sweta's l&t
TRANSCRIPT
A PROJECT REPORT ONPETTY CASH &
DISBURSEMENT(L&T BHUBANESWAR)
(Orissa)
ByMs. Sweta Leena Patnaik
Regn. No. - 4027
Under the esteem guidance of
Mr. Prasenjit Paul
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Project Report On
Petty Cash & Disbursements(L&T Bhubaneswar)
Sweta Leena PatnaikRegn. No.- 4027
Project submitted in partial fulfillment for
Award of the degree of PGDMVVISM
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DECLARATION
I Sweta Leena Patnaik, declare that this project report
entitled “Petty Cash & Disbursement” is the original work
done in L&T Limited. And is submitted by me towards partial
fulfillment of my Post Graduate Diploma in Management, under
the guidance of faculties & the employees named as Mr.
Prasenjit Paul.
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Date:
Place: Bhubaneswar (Orissa) Signature
ACKNOWLEDGEMENT
I am grateful to Mr. Prasenjit Paul for providing me an
opportunity to do my project work in L & T Ltd.
I take this opportunity to express my deep sense of
gratitude to my superior Mr. Prasenjit for the guidance and
other staff of the organization for extending their valuable
support and help in the preparation of this project report.
I am also thankful to my friends and seniors for extending
their co-operation in completion of this project report.
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Date:
Place: Bhubaneswar (Orissa) Signature
CERTIFICATE
This is to certify that the Project Report titled as “Petty Cash & Disbursements”
submitted in partial fulfillment for award of Post Graduate Diploma in
Management (PGDM) was carried out by Ms. Sweta Leena Patnaik under my
guidance. This has not been submitted to any other University or Institution for
the award of any Degree / Diploma/ Certificate.
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Name & Address of the
Branch Manager
Signature of the Branch Manager
Signature of the Supervisor
Date:
Place:
TABLE OF CONTENTS
CHAPTER-1 - INTRODUCTION
- Scope of the Study
- Significance of the Study
- Objectives of the Study
CHAPTER-2 – ORGANIZATIONAL PROFILE
- Company Profile
- Department Details
CHAPTER-3 – RESEARCH METHODOLOGY
- Sources of Data
- Methodology
- Tools and Techniques used
- Limitations
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CHAPTER-4 – RECOMMENDATION & SUGGESTION
CHAPTER-5 – CONCLUSION
ANNEXURE
BIBLIOGRAPHY
INTRODUCTION
Meaning of Petty Cash-:
Petty cash is a small amount of discretionary funds in the form of cash used for
expenditures where it is not sensible to make the disbursement by check, because
of the inconvenience and costs of writing, signing and then cashing the check.
Petty cash allows you to make small purchases or reimbursements, in cash, for items such
as stamps, office supplies, parking, etc. The fund should be enough to cover petty cash
expenditures for about a month. If it is too small you will have to constantly replenish the
funds, and if it is too large it means you have cash on hand which could be more safely
kept in your bank account / Cash Box. The petty cash fund should be kept in a locked box
or drawer Management recommend that only one person, called the custodian, have
access to this cash, and that person be responsible for all petty cash activity. To disburse
petty cash funds, the organization will need to buy or develop petty cash vouchers for
documenting each transaction, and determine who in the organization can approve petty
cash payments. Petty cash must approve by department heads or the petty cash custodian.
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Documentation & Uses of Petty Cash-:
All petty cash transactions must have adequate support which substantiates (1)
what was purchased, and (2) that payment was made. A detailed listing of each
item purchased must be provided, and the original paid invoice/ receipt attached
to the Cash Reimbursement Request form. Photocopies or faxes of
invoices/receipts are not acceptable.
1. Enter the amount of the total purchase.
2. Enter a detailed description of the purchase.
3. The person receiving the cash advance or reimbursement must sign.
4. The custodian is to enter the account number to be charged and sign the
form.
Petty Cash Safeguard
• The petty cash fund should be kept in a locked, secure place.
• Access to the petty cash fund should be restricted to the custodian and a
back-up person.
• Petty cash should be disbursed only by the custodian (or a back-up
person in the custodian's absence).
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• Original receipts should be required in order to disburse petty cash.
Receipts should be maintained in the petty cash fund box for reconciling.
• The person to be reimbursed should indicate on the original receipt what
was purchased (if not obvious on the receipt), the business purpose, and
account and fund to be charged.
• The original receipts should be approved and signed by an appropriate,
authorized individual, such as the supervisor of the person to be
reimbursed.
• The petty cash fund should not be used for personal expenses, personal
loans, or the cashing of personal checks.
• The Custodian should be responsible for regularly reconciling the petty
cash fund. (The sum of cash plus original receipts plus any outstanding
reimbursements should equal the full, original amount of the fund.)
• Requests for closing a petty cash account should be made timely. The
Accounting Services Department performs a fortnightly written
confirmation of the petty cash account balances.
Petty Cash Internal Controls Checklist-:
The following questions reflect common internal accounting controls related to
petty cash. We may use this list to review your own internal accounting controls
and determine which areas require further action.
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o Is an imprest petty cash fund maintained for payment of small, incidental
expenses?
o Is there a limit to the amount that can be reimbursed by the petty cash fund?
o Is supporting documentation required for all petty cash disbursements?
o Is a petty cash voucher filled out with supporting documentation, name of person
being reimbursed and proper authorization?
o Is access to petty cash limited to one person who is the fund custodian?
Overview of the Study-:
This study is completed by me at Bhubaneswar (Orissa) L & T Branch office.
Basically this study is meant to find out functioning of Petty Cash with proper
internal controls in the company. My job in L & T was basically to observe petty
cash dealings & other disbursements in Accounts.
Vision of the Company:-
The company shall be a professionally managed Indian multinational, committed
to total customer satisfaction and enhancing shareholder value. The company
shall foster a culture of caring, trust and continuous learning while meeting
expectations of employees, shareholders and society. The employees of the
company shall be an innovative, entrepreneurial and empowered team constantly
creating value and attaining global benchmarks.
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Mission of the company:-
To compete and grow in a globalize business environment, the company is
implementing a strategic plan (LAKSHYA) for 2005-10. The plan has been drawn
up in consultation with a leading international strategy consultant. It has set
ambitious growth targets for each business and also included are opportunities for
diversification of the company’s business portfolio.
Global Presence-:
L&T has a global presence. A thrust on international business over the years has
seen overseas revenues growing steadily. The company has manufacturing
facilities in India, China, Oman and Saudi Arabia. It has a global supply network
with offices in 10 locations worldwide, including Houston, London, Milan,
Shanghai, and Seoul. The customers include global majors in over 30 countries.
Scope of the Study-:
The scope of my study was basically fund management of this office. I was doing
my project in the Larsen & Toubro Marketing Network. So my work was to check
the expense vouchers submitted by employees in respect of proper authorization,
correct Dept code & GL code. Maintenance of daily Cash book in register and as
well as in SAP.
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Significance of the Study-:
After being involved in the project I came to know that what the objective of
my study was. My objective was to check whether proper internal controls were
followed and expenses are booked with correct Dept code & accounting code. I
was also monitoring the Bank Balance & Cash Balance to maintain minimum
level. During my project I got an opportunity to learn SAP. It will be very helpful
for me in my future. I dealt with the journal entry, rectification entry and the
general ledger codes etc with the help of SAP.
Objective of the Study-:
This project aims at studying the present financial position of the L&T marketing
network of Bhubaneswar (Orissa). This is the very important area of their
business. Basically the aim was to maintain minimum possible balance either in
Bank or Cash and operate accordingly. So the interest burden less for the
company.
Scheme of the Report
My project report starts with the introduction. In this I have given a brief
introduction of petty cash book. Then, I have given the overview of the study,
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which tells all about the project. After this I have shown vision, mission and the
global presence of the company. I have given scope, significance and objective of
the study.
In the second chapter I have given the company’s profile and the details of all its
departments.
Company Profile
INTRODUCTION
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and
manufacturing company. It is one of the largest and most respected companies in
India's private sector. Seven decades of a strong, customer-focused approach and
the continuous quest for world-class quality have enabled it to attain and sustain
leadership in all its major lines of business. L&T has an international presence,
with a global spread of offices. A thrust on international business has seen
overseas earnings grow significantly. It continues to grow its overseas
manufacturing footprint, with facilities in China and the Gulf region. The
company's businesses are supported by a wide marketing and distribution
network, and have established a reputation for strong customer support. L&T
believes that progress must be achieved in harmony with the environment. A
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commitment to community welfare and environmental protection are an integral
part of the corporate vision.
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers,
Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly
committed to developing India's engineering capabilities to meet the demands of
industry. Beginning with the import of machinery from Europe, L&T rapidly took
on engineering and construction assignments of increasing sophistication. Today,
the company sets global engineering benchmarks in terms of scale and
complexity.
Henning Holck-Larsen and Soren Kristian Toubro, school-mates in Denmark,
would not have dreamt, as they were learning about India in history classes that
they would, one day, create history in that land. In 1938, the two friends decided
to forgo the comforts of working in Europe, and started their own operation in
India. All they had was a dream. And the courage to dare. Their first office in
Mumbai (Bombay) was so small that only one of the partners could use the office
at a time! In the early years, they represented Danish manufacturers of dairy
equipment for a modest retainer. But with the start of the Second World War in
1939, imports were restricted, compelling them to start a small work-shop to
undertake jobs and provide service facilities. Germany's invasion of Denmark in
1940 stopped supplies of Danish products. This crisis forced the partners to stand
on their own feet and innovate. They started manufacturing dairy equipment
indigenously. These products proved to be a success, and L&T came to be
recognized as a reliable fabricator with high standards. The war-time need to
repair and refit ships offered L&T an opportunity, and led to the formation of a
new company, Hilda Ltd., to handle these operations. L&T also started two repair
and fabrication shops - the Company had begun to expand. Again, the sudden
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internment of German engineers (because of the War) who were to put up a soda
ash plant for the Tatas, gave L&T a chance to enter the field of installation - an
area where their capability became well respected.
L & T’s Journey-
In 1944, ECC was incorporated. Around then, L&T decided to build a portfolio of
foreign collaborations. By 1945, the Company represented British manufacturers
of equipment used to manufacture products such as hydrogenated oils, biscuits,
soaps and glass. In 1945, L&T signed an agreement with Caterpillar Tractor
Company, USA, for marketing earthmoving equipment. At the end of the war,
large numbers of war-surplus Caterpillar equipment were available at attractive
prices, but the finances required were beyond the capacity of the partners. This
prompted them to raise additional equity capital, and on 7th February 1946,
Larsen & Toubro Private Limited was born. Independence and the subsequent
demand for technology and expertise offered L&T the opportunity to consolidate
and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and
New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was
acquired in Powai. Today, Powai stands as a tribute to the vision of the men who
transformed this uninhabitable swamp into a manufacturing landmark.
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Public Limited Company-:
In December 1950, L&T became a Public Company with a paid-up capital of Rs.2
million. The sales turnover in that year was Rs.10.9 million. Prestigious orders
executed by the Company during this period included the Amul Dairy at Anand
and Blast Furnaces at Rourkela Steel Plant. With the successful completion of
these jobs, L&T emerged as the largest erection contractor in the country. In
1956, a major part of the company's Bombay office moved to ICI House in
Ballard Estate. A decade later this imposing grey-stone building was purchased by
L&T, and renamed as L&T House - it’s Corporate Office. The sixties saw a
significant change at L&T - S. K. Toubro retired from active management in
1962. The sixties were also a decade of rapid growth for the company, and
witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco
India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963).
Expanding Horizon-:
By 1964, L&T had widened its capabilities to include some of the best
technologies in the world. In the decade that followed, the company grew rapidly,
and by 1973 had become one of the Top-25 Indian companies. In 1976, Holck-
Larsen was awarded the Magsaysay Award for International Understanding in
recognition of his contribution to India's industrial development. He retired as
Chairman in 1978. In the decades that followed, the company grew into an
engineering major under the guidance of leaders like N. M. Desai, U. V. Rao, S.
D. Kulkarni and A. M. Naik. Today, L&T is one of India's biggest and best
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known industrial organizations with a reputation for technological excellence,
high quality of products and services, and strong customer orientation. It is also
taking steps to grow its international presence. For an institution that has grown to
legendary proportions, there cannot and must not be an 'end'. Unlike other stories,
the L&T saga continues...
Record of Achievements-:
Larsen & Toubro’s signature of excellence is evident on:
Refinery projects executed in the GCC countries.
World’s largest coal gasifier made in India and exported to China.
The world’s largest ethylene oxide reactor supplied to a petrochemical
complex.
Oil and gas platform projects executed to global benchmark to oil majors
including those in Abu Dhabi.
The world’s largest continuous catalyst regeneration reactor.
The simultaneous execution of clean fuel project.
L & T’s Business Profile:-
Larsen & Toubro Limited (L&T) is India's largest engineering and construction
conglomerate with additional interests in electrical, electronics and IT. A strong
customer-focus approach and constant quest for top-class quality have enabled
L&T to attain and sustain leadership over 6 decades. EPC project business
constitutes a critical part of the L&T's engineering core. L&T has integrated its
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strengths in basic and detailed engineering, process technology, project
management, procurement, fabrication and erection, construction and
commissioning, to offer single point responsibility under stringent delivery
schedules. Strategic alliances with world leaders enable L&T to access technical
know-how and execute process intensive, large scale turnkey projects to maintain
its leadership position. L &T's international presence is on the rise, with a global
spread of over 30 offices and joint ventures with world leaders. Its large
technology base and pool of experienced personnel enable it to offer integrated
services in world markets. L&T enjoys a brand image in India and several
countries offshore. With factories and offices located all over the country and
abroad, L&T operations are supplemented by a comprehensive distribution
network and nationwide ramifications for customer service and
Larsen & Toubro Limited - engineering and construction major - is among the
largest and most reputed companies in India's private sector. The Construction
division of Larsen & Toubro Limited - is India's largest construction organization.
Many of the country's prized landmarks - its exquisite buildings, tallest structures,
largest industrial projects, longest flyover, and highest viaducts - have been built
by ECC. Leading-edge capabilities cover every discipline of construction: civil,
mechanical, electrical and instrumentation. As a division of L&T, ECC has the
resources to execute projects of large magnitude and technological complexity in
any part of the world. The business of ECC Division is organized in six business
sectors which will primarily be responsible for Technology Development,
Business Development, International Tendering and work as Investment Centers.
ECC Division's head quarters in Chennai, India. In India, 7 Regional Offices and
over 250 project sites. In overseas its has offices in Gulf and other overseas
locations.
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Larsen & Toubro , India's top engineering and construction firm, plans to sell 10.3
million shares of Ultratech Cement for up to $160 million. L &T will sell the
shares, 8.3 percent of the equity in the cement maker, at 720 to 735 rupees each in
block deals. The price range is lower by 3.7 to 5.7 percent to Ultratech. Larsen &
Toubro limited ), a 100% subsidiary of the US$ 3.5 billion Forbes Global 1000
and Business Week Asia top 50 technology-driven engineering and construction
major, Larsen & Toubro Limited, offers comprehensive, end-to-end software
solutions and services. Leveraging the heritage and domain expertise of the parent
company, its services encompass a broad technology spectrum, catering to leading
international companies across the globe. A Range of Products & Services.
History of L & T Limited:-
L & T was founded by two Danish engineers, Holck Larsen and Soren Kristian
Toubro, in 1938. Beginning with the import of machinery from Europe, L & T
rapidly took on engineering and construction assignments of increasing
sophistication. It now has a major presence in key sectors of the economy. A
strong, suctomer-focussed approach and the constant quest for top class quality
have enabled the company to attain and sustain leadership in its major lines of
business across seven decades.
With factories and offices located around the country, further supplemented by
a comprehensive marketing and distribution network, L & T enjoys an equity in
virtually every district of India. The company has an international presence, with
a global spread of offices and joint ventures with world leaders. L & T’s large
technology base and pool of experienced personnel enable it to offer integrated
services in world markets.
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The Sales and Order Inflow Statement-:
I am giving the order inflow and sales graph of L & T group of companies. From
the graphs it will be very clear about the growth of the company.
Order inflow in Billion:
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From the above graph it is very clear that X-axis measures the Year from
2005 to 2008. The Y-axis measures the order inflow growth in the company in
Billion. In 2005-2006 the growth rate 224 Billion. In 2006-2007, it is increased to
306 Billion. In 2007-2008 it is increased to 420 Billion. It is the highest growth
rate. From this we can understand the order inflow in the company is increasing
year by year. It is the largest construction company.
Sales in Billion:
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From the above graph it is clear that the X-axis measures the Year from 2005 to
2008. The Y-axis measures the sales growth in billion. In 2005-2006 the sales
growth is 150 Billion. In 2006-2007 the sales growth has increased to 179 Billion.
In 2007-2008 it has increased to 252 Billion. It is the highest sales growth. From
the above graph it is very clear about the sales growth of the company.
Major Awards Received by L&T in 2009
L&T is ‘Best for Investor Relations’: Asiamoney
Technology Block at Hazira wins LEED Platinum Rating
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L&T-Chiyoda bags ICWAI Award for Excellence in Cost Management
L&T Wins Golden Peacock Award for Corporate Social Responsibility
Chemtech Business Leader of the Year
L&T bags FICCI Award for Outstanding Corporate Vision
Padma Bhushan for Mr. A. M. Naik
ET Business Leader of the Year for Mr. A. M. Naik
Mr. A.M. Naik Conferred Gujarat’s Highest State Honour - ‘Gujarat Garima Award’
Departments of Larsen & Toubro
The company is having the following departments. The common aims of these
departments are “Sales and Services”.
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MES / MED - Medical Equipment Section / Department
PSD / EMS - Parts Service Department / Earthmoving Machinery Service ESP - Electrical Standard Product
WPB - Welding Product Business
PDP - Petrol Dispensing Pump
CEB - Construction Equipment Business
LTCEPL - L&T Case Equipment Private Limited
VBG - Valves Business Group
E&C - Engineering & Construction
IIPM - Indian Institute of Production Management
ADMINISTRATION & HR - Administration & HR
ACTS - Accounts
My Work in L & T
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At Larsen & Toubro Limited I was doing office work. Mr. Prasenjit Paul and Mr.
Bijaya Nayak helped me a lot. They taught me a little bit techniques of "Systems
Applications and Products (SAP)”. Basically there, my work was to how fund is
being managed by way of disbursing cheques and cash payments and amount
received from various customers towards sales. They also briefed me about the
sales tax. They generally pay their taxes on the 20 th of every month. So they have
to calculate their taxes before the due date. They taught me the calculation of tax.
I helped them in calculating the tax. We generally calculate all the departments’
tax separately. Then we add all the taxes, calculate it. After that we submit it to
the Bhubaneswar (Orissa) Sales tax office. After working there for 45 days I
understood the value of Waybill. Generally in the corporate like L&T the value of
the Waybill is very important. It is used to transfer the goods from one state to
another. This is the document that is issued from the sales tax office of
Bhubaneswar (Orissa).
From the very first day of my work they taught me that how to deposit cheques in
the Bank. Then they taught me the ways or techniques of SAP, because most of
the work of the company is done in SAP only. So I am very much thankful to the
organization for giving me the opportunity to work with them for few days.
In L & T, I was doing the following work:
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Payment Vouchers were being scrutinized by me after it came Accounts
Dept. Basically authorization part were ckecked.
I was also checking GL (General Codes) mentioned in the vouchers
company for proper accounting.
I have done some accounting work like entry of cheques, journal entry etc.
in SAP.
The most important thing that I have done is the Bank Reconciliation.
About the transfer of their stock or inventory i.e. all about the Waybill.
Rectification entry in SAP
About the taxation system of the company. The taxation includes VAT,
CST, Entry Tax (ET), C-Form, and F-Form.
Research Methodology
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Sources of the Data:-
There are two sources from where I was collecting the data everyday. One source
is from the employer’s applications and from the expenses bills of the employees.
Methodology and Limitation:- The methodology adopted for this study includes both qualitative and quantitative
types of analysis to arrive at a conclusion.
Tools and Techniques:-
MS-Excel and SAP
Working Area: L & T Branch Office Bhubaneswar (Orissa)
Research Design: Descriptive Design
Questionnaire: 6 questions
Limitations:-
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I was working in the branch office of L&T. That is the office of L&T’s Marketing
Network. I feel, the following are the limitation of the company.
Emergency payment sometimes become difficult since fund has to
come from H.O
The work area is very big.
Time constraint, I have to complete the study within time.
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Nature of Reimbursement to employees in Bhubaneswar Branch
Cash payment for employees inside Office.
The following procedures are followed in this company :-
Fund is getting transferred from Head Office on request to Local Bank (Current)
account . The request is based on expense vouchers available with dept.
Then amount is being withdrawn from Bank for disbursement of cash.
Where the request is from outside Bhubaneswar then the same is settled through
cheque.
A manual Cash Book is being maintained for cash payments and closing balance
is arrived.
End of the day the balance is being tallied with physical cash and denominations
are written in the cash book. If tallied then the same is being signed by the Branch
Accountant. I find this as a very good system in control point of view.
After this all the vouchers are entered in SAP and further tallied with Cash Book
in SAP and also corresponding GL Account.
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Payment to employees outside Bhubaneswar
Employees who are posted in other location like Rourkela, Jharsuguda, Barbil,
etc, the reimbursement process is done by cheque. Basically their expenses are
clubbed for the whole month and being sent to this office. After receipt of the
vouchers the expenses are scrutinized and properly authorized by respective
persons. Then the expenses are reimbursed by cheque in favour of employees.
The following activities take place for disbursement in the company.
1. Cheque payment
2. Vouchers payment
3. Bank Reconciliation
4. Imprest account System
5. Business I.O.U.
6. Rectification Entry
These are the petty cash dealings in the company L&T. Let’s explain these one by
one.
Cheques
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A cheque (British English/Canadian) or check (American English) is a negotiable
instrument instructing a financial institution to pay a specific amount of a specific
currency from a specified demand account held in the maker/depositor's name
with that institution. Both the maker and payee may be natural persons or legal
entities.
The most common spellings of the word (in all its senses) were check, checque,
and cheque from the 1600s until the 1900s. Since the 1800s, the spelling cheque
(from the French word chèque) is standard for the financial sense of the word in
the UK, Ireland, and the Commonwealth, while only check is retained in its other
senses, thus distinguishing the two definitions in writing.
The cheque had its origins in the ancient banking system, in which bankers
would issue orders at the request of their customers, to pay money to identified
payees. Such an order was referred to as a bill of exchange. The use of bills of
exchange facilitated trade by eliminating the need for merchants to carry large
quantities of currency (e.g. gold) to purchase goods and services. A draft is a bill
of exchange which is not payable on demand of the payee. (However, draft in the
U.S. Uniform Commercial Code today means any bill of exchange, whether
payable on demand or at a later date; if payable on demand it is a "demand draft",
or if drawn on a financial institution, a cheque.)
The ancient Romans are believed to have used an early form of cheque known
as praescriptiones in the first century BC. During the 3rd century AD, banks in
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Persia and other territories in the Persian Empire under the Sassanid Empire
issued letters of credit known as Ṣakks.
Muslims are known to have used the cheque or ṣakk system since the times of
Harun al-Rashid (9th century). In the 9th century, a Muslim businessman could
cash an early form of the cheque in China drawn on sources in Baghdad,a
tradition that was significantly strengthened in the 13th and 14th centuries, during
the Mongol Empire. Indeed, fragments found in the Cairo Geniza indicate that in
the 12th century cheques remarkably similar to our own were in use, only smaller
to save costs on the paper. They contain a sum to be paid and then the order "May
so and so pay the bearer such and such an amount". The date and name of the
issuer are also apparent.
Between 1118 and 1307, it is believed the Knights Templar introduced a cheque
system for pilgrims travelling to the Holy Land or across Europe.The pilgrims
would deposit funds at one chapter house, then withdraw it from another chapter
at their destination by showing a draft of their claim. These drafts would be
written in a very complicated code only the Templars could decipher.
Cheques generally contain:
1. Place of issue
2. Cheque number
3. Date of issue
4. Payee
5. Amount of currency
6. Signature of the drawer
7. Account number
Let’s see one example of cheque.
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In L & T we generally separate the cheques in two names.
1. Local cheque
2. Outstation cheque
All the cheques coming from Bhubaneswar is called as local cheque. Because the
branch office is situated in Bhubaneswar(Orissa). All cheques and other
Negotiable Instruments payable locally would be presented through the clearing
system prevailing at the centre. Cheques are being collected by authorized
representatives of Collection Bank before the specified cut-off time will be sent
for clearing on the same day. Bank branches situated at centers where no clearing
house exists, would present local cheques on drawee banks across the counter and
it would be the bank’s endeavor to credit the proceeds at the earliest.
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Cut-off time up to which cheques received will be sent for clearing on the
same day depending upon the local Clearing House rules shall be displayed
prominently for the customers by each branch for cheques received across the
counter / in the drop box / for high value clearing and for credit to Govt. A/cs like
Income Tax etc.
All the cheques coming outside Bhubaneswar (Orissa) is called as outstation
cheques. Cheques drawn on other banks at outstation centers will normally be
collected through bank’s branches at those centers. Where the bank does not have
a branch of its own, the instrument would be directly sent for collection to the
drawee bank or collected through a correspondent bank. The bank would also use
the National Clearing services offered by the Reserve Bank of India at centers
where such collection services exist.
Cheques drawn on bank’s own branches at outstation centers will be collected
using the inter-branch arrangements in vogue. Branches which are connected
through a centralized processing arrangement and are offering anywhere banking
services to its customers will provide same day credit to its customers in respect
of outstation instruments drawn on any of its branches in the CBS network.
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Vouchers
A voucher is an accounting document representing an internal intent to make a
payment to an external entity, such as a vendor or service provider. A voucher is
produced usually after receiving a vendor invoice, after the invoice is successfully
matched to a Purchase Order. A voucher will contain detailed information
regarding the payee, the monetary amount of the payment, a description of the
transaction, and more. In Accounts Payable systems, a process called a "payment
run" is executed to generate payments corresponding to the unpaid vouchers.
These payments can then be released or held at the discretion of an Accounts
Payable supervisor or the company Controller.
In L & T accounts section is using two types of vouchers. They are:
1. Payment Vouchers
2. Receipt Vouchers
The Payment Voucher is an Voucher used for cash and bank payments.
One employee has to spend some amount of money for official use . After
the submission of the payment bills he can get his money back from the
company. For this purpose he uses the payment voucher.
The Receipt Vouchers are used only to receive the cash and cheques from
the bank. L & T is dealing with two banks. They are :
AXIS Bank
CITI Group bank
This is all about the Voucher system of L & T group of companies
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Bank Reconciliation
Bank reconciliation is the process of comparing and matching figures from the
accounting records against those shown on a bank statement. The result is that any
transactions in the accounting records not found on the bank statement are said to
be outstanding. Taking the balance on the bank statement adding the total of
outstanding receipts less the total of the outstanding payments this new value
should (match) reconcile to the balance of the accounting records.
Bank reconciliation allows companies or individuals to compare their account
records to the bank's records of their account balance in order to uncover any
possible discrepancies. Discrepancies could include: cheques recorded as a lesser
amount than what was presented to the bank; money received but not lodged; or
payments taken from the bank account without the business's knowledge. A bank
reconciliation done regularly can reduce the number of errors in an accounts
system and make it easier to find missing purchases and sales invoices.
Similar to the process of verifying that bank accounts are in agreement,
Custodian banks who hold securities for clients must also verify that the count of
securities held at the bank matches the client's account(s).
There are many different types of security reconcilements, such as between an
investment manager and the Custodian bank, Fund Accounting or between the
Custodian bank and a depository (such as Euroclear or The Depository Trust
Company)
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Security reconcilements are usually either positional or transactional in
nature. In both cases, the reconcilement is frequently conducted at the security
identifier level, such as CUSIP, ISIN, or SEDOL.
In a positional reconcilement, the shares are counted between two parties and
compared. If the counts match, then the position is said to be in balance. If the
positions do not match, then it is considered "out of balance", also referred to as a
"break".
In a transactional reconcilement, only the changes from transactions are
applied to accounts. The reconcilement occurs by matching offsetting transactions
between the two sides of the reconcilement. If a transaction cannot be properly
matched with its counterpart, it is left open and referred to as an "exception".
A transactional reconcilement can be more accurate when trying to resolve
exceptions. In a positional reconcilement, the only fact known is that the positions
do not agree; in a transactional environment, all of the details are available to
allow for more granular research.
In some locations, reconciliations are required for regulatory reasons.
Most positions are reconciled daily to reduce risk, though for situations where
positions are illiquid or traded less frequently (such at OTC Derivatives), they
might be reconciled weekly or monthly.
A company's general ledger account Cash contains a record of the transactions
(checks written, receipts from customers, etc.) that involve its checking account.
The bank also creates a record of the company's checking account when it
processes the company's checks, deposits, service charges, and other items. Soon
after each month ends the bank usually mails a bank statement to the company.
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The bank statement lists the activity in the bank account during the recent month
as well as the balance in the bank account.
When the company receives its bank statement, the company should verify that
the amounts on the bank statement are consistent or compatible with the amounts
in the company's Cash account in its general ledger and vice versa. This process
of confirming the amounts is referred to as reconciling the bank statement, bank
statement reconciliation, bank reconciliation, or doing a "bank rec." The benefit
of reconciling the bank statement is knowing that the amount of Cash reported by
the company (company's books) is consistent with the amount of cash shown in
the bank's records.
Because most companies write hundreds of checks each month and make many
deposits, reconciling the amounts on the company's books with the amounts on
the bank statement can be time consuming. The process is complicated because
some items appear in the company's Cash account in one month, but appear on the
bank statement in a different month. For example, checks written near the end of
August are deducted immediately on the company's books, but those checks will
likely clear the bank account in early September. Sometimes the bank decreases
the company's bank account without informing the company of the amount. For
example, a bank service charge might be deducted on the bank statement on
August 31, but the company will not learn of the amount until the company
receives the bank statement in early September. From these two examples, you
can understand why there will likely be a difference in the balance on the bank
statement vs. the balance in the Cash account on the company's books. It is also
possible (perhaps likely) that neither balance is the true balance. Both balances
may need adjustment in order to report the true amount of cash.
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After you adjust the balance per bank to be the true balance and after you adjust
the balance per books to also be the same true balance, you have reconciled the
bank statement. Most accountants would simply say that you have done the bank
reconciliation or the bank rec.
A bank reconciliation statement is a statement prepared by organizations to
reconcile the balance of cash at bank in a company's own records with the bank
statement on a particular date. This statement is the most common tool used by
organizations for reconciling the balance as per books of company with the bank
statement and is made at the end of every month. The main objective of
reconciliation is to ascertain if the discrepancy is due to error rather than timing.
The difference between the two records on a given date may arise because of the
following:
Cheques drawn but not yet presented to the bank.
Cheques received but not yet deposited in the bank.
Interest credited and not recorded in the organization's books.
Bank charges debited but not recorded in the organization's books.
Bank Reconciliation Statement process is being outsourced to professional
accounting firms by large organizations. This helps them have an accurate view
and also ensure that the company's bookkeeping is good. Accounting firms make
monthly reconciliation statements for clients and help them determine any
discrepancy.
Simply saying bank reconciliation is used to equalize our own cash book to the
bank’s cash book.
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Procedure followed for Bank Reconciliation at Bhubaneswar
1. Bank statement for the month is being downloaded from net.
2. GL for Bank Book is downloaded from SAP.
3. Both the data are merged and sorted according to cheque no.
4. If the cheque no and amount matches then the same separated.
5. The left out data is considered for reconciliation item and tallied Bank
Balance.
6. A sample copy is attached for reference.
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Imprest System
Simply saying imprest amount means the small expenses of the office. Petty cash
imprest system allows only replenishing the spending. So, if you start the month
with Rs.1000 in your petty cash float and spend Rs.900 of that cash in the month,
an amount of Rs.900 will be then placed in your petty cash float to bring the
balance of your petty cash float back to Rs.1000. In this example the maximum
amount of petty cash that can be issued (spent) is Rs.1000. You can only spend
what you have and you are only replenished with what you spend, in this case
Rs.900.
In a non imprest system where a fixed amount is issued every month e.g. Rs.1000
every time cash is required, there is no incentive to ensure all money issued has
been documented because when money is all spent a cheque for a fixed amount is
issued. It is much more difficult to reconcile a non imprest system as you never
know how much exactly should be in the float.
In an imprest system the amount requested is documented. The documentation
being the petty cash dockets and their associated receipts or invoices. So at all
times you can check how much should be left in the petty cash float by deducting
the amount spent from the opening petty cash float. The imprest system ensures
that you must document how the petty cash is spent. In a petty cash system, petty
cash dockets are written for each amount issued. So when all of these dockets are
totalled at the end of the month and deducted from the opening petty cash float,
the calculated value must agree with what is left in the petty cash float. Under the
imprest system, only that which is recorded as spent is replenished. Any shortfalls
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may have to be replenished by the guardian, usually a bookkeeper, of the petty
cash float from their own personal resources. In a non-imprest system, a fixed
amount is issued every month.
Every time cash is required, there is no incentive to ensure all money issued has
been documented because when money is all spent, a cheque for a fixed amount is
issued by the chief cashier. It is much more difficult to reconcile a non-imprest
system as you never know how much exactly should be in the float. In an imprest
system, the amount requested is documented. So, at all times, you can check how
much should be left in the petty cash float by deducting the amount spent from the
opening petty cash float.
An imprest system of petty cash means that the general ledger account. Petty Cash
will be set at a given amount. As long as set amount is adequate for small
disbursements the Petty Cash account will never have an entry again. When the
amount in the account gets low, a request will be made to replenish the money
that was disbursed. The requested check is drawn on the organization's checking
account, the Cash account will be credited not the Petty Cash account. The
expense accounts will be debited as shown by the petty cash receipts, e.g. Postage
expense, supplies expense. In a nut shell, the general ledger account Petty Cash is
not shown to be involved in the replenishment.
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Business I.O.U.
Business I.O.U. is issued in only exceptional cases. It is issued to employee only
for the business purpose. Example; Meeting, training programme etc. It is
otherwise known as the advance payment. If he didn’t use it in his work he has to
return it to the company with proper explanation. Two Business I.O.U.s cant be
issued in the name of one employee. At first he has to settle his 1 st I.O.U.. Then
the second I.O.U. will be issued. This I.O.U have to settled in 3 days, in
exceptional cases maximum of seven days are allowed.
An abbreviation of the phrase I.O.U. is "I owe you."
An I.O.U. in the business community is actually a legally binding agreement
between a borrower and a lender. The terms of the loan are set out in a contract,
and, once it's signed, the two parties must abide by the terms of the contract or
face legal repercussions. For example, when a corporation issues bonds, it is in
essence issuing an I.O.U. to bondholders. The I.O.U. or bond contract sets out the
terms, including the principal that will be owed, the interest that will be paid, and
the time at which these payments will occur.
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Rectification Entry
Every businessman is interested in finding out the true profit and correct financial
position of his business at the close of the trading period. The effort of the
accountant is to prepare the final accounts in such a fashion which exhibits true
picture of the business. Accounts are considered to be authentic proof of true
financial position of a concern. But in spite of best efforts there are certain
transactions which are omitted to be recorded or entered wrongly in the books.
Such errors affect the final accounts. An accountant should, therefore, try to
locate such errors and rectify them before the preparation of final accounts.
Accountants prepare trial balance to check the correctness of accounts. If total of
debit balances does not agree with the total of credit balances, it is a clear-cut
indication that certain errors have been committed while recording the
transactions in the books of original entry or subsidiary books. It is our utmost
duty to locate these errors and rectify them, only then we should proceed for
preparing final accounts. We also know that all types of errors are not revealed by
trial balance as some of the errors do not affect the total of trial balance. So these
cannot be located with the help of trial balance. An accountant should invest his
energy to locate both types of errors and rectify them before preparing trading,
profit and loss account and balance sheet. Because if these are prepared before
rectification these will not give us the correct result and profit and loss disclosed
by them, shall not be the actual profit or loss.
This entry is used to rectify or to correct one entry. Let’s take an example of the
rectification entry.
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“Conveyance expense”
Wrong Entry: Cost of Ticket A/c……Dr.
To Cash Journal
Correct Entry: Conveyance exp A/c……Dr
To Cash Journal A/c
Rectify Entry: Conveyance exp A/c ……..Dr
To Cost of Ticket A/c
This is the correct entry that means the rectification entry. This entry is used to
cancel one entry. We can use this entry in SAP cash journal entry.
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Recommendation & Suggestions
I am very pleased that I got a project in L&T Ltd. While doing my project I found
that everyone is very hard working. They have good knowledge about their work.
They come to office on time, do their work properly and if the work is more, then
they overstay to complete the task.
Being associated with them for one and half months, I have some observations
mentioned below. This might help the department in reduction of idle fund and
time management.
1. One employee is settling many vouchers (4-5 time) a month. This can be
restricted to only 1. This will reduce cashiers time as well punching time
in SAP. Also minimize vouchers which will help them in space
management.
2. The average daily cash balance for the month of May’09 was approx.
Rs.30,000/-. This amount is on higher side. This can be brought down to
less than Rs.10,000/- and improve their fund management.
3. Also average daily Bank Balance for the month of May’09 was approx.
Rs.2.61L. This amount is also on higher side and same can be reduced to
Rs.1 L.
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Findings-:
As I have mentioned earlier that I was working for the marketing network of the
L&T, basically my work was to deal with the cash balance of the company. This
is all about the proper functioning of the cash in the company. As I mentioned that
my work was to deal with petty cash and disbursement in the company, so I have
to check the payment vouchers of the company.
Through my questionary I came to know that by using petty cash in the company
we can maintain the cash properly. The employees of the company can be
satisfied with the proper functioning the petty cash and disbursement.
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Date Cash Balance No. Of Vrs Date Bank Balance
1-May-09 20563 4 1-May-09 311238
2-May-09 20563 2-May-09 311238
3-May-09 20563 3-May-09 311238
4-May-09 20563 4-May-09 235895
5-May-09 20563 5-May-09 213866
6-May-09 20563 6-May-09 213866
7-May-09 52440 12 7-May-09 163866
8-May-09 39966 9 8-May-09 156866
9-May-09 39966 9-May-09 156866
10-May-09 39966 10-May-09 156866
11-May-09 17134 11 11-May-09 156866
12-May-09 17134 12-May-09 156866
13-May-09 11534 6 13-May-09 113762
14-May-09 11534 14-May-09 313762
15-May-09 17004 6 15-May-09 313762
16-May-09 17004 16-May-09 263762
17-May-09 17004 17-May-09 263762
18-May-09 17004 18-May-09 263762
19-May-09 5278 6 19-May-09 263762
20-May-09 48000 4 20-May-09 1138762
21-May-09 48000 21-May-09 279163
22-May-09 48000 22-May-09 279163
23-May-09 48000 23-May-09 240266
24-May-09 45376 4 24-May-09 240266
25-May-09 42987 4 25-May-09 240266
26-May-09 42487 1 26-May-09 229727
27-May-09 35712 1 27-May-09 223250
28-May-09 35452 3 28-May-09 221499
29-May-09 32107 4 29-May-09 221499
30-May-09 36107 1 30-May-09 221499
31-May-09 36107 31-May-09 221499TOTAL 924681 TOTAL 8098730
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Daily Avg
Balance
29828.42 Daily Avg
Balance
261249
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Conclusion
Well, I am very thankful to Larsen & Toubro Limited for giving me an
opportunity to do my project. The culture of Larsen & Toubro is very good and
everyone is fully devoted to their work.
I feel that I am very much lucky for doing my internship in Larsen & Toubro
Limited Bhubaneswar (Orissa).
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ANNEXURE
1. What is your job title or designation in this company?
2. What is your initial name in the company?
3. What is the product that you have purchased for the company?
4. Do you have any bill as evidence?
5. Any other expenditure?
6. For any extraordinary expenditure, whether any prior approval is
there or not ?
Date:Place: Bhubaneswar (Orissa) Signature
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Bibliography
www.larsentoubro.com
www.google.com
www.answers.com
www.corporate.finance.com
www.wikipedia.org
www.wikianswers.com
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