2. ACCOUNTING POLICY & PROCEDURES WORKSHOP

3. Understand importance of internal controls and mitigation of risks Understand company accounting policies and procedures Understand effects of breaches and discuss how to avoid them Workshop aims

4. Internal controls overview Accounting policies and procedures Credit notes analysis Summary workflow analysis Problems encountered Workshop overview

5. INTERNAL CONTROLS OVERVIEW

6. 1.Existence (Validity) 2.Occurrence (Cutoff) 3.Completeness (i.e., no omissions) 4.Valuation 5.Rights & Obligations 6.Presentation & Disclosure (Classification): 7.Reasonableness Internal controls objectives

7. Segregation of duties Authorization of transactions Retention of records Supervision or monitoring of operations Physical safeguards Analysis of results, periodic and regular operational reviews and other KPI’s IT Security Internal controls activities

8. CompletenessExistenceValuation and allocation All invoices have been dispatched and recorded in the financial statements Accounts receivable amounts represent enforceable claims for the sale of goods or the performance of services existing at the balance sheet date Accounts receivable have been recorded at their proper amount and reflect all services provided

9. Rights and obligationsPresentation and disclosure* Accounts receivable represent amounts owed to the company at the balance sheet date, and the is subject to substantially all the risks and is entitled to substantially all the rewards arising therefrom Accounts receivable have been properly classified, described and disclosed in the financial statements

10. ACCOUNTING POLICY AND PROCEDURES A Brief Overview

11. Must be in numerical sequence All fields must be entered Any break in sequence shall only be for cancelled invoices and documented on the daily batch return Invoices incorrectly raised – cancel and issue new one unless batch has been sent to HQ What about incorrect invoices already sent to HQ? Invoicing

12. Supervisor who knowledgeable about tariff charges certifies invoices as correct before dispatch MTME – SCNT - SCNV - HAND - GEAR - TORS - LVES - Invoicing

13. Batches must be sent on daily basis to HQ LTK and LEV can send theirs weekly Batch headers must be filled completely and entered Why batch? Ensures completeness and accuracy Provides a reference and summary of the invoices batched ANY LOSS OF INVOICE BOOKS MUST BE REPORTED Batches

14. No credit is to be given to any customer unless prior approval has been made through Finance HQ Application for credit facility scrutinized at Finance HQ Any variation to accounts can only be approved through GMF in writing Credit limits will be reviewed by Accountant with consultation with GMF Credit administration

15. Accountant/GMF shall approve all actions/credit transactions before ARP actions Credit terms shall not exceed 30 days from date of monthly statement Credit administration

16. Receipts Cash only received at designated receipt locations Foreign currency payments not allowed Bank drafts not considered unless approved by GMF Cheques accepted from approved customers only. Cheques to be marked ‘not negotiable’ and made to ‘Fiji Ports Corporation Limited’

17. Returned cheque are imposed charges Notification letter is sent within 7 days asking payer to pay within 7 days No response within 10 days, second letter is sent Legal action (cost-benefit) if still no response Charges: <$300 – $25 >$300 - $40 Returned cheques

18. Daily banking to be done unless cash is less than:$1,000 – Suva HQ $500 – Revenue office $100 – Others Banking batch should be sent to HQ daily/weekly Supervisor must check all banking summary Banking

19. Summary of invoices and revenue report by the 2nd working day after month end Reporting

20. CREDIT NOTES ANALYSIS

21. FPCL - $ $96,666.56 – 2010 - $ $184,061.58 – 2009 PTL - $155,601 - 2010 - $63,859.60 - 2009 Credit notes shows wrong revenue was reported in a previous month Credit notes shows breakdown in internal controls Credit notes are a reflection of inefficiencies Credit Notes approved

22. Summary workflow Source document verified

23. Problems encountered In Invoices Late batches Wrong order charged to company One order number two invoices are raised. invoices raised late Wrong information on batch summary Invoice raised to customer not our debtor Wrong charges Invoices charged to wrong order or does not conform to work done

24. Problems encountered Receipting and Banking Receipting entered in the wrong codes. Late banking Batch summary not correct Cancelled receipts not in batch Duplicate invoicing

25. Cost of mistakes Waste of time Cost in dollars Stress (regular communication from HQ) Cash flow is affected Debtor account is messy and makes us look like we are not doing work Performance is affected

26. Discounts, incentives and alternative arrangements are not always communicated accurately between HQ, operations and finance, resulting in errors and customer disputes. Manual invoicing system result in lost revenue and/or additional costs. Failure to reconcile properly work done to invoice results in unbilled work Resolving incomplete or inaccurate information will result in items not progressing to the next stage, however errors or omissions left unresolved result in billing or collections difficulties. Common Causes of Revenue Leaks

27. Incomplete or inaccurate manifests result in delay-related costs. Unclear or inaccurate terms result in disputes between parties Late invoicing may become uncollectible over time. Disputes time is extended and collectibility becomes difficult when customer disputes cannot be resolved quickly due to the lack of accessible logistics data, and historical account information. Common Causes of Revenue Leaks

28. Questions and Discussions……