INTERNSHIP REPORT
SUI SOUTHERN GAS CO. LTD. SSGC House, Block -14, Gulshan-e-Iqbal, Sir Shah Suleman Road. Karachi-75300. Pakistan PABX: +92-21-9021000. Fax: +92-21-9231550
INTERNSHIP REPORT SUBMITTED TO
MR. KALLEM-ULLAH (HR, SSGC)
SUBMITTED BY
Aurangzaib Khan MBA (FINANCE) AND ACCA (Finalist)
TABLE OF CONTENTS -
Acknowledgement
INTRODUCTION TO SSGC Introduction SSGC at a Glance Core Business SSGC’s Vision SSGC’s Mission Core Values Future Outlook Hierarchy of Management Distinguishing Features Strategies Company Objectives Organizational Structure
1 2 2 3 3 3 3 4 5 8 10 10
PERSONAL INFORMATION
11
OVERVIEW OF THE FINANCE DEPARTMENT
12
Major Accounting Policies Areas of Working SUGGESTION & RECOMMENDATION
13 16-43 44
ACKNOWLEDGEMENT I am very delightful and gratitude of Almighty ALLAH who bestowed me with patience and persistency in completing my Six weeks of Internship Program at SSGC and in achieving my task fruitfully. Then i would like to extend my gratitude to SSGC HR management for giving me an opportunity to enrich and upgrade my experience and skills. It was quite a great experience for me to work with diversified and literate people and helped me to understand cross-cultural-differences.
INTRODUCTION TO SSGC INTRODUCTION: Sui Southern Gas Company (SSGC) is Pakistan's leading integrated gas Company. The company is engaged in the business of transmission and distribution of natural gas besides construction of high pressure transmission and low pressure distribution systems. SSGCL transmission system extends from Sui in Baluchistan to Karachi in Sindh comprising over 3,200 KM of high pressure pipeline ranging from 12 - 24" in diameter. The distribution activities covering over 1200 towns in the Sindh and Baluchistan are organized through its regional offices. An average of about 378,468 million cubic feet (MMCF) gas was sold in 2007-08 to over 2.040 million (industrial 3,448, commercial 22,192 and domestic 2,014,827 consumers) in these regions through a distribution network of over 31,877 Km. The company also owns and operates the only gas meter manufacturing plant in the country, having an annual production capacity of over 550,150 meters. The Company has an authorized capital of Rs. 10 billion of which Rs 6.7117 billion is issued and fully paid up. The Government owns the majority of the shares which is presently over 70%. The Company is managed by an autonomous Board of Directors for policy guidelines and overall control. Presently, SSGC's Board comprises of 14 members. The Managing Director/Chief Executive is nominee of GOP and has been delegated with such powers by the Board of Directors as are necessary to effective conduct the business of the company.
SSGC at a Glance: The Company in its present shape was formed on March 30, 1989 following a series of mergers of three pioneering companies, namely Sui Gas Transmission Company Limited, Karachi Gas Company Limited and Indus Gas Company Limited.
Sui Gas Transmission Company Limited was formed in 1954 with the primary responsibility of gas purification at the Sui field in Balochistan and its transmission to the consumption centres at Karachi. Two distribution companies were established in 1955 and were responsible for the distribution of gas to consumers in Karachi and in other towns along the route of the transmission pipeline between Sui and Karachi. In 1985, these two distribution companies were merged to form Southern Gas Company Limited and later, in 1989, Southern Gas Company Limited and Sui Gas Transmission Company Limited were merged to form the Sui Southern Gas Company Limited. Today, half a century of professionalism and progress has made the SSGC one of the largest integrated natural gas transmission and distribution companies in Pakistan, serving the entire Southern region of the country, comprising the provinces of Sindh and Baluchistan. Core Business The main activity of the company is transmission and distribution of gas in Sindh and Baluchistan
SSGC’s VISION To be a model utility, providing quality service by maintaining a high level of ethical and professional standards and through the optimum use of resources.
SSGC’s MISSION To meet the energy requirements of customers through reliable, environment-friendly and sustainable supply of natural gas, while conducting company business professionally, efficiently, ethically and with responsibility to all our stakeholders, community and the nation.
CORE VALUES Integrity: Keep Company's Interest above self. Acts in ethical manner. Promote ethical business environment. Take effective actions if observers unethical behavior or situation. Seen & known to be honest. Lives within means. Intellectually hones. Excellence: Makes positive contribution towards the achievement of SSGC's Vision. Strives for Continuous improvement. Respond effectively to customer needs. Takes timely and Quality decisions. Teamwork: Builds strong relationships within across functions. Works well with all type of Peoples and corporate with others. Solicits and share ideas/best practice with others. Supports the achievements of Company/team goals. Contributes to team effectiveness using people's different skills and styles. Arrives at constructive solutions while maintaining Positive working relationships. Demonstrates sensitivity.
Transparency: Promotes open environment. Displays openness and consistency in applying policies & Procedures. Respects dissent and resolves conflicts fairly. Creativity: Comes up with new ideas. Encourages innovation. Promotes modified approaches. Convert Ideas into actions.
Responsibility to Stakeholders: Stays abreast of change in operating environment that impacts our business (i.e. markets, competitors, Technology, customers, suppliers, employees, regulatory, political and public). Create solutions to make Customer needs. Develops colleagues and team members to improve their skills and performance. Ensure Optimum utilization of resources. Balances short term and long term priorities to maximize on results. Ensures compliance of law.
Hierarchy of Management
Distinguishing Features Developing Human Assets SSGC believes that satisfied employees provide Quality service. SSGC provides satisfaction of its employees and gives them adequate incentives to provide high quality work. Human Resource Development is one of the top priority areas at SSGC. The company undertakes several initiatives to ensure induction and training of professionals with the objective of ensuring high level of professionalism and productivity of its employees. Excellence in Customer Service The SSGC motto is 'Service with a Smile' and SSGC people strive to provide unmatched and diverse services to customers through innovative and progressive ideas in line with best international practices. For speedy and efficient handling of customers’ complaints, queries and suggestions, SSGC has developed Customer Facilitation Centers in all major towns and large population centers that provide fast and efficient response to customers’ queries and complaints. The Company is also introducing innovative Pre-paid Gas Meters for convenience of customers. Pre-paid meters offer such facilities as advance payment and flexible payment and allow people to manage gas consumption at their own convenience. Edge in Technology Quest for excellence and cutting-edge technology has played a key role in SSGC expansion and strength. Above all, technology brings greater benefits to customers. For example, all SSGC meter reading is now carried out through hand-held computers - saving valuable time and minimizing errors.
SSGC's computerized billing system prints bills through the online network in the entire franchise areas. Today, SSGC is set to become the most IT enabled Company in the country. Realizing the need for integration of IT into core business processes, the Information Technology Department is rendering strong support to SSGC. A key initiative of this department is the implementation of the Geographic Information System - a computer-based system that effectively provides forecasting data for further strategy development. Increasing the efficiency of business processes is another priority area for SSGC. Enterprise Resource Planning (ERP) software integrates all departments and functions on to a single computer network. Maintaining its technological edge, SSGC has signed a comprehensive enterprise agreement, with Microsoft - the only such agreement by a public sector utility company in Pakistan. Since the pipeline network forms the backbone of SSGC's operations, special steps have been taken towards ensuring maximum efficiency, such as PL Studio simulation software, which accurately simulates the large and complex pipeline network, driving higher performance, efficiency and financial viability of new projects. Telecommunications Telecommunications plays a vital role in maintaining high operational efficiency at SSGC. Through the advanced microwave digital network, and with video conferencing facility, all SSGC offices and facilities remain connected 24 hours a day.
Promoting Safety SSGC is committed to the health and safety of its employees and preservation of the environment in its areas of operation. Its Health & Safety and Environment (HSE) management system ensures that the standards, processes and procedures needed to achieve safe operations are identified, implemented and maintained. Emergency Response Centers (ERCS) ERCs are working at six key locations at Karachi and Quetta terminals, Shikarpur, Nawabshah, Dadu and Sibi Head Quarters. These are fully equipped to deal with any emergency situation in case of transmission gas pipeline rupture/fire resulting from sabotage, wars acts and similar activities.
STRATEGIES The company has moved beyond basic reengineering as it builds and reinforces culture change by creating performance opportunities, developing Human Resources and pursuing overall business excellence. The company identified successfully different layers of change that needed to be managed concurrently for large projects to be implemented on schedule and within budget. Within the induction of new, improved business process, an appreciable change in productivity was achieved. The company has taken the lead in integrating Change Management within its people, processes and technology. Optimizing market flexibility and maximizing return on investment from major change initiatives are key success factor for the company. The company has adopted an aggressive approach to empower the executives and to create awareness in the rank and file for changing the routine business processes with people-centric work methodology with focus on moving over to best business practices. The SSGC has pioneered efforts for deployment of a cost-conscious and performance-based culture and empowerment of the employees to provide for achievement and excellent at all levels. Expansion of distribution and transmission network for enhancement of gas supply to power plants, industries and commercial sector including supply of gas to previously deprived areas in the domestic sector. Customer satisfaction, innovation, quality services and promotion of service with a smile culture. Consistent appreciation in shareholder’s value by increasing the company’s asset base and significant improvement in productivity and efficiency.
Business Process Re-engineering (BPR), re-structuring of select departments and implementation of ERP to provide effective M.I.S for business operations and control. Enterprise Information System (EIS) and technology implementation in all areas of business to make and maintain SSGC the most IT enabled company. Human resource development and empowerment of employees through career planning and management / vocational training. Improvement in reliability and security system. Improvement in customer services through additional Customer Facilitation Centers, installation of pre-paid meters, and improved bill delivery. Community support services and environmental protection initiative to meet the national and social responsibilities as a good corporate citizen.
COMPANY’S OBJECTIVE The Company aims to supply natural gas wherever there is sufficient load to justify the cost of infrastructure. In many places the gas network is being expanded to meet economic and social requirements through active funding support from the Federal and Provincial governments. In 2003, the Company launched a comprehensive five-year gas network development and expansion Plan to connect hundreds of small towns and villages in remote areas of Sindh and Balochistan, which currently are deprived of piped natural gas. Every year, the Company adds nearly 75,000 new customers (industrial, commercial & domestic) to its customer base and lays hundreds of kilometres. Transmission pipelines and distribution network and installs other facilities such as metering / billing stations in its system using its staff of technically qualified and skilled personnel.
ORGANIZATIONAL STRUCTURE The Company is organized into six functional divisions -Transmission, Distribution, Commercial, Engineering Services, Management Services, and Finance. Each division is headed by a Senior General Manager (SGM) assisted by a team of professional staff, with the exception of Finance, which is headed by the Chief Financial Officer (CFO). Policy matters relating to the natural gas sector are handled by the GOP. OGRA is responsible for regulation, pricing, revenue determination and compliance to service standards. The Board of Directors has the overall responsibility for the management and control over the Company. The management enjoys operational autonomy. The major portion of the work force consists of technically qualified and skilled personnel.
PERSONAL DATA: Father Name
MUHAMMAD AKRAM NASIR
Date of Birth
16th AUG 1988
NIC No:
54302-8436408-5
Marital Status
Single
Religion
Islam
Nationality
Pakistani
Cell No:
0300-3895584
Email Address:
[email protected]
Address:
Flat A-505 Rabi Square Khalid bin Waleed road Khi.
OVERVIEW OF THE FINANCE DEPARTMENT
FINANCE
Finance
Treasury
Accounts
Payroll
Cash & Bank
Cost & Revenue Budget
Insurance
Loans
Fixed Assets
Payments
Investments
MIS
Gas Purchase
Gas Sales
Distribution System
Transmission Project
Taxation
Financial Feasibilities
Revenue Control
MAJOR ACCOUNTING POLICIES Property, Plant & Equipments: Assets are not revalued and historical cost is taken into account. Property, plant and equipment except freehold land, leasehold land and capital work in progress are stated at cost less accumulated depreciation. Freehold land, leasehold land and capital work in progress are stated at cost Depreciation on compressor, transmission lines and other operating assets is calculated under the straight line method over their estimated remaining useful lives. It is charged from the dates these projects are available for intended use upto the date these are disposed off. Stock-in-trade: The stock in trade comprises of Gas in pipelines and Meter manufacturing division. Stock of Gas in transmission pipelines is valued at lower of cost determined under the weighted average basis and net realizable value whereas the materials for meter manufacturing division is valued at lower of moving average cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Stores, Spares and Loose Tools: These are valued at cost determined under the moving average basis less impairment losses, if any. Goods in transit are valued at cost incurred up to the balance sheet date Trade Debts: Trade debts are carried at cost less provision for doubtful debts, if any. Balances considered bad and irrecoverable are written off when identified.
Trade and Other Payables: Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.
Deferred Credit: Amount received from customers and the government as contributions and grants for providing the service connections, extention of gas mains, laying of transmission lines, etc are deferred and are recognized in the profit and loss account over the useful life of the related assets.
Revenue Recognition: Revenue from Gas sales is recognized on the basis of gas supplied to customers at rates periodically announced by the Oil and Gas Regulatory Authority (OGRA). The meter rental is recognized monthly at specified rates for various categories of customers on an accrual basis whereas the sale of meters and gas condensate is recognized on dispatch to the customers. Deferred credit income is amortised to the profit and loss account over the useful life of the related assets. Dividend income on equity investments is recorded on accrual basis. However the company is required to earn a minimum annual return before taxation of 17% per annum o the net average operating fixed assets (net of deferred credit) for the year. Income earned in excess or short of the above guaranteed return is payable to or recoverable from the Government of Pakistan and is adjusted from or to the gas development surcharge payable to or receivable from GoP.
Long Term Deposit: Long Term deposits consist of security deposits from Gas customers and gas contractors. Gas customers’ deposits represent Gas supply deposits based on an estimate of three months consumption of gas sales to industrial and commercial customers while deposits from domestic customers are based on the rates fixed by the Government of Pakistan. These deposits are repayable and adjustable on the disconnection of gas supply. Security deposits from contractors are free of mark-up and refundable on the cancellation of contract.
AREAS OF WORKING I sought opportunity to join SSGC to upgrade my skills in multi-dimensional approach to the section of the Finance Department. Whatever I attained there is elaborated as under:
1) FIXED ASSETS
2) BID BOND
3) STORES
4) COST AND BUDGET
5) GAS PURCHASE
Fixed Asset FIXED ASSETS PROCESS
FUNCTION To maintain and control the fixed asset of the company
Working of Fixed Asset: Budget Proposal The budget section of finance department prepares capital expenditure budgets annually for all the department of SSGCL. Whenever a budget is to be prepared for any department, the budget section notifies the department to prepare list of assets required by them & forward it to the budget section. On receiving the requirements, the budget team examines it & discusses all particulars with the related head of department & staff giving special consideration to the justification of fixed asset requirement & funds available with the company. At this stage, the budget team may reduce the requirements of fixed assets of the department, which may be considered to be necessary as that may be defined to latter period.
The budget [in the form of budget proposal] is now sent to GM & SGM for its approval/changes which may be made by them & finally to the M.D for its approval the case of transmission project which exceeds Rs.100 million approval is then sought from the government by filing PC-1 form & after its approval , same procedure is followed for others. When the budgets for all the departments have been finalized and approved by MD, then agenda is prepared by budget section, which is reviewed by finance committee, the board of directors’ grants approval to the agenda and now the budgets are authorized to be followed. Each department is now intimated through inter departmental note (along with a copy of their budget) that the budget has been approved.
Fixed Asset purchasing process: In order to purchase an asset, fixed asset requisition (FAR) is required to be filed by concerned department, which should be approved by the head of that department. FAR contains details of assets required by the department. The FAR is now forwarded to Procurement department, where Deputy Manager checks whether the FAR falls within the budget. The procurement department invites quotations through tender (if not available in store) and on the basis of commercial and technical evaluation and lowest bidders, a supplier is selected (all such procedures documented in Evaluation Report) and then Purchase order (PO) is prepared and sent to supplier. All assets are received by the KT stores department, where quality inspection is conducted (however not documented) and then a Material Receiving Statement (MRS) is generated and a copy of which is forwarded to the finance department. Following entry is generated: Inventory receiving account
xxx
AP accrual account
xxx
On delivery of asset to the concern department, following entry is generated: Asset clearing account
xxx
Inventory receiving account
xxx
When invoice received by finance department, Account payable department enter invoice in AP module which match invoice with material receiving statement and following entries are generated: AP accrual account
xxx
Liability account Asset cost account Asset clearing account
xxx xxx xxx
Depreciation expense
xxx
Accumulated depreciation
xxx
At payment of invoice, following entry is generated: Liability account Bank
xxx xxx
Fixed Assets Purchase Process:
Fixed Asset Requisition sent to the inventory
Requisition verified by the
section duly authorised
inventory section and
by the departmental
approved by CM, DGM and
head
GM/MD
Supply of assets by the supplier at Receipt & Despatch section at Karachi Terminal
Requisition sent to the procurement department for order placement
Asset delivered to the user /
Details incorporated in the
requisitioning department
relevant records at month end
Depreciation and Adjustment Process Once an asset has been capitalized, working for its depreciation starts. Full year depreciation is charged for the first year regardless of its purchase data. The company uses the straight line method of depreciating except for meter plant, where reducing balance method is used. Depreciation rates differ for different assets. It even differs for same assets in different cities. In the certain situation we call for making adjustments e.g. transfer of an asset from one unit to another, different between assets in books and its physical existence etc. Retirement of the Asset After the completion of life of asset which is fixed by company we retire it. 1 st the Assets Retirement Requisition (ARA) is prepared by the user department and it is sent to the fixed asset section of finance to retire that asset. The company SSGC’s follows certain policies for the retire of asset e.g. only those asset which have a zero book value can be retired. After checking the book value the inspection team is to be formulated. That inspection team inspects the asset, which is to be retired for verification of the condition of the asset. After inspection the report sent to the fixed asset section along with ARA. It is approved / disapproved on the basis of inspection report by GM, DGM and MD. After approval the asset sent to store at Karachi Terminal (KT) for disposal. In case an employee of the company buys it, it is sold on written down value or at 7.5% of its cost, whichever is higher. And some old assets, which are fully scraped and not present physically, are deleted from the books through approval of the management.
Fixed Assets Retirement Process:
Asset Retirement Advice
Inspection of the asset to
prepared by the user
be retired is conducted
department and sent to
for verification of the
the inventory section
condition of that asset Asset sent to store at KT for disposal
Retirement advice is approved / disapproved
Section Inspection
on the basis of
report sent to the
inspection report by GM,
inventory along with
DGM and MD
ARA
BID BOND SECTION PROCEDURE OF BID BOND SECTION Function Performed by the Bid Bond Section: Major functions are performed by the Bid Bond Section includes:
Retaining of Bid Bond amount
Releasing of Bid Bond amount
Retaining of Performance Bond amount
Releasing of Performance Bond amount
Purpose: To record the bidder / supplier of the bid bond and performance bond and also maintain the releasing of bid bond and performance bond. Here, in Bid Bond Section maintain the record of each bidder / supplier. Working in Bid Bond Section: The work of bid bond section starts after the issuing of tender by the Material Management department. When tender will issue from the Material Management department for purchasing the material which are required by the company the certified and interested supplier come forward and offer the bid rate and pay the 2% bid amount of that offered rate in the form of pay order or bank guarantee to the bid bond section in the name of company. If the pay order amount is more than RS. 25000/= the company will encash pay order. After the fifteen days or one month when tender will open by the Material Management department they are selected the lowest bidder or supplier and prepared an evaluation report (comparison of three bids) on the basis of bid received from various suppliers and sent to General Manager of Material Management for approval. Once the evaluation report is approved by the GM (MM) the releasing letter will issued by the GM (MM) to bid section for release the bid amount to the unsuccessful bidder. And the bid data to punch on computer for onward records. Daily 50 Banks Guarantee and Pay Order to punch and check with the documents. (Properly record maintained on computer and manually). After the completion of retaining of Bid Bond, company will request the selected bidder to submit the 10% performance bond as a deposit in the name of company in the shape of Pay Order or Bank Guarantee. In case of Performance Bank Guarantee Bid bond section send the letter to bank for confirmation and after confirmed by the bank the letter to be attached with the Performance Bond Guarantee. Before the expiry of the Performance Bank Guarantee and we have written claim letter to the bank and copy forwarded the Material Management department and also fortnightly MIS reports sent to the concern department. All Pay Orders RS. 25,000/= or more will be encashed in accordance with the prevailing company policy in the Cash Bank section and after encashed to refund the same as advise receipt by Material Management. And bidder also requested to the
GM (MM) for releasing of bid amount, and GM (MM) department has request to the Bid Bond Section to release the bid bond and sent to the Bank and the Bidder/Contractors by TCS and also copy forwarded to the Material Management department. Daily 50 Bank Guarantee and Pay Order release. After release update the filling records. Original Contracts / Agreement and Performance Bond / Bid Bond receipt from Material Management department we are punch on the computer and properly record and retain in safe custody. After completion the project the supplier issue the letter to the Material Management for payment of the received material and performance bond. After the verification of material and projects bid bond section retain the performance bond amount along with projected amount by cheque.
FLOW CHART OF BID BOND SECTION:
RETAINING THE BID BOND FROM THE SUPPLIER
RELEASING THE BID BOND TO THE SUPPLIER
RETAINING THE PERFORMANCE BOND FROM THE SELECTED SUPPLIER
RELEASING THE PERFORMANCE BOND TO THE SUPPLIER AFTER COMPLETION THE PROJECT
ISSUE THE CHECK FOR PAYMENT BY THE CHEQUE
STORES SECTION
STORES ACCOUNTING Function: To check the store balances, maintain and control the records of every kind of stock/material placed in stores at different locations of company. Here, in SSGC Head Office record of each store all location in company is controlled and checked for proper receipt and issue of items. Working: Extracting stores balances in ERP. 1. Checking of stores balances with ledger balances on ERP. 2. Reconciliation store stock loan balances with ledger balances for the more accuracy. 3. Checking of miscellaneous reports of stores balances for confirmation. 4. Preparation of reports of stores stock on quarterly, half yearly and annually. Functions Performed By Company Stores: Major functions are performed by company includes:
Receipt of stores
Issuance of stores for Distribution Projects.
Issuance of stores for Transmission Projects.
Issuance of stores for Meter Plant Projects.
In order to fulfill these functions , company has several stores ate different locations. And here we go in the detail of these stores by using tables.
MAJOR FUNCTIONS OF COMPANY
COMPANY
DISTRIBUTION
TRANSMISSION
METER PLANT
DISTRIBUTION STORES
DISTRIBUTION STORE
KARACHI
SINDH
QUETTA
MAIN STORE SITE
HYDERABAD
SUKKUR
QNGDP
GULSHAN STORE
NAWABSHAH
LARKANA
ST. QUETTA
ST.STORE SITE
ST. HYDERABAD
ST. SUKKUR
DISTRICT SITE
TRANSMISSION STORES
TRANSMISSION OPERATION STORE-KT
HQ-III HYDERABAD
HQ-II NAWABASHAH
HQ-I, SUKKUR
IRBPC-HQ-DADU
IRBPC-HQ –SHIKARPUR
QPL(O&M)-SIBI
QPL(O&M)-QUETTA
CD-KHADEJI
GRIEP PROJECT KHADEJI
PIRKOH-SUI
ST. KHADEJI DISTRICT KHI
DISTRICT KHI KHADEJI
TERMINAL
METER PLANT STORES
METER PLANT
METER PLANT
ST. METER PLANT
.
COST
AND
BUDGET SECTION COST & BUDGET SECTION Function: The major function of cost and budget section is cost controlling and maintaining of revenue expenses and also accumulation of revenue cost which is incurred during the period, and planning for allocating the budget to the individual department. And another function of this section is to calculate the cost of operating and administration section. Purpose: To minimize the extra cost
To operate the organization effectively and efficiently Closely watch t the individual department To run the organization smoothly To control the cost of operating and administration.
Budget Planning Process: Cost & Budget is one of the hub section of finance department. This section is indispensable because planning & cost both are the backbone of every successful organization and this section is first and foremost responsible for the budget planning. Budget planning begins before the distribution of budget for the new fiscal year. The SSGC provide the authority to every department to make their budget like wise, it means department wise and it is controlled and maintained by the cost and budget section in finance department. The 1st step of budget scheduling is “Proposal”. This section send proposal to every department of company in order to know the requisite budget by the departments. Every department suggest their required budget for the new fiscal year along with the details where they want to spend budget and send the proposal back to cost & budget section. The section checks their budget proposal and compare with previous budget. In case of big difference between the current and previous budget the budget will not approved before the justification of respected department. Then this section brings together these proposals according to organizations wise and sends these proposals to the board for the approval. The board makes necessary changes and approves the compiled budget and report will send to every department. And approved proposals are loaded in ERP system (Oracle Financial). The budget is to be made according to year wise but it is issued quarter wise. After that we are uploading the budget. The process of uploading budget is shown below:
Uploading Budgets: Usually budget is uploaded using Application Desktop Integrator (ADI). ADI allows the user to create and modify budget in an Excel spreadsheet which can then be uploaded to Oracle General Ledger.
For maintaining security, the people of the respective department are provided with their own user ids and password. Access is allowed only to limited individuals
For uploading the budget we first need to select the journal type i.e. budgeted journal and the numbers of Journal
Before any data can be uploaded, the sheet needs to be made unprotected first by selecting the “Unprotect Sheet” option from the tools menu.
While viewing the budget worksheet that we want to upload, we have to choose Upload to Interface from the Ledger icon in the ADI toolbar. After that decide whether to upload
All Rows or Flagged Rows (those marked with Y). Start the budget upload process by selecting one of the following options Start if no errors in upload Start regardless of errors
Choose the ok icon to initiate the process When the process completes the system will notify of the completion status. After the uploading of budgets, these are checked to make sure that budgets are correctly allocated in their accounts. After having complete satisfaction the cost & budget section release or allocate the budgets in the accounts of every department. Release of budgets completes the process of budget allocation. In the new fiscal year the departments perform their activities and incur expenses. The expenses are debited in the accounts causing the budget accounts credit.
Additional Budget & Re-appropriation: This Re-appropriation form will use due to shortfall in budget or the departments spend their budget before the specified period or that project is not mentioned in their budget for whom they are sending the requisition. In order to solve this problem which are occurred due to shortfall in budget, 1st the required department sends the appeal for Additional Budget or Re-appropriation to CFO for approval of required material. After the approval from CFO they sent that request to cost and budget section for further procedure. The cost and budget section checks that from which department the required department to take budget and also checks that is that department budget is available or not and also check the required department is really needed for that material or not. After checking and confirmed these things the cost and budget section transfer the budget from the required department is needed through ERP.
GAS PURCHASE SECTION
Introduction The Sui Southern Gas Company Limited (the “SSGC”) is engaged in the business of gas transmission and distribution in Sindh and Balochistan provinces which are the franchised areas of the company. The core businesses of the company are transmission and distribution of natural gas; and designing implementing gas transmission and distribution projects. The non-core businesses include purification of natural gas; manufacturing and sale of domestic gas sales meters; sales of condensate as by-product; and special projects like construction contracts for laying of pipelines. The company receives gas from different oil and gas fields located in Sindh and Balochistan. The natural gas received from these fields is transmitted to different cities and towns of Sindh and Balochistan and distributed to consumers. The fields are owned by either one or more oil and gas exploration and production companies. Any gas field owned by two or more companies is called a joint venture where one company acts as operator on behalf of other companies. Each company is called joint venture partner having respective share in the joint venture in accordance with the terms of Petroleum Concession Agreement. The present corporate status of the company was emerged as merger of three company’s viz. Karachi Gas, Indus Gas and Sui Gas Transmission Company, of which the oldest company was formed in 1954.
Sales and Purchases
The gas sale and purchase between gas producer and buyer is governed by the terms of Gas Sales Agreement (GSA), which is signed by the joint venture partner(s) as Seller(s) and SSGC as Buyer and the Government of Pakistan (the “GOP”). All the agreements with foreign gas producers have also been signed by the Government of Pakistan (GOP) as guarantor. Besides operations, legal and other commitments, the GSA also provides payment procedures. The operator of the field in accordance with the GSA prepares monthly gas sales invoices and sends the same to SSGC on behalf of all the seller partners. The payment of gas bills and sales tax invoices is made to each seller member in accordance with their shareholding and remittance instructions mentioned on the invoice. However, excise duty on total volume of gas purchased from such field is paid to the field operator, who actually discharges this liability on behalf of the joint venture.
Invoices of Gas Purchases
The invoices of gas purchase mainly include following three elements:
Gas Charges
Gas charge is the wellhead value of gas volumes purchased by the SSGC multiplied by the notified gas price. The gas prices are regulated by the GOP and notified through SRO generally applicable for a period of six months. Therefore gas prices applied in the gas bills should match with the notified gas price as per SRO issued by the Oil & Gas Regulatory Authority (OGRA), Government of Pakistan for the respective field.
Excise Duty
Excise duty is charged on the volume of gas produced during the period. The rate of excise duty in accordance with provisions of the Central Excise Act, 1944 is Rs 10% of MMBTU
Excise Duty =
Rs. 10 0f MMBTU
Sales Tax
The GOP brought the gas companies under the sales tax regime w.e.f. 1 st July 2011 through Budget finance bill’. Therefore sales tax is applicable at the rate of 16% on the value of supplies, which includes wellhead value together with all duties, taxes, charges and levies
Responsibilities
the Gas Purchase Section prepares documents of original entry like,
a) b) c) d)
Cheque payment vouchers Bank payment vouchers Gas bills / invoices (Supporting documents) Any other related document of accounting record (double entry)
and maintain record thereof, obtain verification of gas off takes from measurement department and prepare various schedules.
The Section has specific responsibility for the following functions:
1.
Receiving gas purchases invoices from various gas companies.
2.
Preparation of memo for Measurement department for verification of gas off takes.
3.
Verification of gas prices with the gas price notifications.
4.
Independent calculation of gas bills and checking thereof.
5.
Preparation of journal vouchers to record cost of gas purchases
6.
Receiving statements of gas purchase / utilization from Gas Control section of Operations department -KT like GCS-I, GCS-II etc.
7.
Preparation of journal vouchers to record cost of gas / gas consumed internally.
8.
Processing payments of local gas companies in local currency and preparation of bank / cheque vouchers.
9.
Processing local currencies payments of foreign gas companies in respect of excise duty, sales tax and prepare bank / cheque vouchers.
10.
Processing foreign currency payments of foreign gas companies through form 'M' to seek approval of the State Bank of Pakistan for release of foreign exchange and prepare bank transfer letters and bank voucher
11.
Schedules of input sales tax (sales tax register) for claiming input sales tax against output sales tax of the company.
12.
Schedules of cost of gas and ledger accounts of Suppliers.
13.
Reconciliation between the gas supplier record and SSGC record.
14.
Reconciliation of gas off takes received in transmission system and gas transferred to the distribution system (unit-wise).
15.
Preparation of revenue budget of gas purchases.
16.
Preparation of gas purchases schedules.
17.
Compliance of provisions of GSAs and Income Tax and Sales Tax laws.
18.
Correspondence with the gas producing companies.
SUGGESTION & RECOMMENDATION There should be conferencing among the internee at Conference Room. Where by internee should be assigned projects in groups under the supervision of mentor and given case studies in order to take ward in financial decision making which will enable us to deal with any desirable financial situation. Debate declamation contest should be held among the Internees on suitable day. There should be the training process for contract based employees, because of to improve the work efficiency of contractor. All executive should diversify their knowledge to every staff member.
