Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
1.0
Revision Date
1st June, 2002
Page No.
Page 1 of 7
SOP 13 Budgeting
Section 13.1.0
Procedures SCOPE These written instructions set out the policies and procedures for the implementation of Budgets and Budgetary Controls in EDARAN.
13.2.0
OBJECTIVE The objectives of these instructions are:-
13.3.1
To plan all foreseeable costs are budgeted for to identify the future commitment versus target performance.
13.3.2
To provide Senior Management with information for the assessment of Operational Risk
13.3.3
To define the guidelines for better Decision Making and Performance Measurement
13.3.4
To define the role of relevant parties in the Corporate Budgeting process
Document
Process Owner
Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
1.0
Revision Date
1st June, 2002
Page No.
Page 2 of 7
SOP 13 Budgeting
Section
Procedures
Document
13.3.0
ABBREVIATIONS
13.3.1
The abbreviations for documents referred to in these instructions herein are as follows: Document Name Budget Questionnaire Draft Budget Annual Budget Budget Variance Report Monthly Management Accounts Revised Budget Questionnaire Revised Draft Budget Revised Budget
13.3.2
Exhibit
The abbreviations for Job Titles referred to in these instructions herein are as follows: Abbreviation MD GFC HOD GCBM AFM
13.4.0
Abbreviation BQ DB AB BVR MMA RBQ RDB RB
Title in Full Managing Director Group Financial Controller Head of Departments Group Corporate Budgeting Manager Accounts & Finance Manager
PROCESS FLOWS Refer to Flowchart.
Process Owner
Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
1.0
Revision Date
1st June, 2002
Page No.
Page 3 of 7
SOP 13 Budgeting
Section
Procedures
13.5.0
POLICIES
13.5.1
The GCBM is responsible for the Setting-up, the Monitoring, and the Communicating of the Corporate Annual Budget.
13.5.2
The BQ must include areas such as: • Group Missions and objectives • Turnover / Revenue / Sales • Direct Cost / Cost of Sales • CAPEX • OPEX • Human Resource Planning
13.5.3
The BQ must be evaluated based on: • Last Year’s Budget and Business Plan • The Group’s Strategic 5-year Business Plan • Historical Results (Including Last Year’s Audited Results) • Company Policy
13.5.4
The Annual Budget must take effect from the date it is endorsed by the BOD.
13.5.5
At the Monthly Budget Variance Discussion at the Monthly Management Committee meetings, the following must be identified, minuted, and filed in a safe location: • Variances • Reasons for Variances • Risk Issues / Impact • Steps taken to Improve the Situation
13.5.6
The whole process of preparing the AB must not exceed 3 months after the initial date of sending out of the BQ.
13.5.7
The MC is responsible for determining if a RB is to be prepared and the specific cut-off date for the RB.
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Process Owner
Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
1.0
Revision Date
1st June, 2002
Page No.
Page 4 of 7
SOP 13 Budgeting
Section
Procedures
13.6.0
PROCEDURES
13.6.1
Annual Budgeting Process
Document
Process Owner
13.6.1.1
At the beginning of each Financial Year, the GCBM shall tabulate a BQ that is distributed to the HOD. The BQ should include the important areas as defined in 13.5.1.2.
BQ
GCBM
13.6.1.2
The HOD shall then fill in the BQ based on the expected Sales / Revenue and Direct Cost, and the expected OPEX as well as the CAPEX and also the respective department staff strength, and submit them to the GCBM within 2 weeks from the date of receiving the BQ.
BQ
HOD
All the relevant Head of Departments must response and reply promptly to the BQ, failing which, a disciplinary action may be taken against them. 13.6.1.3
The GCBM shall review the BQ submitted by the various HOD.
BQ
GCBM
13.6.1.4
The GCBM shall then contest the prepared BQ, on an individual basis, with each HOD.
BQ
GCBM
13.6.1.5
The GCBM shall then prepare a DB for the Group which will then be forward to ALL those involved in the budget process for their agreement and signatures.
DB
GCBM
13.6.1.6
The GCBM shall discuss the DB with the GFC prior to discussion with the MC.
DB
GCBM
13.6.1.7
The GCBM shall then table the DB to the MC for discussion. Then, obtain the approval of the MC members.
DB
GCBM
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Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
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Revision Date
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SOP 13 Budgeting
Section
Procedures
Document
Process Owner
13.6.1.8
The GCBM shall then call for a Budget meeting with the BOD where he will presents the DB to the BOD (who will then contest the budget and further scrutinise it before approving it). Upon when amendments of the BOD’s decision are made, it will become the AB for the coming year.
DB
GCBM
13.6.1.9
The Budget meeting should be minuted in detail to assist in the preparation of the final budget.
Minutes
GCBM
13.6.1.10
Upon the BOD’s approval, the GCBM shall then amend accordingly before distributing copies of the AB to all HODs.
AB
GCBM
13.6.1.11
The AB will then be reviewed on a monthly basis at the Management Committee meetings and any variances will be explained by the HOD.
AB
GCBM
13.6.2
Monthly Budget Variance Discussion Process
13.6.2.1
The GCBM shall prepare a BVR upon receipt of the MMA from the AFM.
BVR, MMA
GCBM
13.6.2.2
Copies of the BVR will be distributed to the HODs.
BVR
GCBM
13.6.2.3
The GCBM shall present the BVR at the Monthly Management Committee meetings. All explanations for the variances provided by the HODs in the meetings will be minuted together with the proposed mitigating actions by the meeting.
BVR, Minutes
GCBM
13.6.2.4
The GCBM shall file in all explanations for variances provided by the HODs in a Budget Variance Discussion file.
Minutes
GCBM
Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
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Revision Date
1st June, 2002
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SOP 13 Budgeting
Section 13.6.3
Procedures
Document
Process Owner
Budget Revision Process
13.6.3.1
Upon instruction of the MC to perform a budget revision, the GCBM shall prepare an analysis of the Budget from the information contained in the Budget Variance Discussion File.
6-months Analysis
GCBM
13.6.3.2
The GCBM shall then tabulate a RBQ and distribute it to the HODs, together with the details of the analysis of the Budget, and Management Targets for the financial year.
6-months Analysis, RBQ
GCBM
13.6.3.3
The HOD shall then fill in the RBQ based on the revised Business Plan, Sales /Revenue, Cost and the expected OPEX as well as the CAPEX and respective staff strength for the coming months and submit them to the GCBM.
RBQ
HOD
13.6.3.4
The GCBM shall review the RBQ submitted by the various HODs.
RBQ
GCBM
13.6.3.5
The GCBM shall then contest the provided RBQ, on an individual basis, with each HOD by comparing the RBQ against the earlier BQ, as well as considering the group’s ability to meet the set targets for the year.
RBQ
GCBM
13.6.3.6
The GCBM shall then prepare a RDB for the Group which will then be provided to ALL those involved in the budget process for their agreement and signatures.
RDB
GCBM
13.6.3.7
The GCBM shall discuss the RDB with the GFC prior to discussion with the MC.
RDB
GCBM
13.6.3.8
The GCBM shall then table the RDB to the MC for discussion (who will then contest it and scrutinise it before approving it.
RDB
GCBM
Document
Edaran Digital Systems Berhad Policies and Procedures Manual
STANDARD OPERATING PROCEDURE
Index Version
1.0
Revision Date
1st June, 2002
Page No.
Page 7 of 7
SOP 13 Budgeting
Section
Procedures
Document
Process Owner
13.6.3.9
The GCBM shall call for a Budget meeting with the BOD to present the RDB to the BOD (who will then contest it and further scrutinise it before approving it). Upon when amendment of the BOD’s decision is made it will become the RB for the year.
RDB
GCBM
13.6.3.10
The Budget meeting should be minuted in detail.
Minutes
GCBM
13.6.3.11
Upon the BOD’s approval, the GCBM shall then amend accordingly before distributing copies of the RB to all HODs.
RB
GCBM
13.6.3.12
The RB will then be reviewed on a monthly basis at the Management Committee meetings and any variances will be explained by the HOD.
RB
GCBM
13.7.0
APPENDICES
SOP13 Budgeting Process Flow I
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