ACCOUNTING POLICY & PROCEDURES WORKSHOP

• Understand importance of internal controls and mitigation of risks

• Understand company accounting policies and procedures

• Understand effects of breaches and discuss how to avoid them

Workshop aims

• Internal controls overview• Accounting policies and procedures• Credit notes analysis• Summary workflow analysis• Problems encountered

Workshop overview

INTERNAL CONTROLS OVERVIEW

1. Existence (Validity)2. Occurrence (Cutoff)3. Completeness (i.e., no omissions) 4. Valuation5. Rights & Obligations6. Presentation & Disclosure

(Classification):7. Reasonableness

Internal controls objectives

• Segregation of duties• Authorization of transactions • Retention of records• Supervision or monitoring of operations• Physical safeguards • Analysis of results, periodic and regular

operational reviews and other KPI’s• IT Security

Internal controls activities

Completeness

Existence Valuation and allocation

All invoices have been dispatched and

recorded in the financial statements

Accounts receivable amounts represent enforceable claims for the sale of goods or the performance of services existing at the balance sheet date

Accounts receivable have been recorded at their proper amount and reflect all services provided

Rights and obligations

Presentation and disclosure*

Accounts receivable represent amounts owed to the company at the balance sheet date, and the is subject to substantially all the risks and is entitled to substantially all the rewards arising therefrom

Accounts receivable have been properly classified, described and disclosed in the financial statements

ACCOUNTING POLICY AND PROCEDURE

SA Brief Overview

• Must be in numerical sequence• All fields must be entered• Any break in sequence shall only be for

cancelled invoices and documented on the daily batch return

• Invoices incorrectly raised – cancel and issue new one unless batch has been sent to HQ

• What about incorrect invoices already sent to HQ?

Invoicing

• Supervisor who knowledgeable about tariff charges certifies invoices as correct before dispatch

MTME – SCNT -SCNV -HAND -GEAR -TORS - LVES -

Invoicing

• Batches must be sent on daily basis to HQ• LTK and LEV can send theirs weekly• Batch headers must be filled completely and

entered

Why batch?• Ensures completeness and accuracy• Provides a reference and summary of the

invoices batched

ANY LOSS OF INVOICE BOOKS MUST BE REPORTED

Batches

• No credit is to be given to any customer unless prior approval has been made through Finance HQ

• Application for credit facility scrutinized at Finance HQ

• Any variation to accounts can only be approved through GMF in writing

• Credit limits will be reviewed by Accountant with consultation with GMF

Credit administration

• Accountant/GMF shall approve all actions/credit transactions before ARP actions

• Credit terms shall not exceed 30 days from date of monthly statement

Credit administration

Receipts

• Cash only received at designated receipt locations

• Foreign currency payments not allowed• Bank drafts not considered unless

approved by GMF• Cheques accepted from approved

customers only. • Cheques to be marked ‘not negotiable’

and made to ‘Fiji Ports Corporation Limited’

• Returned cheque are imposed charges• Notification letter is sent within 7 days

asking payer to pay within 7 days• No response within 10 days, second

letter is sent• Legal action (cost-benefit) if still no

response• Charges: <$300 – $25

>$300 - $40

Returned cheques

• Daily banking to be done unless cash is less than: $1,000 – Suva HQ

$500 – Revenue office$100 – Others

• Banking batch should be sent to HQ daily/weekly

• Supervisor must check all banking summary

Banking

• Summary of invoices and revenue report by the 2nd working day after month end

Reporting

CREDIT NOTES ANALYSIS

FPCL - $ $96,666.56 – 2010- $ $184,061.58 – 2009

PTL - $155,601 - 2010- $63,859.60 - 2009

• Credit notes shows wrong revenue was reported in a previous month

• Credit notes shows breakdown in internal controls

• Credit notes are a reflection of inefficiencies

Credit Notes approved

Summary workflowSource Document verified

Invoice Raised

Checked andApproved

Dispatch

RESPONSIBILITY Clerks clerksSupervisor orapproved person

Supervisor or approvedperson

General cargo

TORS

SCNT

SCNV

GEAR

HAND

SIFS

LVES

Problems encounteredInInvoices

• Late batches

•Wrong order charged to company

•One order number two invoices are raised.

•invoices raised late

• Wrong information on batch summary

• Invoice raised to customer not our debtor

•Wrong charges

• Invoices charged to wrong order or does not conform to work done

Problems encountered

Receipting and Banking• Receipting entered in the wrong codes.• Late banking• Batch summary not correct• Cancelled receipts not in batch• Duplicate invoicing

Cost of mistakes

• Waste of time• Cost in dollars• Stress (regular communication from

HQ)• Cash flow is affected• Debtor account is messy and makes us

look like we are not doing work• Performance is affected

• Discounts, incentives and alternative arrangements are not always communicated accurately between HQ, operations and finance, resulting in errors and customer disputes.

• Manual invoicing system result in lost revenue and/or additional costs.

• Failure to reconcile properly work done to invoice results in unbilled work

•Resolving incomplete or inaccurate information will result in items not progressing to the next stage, however errors or omissions left unresolved result in billing or collections difficulties.

Common Causes of Revenue Leaks

• Incomplete or inaccurate manifests result in delay-related costs.

• Unclear or inaccurate terms result in disputes between parties

• Late invoicing may become uncollectible over time.

• Disputes time is extended and collectibility becomes difficult when customer disputes cannot be resolved quickly due to the lack of accessible logistics data, and historical account information.

Common Causes of Revenue Leaks

Questions and Discussions……