1 / 56

PRESENTATION ON FINANCIAL CONCEPTS & TERMINOLOGIES REQUIRED TO BE KNOWN AND INTERNAL AUDIT

PRESENTATION ON FINANCIAL CONCEPTS & TERMINOLOGIES REQUIRED TO BE KNOWN AND INTERNAL AUDIT.

garrison-munoz
Download Presentation

PRESENTATION ON FINANCIAL CONCEPTS & TERMINOLOGIES REQUIRED TO BE KNOWN AND INTERNAL AUDIT

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. PRESENTATION ON FINANCIAL CONCEPTS &TERMINOLOGIES REQUIRED TO BE KNOWN AND INTERNAL AUDIT

  2. THE PURPOSE OF THIS PRESENTATION IS TO ACQUAINT THE NEW EXECUTIVES RECENTLY JOINED/JOINING VIGILANCE DEPARTMENT WITH CERTAIN IMPORTANT PROCESSES, INFORMARION AND ACTIVITIES OF THE CORPORATION ENABLING THEM TO APPRECIATE VARIOUS ASPECTS WHILE INVESTIGATING THE CASES FROM VIGILANCE PERSPECTIVE

  3. THE PRESENTATION INCLUDES A BRIEF INSGIHT IN RESPECT OF IMPORTANT MANUALS, BDP, BUDGET, FUNCTIONING OF INTERNAL AUDIT & CAG REPORT PARAS, ANNUAL ACCOUNTS, FUNCTIONING OF EXCECUTIVE COMMITTEE, EXECUTIVE PURCHASE COMMITTEE & BOARD ETC

  4. INDEX

  5. PART-I-IMPORTANT MANUALS & THEIR CONTENTS

  6. PART-II-BOOK OF DELEGATED POWERS(BDP) • IT IS CLASSIFIED IN FINANCIAL POWERS RELATING TO CAPITAL & REVENUE EXPENDITURE • THE DELEGATION OF POWERS DIVIDEDIN TWO CATEGORIES, I.E. BOARD LEVEL & BELOW BOARD LEVEL EXECUTIVES

  7. BDP IS BASED ON CRC STRUCTURE • THE BOARD LEVEL POWERS AS PER BDP HAVE BEEN DISCUSSED LATER IN THIS PRESENTATION IN PART- VI RELATING TO FUNCTIONING OF EC,EPC & BOARD • BELOW BOARD LEVEL POWERS INCLUDE POWERS AT DIFFERENT LEVELS OF OFFICERS FOR CAPITAL EXPENDITURE,INVENTORY, GENERAL ADMN, R&M, CONTRACT SERVICES, LOGISTICS,CONSULTANCY,COMMUNICATION,PRINTING STATIONERY,

  8. HOSPITALITY, CONTINGENT ADVANCES, STATUTORY LEVIES, GRANT-IN-AID, COMPENSATION, MM,DISPOSAL ETC. • FOR USING THE BDP, ONE HAS TO IDENTIFY THE DIFFERENT LEVELS OF EXECUTIVES WHICH ARE AS UNDER:

  9. i) LEVEL I-A TO I-F EXECUTIVES CONTAIN CERTAIN ASSET MANAGERS, BASIN MANAGERS & SERVICES CHIEFS OF BIGGER ASSETS, HEADS OF INSTITUTES, CHIEF OF CORPORATE FUNCTIONS ETC. LEVEL I-A STARTS FOR BIGGER ASSETS AND GRADUALY GOES DOWN TO I-F WHICH ARE RELATED TO SMALLER ASSETS AND HEADS OF CETAIN INSTITUTES ETC.

  10. ii) LEVEL-II OFFICERS CONTAINS ASSET MANAGERS OF SMALLER ASSETS, BASIN, SERVICES AND INSTITUTES ETC iii) LEVEL-III OFFICERS CONTAIN AREA MANGERS UNDER ASSETS, FORWARD BASE MANAGERS, LOCATION MANAGERS AND SOME LOWER LEVEL OFFICERS IN HAZIRA & URAN iv) LEVEL-IV OFFICERS INCLUDE SECOND LEVEL OFFICERS, IN ROs, INSTITUTESAND CORPORATE FUNCTIONS.

  11. v) CVO, ONGC HAS BEEN CONFERRED THE ADMINISTRATIVE & FINANCIAL POWERS AT PAR WITH FUNCTIONAL DIRECTORS OF THE CORPORATION BY VIRTUE OF A SPECIAL ORDER vi) VIGILANCE OFFICERS, IN INVESTIGATION REPORTS, MUST MAKE A MENTION IF ANY VIOLATION OF BDP IS SEEN IN ANY CASE THEY ARE TO DEAL WITH

  12. PART-III-BUDGET • NO EXPENDITURE CAN BE INCURRED UNLESS PROVIDED IN THE BUDGET • THE BUDGET IS MADE AT HQ ON THE BASIS OF REQUIREMENTS OF ALL WORK CENTRES ON CRC STRUCTURE • THE BUDGET PROCESS STARTS IN THE MONTH OF MAY EVERY YEAR

  13. NORMALLY BUDGET IS APPROVED BY ONGC BOARD IN THE MONTH OF SEPT/OCT • BUDGET IS MADE BROADLY UNDER TWO CATEGORIES, I.E. PLAN & NON-PLAN EXPENDITURE(CAPITAL & REVENUE) • THE MAJOR BUDGET HEADS OF PLAN EXPENDITURE ARE: SURVEY,EXPL.DRLG, DEV.DRLG.R&D, MAJOR CAPITAL,OTHER CAPITAL,JVC PLAN,OVERS(OVL)

  14. THE NON PLAN BUDGET HEADS ARE OPERATING EXP,JVC.OPEX, STAT.LEVIES,INTEREST,CORP.TAX.DIVIDEND,LOAN REPAYMENTAND ADVANCES. • PREPARATION OF BUDGET IS BASED ON THE REQUIREMENT RECEIVED FROM ALL WORK CENTRES FOR BUDGET ESTIMATES(BE) FOR NEXT YEAR AND REVISED ESTIMATES(RE) FOR CURRENT YEAR

  15. ALL THE WORK CENTRES ARE REQUIRED TO OBTAIN ADMINISTRATIVE & FINANCIAL SANCTION FROM THE COMPETENT AUTHORITY ON THEIR PROPSALS TO BE PROVIDED IN THE BUDGET. THIS IS TO AVOID DELAY IN THE PROCESS OF INCURRING OF ACTUAL EXPENDITURE • IN CASE OF CAPITAL EXPENDITURE, THE FINANCIAL CONCURRENCE IS NOT REQUIRED IF THE SAME HAS BEEN PROVIDED IN THE BUDGET

  16. BUDGET ALSO INCULDES QUANTITATIVE DETAILS OF VARIOUS ITEMS OF BUDGET SUCH AS DRILLING, PRODUCTION AND SALES ETC • THERE IS A GENERAL TENDENCY OF OVER PROVISIONING IN THE BUDGET WHICH RESULTS IN LOWER BUDGET UTILIZATION(AVERAGE 65 TO 70 %)

  17. GENERALLY, THE RATIO OF PLAN & NON-PLAN BUDGET PROVISION IS 25:75 • EXPENDITURE ON UNBUDGETED ITEMS CAN BE INCURRED ONLY WITH SPECIAL APPROVAL OF THE HIGHER MANAGEMENT • REAPPRORIATION OF BUDGET PROVISIONS CAN BE DONE ONLY WITH THE APPROVAL FROM CA

  18. RE-APPROPRIATION OF BUDGET FROM PLAN TO NON-PLAN & VICE-A-VERSA IS NOT PERMISSIBLE • WHILE INVESTIGATING THE CASES, VIGILANCE OFFICERS ARE EXPECTED TO TAKE CARE IF THE BUDGET PROCEDURES ARE BEING COMPLIED WITH OR ELSE THIS ASPECT HAS TO BE INCLUDED IN THE INVESTIGATION REPORT APPROPRIATELY

  19. PART-IV- FUNCTIOING OF INTERNAL AUDIT SECTION AND A BRIEF ABOUT CAG REPORT PARAS I. Internal Audit • Preparing Annual Audit Plan based on risk-mapping, likelihood and materiality of various risk factors. • Obtaining approval of Audit Committee for annual Audit Plan. • Conducting Internal Audit as per Annual Audit Plan approved by Audit Committee.

  20. Internal Audit (Contd.) • Conducting special audit studies as per the directions of the management from time to time. • Bringing significant audit findings to the notice of Audit Committee and the higher management from time to time.

  21. Internal Audit (Contd.) • Acting as a nodal agency in the matter of replies to Govt. Audit paras for submission of replies to Govt. Audit Draft Paras/Action taken Note Paras expeditiously to Govt. Audit/ MOP&NG, as the case may be.

  22. VIGILANCE OFFICERS CAN ALSO OBTAIN INFORMATION FROM THE INTERNAL AUDIT AND LINK THE SAME WITH THEIR INVESTIGATIONS • THE SIGNIFICANT INTERNAL AUDIT FINDINGS CAN BE VIEWED BY VIGILANCE OFFICRES FROM VIGILANCE PERSPECTIVE

  23. II-GOVT. AUDIT-CAG REPORT PARAS • IN CASE THE REPLIES TO DRAFT AUDIT PARAS GIVEN BY ONGC ARE NOT FOUND SATISFACTORY OR REPLIES ARE NOT GIVEN AT ALL, THESE PARAS ARE CONVERTED INTO CAG REPORT PARAS, TO BE TABLED IN PARLIAMENT

  24. PART-V- CONTENTS OF ANNUAL ACCOUNTS INCLUDING GLOSSARY OF FINANCIAL TERMS USED CONTENTS VISION,MISSION,DETAILS OF BOARD MEMBERS, PERFORMANCE OF LAST 10 YEARS,DIRECTOR’S REPORT,COMMENTS OF CAG ON ACCOUNTS,DETAILS OF HUMAN RESOURCE, CONT.

  25. CONTENTS OF ANNUAL ACCOUNTS CONTD. STATUTORY AUDITOR’S REPORT, BALANCE SHEET & PROFIT & LOSS ACCOUNT, CASH FLOW STATEMENT,CORPORATE GOVERNANCE REPORT, SECRETARIAL COMPLIANCE REPORT, INTEREST OF ONGC IN SUBSIDIARY COMPANIES ETC.

  26. GLOSSARY OF FINANCIAL TERMS USED IN ANNUAL ACCOUNTS • RECOUPED COSTS: It refers to Amortization, Depreciation and Depletion charged in accounts. These are non-cash costs. • AMORTISATION: It refers to the Dry wells and Survey expenditure expensed in the accounts.

  27. DEPRECIATION: • Ameasure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, efflux of time or obsolescence through technology and market changes.

  28. DEPLETION: • A measure of exhaustion of a wasting asset (Producing Properties) represented by periodic write off of cost. It is computed with reference to the amortization base by taking the related capital cost incurred divided by hydrocarbon reserves and multiplied by production.

  29. ROYALTY: • It is a levy imposed under The Petroleum and Natural Gas Rules, 1959 payable to the respective State or Central Government granting the lease (Central Government in case of offshore) on crude oil and natural gas obtained.

  30. CESS: • It is a levy imposed under The Oil Industry (Development) Act, 1974 on crude oil produced and payable to the Central Government. • EXPLORATION COSTS: • Costs incurred in exploring property. Exploration involves identifying areas that may warrant examination and examining specific areas, including drilling exploratory wells.

  31. DEVELOPMENT COSTS: • Costs incurred in preparing proved reserves for production i.e. costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing oil and gas. • PRODUCTION COSTS: • Costs incurred in lifting the oil and gas to the surface and in gathering, treating and storing the oil and gas.

  32. PRODUCING PROPERTY: • These may be defined as the value assigned to crude oil or gas reserves which can be produced from existing facilities. • Working Capital: • Current Assets-Current Liabilities & Provisions • Capital Employed: • Net Fixed Assets+ProducingProperties +Working Capital

  33. Net Worth: • Paid Up Share Capital+Reserves & Surplus-Misc. Exp. Not Written Off • OTHER FINANCIAL DATA/ INFORMATION • Performance at a glance for last nine years

  34. COMMONLY USED FINANCIAL/COMMERCIAL TERMS • WRITTEN DOWN VALUE • ORIGINAL COST • NOTES TO ACCOUNTS • ACCOUNTING STANDARDS • ACCOUNTING POLICIES • TAX DEDUCTION AT SOURCE • FREE ON BOARD • EX-WORKS • CAPITAL EXPENDITURE • REVENUE EXPENDITURE

  35. QUALIFICATIONS IN AUDIT REPORT • COST INSURANCE & FRIEGHT • F-O-R • WRIT-OFF OF LOSSES • PROVISIONS • DOUBTFUL DEBTS • FINANCIAL CONCURRENCE • YEAR MARKING OF FUNDS • SANCTION ORDER • RE-APPROPRIATION OF BUDGET • PLAN & NON-PLAN EXPENDITURE

  36. FLUCTUATION IN EXCHANGE RATES • STATUTORY, INTERNAL & CAG AUDIT • INLAND L/C • FOREIGN L/C • REVOCABLE & IRREVOCABLE L/C • BANK GUARANTEE • DOCUMENTS THROUGH BANK • COMMITMENT CHARGES • ACCOUNTS RECEIVABLE/PAYBLE • LAST PAY CERTIFICATE(LPC) • SUBSIDIARY OR CONTROL ACCOUNTS • PRE-AUDIT

  37. PRICED STORE LEDGER • ASSET MASTER • CASH CREDIT • HYPOTHECATION • PLEDGE • MORTGAGE • SCHEDULE OF RATES • LOADING IN TENDERS • CONTINGENT LIABILITY • CURRENT LIABILITY • CURRENT ASSETS • LIQUID ASSETS • DEMMURAGE • WHARFAGE • FREIGHT TO PAY/FREIGHT PAID • DIVIDENT • INTEREST

  38. INVENTORY, STOCKS,SPARES, CARDEX • PHYSICAL VERIFICATION • DISCRIPANCIES • PACKING & FORWARDING CHARGES • TURNKEY PROJECTS • CURRENT ACCOUNT • IN-OPERATIVE ACCOUNT • FDR, SDR • NORMAL/ABNORMAL LOSSES • COST ESTIMATES • SECURITY DEPOSIT

  39. ROYALTY • EARNEST MONEY DEPOSIT • LIQUIDATED DAMAGES • SALES TAX • WORKS CONTRACT TAX • SERVICE TAX • BANK RECONCILIATION STATEMENT • CESS

  40. PART-VI-FUNCTIONING OF EC,EPC & BOARD • EXECUTIVE COMMITTEE(EC) i) EC CONSISTS OF C&MD & ALL FUNCTIONAL DIRECTORS ii) THE EC MEETINGS ARE HELD ON NEED BASIS iii) ALL CONSULTANCY CONTRACTS ARE TO BE APPROVED IN EC iv) OUT OF COURT SETTLEMENT OF DISPUTED CLAIMS ARE TO BE APPROVED BY EC

  41. v) CERTAIN POLICY MATTERS, MOSTLY RELATED TO HR, ARE ALSO TO BE APPROVED BY EC vi) EC ALSO FIXES NORMS FOR ACCOMMDATION & OFFICE FURNITURE, KITS AND LIVERIES AND RESIDENTIAL TELEPHONES ETC.

  42. EXECUTIVE PURCHASE COMMITTEE(EPC) • IT CONSISTS OF C&MD AND ALL FUNCTIONAL DIRECTORS • THE EPC MEETINGS ARE HELD ON NEED BASIS • ALL POLICY MATTERS RELATING TO MATERIALS MANAGEMENT & CONTRACTS ARE APPROVED BY EPC • ALL PROCUREMENTS BEYOND CERTAIN AMOUNT ARE TO BE APPROVED BY EPC

More Related