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General Ledger

3.1 Overview
General Ledger is the repository of all financial transactions. Financial data entered in all
other modules are transferred to General Ledger to generate financial and management
statements. This section of the Manual provides a foundation for the establishment of a
system of financial accounting, controls and reporting, based on relevant reporting standards.
The function consists of the business processes that maintain the Company’s General and sub
ledger modules, and reconciliation of the ledgers and other accounting records.
The Finance Department shall have the authority to define responsibility for the general
accounting function and processes, including developing, implementing and supervising the
operation of suitable business systems to accomplish this function.
The objectives of this function are:
a) To be the primary source of financial information.
b) To ensure the integrity of financial management information.

3.2 Key Performance Indicators.


The following key performance indicators have been identified for the process
a) Maintenance of financial records as per the financial accounting standards.
b) Identification of errors and their resolution on a timely basis.
c) Errors noted by external auditors.

3.3 Key processes


General Ledger will comprise of the following processes:
3.3.1 Basis of accounting
3.3.2 Chart of accounts and accounts classification
3.3.3 Transfer and reconciliation process
3.3.4 Manual journals
3.3.5 Recurring journals
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3.3.6 Adjustments

3.4 Policies
The following policies have been identified for the General ledger accounting:

3.4.1 Basis of accounting


3.4.1.1 BasrecAlNooh Wood Design shall maintain its accounts and prepare financial statements
using the International Financial Reporting Standards issued by International Accounting
Standard Board.
3.4.1.2 Only the Board of Directors of BasrecAlNooh Wood Design have the authority to change or
make exceptions to the accounting policies.
3.4.1.3 BasrecAlNooh Wood Design shall use the accrual basis of accounting.
3.4.1.4 All the entries passed would be approved by the Finance Manager Chief Accountant and
should be adequately supported by documents explaining the origin of the entry.

3.4.2 Chart of accounts and accounting classification


3.4.2.1 Finance and Administration Department Finance Department in consultation with the
CEOGENERAL MANAGER of BasrecAlNooh Wood Design has the authority and
responsibility to create and maintain the company’s chart of accounts.
3.4.2.2 All changes to account codes and other account related specific information must be
approved by the Finance and Administration Department.
3.4.2.3 Finance and Administration Department Finance Department is responsible for ensuring that
the coding system used in the chart of accounts meets that BasrecAlNooh Wood Design’s
financial reporting requirements.
Accounting Policies and Procedure Manual

3.4.3 Transfer and reconciliation Process


3.4.3.1 Reconciliation, verification and substantiation of sub ledger modules/integrated systems shall
be carried out on a regular basis for implementing effective internal control environment.
3.4.3.2 It is the responsibility of the Finance and Administration Department Finance Department to
ensure reconciliation of financial information is performed on a regular and timely basis.

3.4.4 Manual Journals


3.4.4.1 All journal entries shall be passed by the Accounts executive with the approval of
Finance ManagerChief Accountant for suitably supported transactions.
3.4.4.2 All reversal/adjustment entries supported by relevant documentation/calculation shall be
passed in a separate and identifiable manner by the Accounts executive after obtaining an
approval from the Finance ManagerChief Accountant.

3.4.5 Recurring Journals


3.4.5.1 All journals which are processed on a recurring basis shall be separately identifiable passed
by the Accounts executive with the approval of Finance ManagerChief Accountant with
adequate supporting documentation/ calculation.

3.4.6 Adjustments
3.4.6.1 All journals made at the end of an accounting period to record previously unrecognized
changes in assets, liabilities, revenue and expenses shall be passed by the Accounts
executive with the approval of Finance ManagerChief Accountant. The adjustment entries
include entries to recognize depreciation, accrued liabilities and income, ending inventories
(when periodic inventory method is used) and
3.4.6.2 uncollectibleUncollectible accounts expense.
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3.6 Procedures
3.6.1 Basis of Accounting
3.6.1.1 The basis of accounting will be decided by the Finance and Administration Department
Finance Department and approved by the Board of Directors.
3.6.1.2 The Finance and Administration Department Finance Department shall review these
accounting policies each year to assess the need to amend them in the light of the
amendments to the existing accounting standards prescribed by the International Financial
Reporting Standards issued by the International Accounting Standards Board and other local
statutory requirements.
3.6.1.3 Any changes in the accounting policies will be initiated by the Finance and Administration
Department Finance Department by filling out an ‘Accounting Policy Amendment Form’.
This form will include justification for the change in the accounting policy and the financial
impact of the same on the company.
3.6.1.4 The CEOGENERAL MANAGER and the Finance ManagerChief Accountant will
review the Accounting Policy Amendment Form and along with their comments to approve
the form formand subsequently forward to Chairman/Executive Chairman/Board of Directors
for approval and comments. In case of non-approval by the CEOGENERAL MANAGER and
the Finance ManagerChief Accountant, reasons for the same needs to be noted in the form.
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3.6.1.5 The Accounting Policy Amendment Form will be forwarded to the Chairman/Executive
Chairman and then to Board of Directors for their approval. In case of non-approval by the
Board of Directors, the reasons for the same will be noted in the form.
3.6.1.6 All changes to the existing accounting policies of BasrecAlNooh Wood Design will be
intimated by the Board of Directors General Manager to the Finance and Administration
Department, who will disseminate this information to the various departments within the
company.

3.6.2 Chart of accounts and accounting classification


3.6.2.1 When the need arises for the opening of a new general ledger account or amends an existing
account, the Accounts executive in the Finance and Administration Department Finance
Department will prepare an ‘Account Opening Form’ or ‘Account Amendment Form’ that
specifies:
a) The year in which the chart of accounts is to be created.
b) Main account group
c) Sub account groups
d) The name of the account
e) The line item under which the account code will appear in the Trial Balance, Profit
and loss or balance sheet account is to be specified
f) The frequency of reconciliations to be performed on the account, if any, and
g) Any additional information
3.6.2.2 The Accounts executive will forward the ‘Account Opening Form’ for opening a new
General Ledger account to the Finance ManagerChief Accountant for approval.
3.6.2.3 Amendments to existing accounts may occur to correct any errors that may have occurred
during the account opening phase. The Accounts executive will forward the ‘Account
Amendment Form’ for any amendments and forward to the Finance ManagerChief
Accountant for approval.
3.6.2.4 Once the general ledger accounts have been created, the same cannot be deleted if any
transactions are passed through these accounts.
Accounting Policies and Procedure Manual

3.6.2.5 Accounts will be arranged in the same sequence in which they appear in the financial
statements, that is, asset accounts will be numbered first, followed by liability accounts,
equity accounts, revenue accounts and expense accounts.
3.6.2.6 The following classification shall be followed for opening and maintaining General ledger
accounts:

Account code series Account classification

1-00-00-00 - 1-15-04-00 Asset Accounts

2-00-00-00 - 2-07-01-02 Equity Accounts

3-00-00-00 - 3-13-00-02 Liability Accounts

4-00-00-00 - 4-07-02-02 Income Accounts

5-00-00-00 - 5-01-02-00 Property Expenses Accounts

6-00-00-00 - 6-01-10-08 General & Administration


Expenses Account

7-00-00-00 - 7-01-02-23 Selling Expenses Accounts

8-00-00-00 - 8-02-04-01 Other Costs

3.6.3 Transfer and Reconciliation Process


3.6.4.4 This process ensures all data entered in the sub-modules (Accounts payable, Accounts
receivable, Fixed asset, Cash management etc..) are reconciled and transferred to the General
Ledger.
Accounting Policies and Procedure Manual

3.6.4.5 A master list of general ledger accounts is maintained by the Finance and Administration
Department Finance Department which will provide details of the person responsible for
carrying out the individual account analysis and the schedule for account reconciliations.
3.6.4.6 The schedule for account reconciliations will be reviewed and approved by the Finance
and Administration Department.Chief Accountant.
3.6.4.7 As new general ledger accounts are set up, the Finance and Administration Department
Finance Department will assign an Accounts executive to complete the related periodic
analysis of those accounts.
3.6.4.8 Based on the schedule for account reconciliations, the Finance ManagerChief Accountant
will receive the account reconciliations from the Accounting executive.
3.6.4.9 The Finance ManagerChief Accountant will review the reconciliations and forward any
related queries to the respective accounting staff. The queries will include details of any
adjustment entry recorded, supporting documents for cancellation/ reversal of transactions,
etc.
3.6.4.10 The Finance ManagerChief Accountant will ensure that the reconciled balance as per the
reconciliation statement agrees to the balance as per general ledger. Any related queries
arising on review by the Finance ManagerChief Accountant will be directed to the Accounts
executive.
3.6.4.11 The Chief Accountant Finance Manger approves the reconciliation and forwards to the
Aaccounts executive for filing.
3.6.4.12 The Chief Accountant Finance Manger will also review the financial information on a
monthly basis by applying, as a minimum, the following criteria:
a) Ensure the accuracy and completeness of financial information by verifying revenue and
expenditure reports, payroll reports and other financial reports;
b) Ensure the integrity and completeness of financial information transmitted from sub
ledgers and integrated systems to the general ledger;
c) Review the integrity of balance sheet accounts by ensuring that appropriate reconciliation
mechanisms are in place to ensure the accuracy of the balances reflected in the books.

3.6.4 Manual journals


Accounting Policies and Procedure Manual

3.6.4.1 All journal entries shall be passed by the Accounts executive with the approval of Finance
ManagerChief Accountant for suitably supported transactions.
3.6.4.2 The Accounts executive will review the posting report once all journal lines are posted.
3.6.4.3 All reversing entries shall be separately identifiable passed by the Accounts executive with
approval of Finance ManagerChief Accountant for adequate supporting documentation /
calculation.

3.6.5 Recurring journals


3.6.5.1 The Accounts executive will define the recurring journals skeletons.
3.6.5.2 All recurring journals shall be passed by the Accounts executive with the approval of Finance
ManagerChief Accountant for adequate supporting documentation / calculation by using the
skeleton models from the system.
3.6.5.3 The Accounts executive will review the posting execution report for recurring journals.

3.6.6 Adjustment
3.6.6.1 The Accounts executive will define the adjustment rules based on the criticality of
transactions.
3.6.6.2 The Accounts executive will run the adjustment through the system and forward to the
Finance ManagerChief Accountant.
3.6.6.3 Once approved by the Finance ManagerChief Accountant, the Accounts executive will post
the adjustment entries. In case of non-approval by Finance ManagerChief Accountant, the
Accounts executive will redefine and modify parameters.
3.6.6.4 The Accounts executive will review the adjustment report after posting the entries.
Accounting Policies and Procedure Manual

3.7 Delegation of authority limits

Activities CEOGENERAL CAFM AE


MANAGER

Accounting policies
• Initial creation A1 A2
• Amendment to policies A1 A2

Approval of chart of accounts A1 RE

Transfer and Reconciliation Process A1R RE

Manual Journal A1 RE

Recurring Journal A1 RE

Adjustment A1 RE
Accounting Policies and Procedure Manual