Flow of Project-wise budget Monitoring Internal Controls effectively redefined Group of activities...
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Transcript of Flow of Project-wise budget Monitoring Internal Controls effectively redefined Group of activities...
Flow of
Project-wise budget Monitoring
Internal Controls effectively redefined
Group of activities in the project which can be defined and monitored in such a way to detect and prevent internal inefficiency and the timely preparation of reliable information.
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Flow of Project-wise budget Monitoring Revenue budget including billing schedule Estimation of expected margin Activity-wise preparation of expense budget
o Fixed budgeto Variable budget
Training of budgetary control system to users
Implementation of infrastructure Dual monitoring mechanism as prevention
& detection measures Constructive discussion on positive and
negative deviations Minutes of discussion and implementation
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Planning:
Management broadly estimates proposed project cost considering resources to be deployed (based on this viability of project can be assessed).
Project head prepares and submits the detailed estimate of cost to be involved in their area on proposed project (based on planning as mentioned above).
Preparation of estimated cash flow for the project.
Compilation of the various adjusted cost at management level.
Finalization of proposed revenue budget and expense budget of project.
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Soft and Hard infrastructure:
Design and discuss the proposed information recording system with HODs for respective project.
Detailed discussion by HODs to their subordinates.
Preparation and finalization of concurrence system by accounts and project department based on approved budgets as mentioned earlier. Concurrence sheet will be used by both department.
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Implementation and monitoring:
Monitoring of budget for the project over the span of project using concurrence system. Expenses will be routed through concurrence system.
Review of deviation between actual cost and projected cost (with reasons for deviations).
Mitigating procedure for deviation to achieve targeted object.
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Periodical management discussion / strategic management committee:
Preparation and presentation of management information in predetermined formats.
Constructive and healthy discussion by departmental HODs.
Recording of minutes of meeting.
Tracking of action taken status on minutes of earlier meetings.
Recording of repeated deviations for future cost estimations.
Monitoring over project-wise profitability.
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Factors for adequate Budget of project:
Inadequate budget preparation or monitoring over the budgeted cost affect profitability or business.
Why adequate budget for the proposed project is required?
1. Fixed cost to identify shutdown cost.2. Variable cost to control operational cost.3. Notional cost and factoring the risk to strengthened the bottom line of financial statements.
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Budgetary control flow
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Fixed Expense Budget
Expenses
100%
Upto current month deviation
% of Total
Yearly For each monthsBudget Budget
(A)Actual (B) Provision
(C)Deviation
(A) - (B+C)
Budget (A)
Actual (B) Provision (C)
Deviation (A) -
(B+C)
Fixed Expenses:
Operation cost:
Machine rent
Project Premise / site rent
Project assets depreciation
Employee cost:
Project Manager Salary
Staff house rent
Admin Cost:
Internet Expense
Tender Fees
Interest of EMD
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Variable Expense Budget
Expenses
100%
Upto current month deviation
% of Total
Yearly For each monthsBudget Budget
(A)Actual (B) Provision (C) Deviation (A)
- (B+C)Budget
(A)Actual (B) Provision (C) Deviation (A) -
(B+C)
Variable Expense:
Operation cost:
Material consumption
Stores & consumables
Power & fuels
Freight & forwarding
Repair & maintenance
Employee cost:
Staff salary
Incentives
Statutory payments
Labour contractor
Lodging & Boarding
Travelling
Admin Cost:
Working capital interest
Bank charges
Legal & profession fees
Liasoning expense
Rates & Taxes
Communications
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Vouchers needs to be contained the following information:
• Concurrence number• Project Name• Project Code• Project Location• Expense / overhead Sub-code• Expenses description• Account code• Amount• Total• Project Supervisor Approval• Project Head Approval• Finance Approval
Prerequisite details on expense vouchers
Concurrence procedure:
• Each Expenses of the project is required to be passed through concurrence procedure before processing for payment.
• Separate number is required for the each concurrence.• Concurrence number wise expense booking system is required.
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Concurrence Tracker
Particular Code Budgeted Amount
Concurrence No.
Date of concurrence
Concurrence amount
Total Concurrence amount
Over / under Run
Remark / Approval no.
Project Code PRJ1 100,000
Expense or over head sub-codes FOOC 32,000
Expense or over head sub-codes FOOC-1 15,000 CON1 05-07-2015 5,000
CON3 07-08-2015 4,000
CON7 07-09-2015 9,000 MD/05 08-09-2015
18,000 (3,000)
Expense or over head sub-codes FOOC-2 9,000 CON2 05-07-2015 4,000
CON4 18-09-2015 3,000
7,000 2,000
Expense or over head sub-codes FOOC-3 8,000 CON5 07-08-2015 2,000
CON8 09-09-2015 2,000
CON6 10-09-2015 4,000
8,000 -
164,000 33,000 33,000 (1,000)
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What we expect from you?
• Share this information with your project team & accounts team and conduct the presentation to shape up a broader view of internal controls area in head-wise processing of project expenses.
• Stay connected with us for coming more detailed presentations to have insight on practical aspects of Internal Controls.
• Share your views / give your contribution of knowledge to us to improve this presentation.
• Share email address of the person to whom you want to communicate this system.
• Let’s spread global best practices of effective internal controls across the economy.
Thanks