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CONTENT

SECTION TITLE PAGE

1 Purpose 01

2 Scope 01

3 Responsibility 01

4 Authority 01

5 Chapter 1: Cost And Budgeting 02

6 Chapter 2: Payroll 04

7 Chapter 3: Inventory Control 07

8 Chapter 4: Manufacturing Bond 09

9 Chapter 5: Trade Finance 11

10 Chapter 6: Accounts 14

11 Chapter 7: Cash Office 16

12 Chapter 8: Fixed Assets 18

13 Chapter 9: Financial Reporting 28

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1. PURPOSE
Finance procedure is a central reference to all finance related activities carried out in Al-Karam Textile Mills
(Pvt.) Ltd.

Each chapter is a guideline which is to be used with discretion and understanding of management with the
spirit in which the document is written.

These chapters are reviewed on regular basis and may be revised as and when deemed by the
management or appropriate to reflect the dynamics of the Mills.

2. SCOPE
This procedure is applicable on Finance department of Al-Karam Textile Mills (Pvt) Ltd.

3. RESPONSIBILITY
3.1 Finance Head
3.2 Accounts Head
3.3 Accounts Head AK-II
3.4 Cash Office Head
3.5 Inventory Control Head
3.6 Payroll Head
3.7 Trade Finance Head
3.8 Manufacturing bond Head
3.9 Administration department
3.10 HR department
3.11 QMS department
3.12 BT department
3.13 Engineering department

4. AUTHORITY
4.1 Finance head is authorized for approval of all cash flows related to mill.
4.2 Finance department is authorized to hold the salary of the employee to whom suspense amount or
advance to supplier amount is granted.
4.3 CFO is attorney for bank and cash advices.
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CHAPTER 01- COST AND BUDGETING

1.0 Cost and budgeting department operates centrally for all Units of Al-Karam Textile Mills (Pvt.) Ltd.
2.0 Cost and budgeting department gets data from Accounts (both AK & AK-II), Departmental costing
representatives, inventory control, stores, administration, payroll, and engineering department.
3.0 Cost and budgeting department is responsible for:
3.1 Budgeting
3.2 Costing
3.3 Charging general utilities to departments (Electricity, steam, gas, water, telephone and transport)
3.4 Stores expenses
3.5 Calculation of Profit & Loss (departments / contractors)

4.0 BUDGETING
4.1 Evaluation of budget is made as per the department’s head discretion, past year’s performance,
evaluation of budgets are sent to the heads, for setting the next year’s budget, keeping in view the
future potential business values of overheads are set.
4.2 After completion, when they are received in cost and budgeting department, a comprehensive
budget, Al-Karam’s budget Ref. FC0/BU/001 is made.
4.3 The budget of organization is a confidential document and not for public distribution, hence it is not
uploaded on portal.
4.4 The budget is only shared with Owner Director, CFO, QMS head, HR Head & Concerned Head.
4.5 The budget does not include Capital costs and hence departments after discussion with CFO and
owner director can extend their capacities and capabilities.
4.6 For non-capital items (including; store supplies, inventory item etc.) if departmental budget
exceeds the limit, production or mill must not suffer. Over budget can be approved by CFO / Owner
director.

5.0 COSTING
5.1 Cost and budgeting department receives:
5.2 Monthly statement of wages and salaries Ref. FC0/FM/045 are finalized and received through
system on 6th of every month.
5.3 Electrical units, water and gas consumption are received from engineering on 7 th of every month.
5.4 Monthly payment statuses of contractors are received from accounts and monthly statement of
contractors Ref. FC0/FM/046 is made on 07th of every month (after 07th, all entries are carried
forward to next month).
5.5 General expenses (utilities, transport, billing, entertainment, freight charges etc.) are received from
accounts by 07th of every month, and other entries of current month are carried forward, costing
department generates Utilities consumption sheet Ref. FC0/FM/038 on 08 th of every month.
5.6 Consumption of stores is locked on 05th of every month, and the detail is taken from software on
08th of every month for charging to departments.
5.7 Cost and budgeting department receives wages / salaries, benefits, contractors, depreciation and
insurance, interest, store consumption, packing material, power, gas, water, telephone,
administration and production detail from payroll, accounts, stores, engineering and concerned
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departments respectively and generates master costing sheet Ref. FC0/FM/029 on 12 th of every
month.
5.8 Cost and budgeting department generates department-wise expense detail on Expenses
(department-wise) Ref. FC0/FM/040 and circulates to departmental heads, CFO on 12th of every
month.
5.9 Cost and budgeting department generates total utilities consumption sheet Ref. FC0/FM/038 and
sends to CFO and Director, as per their requirements.

6.0 CHARGING GENERAL UTILITIES TO DEPARTMENTS (ELECTRICITY, STEAM, GAS, WATER,

TELEPHONE AND TRANSPORT)
6.1 Cost & budgeting department receives electricity, steam, gas, consumption details from
Engineering department, production and attendance detail from departmental costing
representatives and HR department.
6.2 Cost & budgeting department compiles data and accordingly generates power / electricity bill
summary Ref. FC0/FM/042 on 08th of every month.
6.3 Accounts / administration department shares telephone and transport bills to costing department
so that expenses can be deducted from departmental budgets and variance is calculated.

7.0 STORES EXPENSES

7.1 Stores department shares summaries of all department’s consumption and accordingly cost and
budgeting department generates stores consumption details keeping in view what departments
have shared to other departments on store consumption detail Ref. FC0/FM/043 on 07 th of every
month.

8.0 CALCULATION OF PROFIT & LOSS (DEPARTMENTS / CONTRACTORS)

8.1 All relevant detail of transactions are received from concerned departments, stores, warehouses,
inventory control and sales teams, and profit and loss summaries of all departments individually is
prepared on; Profit and loss summary (Spinning) Ref. FC0/FM/066, Profit and loss summary (Cone
Dyeing) Ref. FC0/FM/027 Profit and loss summary (Weaving) Ref. FC0/FM/025. Profit and loss
summary (Processing) Ref. FC0/FM/023 and Profit and loss summary (Stitching) Ref. FC0/FM/065.
8.2 For processing, process wise costing sheet Ref. FC0/FM/022 is also prepared.

9.0 RELATED DOCUMENTS:

9.1 Al-Karam’s Budget FC0/BU/001
9.2 Monthly statement of wages and salaries FC0/FM/045
9.3 Monthly statement of contractors FC0/FM/046
9.4 Utilities consumption sheet FC0/FM/038
9.5 Process-wise Costing sheet FC0/FM/022
9.6 Master Costing sheet FC0/FM/029
9.7 Expenses (department-wise) FC0/FM/040
9.8 Power / Electricity bill summary FC0/FM/042
9.9 Store consumption details FC0/FM/043
9.10 Profit and loss summary (Cone Dyeing) FC0/FM/027
9.11 Profit and loss summary (Weaving) FC0/FM/025
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9.12 Profit and loss summary (Processing) FC0/FM/023

9.13 Profit and loss summary (Spinning) FC0/FM/066
9.14 Profit and loss summary (Stitching) FC0/FM/065
CHAPTER 02- PAYROLL
Payroll team is responsible for opening of bank accounts of new employees and update bank accounts of
any existing employees, also the team is responsible for handling and catering ATM, Bank related queries.
Payroll team is responsible for processing of payroll, deductions (Taxes, Advances, etc.), leave
encashments, bonuses and full and final settlements.

1.0 BANK ACTIVITIES

1.1 Payroll section team checks and obtains ATM performance status three times in a day including
replenishment on status of ATM machines Ref. FC0/FM/060.
1.2 Payroll head coordinates with banks for replenishment of cash and other ATM related issues.
1.3 Payroll section helps employees in opening bank account (in AKTM approved bank, that already
exists on AKTM’s panel), whenever any new hiring is done by Human Resource Department.
1.4 If the employee already bears an account in AKTM-approved bank then same is enrolled in system.
1.5 For account opening, TMS Payroll section sends online data through HRMS to relevant bank.
1.6 Employees upon confirmation are directed to payroll section by HR department, for opening their
bank accounts, at first their particulars are written in the bank account opening form by payroll
team, their specimens’ signatures or thumb impressions and Email address are maintained for ESS
access are taken.
1.7 After filling, their forms are submitted to bank by payroll personnel.
1.8 When Cheque books/ATM cards are received, new employees are called for collection & for Bio-
Matric as well.
1.9 Whenever ATM card of any employee / worker is blocked, captured or stolen they request payroll
section, to either arrange cash or refer the employee / worker to the bank.
1.10 For arrangement of cash, cash advice Pay slip is attached with CNIC, along with Company ID card
copy and a request letter if needed along with approval of CFO and Director is required, where
employee has to collect the cash from the bank. after confirmation and approval.

2.0 MONTHLY / FORTNIGHTLY ADVANCE & LOAN

2.1 Advance and loans are granted as defined in Chapter # 20 of Procedure for Human Resource Ref.
HR0/PR/001.
2.2 For advance and loans payroll section gets requests through online system or on manual prescribed
format Ref. Doc.: HR0/FM/173 duly approved by relevant HOD, Head of H.R. & DGM Finance,
accordingly the deductions against salaries are made in system and disbursed to respective
worker’s bank account.

3.0 PAYROLL PROCESSING

3.1 Payroll section receives data through TMS software on 03rd 01st of every month at 12’o clock, and
ensures to validate TMS data in HRM Payroll.
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3.2 Once all the salaries are checked and vouchers are made, payroll section generates Bank Advices
and cash advices and upload on Bank’s Portal, where attorney validates the payment as well. on
letter head as on Annexure A of AKT/PR/004 for final signature of attorney.

3.3 Payroll section checks and verifies the details thoroughly, and finally locks the details for processing
of payroll on every 05th 3rd of each month. This checking cannot exceed for more than two three
days, to make it auditable by 4th day of every month / bimonthly.
3.4 After signing, payroll section updates the details in Oracle EBS and checks whether the amount is
under set budget, then the advices are sent for acknowledgement of Finance / Accounts Head.
3.5 Payroll section sends approved bank and cash advices to bank and cash office, for disbursement of
payment in bank accounts and through cash.
3.6 For bank accounts, a CSV (comma separated value) file is uploaded on bank’s portal by payroll
section.
3.7 Salaries are disbursed within 10 days (maximum) after the wage period is ended, for instance
fortnightly payments can maximum be disbursed by 25th and 10th of every month.
3.8 Printed paper pay slips are discouraged keeping in view the environment, and instead an E-pay slip
by means of SMS and email is sent to everybody.
3.9 Further pay slips can be viewed through AK portal (ESS; Employee Self Service) and terminals.(cadre
wise)
3.10 All payments are made through bank wherever possible (exception to clause 3.2 of Payroll
processing).
3.11 In case of any discrepancy in salaries, workers / employees can write an application to HR head for
correction in salary. All such adjustments (if justifiable) are entertained in next salary.

4.0 LEAVE ENCASHMENT

4.1 All details of leave encashment are received from HR operations, where the system calculated
amount is written on the summary of leave encashment.
4.2 Payroll section generates/verifies amount of leave encashment vouchers Ref. HR0/FM/119 and in
case of any correction advises HR operations about it.
4.3 Arrangement of cash for the same is done as defined chapter under Payroll processing.
4.4 Payment is made through bank/cash counters after 5 to 7 working days if the request is received to
payroll section.

5.0 BONUS PAYMENT

5.1 Upon announcement of bonus, details of eligible employees for bonus are extracted from HRMS.
5.2 Amount of bonuses of employees are summed up and details are separated in categories including;
active workers, active staff, left out workers, left out staff, re-appointment etc.
5.3 Priority of payment of bonuses is upon management discretion but active workers are given priority
over active staff members.
5.4 Bank advices on letter head for payment of bonus are prepared and signed and processed as
defined in Payroll processing.
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6.0 FULL AND FINAL PAYMENT

6.1 Upon receiving details of inactive employees from HR, all the details of payments are checked
thoroughly, and accordingly calculations of gratuity (if applicable) is made.
6.2 Once the details are checked a system generated voucher is printed.
6.3 FNF payments are made through cheque for staff and deductions of car, mobile, laptop etc. are also
calculated.
6.4 After few vouchers are gathered, cash/Cheque advice is prepared and signed by Finance head.
6.5 Workers are given slip to collect their legal dues on Dues Receipt Ref. HR0/FM/118 mentioning date
and time.
6.6 On the decided time given to the ex-workers, they are paid outside mills premises in Cheque/cash.
6.7 Stringent security arrangements are ensured by security department during disbursement of cash.

7.0 AUDIT SOCIAL COMPLIANCE

7.1 60+ Audits/Annum, Present Payroll, Bonus, Gratuity, Arrear record at the time of Audit. (Live Audit on
system & Physical Record Presentation).

8.0 RELATED DOCUMENTS

8.1 Status of ATM Machines FC0/FM/060
8.2 Annexure-A ‘Letter head’ AKT/PR/004
8.3 Leave encashment vouchers HR0/FM/119
8.4 Procedure for Human Resource HR0/PR/001
8.5 Dues Receipt HR0/FM/118
8.6 Employee Wise Bonus Slip FC0/FM/081
8.7 Bonus Pay Sheet FC0/FM/089
8.8 Bonus Summary FC0/FM/090
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CHAPTER 03- INVENTORY CONTROL

1.0 Inventory control department is responsible to record and maintain:
1.1 Movement of inventories (Cotton, Yarn, Dyed yarn, Greige Fabric, Processed Fabric)
1.2 WIP inventories
1.3 Inventory valuation
1.4 Risk Management

2.0 MOVEMENT OF INVENTORIES

2.1 All in / out movement of goods including samples, machine parts, testing/lubricants, shipments etc.
are done as per Annexure A chap #6 Gate pass approving authority Ref. AD1/PR/001 by taking
Inventory control head in loop. Inventory control head is authorized to check and acknowledge
other related documents of all inventory items that are sent outside or brought inside the premises.
2.2 Inventory control department is responsible record and maintain to review movement of
inventories within the mill, hence the goods taken on loan or on cash are also recorded and proper
entries generated along with wastages and yield.
2.3 Inventory control department maintains detail of all supplier’s raw material, CMT units and other
value adding vendors and is responsible to check quantities and costs of material supplied.
2.4 Verification of billing of suppliers and vendors is also done by inventory control department for
which proper in / out records are kept prior payment authorization, the final countersigned copy of
bill is then forwarded to CFO or Director for further approvals.
2.5 Inventory control head is taken in loop for cotton and its waste movements within spinning mill;
accordingly inventory control head prepares raw material reconciliation Ref. FC0/FM/036 by 3 rd of
every month.
2.6 Inventory control department is taken in loop for waste movements (reconciliation of cotton)
within department or outside mill accordingly inventory control head prepares waste received,
issued and closing stock reconciliation Ref. FC0/FM/037 by 3rd of every month.
2.7 Inventory control head is taken in loop whenever greige yarn is brought from outside market in the
facility or transferred from spinning mills.
2.8 Inventory control head authorizes yarn warehouse to issue yarn bags against PO and yarn
warehouse team, issues bags after acknowledgement of inventory control department, to reviews
yarn bags issued against PO as per Griege procurement requirement.
2.9 Similarly inventory control head is taken in loop authorized to review whenever packed yarn is
issued, accordingly inventory control head prepares packed yarn received, issued and closing stock
reconciliation Ref. FC0/FM/035 by 3rd of every month.
2.10 Inventory control head is authorized to check and maintain local sale (LOG), no item from LOG can
be sold unless authorized by inventory control head.
2.11 For all yarn that is used for weaving whether inside or outside it is authorized by inventory control
head and accordingly weaving yarn activity Ref. FC0/FM/034 is prepared.
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2.12 Inventory control head is authorized to review, whenever greige fabric is brought from outside
market or transferred from weaving mills and issued to any mill inside or outside.
2.13 Inventory control head receives all the sales details from marketing and LOG / LOCG, etc.
2.14 Inventory control head prepares Cotton & M.M cloth reconciliation Ref. FC0/FM/033.

3.0 WIP INVENTORIES

3.1 Inventory control department keep records of review and reconcile movement of inventories in the
department and validates WIP inventories within the departments by 8th of every month, this
helps in reconciliation of material, wastage and production along with its actual value.
3.2 All data (in / out, production, delivery, wastage etc.) where ERP is accessible and material wise
reconciliation is done, where ERP is not accessible or available, data is received from godowns,
warehouses and departments.
3.3 Inventory control department also prepares SC wise reconciliation of material which helps
management to see the actual wastages and production of the departments.

4.0 INVENTORY VALUATION

4.1 Inventory valuation is done by adding raw material, warehousing and other variable costs and
accordingly reported to head office on 15th of every quarter.
4.2 Inventory control head receives all billing, sale invoices, commercial invoices, GST invoices for
signing and after validation of Delivery Challans, GRN and IGP the same are signed and submitted to
accounts department for further processing.

5.0 RISK MANAGEMENT

5.1 Inventory control department calculates risks, based on the running orders and material available
in mills to produce orders also risks related to shortages and overages of inventories are highlighted
by inventory control department.

6.0 MANAGEMENT REVIEW ANALYSIS

6.1 Division wise stocks

6.1.1 Cotton and Spinning
6.1.2 Export-Woven
6.1.3 Export-Knit
6.1.4 Local & Domestic

6.2 Process wise stock summary

6.3 Stock Comparisons
6.4 Prospective loss in reported stocks
6.5 Dead and sow moving stock summaries

7.0 RELATED DOCUMENTS:

7.1 Raw Material reconciliation (FC0/FM/036)
7.2 Closing Stock reconciliation (FC0/FM/037)
7.3 Weaving Yarn Activity (FC0/FM/034)
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7.4 M.M Cloth Reconciliation (FC0/FM/033)

CHAPTER 04- MANUFACTURING BOND

1.0 Goods imported under bonded supply chain as per SRO 450/2001 are duty free if the same amount
of goods is declared in exports within 24 months.
2.0 Analysis of goods imported must be submitted within 3 months, right after the goods are imported.
3.0 Every month custom’s bond officer audits statement / bond register.
4.0 All warehouses must have boards mentioning “bonded warehouse” for goods and their total area
covered in sq. fts for audit purposes.
5.0 A license for private manufacturing bonded warehouse has to be acquired from customs
department (Government of Pakistan) which is usually valid for a period of one year.
6.0 New license request must be sent to custom house one month before its expiry and proper
questionnaire is filled.
7.0 Inclusions in license have to be taken from customs collector, each time when a new item is to be
imported.
8.0 Proforma Invoice of item (usually, raw material such as cotton, polyester and other fibrous bales,
yarn, fabric and chemicals) is received from head office’s import department.
9.0 Manufacturing bond department checks their license and inclusions whether the HS code
mentioned in the Proforma Invoice is available or not.
10.0 If the code is unavailable in the license, then manufacturing bond department raise request for
items inclusion on item Inclusion list Ref. FC0/FM/067 to the collector of customs.
11.0 Proforma Invoice, Brochure of items (if any), laboratory test reports (if any), calculation of duty and
taxes on purchase value duty Ref. FC0/FM/068, tentative quantity to import and tentative inputs,
outputs and wastages are shared on statement of input / output ratio of imports Ref. FC0/FM/069.
12.0 After receiving of license, it is then forwarded to import officer in head office for claiming duty free
import, and concerned warehouse / stores where the items will be delivered are also intimated.
13.0 Import department in head office receives bonded Goods declaration from clearing agent and
forwarded to mfg-bond department for uploading on WEBOC portal.
14.0 Import department is responsible to provide original bonded GD (Goods Declaration), copy of
Packing list, Bill of lading and invoice to manufacturing bond.
15.0 Once imported items received in bonded warehouses an intimation from concerned warehouse /
stores department is received for the acknowledgement.
16.0 Manufacturing bond team verifies received items against the received bonded GD (Goods
Declaration) in bonded warehouse on the same day of receiving items and in case of any
discrepancy informs head office about it.
17.0 Manufacturing bond team maintains custom statement, custom register and inventory item-wise
ledger on every receiving and consumption of imported items and maintains them on bonded
import item description Ref. FC0/FM/070.
18.0 Manufacturing bond department coordinates with all concerned departments for collection of
sizes, measurements and recipes of manufacturing process details in case of new item for analysis
certificate, for getting them approved on analysis card Ref. FC0/FM/071.
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19.0 Analysis card / certificate has to be taken within 3 months after the goods are received.
20.0 Analysis card / certificate shows input goods along with units and outputs and wastages.
21.0 If there is any discrepancy it is then forwarded to manufacturing bond for correction or mark it as
IOCO (Input output coefficient).
22.0 After approved analysis card / certificate is received, original card is submitted to custom agent and
copy is handed over to export department and one copy is kept in record.
23.0 When the ledger quantity is converted in zero, manufacturing bond department takes export
ending form, invoice, packing list, bill of lading and bank credit advice against export consignment
and applies for IB (Indemnity bond) & PDC (Post Dated Cheque) realization to bank guarantee sales.
24.0 Manufacturing bond department sends request for IB (Indemnity bond) & PDC (Post Dated Cheque)
realization to deputy collector on letter head, once deputy collector receives IB (Indemnity bond) &
PDC (Post Dated Cheque) realization, Indemnity bond and postdated cheque is returned.

25.0 RELATED DOCUMENTS:

25.1 Item Inclusion list (FC0/FM/067)
25.2 Purchase value duty (FC0/FM/068)
25.3 Sstatement of input / output ratio of imports (FC0/FM/069)
25.4 Bonded import item description (FC0/FM/070)
25.5 Analysis card ( FC0/FM/071)
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CHAPTER 05- TRADE FINANCE

Trade finance department is responsible for facilitating export through managing the bank
documentation, dealing with loan financing facilities, managing & recording receipts etc. While on the
other hand for import trade finance department facilitates import activities by managing clearing process
and documentation.
1.0 EXPORT

1.1 Marketing department forwards LC draft to Trade Finance department through Exports / shipping
department. It is checked against LC draft Ref. Annexure A of this chapter, payment terms and
delivery terms etc.
1.2 In case of any ambiguity advise Marketing department for deferred payment instead of Issuance LC
& ask marketing department for revision of LC.
1.3 Trade finance department is responsible for all sort of bank documentation against the received
payment terms (usually L.C).
1.4 Trade finance department deals with Export Re-Finance / Post-Shipment Loan / Pre-Shipment Loan.
1.5 For short term loan trade finance department negotiates with bank and after acceptance of bank,
prepares loan letter and receives the said loan from bank as per the instruction of Head office.
1.6 Trade finance verifies and updates bank cut entries in Form EE Ref. FC0/FM/050
1.7 After receiving of payment, trade finance department maintains form EF Ref. FC0/FM/051 and
prepares form EE Ref. FC0/FM/050 and sends to banks.
1.8 Trade and finance department deals with Finance head and head office for payments and
acknowledgements.
1.9 Head office inform to trade finance Head regarding forward booking.
1.10 Trade finance department gets request from Export department for uploading Form E on WEBOC
portal.
1.11 At the time of shipment, bank documents are received from Export department for checking.
1.12 Trade finance department checks them against LC and in case of any discrepancy, sends to Export
Department for corrections.
1.13 After receiving of corrected bank documents, Trade finance sends them to designated bank via out
door officer / dispatcher and maintains Out Standing And Payment List Ref. FC0/FM/049.
1.14 Bank is supposed to send all documents to customer’s bank and after acceptance of customer bank
and commitment of payment Trade finance prepares payment receivables in Projection Sheet Ref.
FC0/FM/048.
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1.15 Trade finance department sends the projection sheet Ref. FC0/FM/048 to Finance Head / Director
for their review and approval.
1.16 Approved Projection Sheet is sent to head office by Finance department.
1.17 Payment is received through NOSTRO account according to the Projection Sheet.
1.18 Spot rate of bank is taken by Head office and forwarded to Trade Finance Department for
calculations.
1.19 Bank credit advices are received by banks and trade finance sends them to Head office.
1.20 Follow up of payments and pending Bank credit advices with banks are done.
1.21 Trade finance department arranges outside payments in the form of quotations with the help of
Head office after approval of CFO/ Director.
1.22 Trade finance Generate financial instrument unique number by bank
1.23 Trade finance arrange Adhesive stamp for exports (BOE)
1.24 Manage Custom rebate & DLTL

RELATED DOCUMENTS
1.25 Out Standing And Payment List (FC0/FM/049)
1.26 Projection Sheet (FC0/FM/048)
1.27 Form EE (FC0/FM/050)
1.28 Form EF (FC0/FM/051)

RECEIVABLE & PAYABLE OF AK-USA (BRAND AXIS)

2.0 IMPORT
2.1 For execution of every import purchase i.e., Raw Material / Packing Material / Store & Spares /
Machineries / Laboratory Testing Fees etc., requester department will submit “IMPORT REQUEST FORM”
(Ref. FCO/FM/095) to Trade Finance Department, along with the following documents after getting
approval of respective HODs & MD/COO.

Indent or valid Performa Invoice.

Approved copy of System generated Purchase Order / Work Order.

2.2 After thorough checking of above-mentioned documents, Trade Finance (Import) record the entry with
complete detail for tracking purpose & forward to DGM for approval within 1 working day of receipt. In
case of clarification / update / objection, Trade Finance (Import) & requester department will resolve it
within one working day.

2.3 After approval of DGM, request will email to HO and send hard copies as well. Import section (Head
Office) will process these documents & send to bank for LC opening / BC opening / TT payment after
getting approval of authorized signatories. Trade Finance (Import) will get follow up & coordinate with
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the Head Office (Import section) and arrange LC / Bank Contract / TT copy and forward to concerned
department.

2.4 It is responsibility of concern department to send transmitted LCs / Bank Contract / TT copy to supplier
or indentor for scheduling of their shipments as per need basis. Once the goods shipped, Supplier will
send original shipping documents to our bank & copy shipping documents to concern department as
well as Trade Finance (Import).

2.5 Trade Finance (Import) will also get follow up from concern department but it is responsibility of
concern department to arrange copy shipping documents from supplier / indentor and forward to
Trade Finance (Import).

2.6 After receiving of copy shipping documents, Trade Finance (Import) will forward to self-clearance team
for checking & status of the shipment also arrangement of necessary clearance process.

2.7 After receiving of original documents at our banks, Intimation from bank will receive to our Head Office
(import section) and they will arrange the payment to supplier and deliver the original shipping
documents to self-clearance team for clearance of import consignments.

2.8 Self-Clearance Department will provide approved pay order / PDC as per SRO applicable request of
duty & taxes, wharfage, D.O and other necessary clearance expenses along with calculation sheet /GD /
Bill to Trade Finance (Import).

2.9 Upon receipt of pay orders request AO of Trade Finance (Import) will prepare prepayment in ERP
within one working day and forward to payable department for pay orders preparation after getting
approval of Manager Import.

2.10 Payable department will arrange pay orders & deliver directly to clearing agent for clearance of
shipment.

3.0 PROCESS OF RECORDING BILLS AND LANDED COST

3.1 After arrival of consignments at Mill self-clearance department will intimate to concern department for
unloading schedule, it is responsibility of concern department to provide purchase order after revision (if
required) with actual cost to self-clearance department for GRN marking.

3.2 Once the consignment in house self-clearance department will generate bills and submit to trade
finance (import) within 07 working days along with all supporting bills of actual expenses and mention the
advance/prepayment taken against it, claim over expenses & refund the under expenses.

3.3 After receiving of bills AO of trade finance (import) will prepare the import file consignment wise with
the bill number & record the standard in ERP and knock off the prepayment against it.

3.4 LC/BC/Advance payment, opening/amendment bank charges, Insurance premium on import shipments
& retirement/payment entries will be done by HO team.

3.5 After recording of bills/standard AO of trade finance (import) will prepare landed cost sheet in excel
and record the purchase JV to related account head in ERP and select the GRN against it. Incase of GRN
not found or incorrect, Trade Finance will coordinate with concern store/department for correction.
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3.6 After completion of landed cost, complete import file forward to Manager Import and DGM for
checking. Once the costing signed by DGM, Manager Import will post the JV in ERP.

4.0 PROCEDURE OF RELEASING IB/PDC CHEQUES

4.01 After clearance of consignment, Self-Clearance Department will arrange to release of issued PDCs as
per S.R.O. 492(I)/2009 & SRO 450(I)/2001 & submit cancelled PDCs to Trade Finance for cancellation in
ERP.

RELATED DOCUMENTS:

FC0FM095 IMPORT REQUEST FORM i01

CHAPTER 06- ACCOUNTS

1.0 Accounting is bifurcated into following two major areas:
1.1 Mill Accounting
1.2 Head Office Accounting
2.0 Accounts department is responsible for all kind of payment authorization.

3.0 SALARIES AND BENEFITS

3.1 Payroll section as defined in chapter 02 Payroll, verifies production of company and piece rated
workers and sends data to Accounts department.
3.2 Accounts department receives details of staff & workers through HRMS and computes data as
received from payroll section.
3.3 Accounts department counter checks the data and in case of no objection generates bank advice on
Alkaram’s Letter head Ref. Annexure A of AKT/PR/004.
3.4 The bank advice is then sent to CFO / Owner director for further approvals.
3.5 Payroll section uploads the detail of salaries and wages of employees on banks portal and Oracle
EBS after receiving the signed advice from Finance department.
3.6 Bank advice / authority letter to release payment, is then sent to bank for disbursement of salaries.
3.7 For dues / cash salaries of staff and workers, same procedure of approval is followed and then the
approved copy after entry in Oracle EBS is provided to cash office, for further detail on
disbursement, please refer to chapter 7 Cash office.

4.0 CONTRACTOR’S PAYMENT

4.1 HR department is the custodian of all the contracts, as per need either HR department or
contractor forwards the bill to accounts department.
4.2 Accounts department checks the bill against approved rate mentioned on contract approval of
concerned contractor Ref. HR0/CA/XYZ and checks related documents, (including monthly
statement of contractors Ref. FC0/FM/046 received from cost control) to authorize the payment.
4.3 Once the bill of contractor is legitimate, it is either processed for cheque or cash office for payment.
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5.0 PAYMENT TO SUPPLIERS

5.1 All payments to suppliers are made through head office. except advance payment (for advance
payments please refer to clause 6.2 of this chapter).
5.2 Invoice / bill is received by accounts department with Purchase order Ref. PD0/FM/007 or Work
Order Ref. CS0/FM/047 (if P.O / Work order is not available then concerned department / supplier
prepares debit voucher Ref. FC0/FM/009 and get it signed by concerned HOD or Administration
head in case of conveyance, auto maintenance etc).
5.3 Accounts department verifies GRN, IGP Number, Inspection status and sales tax invoice.
5.4 Accounts department proceeds received invoice for preparation of cheque to head office after
entering it in Oracle EBS.
5.5 The suppliers who are not registered in income tax and sales tax have to pay sales tax and GST
according to the defined percentage as mentioned in local law.

6.0 URGENT PAYMENTS

6.1 Urgent payment are made to suppliers / vendors as and when the requirement of goods / services
are on urgent basis.
6.2 For all known suppliers (registered in database of Al-Karam) advance to supplier form Ref.
FC0/FM/021 is filled and sent to accounts department after necessary approvals.
6.3 For all unknown suppliers, departments need to fill Suspense Form Ref. FC0/FM/020 and send to
accounts department after necessary approvals.
6.4 Advance against Expenses Suspense amount has to be returned within two weeks, otherwise the
same amount is deducted from employee’s salary against whom the suspense amount is issued.
6.5 Finance department after approval provides cash to the requester; if the cash is not received within
the mentioned time frame then Finance department can hold salaries of the same.

7.0 RELATED DOCUMENTS

7.1 Annexure A (Al-Karam’s Letter head) (AKT/PR/004)
7.2 Monthly statement of contractors (FC0/FM/046)
7.3 Contract approval of concerned contractor (HR0/CA/XYZ)
7.4 Purchase Order (PD0/FM/007)
7.5 Work Order (CS0/FM/047)
7.6 Debit voucher (FC0/FM/009)
7.7 Advance to supplier form (FC0/FM/021)
7.8 Advance against Expenses Suspense Form (FC0/FM/020)
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CHAPTER 07- CASH OFFICE

Cash Office deals with the various types of payments general voucher payments, cotton freight, petty cash
voucher, salary, wages and benefits payment.

1.0 GENERAL VOUCHER PAYMENTS

1.1 Unpaid salaries / wages, suspense, loan, contractor’s payments, TA/DA allowances and other
miscellaneous payments etc. are paid through vouchers issued and prepared by Accounts and HR
department.
1.2 For payments, counter slip is to be presented by receiver at cash counter for payments. Cashier pays
the payment after checking and verification through voucher and counter slip.

2.0 COTTON FREIGHT

2.1 Upon receiving Cotton Arrival Note, Cashier checks IGP Stamp & receiving stamp and pays the Cotton
freight by making Debit Voucher (FC0/FM/009) & taking signatures of Driver. Further records Name, NIC no
& passes same to accounts department for further procedure.

3.0 PETTY CASH VOUCHER

3.1 Conveyance, Auto maintenance bills, Entertainment, etc. vouchers are prepared on Debit
Voucher Ref. FC0/FM/009 and issued by accounts department with token slip which is
presented by payee at cash counter for payment.
3.2 Cashier pays the same after checking and verification through Debit Voucher Ref. FC0/FM/009
and token slip.
3.3 Summary of daily petty cash payment is prepared on physical cash position Ref. FC0/FM/010 &
provided to accounts department.

4.0 SALARY, WAGES AND BENEFITS PAYMENT

4.1 Following are the types of payments covered under this head:
4.1.1 Worker and Staff Leave Encashment payment
4.1.2 Workers and staffs Incentive payment
4.1.3 Mill and Contractor Worker and staff Advances
4.1.4 Full and final settlement of resigned / terminated
4.1.5 Mill and Contractor Worker and staff wages/salary (Other than bank)
4.1.6 Staff Salary (including fuel and other benefits)
4.1.7 Bonus & Workers' Profit Participation Fund (WPPF)

4.2 All payments are prepared by pay roll department along with summary which is received through
accounts department after preparing vouchers. Pay roll department issues bar coded slips to
workers and Cashier borrows the amount against the voucher. For e.g. payments cash office
prepares envelops and fill it with cash as per slip.
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4.3 For payments, cashier follows cash disbursement module where payment transaction window is
divided into two windows:
4.3.1 Payment Window.
4.3.2 Cash Receiver Window.
4.4 Whenever someone comes to cashier for payment with payment slip and a barcode slip, the cashier
scans the barcode of that slip. The data of that barcode slip automatically fetches on payment
window with the latest un-paid payment, already existed in system.
4.5 After scanning barcode on payment window, cursor moves to receiver window (Right Side).
Receiver window scans the Employee card as well as thumb impression of receiver who can receive
the payment from cashier.
4.6 After pressing paid button the payment of that employee will be locked and be visible on locked
record scanning window which will restrict in case of re-payment.
4.7 In case of error or mistake in entry, payment reversal procedure will be followed as defined below;

4.7.1 PAYMENT REVERSAL

4.7.2 In case of wrong entry in payment transaction window, only HOD of cash office is
authorized for the reversal of that entry with the help of payment reversal window
and proper record keeping of both entries. All reversal payment record will be
logged in system as well.
4.7.3 The HOD of accounts department / Cash Department will use the same mechanism
(i.e., barcode scan) for the reversal of wrong payment entry.
4.7.4 After the reversal entry, the data is again live for payment window and paid flag
mark as un-paid.
4.7.5 On day end, all expenses will be properly booked in their respective accounts by
accounts department in ERP.
4.7.6 For Cadre 05 & above, cash is delivered by Cash Office Staff on their desk. Further all
employees below Cadre 05 will collect their payment from cash office.
4.7.7 In case of any uncertainty, emergency or undue circumstances, an employee can
nominate other employee for collection of his payment from cash office as per
below process.
4.7.8 An application must be written to HR head mentioning details of payment owner and
payment receiver. The application must be approved by HOD and submitted to HR.
After the approval of HR head, HR will allow the payment in the system.
4.7.9 For proceeding above payments, Cash Office daily provides cash demand to Account
Department. Further cash is received from treasury on debit voucher.
4.7.10 Daily cash handling / disbursement is recorded on register. Cash Office counts cash
received and separates spoil and defected notes and return to treasury.
4.7.11 Cash office daily prepares Daily Bank and Cash Activity (FC0/FM/014) and Cash
Disbursement Report (FC0/FM/015), cash position (FC0/FM/010) and sends to audit
department to update position of daily cash in hand.
4.7.12 At the end of the day Cash Office prepares summary of all payment types
department wise and are updated in the system. Further all the documents are
submitted to the accounts department for updating in ERP.
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4.7.13 The same payments of Al-Karam Unit-2 are also paid by cashier at Unit-2 after
checking and verification.

5. RELATED DOCUMENTS
5.0 Debit Voucher (FC0/FM/009)
5.1 Physical Cash Position (FC0/FM/010)
5.2 Daily Bank and Cash Activity (FC0/FM/014)
5.3 Cash Disbursement Report (FC0/FM/015)

CHAPTER 08- FIXED ASSETS

1.0 PURPOSE
The purpose of this policy is to define and describe a set of standard procedures necessary to record and
control the changes in fixed assets system in accordance with generally accepted accounting principles and
according to the best practices of industry and business norms and to:
1.1 Ensure that the assets are adequately protected from loss and theft, etc
1.2 Provide necessary documentation for the effective use, maintenance management and reporting of
the assets.
1.3 Facilitate the calculation and recording of depreciation

2.0 SCOPE
The fixed assets policy and procedures covers all fixed assets of Alkaram Textile Mills (Private) Limited at all
locations including but not limited to Head Office, Mill and Retail outlets.
This document describes the standard policy and procedure for:
2.1 Purchasing and disposal
2.2 Capitalization
2.3 Depreciation / amortization
2.4 Movement and physical custody of assets
2.5 Impairment and revaluation
2.6 Maintenance of the fixed assets register of the company in compliance with Group policy circulars,
International Financial Reporting Standards, Companies Act, 2017
and the Technical Release (TR - 06) issued by the Institute of Chartered Accountant of Pakistan
2.7. Accounting entries in Fixed Asset Module and GL in the ERP
2.8. Periodic physical counting and reporting
This procedure applies to the all personnel responsible for purchase, transfer and disposal of Fixed Assets
including maintenance of its record.

3.0 RESPONSIBILITIES
3.1 Finance department is responsible for maintaining the record of purchase, transfer, disposal and
Insurance / Takaful of the assets owned by the Company.
3.2 Mill Admin, Mill Production dept, Retail Admin, and Procurement Department is responsible for
providing timely information and evidences required by Finance Department to fulfill their responsibility
regarding assets purchased.
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3.3 Whereas concerned department is also responsible for P.O. generation of all Fixed Assets and its
tagging. Transfer of Fixed Asset form will also be filled by concerned custodian and forwarded to finance
for timely information.
3.4 Further, Mill Admin and concerned department and custodian will be responsible for Disposal
information and formalities to be shared with Finance department for timely entries in ERP and live
movement of fixed assets record in EBS.
In addition to all above responsibilities Mill Admin and Concerned custodian will also be responsible for
physical asset custody and maintenance of their assets. Also, they will be responsible for generating any
Work Order if required for any major overhauling and major repair and maintenance required which may
enhance the efficiency of machine and life of a fixed asset. Work Order should be routed and approved
through Finance Department before any physical work is carried out.

4.0 DEFINITION

4.1. Capital assets will be defined as tangible or intangible assets that have initial useful lives that extend
beyond a single reporting period.

4.2. Common assets Category

The common fixed assets categories are defined as follows:

4.2.1. Land
Vacant land purchased for building site.

4.2.2. Building
Permanent structures including permanently attach fixture.

4.2.3. Computer Equipment

Only major hardware items such as laptops, desktop, servers, printer, scanner, and monitor will be
capitalized.

4.2.4. Software
Software is considered an intangible asset and will be capitalized only when the acquisition cost and life are
considered to be significant. Internally developed software will not be capitalized.

4.2.5. General equipment

Those items not belonging in a specific category but meet the criteria.

4.2.6. Furniture & fixtures

Self-explanatory.

4.2.7. Motor Vehicles

Includes motor bike, motor car and loading vehicles. Accessories will also be included where significant
acquisition cost and life are involved (example Air condition unit for cars or hood body or CNG kit).
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4.2.8. Assets held at Outlets

Assets placed in rented retail outlets & major renovation works at outlet.
• In case of building, decoration & renovation work related to glass work, floor tiling & lighting is
considered as leasehold improvements (Outlets) which are not transferable to other outlets all these types
of renovation work to be depreciated at 10%.
• Similarly, all other equipment such as office equipment, plant & machinery, furniture & fixture
depreciated at 10%.
• For Computer equipment & Vehicles depreciation to be charged as 30% & 20% respectively.

4.2.9. Property, plant and equipment

Property, plant and equipment are tangible items that:
• are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes; and
• are expected to be used during more than one period.

4.3 Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance.

5.0 CAPITALIZATION POLICY

An item will be recognized as an asset if it meets the capitalization threshold and economic benefit will
flow to the company for more than one year.

5.1 Any expense which doesn’t meet the above criteria will be recorded as expense such as small tools and
equipment repair and maintenance.

5.2 Major capital expenditure requests and projects with a value of Rs. 1 million or greater will require a
comprehensive justification by initiator along with Capex Form.

5.3. Capitalization Threshold

Assets Capitalization Threshold (rupees)

Plant, Machinery and Equipment 100,000
Furniture and Fixtures 50,000
Office Equipment 50,000
Motor Vehicle All
Computer Equipment 50,000

Retail Assets Capitalization Threshold (rupees)

Factory Building (Office Building) All
Factory Building (Decoration, Renovation) 50,000
Factory Building (Warehouse) All
Factory Building (Lift) 100,000
Plant & Machinery 50,000
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Plant & Machinery (Stitching Machinery) 20,000

Furniture & Fixture (Bed Set, Mattress, Table Counters, Display Units) 20,000
Furniture & Fixtures Wooden Benches 5,000
Office Equipment (Fire Alarm) 25,000
Office Equipment (Vacuum cleaner, AC, TV, Refrigerator) 20,000
Office Equipment (Sound System & CCTV) 5,000
Motor Vehicle All
Computer Equipment (Software license) 100,000
Computer Equipment (Mainframe system, network router & office Wi-Fi) 50,000
Computer Equipment (Mainframe software) 50,000
Computer Equipment (Laptop, Note Book) 50,000
Computer Equipment (Tablets) 25,000
Computer Equipment (Desktop, Monitor, Printer Scanner, Cable, CD Rom)5,000

6.0 MEASUREMENT

6.1. Initial Measurement.

6.1.1. Once it has been established that an asset meets the criteria for recognition, it is recorded in assets
register at cost price.

6.1.2. Assets can be measured as

i) individual assets; or
ii) A collection of related items or components that cannot operate in isolation whose combined
original cost exceeds the threshold.

6.1.3 Any items which the management considers as an important asset and do not meet capitalization
threshold can be added at Re. 1 in fixed asset register.

6.1.4 Any asset whose cost information is not available will be recorded at Re. 1.

6.2. Elements of cost

The cost of an item of property, plant and equipment comprises:

6.2.1. Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates.

6.2.2 Any cost directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management.

6.3. Subsequent expenditure

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6.3.1. Relating to an item is to be added to the carrying amount of the asset only when it is probable that
future economic benefits surpass the originally assessed standard of performance of the existing assets.

6.3.2. All other subsequent expenditure should be recognized as an expense in the period in which it is
incurred. The costs of the day-to-day servicing of the item are not added to the carrying amount of an item
of property, plant and equipment rather, these costs are recognized as expense in profit or loss, as
incurred.

6.4. Accounting Procedure

6.4.1. Cut-off date for Capitalization should be the date when physical possession is obtained by the
company with proper title of ownership in an item of asset that is ready for its intended use. Till such time
the cost of asset is held in the Capital Work in progress account.

6.4.2. Gains or losses on disposal of an asset is recognized on the basis of net realizable value of asset,
received or receivable, less the cost of asset after adjustment of accumulated depreciation as of the date
of disposal.

6.4.3. Maintenance of Fixed asset register is the responsibility of Finance Department and it should comply
with the Technical Release 6 of ICAP.

6.4.4. Fixed assets register will be reconciled on a quarterly basis with the general ledger by the finance
department.

6.4.5. Depreciation expense is charged on a monthly basis to the appropriate Profit & Loss Depreciation
Account head, with corresponding amount credited to Accumulated depreciation.

6.5. Accounting Entries

Following Entries will be made in Oracle EBS
Addition:
At the time of Purchase of Asset and GRN in store for any fixed asset:
Material A/C xxx
A/P Accrual xxx

At the time of issuance of Fixed Asset from Store to Concerned Dept:

Fixed Asset A/c xxx
Material A/c xxx

At the time of Recording of Invoice:

A/P Accrual A/c xxx
Vendor A/c xxx
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At the time of Payment to Vendor:

Vendor A/c xxx
Bank xxx

At the time Services Received for Fixed Asset (Any Major Overhauling, Installation Charges or all
Capex related services)
CWIP xxx
Clearing Account xxx

At the time of issuance of fixed asset to relevant dept

Asset xxx
CWIP xxx

At the time of receiving of invoice

Clearing Account xxx
Supplier xxx

At the time of payment

Supplier xxx
Bank xxx

Deletion:
Bank xxx
Accumulated depreciation xxx
Loss on disposal xxx
Gain on disposal xxx
Asset xxx

Depreciation:
Depreciation Expense xxx
Accumulated Depreciation xxx

6.6 MAINTENANCE OF FIXED ASSET REGISTER:

At the end of each quarter, a review of the details of all fixed assets acquired, as posted to general ledger
accounts and store issuance report (inventory module) obtained from ERP system will be performed by the
Finance department.
The data so obtained will be reviewed based on the categories as required to maintain in Financial
Statements. The major categories are as follows:
6.6.1 Leased hold Land
6.6.2 Labor Colony
6.6.3 Factory Building
6.6.4 Plant & Machinery
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6.6.5 Vehicles
6.6.6 Computers
6.6.7 Furniture &Fixtures
6.6.8 Factory / Office Equipment & Fittings
6.6.9 Assets Held at Outlets
Adequate itemized record of fixed assets should be maintained which at minimum must indicate following
particulars:
6.6.10 detailed description of each item
6.6.11 original cost of the item (c) date of its acquisition
6.6.12 classification of the item
6.6.13 the location and/or the custodian of the item
6.6.14 the rate of depreciation
6.6.15 accumulated depreciation
6.6.16 depreciation charge for the period
6.6.17 the department / cost center / product to which the depreciation is charged
6.6.18 date of revaluation (if any)
6.6.19 revalued amount (if any) of the items
6.6.20 depreciation on revalued amount
6.6.21 accumulated depreciation on the revalued amount
6.6.22 All Other information as made available in Purchase Order
The allocated code/reference numbers facilitate identification and physical control of the assets. The
numbers are serial and systematic and care is usually taken to ensure that no two items have the same
number irrespective of their similarity of type or location.

7.0 PHYSICAL VERIFICATION OF FIXED ASSETS

7.1. Physical verification of fixed assets will be conducted at least once a year by Finance Department in co-
ordination with relevant process owners and internal audit.

7.2. After the physical verification, any missing assets should be listed. The list will be reported to CFO &
the head of department. Once the missing list has been received, the fixed asset Section will change the
status code on the Fixed Asset System to missing (M) and change the location to missing.

8.0 DEPRECIATION

8.1. Depreciation is charged to income using the diminishing balance method expect of land where
straight-line depreciation method will be followed.
8.2. The amortization of software will be on the basis of expected useful life.

8.3. Deprecation will be charged on pro rata basis.

8.4. The following are the rates for depreciating in accordance with company’s policy.
S.No Class of Asset Depreciation Rate
1 Factory Building 10%
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2 Labor Colony 10%

3 Plant & Machinery 10%
4 Office Equipment and Fittings10%
5 Furniture & Fixtures 10%
6 Office at KDLB Building 10%
7 Computers 30%
8 Vehicles 20%
9 Assets held at Outlets 20%

8. Revaluation/ Impairment: The revaluation or Impairment shall be done in accordance with IFRS.
Every revaluation or impairment will be approved by CFO, COO and MD.
8.1. Revaluation is to be carried out with sufficient regularity. Under existing policy Leasehold Land is
being revalued every three years by an independent valuer.
8.2. The revalued amount is accounted for in the books of account using the Applicable Financial
Reporting Framework.

9.0 TAGGING AND CODING OF FIXED ASSETS

9.1. Maintaining a positive identification of assets is the primary purpose of tagging. Manpower
(existing or new) will be engaged for asset tagging for existing assets till date. For new assets store will not
issue any fixed asset without proper asset tag number.
9.2. Generally, all fixed assets (capitalized) are tagged at the time of issuance from Store Department.
Store department will now be onwards responsible for requesting the finance for issuance of Asset tag
number before issuance of any fixed asset to any concerned department. Finance will issue the tag number
against the request then asset will be tagged by store at the time of issuance of fixed asset by Store
Department. Some assets, such as buildings, Motor Vehicle and land will not be tagged. The asset number
will record in the system, but not physically attached to the asset. For land, a description of the property is
recorded which includes address and plot location found in the assets Register.
9.3. The applicable coding scheme shall be mentioned and approved separately.
9.4. It will be the responsibility of each department that Central Assets Code has been assigned to each
fixed asset and that it will remain properly tagged.
9.5. Further, maintenance department will be responsible to prepare the physical register for all the
plant and machineries asset tag wise for proper records at their end.

10.0 MOVEMENT IN ASSETS

10.1. Addition of Fixed Asset

10.1.1. capitalized expenditures must be done through Capex form.
10.1.2. The requirement shall be filled up in Capex form by the concerned department. Head of
department will sign the Capex form, then Technical Director of that concerned Division will approve it and
send it to Finance department to check if the requirement is in the budget. After approval of CFO, form will
be forwarded to COO / Managing Director (MD) for approval. When approved by Managing Director as
requested or as amended, a copy of the form will go to purchase department and concerned department
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and Original form will be in custody of Finance department. Approval matrix to be followed as per LOAM, if
applicable.
10.1.3 All capital expenditures must be done through purchase order or work order.

10.1.4. All capital expenditure must be approved before Purchase order preparation.
10.1.5 For projects, the transfer from CWIP to Fixed Assets will be made after following conditions are met:
i. The Completion Certificate /Installation Certificate is received from the contractor and Engineering
dept.
ii. The asset is ready for use.

10.1.6. Assets will be recorded in Fixed Asset register by the Finance Department (fixed assets) after
verifying the Form and attaching the following documents:
i. Capex Form (Original)
ii. Copy of Invoice
iii. Purchase order
iv. Delivery challan (if applicable)
v. Standard Purchase Voucher
vi. IGP and GRN

10.1.7. Finance Manager files the Form and attached document in a file for ready reference.

10.2. Procedure for Transfer of Fixed Asset

10.2.1. All asset movement intra-Department or intra-Company will be done though assets transfer form
except of Laptop and Motor Vehicle if user will remain same. If any individual transfers from one
department to another department then it should be routed through HR department through transfer
form for timely transfer of related cost through HR module.

10.2.2. Copy of transfer form must be submitted to Finance, BT Department (In case of IT Equipment),
Admin department factory (In case of furniture & equipment related to factory) and Engineering
department (in case of Plant & machinery).

10.2.3. Assets transfer form must be submitted to Finance department before transfer.

10.2.4. The transfer of asset in the Fixed Asset register will be entered by the Finance Manager and form
will be filed.

10.2.5. In case of idle IT equipment Change of user of assets will also fall in Assets transfer

10.2.6. Temporary Transfer: Movement of equipment outside the organization for repairing and issuer
department will keep back till assets received back.

10.3. Assets Disposal

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Assets previously acquired will eventually be disposed of and need to be deleted from the Fixed Asset
System. Deletion may be required due to a sale of the asset, scrapping, mysterious disappearance (lost or
stolen), or involuntary conversion (fire, flood, etc.). Concerned department should share detail of asset
that have to be sold with Finance department and take prior approval for particular item before the
disposal.

10.3.1. A formal request for the disposal of fixed asset is raised by the MIS department (In case of IT
Equipment), Admin department (in Case of Furniture & fixture, equipment, vehicle & building) and
engineering (In case of Plant & machinery).

10.3.2. Further any sale of Mortgaged Asset / Asset purchased through Long Term Financing Facility (LTFF)
must be auto intimated by the system. Clearance certificate must be signed by Head office and respective
custodian of the Asset.

10.3.3. The disposal form & payment will be forwarded to Finance Department.

10.3.4. Sale of all assets will be approved by the CFO and MD (or as per LOAM, if available).

10.3.5. Disposal Form will be signed by the Finance Manager or per designated for that purpose by CFO.
10.3.6. The Assets lost by theft or damage shall also be communicated to Finance department through
same form. A copy of FIR shall accompany the form in case of theft or burglary.

10.3.7. Finance Manager then enter the disposal of fixed asset in fixed asset register, will record disposal in
General ledger and File Disposal form along with Journal Voucher.

10.3.7 Gate pass will be signed by Finance Department.

10.3.8. If the Company decides to close the outlets, then the leased outlets shall be removed from books as
per IFRS 16 and all leasehold improvements made up till date, shall be written off from the books of the
Company.

10.4 Procedure for write-off

10.4.1. Write-off of assets to take place after CFO, COO and MD approval.
10.4.2. Write-offs to be accounted for in the books of account using the Applicable Financial Reporting
Framework.
10.4.3. LOAM to be followed at all levels.

11.0 HELD FOR SALE ASSETS

In general, the following conditions must be met for an asset (or 'disposal group') to be classified as held
for sale:

11.1 Management is committed to a plan to sell the asset is available for immediate sale
11.2 An active program to locate a buyer is initiated
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11.3 The sale is highly probable, within 12 months of classification as held for sale (subject to limited
exceptions)
11.4 The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value
11.5 Actions required to complete the plan indicate that it is unlikely that plan will be significantly
changed or withdrawn

Non-current assets or disposal groups that are classified as held for sale are not to be depreciated.

12.0 RELATED DOCUMENTS

12.1 Asset Transfer Form (FC0/FM/098)

12.2 Asset Intimation Form (FC0/FM/097)

CHAPTER 09- FINANCIAL REPORTING

Financial reporting represents a complete picture of Organization as a whole. We can say that this
information provide a detail overview regarding its Capital, Assets, Liabilities & Expenses and Revenue.
This information plays a pivotal role for organization to develop its strategic & tactical plans & meet future
objectives by collecting & summarizing information from financial reporting.

The financial reporting team is responsible for closing activities in EBS for all accounts, financial statements
are backed by trial balance extracted from EBS. After closing activities the team is further responsible for
preparing financial statements on periodic basis (Monthly & Yearly)

1.0 MONTHLY REPORTING

1.1 All accounts must be closed on 8th of every month.

1.2 Monthly reporting management accounts prepared on 12th of every month.
1.3 Only profit and loss statement is reported to management on monthly basis.
1.4 Profit & loss statement is reported to MD & CEO on monthly basis, after that shared with CFO in Head
office.
1.5 Sales is closed on monthly basis by 8th of every month after reconciliation from gate passes.
1.6 Monthly Accruals are posted on monthly basis on 10th of every month, expenses are accrued on
historic trend basis.
1.7 Raw material cost processing charges & purchases taken from system by 6th of every month.
1.8 Store consumption posted in system on 8th of every month.
1.9 Reporting team will be maintaining the fixed assets schedule on monthly basis.
1.10 Purchase reconciliation of import done on quarterly basis, but reviewed on monthly basis.

2 YEARLY REPORTING
2.1 Financial statements are prepared from Jul to Jun of every year.
2.2 Financial statements are prepared on September after period closing.
2.3 In collaboration with Head office team financial statements are prepared.
2.4 Financial reporting team is responsible of preparing:
i. Statement of Financial Position
ii. Income Statement
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iii. Cash flow statement
iv. Statement of changes in equity

2.5 Financial reporting team is responsible of preparing:

These financial statements have been prepared in accordance with the accounting and reporting standards
as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards
Board (IASB) as notified under the Companies Act, 2017.
2.6 Statement of financial position reflect the as of position of assets, liabilities, equity, any addition and
disposal will be accounted in financial statements by the reporting team.
2.7 The reporting team will be ensuring the completeness of revenue and cost & expenses occurred
throughout the financial period.
2.8 The reporting team must ensure true and fair reporting of financial statements.
2.9 Financial statements must be backed by the notes as mentioned by reporting team.
2.10 Financial reporting team assist external auditor in year-end audit & responsible for responding
audit queries.

3 AUTOMATING & CUSTOMIZING SYSTEM REPORTS

3.1 The Financial reporting team is also responsible for customizing system’s reports & inducting new
system reports with correspondence with BT department.
3.2 The customized reports are helpful for gathering financial information.