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.

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Flow of Project-wise budget Monitoring Revenue budget including billing schedule Estimation of expected margin Activity-wise preparation of expense budget

o Fixed budgeto 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

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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.

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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.

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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.

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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.

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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.

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Budgetary control flow

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Fixed Expense Budget

Expenses

100%

Upto current month deviation

% of Total

Yearly For each monthsBudget Budget

(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

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Variable Expense Budget

Expenses

100%

Upto current month deviation

% of Total

Yearly For each monthsBudget Budget

(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

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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.

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Concurrence Tracker

Particular Code Budgeted Amount

Concurrence No.

Date of concurrence

Concurrence amount

Total Concurrence amount

Over / under Run

Remark / Approval no.

Project Code PRJ1 100,000

Expense or over head sub-codes FOOC 32,000

Expense or over head sub-codes FOOC-1 15,000 CON1 05-07-2015 5,000

CON3 07-08-2015 4,000

CON7 07-09-2015 9,000 MD/05 08-09-2015

18,000 (3,000)

Expense or over head sub-codes FOOC-2 9,000 CON2 05-07-2015 4,000

CON4 18-09-2015 3,000

7,000 2,000

Expense or over head sub-codes FOOC-3 8,000 CON5 07-08-2015 2,000

CON8 09-09-2015 2,000

CON6 10-09-2015 4,000

8,000 -

164,000 33,000 33,000 (1,000)

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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 email 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.

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