Role of Chartered Accountants in

Building Successful Organizations Building Successful Organizations

Presentation by:
Ahmad Saleem
Performance Management Consultant
0300 8471640
saleem@pms.com.pk
Objective of this Seminar
To discuss role of Chartered Accountants in extended form
My own Experience as Employee & as Consultant
Feel that in many Organization Chartered Accountants can perform Feel that in many Organization Chartered Accountants can perform
significantly better what they are presently performing
Presently they are doing their JOB in perfect way but additional working
can bring major change
Basic Objective of this seminar is to share and discuss our experiences
and knowledge in this regard
Roles of Chartered Accountants
Head of Accounts & Finance
Any position in Accounts Department
Internal Auditor
External Auditor
Management Consultant
Any other position
Why in this Position
Observing all Activities
Every Activity has Financial Impact
Every Activity is Measureable Every Activity is Measureable
During Audit Learned all the
Areas
Cannot improve Quality
Special Traits of Chartered Accountant
System based
Monitoring Risk
Analytical
Chartered Accountants have special traits, which are developed due to their
special nature of training
Completeness
Compliance Testing
Substantive Checking Analytical
Planning
Consideration of Financial Value
Monitoring
Auditing Nature
Substantive Checking
Traits for Building Successful Organization
T
r
a
i
t
s

Visionary
Take Ownership
T
r
a
i
t
s

Complete Business Picture
Leadership
Success
Take Responsibility
Main Areas
Planning
Systems
Budgeting
Costing
Risks & Controls
Monitoring
Performance Monitoring
What to Avoid
Policing
Petty Matters
Audit of every thing
Munshi
What to Opt
Team work
Understanding of
the Business
Leadership
Cooperation
Objectives of the Organizations
Objectives based on basic thought
Different Objectives for different Org .
Based on available resources and opportunities
Working towards achieving their Objectives
Success
What is Success?
Sustainability
Achieving
Your
Objectives
Financial Stability
Expansion
Smooth Operations
No Surprises
What are
Objectives?
Controlled Working
Are Chartered Accountants Responsible?
Whats your opinion?
Need Discussion
In my opinion
Then Why Someone will do this?
Success
Comes by taking
Responsibility
Ownership
In most of the cases, the
Chartered Accountants
are not directly
responsible
But they are in
position to guide
the others for
making Organization
successful
They are in best
position to advise
Management
regarding different
options.
Main Areas
Organizational Level
Departmental Level Departmental Level
Activity/Transactional
Level
Organizational Organizational
Level
Organizational Level
Planning
Goals and Targets
Benchmarking
Budgeting
Organizational Behavior
Systems and Procedures Benchmarking
Financial Planning
Fixed Assets Management
Costing
Systems and Procedures
Risks & Controls
Knowledge Management
Role of MIS
Planning
Planning
Strategic
Planning
Business Plan
Planning
Strategic
Planning
Business
Plan
Long Term For Short Period Long Term
Based on Resources
Cannot be changed EASILY
Short Term planning based on this
By Top Management
For Short Period
Based on Resources
Can make Changes easily
Operations based on this
By Senior and Middle Management
Goals and Targets
Based on the Business Plan, Goals and targets will be determined
Monitoring of Goals and Targets
Verification of Actual Achievements Verification of Actual Achievements
Linking and reconciliations of Results
Keeping on track all the departments
Sales, Production, Purchases, Utilization of Resources
Keeping complete control on the finances of the Organization
Keep financial burden minimum
Establish accurate financial requirement
Financial Planning
Establish accurate financial requirement
Look for high stocks and receivables
Avail maximum benefit from Suppliers and Creditors
Never go for Capital Investment from Working Capital Facilities
Accurate projected Fund Flow Statement involving all departments
and making them responsible
Fixed Assets
In most of the cases, Fixed Assets is the major part of the investment, watch it..
Complete record of Fixed Assets
Differentiate between Productive and Supportive Assets Differentiate between Productive and Supportive Assets
Calculate return on Assets with Sales and Contribution Margin
Record of Insurance and Warranties
Repair & Maintenance
Preventive Maintenance
Disposal of Assets
Assets Condition
Costing, Contribution Margin
and Breakeven
Cost incurred when a resource is utilized. Keep complete
record of Cost, Contribution Margin and Breakeven Analysis
Complete record of cost including direct and indirect cost, fixed cost etc.
Computation of Contribution Margin, linking with Sales and Profit
Product wise Contribution Margin
Compare return with relation to investment, time consumption etc.
Breakeven analysis, simple and based on cash return
Budgeting is a process of making best estimate regarding a
future activity and then following the initial estimate.
Budgeting should be for every activity
Budgeting
Involve all the departments and introduce the culture of Budgeting
People are reluctant in making budgets. Why?
Periodic Comparison of Actual data and Budgeted data
Check for reasons for variations
Budgeting is a process of making best estimate regarding a
future activity and then following the initial estimate.
Budgeting
Production Budgets
Time Budgets
Breakdown Budgets
Energy Budgets
Wastage Budgets
Financial Budgets
Organizational Behavior is the personality of the
Organization Cannot do much however following is
possibility
Delegation
Organizational Behavior
Responsibility Management Delegation
Authority
Result Oriented instead of ..
Responsibility Management
Ownership
System based
Training and Guidance
Systems, Policies and Procedures
Performing any activity in a similar way all the time and all users have same
understanding is called system. This also include processes, policies &
procedure.
Ensure system for every activity Ensure system for every activity
Policies should be available for all scenarios
Standard Operating Procedures SOPs
Should be demanded
Systems, Policies and Procedures
System for Material Issuance
Discount to Customers Discount to Customers
Advance against Salary
Traveling policy
Material receiving
Risks and Controls
With every activity there are risks Inherent, intentional, un-intentional etc.
For Prevention of risks, there are certain Controls
Authorization
Documentation
Physical Checking
Access Controls
Reporting
Budgets
Risks and Controls
Production Risks
Planning Risks
Fixed Assets Risks
Stocks Risks Planning Risks
Marketing Risks
Sales Risks
Human Resource Risks
Stocks Risks
Expenses Risks
Purchasing Risks
Quality Risks
Organizations need to have full information and knowledge regarding all related
activities.
Data
Knowledge Management
Data
Documents and Forms
Reports
Information
Knowledge
Production
Marketing
Knowledge Management - Discussion
Sales
Fixed Assets
Operations
Purchasing
Software can play vital role in Organizational Success this may include every
possibility of Automation
What can be controlled?
Role of Software
What can be controlled?
Basic system is a MUST requirement
Objectives and Benefits
Implementation
Role of Software
Usage Benefits
Processing through Software
Magnetic Cards, Bar Codes etc.
Sensors, timers etc.
Programmable Logic Controllers
Accuracy
Consistency
Speed
Control
Departmental
Level Level
Departments
Marketing
Sales
Production
Quality
Administration
Human Resource
Planning
Purchasing
Stores
Internal Audit
MIS
Accounts
What to observe?
Departmental Working
Departmental Costing
Activity based Costing
Results How Effective
Wastage of Resources
Information & Knowledge
Effectiveness
Objectives
Cost benefit Analysis
As Profit Center
In most of the cases, Chartered Accountants feel that these areas are
out of their Jurisdiction we need Discussion
Marketing
Marketing is a process where product awareness
is built and established
Link Marketing with Sales
Check Relevance
Check with actual activities
Marketing Plan with expected results
Sales is selling the goods/product and dealing
with all related activities.
Contribution Margin Most Important
Actual and Target Sales Comparison
Sales
Actual and Target Sales Comparison
Related expenses relevance
Sales Return and their reasons
Receivable, recoveries and aging
Production is a process of manufacturing and preparing
goods for Sales and Operations are the activities where
production process is not involved.
Know the production process
Production Capacity
Production / Operations
Production Capacity
Establish Benchmark Convert in financial term
Wastage and efficiency
Production Accounts
Compare actual with budgeted with reasons
Relates with all planning matters of Production and
Operations
Planned as per Capacity
Optimum utilization
Production Planning
Optimum utilization
Adjustment of different orders
Coordination with Sales and Production
Losses due to lack of planning
Non utilization of capacity and reasons
Purchasing the required stocks, material, parts and other
items
On time purchasing
Compare pricing with target prices
Purchasing
Compare pricing with target prices
Quality how to measure
Payment terms
Warranties and after sales services
All matters relating to management of materials
Control on receipt Gate Control
Stacking
Material Management
Stacking
Old Items reasoning
Issuance / Consumption
Damage / Expiry Dates
Physical Checking and Record Keeping
Checking quality of goods produced with desired Quality Level
Why Chartered Accountant is responsible?
Incurring a cost and results should be there
Quality Control
Incurring a cost and results should be there
Claims due to Quality charged to deptt
Department should certify
Mention and note all the known problems
Administration provides support services relating to
communication, transportation, utilities, entertainment,
traveling and general office supplies and arrangement.
Not supposed to sign without verification
Administration
Not supposed to sign without verification
Establish justification
Mess charges, conveyance, overtime, utilities
All matters relating to Human resource establishing
requirement, JDs, hiring, retention etc..
Department budget for HR
Requirement based on some criteria
Human Resource
Requirement based on some criteria
Policies must be clear and available
Record must be complete
Roles of departments known to everyone
In house checking of transactions and activities
Should be responsible for whole Organization
Normally considered to check only financial
Internal Audit
Normally considered to check only financial
Production and technical matters
Identify risks and establish controls
What expected improvement?
Related with all hardware and software matters and
activities
In best position to coordinate with IT
Establish requirements and assist in implementation
MIS / IT
Establish requirements and assist in implementation
Verify results
Suggest system improvements
Decision Support System
Related with all hardware and software matters and
activities
In best position to coordinate with IT
Establish requirements and assist in implementation
MIS / IT
Establish requirements and assist in implementation
Verify results
Suggest system improvements
Decision Support System
Responsible to keep accounting record of all transaction
of the Organization related activities. Includes normally
Finance, Costing, Taxation, Budgeting and Corporate
requirements
Responsible for complete book keeping
Accounts
Responsible for complete book keeping
Required to check in depth all transactions
Can question any transaction
Use Reconciliation and ratios
Check unusual activities
Need to extract Information and Knowledge
Activity /
Transactional Transactional
Level
Transactional Level
Justification
Authorization
Relevance
Reasonableness
Budgeted
Purpose
Information & Knowledge
Reasonableness
Support Record
Documentation
Physical
Systems and Rules
Analysis
Reports and Analysis
Ratios Ratios
Reconciliation
Case Studies
Marketing Marketing department spent Rs. 10 million on advertising
campaign, in which heavy advertisement was made. What questions and
parameters can be checked by the Chartered Accountant?
Large Sale contracts have been signed by the Sales Department and Top
Management is very excited about these Sales? What sort of concerns can Management is very excited about these Sales? What sort of concerns can
be raised by a Chartered Accountant in these contracts?
Sizing Beams, which are used in Weaving Industry need to be polished
after certain period of time? You have received bill of Rs 400,000 for their
polishing? What sort of questions can be raised and asked?
Case Studies
Quality Control Your Company is dealing with the customers who are
not quality conscious, however your management is too caring for quality
matters. You will have to discuss this matter with Top Management, what
should be the concerns which should be discussed.
Company received an excellent low priced deal on main raw material. The
Supplier is asking for Cash Payment, despite the main raw material there Supplier is asking for Cash Payment, despite the main raw material there
is uncertainty that material may not be used in near future. What should
be your role in this case?
Manufacturing department is showing excellent result, however they
themselves prepare all the results and no one is checking their results,
however management is very impressed with the high efficiency of
Production. What sort of concerns can be checked by you?