OSCAR GROUP

AS-IS BUSINESS PROCESS

© 2006 IBM Corporation

FINANCE & CONTROLLING:
1. REQUIREMENT/EXPECTATIONS
 CAPTURING ORGANISATION DETAILS FROM LEGACY TO R/3
 CAPTURE REPORTING AT DIFFERENT LEVEL.

AS-IS BUSINESS PROCESS:

PIL and PEL are two separate entities which operates in India and carry out business activities by fulfilling all legal
requirements. They maintain books of accounts as per Companies Act 1956 & 1961.
 Group reporting is done as per PIL level.
 Book of accounts for both companies PIL & PEL are maintained on INR basis.
 Fiscal year followed for both the companies from April to March.

© 2006, IBM Corporation

 AS-IS ACCOUNTS RECEIVABLE

REQUIREMENT FOR PIL:

 Customers are grouped under three categories:
1. Domestic
2. Export Customer
3. One Time Customer
 Domestic sales are handled by Branch office and Export is handled by Head Office.
 Mode of receiving payments from customer:
1. Bill of Exchange, Hundi
2. L.C. for export customer
 Credit notes are raised to customers for discounts under various schemes after analysis and approval.
 Credit management & debt management are followed.
 Branches are responsible for collection from domestic customer & remit to HO on monthly basis with statement.
 Export Sales collection by LC
 Advance payment received from customer as per terms and condition.
 Reminder notice should be sent to customers about due amount & interest should be charged on due balance.
 Three reminders are sent:
1. After due date
2. After 7 days of due date
3. Provision for bad debt

© 2006, IBM Corporation

AS-IS ACCOUNTS RECEIVABLE (CONTD)

REQUIREMENTS FOR PEL

Company PEL is having only domestic sale.

REPORTS GENERATED:
1. Customer overdue statement.
2. Bank statement for customer
3. Debtor ageing analysis as per Scheme VI
4. Credit control report regionwise.

© 2006, IBM Corporation

AS-IS ACCOUNTS PAYABLE

OBJECTIVE:
To process the bills of the suppliers in time and at the same time securing maximum credit period in order to
achieve an optimum working capital cycle and standard current ratio.
PROCUREMENT SOURCES:
 Domestic Suppliers
 Overseas Suppliers for high value specialized components
VENDOR GROUPS:
 Domestic vendors
 Import vendors
 Service vendors
 Vendors for Capital Goods
 One time vendors
TAXES:
 Withholding tax applicable for all types of vendors under the provision of IT ACT 1961.
 TDS id deducted at the billing time or payment time whichever is earlier.
 Taxes mainly include tax under Sec 194C, 194H, 194J and 194I.

© 2006, IBM Corporation

 AS-IS ACCOUNTS PAYABLE (contd….)

 Payment Modes:
 Invoice payments
 Advance payments
 Payment Terms:
 Credit period for procurement from domestic suppliers is on an average 45 to 60days from the date of receipt of
materials at the plant.
 Imports are made against issue of irrevocable letter of credit of 120 days
 Credit period of vendors for office supplies varies from 15 to 20 days.
 Payment to domestic vendors are made from regional offices.
 Bills are processed twice in the month on fortnightly basis: 7th and 22nd of the month.
 The regional offices send a statement/forecast of funds required to make the payment to the domestic vendors
for a month to HO by 20th of the previous month.
 Based on this, HO transfers the amount to bank of the regional offices by 5 th and 20th day of next month.
 Post payment regional offices prepares a vendor wise statement and send to HO for reconciliation by 15 th and
30th of month.
 Blocking a vendor from payment is solely decided by HO.
 Company raises debit notes on vendors in case of non performance/deficiency/rejections.

© 2006, IBM Corporation

 AS-IS ACCOUNTS PAYABLE (contd….)

REPORTS:
 Vendorwise report generated by regional office
 Correspondences are sent to vendor to confirm due.
 TDS certificate issued to vendors on yearly basis.

© 2006, IBM Corporation

 AS-IS INVENTORIES

PRICING:
 Inventories are valued at lower cost or net realizable value.
 Cost of raw materials are calculated on moving average price.
 Cost of semi finished goods and finished goods are calculated at standard price.

REPORTS:
 Plant level
 Regional level
 Branch level

© 2006, IBM Corporation

AS-IS FIXED ASSET ACCOUNTING
 Head office responsible for all procurement of Fixed Assets centrally.
 Respective department of the plant, regioanl offices and branch offices provide requisitions to HO.
 Respective center responsible for making entries in books of accounts.
 Fixed Asset register is maintained for acquisition, disposal, transfers and depreciation of fixed assets at HO.
 Budget maintained for Fixed assets.

DEPRICIATION:
 Straight line method as per Sch VI
 WDV for managerial remuneration
 Monthly depreciation run for company code

Retirement or disposal of fixed assets are made on proper approval of HO.

REPORT:
Asset Acquisition Report
Sale/Disposal report
Retirement of Assets
Transfer In
Transfer Out
Depriciation

© 2006, IBM Corporation

 AS-IS BANKING

 Books of Accounts maintained at Head Office, Regional Office, Branch Office and Manufacturing Location.
 Currency should be INR only
 All expenses incurred at the plants are paid by HO.

REPORT:
 Plant report submit to HO
 Bank Reconciliation Statement monthly basis
 Credit Balance above certain credit limit transferred to HO periodically.

© 2006, IBM Corporation

 AS-IS MIS REPORTING

PROFIT CENTER:
 MIS reporting is required for both company code.
 Plan and Actual report
 Regional / branch office considered as profit center for performance analysis. Plan uploaded once in a year in 1st
quarter & remain unchanged during a year.
 In exceptional cases plan can be changed.

 Actual vs Plan profit centerwise reporting.

COST CENTER:
 Departments of manufacturing units and Regional offices considered as cost centers.
 Cost Center planning is there for expenditure control.
 Expenses are booked cost center wise.
 Each cost center is attached with profit center.
 All common costs incurred in a general cost center and as per HO instruction are allocated / apportioned to user
center.
 Apportionment should be made before month end activity.

© 2006, IBM Corporation

AS-IS PRODUCT COSTING AND OVERHEAD ALLOCATION
 Product Costing is carried out as per production order as well as sales order.
 Variance Analysis
 Plan vs Actual Report
 Standard costing approach for estimate costing & release before beginning of every quarter.

Product costing is divided into 5 categories:

 Material
 Process Cost
 Production overhead cost
 Sales & Distribution
 Other Cost

Under/over absorption are taken into account via production.

© 2006, IBM Corporation