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STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 1
STANDARD OPERATING PROCEDURES (SOPs)
FINANCE DEPA...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 2
 Properpurchase requisitionnote shouldbe sendtot...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 3
INVENTORY
 Onlyauthorized personsshallhave acces...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 4
2. Pink copy – ReceivingWarehouse.
3. White copy ...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 5
ACCOUNTING TREATMENT OF PRODUCTION
 Productionen...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 6
D. SALES/DISPATCH
 Salesexecutive shouldprepare ...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 7
SALES ENTRY
Description Debit Credit
Customer XXX...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 8
ANNEXURE A.
GRN formatis attached below:
GOODS RE...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 9
ANNEXURE B.
STN formatis attached below:
STOCK TR...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 10
ANNEXURE C.
CALCULATION OF KILO GRAMS OF REAMS:
...
STANDARD OPERATING PROCEDURES FINANCEDEPARTMENT
PAK PAP (Pvt) LTD Page 11
ANNEXURE D.
Gate Pass formatis attached below:
G...
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SOPs of Finance Dept

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SOPs of Finance Dept

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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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