Requirements: 1. Select and research a business that you are familiar with. Repo
ID: 2459233 • Letter: R
Question
Requirements:
1. Select and research a business that you are familiar with. Report on one process such as sales, purchases, payroll, fixed asset acquisitions, inventory, etc.
2. Prepare an outline of your project. It should include bullet points describing each requirement, organized as the final project will be organized. (This is due in Week 5.)
3. Study the information system, using various tools that will be covered in this course (i.e. flowcharts, risk assessments, control matrices, etc.).
4. Prepare and submit your report.
Content:
1. Brief summary of business selected (e.g., industry, organizational structure, purpose, number of employees, revenues, etc.)
2. Overview of component of company’s AIS selected (e.g., what does it accomplish for the company, accounting cycle, number of employees involved, manual vs. automated)
3. Process flowchart
4. Risk assessment
5. Control matrix of key controls
6. Summary assessment of results (what did company do right/wrong, what needs improvement and how to improve)
Explanation / Answer
i am going describe about Tyres Industry.
TVS SRICHAKRA LIMITED
Order to Cash
Process and Control Narrative
Business Unit
TVS SRICHAKRA LIMITED
Process
Order to Cash
Main process
Sub Process
Exports
OE
After Market
Associated IT applications
Process owner(s)
SAP
Mr. S Mathan Babu (Export)
Mr. K. Srinivasan (OEM)
Mr. William Noronha (After Market)
Departmental Structure
Name
Area
Designation
Reporting to
Mr. TJN
Sales and Marketing
Executive Vice President
President – Business Head
Mr.K Srinivasan
OE
Deputy General Manager
EVP
Mr. William
After Market
Deputy General Manager
EVP
Mr. Mathan Babu
Exports
Vice President
President – Business Head
Mr. Phillips
Exports (2W & 3W)
Manager
EVP
Mr. Girish
Branding
Vice President
EVP
Mr. Venukumar
Aftermarket Services
Assistant General Manager
DGM After Market
After Market Process
Tyres are supplied from two locations namely: UKD (Primarily delivering for upper market) and Madurai. There are 35 depots across the country with 9 hubs having access to SAP with billing rights.
The following activities are covered by the aftermarket department:
1)Process of new dealer appointments
For appointing a new dealer, the marketing department reviews the market share of each other the dealer based on which decision is made as to where to expand. The dealers are classified on slab basis (0-100,100-200 off take per month etc).The department identifies the dealers and the areas for which the dealers are required. To identify the dealer, the department checks the potential of the dealer, the reputation of the dealer in the market and the willingness of the dealer to be associated with the company. After selecting the dealer based on these criteria’s, a new dealer form is filled and a minimum deposit of Rs. 50,000 is collected from the dealer (SAS – Sales Advance Scheme) which attracts an interest of 8% per annum. The details filled in the new dealers form along with the pan card of the dealer are sent to the regional head which is then forwarded to the Deputy General Manager After Market for his approval. The DGM After Market then appoints the new dealer. The dealer code is created in Chennai based on the recommendation from the marketing department and the finance department in Madurai blocks the credit limit of the dealer on SAP.
The credit limit policy for dealers has been fixed as follows :
First 6 months – Deposit Amount of the dealer
After 6 months – Based on the business in the last 6 months : Average collection for 6 months period + Deposit amount.
For fixing the credit limit of the dealers, recommendation is given by the Deputy General Manager After Market to the Regional Heads.
Every once in six months, if the need arises, the credit limit is reviewed.
A control exists where billing cannot be done more than credit limit on SAP.
3)New Product Pricing
Usually, there are two types of new products : 1) Niche Product which is not available in the market and 2) Existing Product in the market with competitors
Generally, the company produces products that already exist in the market. For such products, the Net Landed Cost (NLC) is arrived at by adding the Basic Price with the discount amounts (based on competitive prices) resulting in the Net Basic Price to which the VAT (12.5%) is added and the grid is prepared.
The Fixed cost, basic cost, contribution and Margin is provided by the costing department to the Aftermarket department. The DGM (AM) communicates the Fixed cost, basic price, contribution and margin to the GM (AM) for approval and it is escalated to the MD if required. On receiving the approval of the GM/MD, the approval is sent to the costing department for uploading into the system.
In case of any product price revision, the costing department makes the necessary changes in the depots. All product price revision documents are maintained at the costing department.
4)Outstanding review control
A rapid dashboard is reviewed every Friday by the DGM with the regional head where the agreed sales, new dealer development, activities planned, collection etc are discussed. On 24th of every month, a dealer wise depot wise collection overdue is sent to marketing department and on the 25th of the month, the overdue outstanding is reviewed. In case of any overdues pending from the dealers, further review is done on the 10th of the following month and appropriate action is taken.
5)Cheque return policy
The company mostly accepts only RTGS transfers, but if the dealer makes a payment by cheque , the company has a cheque return policy wherein :
In case of one cheque return – Billing is locked against the cheque for one month
In case of two cheque returns – Billing is locked against the cheque for three months
In case of three cheque returns – Billing is locked against the cheque for one year
6)Process of collection
Collections are mostly made via RTGS transfers. In case of cheque collections, the depot incharge has the responsibility of maintaining the cheque holder and has to deposit the cheque on the date of deposit. In case of any delay regarding collection of cheque, the approval of the regional head is taken.
7)Sales Return
The company generally does not get any sales returns. But if a situation arises where the dealer is not satisfied with the product or is not in need of a product and returns the same, an entry is passed in the system as sales returns. Sales return has to be done within 6 months.
8)Dealer commission, discount policy and rebates
The company has a marketing policy which covers the DP (discount policy), CD (Cash discount policy) and BP (Business policy). The company has different slabs of dealers (S1, S2, S3 etc) depending on the volume of transactions. For these dealers, there exists a discount policy, in which discount is given based on landed cost, which is mentioned on the face of the invoices. Business Policy Discount (BP) is given on a quarterly basis based on quarterly achievement. This BP is usually released on the 10th of the subsequent month at the end of the quarter. In case of any advance payments made by the dealer, a cash discount (CD) is given, which is loaded into the system, and the same is mentioned on the face of the invoice.
9)Customer order capturing and execution
Customer order is created via 1) the phone or 2) physically through the executive. The customer order is then loaded into SAP based on the communication via phone, through mail or from the physical order book. A billing plan is made for every regional head to achieve the daily target. A dealer target is fixed on a quarterly basis with the marketing policy which includes discount policy, scheme etc and communicated to the GM (AM) for his approval and then sent to finance department.
The marketing department gives their sales forecast on the 20th of every month.
10)Physical verification
Depot stock verification is done on a quarterly basis by the internal auditors and the variance is adjusted in the books. On a monthly basis, a self declaration is produced by the depots with the stock details lying at each depot.
Exports Process
Exports – Off Highway Tyres – Process narratives
Order received fromcustomer for new product
Order received from customer for existing product
Order received from a new customer
OE Process
OE – Process Narratives
The company represents leading automotive companies like Ashok Leyland, Daimler Chrysler, General Motors, Honda and Mahindra & Mahindra.
Enquiry from customer for existing product
Review of outstandings
Development of a new product
Control Description
S.NO
Sub Process
Control Description
Action Points
1.
Customer Master creation &updation
Access rights to create / amend customer master is restricted to ____________
_______ in the Sales dept. enters data such as Name, address, PAN no., tax details. ______ in the F&A department enters data relating to taxation details, etc. in customer Master based on appropriate supporting. .
2.
Checklist specifying documents required and mandatory fields /information like name, address, e-mail id, contact nos., PAN, TAN, VAT, etc. is maintained and all documents are collected accordingly based on which customer master creation is done in the system
3.
All creations/modifications in the customer master are invalid until authorized by DC Dy.F&A Head in the system
4.
Access control rights for customer master creation / updation are reviewed on a yearly basis by DC F&A Team
5.
An independent review of edit log reports of the vendor master is conducted on a _______ basis by _________ to check if all creations/modifications are authorized
6.
System restricts creation of customer code without entering information in fields marked as mandatory
7.
An independent verification of customer master is conducted by _______ on a _______ basis to check if important information is not captured/ inaccurately captured in the system
8.
System is configured to restrict creation in case any of the unique information (like Name, Address, TIN number, etc.) already exists in the database
9.
An independent verification of customer master is conducted by __________ on a _________ basis to check if duplicate codes exist for the same vendor
10.
Report of customer master is generated by _________the to identify inactive customer codes lying unblocked in the system and approved by ____________ on a _______ basis.
11.
Price Master
Access rights to create / amend price master is restricted to Planning In Charge
12.
Access control rights for price master creation / updation are reviewed on a need basis by Project In Charge
13.
________ reviews the log of changes made to price master and takes appropriate action
14.
Any changes in the price master are approved as per the authority matrix in the Corporate Guidelines Policy
Project In Charge reviews and approves the changes made to the <Price Master File> on an annual basis, to ensure all changes are valid.
15.
Credit Management
All changes made to the credit limit are approved by ___________ as per the credit policy
16.
Access control rights for Credit limits creation / updation are reviewed on a yearly basis by __________
17.
Sales Order creation
Access rights to create sales Order is restricted to __________________.
____________ approves the Sales order in ERP based on vallid quotation and other documents like Customer PO, etc. Sales order becomes active only after approval
It is ensured that access rights for Sales Order Processing are not given to a person who is responsible for maintaining Billing Documents and sales pricing condition.
18.
System restricts creation of sales order without entering information in fields marked as mandatory like Customer name, Product Code, product description, delivery date, payment terms, credit period, etc are kept mandatory in the system along with field validation, so that no sales order can be created without basic details required
19.
System accurately applies the product price according to the customer pricing tier in the customer master file to the sales order.
20.
Open order status is reviewed periodically for long open Sales orders by __________ in the Sales department. There is a defined policy / process for timely review and monitoring of open Sales Order.
21.
Invoicing & Dispatch
Shipments of goods to customers are logged and reviewed by Planning Manager. The log is used to determine that all shipments are invoiced and that all invoices are recorded.
22.
There is Integration of CRM module with FI module so that automatic sales entries are reflected in FI module once sales is recorded in CRM module.
23.
Blank shipping authorizations, numerically controlled shipping documents, and bills of lading are under the custody of ___________and safeguarded as follows ____________from unauthorized access and use.
24.
Proof of delivery is provided by third-party shippers for all shipments made. The proof of delivery is required in order for the invoice to be generated.
25
IC F&A Manager ensures that the exchange rate is updated on the basis of communication received from Treasury. The updation of exchange rate is approved by DC System Team in the system
26.
Pricing & commercial terms are as per the approved sales order created in the system. Changes cannot be made as price & commercial terms are not editable during invoicing and dispatch.
27
Revenue Recognition
The system restricts the back-dating of invoices.
28.
Numerically controlled dispatch transactions must be prepared for all goods dispatched. Evidence of dispatch must be maintained and forwarded to accounting or billing.
29.
Monthly sales cutoff procedures must be established at each shipping location and approved by ____________
30.
Rebates, Discounts and Returns
______________ from the department enters and generates credit memo(s) based on the <Returned Material Authorization Form> approved by an appropriate person and the physical <Journal Report> from the Warehouse team that provides verification the inventory items were returned. Supporting documentation is kept for records
31.
Access rights to create credit memos is restricted to _________.
All credit memos are approved based on the authority matrix in line with Corporate Authorisation Guidelines
On _________ basis (periodicity) ___________ from IT team reviews the authorisations
32.
Warranty
Warranty Reserve is calculated by ____________ on a quarterly basis and posted in the system. ______________ in F&A reviews the posting entry to ensure it was entered correctly. The documentation to support the reserve calculation is maintained.
33.
Free Samples
Discount and free/samples issues are approved by __________ as per authorization limits in the system
34.
The calculation for promotional allowances and volume rebates and supporting documentation are reviewed by management prior to recording the journal entry.
35.
Promotional allowances and volume discounts are analysed on a monthly basis by ______________ and compared to budget. Explanations are obtained for any significant variances and differences. The analysis is reviewed by ___________ in senior management.
36.
Sales returns
Returned goods received and credit memos issued at, before, or after the end of an accounting period are scrutinised by ________________ and/or reconciled to make certain the sales return is recorded in the appropriate accounting period.
37.
Credit notes
Manual journal entries to record inventory purchases or returns and related accrued payable adjustments are prepared by ______________ in F&A and supported by documentation that the inventory has been received or title has transferred to the entity prior to recording the entry. Management reviews and approves the journal entry and underlying supporting documentation.
38.
Representations are received on a quarterly basis from sales ___________ in Sales Dept. and management regarding the existence of customer side agreements or credit memos not yet communicated to accounting.
39.
Credit notes issued after period-end are verified by __________ in F&A for association with side agreements and proper accounting.
40.
All sales returns are logged when goods received by ______________. Return details per the log are compared to credit notes issued and recorded to determine that credit notes are issued in accordance with company policy.
41.
ERP system validates the amount of the issued credit note against the original invoice. Credit notes issued in excess of the original invoice are flagged and must be reviewed and approved by finance manager.
42.
Credit memo transactions must be numerically controlled and accounted for periodically. Credit memos must be prenumbered where the integrity of sequencing is not computer controlled.
43.
Collections
Clearing of customer collection against correct invoice is ensured by IC F&A Treasury Executive in the collection monitoring dept.
44.
Adherence to Corporate guidelines with respect to provision for bad and doubtful receivables is ensured. Provisions are made only after obtaining the approval of BU Head / IC F&A Head in the IC.
45.
Balance confirmations are obtained from the customers at the end of every month / quarter and differences if any are reconciled immediately by Project Accountant and any adjustments are approved by IC F&A Head
46.
IC F&A Manager reviews the balances (both debits and credits) regularly and initiate collection efforts on all accounts outstanding over the specified terms of sale. Collection efforts should be adequately documented in the customer credit files.
47.
Ageing analysis must be carried out on a frequent basis by IC F&A Manager in the department. The ageing must be accurate and not distorted by customer liabilities (e.g., cash withorder, down payments, or unapplied cash or credits).
48.
Bad debts
IC Dy F&A Head reviews the provision for doubtful trade receivables methodology, assumptions, and underlying calculation for appropriateness on a Annual basis.
49.
Customer account write-offs should be adequately documented and approved by IC F&A Head / IC Head / IC Board.
50.
Correspondence with client should be documented to avoid further disagreements
51.
Provisions
Provision for warranties, rectification costs is calculated on the basis of defined Corporate policy. Approval is obtained from ____________in the IC.
52.
Provision for forseaable losses and LD is based on prudence, calculated on the basis of past experience and subject to management review. Approval is obtained from BU Head / IC Head / IC F&A Head in the IC.
Business Unit
TVS SRICHAKRA LIMITED
Process
Order to Cash
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