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SOPs of Finance Dept
Mar. 17, 2015 • 24 likes • 54,361 views
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SOPs of Finance Dept
1. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 1 STANDARD OPERATING PROCEDURES (SOPs) FINANCE DEPARTMENT PAK PAP
(Pvt) Ltd, KARACHI INTRODUCTION Thisdocumentoutlinesthe Financial Control
Frameworkwithinthe Pak Pap (Pvt) Ltd. andexplainsits businessprocessesbeingfollowedbythe
Pakpapfinance department.Itwill alsoensure thatinternal controlsare inplace and financial
powersare exercisedappropriately,effectivelyandefficiently. HUMAN RESOURCE
Companyshouldhire aqualifiedHRteamwhichcan properlymaintainthe recordsof the
employeesand prepare payroll atthe endof everymonth. HR departmentshouldhire
acandidate onmeritbasis,andexplainshisjobresponsibilitiesalong withhisdesignationandgrade
inthe interview. HR departmentshouldmaintainhispersonal file inwhichhe attachesall
hiseducation documents, resume andhissignedofferletter. Payroll tobe prepare accordingto
the employee salary,if employeeisondailywagessosalary should be
calculatedfromhisattendance card.Overtime ratesshouldbe calculatedproperly accordingto the
company’spolicy. Propercalculation of income tax accordingto the income tax
ordinance,ProvidentFund, GratuityFund,loansand advances. Salarysheetshouldbe
reviewedbythe finance manager andapprovedbythe management. Propertime inand time
outof all employeesshouldbe maintained. ACCOUNTS DEPARTMENT There shouldbe more
thanone signingauthorities. All paymentvouchersshouldcontain
preparedbycolumnandapprovedbycolumnanditshould be signedbythe relevantstaff. All
paymentvouchersshouldbe approvedbythe finance managerbeforepayingtothe supplier.
Local purchasesof more than 1 millionshouldbe approvedbythe management.
2. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 2 Properpurchase requisitionnote shouldbe sendtothe supplier. Properinvoice
shouldbe sendtothe supplierafterreceivingthe goods. Importpurchase vouchershouldbe
signedbythe managementaftertransferringall the transactionsfromL/C account intothe purchase
account inthe accountingsoftware. Pettycash shouldbe handledbythe finance
departmentonly,limitof pettycashshouldbe Rs. 25,000/-. Properpettycash vouchersshouldbe
preparedandreceiver’ssignature shouldbe mentioned on the vouchers. Entry of pettycash
shouldbe recordedinthe accountingsoftware bythe pettycashier notby the otherexecutive.
Salesordershouldbe approvedbythe salesmanagerbefore handingoverittothe customer and to
the warehouse incharge. Sales,stocktransferandproductionentries inthe accountingsoftware
shouldbe recordbythe finance department. Properdeductionsof
withholdingtaxesonpaymentsof suppliersandservices undersection153 of income tax ordinance
2001. Bank reconciliationshouldbe made onmonthlybasisof all banks. Bank
reconciliationshouldbe preparedtill10th of everymonth. All
bankstatementsandbankbookshouldbe properlyfiled. Bank reconciliationshouldalsobe
approvedbythe finance manager. INTERNAL AUDIT Companyshouldhire aninternal
auditorqualified/semi qualifiedwithgoodexperience whocan handle all assignmentgivenbythe
management. All payments shouldbe pre-auditedbythe internal auditorbefore payingthe
cheque tothe supplier. Monthlyphysical cashcount shouldbe conductbythe auditdepartment
andreconcile itwith the ledger. Auditdepartmentshouldconductquarterlyphysical
stockcountinKarachi warehousesand everyhalf yearlyphysical stockcountof Lahore
Warehouses. Internal auditorshouldidentifythe errors of the systemandadjustthemwiththe
helpof finance department. Preparesauditreports. Reviewof final
accountsandmonthlyreports.
3. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 3 INVENTORY Onlyauthorized personsshallhave accessonthe production floor. All
goodswill be issuedonFirst-in-Firstout(FIFO) basis. A designatedlocationshouldbe
allocatedforall typesof paperinwarehouse. All typesof papersapprovedafterinspectionshall be
storedinthe designatedlocations. Warehouse incharge of JahangirgodownandNew Challi
godownshouldsendproperreport whichclearlymentionall the details fromthe productionfloor of
raw material andfinished goods. Warehouse incharge will be responsibleforsendingthe
wrongdetails. All finishedgoodsshouldbe stackedproperlyinwarehouse. A.
PURCHASES/RECEIVING At the time of goodsreceivedat“Port Qasim”
warehouse,warehouseincharge unloadthe stock andmeasure the “kanta” weightof
eachitemandrecord it. Inspectionshouldbe done oneveryreceiptof papersonimmediate basis.
At the time of preparationof GRN properKantaweightshouldbe mentionsothataccounts
departmentcanrecord correctweightinthe Busy Win. There will be three copiesof
GoodsReceivedNote (GRN). (ANNEXURE-A) 1. Blue copy – Original GRN – Warehouse. 2.
Pink copy – AccountsDepartment/AuditDepartment. 3. White copy – salesDepartment.
ACCOUNTING TREATMENT OF PURCHASES/RECEIVING At the time of importall the
expensesincurredshouldbe recorded inthe L/Caccount. GRN receivedfromthe
warehousewiththe correctweightsshouldbe recordedinthe Purchases. Belowshowsthe
sample of recordingpurchase entry. Description Debit Credit Purchases(withall itemsize and
kanta weight) XXX L/C account (withref number) XXX B. STOCK TRANSFER Stock
shouldbe transferredunderthe supervisionof warehouse incharge. Stock shouldbe
transferredonthe documentnamed “STOCKTRANSFER NOTE (STN)” STN shouldbe
signedbyboththe warehouse incharge atthe time of sendingandreceiving. There will be
fourcopiesof STOCK TRANSFER NOTE (STN). (ANNEXURE-B) 1. Blue copy – Original GRN
– SendingWarehouse.
4. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 4 2. Pink copy – ReceivingWarehouse. 3. White copy – Accountsdepartment. 4.
Greencopy - SalesDepartment. At the day endwarehouse incharge
shouldsendstocktransferreporttothe salesdepartment and accountsdepartmentbycopying Mr.
Irfan Ahmed. ACCOUNTING TREATMENT OF STOCK TRANSFER Stock
transferentriesshouldbe recordedbythe StockTransferNote (STN). Stock
transferentriesshouldbe recordedbyone executivei.e. ‘Mr.Naveed’. Before recordingthe
entryin “BusyWin” executive shouldproperlyreconcile the stocktransfer reportwiththe Stock
TransferNote (STN) whethercomplete informationisprovidedornot. Anydiscrepancyinthe
reportsshouldbe highlightedandsendittothe concernedwarehouse
immediatelybycopyingMr.Irfan Ahmed. Belowshownisthe sample of stock transferentry. From:
NewChalli To: Sheetinggodown Item Quantity Unit Price Amount 23/52 2,039.000 Kgs 46.91
95,649.49 2,039.000 95,649.49 Viewthe impactof stockin and stockout inboth the accounts.
Once entriesare recordedinthe systemitshouldsignedby3 persons. a) In PreparedBy column,
Mr.Naveed. b) In ApprovedBy column, Mr. Salim. c) In AuditedBy column, PresentAuditor.
File the voucherswiththe stocktransferreportsondailybasis. C. PRODUCTION There are five
typesof production. 1. Aara. 2. Rewinder. 3. Conversion. 4. PSH. 5. ReamProduction.
Clienthas 2 productionfloors Jahangirand NewChalli. But Aara and Rewinderproduce
inJahangironly. Deliverychallanshouldbe signedbythe warehouse managerandthe customer.
Warehouse managershouldprepare cuttingreportandsalesreportatthe endof the day and
email tothe salesdepartmentandaccountsdepartment. Cuttingreportshouldbe
clearlyshowingthe productionprocesswhichincludesbyproducts also.
5. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 5 ACCOUNTING TREATMENT OF PRODUCTION Productionentriesshouldbe
recordedbythe “CuttingReport”. Productionentriesshouldbe recordedbyone executivei.e.
‘Mr.Naveed’ Before recordingthe entryin “BusyWin” executive shouldproperlygothroughthe
cutting reports,whethercomplete informationisprovidedornot. Anydiscrepancyinthe
reportsshouldbe highlightedandsendittothe concernedwarehouse
immediatelybycopyingMr.Irfan Ahmed. Before recording the entryof
productionexecutiveshouldkeepinmindthatsystemis carrying the correct price,if not socalculate
it manuallyandthenrecord andmake sure that stockis not goingnegative. In
productionentriesItemconsumedanditemgeneratedshould be balanced. Belowshowsthe
sample of recordingthe ‘ProductionEntry’. ITEMS GENERATED Item Quantity Unit Price
Amount 20x28/52 251.740 Reams 568.11 143,015.94 Cour 10.920 Pes 33 360.36 Batten
8.900 Kgs 13 115.70 Wastage 115.00 Kgs 13 1,508.00 387.560 145,000.00 ITEMS
CONSUMED Item Quantity Unit Price Amount 20.3/52 2,500.000 Kgs 58.00 145,000.00
2,500.000 145,000.00 Calculationof kilograms of Reamsis showninthe Annexure C. Both
entriesshouldbe balancedoff asshowninthe above sample. In cuttingreportproperwastage
isnot shownsoquantitydifference of boththe headsshould be assumedas wastage material.
Ratesof the cour, batten,muddi andwastage are not properlycarriedbythe systemsorecord
themwiththe sale price of these items.Ratesare showninthe above example. Once entryis
balancedproceedtothe next. Dailyentriesshouldbe enteredandall the vouchersshouldbe
filedwiththe cuttingreportsand disposal reports. Once entriesare recordedinthe
systemitshouldsignedby3 persons. d) In PreparedBy column, Mr.Naveed. e) In ApprovedBy
column, Mr. Salim. f) In AuditedBy column, PresentAuditor.
6. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 6 D. SALES/DISPATCH Salesexecutive shouldprepare salesorderatthe time of sale
whichclearly mentionsall the specificationsof the item. Salesordershouldbe signedbythe
executive andapprovedbythe highauthority. Copyof salesordershouldbe giventothe
customerandone copy shouldbe properly filed. Salesexecutive shoulde-mail the
softcopywiththe reference numbermentiononthe sales ordershouldbe sendto the ware house
incharge where he will verifythe referencenumber withthe copy of customerand give himthe
correct material. At the time of delivery, warehouse incharge will preparethe
deliverychallananditwill be signedbythe customerbefore leavingthe warehouse. A gate pass
shouldbe prepared fortakingoutmaterials.These shouldbe signedonlybythe Warehouse
Incharges. There are three copiesof Gate Pass. 1. Blue copy – Original Gate pass –
Warehouse. 2. Pink copy – AccountsDepartment. 3. White copy – salesDepartment. 4.
Greencopy – Internal AuditDepartment. At the day endwarehouse incharge will e-mail
salesreporttothe salesdepartmentand accounts department. ACCOUNTING TREATMENT OF
SALES Accountsdepartmentreconcilethe saleswiththe salesorderand
salesreportthanrecordsales inthe systemondailybasis. Before recordingthe entry,executive
shouldconfirmthatparticularitemisnotgoingnegative, reconcile itandrecordthe entryproperly.
Salesentriesshouldbe recordedbyone executive i.e. ‘Mr.Naveed’. ENTRY TYPE RV Description
Debit Credit Cheque inhand XXX Customer XXX ENTRY CONTRA Description Debit Credit
Bank XXX Cheque inhand XXX
7. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 7 SALES ENTRY Description Debit Credit Customer XXX Sales XXX Once entriesare
recordedinthe systemitshouldsignedby3 persons. a) In PreparedBy column, Mr.Naveed. b) In
ApprovedBy column, Mr. Salim. c) In AuditedBy column, PresentAuditor.
8. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 8 ANNEXURE A. GRN formatis attached below: GOODS RECEIVED NOTE PAK PAP
(Pvt) Ltd GOODS RECEIVED NOTE GRN # _Pre numbered GRN DATE ____________
PurchaseOrder# ___________________________ S.NO ITEM CODE DESCRIPTION Qty In
Reel Qty In Kgs TOTAL GRN ITEMS Remarks
_________________________________________________ (If Any)
_________________________________________________ ______________
____________ PREPARED BY APPROVED BY
9. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 9 ANNEXURE B. STN formatis attached below: STOCK TRANSFERNOTE PAK PAP
(Pvt) Ltd STOCK TRANSFER NOTE STN # _Pre numbered STN DATE ____________
FROM_________ TO___________ S.NO ITEM CODE DESCRIPTION Qty In Reel Qty In Kgs
TOTAL GRN ITEMS Remarks _________________________________________________ (If
Any) _________________________________________________ ______________
____________ PREPARED BY WAREHOUSE INCHARGE
10. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 10 ANNEXURE C. CALCULATION OF KILO GRAMS OF REAMS: Working : Item Size=
20x28x52 Quantity = 251.74 Reams 20x28x52 29,120 29,120/3,100 (3,100 is of formula)
9.39354839 per kilograms Quantity 251.74 Reams 2,365 Kilograms 2,365 kg is the weight of
251.740 Reams. CALCULATION OF RATE: Working : Item Size= 20x28x52 Purchase Price=
58 20x28x52 29,120 29,120/3,100 (3,100 is of formula) 9.39354839 per kilograms Purchase
Price 58 Reams 545 545 isthe cost incurred on producing the product.
11. STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT PAK PAP (Pvt) LTD
Page 11 ANNEXURE D. Gate Pass formatis attached below: GATE PASS PAK PAP (Pvt) Ltd
GATE PASS Gate Pass # _Pre numbered Gate Pass DATE ____________ Sales Order #
___________________________ S.NO ITEM CODE DESCRIPTION Qty Of Reams Qty In
Kgs TOTAL GRN ITEMS Remarks
_________________________________________________ (If Any)
_________________________________________________ ______________ ___________
____________ PREPARED BY INCHARGE CUSTOMER
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