Flow of Project-wise budget Monitoring Internal Controls effectively redefined Group of activities in the project which can be defined and monitored in such a way to detect and prevent internal inefficiency and the timely preparation of reliable information.

2 Flow of Project-wise budget Monitoring  Revenue budget including billing schedule  Estimation of expected margin  Activity-wise preparation of expense budget o Fixed budget o Variable budget  Training of budgetary control system to users  Implementation of infrastructure  Dual monitoring mechanism as prevention & detection measures  Constructive discussion on positive and negative deviations  Minutes of discussion and implementation

3 Planning:  Management broadly estimates proposed project cost considering resources to be deployed (based on this viability of project can be assessed).  Project head prepares and submits the detailed estimate of cost to be involved in their area on proposed project (based on planning as mentioned above).  Preparation of estimated cash flow for the project.  Compilation of the various adjusted cost at management level.  Finalization of proposed revenue budget and expense budget of project.

4 Soft and Hard infrastructure:  Design and discuss the proposed information recording system with HODs for respective project.  Detailed discussion by HODs to their subordinates.  Preparation and finalization of concurrence system by accounts and project department based on approved budgets as mentioned earlier. Concurrence sheet will be used by both department.

5 Implementation and monitoring:  Monitoring of budget for the project over the span of project using concurrence system. Expenses will be routed through concurrence system.  Review of deviation between actual cost and projected cost (with reasons for deviations).  Mitigating procedure for deviation to achieve targeted object.

6 Periodical management discussion / strategic management committee:  Preparation and presentation of management information in predetermined formats.  Constructive and healthy discussion by departmental HODs.  Recording of minutes of meeting.  Tracking of action taken status on minutes of earlier meetings.  Recording of repeated deviations for future cost estimations.  Monitoring over project-wise profitability.

7 Factors for adequate Budget of project : Inadequate budget preparation or monitoring over the budgeted cost affect profitability or business. Why adequate budget for the proposed project is required? 1. Fixed cost to identify shutdown cost. 2. Variable cost to control operational cost. 3. Notional cost and factoring the risk to strengthened the bottom line of financial statements.

8 Budgetary control flow

9 Fixed Expense Budget Expenses 100% Upto current month deviation % of Total YearlyFor each months BudgetBudget (A) Actual (B)Provision (C) Deviation (A) - (B+C) Budget (A) Actual (B)Provision (C) Deviation (A) - (B+C) Fixed Expenses: Operation cost: Machine rent Project Premise / site rent Project assets depreciation Employee cost: Project Manager Salary Staff house rent Admin Cost: Internet Expense Tender Fees Interest of EMD

10 Variable Expense Budget Expenses 100% Upto current month deviation % of Total YearlyFor each months BudgetBudget (A) Actual (B)Provision (C)Deviation (A) - (B+C) Budget (A) Actual (B)Provision (C)Deviation (A) - (B+C) Variable Expense: Operation cost: Material consumption Stores & consumables Power & fuels Freight & forwarding Repair & maintenance Employee cost: Staff salary Incentives Statutory payments Labour contractor Lodging & Boarding Travelling Admin Cost: Working capital interest Bank charges Legal & profession fees Liasoning expense Rates & Taxes Communications

11 Vouchers needs to be contained the following information: Concurrence number Project Name Project Code Project Location Expense / overhead Sub-code Expenses description Account code Amount Total Project Supervisor Approval Project Head Approval Finance Approval Prerequisite details on expense vouchers Concurrence procedure: Each Expenses of the project is required to be passed through concurrence procedure before processing for payment. Separate number is required for the each concurrence. Concurrence number wise expense booking system is required.

12 Concurrence Tracker ParticularCodeBudgeted Amount Concurrence No. Date of concurrence Concurrence amount Total Concurrence amount Over / under Run Remark / Approval no. Project CodePRJ1 100,000 Expense or over head sub-codesFOOC 32,000 Expense or over head sub-codesFOOC-1 15,000CON ,000 CON ,000 CON ,000 MD/ ,000 (3,000) Expense or over head sub-codesFOOC-2 9,000CON ,000 CON ,000 7,000 2,000 Expense or over head sub-codesFOOC-3 8,000CON ,000 CON ,000 CON ,000 8, ,000 33,000 (1,000)

13 What we expect from you? Share this information with your project team & accounts team and conduct the presentation to shape up a broader view of internal controls area in head- wise processing of project expenses. Stay connected with us for coming more detailed presentations to have insight on practical aspects of Internal Controls. Share your views / give your contribution of knowledge to us to improve this presentation. Share address of the person to whom you want to communicate this system. Let’s spread global best practices of effective internal controls across the economy. Thanks