TB CARE -Zimbabwe

International Union Against Tuberculosis and Lung Disease

CHINHOYI UNIVERSITY OF TECHNOLOGY

SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT

DEPARTMENT OF ACCOUNTING SCIENCES AND FINANCE

INDUSTRIAL ATTACHMENT REPORT

BY

HOWARD KUDAKWASHE MATAGA

C1213546Y

A Project Submitted To The School of Business

Sciences And Management In Partial fulfilment Of

The Requirements For The Award Of The Bachelor of Science Honours In

Accountancy Degree Programme

SUPERVISOR: MR MATOWANYIKA

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DEDICATION

This report is dedicated to my Parents who continuously extend their loving and caring hand
over me, and have been of great influence to my studies and life. I ask the Lord Almighty to
bless them abundantly, grant all their wishes and protect them.

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ACKNOWLEDGEMENTS

My deepest gratitude goes to all the people who have been of great assistance during my
attachment year. This is a momentous year marked with immense pressure and a sought after
level of understanding and implementation of concepts. Special mention goes to, Mr. M.
Jonasi (Administrator); Mr. K. Murapa (Supervisor); Mr. M. Muringami (Accountant), the
administration and finance team to which I was a part of, rallied behind me in my year of
internship with no discrimination whatsoever. Immense gratitude is also passed on to the rest
of TBCARE staff who made themselves available on compiling data for the report

I will also thank all relevant Organisational staff I encountered all over Zimbabwe during the
course of my Industrial Attachment year. All brethren in Christ who have guided me in the
right direction and all friends who stood by me throughout the year, my deepest gratitude are
directed to you.

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EXECUTIVE SUMMARY

In a bid to produce highly competitive, well nurtured, cultured and productive graduates, The
Chinhoyi University of Technology gives students a chance to go into the field and put to
practise the theoretical concepts that they would have acquired in their first two years of
study with the institution. This is of great importance in the studies and research of students
as they work towards earning their degree programmes as we get a chance to seek for
relevance of our academic studies and to consolidate our knowledge with what is in the real
industry and apply what we know in the real business environment.

This report outlines the various activities that the student undertook during his industrial
attachment year at The International Union against TB and Lung Disease (TBCARE), a non-
governmental organisation dedicated to providing affordable health solutions to the poor.

The writer took a critical analysis of the organisation he was attached at and also outlines the
various activities that he carried out in each and every department and goes into analysing the
relevance of theory to practice. The writer also indicates the various constraints and makes
recommendations.

Basing on industrial attachment experience it is evident and undisputed that the theoretical
finance knowledge gained by the writer during his two year studies at Chinhoyi University is
of great relevance to the business world and organisational structures of various
organisations. Industrial attachment year was of importance to the writer and conclusion is it
is a vital element of acquiring an Honours in Accounting degree

LIST OF ABBREVIATIONS AND ACRONYMS

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TABLE OF CONTENTS

Dedication…………………………………………………………………………………

Acknowledgements………………………………………………………………………..

Executive summary……………………………………………………………..................

List of abbreviations and acronyms……………………………………………………….

CHAPTER 1

Introduction

Organisational background…………………………………………………………………

Organisational Structure………………………………………………………… ………...

Company Vision and

Mission……………………………………………………………………………………..

Departments attached...........................................................................................................

CHAPTER 2

CHAPTER 3

CHAPTER 4

CHAPTER 5

CHAPTER 6
Constraints………………………………………………………………………………….
1.0 Chapter 1
1.1 Introduction

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1.1.1 Organisation background

The Union is an international scientific Institute strong in technical

assistance, operational research and education, addressing the challenges
of tuberculosis, lung disease,HIV/AIDS and tobacco control in low and middle-
income countries. The Union is also a Federation of more than 15,000 members and
subscribers in 150 countries committed to the same vision: health solutions for the
poor.  It was founded in 1920, in Paris France, and has been through various
strategic changes for the past years. The major decision to decentralise operations
came through in the 2000s and offices were opened in all regions of the world.

Offices opened in Zimbabwe in 2009, and Dr. B. Nyathi was appointed as the first
Country Director.

 Organisational Structure

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Above is the organisational structure of The Union showing all departments. The
Zimbabwean office comprises of two sections, Technical section, which go under the
Deputy Country Director; and the Finance and Administration section which goes
under the Senior Administrator.

 Vision

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To provide health solutions for the poor.

 Mission

The Union brings innovation, expertise, solutions and support to address health
challenges in low- and middle- income populations.

 Values

Quality     

We deliver our services and products to the highest possible standards.

Accountability

We are responsible stewards of resources and deliver on our commitments.

Independence  

We maintain the freedom to pursue innovation and are guided by the best evidence to
improve the health of the poor.

 Solidarity  

We stand together as one Union to overcome the greatest challenges to improve health
among the communities we serve.

 Objectives

 Departments The Student was Attached

In depth the rest of this report will look at the various activities the writer undertook in
the Administration and Finance department that he worked in. A brief outline of
activities partaken under the technical department will also be included. The various

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challenges that the writer came across will also be listed and the possible noted solutions
that will have been able to solve or curb the challenges .The rest of the chapters will
look at the writer’s daily activities and their relevance to the finance discipline and how
well relevant they are.

Chapter 2

Technical Department

Chapter 3

Finance and Administration department

 Introduction

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Basically part of the induction, for the sake of getting the proper understanding, was
appreciation of how documents used in the overall accounting department are
generated. As time progressed, the scope of work done broadened to fit the general
practice of accounting and asset management.

In this department the writer was under the supervision of Mr. M. Jonasi who is the
Head of the Finance and Administration team.

Since the organisation did not produce any goods, the credit section was the largest part
of accounting procedures. Most if not all of transactions partaken were on cash to
supplier basis.

Outlined below is the procurement cycle:

 Purchasing

Any payment for the purchase of goods, services and equipment above US$500
was mandated to be supported by at least 3 quotations. The Administration
assistant was responsible for procurement of all quotations. Ultimately, it was
the task handed over to me, and also preparations of comparative schedules. A
comparative schedule is then submitted to the accountant, the Senior
Administrator and the Country director, in that order, for approval. I was hence
in charge of updating a suppliers listing database based on all quotations
received. For all purchases made of the same commodity, an approved supplier
can be used without the need for quotations over a period of six months.

Routine and administrative payments of less than US$500 did not require
quotations.

 Supplier

-Suppliers raise an invoice as per order and supply the goods.

Supplier issues a Delivery note to handover to the office

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 Requirements: tax invoice

- The words “TAX INVOICE” in a prominent place

- Name, address and VAT registration number of the supplier

- Name and address of recipient

- Individual serialised number and date of issue

- Description of goods and /or services

- Quantity or volume of goods or services supplied

- Price & VAT **

 Customer: The Union

-The office receives a Dlivery note from the supplier

-Delivery note is signed by the secretary or any other member of the finance and
administration team who is around

-the quantities provided for in the delivery note are checked with those on the invoice
that has been raised for value verifications

 Payments

The finance and administration department was responsible for all forms of
payments to all expenses incurred. All invoices from suppliers of goods and
services were handed to the Administration Assistant for processing. Payment
vouchers were prepared and were handed to the Accountant before payment.
Approval was made by the senior Administrator.

Methods of payment

 Cash

The office maintained two types o cash floats, the workshop float and the petty
cash float. The amounts were kept on a dual lock safe in the Accountant’s office.

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Possessors of the keys were the Administration assistant and the Accountant.
The cash floats were used to pay for all transactions not exceeding $200.00, to
which the petty cash float was used more. The workshop float was used to pay
course participants who partook programs facilitated by the organisation. All
related expenses to those workshops were shouldered by the workshop float. It
was also used to cater for transactions from regular suppliers. Regular suppliers
are those who cater for communication expenses and motor vehicle maintenance.

 Bank transfers

All transactions that surpass five hundred dollars are paid using bank
transfers. With the exception of regular suppliers who offer services solely
dependable to them, all other transactions over five hundred dollars are
paid via RTGS. Bank transfers are prepared by the Administration
assistant and are passed to the Accountant for verification. The Senior
Administrator and the Country Director approve all transactions passing
through the bank via electronic transfer.

At the end of each month there is the preparation of creditor reconciliations were we match
our ledger balances for each creditor with the statements that are produced by each individual
supplier and they will be showing the outstanding balances that we owe to them.If the two
balances do not match we have investigate and see why our balance does not match that of
our supplier

 Reasons why the two balances may not match:

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- These kinds of errors might be as a result of errors of original entry whereby the
wrong value is capture i.e. a GRV or payment is understated or overstated.
- Payments may be recorded against incorrect creditor accounts

- Unrecorded purchases or purchases that have been under recorded will lead to the
understatement of liabilities
- Differences in GRV amounts and suppliers invoice amount.

- Payments may be made and never recorded in the accounting records

- Payment of inflated invoices or incorrect amounts

When the two balances match the creditor reconciliation form has to be signed by the parties
involved that is the head of the creditors department and the creditor in question. With this
finalized and our balances have been matched and both parties have agreed to the balance
owed reconciliations are sent to final accounts where they are attached creditors listing as
proof of balances owed. The Creditors listing will be part of each end of month Management
Accounts Pack prepared and submitted to the Finance Director for appraisal.

 Potential Risk Linked To The Creditors Department

- Payments may be recorded against incorrect creditor accounts

- Paying for goods not delivered to us.

- Payments may be made and never recorded in the accounting records

- Duplication of payments.

- Paying wrong amounts due to erratic reconciliations

- Payment of inflated invoices or incorrect amounts .

- Failure to pay in time attracting penalty interest charges and strained relationships

- Unrecorded purchases or purchases that have been under recorded will lead to the
understatement of liabilities and a corresponding overstatement of profits.
 Account Allocations
At the end of each month after all reconciliations have been done the vendor account ledger
entries that coincide are allocated i.e. they are cleared in the account so as to remain with the

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outstanding ledger entries showing in the account .This is done to avoid to have too many
entries in a particular vendor account which will make it hard to make investigations in cases
when we are making creditor reconciliations.

 Key controls – creditors reconciliations and payments

- Proper authorization of all requisitions and orders and purchasing function should be
vested in specified persons.
- The arithmetical accuracy and details on every invoice should be checked prior to
processing. Every invoice should be accounted for by a credit to the correct supplier's account
and the creditors Control account and a debit to the appropriate stock or expense account
- Matching of suppliers invoice, purchase order and GRV, paying particular attention to
unit prices, quantity and castings
- The accounts copy of the purchase order and GRV are stapled to the invoice, and
passed onto the Finance Manager for final checking and authorization for payment.
- Where part deliveries are concerned, both the suppliers invoice and the GRV must be
clearly marked PART ORDER and the accounts copy of the purchase order held back until
final delivery
- Chart allocation codes should be applied correctly and the finance manager must
check the allocations when authorizing the documents for payment
- Delivery notes are not recognized payment documents and will not be accepted for
payment to suppliers
- All paid up invoices to be stamped “ paid” and cheque number cross referenced

 Relevance of theories learnt to practical

Attachment period is a time when students implement what they have learnt in their first two
years of study at the university. The students studies have shown to be of great relevance and
very necessary for the effective accomplishment of tasks carried out practically. Activities
validated the necessity of the following courses:
- Information Technology and Information Systems

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These courses proved to be relevant and very crucial when it came to the use of the
company’s accounting software package (NAVISION) as well as various tasks that needed
proficiency in computer skills especially Microsoft Excel which was used in most accounting
reports which needed to be part of the end of month Management Accounts Pack.
- Treasury Management

The element of controlling the company’s liquidity position was of crucial importance to the
creditor’s department as well as the treasury department itself .The two worked together so as
to minimise the company’s liquidity risk and this shows how relevant studies of the various
risks that are associated with operating business and how they can be managed and it thus
justifies why the company tried to spread its credit owings to suppliers over a wide period so
as to pay them off in a way that will not compromise the firms liquidity position ensuring that
the firm is always able to meet its short term obligations.
- Accounting 1 & 2

The basic principles of accounts were of importance so as to appreciate the accounting terms
and practices that were carried out in the creditors department. An accounting background
helps in the appreciation of why it is important to have transactions relating to a particular
creditor have to be posted/captured into same vendor codes(Principle of double entry).Other
issues of accounting were noted by the student and these included accounting errors for
example the error of omission as well as error of original entry .Accounting principles learnt
were relevant to a much large extent to all departments of the organisation and it helped in
understanding the several processes that we carried out under NAVISION.

- Corporate Finance

The management of the firm’s cashflow stresses the importance of corporate finance
knowledge in the running of the firms. This ensures a favourable liquidity position of the
firm.
- Communication and Peace Leadership and Conflict Transformation

Dealing with creditors requires considerably good communication skills as the student was
interacting with different people in the work place as well as creditors that came chasing after
their payments. One has to know how to handle the different scenarios as creditors react
differently in cases where they do not get their payments in time or they don’t get the full

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amounts that we owe them.These skills helped in dealing with different issues as the student
was working as part of PG Timbers and hence theories learnt are very relevant.

 Summary

The creditors department was the first department the student was attached to and had a lot to
learn in as far as work related environment and of the different activities that the student
found theories studied at the university to be of great relevance some directly and some
indirectly.




 Introduction

This was the main focus of this department is to ensure proper management of funds and
assets as outlined by the requirements. It established proper internal control procedures and
monitoring mechanism on all aspects of the organisation.
The department comprises of five staff member, the author included, and recorded as the
largest in the organisation. There were no distinct features to alienate finance from
administration; hence the author had direct application of management and accounting.
The finance and administration team worked under a policy designed to bring the highest
level of accountability and transparency. This was mainly initiated by the stewardship role
the organisation had on all funds received from donors and the various assets acquired for
specific purposes.

 Activities

The core focus of the finance and administration department is following the widely
recognised principles of internal control procedures.
 Proper authorisation-

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 Segregation of duties

 Provison of proper documentation

 Safeguard over access to assets and records

 Independent checks ob performance and valuation

These principles were applied in

 Purchasing procedures

 Payments; cash and bank

 Advances for workshops

Purchasing procedures

The Accounts copy is sent to the Accounts department for filling. The transaction details are
posted direct into the Debtor’s code (Customer code) or account at the invoicing desk.
Receipts of payments done are sent to the Debtors department where they are capture into
their respective accounts.

 Capturing of Debtors’ Receipts

If the invoice was posted in the correct customer account the capturing of the receipt will
mean that the amount remaining in the debtor’s account will be reduced or even cleared if full
payment has been made.If due to any error the double entry was not done properly i.e.
purchase invoice and receipt are not in the same account the transaction posted in the wrong
customer code will be reversed and the transaction is reposted into the correct account. This
process all takes place in NAVISION.

 Debtors Statements and Reconciliations

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Statements of account are sent to customers at the end of each month and should be checked
for accuracy before dispatch. Statements will show our ledger balances for the particular
debtor and statements are accompanied with reconciliation forms which debtors are to sign
as confirmation of the balances that they owe us.

In the event that the balances in our ledger and the one in our customer’s books do not match
the variance should be investigated so as to find out the cause of the differences. Some of the
differences are a result of payments receipts made by debtors not being availed to the
accounts department for capturing or one of the entries being posted into the wrong account.
After all possible causes of variances have been investigated and balances have matched our
debtor will sign confirming the amount owed to the company. Signed confirmations will be
attached the debtors listing and this is part of the end of month toolkit (Accounts Pack).
 Debtors Listing
The debtors listing is a list of the company’s major and minor debtors showing balances they
owe the company .A debtors list should be prepared periodically and the individual account
balances should be analyzed by age. The aged debtors list also provides management with
information concerning the effectiveness of the credit granting and debt collecting
procedures.
 Debt Collection

The debtors list is submitted to the debt collection department which falls under the Debtors
department and follow-ups will be made to debtors to push for payments for overdue and any
other balances that the debtors will still have outstanding.

In cases of debtor that have proven to be failing to pay or unwilling to pay their owing
balances a list of such debtors is submitted to the IT Department which will temporarily
suspend the account from all further purchase. If the debtor continues to default payment he
is permanently blocked and he is black listed at the highest level meaning he will not be able
to carry out any business transaction with any P G Industries Subsidiary. From here on legal
action will follow to enforce payments through legal means that is sending of final
demands, summons and warrants of execution to compel debtors to pay what they owe.

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 Weaknesses

- Legal process is long and further worsened by temporal defaulters causing losses
through the time value of money,
- Failure to measure performance in percentage terms to ascertain successes in debt
recovery,
- Pursuing long overdue accounts whose values are eroded by ever increasing costs
becomes unbeneficial in terms of the Cost-Benefit Analysis principle

 How activities relate to Finance Theories learnt

Several theories learnt have shown great relevance to practises in the Debtors department as
well as other departments that are linked to debtors such as sales and marketing as they are
the pushing factor to credit sales.

- Micro Economics

One of the determinants of demand is the offering of credit facilities to customers and this
will increase the sales of any organisation and this explains the huge credit sales that are
made by PG Timbers. Credit sales comprise of the largest portion of the firms income
hence showing relevance of theories to practise .Considering that the sales and debtors
department work hand in hand one might also say that micro economics in the practices
of the firm also help in price determination through forces of demand and supply.

- Treasury Management and Corporate Finance

Default risk, this the greatest form of risk that the debtors department tries to keep under
constant monitoring. The department is very analytical to the customers that it extends
credit facilities to and the limit of their credit power. Monitoring of debtors shows the
importance of cashflow in a firm and the risk that needs to be avoided when selling on
credit. Liquidity risk in the firm is also kept under constant check and if debtors pay in
time the liquidity position of the firm will be greatly improved.

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- Communication

Working with different customers helped the student as he had to implement the various
communication skills he had learnt and understood. It helped in handling queries in the
most polite and professional manner. Communication as a studied aspect was very
relevant to the activities in the Debtors department.

 Summary

Similar to the Creditors department theories learnt were of great relevance to the Debtors
department and the student had a feel of how to deal with the various attitudes of debtors
some who we fail to agree with in terms of the balances that they owed the company.

Chapter 4

Final and General Ledger Accounts

 Introduction

The Final and General Ledger Accounts Department is responsible for the preparation of
various reports that will be sent directly to the company’s Top Executives such as the Chief
Executive Officer as well as shareholders of the company after they have been approved by
the Finance Manager.

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In this department I was under the supervision of Mr M Makombe who is the Head of
Accounts activities and reports to the Finance Manager (Mr P Pikire).

This department is a crucial aspect of Financial Reporting and accuracy is an important

attribute as errors will produce biased financial statements that can critically mislead the
management board.

 Activities

- Fixed Asset Register

The major activity that was wholly the student’s responsibility during the attachment year
was the preparation of the Fixed Asset Register in preparation for Property Plant and
Equipment revaluation which was done by Richard Ellis Africa.

The main responsibility of the student was the counting and physical verification of the assets
existence. The student compiled a list of all the assets of PG Timers a SBU of PG Industries,
assets had to be accounted for whether physically present or not available at the time of
verification. This was the first part of the asset re-evaluation exercise.

The second round involved a repeat of verification and counting but this time with an
external agent from Richard Ellis Africa (Mr Clifford Chakawarika) .He confirmed the
register that had prepared by the student and did the asset description in his own technical
language so as to help him do the proper valuation .A month after his visit he sent back the
final asset register with values of the company’s assets that had been re-valued.

The third part of the exercise was to verify the completeness and accuracy of the asset
register produced by Richard Ellis Africa. The checked register became the company’s final
asset register and was to be maintained and was also part of the January 2011 Management
Accounts Toolkit.

- Audit Responsibilities

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Around the end of the Fixed Asset Register exercise came External Auditors and the major
activity linked to the auditors was providing them with the necessary information i.e.
supporting documents that helped them do their job in the shortest possible time to cut audit
costs and to have it run smoothly.

The fixed asset register was part of the information that was required by external
auditors .The student had to make sure that the asset register was updated every time an
addition was made to the company’s assets and such additions included Motor Vehicles and
Computers and any other class of assets.

 Management Accounts Pack

The major activity in this department is the preparation of financial statements that are
presented to the top executives of the company after approval by the finance manager. The
Management Accounts Pack is prepared every end of month and it will be comprised of the
Accounts Pack, toolkit and checklist. The toolkit and checklist serve as supporting schedules
to the Accounts Pack.

Preparation of the Management Accounts Pack begins with the spooling of the Trial Balance
from NAVISION after NAVISION generates the trial balance for the period in question it is
exported to an excel sheet .The system generated trial balance is then pasted in the audit pack
template sheet where all the other sheets of the accounts audit pack will subsequently pick
values from as there will be formulas in these templates. The Management Accounts Pack
has an excel template that is used every month,the excel template has formulas and
information is not typed in but there is a TB(Trial Balance) sheet where the spooled trial
balance from NAVISION is copied and the rest of the Accounts Pack will be updated
automatically.

Then when it comes to the supporting schedules of the management accounts pack which are
the toolkit and checklist these have to be linked to the accounts pack so as to update

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them,unlike the accounts pack these have to be updated sheet by sheet as the whole schedule
does not update automatically but after the linking to the accounts pack every change in terms
of values that happens to the accounts pack will be updated across all the documents linked to
the accounts pack thus the toolkit and checklist.

However there are times when some aspects do not update automatically after change to the
accounts pack have been made especially in the checklist, this will call for further
investigation as to why there are differences or why it is not updating. Such issues maybe a
result of errors in the linking of the supporting schedules to the accounts pack.

The accounts pack having several sheets to it was deemed fit to have an index so as to help
unfamiliar individuals to use the accounts pack. The index is the first sheet of the accounts
pack.

After we have finalised all the accounts and have made the necessary adjustments through
journal entries into NAVISION we print the accounts pack and file it, it is then sent to the
Finance Manager who goes through it confirming the information in the pack by signing all
the vital sheets.

Various departments have to provide their relevant supporting documents to support the
schedules that they prepare that are part of the accounts pack, for example the debtors and
creditors department will have to provide their debtors and creditor’s listings as well as
signed reconciliations from trade debtors and trade creditors as well as group debtors and
creditors. These have to be signed as a way of confirmation and provide proof that our
debtors and creditors recognise that we have balances owing to them and they have balances
owing to us and the amounts. This is so to match our ledger balances with those of our debtor
and creditor’s book balances.

 CAPEX (CAPITAL EXPENDITURE APPLICATION FORM)

CAPEX is by definition a capital expenditure application form that has to be filled and
submitted to the Managing Director, Group Finance Director and the Group Chief

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Executive for approval. This is a prerequisite for any asset acquisition transaction that
takes place in the company and is dealt with in the final accounts department. Appendix
1.0 is an example of a filled CAPEX, showing the information that they will require
before approving expenditure of a capital nature.

Information that will be required before the approval of any asset acquisition that will be
on the CAPEX include the

- Purpose of Expenditure

- Quantity and Cost

- Impact on volumes, efficiency, profitability etc.

- Payback Period

- Source of funding

- Cost of Funding.

 Account Provisions and Validation of Entries

In this department on of the activities carried out by the student was the inspection of each
and every account category to check if transactions were posted in their correct accounts
ensuring that accounts are not under or overstated. This ensures that expenditure of capital
nature are not expensed or prepayments are not posted in the wrong accounts or even GRVs
being posted yet the goods have not been received.

In cases where errors are noted reversal journals are done and the correct transaction is then
reposted this time into the correct accounts. Appendix 1.1 shows the Journal Form that is
used prepared so as proof of the journal and this journal has the specific happenings of the
transaction that will be taking place ie the account to be debited and to be credited the amount
and reason for the reversal as well as the date when the journal was captured.

The calculation of every month’s depreciation charge and provision of these type of
expenditures was another activity that was done in this department. Provisions are made for
the likes of Leave Pay, Depreciation, Audit Fees and other various expenditures.

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 Relevance of finance theories to practise

Theory learnt proved to be of great relevance to practises in the Final and General Ledger
accounts department.Such theories included the following:

- Corporate Finance

Theories learnt in these courses were very vital in the understanding of the practises that the
student was involved in. Practises such as Cost Benefit Analysis and Project Appraisals were
important in the determination of the decision to acquire an asset or not and in presenting
reasons to push for the acquisition of an asset .The basic concept of managers being
employed to run the business on behalf of the principals fully shows the applicability of the
agency theory in practise as principals are after maximising the value of the firm through
employing well educated managers to run the business on their behalf, and they get to
evaluate the performance of these managers using various indicators as well as end of month
financial reports that are prepared in the final accounts department. Leasing was yet another
theory that the student noted to apply to the activities carried out as the student noted that the
company had a long term lease agreement that catered for the provision of company premises
as well as mobile plant machinery such as forklifts.

- Financial Markets

The company’s source of funds for assets and other activities also needs an understanding of
financial markets to understand how funds are sourced and from where, during the course of

the students attachment rights issues were offered to the company’s employees as the
company’s was in search for funds and debentures from the investing public.

- Accounting 1 & 2

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When it comes to preparation of financial statements the basic principles of accounting

were vital in preparing these reports as it helped the student understand what were their
significance and the meaning of certain indicators that are given by these financial
statements. The calculation of depreciation on the company’s assets using the straight line
method is yet another theory that came in handy in the practises undertaken by the
student. Accounting theories learnt were noted to be relevant to practise as the student
had to investigate ledger entries for several accounting errors to ensure the reliability of
reports produced. Such errors included errors of original entry, errors of commission,
errors of omission and other various accounting errors learnt by the student.

 Summary

Working in this department was a great experience for the student as he was at a position
where his work would be presented to people higher the organisational structure as they went
through for example the financial statements prepared by the student and this gave a sense of
responsibility to the student. At the beginning working in this department was a great
challenge for the student but he managed to adapt and grasp most of the concepts as well as

to realise and to put into practise the theories that he found to be relevant to the activities he
carried out.

Chapter 5

Treasury Department

 Introduction

This was the final department the student was attached to.The Treasury department is a key
department in any organization in as far as management of the company’s funds as well as
liquidity. This is the section which is responsible for the financial administration of the

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company It is the centre of all payment activities in the company.It is responsible for all
payments and all departments requesting payment of any purchases or services provides have
their payments done through the treasury department other treasury department functions
include provision and use of funds (capital), collection and disbursement of money market
instruments. Thus, the treasury is the centre of all cash handling, bill payment and all back
office functions in various money management operations for the company .In this
department I was under the supervision of Mr D Chataika who is the Head of the Treasury
Department.

 Activities

- Bankers

P G Timers banks with Stanbic and it has several accounts with the bank each for a specific
type of transaction or payment. There are basically two active accounts one is specifically for

Cheque payments and the other one is solely for RTGS (Real Time Gross Settlement) and
Fund Transfers.

- Signatories

When payments are done there are specific people they were made the company’s signatories
and these include the Finance Manager (Mr P Pikire), Procurement Manager (Mrs T Mtetwa),
Managing Director (Mr J Banda) and Operations Manager (Mr L Dapira). Any two of these
signatories are enough to authorise any kind of payment.

- Payments

The majority of payments for PGT are done at head office via the RTGS system with
payments of relatively small amounts being done by cheques.
Cash payments made are for back to back orders where goods are being purchased on a cash
basis; this cash would have been received from the respective customer or from cash sales.

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For every payment to be done it requires the documents to be paid to be all available and
invoices should be VAT compliant, payments are done starting with the oldest invoices that
are outstanding unless if it is on COD basis.

As stated before the head of the creditors department submits tax invoices that are due and
need to be paid to the treasury department, all other departments also submit tax invoices that
need to be paid to the treasury department. A cheque requisition is prepared for each tax
invoice to be paid and this cheque requisition will have the Payee (name the payment is to be
made to), amount to be paid and the account code of the expense to ensure that the payment
is captured into the same accounts as the purchase was posted in.

After the requisition has been prepared and all the required documents for payment have been
attached i.e. GRV, Tax Invoice, Quotations and Purchase Order the batch is submitted to the
Finance Director for payment authorisation.

Authorised payments are sent back to the treasury head who then depending on the amounts
decides to pay with a cheque or rtgs .Usually small amount ,those below five hundred
dollars($500) will have cheques written and the minimal number of signatories will sign the
cheques and they are booked in our cheque register waiting for their collection. The cheque
number is also quoted on the specific payment cheque requisition.

For RTGS payments the procedure is the same in terms of having two signatories authorise
the payment and these are taken to the bank where they are processed and the bank personnel
will have to call the finance director to confirm the payment for security reasons.

A copy of the RTGS is attached to the rest of the payment documents and these are filled for
future references ie to prove payments made to suppliers and our other creditors. RTGS
payments are made for amounts above one thousand dollars ($1000).

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- BANKING

When it comes to treatment of our sales,all sales made in the form of cheques or cash have to
be banked into the respective company accounts before they are deducted for any reason and
there are no exceptions unless authorised by the finance director.

All cash sales batches have the cash deposit slip attached the following day after banking is
done. The amount banked is the cash received from the cash sales, any difference between
cash received and amount banked arises when cash has been used for petty cash where the
voucher is attached to the appropriate sales batch along with cash deposit slip.

A receipt is generated for RTGS deposits upon confirmation that funds are in our account.
The RTGS copy and receipt are attached on the cash sales batch from the day sales are
invoiced. If the RTGS deposit is for a credit sale, the debtor account is credited with funds.
Payments received from credit sales are banked separately from cash sales after receipt is
generated. These are also batched together and sent for processing.

- BANK RECONCILIATIONS

Bank reconciliations are done every morning when bank statements are received from the
bank and after all documents have been processed (captured) at the end of each trading
month. Any transactions generated by the bank is captured by the bookkeeper (data
centre).Bank reconciliations are done at the end of the capturing process and this is where we

try and match our ledger balances of our banks with the balances on our bank statements. In
order to prepare Bank Reconciliation statements the following activities have to be done:

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• Receiving and checking of daily bank statements from the bank. All documentation has to
be in intact,

• Analysis of all bank charges, determine the relevant accounts being affected.

 • Analysis of the Cash Book to ensure that the Bank and the Cash Book tally,

• Cancellation of all drawn cheques that have exceeded six months (stale cheques) from PG
Timbers Records,

 • Reconciliation of the bank account every month ending up to Final accounts stage, and

• Correction of errors emanating from computer input from various organisation’s sections on
the Error Report (a report of inaccurate data rejected) and the relevant reconciliation’s.

Any variances will call for investigations, as to why the two balances do not match. Usually
the main cause of variances will be cheques written or paid out to certain suppliers that would
not yet have been accounted for at the bank by the respective payee thus bringing about the
variance.Other reasons why bank balances will not match with ledger or sales batches
include:

• Over bank: - more amount being banked than the receipted amount

• Under banks: - less amount being banked than the receipted amount

• Timing differences: - the dated sale not corresponding with the bank date

• Bank error: - deposits that suggest are paid but maybe in wrong accounts or bounced checks

• Record error: - the existing physical document not corresponding with the recorded proof.

Over banks and under banks are issues that raise eyebrows and have to be explained .The
responsible cashier have to pay for the deficit.

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- Risks monitored by the Treasury Department

 Liquidity Risk

The treasury department has to ensure that the company’s Liquidity Risk is monitored
always. The company is sometimes exposed to liquidity risk due to cash losses through
wrong investments and too much cash outflows. This risk is usually absorbed when the
company borrows from the bank or other sources since it has a good reputation with lenders.

 Credit / Default Risk

Clients/Customers that purchases products on credit at PG Timbers may fail to pay in time
but the institute does not usually write off. The company uses debt collectors to collect the
un-met obligations within the agreed space of time , those who do not pay in time are
penalized depending on the amount they owe. The debtor also meets all the cost incurred by
the company to get its payment. The aspect of monitoring default risk is in the hands of the
treasury department as well as the debtors department which is the department that is directly
in line with credit sales.

 Reputational Risk

Over the years PG Industries as a whole has managed to maintain its reputation with the
clients and the lending institutes. It’s borrowing power and creditworthiness is good due to
efficiency and good management. Risk management team is responsible for analyzing this
risk and advise other departments on how to maintain good reputation. If reputational risk is
well managed it will be a great benefit to PG Timbers as it will translate to longer credit
terms with our suppliers.

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 Relevance of finance theories to practise

 Summary

Chapter 6

 Constraints

 Recommendations

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Chapter 7

 Conclusion

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Appendix

Appendix 1.0 – CAPEX FORM

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Appendix 1.1

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