Departmental Roles

Following are the main roles of Accounts department;

1. Book keeping

2. Budgeting

3. Costing

4. Financial reporting

5. Fixed asset management

6. Monitoring and verification

7. Payable management

8. Receivable management

9. Reconciliation

10. Taxation and corporate affairs

The basic concept of each role of Accounts department is explained hereunder;

Book-keeping

One of the core responsibilities of Accounts department is book-keeping. All the transactions those have a financial impact, finally reach accounts department and recorded accordingly. There can be multiple financial transactions in a business. However, all are covered under following categories in general;

• Cash transactions (payments and receipts)

• Bank transactions (payments and receipts)

• Booking the purchases (cash or credit)

• Booking the sales (cash or credit)

• Booking expenses (direct expenses, indirect expenses, admin expenses, selling expenses, marketing expenses, distribution expenses etc.)

• Booking financial charges (financial charges, bank service charges, premiums, interests, etc.)

• Booking inventory transactions (receipts, issuance, rejections, returns, etc.)

• Booking accruals and deferral incomes and costs

• Booking adjusting entries to settle the effects in various heads of accounts

It is essential now days to use specialized software for book-keeping purpose. There are many standards software in the market. Good software should provide certain basic features those include;

• Multi-level chart of account

• Concept of responsibility centre, cost centre, profit centre or revenue centre

• Store accounting

• Basic accounting based on double entry system

• Back tracking of each transaction from any level

• Compilation of data and financial reporting

• Reconciliation features

• Audit trail

• Work log maintenance (user wise)

• Auto Posting of accrual entries

• Fixed asset register

• Tracking transactions against one work order

We consider that accounts department at least covers following areas when performs book-keeping role;

1. Voucher preparation based on transaction nature

2. Proper utilization of the software – using all available features of the software

3. Maintaining hard form of data as well for vouchers

4. Maintaining the inventory records; receipts, issuances

5. Preparing Store accounts

6. Track of all the transactions is well maintained not only in software but in manual records as well

7. Concept of cost centre i.e. project accounting is performed

8. Track of transactions against one project, against one purchase order is possible

9. Financial record for previous periods is well maintained, properly filed and easily traceable at any given time

10. Updated book-keeping of imprest accounts

11. Updated book-keeping of advance against salaries and advance for purchases

12. Updated aging reports for sales and purchases

13. Accrual entries are well known and updated in the software

Budgeting

Budgeting is a broad role and varies from organization to organization. We consider budgeting role of accounts department and it is specific to the expenses. Budget is designed to direct company’s financial and human resources. There are following general types of expenses;

• Admin expenses

• Selling expenses

• Marketing expenses

• Distribution expenses

All these expenses are regular in nature and can be predicted on different basis, usually on basis of historical expenses. Furthermore, budgets can be prepared for departments; department heads are responsible to give feedback about their budgets. It is role of accounts department to do the following;

1. Preparation of budgets

2. Identifying and incorporating control measures

3. Assigning departmental responsibilities and budget limits

4. Monitoring the budget

5. Notifying budget variances in real time

Costing

Costing helps the company management to decide about a sales order to be accepted or rejected. If proper costing of a product, service or project is conducted well in time, management may know exactly the contribution margin that can be earned from that order. Furthermore, a post costing measures the actual results of an order. Therefore, it is used to measure the performance of company resources including human resource as well.

Accounts dept. performs following activities to fulfil this role;

1. Breakeven analysis

2. Identifying direct expenses / CGS

3. Application of costing method and preparation of pre-costing

4. Contribution margin calculation

5. Reviewing actual costs

6. Variance reporting

7. Post costing and identifying the profit or loss

Financial Reporting

Preparation and presentation of financial statements is the most important role of accounts department. Being custodian of the records of all financial transaction, accounts dept. prepares company financials, preferably management accounts are prepared on monthly basis, all the financial statements are prepared on quarterly basis and half yearly review is also conducted by an external source. However, legally, company is bound to prepare and submit company accounts once a year as per Government laws.

Financial reporting in real time is always important. Company management is interested to know the financial performance and financial position of the company on regular basis. Also, it is important to project future cash flow requirements to run the business operations smoothly. For this purpose following financial reports are prepared and presented by the accounts department on regular basis;

1. Trading and Profit & Loss Account (Projected and actual)

2. Balance Sheet

3. Statement of cash flows (projected and actual)

4. Aging reports

5. Budget reports

6. Store accounts

Certain statements are also added when set of statements is required by a Government body, tax office or by banks. For all the financial statements those are submitted to the said institutions, all the applicable international accounting standards, international financial reporting standards and local laws must be complied with.

Fixed Assets Management

In some industries fixed assets are the backbone of the business and are a major investment. Inability to plan the exact requirement of fixed assets and invest in only those assets that add value to the organization is a critical step for any business. Improper execution of this step may lead to investor value being destroyed and essential resources locked in.

Moreover, it is essential to keep detailed record of all the fixed assets. Accounts dept. prepares fixed asset register that contains complete record of every fixed asset. Following areas are covered by the accounts department for fixed asset management;

All these expenses are regular in nature and can be predicted on different basis, usually on basis of historical expenses. Furthermore, budgets can be prepared for departments; department heads are responsible to give feedback about their budgets. It is role of accounts department to do the following;

1. Preparation of budgets

2. Identifying and incorporating control measures

3. Assigning departmental responsibilities and budget limits

4. Monitoring the budget

5. Notifying budget variances in real time

Monitoring and Verification

Monitoring and verification is a wide role and one of the most important roles being performed in the organization. Being custodian of all the financial transactions of the organization, accounts dept. performs this important role.

Concept of monitoring is to keep an eye on the financial targets of all the departments. Following areas are considered critical and regularly monitored by the accounts dept.;

Verification becomes a primary role of accounts dept. in absence of Internal Audit dept. However, even if, there is internal audit dept. is in place, Accounts dept. has a significant role of verification of financial transactions.

Accounts dept. is involved in book-keeping of all the financial transactions of the company, therefore, is in position to check whether all the company rules & regulations, company policies and procedures are being followed regarding each transaction. For this purpose, accounts department performs the following activities;

1. Verifying the transaction details, all the supporting documents before posting in the accounting system

2. Such verification procedures should be available in writing with accounts personnel to ensure the effectiveness of the verification

3. Verifying that the transaction is pre-approved by the relevant signing authority

4. Verifying the calculations of the transactions

5. Verifying the reasonableness of the expenses keeping in view the recent transactions of similar nature

6. Verifying the calculation basis of interest charges and financial charges charged by bank keeping in view the facility offer letter.

7. Verifying the calculation basis of insurance premiums observing the insurance agreements

8. Verifying the basis of salary preparations, files of new comers, final settlement records, random check on attendance records, calculation basis of overtime bills and contractor bills

Payable Management

Accounts dept. records all the payables of the company. All the procurement transactions are routed to accounts dept. where all the purchases are recorded. Furthermore, accounts dept. has the knowledge of cash flow projections, can plan or stop the payments as per company policy.

Accounts dept. makes sure;

1. To abide by company policy about payment

2. To abide by payment procedure to vendors and employees

3. To prepare aging reports of all the payables

4. To reconcile payments with vendors

5. To prepare cheques

6. To keep the record of payables and payment

Receivable Management

Accounts dept. records all the receivables of the company. All the sales transactions are routed to accounts dept. where all the sales are recorded. Furthermore, accounts dept. has the knowledge of cash flow projections and financial targets, can follow up the receivables as per company policy.

Accounts dept. makes sure;

1. To abide by company policy about receivables

2. To abide by procedures of receivable management

3. To prepare aging reports of all the receivables

4. To reconcile receivables

5. To follow up with customers

6. To keep the record of receivable and receipts

Reconciliation

There are multiple transactions being held in the organization in different departments. All the transactions, which have financial impact, are required to be recorded by the Accounts dept. this is role of accounts department to ensure the completeness of the records to point out any mistake or flaw during execution of the transaction or during book-keeping.

For this purpose, accounts dept. reconciles all such areas, which include;

1. Reconciling imprest accounts with cash register

2. Reconciling bank ledgers with bank statements

3. Reconciling payables with vendor records

4. Reconciling sales with the record of sales dept.

5. Reconciling material consumption

6. Reconciling inventory by conducting stock taking

Taxation & Corporate Affairs

Taxation is a wide scope which is a legal obligation of every company where taxes are applicable. This is role of accounts department to make sure the record keeping of tax transactions. Also, this is responsibility of accounts dept. to file tax returns before or on due date of filing. In case that company is in agreement with a tax consultant, the major responsibility is shifted to the tax consultant. Accounts dept. should ensure the following in this regard;

1. To keep the record of tax transactions

2. To prepare tax return

3. To file the tax return before or on due date of filing

4. To liaison with tax consultant and provide assistance

5. To respond to the tax authorities regarding their concerns, notices, etc.

6. To deposit the tax liability in Government treasury

7. To apply for refund / to liaison with tax consultant and provide required data

There are certain legal obligations of other government bodies like Securities and Exchange Commission of Pakistan (SECP). It is responsibility of Accounts department to fulfil all the requirements of SECP enquired on time to time basis and submit the required documentation as per schedule for all the group companies.

Related: Departmental Profile - Accounts

Following are the main roles of Admin department.

1. Discipline

2. Housekeeping

3. Asset Management

4. Vehicle Management & Operations

5. Security

6. Staff Accommodation

7. Telephone/Mobile

8. Utilities Management

9. Emergency Handling

10. Staff Entertainment

11. Visitor Handling

12. Generator Handling

13. General Item Management

14. Local Laws

15. Staff Placement

Discipline

Discipline is to follow the rules & regulations of company, respect for authority self reliance and teamwork.

We considered the following areas important to ensure discipline;

·      Policies & Procedures

·      Duty Timings

·      Attendance

·      Dress Code

·      Code of Conduct

·      Code of Ethics

Housekeeping

Housekeeping is a basic role that includes a wide range of activities to be performed. The purpose is to ensure cleanliness in office premises that includes office block, passages, kitchens, cafeteria, washrooms, staff accommodation, etc. Proper arrangements of housekeeping in all said areas help the staff to enjoy healthy office environment and it reflects the overall image of the organization.

We consider the following areas important to ensure housekeeping;

1.     Quality of housekeeping

2.     Written company policy regarding housekeeping

3.     Written working procedure regarding housekeeping

4.     Non-compliance reporting and handling

Assets Management

Asset management is a systematic process of maintaining, upgrading and operating physical assets. Asset management is the crucial role that covers the major activities like listing of the assets, and record keeping. Proper management of assets ensures the correct usage of assets that becomes helpful for an asset to prevail long working life.

We consider the following areas important to ensure housekeeping;

1.     Written company policy regarding assets management

2.     Written working procedure regarding assets management

3.     Listing & Record-keeping

4.     Maintenance

5.     Handing over

6.     Taking over

7.     Physical Inspection of Assets

8.     Warranties

9.     Insurance

10.  Non-compliance reporting and handling

Vehicle Management

Vehicle Management means to manage the vehicles physically and maintaining complete record for that vehicle in a single file.

Physical management includes the usage of pool vehicles for office usage, rotation of drivers and completing the requirements of company staff regarding vehicle availability. This also includes the repair & maintenance of the vehicles, all vehicles should be in perfect position all the time.

Record keeping means all records for a vehicle should be available in its file. These records include,

·      Registration Documents

·      Bank Documents

·      Insurance Documents

·      Handing Over/Taking Over Records

·      Maintenance Records

·      Accident Reports

We consider the following areas important to ensure vehicle management;

1.     Written company policy regarding vehicle management

2.     Written working procedure regarding vehicle management

3.     Recordkeeping

4.     Maintenance

5.     Handing over

6.     Taking over

7.     Custodian’s proficiency

8.     Physical Inspection of vehicles

9.     Insurance

Security

Security means the assured safety of all premises, assured prevention of trespassing and secured entrance and issuance of all types of goods.

We consider the following areas important to ensure security;

1.     Policies, procedure & security plan

2.     Security plan implementation

3.     List of security staff/Performance profile

4.     Listing & record keeping of all the possessions of security staff, e.g.

·      Weapons

·      Ammunition

·      Wooden Rods

·      Torches

·      Uniforms

·      Badges

·      Any other

Staff Accommodation

Company maintained residences specified for employees where rules may get differ from company to company.

We consider the following areas important to ensure staff accommodation:

1.     Policies & Procedures

2.     List of employees getting company accommodation

3.     List of assets at company accommodations

4.     List of venues specified for company accommodation

5.     Handing over / taking over of assets at company accommodation

6.     Security arrangements and code of conduct at company accommodation

Telephone/Mobile

This section will include the availability of telephone/mobile, their usage and management.

We consider the following areas important for telephone/mobile management:

1.     Policies & Procedures

2.     Implementation of policies

3.     Limits & Authorizations

Electricity Management

The controlled usage of electricity at workstations was reviewed in this section.

We consider the following areas important for electricity management;

1.     Policies & Procedures

2.     Implementation of policies

Emergency Handling

Emergency means all types of emergencies including fire and smoke, earthquake, medical and any other.

We consider the following areas important for emergency handling;

1.     Policies & Procedures

2.     Knowledge & training of staff regarding emergencies

3.     List of responsible personnel during any emergency

4.     Management of firefighting equipment

5.     Management of first aid box

Staff Entertainment

The benefits provided to staff during working hours are discussed in this role.

We consider the following areas important for staff entertainment;

1.     Policies & Procedures

2.     Implementation of policies

Visitors Handling

The benefits provided to staff during working hours are discussed in this role.

We consider the following areas important for staff entertainment;

1.     Policies & Procedures

2.     Implementation of policies

Generator Handling

The physical handling and maintaining the documents will be discussed in this role.

We consider the following areas important for staff entertainment;

1.     Policies & Procedures

2.     Fuel Consumption

3.     Maintenance

General Items Management

General items include stationary, grocery and cleaning products, etc.

We consider the following areas important for staff entertainment;

1.     Policies & Procedures

2.     Implementation of policies

3.     Record keeping

Local Laws

Local laws are the rules & regulations applied by government.

We consider the following areas important for this role;

1.     Policies & Procedures

2.     List of applicable local laws

3.     Implementation of local laws

4.     Liaison with govt. departments & officials

5.     Record keeping

Staff Placement

This role contains the management of staff placement and offices.

We consider the following areas important for this role;

1.     Policies & Procedures

2.     Offices and their utilization

3.     Seating pattern of department’s staff

4.     Assets, furniture & fixtures available at departments

Related: Departmental Profile - Admin

Following are the main roles of procurement department.

1. Selection & evaluation of vendors

2. Negotiation

3. Procurement

4. Record Keeping

5. Coordination

6. Research & Development

Each role is described in detail hereunder;

The basic concept of each role of Purchase Department is explained hereunder;

Selection & Evaluation of Vendors

Assessment of strengths and weaknesses of current and prospective vendors in terms of their capacity, sales, revenue, reputation, quality, reliability, service and payment terms is called vendor evaluation. It is expected that Purchase Department should set the standards for all the materials in coordination with company management.

·      In case if a new vendor is required for some materials the evaluation for this vendor is called “Vendor Selection”.

·      Assessment of current vendors is called “Vendor Evaluation of Existing Vendors”.

We consider it important that Purchase Department should have comprehensive market knowledge. This knowledge should consist of market trends for any specific product regarding prices, supplies, stocks projections and vendor’s strengths and weaknesses regarding that product. Purchase Department should liaison with vendors and market to analyze the market trends and vendor’s strengths and weaknesses.

The vendor evaluation of existing vendors can be done by observing the prices offered by them, the overall terms and conditions, deliverance of orders, quality of delivered materials etc. The data of price approvals, quality approvals, time deliveries, rejections, delayed deliveries should also be maintained to conduct evaluation of existing vendors.

Negotiation

This is an important role of Purchase Department. Once an approved indent is received for procurement, Purchase Department should get quotations, rates from the market and from approved vendors. The rates and terms & conditions should be well negotiated with the vendors and then a comparative statement should be prepared that is essential to get approved from the competent authorities.

We consider it important that the terms & conditions should be well negotiated before submission of the comparative statement for verification and approval from competent authority. The changes in rates and terms negotiated by the verifying or approving authorities should also be recorded and kept in the record for future references.

Procurement

Procurement is the main role of Purchase Department. Purchase Department should ensure the following during procurement;

·      Procurement from approved vendors

·      Terms and conditions should be competitive as per market practices or better from it and should be within budget limits.

·      A transaction of procurement should be formal and all the required documentation both by the company and by the vendor should be completed and recorded.

·      Deliveries should be observed on time and in case of delays, it should be recorded in the records of the vendor for evaluation purpose

·      The quality of the procured materials should be according to the requirements

·      The quantities ordered should be accomplished by the same vendor. In case that vendor fails to deliver the required quantities, it should also be recorded in the vendor records for future reference.

·      Purchase Department should keep the tracks of partial deliveries and liaison with the vendor for balance deliveries

·      Purchase Department should coordinate among all the concerned including site stores, vendors, accounts department, etc.

·      Purchase Department should submit the required documentation for payable processes to the accounts department in a timely manner. The required documentation should be complete according to the requirements of accounts department.

·      There should not be disputes between sending and receiving ends and if the case may be, such issues should be resolved by Purchase Department.

·      Purchase Department should maintain the records of POs issued to the vendors. All partial deliveries, completed deliveries, POs pending or awaited for deliveries, cancelled POs, closed POs should be kept in record and proper tracking should also be available.

Recordkeeping

Record keeping means to compile all the documentation involved in Purchase Department. Such record keeping includes the following;

·      Vendor selection and records

·      Approved indents received and their status

·      Quotation gathering and their record

·      CS preparation and their record

·      POs preparation and their record

·      Deliveries and their adjustment

·      Invoices from vendor and their tracking through documentation

·      Submission of required documentation for payable management to accounts department

·      Coordination with vendors and company departments and their records

·      Payment records to the vendors

·      Records of purchase returns

·      Vendor evaluation of existing vendors and their records. 

Coordination

Coordination regarding material arrangements and related matters is a key role of Purchase Department. It may involve the coordination with the following stakeholders;

·  Coordination with site stores and management

·  Coordination with PCC department

·  Coordination with vendors for quotation or rate gathering and setting terms & conditions

·  Coordination with audit department regarding verification of CS

·  Coordination with GMO for CS approvals

·  Coordination with vendors for schedules and deliveries

·  Follow up with vendors regarding schedules and deliveries

·  Coordination with vendors for invoicing

·  Coordination with finance department regarding financing arrangements

·  Coordination with accounts department

·  Coordination with vendors for payment matters

·  Coordination with accounts and cash section for payment processing

·  Payments to vendors.

·  Coordination among the purchase team

·  Market surveys

·  Any special requirements by the competent authorities 

Research & Development (R&D)

The role of research & development requires the innovative thinking of Purchase Department. This role contains,

·      Market research for the materials that can be manufactured by Eden Builders Limited.

·      Research for alternative materials at lesser rates.

·      Research for innovative materials.

Related: Departmental Profile - Procurement