SHIRAZI

TRADING
COMPANY
(PRIVATE)
LIMITED

Finance &
Accounting
0
Manual
APRIL 01, 2018

Finance Department

Page 1 of 31
 Document Information
Department Finance & Accounts

Document Finance & Accounting Manual

Version Version 1.0

Document Location Head Office

Issue Date April 01, 2018

Distribution 1. Chief Executive Officer

2. Chief Financial Officer

3. Head of Finance & Accounts

4. Internal Auditor

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 Reviews

Name Designation Signature

Muhammad Imran Head of Finance & Accounts -Sd-

Emad Internal Auditor -Sd-

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 Approvals

Name Designation Signature

Syed Arsalan Sadiq Chief Financial Officer -Sd-

Chief Executive Officer Chief Executive Officer -Sd-

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 Revision History

Date Version System Description

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 Filing Instructions
Updates will be circulated from the office of the Chief Financial Officer, along with the version control,
whenever revision takes place. The Manual holder should:

• Replace the old pages with the updated pages.

• Discard the replaced pages.
• Replace the previous version control history document with the latest release.

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 Definitions, Acronyms And Abbreviations

Term Description

STC Shirazi Trading Company (Pvt.) Limited

GL General Ledger

PO Pay Order

DD Demand Draft

JV Journal Voucher

BPV Bank Payment Voucher

BRV Bank Receipt Voucher

GDN Goods Dispatch Note

GRN Goods Receiving Note

DC Delivery Challan

DN Demand Note

IR Issue Requisition

PR Purchase Requisition

PO Purchase Order

LC Letter of Credit

SO Sales Order

CEO Chief Executive Officer

CFO Chief Financial Officer

HOF&A Head of Finance & Accounts

AMF Assistant Manager Finance

HOD Head of Department

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 Corporate Information
Shirazi Trading Company (Private) Limited (STC) (An Atlas Group Company) was established in 1975
under the Compliance Act, 1913 (now companies Ordinance, 1984). The company is wholly owned
subsidiary of Shirazi Investments (Private) Limited (the Holding Company). The company is primary
engaged in the business of trading and maintenance of office equipment, power generators, security
and medical equipment and trading of automotive parts. The company has country wide sales and
service network and its branches are located at Karachi, Lahore, Islamabad, Multan and Peshawar. The
registered office of the Company is situated at 8th floor, Adamjee House, I.I. Chundrigar Road Karachi.

Organizational Structure of Finance Department

Organizational Structure of Finance Department

Chief Financial Officer

Head Of Finance And

Accounts

Assistant Manager Accounts Executive Accounts Officer

Finance

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 1 INTRODUCTION

1.1 Importance of the General Accounting Function

The accounting function is a major determinant in the promotion of uniformity in the
presentation and comparison of financial data and making available to the users of the financial
information, a snapshot of information for their insight and decision-making.

1.2 Scope
This Manual describes the activities carried out by people or groups of people within the
Accounting system. Primarily it attempts to tell the reader how to carry out individual work
steps in the process. The purpose is to coordinate efforts of group of people working together to
perform an activity.

1.3 Applicability
The Manual covers the Accounting function of STC. The procedures described apply to:

 General Scheme of Accounting

 General Ledger
 Sales & Receivables
 Purchase and Inventory
 Fixed Assets
 Payable

1.4 Clarification
Requests for clarification or explanation of the material presented in this Manual should be
addressed to the Head of Finance & Accounts and Chief Financial Officer.

1.5 Revision Procedure and Control Techniques

The following Manual revision control techniques will be used:

 Ensure that the written procedures are followed without exception. The Manual holders
would be requested to suggest revision, if the current policies seem impracticable due
to changing environment.
 Issue revised contents and index pages frequently with a request that Manual holders
check their Manuals for completeness.
 The Head of Finance & Accounts will be responsible for ensuring that the procedures for
revision laid down in this Manual are followed.

The Manual holders are responsible for updating their copies for all revisions made from time to time
and ensuring that these revisions take effect as prescribed in the revision document.

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  All amendments, changes and revisions in the Manual should be circulated to the users
by the Head of Finance & Accounts. Users will be responsible to provide their
comments, if any, to the Head of Finance & Accounts within 15 days from date of their
receipt, otherwise the proposed amendments will be assumed as accepted.

1.6 Prior Approval for Changes

No changes will be made in the Manual unless duly recommended and approved by the Chief
Financial Officer and Chief Executive Officer respectfully. In case of any proposed revision in
policies/controls, procedures or other contents of the Manual, the details of proposed revision
would be sent to every Manual holder for their comments/suggestion. In case of no response
from the Manual holder within the period of 15 days from sending of proposed revision details,
the approval from the Manual holder would be assumed and changes would be subsequently
made in the Manual.

A copy of the approved amendments will be sent to each of the Manual holders by the Head of
Finance & Accounts to allow them to update their copy of the Manual. At regular intervals, an
index of all amendments made during the period will be circulated to ensure that each Manual
holder has replaced all the outdated pages and inserted additional ones in the Manual.

1.7 Version Control

The Release of the Manual is mentioned at the bottom of each page (release-number, Issue:
mm/yy) i.e. Rel. 01.00, Issue: February 04.

Release number consists of two parts – the number before decimal point denotes release of
entire Manual whereas the number after decimal point represents revision of sections and
pages.

Any minor amendment will be issued as revision and only affected pages will be replaced.
Revision number(s) will be in continuous increments of 1. Sequential control will be maintained
through revision history and control sheet.

A new release will be issued in circumstances where cumulative revisions exceed 30% of pages
of procedural sections.

Revision number will be reset to “00” with issuance of each new release.

1.8 Manual Holders

The following executives of the company will be provided with a copy of this Manual:

 Chief Executive Officer

 Chief Financial Officer
 Head of Finance & Accounts
 Internal Auditor

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 The Manual Holders will be responsible for updating their copies for all revisions made from
time to time and ensuring these take effect as prescribed in the revision document.

1.9 Property Rights

The General Accounting Manual is the property of Shirazi Trading Company. It will be treated as
a confidential document and access would be granted to the staff of STC who needs to refer to it
during the course of their duties.

It is understood that the Manual would not be photocopied or taken out of the premises of STC.

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 2 General Scheme of Accounting
The Company prepares its annual financial statements on the basis of Accounting and Reporting
Standard for Large-Sized Entities (LSEs) which are being audited by Ernst & Young Ford Rhodes Sidat
Hyder, a firm of Chartered Accountants having satisfactory QCR rating.

These financial statements are prepared in accordance with the approved accounting standard as
applicable in Pakistan. Approved accounting standards compromise of such International Financial
Reporting Standards (IFRS) issued by Institute of Chartered Accountants of Pakistan (ICAP), as are
notified under the repelled Companies Ordinance, 1984. During the year, The Companies act 2017 has
been promulgated.

Shirazi Trading has implemented Oracle Financial Application (ERP) to automate the Order to sales and
receipts, Fixed Assets, Inventory, Payable, Service, and GL systems. This implementation has not only
streamlined operations but has created differentiation for Shirazi Trading in the market place. Shirazi
trading has also implemented the “document archiving system” as a step toward attaining its vision of
becoming a “Paperless Office”.

2.1 Sub ledger Accounts

The Company will maintain sub ledger for the following areas through the ERP system:

2.1.1 Fixed Asset

Records will be maintained in the ERP system. At month end, the General Ledger will be updated
through depreciation process from fixed assets.

2.1.2 Payables
Entries will be made in the Payable module and processing will be run to update the General Ledger.

2.1.3 Receivables
Receipts will be generated in the Receivable module and processing will be run to update the General
Ledger.

2.1.4 Cost Management

Records related to purchases and inventory items are maintained in the ERP system.

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2.2 Maintenance of the General Ledger
The General Ledger is maintained with the help of Oracle’s E-Business Suite (ERP). Posting in the GL will
be made by the Accounts Executives and Accounts managers.

Each voucher shall be checked and authorize by relevant authority.

Transactions are recorded in the ERP system in their respective module after thoroughly checking to
minimize the chances of difference in the month end trial balance.

 General Ledger is divided in operating units at five different locations

 General Ledger is consolidated at company level compromising all operating units data.
 General Ledger is based on chart of accounts through which it can be retrieved in different way
 Chart of accounts

Location Sub Account

1 . 0000 . 10 . 101200 . 00000 . 00 . 000

Company Future

Cost Centre Control Account Inter Location

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2.3 Reports/Processes:
In order to generate financial statements following processes are performed at every month end in the
General ledger:

2.3.1 Payable Module:

1. Create Accounting.

2. Transfer journal Entries to GL.

3. Period should be closed at month end. (If Period doesn’t close so kindly run the Exception
Report to investigate the same)

2.3.2 Purchasing Module:

1. Create Accounting-Receiving

2. Transfer Journal Entries to GL-Receiving (Application: Bills of material)

3. Transfer Journal Entries to GL (Application: subledger accounting)

4. Period should be closed at month end.

2.3.3 Receivable Module:

1. Create Accounting.

2. Submit Accounting (Navigation: Control>Request>Run>)

3. Transfer Journal Entries to GL.

4. Revenue recognition Master Process; (In case not ran in step-2)

2.3.4 Inventory Module

1. Record Order Management Transactions (Let each request be completed then run the other
one)

2. Collect Revenue Recognition Information

3. Generate COGS Recognition Events

2.3.5 Fixed Asset Module:

1. Create Accounting-Assets

2. Transfer Journal Entries to GL – Assets

2.3.6 General Ledger

1. Find the Un-posted data from all sources then Post it.

2. Trial Balance for every month.

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2.4 Preparation Of Financial Statements:
 General Ledger, Trial Balance, Cash flow statements and summarized Profit and Loss account can be
obtained from the ERP.
 Assistant manager finance will update General Ledger to prepare financial statements i.e. Cash flow
statements and Profit and Loss Accounts and forward them to Head of Finance & Accounts.
 After reviewing, financial statements will be forwarded to Chief Financial Officer.

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 3 Sales & Receivables
3.1 Revenue Recognition
 Sales of goods are recognized when significant risks and rewards of ownership of the goods have
been passed to the customers, which usually coincide with the delivery of goods.
 Revenue from commission and rental income from equipment is recognized when related
services are rendered.
 Revenue from service contracts is recognized on the basis of percentage of completion method.
 Dividend income is recognized when the right to receive the same is established.
 Profit on bank accounts is recognized using effective interest rate method.

3.2 Services
1. Sales order for service invoice will be recorded in the order management module by Coordinator of
respective department.
2. After booking of Sales Order Coordinator then run auto invoice in Receivable Module by which
service invoice is generated.
3. Following accounting entries will be passed in the general ledger

Description Account Code Debit Credit

Account Receivable 1.0000.10.111100.00000.00.000 XXX

Service Revenue 1.0000.10.41400.00000.00.000 XXX
Service Sales Tax (Punjab) 1.0000.10.231011.00000.00.000 XXX
Service Sales Tax (Sindh) 1.0000.10.231012.00000.00.000 XXX
Service Sales Tax (KPK) 1.0000.10.231013.00000.00.000 XXX
Service Sales Tax(Balochistan) 1.0000.10.231014.00000.00.000 XXX
Narration: Service sales on credit

3.3 Sales
According to the activities of each department, transactions of sales and other activities of revenue
generation are recorded in Oracle based ERP. Activities are broadly divided into Tender Business or Non
Tender Business. Sale is executed exclusively according to Purchase Order from customer as per Terms
& Conditions agreed upon and mentioned in Purchase Order.

1. Sales order will be recorded in the order management module by coordinator of respective
department.
2. After booking of sales order Business Unit Coordinator runs pick slip in the Order Management
Module.
3. Business unit coordinator then asks Store Executive to create delivery challan in the Inventory
module.

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 4. Following entry is automatically generated at the time of making delivery challan in the
Inventory module.

Description Account Code Debit Credit

Deferred COGS 1.0000.10.621826.00000.00.000 XXX

Stock 1.0000.10.161500.00000.00.000 XXX
Narration:

1. Business Unit Coordinator run auto invoice in the Receivable Module.

2. After creating Sales Order, Coordinator then run auto invoice in Receivable Module by which
sales invoice is generated.

Following entry will be passed in the General Ledger

Description Account Code Debit Credit

Account Receivables 1.0000.10.111100.00000.00.000 XXX

Sales 1.0000.10.401000.00000.00.000 XXX
Sales Tax 1.0000.10.231010.00000.00.000 XXX
Narration: Sales on credit

3.3.1 Cost Management Process Run

At the day end following entries are recorded in the Cost Management SLA module

Description Account Code Debit Credit

COGS 1.0000.10.501050.00000.00.000 XXX

Deferred COGS 1.0000.10.621826.00000.00.000 XXX

Narration:

3.4 Earnest Money/Security Deposit:

1. Sales order for EM/SD invoice will be recorded in the order management module by Coordinator of
respective department.

2. After booking of Sales Order Coordinator then run auto invoice in Receivable Module by which
EM/SD invoice is generated.

3. Following accounting entries will be passed in the general ledger

Description Account Code Debit Credit

Earnest Money 1.0000.10.141600.00000.00.000 XXX
AR Clearing 1.0000.10.111950.00000.00.000 XXX

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 Narration:

Description Account Code Debit Credit

Security Deposit 1.0000.10.141510.00000.00.000 XXX
AR Clearing 1.0000.10.111950.00000.00.000 XXX

Narration:

3.5 Sales Return

Sales returns are part & parcel feature of sales activities. Sales Return are accounted by adopting the
following procedure.

1. Head of department forward the approved case of Sales Return to Central Store with debit
advice from customer.

2. Assistant manager store examine the paper and execute sales return in on behalf of branch in
Inventory Module of ERP by issuing Stock Receiving Report (SRR). Intimate Store Officer of the
concerned branch for making SRR on his behalf.

3. Assistant manager store forward all set of documents with SRR to Accounts Department at Head
Office with the copy of intimation to Store Officer of the concerned branch.

4. Accounts executive HO receives the Sales Return papers from Central Store, examine them and
on satisfying by all the compliances, file the documents. Issues "Credit Advise" and dispatch to
the concerned branch to customer.

3.5.1 Accounting Entries

From accounting perspective, there will be two different accounting to Sales Tax Act 1990.

Entry # 01
Sales is returned within 180 days

Description Account Code Debit Credit

Sales Return 1.0000.10.401000.00000.00.000 XXX
Sales Tax 1.0000.10.231010.00000.00.000 XXX XXX
Account Receivable 1.0000.10.111100.00000.00.000
Narration:

Entry # 02
Sale is returned after 180 days

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 Description Account Code Debit Credit
Sales Return 1.0000.10.401000.00000.00.000 XXX
Charges 1.0000.10.611400.00000.00.000 XXX XXX
Account Receivable 1.0000.10.111100.00000.00.000
Narration:

3.6 Service Return

From accounting perspective, there will be two different accounting to Sales Tax Act 1990.

Entry # 01
Returned within 180 days
Description Account Code Debit Credit
Service Return 1.0000.10.41400.00000.00.000 XXX
Service Sales Tax (Punjab) 1.0000.10.231011.00000.00.000 XXX
Service Sales Tax (Sindh) 1.0000.10.231012.00000.00.000 XXX
Service Sales Tax (KPK) 1.0000.10.231013.00000.00.000 XXX
Service Sales Tax (Balochistan) 1.0000.10.231014.00000.00.000 XXX
Account Receivable 1.0000.10.111100.00000.00.000 XXX
Narration:

Entry # 02
Returned after 180 days
Description Account Code Debit Credit
Service Return 1.0000.10.41400.00000.00.000 XXX
Charges 1.0000.10.611400.00000.00.000 XXX XXX
Account Receivable 1.0000.10.111100.00000.00.000
Narration:

3.7 Receivables
1. Each sale person and engineer is responsible to collect payments in the form of crossed cheques or
pay orders in the name of STC from the customers to whom he sold goods or services. All customers
are advised while confirming their Purchase Orders, that the payment will be accepted through
crossed cheque or pay order in the name of STC.

2. Salesman/Service Engineers follow up and collect payments from customers.

3. Salesman/ Service Engineers handovers collection to Account Officer at branch to issue receipts.

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4. Accounts officer at branch acknowledges receiving of payment. On Realization of cheque all amount
available in collection account automatically transferred to central account at Head Office in Karachi
on the standing instructions given to the bank of collection account.

5. Accounts Officer issues receipts from the ERP system. System generated receipts are signed by
Accounts Officer, Zonal Manager and Branch Manager / Branch Incharge.

6. There are 3 copies of receipt

 System generated receipt are handed over to the respective field staff who are
responsible for onward delivery / dispatch to the customer.

 A copy of receipts along with deposit slip is dispatched to Accounts Executive at Head
Office for reviewing and ensuring compliance

 Remaining copy of receipt is kept at respective location

7. Cheques and amount collected during the day deposited into the bank same day. Collections
reached to Accounts Officer after banking hours are deposited into bank following working day. No
cash collection is allowed from the customers.

8. Receipts can be partially or fully applied to a single debit item or to several debit items.

3.8 Receipt
Two types of receipt are generated in the ERP system by the accounts officer

3.8.1 Standard receipts:

Standard receipts are made for the following the areas in the Receivable module

I. Goods And Service Invoice: Payments that you receive from your customers for goods or
services. Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
AR-Trade 1.0000.10.111100.00000.00.000 XXX
Narration:

II. Earnest Money and Security Deposits:

EM/SD in shape of pay order/demand draft once received back from beneficiary, is forwarded to
bank for cancellation along with request for cancellation. And a receipt in ERP system is
prepared for cancelling or as collection of EM/SD

Following entry is recorded in the Receivable module

Description Account Code Debit Credit

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 Bank 1.0000.10.141510.00000.00.000 XXX
Earnest Money/ Security Deposit 1.0000.10.141600.00000.00.000 XXX
Narration:

i. Advance from customers

To record advances from customers a deposit invoice is created. Following entry is recorded
in the Receivable module

Description Account Code Debit Credit

Receivables 1.0000.10.111100.00000.00.000 XXX
Advances from customers 1.0000.10.201200.00000.00.000 XXX
Narration:

After making deposit invoice a standard receipt is generated. Following entry is recorded in the
Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
AR- Trade 1.0000.10.111100.00000.00.000 XXX
Narration:

3.8.2 Miscellaneous receipts:

Miscellaneous receipts are made for the following the areas in the Receivable module

i. Sales proceeds of fixed assets disposal

Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
Assets Clearing 1.0000.10.191800.00000.00.000 XXX
Narration:

ii. Scrap sales

Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
Scrap Sales 1.0000.10.191800.00000.00.000 XXX
Narration:

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 iii. Transfer of funds
Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
AP-Clearing 1.0000.10.201350.00000.00.000 XXX
Narration:

iv. Early repayment of personal loans by employees

Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
Payroll - Advances & Loans 1.0000.10.201354.00000.00.000 XXX
Clearing
Narration:

v. Settlement of advance to employees

Following entry is recorded in the Receivable module

Description Account Code Debit Credit

Bank 1.0000.10.261100.00000.00.000 XXX
Payroll – Advances & Loans 1.0000.10.201354.00000.00.000 XXX
Clearing
Narration:

3.9 Chargebacks
Chargebacks or adjustments are created against these transactions, where chargeback means income
tax deduction and 1/5th sales tax deduction.

Following entries are recorded in the Receivable module

Entry#01

Description Account Code Debit Credit

AR- Income Tax Challan 1.0000.10.261100.00000.00.000 XXX
Receivables 1.0000.10.201354.00000.00.000 XXX
Narration:

Entry#02

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 Description Account Code Debit Credit
Bank 1.0000.10.261100.00000.00.000 XXX
Payroll – Advances & Loans 1.0000.10.201354.00000.00.000 XXX
Clearing
Narration:

3.10 ERP View Of Receipt Generation

3.11 Bank Guarantees:

A bank guarantee serves as a promise from a commercial bank that the liability of a particular debtor
will be met if contractual obligations are not met.

Bank Guarantees include performance bonds, bid bonds and guarantees against advance payments etc.

1. Head of finance & accounts receives request from concerned departments for obtaining bank
guarantees. HOF&A discusses the request with CFO then instructs the Accounts Executive to
complete the formalities

2. Accounts Executive completes all the documents and formalities as per HOF&A instructions and
forwards the relevant documents to HOF&A.

3. HOF&A reviews the documents and forward it to authorized signatories.

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4. Accounts Executive receives guarantee documents, compares the guarantee application form
and other supports, ensures the signatures and sends application with relevant documents to
concerned banks.

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 4 Cash Management
4.1 Bank Reconciliation Statement
Bank Reconciliation Statements (BRS) are prepared for all the banks at Head Office. Prescribed format is
used to reconcile each bank balance at the end of each month, within 5 days of the following month.

 BRS is prepared by Accounts Executive.

 Accounts Executive (HO) identifies reconciling items, takes appropriate action, and forward
the Bank Reconciliation Statement to Head of Finance & Accounts.
 Monthly Bank Statements are attached with related Bank Reconciliation Statements for
future reference. Bank Reconciliation Statements are reviewed by the Head of Finance &
Accounts and approved by CFO.

4.2 Daily Finance Report

Daily Finance Report (DFR) is a quick glance at previous day financial statistics i.e. summary of all the
required data. Finance report is made daily to provide a payment activity and collection activity
overview containing multiple reports including Salesman wise aging report, Payable aging, Payments
detail and ledger, Collection report, Earnest money and Security deposit aging, bank guarantees and
bank details.

Accounts Executive generates Daily Finance Report and transmits it to Head of Finance & Accounts and
CFO containing following details

 Bank borrowing and other facilities availed

 Department wise net collection
 Receivables
 Earnest money
 Security deposit
 Department wise stock
 Advances

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 5 Payables
Following are the transactions which create situations for payments in the Shirazi Trading Company Pvt.
Ltd.

1. Procurement of fixed assets

2. Operating and admin expenses
3. Imports and local purchases
4. Distribution and marketing
5. Taxation and government levies
6. Payment of dividend
7. Others

5.1 Payments
1. All expenses are as per instance and should be within allocated budget.
2. Upon approvals of bills according to power and authorities Account Executive record the bills
into the system by debiting appropriate accounts. ERP System generates the entry and creates
the liability against approved bills.
3. Accounts Executive prepares voucher in system from the approved bills, prepares cheques and
stamp the bill. Payments are made to the suppliers through crossed cheques, pay orders,
demand draft or direct transfer to bank account.
4. Also consider applicable WHT.
5. Vouchers attached with cheque are sent to Head of Finance and accounts for verification of its
appropriateness.
6. After HOF&A verification CFO signs the voucher and it is submitted to from CEO’s approval.
7. In case of disbursement through PO / DD, Accounts Executive sends the cheque to the bank for
issuance of PO / DD. On receipt of PO / DD, enters relevant details in the computer system and
arrange for delivery.

5.2 Invoices
Four types of invoices are generated in the ERP system by the accounts officer at Head Office

5.2.1 Standard Invoices

i. Direct Invoice recorded

Description Account Code Debit Credit

Expenses 1.0000.10..00000.00.000 XXX
AP – Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

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 ii. Payroll through HR

Description Account Code Debit Credit

Payroll Clearing 1.0000.10.201351.00000.00.000 XXX
AP – Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

iii. Duties & taxes recording in commercial

Description Account Code Debit Credit

Stock in transit 1.0000.10.161600.00000.00.000 XXX
Advance income tax 1.0000.10.151620.00000.00.000 XXX
Advance sales tax 1.0000.10.231020.00000.00.000 XXX
AP – Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

iv. Inter branch accounting is automatically generated in the system

Accounts Executive at branch/location records the following entry
Description Account Code Debit Credit
Expense/utility (Entertainment) 1.0000.10.605560.00000.00.000 XXX
Intercompany clearing account 1.0000.10.29140.00000.00.000 XXX
Narration:

Accounts officer at head office records following entry

Description Account Code Debit Credit
Intercompany clearing account 1.0000.10.29140.00000.00.000 XXX
AP – Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

5.2.2 Debit and credit notes

For adjustment against receivables following entry is recorded in the Payable module by accounts
officer

Description Account Code Debit Credit

AP - Trade 1.0000.10.201100.00000.00.000 XXX
AR Clearing 1.0000.10.111950.00000.00.000 XXX
Narration:

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5.2.3 Prepayment and advances
Description Account Code Debit Credit
Advance to staff (Expense) 1.0000.10.151512.00000.00.000 XXX
Advance to supplier 1.0000.10.151520.00000.00.000 XXX
AP Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

5.2.4 Withholding Tax

Withholding taxes are applied to payments at the time of invoice generation. Withholding tax
invoices are generated automatically in the Payable module. Following entry is recorded

Description Account Code Debit Credit

WHT deduction 1.0000.10.221100.00000.00.000 XXX
AP – Trade 1.0000.10.201100.00000.00.000 XXX
Narration:

5.2.5 At the time of payment following entries are recorded in the payable module
Entry #01

Description Account Code Debit Credit

AP Trade 1.0000.10.201100.00000.00.000 XXX
Bank (Cash In Bank) 1.0000.10.101200.00000.00.000 XXX
Bank (Running Finance) 1.0000.10.261100.00000.00.000 XXX
Bank (Running Musharka) 1.0000.10.261110.00000.00.000 XXX
Narration:

Entry #02

Description Account Code Debit Credit

AP Trade 1.0000.10.201100.00000.00.000 XXX
WHT Deduction 1.0000.10.221100.00000.00.000 XXX
Bank (Cash In Bank) 1.0000.10.101200.00000.00.000 XXX
Bank (Running Finance) 1.0000.10.261100.00000.00.000 XXX
Bank (Running Musharka) 1.0000.10.261110.00000.00.000 XXX
Narration:

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5.3 Withholding Tax
1. Withholding of Tax at source from all applicable payments to suppliers is done on regular basis
and payment of Withholding Tax to the Government is done within the allowed time with
challan and details of withholding.

2. Accounts Executive generates a statement 3 days before the due date for the payment of
Withholding Tax deducted from payments to suppliers of goods and services in the format
prescribed by the tax authorities and forward it to Head of Finance & Accounts.

3. Head of Finance & Accounts reviews the statement to ensure accuracy / cut-off.

4. Payment procedure is followed

5. The system generates a report / list containing required particulars to be furnished to the Tax
Authorities along with the paid treasury challan.

6. The system database maintains detail of payments made to suppliers against goods and services
and list of suppliers who have supplied goods and services and produces the exemption
certificate to avoid withholding of Tax.

7. Accounts executive generates E-template and submit it to IRIS/FBR.

5.4 Petty Cash

 Petty cash fund is paid to all locations for utilization and claiming reimbursement, against petty
expenses.

 Branch manager/zonal manager initials bills of petty expenses.

 Claimant presents initiated bills to accounts officer for reimbursements.

 Accounts Officer reimburse amount to Claimant and prepares Petty Cash Voucher. Makes
Payment and stamps voucher and supporting documents as "Paid". Obtains claimant's signature
on the bill to evidence payment.

 Accounts Officer prepares "Statement of Daily Petty Cash" end of the day sent to the relevant
authorities. At day end all Petty Cash Voucher attached with paid supporting bills presented to
Branch Manager to sign the voucher then sends it to Accounts Executive at Head Office

 Accounts Executive at Head Office gets the approval of Accounts Manager of petty cash
expenses and prepares a cheque to replenish the fund. Is responsible to get the cheque signed
from authorized person and dispatch to Accounts Officer at branch.

 The Petty Cash module in ERP generates its own serial for each petty cash voucher.

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 6 Management Report
 Management Reports helps gaining an insight on Company’s performance and financial standing of
the company. Instead of an overall evaluation of the company, management reporting is focused on
segments of the business.

6.1 Divisions
6.1.1 Healthcare solutions
Products: Ultrasounds, Software and consumables, Diagnostic Imaging and Life care solutions.

6.1.2 Industrial solutions

Products: Ball bearing and Sp. Plug, Tools and other, Chemical, Generator, Security equipment and
Navigational aids.

6.1.3 Business Solutions and Services

Products: Copier, Scanner, Large format printer, Software, Bureau service, Parts and consumables.

6.2 Locations
 Head office
 Karachi
 Lahore
 Islamabad
 Peshawar
 Multan
 Management reports are published on monthly basis comparing budgeted figures against actual
figures in order to analyze company’s performance Department wise, Product wise and Location
wise.
 Management report covers the following areas:
1. Operational Performance
Outlines sales and PAT division wise and location wise.
2. Performance summary for the month
3. Balance Sheet for the month
4. Profit and Loss Account for the month
5. Cash Flow Statement for the month
6. Performance Indicators
Includes Profitability, Efficiency, Liquidity and Returns of the company.
7. Graphical financial analysis
8. Performance Highlights
Includes Analysis of the Company performance, Profit, Departmental performance.
9. Departmental/zonal performance

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10. Notes to accounts

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