ACCOUNTING & FINANCIAL MANUAL


ACCOUNTING & FINANCIAL MANUAL  ___________ OF COMPANIES

 

 

 

 

 

 

Prepared & compiled by:                                             Approved by:

 

_______________________                                        _________________________

Chief Financial Officer (CFO)                                       Director, Finance

___________ of Companies                                            ___________ of Companies

Address                                                                         Address

 

 

 

 

FORWARDING

This manual has been prepared to document the internal accounting procedures for ___________. Its purpose is to ensure that assets are safeguarded, that financial statements are in conformity with generally accepted accounting principles, and that finances are managed with responsible stewardship.

 

This manual puts in place basic accounting, billing, and cash control policies and procedures designed to protect and secure ___________, ensure the maintenance of accurate records of financial activities and ensure compliance with governmental and private funding source reporting requirements.

 

All personnel with a role in the management of ___________'s fiscal operations are expected to uphold the policies in this manual. It is the intention of ___________ that this accounting manual serves as our commitment to proper, accurate financial management and reporting.

 

Where this manual conflicts with specific Government regulation or with ___________’s Board policy, the Government regulations or board policy shall prevail.

 

With the passage of time, expansion of the Group’s financial activities and change/amendment of Government regulations, the policies/procedures contained in the manual will be changed/amended as and when necessary.

 

 

 

Sign: xxxxxxxxxxxxxxx

Chairman

 

                                            ___________ OF COMPANIES

rmg

Accounting & Financial Manual of ___________ of Companies

Introduction

___________ of Companies is a group of 100% export oriented apparel industries specialized in sweater, steel and engineering products for local and export markets. ___________ consists of the following companies located in different parts of Bangladesh:

  1. _________________
  2. _________________
  3. _________________
  4. _________________
  5. _________________
  6. _________________
  7. _________________
  8. _________________
  9. _________________
  10. _________________

                     

This Group has started its operation in 2001 and with the dynamic leadership of its Chairman and Members of the Board of Directors; the Group has been expanding its business rapidly to meet the international demand for its products and contributing to the national economy.

The Accounting & Financial Manual contains the policies, procedures, standards, and guidelines for the accounting and finance staff, for the managers, the management and the stakeholders of the Group. The purpose of this manual is to describe the financial and accounting policies and procedures of ___________ of Industries.  The manual also details the internal controls and specific methods to safeguard the Group’s assets, to maintain books of accounts with the accuracy and reliability of recorded accounting data, and promote efficiency in the accounting and financial operations. The manual ensures that Financial Statements of the Group are prepared in conformity with Companies Act 1994, with the generally accepted accounting principles, with the Bangladesh Accounting and Auditing Standards framed by the Institute of Chartered Accountants of Bangladesh, IFRS and as per laws of the land.

 

The Accounting & Financial Manual has been divided into chapters mainly payment procedures, bank reconciliation, Fixed Assets management, inventory of stocks, monthly reports, budget, delegation of authority and organization chart, Intercompany transaction, duties and responsibilities of the managers and officers of A &F department.

 

 

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Importance of Accounting & Financial Manual

"Cut your coat according to your cloth" - so goes the saying. Even a king becomes a pauper; if he fails to exercise economy in his expenditures. In other words, every organization, irrespective of size or type will have to plan for its expenditure according to its income. The 21st century, is the time of globalization and rapid industrialization in developed and developing countries. This is an era of stiff-competition between industries and businesses. To meet the world demands, to the buyers compliance rules and regulations, most of the export oriented industries especially apparels and textile industries have follow the rules, regulations and procedures for accounting, finance and administration, set by the local regulatory authorities and international buyers. Accounting & Finance Manual of ___________ of Industries shall help achieve the best financial management and shall guide the accounting and finance staff.

Underpinning all financial management systems is a series of accounting and financial policies and procedures which guide operations and lay out how an organization uses and manages its money and maintains credible records. An accounting &financial procedures manual brings all these together in one document. It helps to establish financial controls within the organization that ensure accuracy, timeliness and completeness of financial data accounting entries in the books of account. The manual is generally used by accounts and finance staff, but it can also act as a reference for board members, managers and other staff.

 

An Accounting & Financial Manual will help an organization to:

 

a) make effective and efficient use of limited resources

b) achieve objectives and fulfil commitments to stakeholders, become more accountable to loan giving agencies like banks and leasing companies, the customers of the organization

c) gain the respect and confidence of funding agencies, partners and beneficiaries

d) gain advantage in competition for increasingly scarce resources prepare for long term financial sustainability.

e) diversify income and manage risk

f) maximize utilization of fund by preparing prioritized budgets for the organization

g) check the performance by budgetary control system and take action for the variance between actual performance and budgeted performance

Major Roles and Functions of Accounting & Finance Department of ___________ of Companies

 

Mission

The mission of the Accounting and Finance Department is to provide cost effective and efficient accounting and financial management services to the Board, stakeholders, management and managers of the group and its customers and bankers.

Timely, accurate, clear and complete accounting and financial information is provided through budget and financial reporting, management information systems, forecasting and procedure development.

Values

The department is driven by the following values:

  1. Quality
    • A high standard of excellence drives Accounts &Finance to provide outstanding levels of support and service. The Department continuously strives to be exemplary in all activities and to exceed expectations.
  2. Integrity
    • The Accounting &Finance Department commits to conforming to the highest level of ethical standards and to maintain strong integrity at the time of convenience and also at the time of crises.
  3. Leadership
    • The Department leads by example, encouraging growth and development in the ___________ of Companies.
  4. Teamwork
    • The department strongly believes in team-spirit and aims to make the best decisions collectively and in the best interest of the ___________. As a team, we capitalize on the strengths of each member.

 

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Accounting &Finance Department’s Major Functions

The Department renders support and service to the line functions within the ___________ of Companies with the following key performance areas:

  1. Prepare  the Group’s monthly, quarterly and annual financial statements including Income Statement, Balance Sheet and management reports thereon;
  2. Preparation and evaluation of monthly management accounts;
  3. Ensure compliance to applicable statutes, regulations and international financial reporting standards;
  4. Develop and maintain effective systems of internal and financial control;
  5. Develop and maintain efficient management information systems;
  6. Provide sound advice on the financial and tax implications of business decisions;
  7. Preparation and monitoring of annual budgets and forecasts and reports variances between actual performance and budgeted performance;
  8. Develop and ensure adherence to financial and accounting policies and procedures
  9. Bank and cash management;
  10. Ensure annual inventory of stocks and fixed assets of the Group;
  11. Costing and cost analysis of various products.

 

Key roles of Accounting & Finance Department

  1. Money out – making payments and keeping the bills paid;
  2. Money in – processing incoming payments;
  3. Payroll – make sure everyone gets paid (including the government);
  4. Reporting – preparing financial reports, e.g. P&L Account, Balance sheets and budgets;
  5. Financial Controls – to avoid errors, fraud and theft.

 

 

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  1. Chart of Accounts

___________’s accounting system shall ensure that all incomes and expenditures, all assets and liabilities are properly classified and coded with different numbers for quick identification, quick tracking. Chart of accounts shall be an integral part of computerized accounting, whatever may be the accounting software. Chart of Accounts shall cover all accounts-revenue and capital.

 

2.00  Payment Procedures

2.01  Cash Payment: It is the Group’s policy to discourage cash payments to contractors, suppliers and service providers. However, for urgent works, services or for goods or small amount of payments, cash payments may be allowed. Documents required for cash payment, other than petty cash payments, are Work Order (WO)/Purchase Order (PO), quotations, bills, invoices, delivery challan/Material Receiving Report (MRR). The WO/PO shall show the payment terms either by cash or by cheque and shall be approved by the appropriate authority as per delegation of financial and administrative authority.

 

2.02 There shall be a requisition duly approved by the appropriate authority. The requisition shall mention the types of work to be done or goods to be procured, quantity and value. In case of changes or amendments in the quantity or value, this shall be approved by the appropriate authority. If the amount involved for the goods or services is more than BDT 100,000, at least 3 (three) quotations shall be with the requisition.

 

2.03 If any advance is made to any officer/manager or any staff for cash purchases or for any specific works to be done, the responsibility to adjust the advance shall fall on the person who takes the advance. Cash advance to any employee shall be adjusted within seven days time or as soon as the work is done or goods supplied.

 

2.04 Preparation of cash payment vouchers: The concerned Accounts Officer shall prepare the cash payment vouchers as soon as he/she receives the bills/invoices with required documents. The payment vouchers shall be checked by Accounts Manager and approved by CFO and MD/Director. The Cashier shall not prepare any cash payment vouchers. Based on the signed and approved payment vouchers, the Cashier shall pay and make entry in the Cash Book. All paid vouchers shall be stamped “PAID” immediately after payment.

 

2.05 Petty cash advance to Factories: Petty cash advance shall be made to Group’s factories against approved requisition. The cash advance made to Factories shall be adjusted fortnightly by submitting the petty cash vouchers duly checked and verified by the factory management and by the auditors stationed at factories. The Accounts Manager/Officer at factory, shall maintain a Cash Book, either by computer or manually. All receipts from Head Office shall be entered in the receipt side of the Cash Book and all payments duly checked and approved by factory management shall be entered in the payment side of the Cash. The Cash Book shall be balanced on daily basis and the cash in hand in the Cash Book must be the same as physical cash in hand.

 

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2.06 Reconciliation of Petty Cash advance to Factories: The petty cash advance to factories shall be reconciled monthly by the concerned Accounts Manager with the Head Office cash account.

 

2.07 The Head Office cash book shall be closed every working day after posting all receipts and payment of cash showing the cash in hand. The cash book shall be checked with the physical balance by the designated Accounts Manager on daily basis.

 

3.00 Payment by Cheques:

 

3.01The A & F Department shall make payments to contractors, suppliers, C & F Agents, Transport Agencies, Freight Forwarders, Courier service providers and other big suppliers by account payee cheques. Cash cheques or cash payments shall be discouraged. In case of urgency, payment by cash cheque shall be made with the approval of CFO/MD/Director. Money receipt shall be obtained while making payment by cash or account payee cheque.

 

3.02 Payment to suppliers/contractor/service providers shall be made by A & F Department twice in a month, namely, on 10th and 25th of each month.

 

3.03 Cheques shall be signed jointly by the authorized signatories of the respective companies.

 

3.04 The A & F department shall maintain separate ledger for each bank account. The bank account balances in the ledgers shall be monitored with banks so that no cheque is dishonored.

 

3.05 Cheque Issue Register: Accounts & Finance Department shall maintain a cheque issue register for each bank account. The register shall be signed by the cheque signatories and shall be signed by CFO of the group.

 

3.06 Cancelled Cheques: Cancelled or void cheques shall not be destroyed rather shall be kept carefully with cheque-counter-folio for any future reference.

 

4.00 Bank Reconciliation: The bank accounts of the companies of ___________ shall be checked and reconciled with bank statements, bank advices monthly. The Accounts Manager-in-charge of a Company is responsible for timely completion of bank reconciliation. All reconciliation of bank accounts shall be finished latest by 15thof the following month. The reconciliation statement shall be reviewed and approved by CFO. Any discrepancy or any irregularity found, shall be brought to the notice of the concerned bank and to the Group management.

 

4.01 Accounts Manager shall arrange to collect bank statements, bank advices each month and check the details of bank charges, commission, etc and shall report to banks immediately if excess amount is debited by banks. All banking transactions –receipts and payments shall be

 

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posted to the Bank Books of the company. Every month the Bank Book shall be closed to find out the Bank book balance.

 

4.02 A Bank Reconciliation Format is attached “Annexure- “A” that shall be used for bank reconciliation purpose.

 

5.00 The Group’s A & F department shall maintain party ledgers for Accounts Receivable and Accounts Payable separately, either in General Ledger or in Party Leaders. These parties ledger

accounts shall be checked and reconciled each month with the statements of accounts of the parties. A & F shall review the accounts receivable position and take necessary steps to collect the overdue amounts.

 

5.00 Fixed Asset Management

 

5.01Accounts Manager of the respective company shall prepare a monthly Fixed Assets Schedule showing the cost, additions, sale or disposal, depreciation charged, accumulated depreciation and net book value. A format is attached (Annexure “B”) for use by A & F Department.

5.02 Depreciation

The annual depreciation charge shall be calculated using the Straight Line Method at annual rates estimated to write off the carrying values of assets over their expected useful lives. The annual depreciation rates shall be used are:

Particulars of Assets                          Rate of Depreciation                        

Building                                                                    3%

Plant & Machinery                                           20%

Furniture & Fixture                                         10%

Office Equipment                                            20%

Computer-Software & Hardware                    20%

Motor Vehicles                                               20%

 

Depreciation shall be charged on monthly basis while closing the monthly accounts.

 

5.02 Every Company shall have a Fixed Assets Register at its Head Office. This is a permanent register that shall be maintained by A & F Department. The Fixed Assets Register shall contain the following information:

  1. Description of the asset
  2.  Date purchase, value and name of supplier
  3. Warranty period, if any
  4.  Rate of depreciation
  5. Location of the asset
  6. Date of sale/disposal
  7. Remarks

 

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6.00 Annual inventory of Fixed Assets: An inventory committee consists of accounts, audit and representative from Factory, shall physically check and count the assets and reconcile with the Fixed Assets Register.

 

7.00 Insurance Coverage: A & F department shall ensure that the factory buildings along with the plant & machineries, office equipments, generators, electrical appliances, motor vehicles are properly insured covering all risks from fire, earth-quake and riot.

 

8.00 Half-yearly/Annual Inventory of Stock at Factories:

 

8.01 A & F department shall carry out annual/half-yearly physical inventory of stock of Raw Materials, Packing Materials, Dyes & Chemical, Semi-finished and Finished Stock of every industry.

8.02 An inventory committee consists of representatives from accounts & finance, audit and stores (at factory) shall carry out the inventory and shall submit the report to the respective Managing Director.

8.03 The inventory report shall show the short/excess after comparison of physical quantity with the stock register quantity.

8.04 A & F Department shall value the stocks in process and finished goods stock and make entries in the ledger accounts of the respective companies.

9.00 Payment of Salary & Wages

9.01 The Group has to maintain a time frame to pay salary & wages of factory workers & staff to meet the compliance requirement. The factory management shall complete preparation and checking of wages & salary sheets by the internal auditors and accounts personnel at factory by 04th of each month and shall send the department/section-wise summary sheet to CFO on the same day (04th) for arrangement of fund.

9.02 A & F department shall arrange fund and shall pay to factory workers and staff positively by 7th of each month.

9.03 The factory wages sheet shall be thoroughly checked with the attendance sheet, production sheet, and time sheet and shall be signed by GM, Adm & HR, Internal Auditors and Accounts Manager of the factory.

9.04 For better internal control, the persons who prepare the wages sheets shall not be involved with the wages payment to the workers, cash payment shall be done by some other persons who are not involved with wages/salary sheet preparation.

9.05 The unpaid salary/wages shall not be used for petty cash or for other payments at factory. The unpaid salary shall have to deposit company’s bank account.

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10.00 Intercompany Accounts Reconciliation:

10.01 The Group has 10 sister companies and many transactions relating to intercompany. Every company shall maintain intercompany accounts to record the intercompany transactions.

10.02 The Accounts Manager-in-Charge of a company shall reconcile the intercompany accounts monthly and shall make missing entries, if any and post to the respective accounts.

11.00 Budget & Budgetary Control

11.01 The A & F department shall prepare half-yearly revenue and expenditure budget and capital expenditure budgets for the ___________ of Companies. The shall show the expected revenue and expected expenditure and Factory management with consultation with the marketing/merchandizing managers, shall provide the required information such as expected revenue (value and volume) and estimated costs. A & F department shall compile the information including overheads and fill in the budget formats.

11.02 The budget shall be reviewed and approved the MD/Chairman of ___________. If necessary the budget shall be revised to accommodate changes, if any.

11.03 The approved budget shall be checked and verified with the actual performance and a variance report shall be prepared showing the variances.

11.04 A budget format is attached (Annexure “C”) that shall be used while preparing a budget.

12.00  Wastage (Zhut) Sales at Factory

12.01 The rates of wastage (Zhut) sales shall be fixed by the Managing Director of the concerned company. The money received from wastage sales shall not be used at factory for payments. It shall be deposited to Company’s bank account.

13.00 Delegation of Authority

13.01 Delegation authority means power of authority of the Directors of the Companies for according approval for procurement of goods or services or works to be done for the ___________ of Companies.

13.02 The Chairman of the ___________ or the respective Managing Directors of the Companies shall have the absolute power of authority to accord approval for procurement of goods or services or works to be done.

13.03 The Chairman or the Managing Directors, may, however delegate their power of authority to any Director or to any Senior Managers of the Group, if they think appropriate or necessary, for any particular period of time.

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14.00 Monthly Reports:

14.01 A & F Department shall prepare the following reports:

  1. Income Statement for each of the company-monthly
  2. Loans & Liabilities position of individual company with Banks-monthly
  3. Group liability position and statement of monthly installment –monthly
  4. Monthly statement of realization status of exports
  5. Bank reconciliation statements of every company-monthly
  6. Fixed Assets schedule showing the additions, sales, depreciation and net book value-monthly
  7. Balance Sheet of each of the company-Quarterly
  8. Closing stock reports-monthly
  9. Cash receipts & payments reports from Factories-daily

15.00 Procurement Manual: The Group shall have a detailed Procurement Manual that contains the required procedures, documentations, quotations, requisition, etc. for procurement of goods and services and works to be done, locally and internationally.

16.00 Back up of Computer generated data and reports:

16.01 A & F Department shall keep backup of accounting data generated by TALLY Accounting Software from the beginning to date in separate PC (other than the server) and in DVD. The DVD with the backup data shall be kept with CFO outside office premises.

16.02 Backup of all computerized data of ERP and MIS shall be kept by the Manager, IT of ___________ of companies.

17.00 Organization Chart of Accounts & Finance Department: An organization chart of Accounts & Finance Department of the Group is attached (Annexure “D”)

 

 

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18.00 Job Responsibilities of CFO and other Managers in A & F Department:

18.01 Job Responsibilities of Chief Financial Officer (CFO)

  1. Overall responsibility of the accounts &finance department of the Group
  2. Fund management & control of the ___________ of Industries
  3. Preparation of financial statements including income statement , balance sheet and management reports thereon
  4. Check and verification of payment documents and accord financial approval
  5. Attend the meetings with the managements on matters of administrative and financial decision making
  6. Supervision of managers and staff in A & F department
  7. Developing a suitable accounting system and procedures
  8. Coordinating both internal and external audits
  9. Coordinating the preparation of annual budgets and cash flow forecasts
  10. Safeguarding the Group’s assets and liabilities
  11. Ensuring timely preparation of monthly Bank Reconciliation for all Bank Accounts
  12. Ensuring that the implementation of the Financial and Accounting Procedures Manual and also ensuring it is updated on a regular basis.
  13. Any other duties related to finance that may be assigned from time to time by the MD/Chairman of the Group

18.02 Job Responsibilities of Deputy General Manager (DGM):

  1. Works as DGM, Accounts- In-Charge of __________________.
  2. Costing and analysis of revenue and expenditure of _________.
  3. Liaison with Factory management on matters of accounts & finance.
  4. Supervision of staff and officers at Groups Head Office accounts & finance department
  5. Supervise the store managers at factories
  1. Follow up with ERP and MIS and work as a trouble shooter.
  2. Perform any other jobs as assigned by the management
  3. Reporting to CFO of the Group.

 

18.03 Job Responsibilities of Assistant General Manager (AGM):

  1. Prepare monthly financial statements –Profit & Loss Account and Balance Sheet of ___________’s industries
  2. Check stock valuation sheets of ___________’s industries
  3. Check reconciliation of intercompany accounts
  4. Liaison with banks and leasing companies
  5. Check the costing sheets prepared by the concerned cost accountant
  6. Supervision of staff and officers in Accounts & Finance Department.
  7. Report directly to DGM
  8. Perform any other jobs as assigned by CFO or by Management as and when required.

 

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18.04 Job Responsibilies of Manager-in-Charge of a Company:

  1. Prepare Monthly/Quarterly accounts of the company
  2. Prepare payment documents and arrange for payment to contractors, suppliers and service providers
  3. Reconcile bank accounts with accounts maintained by TALLY Software and prepare monthly bank reconciliation statements of all bank accounts
  4. Reconcile intercompany accounts and valuation of closing stocks at month-end
  5. Check postings to party ledgers and general ledger
  6. Liaison  with Factory management and accounts  as and when required
  7. Perform any other jobs as assigned by the higher management
  8. Supervision of staff and officers working under him and will be reporting to CFO of ___________.
  9. Cost analysis and costing of products
  10. Check entries of purchases and sales, local and international

 

18.05 Job Responsibilities of Manager, Finance

  1. Prepare  the loan schedule
  2. Prepare the realization statement
  3. Prepare the monthly group liability position
  4. Check  and verify acceptance documents with EPR/Challan/MRR reports
  5. Any other jobs as assigned by the Higher Management as and when required.
  6. Collect bank loans statement and reconcile with loan accounts
  7. Report to AGM/CFO

 

18.06 Job responsibilities of Assistant Manager:

  1. Prepare cheque payment vouchers and check with the supporting documents as bill, MRR, Challan, Work Order, Requisition, etc.
  2. Check cash and cheque payment vouchers and prepare journal vouchers and posting to GL
  3. Posting of payment vouchers and receipt vouchers to TAALY Accounting Software
  4. Prepare Bank reconciliation Statement  after checking with Bank accounts in TALLY Software
  5. Collect bank statements, bank advices and check and posting to ledger accounts
  6. Check Head Office salary sheet and arrange for payment
  7. Any other jobs as assigned by Manager and Senior Managers of the group
  8. Reporting directly to Manager-in-Charge

 

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19.00 Changes/amendments to the Accounting & Financial Manual of ___________ of Companies:

19.01 In case of necessity or in case of changes in the nature and volume of works of the A & F Department or if the Managing Director or the Chairman of the Group wants to add or to delete any paragraphs or any provisions of the Manual, that shall be done with the approval of MD or Chairman of the ___________.

 

                                                                                          The End


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