Accounting Manual of SPMCIL

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Accounting Manual of SPMCIL Powered By Docstoc
					Accounting Manual of
     A Brief Presentation
By Praveen Gupta, Assistant Manager (F&A)

• Before Corporatisation the nine units of Mints
  and Presses have been maintaining their
  accounts on cash basis under Government
  Accounting System.
• After corporatisation SPMCIL is governed by
  Provisions of Companies Act, 1956.
• The companies act prescribes the books of
  accounts to be kept by company and the it
  specifies that double entry and accrual system of
  accounting is to be followed by companies.

         Background Contd…
• As per companies act all companies must follow
  Accounting Standard issued by Institute of
  Chartered Accountants of India (I.C.A.I).
• According to Accounting Standards issued by
  I.C.A.I, company may follow different accounting
  policies. For example for valuation of Inventories
  a number of methods have been given in
  Accounting       Standard    2    “Valuation     of
• Therefore a need arise to form a manual which
  will specify the standard practices to be followed
  by all units uniformly.
     Accounting Manual Contd..
• Accounting activity starts with accounting transaction like
  incurring expenses on travelling.
• It is then recorded in Books of Accounts.
• For recording accounting transaction Accounting head is
  required. Like for travelling expenses it can be recorded
  under travelling expenses/tour Expenses/ any other
  head as decided by management.
• If different accounting head are used by different units it
  may not be possible to compare the expenses incurred
  by different units on transactions of similar nature.
• Therefore need arise to have chart of account.

         Accounting Manual
• In order to maintain standard accounting
  practices across all units of SPMCIL an
  Accounting Manual has been made.
• Uniform accounting practices among all units
  facilitate comparison between different units.
• Uniform accounting facilitates better MIS i.e
  better decisions.
• Manual was needed to bring transparency in the
  accounting procedures and to ensure that no
  malpractices takes place and no chance of
  misappropriation of funds.

    Accounting Manual Contd..
• Accounting manual specifies:
 Accounting heads to be used for Accounting
 Procedure to be followed for recording
  transactions in books of accounts
 Checks to be applied to ensure transactions are
  recorded after necessary approvals.
 Procedures        to   carry   out      necessary
  reconciliations like bank reconciliation and inter
  unit reconciliation.
 How to make year end financial statements.

             Flow of Accounting
• Recording of Entry in Books of Accounts.
• Trial Balance.
• Profit and Loss Account for the period
• Balance sheet as on date
• Approval of Financial Statements i.e Balance Sheet, P&L
  Account by Board of Directors.
• Submission of duly Approved financial statements to
  Statutory auditor for Audit.
• Submission of Audited Financial Statements to C&AG for
  their comments u/s 619 of the Companies Act.
• Holding AGM of the Company and placing the audited
  accounts alongwith management reply on the comments
  of C&AG and Statutory Auditors.
 Contents of Accounting Manual
1.   Introduction
2.   Chart of Accounts
3.   General Accounting Procedures
4.   Transactions Entries - Accounting Principles and Procedures
        a. Receipts
        b. Expenses
        c. Employee related transactions
        d. Purchase and Stores
        e. Sales
        f.   Fixed Assets
        g. Investments
        h. Loans and Borrowings
        i.   Provisions – Bad Debts/ Taxation
        j.   Inter Unit Transactions
5.   Reconciliation Procedures
6.   Period end Financial Statements
7.   Audit

           Internal Control
• It refers to all the plans, policies and
  procedures adopted by management of
  the entity for
Conducting the business in order and
  effective manner.
Follow management policies
Safeguarding of assets
Detection, prevention of fraud and error on
  timely basis.
            Internal Check
• It refers to check on day to day transaction
  operating continuously as a part of routing
  system whereby work carried out by one
  person is automatically checked by
  another person.

    Internal Controls and Checks

• Internal checks and Internal control
  procedures have been defined in
  accounting manual for all accounting
  activities so that work of one person is
  automatically checked by another and
  Detection, prevention of fraud and error is
  done on timely basis.

   Internal controls/Checks regarding
expenditure specified in Accounts Manual

 •   The Head of the Accounts Department shall
     ensure budget availability with respect to the
     expenditure incurred at the time of accruing of
     the expenditure.
 •   The Head of the Accounts Department shall
     ensure that all the bills/invoices were journalized
     before release of the payments.
 •   The Head of the Accounts Department shall
     ensure proper authorization of Payment Order as
     per the authorities delegated by SPMCIL.

Internal controls regarding expenditure
     specified in Accounts Manual

• The Head of the Accounts Department shall
  ensure that the relevant supporting documents are
  annexed to the Payment Order submitted by the
• The Head of the Accounts Department shall
  ensure appropriate classification both in terms of
  expenditure head and the period in which the
  expenditure has been accounted with reference to
  the nature of the bill and the date of the bill,

     Internal controls regarding expenditure
          specified in Accounts Manual
• Similarly Internal controls in respect of
  other transactions have also been
  specified in Accounting Manual e.g
Employees advances
Fixed Assets etc..
     Specific Controls to prevent
          Fraud and Error
• No payment without proper authorisation.
• All Payments through Cheque.
• Daily closing of Cash book and Day book.
• Entry in Accounting software on daily basis.
• Bank reconciliation on daily basis.
• In each unit two separate Bank account one for
  receipts and other for withdrawls.
• No Entry in Books of Account without approval.
• Timely scrutiny of Accounts.

    Specific Controls to prevent
     Fraud and Error contd..
• Back up of Accounting Information to H.O
  on regular Basis.
• Internal audit for checking 100%
  transactions and to ensure legal

• Following audits are carried out to ensure the
• Internal Audit- By Firm of CAs engaged by
  Management- It reports to Top Management.
• Statutory Audit- By CA firm appointed by CA&G-
  Reports to Shareholders of the Co.
• Transaction Audit- By Staff of C&AG Office-
  Presented to Parliament
• Supplementry Audit- By Staff of C&AG Office-
  Reports to shareholders of co. and also placed
  in parliament

Thanking you

For your attention