Drafting Standard

Operating Procedures

CA Professional Services

Sripriya Kumar
A Smart CA Initiative
 01 Context

02 What is an SOP – Policy Manual – Desk Procedure

03 As is Vs Should Be Process Understanding

04 Steps in Drafting an SOP

05 About Us of an SOP and a Model Template

Contents
 Context

About
Q & A Us
 The Control Onion Gets More intense

Statutory Audit / Regulators

Peer Reviews

Quality Assurance Reviews

Internal Audit
Every One
would like to Self-Assessment
understand
Management Oversight
how business
and
operations
are getting
done, by
whom and
what controls
 SOP Vs Policy Vs Desk Procedure

About
Q & A Us
 SOP Vs Policy Vs Desk Procedure

A Policy is a high level statement of intent –

example Purchase Policy, Sales Policy and
would state the controls to be followed Policy
A Desk Procedure is a detailed work instruction
example – who should do it, what account code,
when should it be performed and is a very intense
SOP
document with step by step instructions
Desk
An SOP is a fairly detailed document that covers any
process and provides what is to be done with limited
Procedures
focus on how it is to be done as well

SPR & Co, Chartered Accountants

 Voice of Process – As it Vs Should be

About
Q & A Us
 Process Review

Gap Should be Drafting the

As is Process
identification Process Ideal SOP

Study the present Identify Gaps that Define and agree Draft the SOP
process , the ought NOT to be on the ideal
players, the there Should Be process
process, the risks,
controls, the
systems

SPR & Co, Chartered Accountants

 Common Areas

Brief Policy Document Schedule of Authority

Fixed assets Procure to Pay

Cash , Bank, and Investment operations Hire to Retire

Inventories and Production Month end protocols

Revenue and Receivables Statutory Compliances

SPR & Co, Chartered Accountants

 Steps in Drafting an SOP

About
Q & A Us
 Steps in Drafting an SOP

• Agree on the areas to be covered ( High on Risk, Materiality and Compliances )

• Obtain the organisation chart ( else prepare one )
• Prepare a matrix of roles and responsibilities
• Walk through the process with the user(s) and HOD’s
• Identify gaps in present process
• Discuss on gap remediation and ideal “Should Be” process
• Document the basic SOP in draft
• Clear with the management
• Issue final SOP with flow charts and swim lane diagrams

SPR & Co, Chartered Accountants

Process Flow charts & Swim lane diagrams

About Us
 Contents of an SOP

About Us
BROAD STRUCTURE OF SOP

04
 Component – Process – Sub Process
Procure to Pay Order to Cash IT General Controls
▪ Purchase Requisition ▪ Quotations
▪ Access Management
▪ Approvals ▪ Agreements/Contracts
▪ Change Management
▪ Purchase Order ▪ Credit
▪ Logical and Physical
▪ Receipt and Rejections ▪ Delivery
Security
▪ Supplier Invoice ▪ Invoice
▪ Validation ▪ Collection
▪ Payment

Fixed Assets Statutory Compliance Hire to Retire

▪ Asset Acquisition ▪ Direct Tax ▪ Human Resource Cycle
▪ Fixed Asset Register ▪ Indirect Tax ▪ Employee Master
▪ Capitalization ▪ Labour Laws maintenance
▪ Disposal ▪ Other Key Compliances ▪ Salary Processing
▪ Impairment ▪ Recruitment
▪ Separation
Production
▪ End to End process

SPR & Co, Chartered Accountants

 The same 4 box chart

Process Risks Client Buy in a must

Get the team interested – it is their SOP not YOURS
Make it interesting
Wrap up with user training
Culminate in a Reporting Dash Board

SOP Controls

SPR & Co, Chartered Accountants

 Getting a Client

• Vastly unexplored and not done by even large organisations

• Build Market Awareness
• Process to be independent of persons performing the task
• Small organisations also need SOP’s
• Presentations and pitches galore
• Participation in Trade organisations
• Statutory Auditor references

SPR & Co, Chartered Accountants

 Model SOP

About Us
 The Smart CA Initiative is a Private – Not for Profit initiative of CA
Sripriya Kumar and S P R &Co, Chartered Accountants, where we
Sripriya Kumar share knowledge amongst the professional community. The objective
The Smart CA Initiative is to share – learn and grow.
919841026973
sripriya@spka.in
All programs and mails are by specific consent of user / attendee and
are intended to ensure that we build competence and confidence to
approach and deliver best of solutions to clients and to bridge the gap
between the Big and the Other firms in the profession