Standard Operating Procedures And Financial Planning

SUMMER TRAINING REPORT On

STANDARD OPERATING PROCEDURES & FINANCIAL PLANNING

(STERIA INDIA LTD)

Submitted in partial fulfilment of the requirements of Post Graduate Programme By SATVINDER SINGH PGDM (2011-13) FT-11-1027

IILM Graduate School of Management Greater Noida

1|Page

Standard Operating Procedures And Financial Planning

DECLARATION FORM

I hereby declare that the Project work entitled_____________________________________________________________ _____________________(write the title in Block Letters) submitted by me for the Summer Internship during the Post Graduate Program to IILM Graduate School of Management, Greater Noida is my original work and has not been submitted earlier either to IILM or to any other Institution for the fulfilment of the requirements for any other course of study. I also declare that no chapter of this manuscript, either in whole or in part, is copied from any other document.

Signature of Student: _________ Name of Student: ___________

Signature of Company Mentor: ___________ Name of Company Mentor: ______________ Designation: __________________________

Date: Place:

Date: Place:

2|Page

Standard Operating Procedures And Financial Planning

Acknowledgement
The project title STANDARD OPERATING PROCEDURES & FINANCIAL PLANNING has been conducted by me during 1/May/12 to 30/June/12 at Steria India Ltd. I have completed this project, based on the primary research, under the guidance of Kripal Singh, Vice-President, Steria India Ltd. and Lecturer Prof. F.M.A Khan, IILM Graduate School of Management, Greater Noida.

Apart from the efforts of me, the success of this project depends largely on the encouragement and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of this project. I would like to show my greatest appreciation to Kripal Singh, Vice-President, Steria India Ltd. He had helped me learn about the process and giving me valuable insight into the STANDARD OPERATING PROCEDURES & FINANCIAL PLANNING. I feel motivated and encouraged every time I attend their meeting. Without their encouragement and guidance this project would not have materialized.

The guidance and support received from all the team members including Sunny Goel, Raj chabbra, was vital for the success of the project. I am grateful for their constant support and help. Last but not the least, I feel indebted to all those persons and organisations who/which have helped directly or indirectly in successful completion of this study.

Date

Satvinder Singh

3|Page

Standard Operating Procedures And Financial Planning

Content
S.No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Topic Executive Summary Introduction Objective of Project Company Profile Standard operating Procedures Financial Planning in Steria Analysis & Interpretation Action Plan for Financial Planning Conclusion Bibliography Annexure Page No:
Page 5 Page 6 Page 6 Page 7-11 Page 12-51 Page 52 Page 53-62 Page 63 Page 64 Page 65 Page 66-68

4|Page

Standard Operating Procedures And Financial Planning

Executive Summary
What does Summer Internship mean? How it will help me in building my knowledge? Which type of project I have to make? In what topic I will make a project? These are some questions which were revolving around my ears when I started my summer internship in Steria. Today I have completed my project. It reminds me all the tuff days of summer internship. Everything the work which I had done as well as the learning which I got from respected, experienced and encouraging industry and faculty guides, corporate peoples, teachers, and students are not forgettable. They help me in choosing the topic Standard operating procedures & financial planning analyzing its features and terminology. Standard operating procedures includes many process like I had done payroll process, intercompany journal, Pension process, monthly journal include accrual process, prepayment process & provision account ting. These are the procedures I had done in my summer internship. Financial planning is the devising of a program for the allocation and management of finances and capital through budgeting, investment, etc. When we plan the process of financing certain risks come to fore because of different situations whether it is a loss in investment or a situation of more debt. So we have to manage all those risks which are incurred in the business transactions. This report not only contains the workings in project topic but also the 1 month of my basic learning in finance at Steria India. These learning help me to analysing the report and produce a better frame work for them. I checked some bills, form no 16, some entries in Oracle. I also prepare many notes over there apart from my project like US GAAP & UK GAAP & taxation part also. Then I did some entries in ORACLE and find that the security system of Steria is very powerful. I learn about Steria functioning for their client. After that I feel reputation is an important factor for Steria. In the second month choose this topic financial planning in which I had analysed the 5 years profit & loss Account, balance sheet & Cash flow statement. After analysing the financial statements, we determine the current position of the Company Steria. I also had analysed the various solvency ratios, activity ratios, profitability ratios & some leverage ratios of 5 years. This is all about the overview of my project in Steria.

5|Page

Standard Operating Procedures And Financial Planning

Introduction
Steria is an outsourcing and technology company that helps its clients to do more. Committed to delivering guaranteed business outcomes through a combination of technology and process expertise, Steria gives its clients the freedom to do more with their business. Strong relationships, commercial innovation and an integrated Indian delivery capability ensure that Steria drives real and long-term cost reductions, performance improvements and new ways of working tailored to each client. In this project, I had done the standard operating procedures particularly followed in this company in which I had done pension process, monthly journals, and corporate taxation. In this I also had done financial planning of my project under I had analysed the financial statement for the past 5 years & to show the current position of the firm In Standard operating procedures, these are the abbreviation of company used in this project. XU : Steria UK Limited NE : NHS SES (Steria employee services) NB: NHS SBS (Steria business services) SR: Steria recruitment XH : Steria holding

Objective of the Report

To analyze the Standard operating procedures & financial planning and to contribute in making it more effective so that company can grow. Also use various tools in analyzing the financial plan and the various standard operating techniques adopted by Steria for better functioning to achieve maximum growth.

6|Page

Standard Operating Procedures And Financial Planning

STERIA INDIA LTD.

Steria founded in 1969 has offices in Europe, India, and North Africa & South East Asia. In 2011, they had revenue of 1.75 billion, 21% of the Steria capital owned by its employees. There headquarter in Paris, it is also listed in Euro next Paris market. Steria delivers IT enabled services to public & private sectors so that they can operate more efficiently & profitably. Steria gives its clients the freedom to do more with their business. Strong relationships, commercial innovation and an integrated Indian delivery capability ensure that Steria drives real and long-term cost reductions, performance improvements and new ways of working tailored to each client. They also focus on their diversified market sectors like finance, public services, telecommunications & transport etc. The company also in business process outsourcing & also provides consulting services for its clients business & also operates there information system. There are around 20000 employees working across 16 countries supports the system, services & processes.

Steria locations in UK: Birmingham, Bedford, Edinburgh, Holborn (London), Leeds,

Northampton, Reading, Manchester.

Steria locations in India : Chennai, Noida, Pune KEY FACTS:

Founded in 1969 Current General manager Steria UK Francois Enaud, Steria India Ltd CEO Mukesh Aghi Over 20000 employees in the organisation in which India & UK have 9860 Revenue 1.75 billion Listed in London Stock Exchange code XAN & Euro next Paris market

o SERVICES:
Steria portfolio of services has been developed with one objective - to give our clients the space to develop their offerings for their customers. Steria has the depth, breadth and availability of expert resource, both on and offshore, that supports our clients' strategies in their changing markets worldwide. Steria solutions are built on the sector, business and technology understanding we have developed through strong, long-term client relationships.
7|Page

Standard Operating Procedures And Financial Planning

o Business and Technology Consulting: Steria works with clients to define

strategies that address key business and technology challenges. We are designing and implementing transformation programmes that ensure clients can focus on their customers and business development. As it requires a cohesive team effort, a range of skills, and most of all, and the experience of having done it before. Working in partnership with client teams, Steria brings expertise in:

Business and IT programme management Business performance improvement Organization and people change issues IT architecture Sourcing, procurement and services management

o IT Services: As a market leader in end-to-end application services with over 40 years

experience, Steria enables clients to realize the full value of their IT systems. We design, build, implement, integrate and manage both tactical and strategic solutions. In partnership with the world's leading technology providers, we are implementing some of the most complex ERP systems in the world. In both the public and private sector, Steria is helping clients to integrate global systems, revolutionize supply chains and harness technology to introduce new services and channels to market. o

IT Outsourcing:

Outsourcing IT processes to Steria provides a mechanism for

implementing strategic change whilst future-proofing and maximizing return on investment from current IT systems. Our integrated on and off-shore delivery capability guarantees a low-cost path to continuous service improvements. This is supported by a full spectrum of venturing and partnership models designed to enable effective sharing of risk and reward in an open and highly commercial culture.

o On and off shore delivery: With a presence in India dating back to the 1980s,
Steria was one of the first UK outsourcing and technology companies to bring UK clients the benefits of a full portfolio of integrated onshore and offshore solutions. This heritage gives us a unique combination of local knowledge and cultural understanding enabling us to wholly integrate UK and Indian operations. We deliver the cost-effectiveness of
8|Page

Standard Operating Procedures And Financial Planning offshore, balanced with the comfort of onshore control and management rigor. Our clients across public and private sectors are enjoying the advantages of India - harnessing global sourcing as a highly effective means of accelerating their performance. Whether it is business process outsourcing, application management services, or business and technology consulting, we guarantee improved performance, long-term cost reductions and above all, the freedom for you to do more for your customers. o

Finance and Accounting Outsourcing:

Steria is the UK leader in the

delivery of world-class outsourced Finance and Accounting (F&A) and IT services. Our clients include BT, MyTravel and the NHS. Our Finance and Accounting services include: General Accounting, Treasury & Cash Management, and Order to Cash, Purchase to Pay, Employee Payment and other Industry specific processes. On top of this we offer Accounting and Business Support, Financial Planning Services and Reporting Services. This can all be backed up by Help Desk support, Finance Systems expertise and Shared Services Management capability. o

INDUSTRIES: BANKING --New approaches to the same challenges

The need to achieve operational excellence, the demand to improve shareholder returns, and the obligation to meet regulatory compliance has remained on top of the banking agenda for the past decade. Steria has unrivalled breadth of knowledge across all aspects of retail and Wholesale banking. Steria consultants took lead roles in the design and implementation of many key parts of the financial services infrastructure, such as Continuous Linked Settlement Bank and the Chip and Pin architecture for APACs.

INSURANCE--Guaranteed outcomes for industry challenges

The insurance industry continues to face the challenges of reducing costs and sustaining growth whilst responding to regulatory pressures and the increasing demands of the market. Helping our clients to meet these challenges, Steria has been delivering tailored IT and business process outsourcing solutions to many of the UK's leading insurance

9|Page

Standard Operating Procedures And Financial Planning organizations for over 20 years. Today, we are helping our insurance clients to focus on meeting the challenges of the market and growing their business by:

Implementing cost effective and timely responses to regulatory change Improving productivity and speed-to-market Delivering guaranteed results through commercial innovation, including outsourcing and joint ventures

PUBLIC SECTOR--Positive answers to hard questions

We help local and central government clients address the challenges of the transformation agenda, through the effective use of IT, and through new ways of working such as shared services for finance, accounting and HR.

RETAIL-- A passion for retail excellence

At Steria, we have shared risk and rewards with UK retailers large and small. We have applied retail-specific services, as well as ideas and intelligence from our work in other industries. Whatever Steria does, ultimately, is designed to improve its position in the market - against the competition, and with the consumer. We can make back-office and store processes more effective. We can improve the use of IT. The end game is to free up cash and resources for investment elsewhere, whether for the shareholders, the logistics team, or the store operations.

TELECOMS--Flexible partnerships deliver results

It's taxing everyone's minds in the telecoms sector, driving prices down, customer expectations up and creating churn. At Steria, we can help you address the obvious pressure that this places, not just on your margins, but on your processes, your time to market and your customers' satisfaction. Steria has improved efficiency and reduced operating costs by as much as 25 per cent, releasing resource and capital for new product development, marketing, customer services or network investment.

Competitive advantage through business process outsourcing:

Steria works in partnership with clients to drive substantial, long-term cost reductions and performance improvements through BPO. By optimizing business processes, controlling costs more effectively and helping clients make the most of technology innovations; we are enabling organizations to do more for their customers. Our BPO portfolio centres on
10 | P a g e

Standard Operating Procedures And Financial Planning finance and accounting, customer service, back-office processing and human resources. To deliver this, we combine both on- and off-shore delivery channels. This approach allows us to offer high quality, cost-effective solutions that deliver a rapid return on investment. Supporting each Steria BPO solution is a wealth of outsourcing expertise; we are approaching our 5th year delivering BPO services, we have been delivering results through India for 16 years and have over 40 years experience providing technology services. We focus on building highly effective business relationships. We construct and evolve partnerships to meet our clients' long term needs and tailor solutions for each client's unique requirements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

At Steria, we recognize that the Community is as important as our other stakeholders and we try to do our bit for the betterment of this community as part of our Corporate Social Responsibility initiatives. The objective for us is not merely charity, but to make the less Privileged, self sufficient to the extent possible, thus making them useful contributing members to society. What makes it really work at Steria is the fact that it is not just one person's vision, but a belief that is enthusiastically shared and supported by all of our employees across the world. The scope of our CSR initiatives is to empower the community in the areas of computer literacy and education, as well as to provide care and support to the less privileged, thus making them self reliant.

11 | P a g e

Standard Operating Procedures And Financial Planning

General Ledger Department

Chart of Accounts Intercompany Reconciliation Payroll Process Pension Process Fixed Asset Accounting

Monthly Journal
Cost Movement Accruals process Provision Accounting Prepayment Process Purchase Order Process

Accounts Payable Process

Bank Revaluation Balance Sheet Reconilliation Bank Reconcilliation Corporate Taxation (Income tax, Wealth tax & Deferred tax)

12 | P a g e

Standard Operating Procedures And Financial Planning

Standard Operating Procedures

1. Chart of Accounts:

o General accounting policy:

Every subsidiaries of Group Steria should prepare financial statements in compliance with the IFRS and the Group accounting policies. The financial statements of Group Steria SCA are prepared in accordance with International Financial Reporting Standards (IFRS) applicable, as adopted by the European Union and available for consultation

1.1 Presentation of the financial statements

The Group presents its financial statements in accordance with IAS 1, the IFRS conceptual framework of the French National Accounting Council relating to the format for company financial statements under the international accounting framework. Accordingly, the following principles have been adopted by the Group: The income statement is presented by nature of income and expense in order to best represent the Groups type of business activity. The Groups main financial performance indicator is its operating margin which is defined as the difference between revenue and expenses of current activities. Operating profit is determined by deducting from the operating margin other unusual & unpredictable operating income and expenses of a particularly significant amount which are presented separately in order to facilitate the understanding of performance relating to the Groups ordinary activities. They mainly comprise the estimated fair value of share-based payments, the impact of impairment tests of intangible assets with indefinite useful lives, restructuring expenses and other income and expenses such as profit or loss arising from post-employment benefit plan settlements or amendments, actuarial gains or losses recognised in connection with the recognition (corridor method) of such plans, etc. Net financial expense presents the Groups borrowing cost separately from other financial income and expenses. The balance sheet presents a breakdown of current and non-current assets and liabilities.

Group Chart of Accounts Design

The Chart of accounts of the Group is designed on the Chart of account mandatory in France, adapted in order to be compliant with IFRS standards. The Chart of Account Guidelines book describes how to use the group chart of accounts. The C.O.A., composed of 8 characters, is organised as a decimalised code with: Single-digit coding for classes 1-9 reserved for the highest level of classification (class)
13 | P a g e

Standard Operating Procedures And Financial Planning Two-digit codes for the first level of subdivision within singledigit classes (sub-class) Three-digit codes for the next level of subdivision within twodigit sub-class (account)

1.2 Group of accounts or Singledigit coding:

The Group chart of accounts considers five groups of accounts for the balance sheet, two groups of accounts for the profit and loss statement, one group of special accounts and one group for internal transactions in the same company.

Balance sheet: Class 1 Class 2 Class 3 Class 4 Class 5 Profit and Loss: Class 6 Class 7 Costs and Expenses Revenue Capital, Provisions and Loans Fixed Assets Inventory Receivables and Payables Financial

STERIA SPECIFICITIES: Class 8 Accounts used to manage the IFRS entries. These accounts are dedicated for very specific entries validated before by the Consolidation team. The class 8 should always be equal to zero. Internal accounts for costs transfer: costs & revenues between two departments of the same company. The class 9 should always be equal to zero.

Class 9

1.3

Sub-class or Two-digit and three-digit coding

Those are used to denote its function from a classification and data processing viewpoint.

Example of categories:
14 | P a g e

Standard Operating Procedures And Financial Planning 20 Intangible Assets 21 Tangible Assets 40 Suppliers 41 Customers 76 Financial revenue

The nature: Two-digit balance sheet accounts ending by 9 within classes 2-5 means a depreciation of assets and linked to operating accounts ending by 8 of class 6 or 7. (Balancing by an account 68x or 78x) Example: 291 Provision for depreciation of tangible assets ; 39xxxxx provision for loss in value of stocks ; 491 Provision for loss in value of customers

Two-digit balance sheet accounts ending by 8 in class 2 means amortization of fixed assets linked to operating accounts ending by 8 of class 6 or 7 (68 or 78). Example: 280 Depreciation of intangible assets 68 Provision for depreciation

The following numbers in the second or third position mean:

6 as Financial: o 16: Financial debts o 26: Financial assets o 296: provision for loss in value of financial assets o 66: Financial costs o 686: Financial depreciations and provisions 7 as Extraordinary: o 67: Extraordinary expenses o 687: Extraordinary depreciations and provisions 8 as Provision or depreciation: o 68: Depreciation and provision o 78: Write-off of depreciation and provision o 28: Depreciation of fixed assets

Three or more digit accounts ending by 9 (class 1-5), indicate balances of opposite sign. Example:
15 | P a g e

Standard Operating Procedures And Financial Planning

409 are used for suppliers in debit, whereas account 40 normally has a credit balance. 4098 credit note receivable outstanding has a debit balance whereas account 408 Suppliers Invoices outstanding normally has a credit balance. Each class of accounts below will be described in a specific

List of accounts:

detailed sheet of the COA book.

Balance sheet
Liabilities Class 1 Assets Class 2 Assets Class 3

Assets & liabilities Class 4 RECEIVABLES and PAYABLES (external & intercompany)

Assets & liabilities Class 5 FINANCIAL

CAPITAL

FIXED ASSETS

INVENTORY

10 Capital and Reserves 1 Capital 4 Premium on share 6 reserves

20 Intangible Asset

40 Suppliers 1 Suppliers 3 Bill of exchange 4 F.A. suppliers 8 Outstanding

50 Investments

9 Uncalled Capital 11 Profit or loss carried forward 0 Profit brought forward 9 Loss brought forward 21 Tangible Asset

9 Suppliers in debit 41 Customers 1 Customers institutions 3 Bill of exchange 6 Doubtful customers 8 Unbilled services 9 customers in credit 51 Bank and similar

16 | P a g e

Standard Operating Procedures And Financial Planning

12 Profit or loss for the Year 0 Profit 9 Loss 42 Employees 1 Remuneration payable 5 Advance, payment on account 7 Blocked accounts 8 Accrued amounts payable & receivable 43 Social security and other social agencies 1 Social security 7 Other social agencies 8 Accrued amounts payable and receivable 14 Tax regulated provision 34 Work in progress 44 Government and other public authorities 4 Income Tax 5 Vat 4455 payable 4456 deductible - 4457 collected - 4458 to be adjusted 7 withholding tax 15 Provision for liabilities and charges 1 Reserves for risk / dispute 3 Reserves for pensions 45 Current accounts due to or from group companies and shareholders 1 Group 7 Dividends payables 52 Treasury instruments

13 Investment grants 23 Fixed Assets in progress

53 Cash in hand

17 | P a g e

Standard Operating Procedures And Financial Planning

4 provision for restructuring 5 Provision for taxation 8 Other provision for charges 58 Interest to be paid

16 Loans and similar debts 8 accrued interests on loans

26 Investments and loans to group companies 1 Not consolidated Share 2 Consolidated share 27 Other Financial assets 4 Loans 5 Guarantee deposits 28 Depreciation of Fixed Assets 0 Depreciation of intangible FA 1 Depreciation of tangible FA 29 Provision for loss in value of assets 0 Intangible FA 1 Tangible FA 6 Financial assets 7 Other Financial assets

46 Sundry Debtors/Creditors

37 Goods for resale 1 Hardware 2 spare parts

47 Suspense Accounts 1 Suspense account

17 Debts and loans group and associated companies

48 PREPAYMENTS AND DEFERRED INCOME 6 Prepayment charges 7 Forward billing 8 Deferred amount 39 Provision for decrease in value of stocks 71 hardware 72 spare parts 49 Provision for doubtful debt 1 customers 5 ShareholdersCurrent account 6 Debtors 59 Bank overdraft

P&L Class 6 Class 7

18 | P a g e

Standard Operating Procedures And Financial Planning

EXPENSES

REVENUE

60 Purchase (Except 6037) 37 Variation of inventory 4 Services (subcontracting on project) 5 Machinery, equipment and work done 6 Supplies not for stock 7 Goods for resale 9 Rebates and allowances on purchase

70 Sales 6 Services 7 Goods 8 Others revenues 9 Discount on sales

61 External charges for services 1 General subcontract work 2 Hire purchase and leasing charges 3 Hire and rental charges 4 Accommodation charges 5 Repairs and maintenance 6 Insurance Premiums 7 Research expenses 8 Sundry 9 Rebates and allowances on external charges 62 Others external charges for services 1 Temporary staff 2 Remuneration of intermediaries and professional fees 3 Advertising, publication and public relations 4 Transport of goods and employees transportation

19 | P a g e

Standard Operating Procedures And Financial Planning

5 Travel and entertaining 6 post and telecommunication 7 Bank services 8 Sundry

63 Taxes and Similar levies 1 Based on payroll due to tax authorities 3 Based on payroll due to other authorities 5Other taxes due to tax authorities 7Other taxes due to other authorities

64 Personnel expenses 1 Staff wages and salaries 5 Social security contributions 7 Other social charges 8 Other personnel expenses

74 Operating grant

65 Other operating expenses 1 Royalties 3 Directors fees 4 Irrecoverable debt 8 Miscellaneous operating expenses

75 Other Operating Income 1 Royalties 2 Income from property not used in operations 5 Share of profits from joint venture 8 Miscellaneous operating income

66 Financial Expenses 1 Interest payable 4 Losses on amounts due from group Cie 5 Discounts allowed

76 Financial Income 1 Participating Interests 2 Other Financial FA 3 Other debtors

20 | P a g e

Standard Operating Procedures And Financial Planning

6 Realised losses on exchange 7 Net loss on disposal of securities 8 Other Financial expenses 4 Investments Security 5 Discounts Received 6 Realised profit on exchange 7 Net profit on disposal of securities 8 Other financial Income

67 Exceptional expenses 1 Exceptional & Extraordinary Expenses 5 Net book value of assets 8 Other exceptional & extraordinary expenses

77 Exceptional Income 1 Extraordinary operating profit 5 Proceeds from sale of assets 7Share of investment grants brought to account to the financial year 8 Other exceptional & extraordinary Income

68 Depreciation & provision 1 Operating 6 Financial 7 Exceptional 69 Employee profit sharing and Income tax

78 Write-back of depreciation & provision 1 Operating 6 Financial 7 Exceptional 79 Transfer of charges 1 Operating 6 Financial 7 Exceptional

Analytical repartition of the balance sheet

Structure of most of the Steria companies: o Conventional departments: It does not have employee costs and records charges to reallocate the whole or part to the departments according to repartition keys. Finance: Only one by subsidiary, for e.g all the financial costs, loans with other subsidiaries of the Steria Group.

21 | P a g e

Standard Operating Procedures And Financial Planning Fixed Asset (or Holding): Only one by subsidiary. Used for fixed assets excepted for financial fixed assets for e.g acquisition, accounting depreciation (local and group), re-billing of internal depreciation of fixed assets. Transfer cost (or Siege): Only one by subsidiary for e.g common revenues and costs that could not be booked on other conventional department and that will be re-billed to other department of the company. This department does not manage any contract, only cost recovery. Localisation: Number depends on companys needs for e.g all the transactions concerning sites as rent of building Stock: Department specially dedicated to all stock transaction.

o Staff departments: It groups dedicated team or staff to one or several functions but does not manage any contract. (External or Internal projects) Examples: finance, marketing, MIS department o Operating departments: Whole or part of a profit centre benefits from a permanent headcount and manages external and internal contracts directly affected to it. o Mutualised department: platform which mutualised resources (machines, people) for several customers in order to saved costs. These departments manage only internal contracts for re-invoicing exploitation departments. o Non-Current Department: All charges booked in this department must be approved by HQ, like : Non-current restructuring. Change differences on current accounts. Disposal of financial Assets.
ACCOUNTING
GROUP

OPERATIONAL

AREA UNIT

COMPANY

SUPER SECTOR UNIT SECTOR UNIT

PROFIT CENTER

DEPARTMENT

PROJECT 1

PROJECT 2

PROJECT 3

Flexible Key

22 | P a g e

Standard Operating Procedures And Financial Planning

2. Intercompany Reconciliation:
All different accounting teams, namely AP team, GL team etc. book all the expenses and revenue to below mentioned GL control account and at each month, these expenses and revenues are transferred to the concerned company by raising invoices. 1. 2. 3. 4. 5. 6. 42100000 ( Staff Remuneration Payable) 42581009 (Godfrey Davis lease cars control Account) 42581010 (Mobile Phones Control Account) 42581012 (Company Credit Card Control Account) 42581014 ( Arval Fuel Control account) 42581013 ( Expenses Control Account)

Following are the instances where entries are passed using these accounts: a) Payroll cost of BA, XH, SR, NB paid by XU. b) Fuel charges, mobile expenses, Car lease, Company Credit card etc of BA / NB / NE/ SR paid by XU. c) Vendor payments made by XU against consolidated invoices raised on XU which contain expenses of other companies as well. 1. 42100000 (Staff Remuneration Payable) This is an Inter-company Payroll Account; it is used as payroll cost of other entities like SR, XH, NE and BA are paid by XU on their behalf. For Exp. : Payroll Cost of BA paid by XU:Accounting treatment:

XU
Book The Invoice XXXXXXX

BA
Salary A/c Debit To 42100000

Payment of Expenses 42100000 Debit To Payroll Control A/c Billing Through ACCOUNT RECEIVABLE SO_BA a/c Debit To 42100000 XXXXXXX

ACCOUNT PAYABLE

42100000 Debit To SO_XU

Same procedure will be followed while raising payroll invoices on SR, XH and NB. Here also, the following points have to be kept in mind: a) No VAT will be charged while raising the invoices b) Amount charged by invoices will be net off PHI and SMP Credits.
23 | P a g e

Standard Operating Procedures And Financial Planning 2. 42581009 (Godfrey Davis Lease Car Control Account) Every month AP received the consolidated invoice from Godfrey Davis for the cost of vehicle used by UK Steria employees. When AP makes the payment to the vendor they pass following entry in the books of XU. Step1:- Initially at the time of payment, the following entries are passed by the AP Team Books of XU: 425810009 Debit To Vendor Then GL book the cost to their respective department on the basis on employees detail and pass the journal entry. If expenses belong to other entity like NE then XU will raise the intercompany invoice and post following entry before raising intercompany invoice in other books. For example: In Case of NE and XU: Books of NE: Expense A/c Debit To 425810009

Step 2:- At the time of raising the invoices, the following entries will be passed in the respective set of books Books of XU: Entry will be done by the AR Team in Mondeo. SO_NE a/c Debit To 42581009

Books of NE: -

Entry will be done by AP team once invoice will be raised by XU. 42581009 A/c To SO_XU Debit

3.

42581012 ( Company Credit Card Control Account)

For Inter company prospective we have two types of Barclay Cards:1. Centrally paid Non Purchasing Card 2. Centrally paid Purchasing card Transactions are booked via STEM or by uploading in AP module. If the expenses are incurred for entity other than the entity which paid the monthly bill to the Barclays, then it will require an inter-co invoice to be raised. 4. 42581010 and 42581014 (Fuel & Mobile Phone Control Account) Mobile: Every month AP received the consolidated invoice from vendor (O2 UK Limited) for the cost of Mobile phones and Blackberry used by UK Steria employees. When AP makes the payment to the vendor they used 42581010 accounts.

24 | P a g e

Standard Operating Procedures And Financial Planning FUEL: Steria has provided Arval Fuel Cards to employees in UK and on weekly basis GL team received fuel details from Arval PHH Business Solutions Ltd through e-mail. While booking mobile and fuel cost in oracle the actual usage charges excluding VAT will be taken care by debiting expense account with department code and crediting above control accounts. If the expenses belongs to other entities, Intercompany invoice will be raised on other business units from XU. This action is being taking place on or before the end of the month. The basic reason to raise the invoices in respect of the above, is to book the expenses in the entity to which they belong and thus to represent fair picture of the profit and losses of any entity. For accounting treatment 42581009 (Godfrey Davis) procedure will follow. 4.1 42581013 (Expenses Control Account - AP) VENDOR PAYMENTS MADE BY XU AGAINST CONSOLIDATED INVOICES RAISED ON IT 1) Company Code 2) VAT Charged on the original invoice While raising the intercompany invoices on different entities, we must consider the fact whether VAT has been charged by the vendor on the original invoice or not and in case, no vat is charged on the original invoice, intercompany invoice will be raised without charging the VAT. Reason behind this is very simple and straight: When we raise intercompany invoice on any of the entity, it is simply a reimbursement of expenses being paid by XU on behalf of any other entity and no value has been added to the services or we can say that no value added services are provided by XU to the entity on which invoice is being raised. So, there is no question of charging VAT if VAT is not charged in the original invoice. Accounting Treatment: Step 1: At the time of booking the invoice Books of XU: 42581013 A/c Debit To Vendor A/c

Step 2: At the time of making the payment to the vendor by AP team: Books of XU: Vendor A/c Debit To Bank Account

Step 3: At the time of raising intercompany invoice Books of XU: SO_BA/SO_NE/SO_XH/SO_NB To 42581013 A/c Debit

25 | P a g e

Standard Operating Procedures And Financial Planning Step 4: Once invoice is raised and forwarded to the concerned entity: Books of Second Entity: 42581013 A/c To SO_XU Debit

While forwarding the inter company invoice to the concerned entity, details originally provided by the AP team are to be forwarded to the concerned second entity as a supporting document for booking the expenses through Journal in their books of accounts. GL team booked Expense in second entity: Expense A/c. T0 42581013 A/c Debit

3. Payroll Process:
Note 1: Payroll Cost of UK Employees refers the payroll cost of XU, SR and NB. 1) Pay UK It contains various components of current month salary that is to say Segregation of Payroll Cost like Basic Pay, Various Bonuses, Various types of Commission, Different types of Overtime Cost, Redundancy Payment, Holiday pay, PHI ,SMP and Employer Contribution to Pension and National Insurance etc.( There are around 110 types of cost which generally comes in this tab.) Please note: - This file is used for the purpose of booking payroll cost in Profit and Loss Account. 2) Ded UK It contains various deductions from the salary that is to say Net Pay, PAYE, Employee Contribution to NI, Employee Contribution to Pension, Deduction against Advances, deductions against Student Loan etc. ( There are around 85 types to deductions which generally comes in this tab). Please note: - This file is used for the purpose of booking payroll in Balance Sheet Control Account. 3) Cost UK It contains only Summary of Payroll Cost that is to say Gross Pay, Employer Contribution to NI and Pension, only 3 Columns are there (All types of cost mentioned in Pay UK are clubbed in Gross Pay). Note 2:- Gross Total of each tab should match with gross total of other two tabs. Take the case of UK employees if Pay UK has total gross cost of 15,482,412.40 then exactly same cost should appear in Pay UK and Ded UK, if there appear difference then Payroll team should be immediately informed about the difference. Please note: - For the purpose of posting payroll in General Ledger, we basically use only Pay and Ded tab. Following are the costs that have to be clubbed in Pay tab.

26 | P a g e

Standard Operating Procedures And Financial Planning

Types of Cost
All types of Bonus Cost All types of Commission All types of Overtime Cost All types of Redundancies Cost All types of Share based payment Other than above cost (including Basic pay)

Oracle code
64132000 64132400 64121000 64142000 42570010 64110000

Note 3:- Payroll cost reported by each tab of payroll file do not have to be altered, whatever cost reported has to be processed as it is, but following are the some exceptions which have to be done in the payroll file. (It is to be noted that whatever changes we do, should be done in Pay tab & Ded tab so that there should not come any difference in Pay tab & Ded tab of the file in any point of time). (a) Pension Payroll file does not report Pension Cost, it is reported by Bluefin hence Pension Cost has to be separately added up in the Payroll file. (All types of Pensions reported by Bluefin like Steria Retirement Plan (SRP), Federated Pension Plan(FPP), and GPP Plan like Scottish Widows are populated in payroll file). This exercise is done so as to have combined file for Payroll & Pension. (b) LOC (Labour on Cost) -- 3.50% of basic pay is separately added up in each tab. (c) PHI (Personal Health Insurance) PHI Cost is included in Pay tab, we fetch it out from Pay tab and update the same with negative values in separate column in Pay and Ded tabs .The purpose of negative value is we debit the value of PHI from Long Term Sick Control Account (Balance Sheet) and credit Salary Cost (P& L A/c). In nut shell, firstly we book PHI as salary cost and then we credit it by debiting Long Term Sick Control Account, we set off PHI expense against credit received from insurance company and this credit is placed in Long Term Sick Control Account. (d) 92% of SMP (Smart Medical Plan) SMP Cost is included in Pay tab; we fetch it out from Pay tab and update the same with negative values in separate column in Pay and Ded tabs. The purpose of negative value is we debit value of 92% SMP from NI Control Account (Balance Sheet) and credit Salary Cost (P& L A/c). In nut shell, firstly we book SMP as salary cost and then we reverse 92% of SMP by debiting NI Control Account and crediting salary account. In nut shell we reduce NI liability by 92% of SMP value. Preparation of Master GL file This file is prepared for the purpose of making Department-wise GL Accounting journals which have to upload in to the Oracle system by 1st of next month. Following are the steps which are followed in preparation of Master GL file
27 | P a g e

Standard Operating Procedures And Financial Planning Step 1 Using Pay tab & Ded tab of Payroll file for preparing master GL file. (Pay Tab will used for booking Payroll Cost in P&L and Ded Tab will used for Balance Sheet Purpose) Step 2 Prepare Pivot table / Summary of Pay tab (Company wise to Department wise to Salary Components wise to payroll cost), format is attached below. Company Code SO_XU Cost Code DPB455 Data Sum of PHI Value this time (Minus) Total -12121.27

SO_XU SO_XU SO_XU

DPB840 DPA555 DPA675

Sum of 92% of SMP Value this time (MINUS) -5086.32 Sum of Total DC Pension Sum of Basic Pay Value this time 39604.01 42491.53

Step 3 Prepare Pivot table / Summary of Combined Ded tab (Company wise to Department wise to Salary Deductions wise to payroll cost), format is attached below. Cost Company Code Code

Data

Total

SO_XU SO_XU SO_XU

DPA553 DPA553 DPA553

Sum of Net pay (Including Tax Credit & Rounding) 640457.97 Sum of Tax paid in this period Sum of Total DC Pension 232853.93 148329.86

Step 4.Make sure total cost of a particular department code of a particular company in the Pay pivot table prepared above is matching with total cost of same department code of a same company in the Ded cost table prepared above. This is achieved by making again pivot table of each pivot table made above but this time Company wise to Department wise to payroll cost. Step 5 Add up pivot tables of Pay and Ded tab prepared above so as to have combined pivot table taking figures of the Ded tab on a separate Column (Credit Column). This file is called Master GL file and we have to make following addition / changes in the file so as to get it as per prescribed format. 1) Currency 2) Last Date of Month
28 | P a g e

Standard Operating Procedures And Financial Planning 3) OFA Codes of each component of Salary and deduction from Salary. ( Make sure right code is being used for right cost) 4) Negative Values not to be shown in this prescribed format instead they are shown on debit side if negative value come in credit column or vice versa. Preparation of Intercompany Payroll Journal XU firstly pays whole of the payroll and pension cost of all other companies i.e. SR & NB. So other entity has to transfer his liability to XU which has been created through payroll journal. After successfully uploading of payroll journals in all three entities, we have to pass the intercompany payroll journal. In the book of XU Intercompany payroll journal is created through crediting the payroll liability of other two entities and Debiting the payroll control account COA 42100000 with respective flex field so that we can raise a separate Intercompany Payroll invoices to other entities. COA Cost Code Destination Debit 0 0 0 0 0 0 0 0 0 0 0 GL-CSR1 GL-CNB1 152586.56 2344560.22 Credit 45031.53 59785.6 62196.37 217352.96 1.04 675.58 678.88 2555.81 3119.7 3798.26 17412.65

43710100 GL-B344 43100000 GL-A710 44700001 GL-B344 42100000 GL-A711 44570000 GL-A629 43713100 GL-B420 43780000 GL-B191 43100000 GL-A634 43713100 GL-A629 44700001 GL-A629 42100000 GL-A634 42100000 GL-CXU1 42100000 GL-CXU1

29 | P a g e

Standard Operating Procedures And Financial Planning In other entity (SR & NB) Intercompany payroll journal is created through debiting the payroll liability and crediting the payroll control account COA 42100000 with flex field so that we can book the Intercompany Payroll invoice raised by XU. COA Cost Code Destination Debit 0 0 0 0 0 GL-CXU1 9274.95 11529.52 11560.4 16596.34 17412.65 152586.56 Credit

42100000 GL-B420 42100000 GL-B534 42100000 GL-A633 42100000 GL-B191 42100000 GL-A634 42100000 GL-CSR1

COA

Cost Code

Destination Debit 0 0 0 0 GL-CXU1 213383.9 213579.1 214760.6 217353

Credit

42100000 GL-A712 42100000 GL-A710 42100000 GL-A710 42100000 GL-A711 42100000 GL-CNB1

2344560.22

Preparation of Master Bears file This file is prepared for the purpose of preparing employee-wise cost which have to be uploaded in to Bears System. This file is prepared through the help of Pay Tab prepared at Step 1 above, this is basically the employee-wise pivot table which contains all cost related to employees. Please notes the following things 1) There is different coding for companies which used for this file are as follows: Company Codes SO_XU SO_SR SO_NB Company Codes 001 003 007 Company Codes PA1 PA3 PA7

30 | P a g e

Standard Operating Procedures And Financial Planning 2) Employees codes have to be in 6 digits, if any employee has employee code which is of less than 6 digits then make it of 6 digits by putting 0 as prefix. 3) Negative figures have to be shown as positive ones but we have to show sign in respect negative value in the next column named as Blank Col. Blank Col. Payroll Emp. Company I.D. PA4 PA4 PA4 PA4 First Name SJ MH EG JM

Account

Total

Surname

64110000 2,573.88 64110000 1,233.78 64110000 459.56 64121000 77.64

602795 LAMBERT 602884 RICHARDS 602928 COOPER 602916 O'SULLIVAN

Payroll Accounting Process: XU firstly pays whole of the payroll and pension cost of all other companies i.e. SR & NB and then raises AR invoices to them for the recovery of payroll & pension cost paid on their behalf. In XU Book Salary Journal at GL Level Debit Credit Payroll & Pension Cost Accounts Profit and Loss Accounts Only XU Cost Payroll and Pension Control Account - Balance Sheet Codes Only XU Cost

Payment Journals done by Steria Cashier Debit Credit Payroll and Pension Control Account - Balance Sheet Codes Cost of all Companies Bank Account Cost of all Companies

Inter-company Journal at GL Level Debit Debit Credit Intercompany Control Account i.e. 42100000.GL-CXU1.GL-CNB1 For NB Intercompany Control Account i.e. 42100000.GL-CXU1.GL-CSR1 For SR Payroll and Pension Control
31 | P a g e

Standard Operating Procedures And Financial Planning Account - Balance Sheet Codes

Invoice Raising at GL Level Debit Debit Credit NB Account SR Account Intercompany Control Account i.e. 42100000 X X X

Receiving payment of payroll invoices raised Debit Credit Credit Bank Account NB Account SR Account X X X

In Other Companies Book (SR & NB) Salary Journal at GL Level Debit Credit Payroll & Pension Cost Accounts - Only Profit and Loss Accounts Cost Payroll and Pension Control Only Account - Balance Sheet Codes Cost respective respective Company Company

Inter-company Journal at GL Level (NB) Debit Credit Payroll and Pension Control Account -Balance Sheet Codes X Inter-company Control Account i.e. 42100000.GL-CNB1.Gl-CXU1 X

Inter-company Journal at GL Level (SR) Debit Credit Payroll and Pension Control Account -Balance Sheet Codes X Inter-company Control Account i.e. 42100000.GL-CSR1.GL-CXU1 X

32 | P a g e

Standard Operating Procedures And Financial Planning

Payroll Invoice at GL Level Debit Credit Inter-company Control Account i.e. 42100000 X XU Account X

Payment Payroll Invoice- done by Steria Cashier Debit Credit XU Account Bank Account X X

4. Pension Process:
This is the Pension process of UK employees. A) Steria GPP contribution schedule B) Steria FPP DB Report C) Steria SRP DB Report Following adjustment are made in above files: 1) In Steria FPP DB report, we have to calculate the employer contribution by using the employee contribution, employee percentage & Total percentage. Formula for calculating the Employer contribution: Employer contribution = Total contribution Employee contribution. Total contribution = Employee contribution x Total percentage Employee percentage 2) In Steria SRP DB report, we have to calculate the employer contribution by using the Employee contribution, Employee percentage & Employer percentage. Formula for calculating the Employer contribution: Employer contribution = Employee contribution x Employer percentage Employee percentage

3) In Steria GPP contribution schedule, Updation of Employer and Employee contribution under different schemes reported through payroll. 4) In all above file, Updation of Additional Variable Contribution (AVC) coming through Payroll.

33 | P a g e

Standard Operating Procedures And Financial Planning Two tabs that would be made in a excel sheet; a) AVCXUK which contains Employee ID & Name with amount of contribution deducted from their Salary for that particular month and this contribution have to be updated in the GPP contribution, FPP contribution, Cleveland Police contribution & Prudential AVC contribution file. b) PENXUK It contains employer and employee contribution towards various pension schemes Pension Payment a) GPP Contribution Scheme: Bluefin provide us figures like how much amount is required to be paid to Scottish Widows Plc along with the amount of deductions on account of Employee and Employer made by payroll team, if any. Federated Pension Plan (FPP): Bluefin provide us figures like how much amount is required to be paid to Federated Pension Plan in respect of NHS Employees along with the amount of AVC deducted by Payroll team, if any. Steria Recruitment Plan (SRP): Bluefin provide us figures like how much amount is required to be paid to Steria recruitment Plan along with the amount of AVC deducted by Payroll team, if any. Hertfordshire Local Govt. Pension Fund: Pension and AVC file given by Payroll provide us figure like how much amount as employer and employee contribution to be paid to Hertfordshire Local Govt. Pension Fund. Cleveland Police Contribution: Pension and AVC file given by Payroll provide us figure like how much amount as employer and employee contribution to be paid to Teesside Pension Fund. Prudential AVC: Pension and AVC file given by Payroll provide us figure like how much amount as employer and employee contribution to be paid to Prudential AVC department. Deficit Removal Payments: Jon Taylor has provided us with one spread sheet which contains how much amount has to be paid each month pertaining to deficit removal under following pension schemes: A. B. C. D. E. Steria Management Plan (SMP) Steria Retirement Plan (SRP) Steria Electricity Supply Pension Scheme (SESPS) Steria Pension Plan (SPP) Federated Pension Plan (FPP)

b)

c)

d)

e)

f)

g)

34 | P a g e

Standard Operating Procedures And Financial Planning Particulars For GPP Contribution For Steria Management Plan (SMP) For Steria Retirement Plan (SRP) Name of the payee Scottish Widows Plc BCC Steria Management Plan TST Ltd. BCC Steria Retirement Plan TST Ltd. Oracle code to be debited 43713100.GL-CXU1.0 43710000.GL-CXU1.0

43710000.GL-CXU1.0 (Deficit Funding) 43711100.GL-CXU1.0 (Normal Contribution) For Steria Electricity Supply Pension Bluefin Corporate Consulting 43710000.GL-CXU1.0 Scheme (SESPS) Ltd. Steria Electricity Supply Pension Trustee Ltd. BCC Steria Pension Plan 43710100.GL-CXU1.0 For Steria Pension Plan (SPP) Client Account For Federated Pension Plan (FPP) The Federated Pension Plan 43710100.GL-CXU1.0 For Hertfordshire Local Government Hertfordshire County 43713100.GL-CXU1.0 Pension scheme (Hertfordshire LGPS) Council Pension Teesside Pension Fund 43713100.GL-CXU1.0 For Cleveland Police PACCORPPMS6000 43713100.GL-CXU1.0 For Prudential AVC

5. Bank Reconciliation Statement:

In the bank reconciliation statement, it was actually same as in the bank like there are two sets of balance need to make or to make a check like balance as per bank book & pass book. Also there should be a difference between the two that should taken under a view that it should be like Cheque issued but not cleared Cheque deposited but not cleared Errors of omission ( double booked, double payment) Like bank charges would be deducted as per pass book Interest paid by bank treated as added in pass book Amount recorded in the bank book but not recorded in Oracle path. In all these processing of BRS, there would be certain time utilised like in firstly depositing the certain amount in one part, then processing, then clear/deposit to final settlement. So these should also create discrepancies in both the balances in cash as per pass book & bank book.

6. Fixed Asset Accounting:

added to FAR by FA team.

In India the fixed assets entry is entered by AP team & is

35 | P a g e

Standard Operating Procedures And Financial Planning

FA number issued by AP team on receipt information provided by procurement team against Approved PO AP team to process invoice submitted by procurement & debit Asset GL , photcopy send to FA team FA team to validate ledger booking & suggest corrections if required

Depreciation run once a month on ABEL & interfaced to oracle

Disposals/transfers done based on approved request or against policy

After validations asset is created on ABEL(FAR) against specified asset number

GL vs ABEL recociliation & pass correction entries if required

Fixed Asset Accounting process in Steria India Ltd.

In India, Individual assets costing Rs. 5000 or more are fully depreciated in the year of purchase. In U.K, Individual assets costing GBP 500 or more are fully depreciated in the year of purchase Computer softwares are in the nature of software licenses & are amortised over the lower of license period or three years. Increase in the value on revaluation shall be credited to revaluation reserve while the decrease should be charged to profit & loss account. Profit/loss on disposal should be charged to profit & loss account.

Assets Class, Ledger Codes for Depreciation Booking & Its Rates
Asset Classification Ledger Code 20510000 21830000 Steria India Rates (%) 33.33/perio d 25% P&L Accounts 68111510 68112830 Balance Sheet Accounts 28051000 28183000 Description

Software Hardware/computers

Dep. of Softwares Dep. of Computing Equipments Dep. of Lease Land Dep. of Building Dep. of Sundry General Dep. of Lease
36 | P a g e

Land Building Electrical Installations Lease hold

21100001 21300000 21350000 21350001 20% 3% period

68112100 68112300 68112810 68112813

29200000 28130000 28181000 28135001

Standard Operating Procedures And Financial Planning Improvement Plant & machinery Furniture & fixture White goods Vehicle Office equipment Hold Improvement Dep. of Plant & Machinery Dep. of Furniture & Fixtures Dep. of White Goods Dep. of Transport Equipment Dep. of Office equipment

21540000 21810000 21811000 21820000 21840000

25% 10% 20% 25% 20%

68112854 68112840 68112811 68112820 68112840

28154000 28120000 28181100 28182000 28184000

Accounting entries:
I. Additions: 21830000. GL-A959.0 Vendor/Bank.GL-CSI1A II. Transfer: 21830000. GL-A961.0 21830000. GL-A959.0 Dr. Cr. XXXX XXXX Dr. Cr. XXXX XXXX

A similar entry of transfer of depreciation reserve needs to be passed manually III. Disposal without value: 28183000. GL-A959.0 21830000. GL-A959.0 IV. Disposal with value: Bank /Vendor. GL-CSI1A.0 Dr. XXXX 28183000. GL-A959.0 Dr. XXXX 21830000. GL-A959.0 Cr. XXXX 67520000/77520000.GL-A959.0 Dr./Cr. XXXX (Balancing factor) V. Depreciation booking: 68112830. GL-A959.0 28183000. GL-A959.0 Dr. Cr. XXXX XXXX Dr. Cr. XXXX XXXX

Recording Assets on ABEL to add to FAR (Fixed Asset Register):

ABEL is software on a remote desktop in France and is used to capture FAR. After the accounting entries in asset GL are identified, they are captured on ABEL. Mandatory fields while capturing assets details on ABEL are: Description of Asset, Asset class/family, Acquisition date, GL posting date, Number of asset (1 always), Net purchase value, Operational department, Conventional department, Super sector, Site.
37 | P a g e

Standard Operating Procedures And Financial Planning All the transfers & disposals in the month have to be effected before the depreciation run in the month. Any disposal or transfer after depreciation run would require re-run of depreciation in the month to account for the incremental effect. Actual periodic calculation is run only in a month After depreciation run on ABEL the interface with OFA has to be initiated immediately. ABEL created an export file for depreciation booking which is interfaced to Oracle. Only GL accountant role & GL local administrators have the right to interface the entries.

7. Monthly Journal Entry Rules: The following rules are too used to made accurate
entry of journals in OFA. a. Revenue: Revenue must be created in PA (Project Accounting) not GL (General ledger); therefore any general entry will be reversed in the following month & should be corrected in PA. b. Internal cost / Internal revenue: Internal transactions are entered on accounts beginning with 9, it is essential that across the company internal costs are equal to internal revenue, therefore a debit entry to 9 account must be balanced with a credit entry to a 9 account & vice versa. c. Costs: A journal on 6xxxxxx.project.0 will affect gross margin, whereas a journal on 6xxxxxx.GL-xx.0 or 6xxxxxx.AA.0 will affect operating cost. d. Provisions: Movements in the balance sheet provision accounts (15xxxxxx) be matched by an equal & opposite movement in a provision movement account (68xxxxxx for increase, 78xxxxxxx for decreases). The loss on completion provision account (15160000) is calculated in PA based on project costs & project budget information. Any adjustments to this account must be reversing with correction made to PA data of the following month. e. WIP (Work In Progress): As with the provisions, movements in the balance sheet WIP accounts (345xxxxx) must be matched by an equal & opposite P& L movement in a WIP movement account (713xxxxx). f. General: Please separate out reversing & non reversing entries when providing journals. For any Fixed asset/ Depreciation adjustments, please discuss with the fixed asset manager. For any payroll adjustment, please remember to consider the effect of clearing. To avoid some errors, some COA codes can only be used with a project, others only with a department.

38 | P a g e

Standard Operating Procedures And Financial Planning COA 40810001 48600000 NAME Manual Accruals Prepayments DETAIL Department only Dr & Cr. Must both be on the same project/ Dept. Project only Department only Project only Project only with Interco flex field Project only Department only Department only

68150000/78150000/15160000 Loss Provisions 15xxxxxxx 70xxxxxxx/41810000 90021000/90021100 34500000/71345100 42861000 64xxxxxx All other Provisions Revenue Internal Revenue/Cost WIP IB Accruals Payroll related Items

Journal Entry Processing:

Follow the journal rules Enter an approved journal entry & post it Enter Correct COA code for all transaction All fields must be completed Journals should be reviewed & approved as per defined authority levels A journal requires a valid COA code, project or dept. code & a destination segment

Journal Entries:
Non Reversal: Permanent Journal

6xxxxxxx

Dr 500

To 40810000 500 Reversal: April: 6xxxxxxx Dr 1000 (Reverse on next month)

To 48100000 1000
39 | P a g e

Standard Operating Procedures And Financial Planning May:

48100000

Dr 1000

To 6xxxxxx 1000 6xxxxxxx Dr 1000 1000

To 48100000

8. Accrual Process:

In the process of accrual, there are different costs that we need to accrue in a due time to evaluate different costs. So firstly we need to make provision of any non operating expenses. Accounting Treatment: Bonus Account Dr To Provision for Bonus A/c Provision for Bonus A/c Dr To Bank Account

9. Cost Movement:
In the process of cost movement there are different costs of the department that could be incurred by one company firstly then later they had to repay that amount to them in a way like cost movement, that could be put into their cost structures. Like in our company, the area unit, then super sector, then sector, then departments then there are different project. Under the project part, there is a cost we need to render in this cost movement process. In this process, like there are many times dept wrongly entered the cost of one dept. into another dept. so for that they need to offset the wrong entry into right by passing another entry to nullify the dept. cost. . GL-A504 (wrongly entered) Accounting Entries: 65800000. GL-CXU01.0 Dr. 500 40100000. GL-CXU01.0 Cr. 500 Correct: 65800000. GL-A550.0 65800000. GL-A504.0 Dr. 500 Cr. 500

10. Bank Revaluation:

This topic is all about the bank revaluation, in which foreign money value appreciated or depreciated with the due time. So there would be a process to evaluate all factors. Like in the above example:

40 | P a g e

Standard Operating Procedures And Financial Planning

(Amount) EURO 500 @ USD 600 @

31.1.12 60.70 55.70

30.6.12 61.72 52.48

Difference 1.02 (3.22)

Result 510 (1932)

So through this we can see that the price of the EURO would be appreciated by 1.02 & USD would be depreciated by (3.22). The result came out also gives EURO a positive balance & USD a negative balance. In Steria It will be recorded as if it is an Exchange loss that it would be debited & if there will be Exchange profit then it would be credited against Bank account. ENTRIES: Bank Account Dr 510

To Exchange Profit Account 510 Exchange Loss Account Dr 510 To Bank Account 510

11. Provision Accounting: The general rule is that movements in Balance Sheet
provision accounts (15xx) must be matched by equal movements in the specific P&L provision movement accounts (68xx and 78xx). Increase to Provision (non-restructuring / exceptional) Dr 681xxxxx (Expenses) (Balance Sheet Provision Accounts)

Cr 15xxxxxx

Increase to Provision (restructuring / exceptional / industrialisation / integration). The non-current dept must be used for the P&L side of any exceptional cost. Dr 6875xxxx.GL-NAXU.0 Cr 15xxxxxx

Decrease to Provision (non-restructuring / exceptional) Dr 15xxxxxx (Balance Sheet Provision Accounts) Cr 781xxxxx (Revenue)

Decrease to Provision (restructuring / exceptional / industrialization / integration) (The additional lines are needed to move the expense below the line) The non-current dept must be used for the P&L side of any exceptional cost / credit.
41 | P a g e

Standard Operating Procedures And Financial Planning Dr 15xxxxxx Cr 7875xxxx.GL-NAXU.0 Dr 67180000.GL-NAXU.0 Cr 6xxxxxxx OPA system-generated loss provisions (15160000) must be against a project. Other provisions should be against a dept. Specific accounts are as follows: Note that Not used means released without any cash being spent. Used implies that the provision was utilised for the purpose for which it was set up. Note also that a code ending in 1 usually implies long-term, whereas a code ending in zero will usually be for short-term provisions.

12.

Prepayment Process:

For creating and releasing a prepayment, the Project Finance Analyst (PFA) has to provide the details in the below given prescribed format to the GL Team for its action:
Supplier Name Cristie Data Products Ltd Sout Bucks District Council Invoice Number 22368 40057 Project Number 1029288_U 1106058 Prepay Period From Until DPA DPA495 DPA495 Amount Dec-11 2,562.00 2768.44 Jan-12 Nov-12 Dec-12 Total Months 12 12

COA 61560000 61321000

Note: All the details mentioned above are mandatorily required for its action. We cannot prepay a receipt. We can only prepay the invoiced cost. This is to avoid grossing up the BS with accruals and prepayments for the same item. If anyone requires prepaying an un-invoiced receipt then it must be on a reversing basis and the Balance Sheet side must be on the Accruals account (40810000), not the Prepayments account.

Accounting Treatment 1. Entry for creating the Prepayments in Oracle: To move the cost from P&L to Balance sheet Prepayment account, a GL journal is required By Debiting the Balance Sheet Prepayment code and crediting the Original expense/ cost code as follows.
42 | P a g e

Standard Operating Procedures And Financial Planning

COA 48600000 48600000 61560000 61321000 Project 1029288_U 1106058 1029288_U 1106058 Destination 0 0 0 0 Account Prepayment A/c Prepayment A/c Expense A/c Expense A/c DR 2562 2768.44 CR

2562 2768.44

2. Entry for releasing the Prepayments in Oracle: For monthly prepayment release to P&L, a GL journal is required By Debiting the Original expense/ cost code and crediting the Balance Sheet Prepayment code as follows.
COA 61560000 61321000 48600000 48600000 Project 1029288_U 1106058 1029288_U 1106058 Destination 0 0 0 0 Account Expense A/c Expense A/c Prepayment A/c Prepayment A/c DR 213.5 230.7 CR

213.5 230.7

3. After passing the Journal entry for creating and releasing the prepayment as given in Step 1 & 2. We have to run a special process in ORACLE through which we transfer the release from GL into PA, allocating it on project as ECSE other charges. It may be run many times during the month end process, but must be run after the final prepayment journals have been posted. 4. The above prepayment process (Step 1, 2 & 3) will be done as early as possible in order to allow finance managers as much time as possible before month end in which to review their costs.

13. Purchase order Process:

USER REQUEST FOR PURCHASE ORDER NEED TO SELECT THE LEAST EFFECTIVE PURCHASE DEPT. PASSED THE PO TO OTHER DEPT.

FILE AN APPLICATION OF PO (PURCHASE ORDER)

NEED TO FILE QUOTATION OF PRICE LIST

GRN (GOODS RECEIVED NOTE) WOULD BE MADE

PURCHASE DUE AFTER APPLICATION BEEN RECEIVED

NEGOTIATION WITH VENDOR

RECEIVED BY FACILITY MANAGER AT ENTRY GATE

43 | P a g e

Standard Operating Procedures And Financial Planning

Accounting Treatment of Purchase Order:

Material Receipt Entry: Asset A/c Dr.

To GR/IR clearing A/c

Accounts Payable Clearing Entry: GR/IR A/c Dr. To Vendor A/c

Accounts Payable Payment Entry: Vendor A/c Dr. To Bank A/c.

14. Accounts Payable process:

44 | P a g e

Standard Operating Procedures And Financial Planning

Accounting Treatment of Accounts Payable:

Profit and loss A/c To Dr. Supplier A/c

Payment
Supplier A/c Dr. To Bank A/c

15. Balance sheet Reconciliation :

On a monthly basis all tax accruals, which must be supported by an appropriate level of documentation, must be reconciled to the General Ledger. These reconciliations will be reviewed by the Accounting Manager. On a quarterly basis the current year estimate of tax liability will be reviewed and updated by the Head of Tax to ensure that unusual items are identified and analysed. Any adjustment arising will be recorded so that the revised calculation agrees to the General Ledger. They also need to check the balances which are still idle in reconcilliation & they need to clear them before the quarter end. Sundry Debtors & Sundry Creditors Current assets & Liabilities Provisions Current accounts Bank accounts (US entities) Payroll Sector Reconciliations

16. Corporation Tax :

INTRODUCTION: This Policy defines the rules within Steria for recording the
appropriate corporation tax expense in the profit and loss account and for accounting for the creation, utilisation and release of corporate tax provisions in line with UK accounting and tax legislation. It also establishes the related accounting structure. For the purposes of this Policy, corporation tax includes all domestic and foreign taxes which are based on taxable profits. Whilst such taxes are commonly referred to, within the Steria chart of accounts, as Income Tax, under UK legislation they are referred to as Corporation Tax. This policy does not cover the accounting for other taxes such as Value Added Tax (VAT) or payroll-related taxes such as Pay as You Earn (PAYE) and National Insurance (NI). These are covered by separate accounting policies, for details of which refer to Accounting Policy 0440: Amounts due to or from Government.

45 | P a g e

Standard Operating Procedures And Financial Planning The main difference between the International Accounting Standards and UK GAAP lies in the conceptual basis for recognising deferred tax. Whilst tax accounting entries in the UK will be based upon UK legislation, additional data will be made available to Steria headquarters in Paris to enable the consolidated results of the group to comply with International Accounting Standards. Note that account descriptions are in line with Steria chart of accounts. In some cases an alternative description has been provided in [square brackets]. 1. Balance Sheet: Amounts due to or from Government Agencies in respect of corporation tax will normally be recorded in a Class 4 (Third-party) Balance Sheet account, with a 4 (Government Agency) sub-class. Thereafter the third digit indicates the nature of the tax with 4 representing current income, or corporation, tax and 8 representing accrued (deferred tax) amounts. For the purposes of corporation tax all current amounts are deemed to be payable or receivable (rather than accrued) and are to be shown in accounts 444xxxxx. All deferred tax, conversely, is to be shown in accounts 44870xxx.

2. Profit & Loss account:

The cost of corporation tax will be recorded in a Class 6 (Expense) account, with a 9 (Income Tax) sub-class (69xxxxxx). Thereafter the third digit indicates the nature of the tax with 5 representing current income, or corporation, tax, 8 representing deferred tax amounts and 9 representing tax loss carry back amounts. Therefore, current corporation tax amounts are to be shown in accounts 695xxxxx, deferred tax in accounts 698xxxxx and tax loss carry-back amounts in 699xxxxx. Accounting Treatment: 1) Accrual of current corporation tax liability, assuming a taxable profit Dr 69510000 Cr Income Tax [Corporation Tax] Income Tax [Corporation Tax]

44400000

A reversal or reduction of the current tax liability will result in the above entry being reversed. 2) Accrual of the deferred corporation tax liability or tax asset (1) Dr/Cr 69800000 Deferred Tax Other Deferred tax account other

Cr/Dr 44870000 OR

46 | P a g e

Standard Operating Procedures And Financial Planning (2) Dr 44870100 Cr

(1)

Deferred Tax account on fiscal loss Deferred Tax on fiscal losses

69800100

Used for deferred tax relating to short-term timing differences and accelerated capital allowances.
(2)

Used to record the deferred tax asset on tax losses carried forward.

A reversal or reduction of the deferred tax liability will result in the above entry being reversed. 3) Payment of amounts on account During the year payments made on account of the current year liability will be recorded as follows: Dr 44400000 Cr Income Tax [Corporation Tax] Bank

512XXXX

Final payments in settlement at the end of the accounting period will be recorded in the same accounts. 4) Quarter-end adjustments current tax The Head of Tax is responsible for maintaining an analysis of account 44400000 by accounting period. At each quarter end he should identify any accounting periods where the tax amount is recoverable from HMRC and instruct the Accounting Manager to transfer that amount to a debtor account as follows: Dr 44430000 Cr Income tax recoverable [Corporation Tax recoverable] Income Tax [Corporation Tax]

44400000

The above journal should be reversed in the last month of the next quarter and replaced by a new journal if required. When the corporation tax overpayment is recovered from HMRC, the following entry will be recorded: Dr 5122xxxx Bank

Cr 44430000 Income tax recoverable [Corporation Tax recoverable] 5) Wealth tax Payable: In the Wealth tax computation in our company; they were particularly doing their wealth tax computation on their Cars only, as if there many of the employees insured their car
47 | P a g e

Standard Operating Procedures And Financial Planning with the company. There were many particulars would be made in respect to computation like description, value of the car , insurance amount, policy starting as well as expiry date. In the end they need to make a total of Insurance amount with respect to standard deduction of 3000000 if that particular amount is greater than 30 lacs. The remaining would liable a 1% of wealth tax that should be submitted to govt. There should be proper accounting entries recorded in Accounts payable department & that amount also be payable through bank by creating a provision of wealth tax payable. Accounting entries: Wealth Tax Expenses Account Dr

To Wealth Tax Payable A/c Wealth Tax Payable Account Dr To Bank Account Corporation Tax accounts used: The list of corporation tax accounts (both Balance Sheet and Profit & Loss account) in the Steria chart of accounts is quite extensive. In the interests of clarity, the accounts available for use in the UK are listed here. Balance Sheet 44400000 44430000 44440000 44870000 44870100 Income Tax [Corporation Tax] Income tax recoverable [Corporation Tax recoverable] States - Carry back debts [Corporation Tax loss carried back] Deferred tax account other Deferred Tax account on fiscal loss

Profit and Loss account 69510000 69800000 69800100 Income Tax [Corporation Tax] Deferred Tax Other Deferred tax on fiscal losses

48 | P a g e

Standard Operating Procedures And Financial Planning

Financial Planning: It is the devising of a program for the allocation and management of
finances and capital through budgeting, investment, etc. When we plan the process of financing certain risks come to fore because of different situations whether it is a loss in investment or a situation of more debt. So we have to manage all those risks which are incurred in the business transactions.

Steria comes under top 50 companies of the world with their better financial planning and risk management system. Their way of doing thing is far better than other organization in their field. The financial planning which Steria use I am describing here. They also have a better understanding level and management plans for risk recurred in their business. Financial planning in Steria:This is a financial plan followed by Steria
DELIVER PRODUCT AND SERVICES

BANK

STERIA U.K.

MANAGE RESOURCES AND DEVELOP CAPABILITY

CREATE / AMEND PROJECT AND PRICING DATA

CLAIMS AND APPROVE EXPENSES

RECORD AND APPROVED TIME

CHECK PROJECT FINANCES

PRODUCE FORECASTS

PERFORM BILLING

PERFORM PERIOD END CHECKS

49 | P a g e

Standard Operating Procedures And Financial Planning

Financial statement analysis; It is the collective name for the tools & techniques
that are intended to provide relevant information to decision makers. The purpose of such an analysis is to assess a company`s performance. It includes comparison of the same company over the periods of time. It also refers to classification of the various items given in Financial Statement and further its interpretation. It is the powerful mechanism of ascertaining the financial strengths and weaknesses of a firm. Financial Statement analysis enables investors & creditors to: Evaluate past performance & financial position: The starting point in the analysis of a company is to look at the past record. These past information help in finding or judging the future performance. For example trend of past sales, earnings, cash flow, profit margin & return on investment provide a basis for evaluating the efficiency of a company performance & aid in assessing its prospects. To a large extent, the expectations of investors & creditors about future performance are shaped by their evaluation of past performance and current position. Predict future performance: Investors & creditors use information about the past to assess a company prospects, investor expect an adequate return from the company in the form of dividends & market price appreciation. Creditors expect the company to pay interest and repay the principal in accordance with the terms of lending. They are interested in predicting the earning power & debt paying ability of the company.

Analysis of Profit & Loss Account

a) Revenue: The revenue in the year of 2011 is 17, 47,677, this shows an upward trend in the revenue as shown in the graph. After 2008 it was like steep decrease but also it went well afterwards.
2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1,765,678 1,416,164 1,747,677

1,629,977

1,692,668

Revenue (Euros)

Revenue Linear (Revenue)

2007

2008 1,765,678

2009 1,629,977

2010 1,692,668

2011 1,747,677

Revenue 1,416,164

50 | P a g e

Standard Operating Procedures And Financial Planning b) Operating Profit: It is the profit earned from a firm core business operations & it does not include any profit earned from investments. Operating profit = Operating revenue operating expenses From this graph there would be decrease in the operating profit after 2008, due to increase in other operating expenses. But also there is a balance of 81900 in the year of 2011 shows positive implications.

Operating Profit
120,000 100,000 80,000 60,000 40,000 20,000 0 Operating profit Operating profit 95,706 110,006 92,029 81,632 81,900

Year 95,706

2007 110,006

2008 92,029

2009 81,632

2010 81,900

c) Net Financial Expenses: It includes total cost of borrowings & other financial expenses which decrease the net profit. It will be increasing year to year from 2007 onwards till 2010, but in 2011 it shows a sudden decrease of 7244 that shows might be increase in profit also.

Financial Expenses
30,000 24,457 25,000 20,000 15,000 10,000 5,000 0 financial Expenses 2007 16,278 2008 24,457 2009 20,532 2010 20,926 2011 7,244 7,244 financial Expenses 16,278 20,532 20,926

51 | P a g e

Standard Operating Procedures And Financial Planning D) Net Profit: There is a steep decrease in the net profit as shown in the graph but in the year of 2011 it shows a maximum net profit in the last 5 years as shown in the graph. The net profit in 2011 is 55136.

Net Profit
60,000 50,000 40,000 30,000 20,000 10,000 0 Net Profit 50,246 51,123 55,136 44,011

48,707

2007 50,246

2008 51,123

2009 48,707

2010 44,011

2011 55,136

E) Earning per Share: It actually shows the company profitability in terms of shares. The earnings per share shows a level of decreasing to increasing trend in the following graph & the EPS value in 2011 is 2.73

Earning Per Share

3.00 2.50 2.00 1.50 1.00 0.50 0.00 Earning Per Share 2007 2.80 2008 2.42 2009 2.23 2010 2.21 2011 2.73 2.80 2.42 2.23 2.21 2.73

52 | P a g e

Standard Operating Procedures And Financial Planning

Analysis of Balance Sheet

1) Total Assets: In this graph, it actually a sum of total fixed assets & total current assets to show the current picture of the company, It`s been shown that after 2007 there is sudden fall in the number of total Assets till next year. Then from 2009 onwards the total assets value keep on increasing to a achieve good growth

Total Assets
Total current Assets 1,200,000 1,000,000 800,000 732,761 1,068,925 860,348 691,803 914,379 723,334 940,632 711,283 979,826 748,403 Total Fixed Assets

Amount

600,000 400,000 200,000 0 Total current Assets Total Fixed Assets 2007 732,761 1,068,925 2008 691,803 860,348 2009 723,334 914,379 2010 711,283 940,632 2011 748,403 979,826

2) Cash & Cash Equivalents: These are very important in the assessing growth of any company; it also helps in evaluating financial position. In this graph it shows an increasing trend which gives a balance of 170369 in 2011.

Cash & Cash Eqivalents

200,000 147,173 150,000 100,000 50,000 0 2007 2008 2009 141,138 149,859 177,246 170,369

2010 2009 149,859

2011 2010 177,246 2011 170,369

Cash & Cash Eqivalents

2007 147,173

2008 141,138

53 | P a g e

Standard Operating Procedures And Financial Planning 3) Shareholder Equity: It represents the amount in which a company or a firm is financed through common shares as well as preferred shares. It also known as net worth, stock holders & share capital.

Shareholder`s equity
Shareholder`s equity 1,000,000 500,000 0 2007 2008 2009 Shareholder`s equity 2010 2009 633,179 2011 2010 719,334 2011 764,493

Shareholder`s equity

2007 675,479

2008 544,960

4) Total Liabilities: In this graph, it actually a sum of total non-current liabilities & total current liabilities, they are expected to be paid in 1 or more than 1 year It`s been shown that after 2007 there is steep fall in the number of current liabilities & non-current liabilities, this was actually good for the company to achieve marginal growth.
700,000 600,000 500,000 400,000 Total Current Liabilities Total NonCurrent Liabilities 300,000 200,000 100,000 0 Total Current Liabilities Total Non-Current Liabilities 2007 636,173 488,071 2008 594,774 411,862 2009 659,807 343,444 2010 647,741 282,943 2011 624,030 345,750 488,071 411,862 343,444 282,943 345,750 636,173 594,774 659,807 647,741

624,030

54 | P a g e

Standard Operating Procedures And Financial Planning

Analysis of Cash Flow Statement

a. EBITDA: It is all about earnings before interest taxes depreciation & ammonization it tells about company financial performance. It also enables to find firm`s profitability before paying any payments such as interest & taxes etc. It shows an upward trend but there is a marginal down in 2010 but there after increased in 2011 by 152.

EBITDA
160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 EBITDA 145.2 119.0 149.1 129.8 152.0

EBITDA

2007 119.0

2008 145.2

2009 149.1

2010 129.8

2011 152.0

b. Operating Cash flow: The cash is generated by company through its operations. it is also called revenues less all operating expenses & also can be used on the check on the quality of company`s earnings for the future growth. In the graph this growth in operating cash flow helps in getting more earnings & be easier to pay off its debts. But in 2011 the sudden downfall leads to bad operating cash flow i.e. 22.3

Operating Cash Flow

99.8 100.0 80.0 60.0 Operating Cash Flow 40.0 20.0 0.0 Operating Cash Flow 22.3 85.8 87.9 97.6

2007 85.8

2008 99.8

2009 87.9

2010 97.6

2011 22.3

55 | P a g e

Standard Operating Procedures And Financial Planning c. Free Cash Flow: It represents cash that a company able to generate after paying down all the expenses to expand it asset value (base). It enables help in acquisitions, pay dividends & to reduce debt. It should also be calculated as: operating cash flow capital expenditures If the FCF shows negative value it should be sign of making large investments, if these investments fetch higher return, this strategy has the potential to pay off the debts in longer run.

Operating Cash Flow

200.0 100.0 0.0 -100.0 -200.0 -300.0 -400.0 2007 2008 71.6 2009 48.3 2010 85.9 2011 -24.7 Operating Cash Flow -307.7 71.6 48.3 85.9 -24.7

Operating Cash Flow -307.7

Techniques of Financial statement analysis: Ratio Analysis: It involves establishing a relevant financial relationship between
components of financial statements. It helps in identifying significant relationships between financial statement items for further investigation. It can be a powerful tool for recognizing company strengths as well as it potential spots.

Type of Ratio 1) Current ratio

2007 1.51

2008 1.16

2009 1.09

2010 1.09

2011 1.19

Formula used Current Assets/Current liabilities

2) Quick ratio

1.08

1.10

1.04

1.04

1.14

Quick

Assets/Current

liabilities 3) Debt/equity ratio 4) Capital gearing 1.74 ratio 1.67 2.34 3.53 2.90 1.51 1.68 1.46 1.18 1.15 Total Debt/Shareholder`s funds Total equity / Long term Debt

56 | P a g e

Standard Operating Procedures And Financial Planning 5) Fixed ratio 6) Proprietary ratio 7) Net profit ratio 20.40 25.26 24.09 22.38 23.09 0.37 0.35 0.38 0.43 0.44 Shareholder`s Total Assets Net profit After tax *100 / Net sales 8) Operating profit ratio 9) Earning per 2.80 share 10) Price earning 16.67 ratio 11) Return Assets 12) Operating leverage 4.52 3.76 4.11 3.97 3.45 on 6.6% 9.35% 9.09% 7.85% 8.74% EBIT/ Total Assets Contribution/EBIT 9.97 3.69 9.73 7.12 2.42 2.23 2.21 2.73 95.22 95.88 96 96.28 97.10 Operating profit *100/ Net sales Net profit After tax/ No. of equity shares Market price/ Earning per share Funds/ Asset 2.75 2.64 3.38 4.60 3.71 Fixed Assets/ Net sales

Current ratio: It gives the idea of the company ability to pay back its short term liabilities with its short term assets. Current Ratio assesses short term solvency i.e. the ability to meet short term obligation of the company.Generally a current ratio of 2:1 is considered satisfactory. In this company they are not under 1 it shows the company is moving on the growth side by paying off its short term liabilities. Quick ratio: Its all about Inventory and prepaid expenses being excluded because these two items are generally considered less liquid-able than any other items of Current assets. Generally a quick ratio of 1:1 is considered satisfactory. In this company they are pretty much satisfactory & they are able to pay or convert their inventory into cash.

Debt-Equity ratio: It reflects the proportion of owner`s stake in business, if there

would be excessive liabilities, then there would be a problem related insolvency & working capital problem, if a debt equity ratio is 1:2, every rupee of outsiders , the firm has two rupee of owner`s capital. In this company, as from the trend it shows a range from increase to decrease then it would lead to lower D/E ratio; it is also beneficial for the
57 | P a g e

Standard Operating Procedures And Financial Planning company. The D/E ratio is relatively lower, so they have sufficient margin available for creditors, cost of debt also not burdening, there would be more mobilization of funds.

Capital gearing ratio: It is used to calculate the long term financial position of the
firm, as if the ratio is higher, the company will be more risky. If the numerator is higher than denominator, then it `s a low gearing ratio otherwise high, In this company, there is a low gearing ratio as their shareholder`s funds are more than long term debt, the increasing trend also gives a sign, that also leads to cover future earnings certain.

Fixed asset ratio: It actually shows the investment in fixed asset contribute to sales.
The fixed assets ratio showing an increasing trend, it means that the fixed asset are properly utilized, but also in the last year it shows a decreasing value, which would be taken care in future

Proprietary ratio: It actually shows that the amount of shareholder`s money invested
or utilized in total assets, In this company it shows that all the ratios are less than may point towards more of the borrowing by the company, so in future it should be reduced as it helps in getting good future growth.

Net profit ratio: It shows that high net profit ratio is a good sign, as it ensures
sufficient return to owners. In this company, it shows a increasing as well as decreasing trend, so it will lead to minimum growth. Lower the ratio gives idea that company may earn profit by selling more quantities will also lead to incurred more costs.

Operating profit ratio: This ratio shows the role of operating profit in the total sales,
the healthy operating profit ratio is required for a company to be able to pay its fixed costs, such as interest on debt. In this company, it shows an increasing trend, this will lead him to incur all types of cost (variable as well as fixed) in future.

Earning per share: EPS is a widely used ratio, as it is used as a measure of

profitability from owner`s point of view. Higher the ratio, investors will be more attractive. If the EPS is higher, it gives a positive impression about the company outside.

58 | P a g e

Standard Operating Procedures And Financial Planning In this company it shows a increasing trend as it will lead him to fetch more return from the owner`s point of view.

Price earning ratio: It shows about that for every rupee of earning per share, how
much the price being paid by the market. It actually shows the trend towards appreciation in the value of shares per every rupee of EPS. In this company, it shows the decreasing trend as it will show lesser P/E ratio. But 2010 onwards, it gives better results as the value of EPS in the market increased.

Return on assets: It shows that a higher rate of return on assets it shows their assets
utilization is good. But in this company it shows a fluctuating trend as the company basically short of the revenue due to increase in costs. So for the future, the company needs to look on the revaluation on the assets as well as look on the revenue Updation.

Operating leverage: It shows if the business has a higher proportion of fixed costs and
a lower proportion of variable costs, it is said to have more operating leverage. Those businesses have lower fixed cost & higher variable cost are said to be employ less operating leverage. In this company, it shows a lower operating leverage as if it`s higher, the greater the potential danger from forecasting risk.

59 | P a g e

Standard Operating Procedures And Financial Planning ACTION PLAN FOR FINANCIAL PLANNING: - This financial plan I made for my project analysis. It helps me to keep on track of financial planning. It gives a view for my project and helps me to work accordingly what exactly I want.
START

GOALS

BUDGETING

PAY OFF DEBTS

IS BUDGETING SUFFICIENT? Yes

No

SAVING

INVESTMENT I = (1 TO N) FOR I =1

FIND MAXIMUM EARNINGS INVEST IS THIS INVESTMENT MORE PROFITABLE?

NO

I = I+1

Yes

STOP

60 | P a g e

Standard Operating Procedures And Financial Planning

Conclusion
Introduction
Two months summer internship is very important to learn the work and corporate environment. One can not only discover the better ways of implementing theoretical concepts but also watch the general behaviors for an organization.

Objective
I want to learn the concepts of finance, its working within the organization which not only help me but also help STERIA to grow.

Contribution
My whole internship is divided into two parts. In the first one month I learnt the standard operating procedures which help me in getting the overview as well as functioning of finance in Steria and in the second month of my internship I got a topic on financial planning for my project preparation.

LEARNING IN Oracle:Working in finance is incomplete without better collection and quicker processing of data. Oracle provides them quick processing and better documentation. Every transaction started from a simple payment to a big deal is recorded in the Oracle. It is systems application product. This helps in recording, estimating, and overall accounting system of the organization. I work in some areas of Oracle. For Example:o I have done some entries for changing vendors address. o I learn GL codes. o Check the data for bills payable and learn how to enter the data for payment. o Got overview for Bills Payable.

61 | P a g e

Standard Operating Procedures And Financial Planning

Bibliography
http://www.steria.com/ http://www.investopedia.com/ www.googlesearch.com

www.wikipedia.com

Financial Accounting By R Naryanaswamy Financial Statement Analysis John j .wild , Robert F , Halsey http://investors.steria.com/phoenix.zhtml?c=170213&p=irol-reports

62 | P a g e

Standard Operating Procedures And Financial Planning

Annexure
Consolidated Income Statement
PARTICULARS (in thousand of euros) Revenue Cost of sales and sub-contracting Personnel costs Bought-in costs Taxes (excluding income tax) Change in inventories Other current operating income and expenses Net charges for depreciation and amortisation Net charges to provisions Net charges for current asset impairment Operating margin Operating profitability (% of revenue) Other operating income and expenses Operating profit/income Net cost of borrowings Other financial income and expenses Net financial expense Income Tax expense Share of income/(loss) from operations held for sale Net profit from continuing operations Net income/(loss) from operations held for sale Net profit for the year Attributable net profit Non=controlling interests 2007 14,16,164 -2,59,427 -7,88,831 -2,01,324 -27,763 964 6,919 -31,259 -3,303 -689 1,02,451 7.20% -6,745 95,706 -13,217 -3,061 -16,278 -28,025 -280 51,123 -877 50,246 50,018 228 2008 17,65,678 -3,08,276 -9,78,768 -2,74,454 -37,383 335 8,752 -43,117 -1,736 -627 1,30,404 7.40% -20,398 1,10,006 -20,092 -4,365 -24,457 -33,140 -2,057 50,352 771 51,123 51,601 -478 2009 16,29,977 -2,83,740 -9,45,949 -2,35,327 -23,938 19 20,750 -35,608 -10,938 -817 1,14,931 7.00% -22,362 92,029 -14,016 -6516 -20,532 -23,565 775 48,707 0 48,707 48,189 518 2010 16,92,668 -3,03,040 -10,01,318 -2,46,712 -18,109 412 20,130 -31,818 4,894 -1,407 1,15,700 6.80% -34,068 81,632 -10,633 -10,293 -20,926 -18,312 1,512 44,011 0 44,011 43,524 487 2011 17,47,677 -3,24,203 -10,31,087 -2,30,429 -19,043 1 10,727 -28,914 2,832 -2,359 1,25,202 7.20% -43,301 81,900 -1,633 -5,611 -7,244 -21,032 1,617 55,136 0 55,136 55,009 128

Underlying diluted earnings per share (in euros)

Market Stock price

2.80
46.7

2.42
24.13

2.23
8.25

2.21
21.51

2.73
19.46

Consolidated Balance Sheet

63 | P a g e

Standard Operating Procedures And Financial Planning

PARTICULARS (in thousand of euros) Goodwill Other Intangible assets Property, plant and equipment Investment in associates Available-for-sale financial assets Other financial assets Retirement benefit assets Deferred tax assets Other non-current assets Non-current assets Inventories Net trade receivables and similar accounts Amount due from customers Other current assets Current portion of non-current assets Current tax assets Prepaid expenses Cash and cash equivalents Current assets Assets/Non-current assets classified as held for sale Total assets Shareholder`s equity Non-controlling interests Total equity Long-term borrowings Retirement benefit obligatons Provision for non-current liabilties and charges Deferred tax liabilties Other non-current liabilties Non-current liabilties Short term borrowings Provision for current liabilties and charges Net trade payables and similar accounts Gross amount due to customers and advances and payments on account received Current tax liabilities Other current liabilties Current liabilities Liabilities directly associated with noncurrent assets classified as held for sale Total equity and liabilities

2008 83,166 81,626 1,03,559 10,641 2,367 11,790 0 26,467 1,309 10,68,925 15,489 3,34,582 1,68,688 25,995 2,291 9,313 29,230 1,47,173 7,32,761 1,250 18,02,936 6,75,479 2,021 6,77,500 3,87,830 68,509 18,009 12,755 968 4,88,071 66,239 14,935 1,75,166 1,13,485 20,242 2,46,106 6,36,173 1,192 18,02,936

2009 6,72,015 62,050 85,453 5,222 2,203 12,466 3,440 15,310 2,189 8,60,348 6,201 2,81,284 1,90,434 26,186 2,838 15,837 27,885 1,41,138 6,91,803 0 15,52,151 5,44,960 555 5,45,515 3,25,837 39,898 13,688 14,293 18,146 4,11,862 50,583 19,216 1,34,493 1,13,702 31,366 2,45,414 5,94,774 0 15,52,151

2010 7,06,417 66,301 74,004 6,181 1,809 3,977 42,230 10,506 2,900 9,14,379 9,194 2,81,445 1,92,025 36,017 2,963 27,340 24,491 1,49,859 7,23,334 0 16,37,713 6,33,179 1,283 6,34,462 2,70,001 33,698 17,529 16,750 5,466 3,43,444 66,866 35,590 1,48,386 1,08,857 34,900 2,65,208 6,59,807 0 16,37,713

2011 7,27,977 67,041 70,365 7,941 1,808 3,234 44,592 14,149 3,525 9,40,632 8,165 2,71,031 1,67,164 31,731 3,743 28,160 24,063 1,77,246 7,11,283 0 16,51,915 7,19,334 1,897 7,21,231 2,04,110 35,052 20,688 17,780 5,313 2,82,943 74,332 34,763 1,45,719 80,587 42,467 2,69,874 6,47,741 0 16,51,915

2012 7,44,456 71,072 58,642 10,938 2,273 3,484 58,212 27,332 3,418 9,79,826 9,218 2,99,468 1,76,345 31,225 3,565 35,213 23,001 1,70,369 7,48,403 9,095 17,37,324 7,64,493 1,897 7,66,390 2,63,626 40,247 14,122 20,939 6,817 3,45,750 32,648 34,638 1,52,179 70,900 54,971 2,78,694 6,24,030 1,155 17,37,324

64 | P a g e

Standard Operating Procedures And Financial Planning

Consolidated Cash Flow Statement

PARTICULARS EBITDA Income Tax expense Change in Working Capital Requirement Operating cash flow Net industrial investment Restructuring Operating free cash flow Dividends Net financial investments Capital increase Change in perimeter Additional contribution to pension funds Other Free cash flow 2007 119.0 -40.8 -49.1 127.3 -29.3 -12.2 85.8 -7.6 -693.1 376.2 -60.7 -8.3 0.0 -307.7 2008 145.2 -10.9 14.4 148.7 -29.8 -19.1 99.8 -13.2 -1.3 3.5 1.4 -28.5 10.0 71.6 2009 149.1 -18.5 -2.3 128.3 -22.4 -17.9 87.9 -13.6 5.0 11.5 0.0 -37.8 -4.8 48.3 2010 129.8 -15.3 21.9 136.4 -25.1 -13.7 97.6 -11.0 -1.6 8.8 0.0 -16.8 8.8 85.9 2011 152.0 -18.7 -43.6 89.7 -33.1 -34.2 22.3 -14.9 -4.1 6.8 -1.0 -18.6 -15.2 -24.7

65 | P a g e