Finance Flashcards
Budgeting Process Includes
Budget planning, preparation, approval, monitoring, reporting, and revision. (6)
Annual Budget Period
January 1st to December 31st.
Budget Process Timeline
Begins in August of the preceding year and ends in November.
Budget is approved by
PC Limited’s Board of Directors.
Duration to pay suppliers
within 45 days.
Processes invoices for vendor payments
Accounts Payable Unit (APU)
Invoice Certification is done by
user department and procurement department representatives.
APU Reports
Provides monthly and weekly reports.
How is credit granted to Long-Term and Spot Customers
Credit granted based on credit analysis and limits.
Credit Terms
Stated in the Credit Contract.
How often are credit limits Reviewed
Credit limits reviewed annually.
Debt Collection is done by
Approved Debt Collection Agency.
Fixed Asset Disposal Approved by
Endorsed by CFO and approved by CEO.
For Preservation of inventory items
First-In-First-Out/First-Expiry-First-Out
Intercompany Loans must comply with
arms-length transfer pricing principle.
Intercompany Loans is Approved by
Managing Director and CFO.
Proposed final dividends from distributable profits should not exceed
80%
Dividends declaration for Wholly Owned Subsidiaries must be
endorsed by Head of Finance & Accounts, approved by Managing Director.
Cash must be reserved to
Meet capital and operational expenditure for the next 30 days.
Investment Portfolio should be in
money market funds (Nigerian Naira) with AAAm, AAAmmf, or Aaa-mf credit rating.
Corporarte income Tax Rates
Large companies (30%), medium-sized (20%), small companies (exempted).
CGT Returns are Due by
June 30 and December 31.
The Transfer Pricing Regulations apply to various transactions including
the sale and purchase of goods and services, financial transactions, and manufacturing arrangements
In transfer pricing, PC must
Declare relationships with connected persons, file TP declaration or face N10M fine
PC’s revenue streams are mainly classified into
- Core revenue,
- Finance income,
- Miscellaneous income
PC core revenues include
sales of crude oil and gas, refined products and rendering of technical services
PC finance income includes
Fixed income investments, dividend income and rental income
PC miscellaneous income includes
(4)
- Disposal of asset,
- Registration fees,
- Bulk Purchase Agreement (BPA) and
- other third-party fees.
The budget cycle for a financial year shall be implemented in line with
PC Limited’s approved budget timetable.
Approvals for Budget Commitments shall be made in line with
the PC Delegation of Authority DOA/DFA Guidelines.
PC Limited and its subsidiaries budget shall be prepared on
an annual basis and derived from the three to five-year strategic business plan of the Company.
The annual budget shall be divided into three sections
- revenue budget,
- capital expenditure (CAPEX) budget, and
- operating expenditure (OPEX) budget.
CAPEX shall consist of
- acquisition of movable and non-movable fixed assets, and
- execution of capital projects
OPEX primarily consists of
all ( both direct and indirect expenditures (salaries, benefits, and overheads) operational expenses for the day to day running of the business
Imprest management is
Process of managing and controlling funds reserved for unplanned business expenses.
How imprest is kept
Usually kept as
- cash or
- assigned operational debit cards (P-cards).
Custodian Responsibility for imprest
Safeguarding and accounting for funds during operation.
P-card Usage
Assigned to specific departments/divisions for payments like
- subscriptions,
- online training, and
- foreign services.
Imprest Funding is made by
Treasury Department provides monthly funding (up to N 300,000).
How imprest is Audited
Subject to periodic audit by the GRC function.
Imprest Funds should not be used for
- loans,
- personal commitments,
- travel allowances, or
- non-office-related expenses.
Property plant and Equipment management
Process of
- acquiring,
- recording,
- capitalizing,
- transferring, and
- disposing
of assets owned by PC and its subsidiaries.
PP&E Management is carried out to (4)
Ensure adequate procedures for managing PC Limited’s PP&E, including
- tagging,
- verifying,
- consistent depreciation rates, and
- recognizing impairment.
Sub-Processes of PP&E management
(6)
- Asset Acquisition and capitalisation,
- Safeguard and Control,
- Depreciation,
- Impairment,
- Transfer,
- Disposal
PP&E management should Strictly adhere to
Supply Chain Management Policy and Procedural Guide.
Inventory management is
Process of managing and tracking inventory items within PC Limited and its subsidiaries.
Objectives of inventory management
- Proper handling of received materials to eliminate wastage and ensure safety.
- Storage, preservation, and systematic distribution of inventory items;
- Up-to-date documentation for enhanced accountability.
Sub-Sessions Covered in inventory management (6)
- Inventory requisition,
- receipt,
- issuance,
- monitoring and replenishment,
- measurement and reconciliation,
- disposal
What items in inventory are issued first?
Items with close expiry dates
Approval of inventory items transfer/disposal requests
CFO of PC Limited or MD of respective subsidiaries
Project accounting is
Processes involved in
* initiating,
* recording, and
* reporting
project transactions from commencement to closure.
Project accounting objectives
Project controls
Adequately track and account for project costs on a project-by-project and asset class basis.
Project accounting controls (4)
- Implement controls over project expenditure;
- Provide timely and accurate financial status reporting;
- Detect potential budget overruns;
- Forecast estimates to completion.
Project accounting Sub-Processes
- Project Approval and Account Set-Up;
- Project Budget Monitoring and Reporting;
- Project Completion and Certification.
Budget Monitoring
- track actual expenditure and estimated cost to completion;
- Project Accountant prepares a financial performance report; Report includes budgeted cost, actual cost, estimated cost, and variance analysis.
Approving Authorities for tendered items
BOD
Tenders committee levels 1,2,3,4
GCEO
Approving Authorities for non-tendered items
BOD
GCEO
GED
GGM
GM
