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Role of Chartered Accountants in
Building Successful Organizations
Presentation by:
Ahmad Saleem
Performance Management Consultant
0300 8471640
saleem@pms.com.pk
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Objective of this Seminar
To discuss role of Chartered Accountants in extended form
My own Experience as Employee & as Consultant
significantly better what they are presently performing
Presently they are doing their JOB in perfect way but additional working
can bring major change
Basic Objective of this seminar is to share and discuss our experiences
and knowledge in this regard
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Roles of Chartered Accountants
Head of Accounts & Finance
Any position in Accounts Department
Internal Auditor
External Auditor
Management Consultant
Any other position
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Why in this Position
Observing all Activities
Every Activity has Financial Impact
During Audit Learned all the
Areas
Cannot improve Quality
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Special Traits of Chartered Accountant
System based
Monitoring Risk
Chartered Accountants have special traits, which are developed due to their
special nature of training
Completeness
Compliance Testing
Analytical
Planning
Consideration of Financial Value
Monitoring
Auditing Nature
Substantive Checking
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Traits for Building Successful Organization
Visionary
Take Ownership
Traits
Complete Business Picture
Leadership
Success
Take Responsibility
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Main Areas
Planning
Systems
Budgeting
Costing
Risks & Controls
Monitoring
Performance Monitoring
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Objectives of the Organizations
Objectives based on basic thought
Different Objectives for different Org .
Based on available resources and opportunities
Working towards achieving their Objectives
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Success
What is Success?
Sustainability
Achieving
YourObjectives
Financial Stability
Expansion
Smooth Operations
No Surprises
What areObjectives?
Controlled Working
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Are Chartered Accountants Responsible?
Whats your opinion? Need Discussion
In my opinion
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Then Why Someone will do this?
Success Comes by taking
Responsibility
Ownership
In most of the cases, the
Chartered Accountants
are not directly
responsible
But they are in
position to guidethe others for
making Organization
successful
They are in best
position to adviseManagement
regarding different
options.
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Main Areas
Organizational Level
Departmenta Leve
Activity/Transactional
Level
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Or anizationalLevel
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Organizational Level
Planning
Goals and Targets
Benchmarking
Budgeting
Organizational Behavior
Systems and Procedures
Financial Planning
Fixed Assets Management
Costing
Risks & Controls
Knowledge Management
Role of MIS
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Planning
Planning
Strategic
Planning
Business Plan
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Planning
Strategic
Planning
Business
Plan
Long Term
Based on Resources
Cannot be changed EASILY
Short Term planning based on this
By Top Management
For Short Period
Based on Resources
Can make Changes easily
Operations based on this
By Senior and Middle Management
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Goals and Targets
Based on the Business Plan, Goals and targets will be determined
Monitoring of Goals and Targets
Verification of Actual Achievements
Linking and reconciliations of Results
Keeping on track
all the departments
Sales, Production, Purchases, Utilization of Resources
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Keeping complete control on the finances of the Organization
Keep financial burden minimum
Financial Planning
Establish accurate financial requirement
Look for high stocks and receivables
Avail maximum benefit from Suppliers and Creditors
Never go for Capital Investment from Working Capital Facilities
Accurate projected Fund Flow Statement involving all departments
and making them responsible
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Fixed Assets
In most of the cases, Fixed Assets is the major part of the investment, watch it..
Complete record of Fixed Assets
erent ate etween ro uct ve an upport ve ssets
Calculate return on Assets with Sales and Contribution Margin
Record of Insurance and Warranties
Repair & Maintenance
Preventive Maintenance
Disposal of Assets
Assets Condition
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Costing, Contribution Margin
and BreakevenCost incurred when a resource is utilized. Keep complete
record of Cost, Contribution Margin and Breakeven Analysis
Complete record of cost including direct and indirect cost, fixed cost etc.
Computation of Contribution Margin, linking with Sales and Profit
Product wise Contribution Margin
Compare return with relation to investment, time consumption etc.
Breakeven analysis, simple and based on cash return
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Budgeting is a process of making best estimate regarding a
future activity and then following the initial estimate.
Budgeting
Production Budgets Time Budgets
Breakdown Budgets
Energy Budgets
Wastage Budgets
Financial Budgets
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Organizational Behavior is the personality of the
Organization Cannot do much however following is
possibility
Organizational Behavior
e ega on
Authority
Result Oriented instead of ..
espons y anagemen
Ownership
System based
Training and Guidance
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Systems, Policies and Procedures
Performing any activity in a similar way all the time and all users have same
understanding is called system. This also include processes, policies &
procedure.
Ensure system for every activity
Policies should be available for all scenarios
Standard Operating Procedures SOPs
Should be demanded
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Systems, Policies and Procedures
System for Material Issuance
D scount to ustomers
Advance against Salary
Traveling policy
Material receiving
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Risks and Controls
With every activity there are risks Inherent, intentional, un-intentional etc.
For Prevention of risks, there are certain Controls
Authorization
Documentation
Physical Checking
Access Controls
Reporting
Budgets
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Organizations need to have full information and knowledge regarding all related
activities.
Knowledge Management
Data
Documents and Forms
Reports
Information
Knowledge
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Production
Marketing
Knowledge Management - Discussion
Sales
Fixed Assets
Operations
Purchasing
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Software can play vital role in Organizational Success this may include every
possibility of Automation
What can be controlled?
Role of Software
Basic system is a MUST requirement
Objectives and Benefits
Implementation
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Role of Software
Usage Benefits
Processing through Software
Magnetic Cards, Bar Codes etc.
Sensors, timers etc.
Programmable Logic Controllers
Accuracy
Consistency
Speed
Control
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DepartmentalLevel
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Departments
Marketing
Sales
Production
Quality
Administration
Human Resource
Planning
Purchasing
Stores
Internal Audit
MIS
Accounts
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What to observe?
Departmental Working
Departmental Costing
Activity based Costing
Results How Effective
Wastage of Resources
Information & Knowledge
Effectiveness
Objectives
Cost benefit Analysis
As Profit Center
In most of the cases, Chartered Accountants feel that these areas are
out of their Jurisdiction we need Discussion
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Marketing
Marketing is a process where product awareness
is built and established
Link Marketing with Sales
Check Relevance
Check with actual activities
Marketing Plan with expected results
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Production is a process of manufacturing and preparing
goods for Sales and Operations are the activities where
production process is not involved.
Know the production process
Production / Operations
Production Capacity
Establish Benchmark Convert in financial term
Wastage and efficiency
Production Accounts
Compare actual with budgeted with reasons
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Relates with all planning matters of Production and
Operations
Planned as per Capacity
Production Planning
Optimum utilization
Adjustment of different orders
Coordination with Sales and Production
Losses due to lack of planning
Non utilization of capacity and reasons
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All matters relating to management of materials
Control on receipt Gate Control
Material Management
Stacking
Old Items reasoning
Issuance / Consumption
Damage / Expiry Dates
Physical Checking and Record Keeping
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Checking quality of goods produced with desired Quality Level
Why Chartered Accountant is responsible?
Quality Control
Incurring a cost and results should be there
Claims due to Quality charged to deptt
Department should certify
Mention and note all the known problems
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Administration provides support services relating to
communication, transportation, utilities, entertainment,
traveling and general office supplies and arrangement.
Administration
Not suppose to s gn w t out ver cat on
Establish justification
Mess charges, conveyance, overtime, utilities
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All matters relating to Human resource establishing
requirement, JDs, hiring, retention etc..
Department budget for HR
Human Resource
Policies must be clear and available
Record must be complete
Roles of departments known to everyone
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Related with all hardware and software matters and
activities
In best position to coordinate with IT
MIS / IT
Verify results
Suggest system improvements
Decision Support System
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Responsible to keep accounting record of all transaction
of the Organization related activities. Includes normally
Finance, Costing, Taxation, Budgeting and Corporate
requirements
Responsible for complete book keeping
Accounts
Required to check in depth all transactions
Can question any transaction
Use Reconciliation and ratios
Check unusual activities
Need to extract Information and Knowledge
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Transactional Level
Justification
Authorization
Relevance
Budgeted
Purpose
Information & Knowledge
Support Record
Documentation
Physical
Systems and Rules
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Analysis
Reports and Analysis
a os
Reconciliation
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Case StudiesMarketing Marketing department spent Rs. 10 million on advertisingcampaign, in which heavy advertisement was made. What questions and
parameters can be checked by the Chartered Accountant?
Large Sale contracts have been signed by the Sales Department and Top
be raised by a Chartered Accountant in these contracts?
Sizing Beams, which are used in Weaving Industry need to be polished
after certain period of time? You have received bill of Rs 400,000 for theirpolishing? What sort of questions can be raised and asked?
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Case StudiesQuality Control Your Company is dealing with the customers who arenot quality conscious, however your management is too caring for quality
matters. You will have to discuss this matter with Top Management, what
should be the concerns which should be discussed.
Company received an excellent low priced deal on main raw material. The,
is uncertainty that material may not be used in near future. What should
be your role in this case?
Manufacturing department is showing excellent result, however they
themselves prepare all the results and no one is checking their results,however management is very impressed with the high efficiency of
Production. What sort of concerns can be checked by you?