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