Versions Compared

Old Version 1

changes.mady.by.user Sevilla, Rosario

Saved on

compared with

New Version Current

changes.mady.by.user Gomes, Susana

Saved on

Key

  • This line was added.
  • This line was removed.
  • Formatting was changed.


1. Objective and Scope

1.1   Objective of this Procedure

This procedure describes the Group requirements for Costing – Internal Controls - Monthly closing 

It includes:

  • the roles and responsibilities within the SBS RtR organizationSU Management Accounting (SU MAC)
  • the tasks to be performed
  • the related deadlines.

 More precisely, this document will focus on:

Part 4.

1

: the overview of responsibilities in the light of SBS organizationPart 4

.

2 : the Internal Controls process General Description
  • Part 4.3 : the Internal Controls for product costing
  • Part 4.4 : the Internal Controls for inventory valuation  

    • 1.2   Scope

    This organizational procedure (P) applies to all companies included in the Solvay Business Services scope of entities.

    This procedure takes effect as of disclosure of the document to the Group.

    2. Reference Documents

    SBS-P-RTR-05-005 Closing Calendar

    GAR List of companiesN/A

    3. Definitions

    Costing costing - Glossary

    4. Organizational Procedure

    4.1   General Roles and Responsibilities

    SU Management Accounting (SU MAC)

    WW RtR PE Costing :  Process Management Team – WW level

    • PE Costing is the owner of the process for the Group at a worldwide level

    • Ensure efficient governance of the process through rules definition, communication and enforcement.

    • Define Manage internal controls on Costing and Cost Accounting

    The Process Expert will work closely with a Delivery team in charge of RtR activities organized as follows:

    RtR Regional Operations Process Managers

    • Deploy procedures / orientation defined at RtR Process Management level

    • Manage the delivery accounting team in each region 

    RtR Regional Costing Manager

    • region

    • Deploy common/standard procedures and support local teams

    • Establish the link between Process Management and Delivery team in each region
    • Mostly act as supervisors to ensure process efficiency and performance enhancement

    • Create/Maintain the controlling network 

    • Leverage the controlling network to achieve process efficiency and transmission of required expertise

    The Process Expert will work closely with a Delivery team in charge of Su MAC activities organized as follows:


    SU Management Accounting (SU MAC) RtR Service centers 

    • Perform daily operations related to the Costing Monthly closing process, in line with guidance and rules defined upfront, for activities not requiring proximity to customers or specific local knowledge

    • Optimize and standardize operations, as well as documentation materials (mostly Operating Procedures).

    • Offer standard services and conduct related internal controls

    • Three centers serving their regions as well as the whole world, and coordinated worldwide (Lisbon, Curitiba, Bangkok)

    Non-SBS GBS Roles:

    Corporate Controlling

    • Responsible for giving instructions on process objective

    GROUP ACCOUNTING REPORTING Group Accounting Reporting (GAR)

    • Responsible for giving instructions on process objective

    GBU FinanceDirectors

    • Responsible for financial statements compliance

    • Designate FRA and GCCO, and in general, all responsible of internal controls to be performed by the GBUestablishing Group consolidation policies

    GBU Finance Responsible Assigned (FRA)

    • Responsible for validating Costing processes

    • For reason of simplification, there is only one role GBU FRA, however in some sub-processes this role could be developed by 2 actors: FRA and GCCO

    GBU Costing Control Owner (GCCO)

    •   Responsible for some internal control regarding  IAC  processes

     


    4.2   Internal controls

    4.2   Costing Monthly Closing: General Process Description

    4.2.

    1  Internal Controls Roles

    1 Costing Monthly Closing  Roles and Responsibilities

    The Internal Controls Costing Monthly closing activity implies inputs and responsibilities from various actors in the organization, as described below:

     


    4.2.1.1    SBS actors of the

    Internal Controls

    Costing Monthly closing

    WW RtR PE Costing

    • Define the generic roles of the Costing and cost accounting organization
    • Define, communicate and implement Internal controls Costing Monthly closing procedures
    • Validate Internal controls proceduresCosting Monthly closing procedures
    • Provide the needed training of resources
    • Design of internal controls on the process

    RtR Regional Operations Process Managers

    • Organize teams in order to ensure the proper functioning of the Internal control processthe Costing Monthly closing process
    • Ensure a proper allocation of resources to the Internal control process
    RtR Regional Costing Managers
    • Costing Monthly closing process
    • Ensure the link between process management and delivery team in each region
    • Provide feedback, relay information from the regions to PE costing
    • Control and validate the requests sent by GBU
    • Supervise and validate internal control efficiency within the region

     

     

    4.2.1.2    Non-SBS actors of the Costing Model Architecture

    FRA/Site Controller

    • Responsible for all controls performed at plant/warehouse level
    • Validate last quarter inventory count calendar
    • Validate inventory count procedures
    • Prepare inventory reports
    • Validate the costing model 
    • Owner of the internal controls
    • Validate standard cost calculations
    • Prepare variance analysis

    Company Accounting Managers

    • Provide feedback  and relay information  from the regions to Process Experts  Costing
    • Review financial results for each legal entity
    • Responsible for BFC packages publishing

    SU Management Accounting (SU MAC)

    • Main responsible for performing the monthly  closing activities  (including monitoring and executing Schedule Manager)

    • Check that all the closing operations have been duly and timely performed. 

    • Provides balanced and consistent  financial statements before Tax


     






    4.2.1.2    Non-GBS actors of the Costing Monthly Closing

    FRA/GBU Controller

    • Provide  manual accruals on time 
    • Control and validate  the preliminary P&L

    GAR

    • Responsible for BFC reporting structure
    • Establish and communicate month-end consolidation policies

    4.2.2 Monthly Closing Schedule

    Please refer to the Finance SL Closing Calendar (Harmonized Timetable)

    GCCO

    • Owner of the internal controls
    • Validate variance analysis
    • Perform control related to net realization value reserve

     

     

    4.3  Product Costing internal controls

    4.3.1  IAC 03.09.04  Validation costing model (specific standard cost method)

    The objective of IAC 03.09.04 is the validation of the costing model including fixed cost assessment flows and allocation keys. The “costing model” is up-dated each year by December 15th and validated by Plant Manager, GCCO and IAC CPM. All variances of 10% or above compared to the previous year have to be explained by Plant Manager. The following are the main underlying rules governing IAC 03.09.04:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for validating the accuracy of the calculation process

    4.3.2  IAC 03.08.05  Appropriate use of manual costing

    The objective of IAC 03.08.05 is to check the appropriate use of manual costing. The use of manual costing / forced MAP must be justified in one of the following categories: co-product/sold waste/recycled material, integrated FIFO, wrong material purchase info, erroneous reception or other (detailed explanation to be provided). The following are the main underlying rules governing IAC 03.08.05:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.08.05 is performed monthly 

    4.3.3 IAC 03.09.00.01 Validation standard cost calculation (specific)

    The objective of IAC 03.09.00.01 is to validate standard cost calculation reports and make sure that all items in BOM are valid.

    GCCO post on e-room mail(s) he sent to accounting platform

    • Mail A (only for plant referenced as raw material purchasing plant in integrated FIFO mapping document): legal entity integrated FIFO template
    • Mail B: standard cost estimate calculation check list + variance analysis

    The following are the main underlying rules governing IAC 03.09.00.01:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.09.00.01 is performed monthly 

    4.4 Inventory Valuation Internal Controls

    4.4.1  IAC 04.13.00.01  Existence physical inventory procedure

    The objective of IAC 04.13.00.01 is to ensure that a physical inventory procedure exists and that compliance with corporate guidance is evidenced by check-list. FRA receives validation by GCCO at end of September of physical inventory procedure check-list for physical inventory procedure applicable from Oct 1st of current year to September 30th of next year. The following are the main underlying rules governing IAC 04.13.00.01:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 04.13.00.01 is performed yearly at the end of September

    4.4.2  IAC 04.13.00.03  Exhaustive counting

    The objective of IAC 04.13.00.03 is to check that except for industrial supplies:

    • A complete count of the items included in the inventory records of each warehouse should be done for 31st December.
    • A count of items representing 90% of the value of prior end inventory should be done as of 30th September, each year.

    A special timeframe is applied for industrial supplies:

    • All references must be checked over a 3-year period.
    • By December 31st, references counted must represent at least 80% of the total value of the industrial supplies inventory
    • The following are the main underlying rules governing IAC 04.13.00.03:
      • The control owner is the GCCO
      • The Regional Costing Manager is responsible for supervising and validating the internal control
      • IAC 04.13.00.03 is performed twice a year at end of September and end of December

    4.4.3  IAC 04.13.00.04  Identification of items not count

    The objective of IAC 04.13.00.04 is to validate, by GCCO, the last quarter planning for physical inventory count and the list of Items/warehouse, out of industrial supplies/MRO, which are likely not to be counted before year-end. The following are the main underlying rules governing IAC 04.13.00.04:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 04.13.00.04 is performed yearly by the 30th of September

    4.4.4  IAC 04.13.00.07  Control of inventory reports

    IAC 04.13.00.07 has to be established by RtR PE. The objective of IAC 04.13.00.07 is to check and validated the inventory reports that are prepared and posted, after the count, by FRA and the physical inventory manager. The following are the main underlying rules governing IAC 04.13.00.07:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    •  IAC 04.13.00.07 is performed yearly at the release of the inventory reports

    4.4.5  Internal Control: Variance in Physical Inventory at third party facilities  

    An internal control for variances in physical inventory at third party facilities  has to be established by RtR PE. The objective of the internal control is to validate changes in inventory compared to the previous  stock count when above a threshold to be determined. 

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control

    4.4.6  IAC 03.08.08  June review of reserves 

    The objective of IAC 03.08.08 is to review inventory reserves and re-evaluation in accordance with Group Policy. The following are the main underlying rules governing IAC 03.08.08:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.08.08 is performed yearly in June 

    4.4.7 IAC 03.08.09  December review of reserves

    The objective of IAC 03.08.09 is to review inventory reserves and re-evaluation in accordance with Group Policy. The following are the main underlying rules governing IAC 03.08.09:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.08.09 is performed yearly in December 

    4.4.8  Internal Control:  Intercompany Margins in Inventory

    An internal control for intercompany margins has to be established by RtR PE. The objective of the internal control for intercompany margins is to review intercompany margins calculations and elimination in accordance with Group Policy.

    • The control owner is the GCCO
    • The Regional Costing Manager has to be the responsible for supervising and validating the internal control for intercompany margins
    • The internal control for intercompany margins has to be performed on a monthly basis

    4.5  Monthly Closing Internal Controls

    4.5.1 IAC 01.01.02.03:  FI CO monthly reconciliation on cost of sales

    The objective of IAC 01.01.02.03 is to reconcile monthly cost of sales between FI and COPA accordance with Group Policy. The following are the main underlying rules governing IAC 01.01.02.03:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 01.01.02.03 is performed on a monthly basis 

    4.5.2  IAC 02.06.02.00  Inventory / GL monthly reconciliation 

    The objective of IAC 02.06.02.00 is to reconcile monthly detail inventory ledgers with G/L inventory accounts. The control is performed by a member of the accounting team and validated under the responsibility of the country head of accounting. The following are the main underlying rules governing IAC 02.06.02.00:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    •  IAC 02.06.02.00 is performed on a monthly basis 

    4.5.3  IAC 03.08.06  Monthly variance analysis  (standard method)

    The objective of IAC 03.08.06 is to perform monthly CP/CNP/AMO variance analysis, the control owner monthly posts variance analysis using group template. The following are the main underlying rules governing IAC 03.08.06:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.08.06 is performed on a monthly basis 

    4.5.4  IAC 03.08.07  Half yearly variance analysis  (standard method)

    The objective of IAC 03.08.07 is to validate half yearly CP/CNP/AMO variance analysis, for June and December variance analysis is validated by FRA or by GCCO. The following are the main underlying rules governing IAC 03.08.07:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 03.08.07 is performed twice a year, in June and December 

    4.5.5  IAC 04.14.00  Control critical inventory transaction

    The objective of IAC 04.14.00 is to validate reports tracking critical inventory transaction code (sample management, consignment…), GCCO must enter validation for any document article above 1500 € in Excel file based on group layout. The following are the main underlying rules governing IAC 04.14.00:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 04.14.00 is performed on a monthly basis 

    4.6  Data Management Internal Controls

    4.6.1  IAC 04.13.00.02  Storage locations assigned to PIM

    The objective of IAC 04.13.00.02 is to validate, by FRA, storage locations creation and suppression. IS data management checks that there is a Finance Responsible Assigned (FRA) and a Physical Inventory Manager (PIM) for each plant listed in the active tab (except for plants considered as technical NDIR/VCOM or head offices). All plant creation is validated by customs & trade compliance process owner and costing Process expert.

    The following are the main underlying rules governing IAC 04.13.00.02:

    • The control owner is the GCCO
    • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 04.13.00.02 is performed yearly by end of June

    4.6.2  IAC 04.13.00.06  Check storage locations

    The objective of IAC 04.13.00.06 is to validate, by FRA, storage locations creation and suppression. Before the end of September, IAC CPM receives from each Country Finance Manager the validation of FRA. The following are the main underlying rules governing IAC 04.13.00.06:

  • The control owner is the GCCO
  • The Regional Costing Manager is responsible for supervising and validating the internal control
    • IAC 04.13.00.06 is performed yearly by end of September