allocation sheet Yearly SectionOfficer Accounts
Officer Sr. Accounts
Officer
ReconciliationStatement of Performa D withconsolidated TrialBalance of allXEN
Yearly SectionOfficer Accounts
Officer Sr. Accounts
Officer
Performa D Yearly SectionOfficer Sr. Accounts
Officer
Chief Accounts
Officer
Performa D as per Cost Accounting
Records (ElectricityIndustry) Rules, 2001
ReconciliationStatement of Performa F with
Trial Balance
Yearly SectionOfficer Accounts
Officer Sr. Accounts
Officer
Performa F Yearly SectionOfficer Sr. Accounts
Officer
Chief Accounts
Officer
Performa F as per Cost Accounting
Records (ElectricityIndustry) Rules, 2001
Performa C Yearly SectionOfficer Sr. Accounts
Officer
Chief Accounts
Officer
Performa C as per Cost Accounting
Records (ElectricityIndustry) Rules, 2001