Draft Finance Manual_Costing

7/31/2019 Draft Finance Manual_Costing

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Haryana Vidyut Prasaran Nigam LimitedCosting Manual

CC oo ss tt iinn gg MMaa nn uu aa ll


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Private and confidential 2


TABLE OF CONTENTS

S. No Section HeadPage

Reference

1.1 Introduction 3

1.2 Objectives and Policies 3

1.3 Preparation and Review of Cost Performa D 4

1.4 Preparation and Review of Cost Performa F 10

1.5 Preparation of Performa C 14

1.6 Templates & Formats 19


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1.1 INTRODUCTIONHVPNL is required to maintain Cost Records as per the Performa suggested vianotification number G.S.R. 913(E) dated December 21, 2001, also called as Cost

Accounting Records (Electricity Industry) Rules, 2001.

Costing manual for HVPNL sets out the principles and practice of costing to be appliedin preparation of these Cost Records. It is a guiding factor to allocate cost for core aswell as non-core activities of the business.

1.2 OBJECTIVES AND POLICIES

Objectives

To facilitate preparation of Cost records prescribed by law from time to time

Policies

a) Cost records should be prepared and maintained as per prescribed guidelines bylaw from time to time;

b) Preparation of Cost records should be within the timelines prescribed by law(currently 90 days of closure of Financial Year);

c) Costing should be done on full absorption basis to identify the full cost;

d) Costing process should be transparent with a clear Audit Trial


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1.3 Preparation and Review of Cost Performa D

1.3.1 Process Summary

Input Output Key Controls KPIs for MIS Report

Trial Balance for all units andHVPNL

Statementshowing Power Transmitted for the year

Performa D for last financial year

Performa D asper Cost

AccountingRecords(ElectricityIndustry) Rules,2001

Approval of PerformaD by Chief Accounts Officer (CAO)

Reconciliation of Performa D withFinancial Statements

Instances of delayin preparation of Performa D

Other ReferenceDocuments

Notification G.S.R. 913(E) dated December 21, 2001, also called asCost Accounting Records (Electricity Industry) Rules, 2001

Automated Activities Preparation of Performa D in ERP environment on the basis of books of accounts


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1.3.2 Process Flowchart


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1.3.3 Process Narrative

The activities of Preparation & Review of Cost Performa D for financial year are given below:

S. No Activities including controls Responsibility

Receipt of Trial Balance

1 Trial Balance for all units and HVPNL is received from A&R Section within 60 days of closure of financial year.

Accounts Officer

Grouping of Ledger codes to Cost Account Heads

2 On the basis of TB ledger codes, Trial Balance for allunits are grouped under below mentioned Cost AccountHeads:

Sale of Power

Wheeling of Power

Other Income

Fuel Cost

Repair & Maintenance Sub Stations

Repair & Maintenance Transmission Repair & Maintenance Others

Wages/Salary & Benefits

Admin Overheads

Insurance

Loss Sales of Fixed Assets

Investments Diminution of Value

Other Debits/Written Off

Grant to HTTS (Capital or Revenue)

Rebate Wheeling

Prior Period Debits/Credits

Depreciation

Interest Working Capital or Others

Interest Capital Projects

Table given below explains an example of grouping of

Section Officer


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Ledger Heads under Repair and Maintenance for allunits into Cost Account Heads.

Ledger HeadTrial

BalanceCode

CodeDescription Cost Account Head

Repair andMaintenance

74.1 Plant andMachinery R&M - Sub-Stations.

74.2 Building R&M - Others.

74.3 Civil Works R&M - Others.

74.4 Hydraulic Works R&M - Others.

74.5 Line S/C NetworkR&M - Transmission

Lines.

74.6 Vehicles R&M - Others.

74.7 Furniture/Fixture R&M - Others.

74.8 Office Equipment R&M - Others.

74.9 O&MY/BARRAGE R&M - Others.

(Refer AS.1 for all the Trial Balance Codes to be grouped)

Allocation of Expenses

3 Expenses grouped in Step - 2 are allocated to belowmentioned sections:

Generation

Transmission

Civil Works

Admin

Services

(Refer AS.2 Allocation of expenses under various

heads)

Basis of Allocation will be as follows

Particulars Description Basis of Allocation

Sale of Power Income Actual

Wheeling of Power Income Units Transmitted

Other Income Income Actual

Fuel Cost Expense Actual

Section Officer


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Repair & Maintenance Expense Actual

Wages & Salary Expense Actual

Admin Overheads Expense Actual

Insurance Expense Actual

Loss Sale of fixed assets Expense Actual

Investment Diminution in value Expense Actual

Other Debits Written off Expense Actual

Rebate Wheeling Expense Units Transmitted

Prior Period Debits/ Credits Expense Actual

Depreciation Expense Actual

Interest W/ Capital & Other Expense T/ Cost Depreciation

Interest Capital Projects Expense N/F Assets

Preparation and Review of Performa D

4 The calculated values for Transmission in Step 3 areplotted under Cost Information head in the PerformaD. Previous years values are obtained from PerformaD for previous year.

Section Officer

5 The Quantitative Information is mapped in the Performa

D from following documents: Statement showing Power Transmitted for financial

year

Information on Length of Transmission lines fromProjects Department.

Previous Years Performa D.

Section Officer

6 Independent review is performed to assess thecorrectness of cost as per Performa D, by matching itwith consolidated Trial Balance for all the XEN.

(Refer AS.3 for Reconciliation Statement of Performa D with consolidated Trial Balance of all

XEN)

Senior AccountsOfficer

7 In case of any variation with the consolidated TrialBalance, the same is reviewed and explained.


8 Final Performa D is a uthorized by Chief AccountsOfficer.

Chief AccountsOfficer


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Responsibility Matrix

Activity DescriptionSectionOfficer

AccountsOfficer

Sr. AccountsOfficer


Grouping of Ledger codes to Cost Accountcodes

Initiate Review Authorize

Allocation of Expenses

Initiate Review Authorize

Preparation andReview of PerformaD

Initiate Review Review Authorize


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1.4 Preparation and Review of Cost Performa F



Performa C, Dand E for thecurrent year

Trial Balance for HVPNL

Performa F asper Cost

AccountingRecords(ElectricityIndustry) Rules,2001

Approval of PerformaF by Chief AccountsOfficer (CAO)

Reconciliation of Performa F withFinancial Statements

Instances of delayin preparation of Performa F



Automated Activities Preparation of Performa F in ERP environment on the basis of books of accounts


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The activities of Preparation & Review of Cost Performa F for the financial year are given below:


Receipt of Cost Performa C and D

1 Cost Performa C and D for the current year arecompiled.

Accounts Officer

Allocation of expenses to Core/ Non - Core Activities

2 If HVPNL is manufacturing any other product(s) or isengaged in other activities in addition to generation,transmission, distribution or supply of electricity, theparticulars relating to utilization of materials, labor andother expenses in so far as they are applicable to suchother products or activities shall be categorized asexpenses on Non Core activities.

Separate Trial Balance is prepared for Core activities aswell as Non Core activities.

Section Officer

Preparation and Review of Performa F

3 The values of Core activities from Performa C, D and Eare plotted in the Performa F along with the values for Non Core Activities segregated in Step 2.

Section Officer

4 The basis of allocation to Core/Non Core Activities isalso documented in Performa F.

Section Officer

5 Independent review is performed to assess thecorrectness of cost as per Performa F, by matching it with Trial Balance.

(Refer AS.4 for Reconciliation Statement of Performa F with Trial Balance )


6 In case of any variation with the Trial Balance, the sameis reviewed and explained.


7 Final Performa F is authorized by Chief AccountsOfficer.



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AccountsOfficer

Sr. AccountsOfficer


Allocation of expensesto Core/Non Coreactivities

Initiate Review Review

Preparation andReview of Performa

F



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1.5 Preparation and Review of Performa C



Performa C for the previous year

Trial Balance of BBMB andIPGCL

Performa C asper Cost

Accounting

Records(ElectricityIndustry) Rules,2001

Approval of PerformaC by Chief AccountsOfficer (CAO)

Reconciliation of Performa C withFinancial Statements

Instances of delayin preparation of Performa C



Automated Activities Preparation of Performa C in ERP environment on the basis of books of accounts


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Trial Balance of BBMB andIPGL reviewed by A&R by

Accounts Officer

On the basis of TrialBalance, grouping is doneas per cost accounts head

by section officer

Cost of generation of electricity is computed

independently for BBMBand IPGCL and cumulative

for HVPN

Performa C is prepared asper cost of Generation as

computed by Section Officer

Independent review toassess the correctness of

cost as per Performa C bymatching it with Trial

Balance by Senior AccountsOfficer

In case of any variation withthe Trial Balance, the sameis reviewed and explained

Final Performa C isauthorized by Chief Accounts Officer


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The activities of Preparation & Review of Cost Performa C for the financial year are givenbelow:


Receipt of Trial Balance

1 Trial Balance of BBMB and IPGCL is received from A&RSection within 60 days of closure of financial year.

Accounts Officer

Grouping of Ledger codes to Cost Account Heads

2 On the basis of TB ledger codes grouping is done as per Cost Account Heads:

Material/ Fuel Cost

Direct Wages

Stores and Spares

Repair and Maintenance

Insurance

Depreciation Administrative Overheads

Interest and Finance Charges

Section Officer

Computation of Cost of Generation

3 Cost of generation of electricity is computed as per thetable below. Cost of generation is computedindependently for BBMB and IPGCL and cumulative for HVPN. Further, cost of generation is also computed Per Unit of power generated.

ParticularsFuel Cost

Add: Direct wages and salaries Add: Stores and spares Add: Repair and maintenance Add: Depreciation Add: Administrative overheadLess: Common pool saleLess: Prior period income

Section Officer


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Less: Miscellaneous incomeCost of generationSelling expensesInterest and finance chargesTotal cost of generation

Preparation of Performa C

4 Performa C is prepared as per the cost of generationcomputed in Step 2.

Section Officer

Review of Performa C

5 Independent review is performed to assess thecorrectness of cost as per Performa C, by matching itwith Trial Balance.


6 In case of any variation with the Trial Balance, the sameis reviewed and explained.


7 Final Performa C is authorized by Chief AccountsOfficer.



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AccountsOfficer

Sr. AccountsOfficer


Allocation of expensesto Core/Non Coreactivities

Initiate Review Review

Preparation andReview of Performa

F



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1.5 Templates and Formats

Description Frequency Preparer Reviewer Approver Template

Grouping Chart Yearly SectionOfficer Accounts

Officer Sr. Accounts

Officer

Allocation sheet Yearly SectionOfficer Accounts


Officer

ReconciliationStatement of Performa D withconsolidated TrialBalance of allXEN

Yearly SectionOfficer Accounts


Officer

Performa D Yearly SectionOfficer Sr. Accounts

Officer

Chief Accounts

Officer

Performa D as per Cost Accounting

Records (ElectricityIndustry) Rules, 2001

ReconciliationStatement of Performa F with

Trial Balance

Yearly SectionOfficer Accounts


Officer

Performa F Yearly SectionOfficer Sr. Accounts

Officer

Chief Accounts

Officer

Performa F as per Cost Accounting


Performa C Yearly SectionOfficer Sr. Accounts

Officer

Chief Accounts

Officer

Performa C as per Cost Accounting
