1

Finan ce & Acc ou nt ing M anu al

Planning & Budgeting

2
 PLANNING AND BUDGETING
1. Introduction & Definitions
2. Types of Budget
3. The Master Plan
4. The Revenue Budget
5. The Capital Expenditure Programme
6. The Human Resource Budget
7. The Non-project Capital Budget
8. The Expenditure Budget
9. Review and approval
10. Budgeting Timelines
11. Budgetary Controls
12.Feedback and Questions
3 3
 Introduction
Planning: Looking into the future with a view to
 Foresee in advance the possible external and internal
forces that will affect the strength and performance of the
company.
 Allocate necessary physical and financial resources in
advance to re-track the company on the path as
envisioned in the company vision and mission statement
and as management desires.
 Integrate the efforts of different functions for directing
their efforts towards the company’s common Goal.
Budgeting: An effective tool of planning and control
exercised in the Company to help management get the
desired goals of stakeholders’ value enhancement.

4
 Introduction
• Since last few years, Finance department is struggling to
improve the Budget system by involving the relevant
offices which practically execute the Budget.
• The ongoing ERP implementation will further help in the
systematic process of budgeting and its implementation
at all level of zones, regions, Profit and cost centres.
• The Chapter on Planning & Budgeting in Accounting and
Finance Manual is a systematic attempt to
• harmonize the thought of the players in the timely
preparation of budget and its execution,
• gauging performance,
• assisting in fixing accountability
• removing hurdles causing delay in the activities.

5
 DEFINITIONS
MASTER PLAN

The company’s long term plan which consists of strategic plans

along with financial impact for a period of five years, to be reviewed
annually according to prevailing threat & opportunities and
management strategies.

ANNUAL CORPORATE BUDGET

The Annual Corporate Budget is the company’s short term budget,

to be prepared annually in consistency with the target set in the
Master Plan. The annual Corporate Budget will be the sum of:
• Revenue Budget
• Capital Expenditure Budget
• Human Resource Budget
• Non-Project Capital expenditure (Admn) Budget
• Operating expenditure budget

6 6
 DEFINITIONS
BUDGETARY CONTROL

A mechanism through which company will match budget with

actuals and accordingly hold accountable the department/
locations/ individuals.

The company shall establish transaction level controls and other

periodic controls to monitor its revenue and expenditure, the
progress on developments projects etc.

7 7
 Long Term Vs Short term Planning

8
 TYPES OF BUDGET

a) Master Plan

b) Revenue Budget

c) Capital Expenditure Budget

d) Human Resource Budget;

e) Non-Project Capital expenditure

f) Operating Expenditure Budget.

9 9
 MASTER PLAN
 Master Plan aims to bridge the gap between the long
term aspirations of the company and what the Business
zones expect to achieve within the context of a
potentially changing business environment.
 It gives the management early sight of key issues which
may require goals to be adjusted.
 It relies on strategic thinking, business awareness and a
commercial understanding.
 It is prepared for the five years and shall be used to
allocate resources within the company based on broad
assumptions and goals set by the BoD and
management committee.

10 10
 MASTER PLAN

Company Vision and Mission Statement

The Basis
Strategic directives From BoD, PCEO and HoDs

HoDs (Working Financial impact

Strategic Plan (EVP Fin. Pl. & Tr.)
Preparation out 5Y Fin
(EVP Corp. Str.) to workout opex
Impact and Proj P&L, B/S

Review SEVP CA SEVP Fin

Audit Board Of
Approval Committee Directors

11 11
 REVENUE BUDGET
The Revenue Budget shall contain:
 Stream wise Revenue of existing and
planned products.
 Profit Centre-wise capacity and number of
existing and planned customers
 Present and planned capacity
 Assumptions and basis of the projected
forecast.
 Month and Head wise break up of the
forecast.
 Traffic analysis and trends.
 Projected tariff structure.

12 12
 REVENUE BUDGET
Revenue Budget shall be sub-divided into:

 Core Business Revenue, (which is

further divided into):
i. Domestic Revenue
ii. International Revenue
 Non-core Business Revenue (Other
Revenue)

13 13
 THE DOMESTIC REVENUE BUDGET

EVP CS – Master Plan

The Basis EVP FPT - guidelines

GM Business Intelligence- Instructions and guideline

Preparation GM Sales P&F/GM IC

GM Finance
Analysis
At Zones

GM Business Intelligence Consolidation

Consolidation
(based on projected tariff) into ACB

EVP Comm Plg SEVP

Review SEVP Finance
and Support Commercial

14 14
 THE INTL REVENUE BUDGET

EVP CS – Master Plan

The Basis
EVP FPT - guidelines

GM International Carriers Relations

o Expected Traffic
Preparation
o Projected Tariff
o Revenue Forecast based on above

Review EVP IBR SEVP CA

SEVP Fin

Consolidation
into ACB

15 15
 THE NON-CORE REVENUE BUDGET

EVP CS – Master Plan

The Basis
EVP FPT - guidelines

EVP Fin. Planning & Treasury

EVP Business Zones
• Return on deposits
Preparation • Gain on disposal of assets
• Return on investments
• etc.

Review SEVP Finance

Consolidation
into ACB

16 16
 CONSOLIDATION OF REVENUE BUDGET

 SM Operating Budget will receive reviewed Domestic

Revenue Budget, International Revenue Budget and Non-
core Revenue Budget from Commercial, Corporate Affairs
and Finance Departments respectively.

 These budgets will be consolidated to the company

Corporate Revenue Budget.

 The consolidated Corporate Revenue Budget will be

reviewed by GM BC, EVP FPT to ensure conformity with
Master plan.

17
 CAPITAL EXPENDITURE PROGRAMME

Capital Expenditure Program is the budgeted capital

expenditure of the company to be incurred on planned
capital projects to be undertaken in the coming fiscal year
and shall also include expenditure to be incurred on the
carryover capital projects not completed in previous years.

18 18
 CAPITAL EXPENDITURE PROGRAMME

Guidelines/ financial parameters Instructions for preparing &

The Basis From EVP FP & T completion of CEP
(In-line with the Master Plan) from EVP Tech. & SP

Expenditure requirements entered by Allocation needs for carry over

SE at locations (after financial eval. by projects
SM Fin) into Inv. Man. Module GM Dev. at locations

GM Development at locations EVP Business Zones identify sub-

categorize the sub-projects identified projects proposed to be carried out.

Sub-projects > 500 M, or for new Consolidation of sub-projects into

products/ technology or of special projects
strategic nature approved by PAC GM Strategy & Plans

EVP T & SP and EVP FP & T review

Review of consolidated CEP
the CEP, and check conformity with
SEVP Technical
master plan

The start date of the projects / sub-projects in the budget shall take into account
the procurement lead time, wherever applicable.
19 19
 HUMAN RESOURCE BUDGET

The Human Resource Budget provides for the following key

elements along with estimated financial impact.:

 Projected number of manpower identifying existing

staff levels.
 Expected staff retirements
 Promotions and up gradations
 Recruitment targets.
 Increments’ Plan

HR Budget will be split into months.

20 20
 HUMAN RESOURCE BUDGET
Guidelines/ financial parameters Instructions for preparing & completion
The Basis From EVP FP & T of HR Budget from
(In-line with the Master Plan) EVP HR

Cost Centre head provide

Existing HR data is already available requirements to SM HR at locations
in HCM module duly approved from HOD

SM HR at locations compile staff

requirements with financial impact. GM HR & A & EVP BZ review the
Data is input in HCM Module budget and submit to H/Q

Reviewed and consolidated location HR Budget reviewed

wise by EVP HR H/Qs by SEVP HR & Admin

Board HR Committee

21 21
 NON-PROJECT CAPITAL BUDGET
Non-Project Capital Budget includes those assets that
 are planned to be acquired within the coming fiscal year
 may or may not be related to capital projects
 are for administrative use rather than operational use
 do not form part of the Capital Expenditure Program.

Non-Project Capital Budget shall be prepared month wise

Any item due to be purchased in a specific quarter shall not be
purchased before that quarter.

Purchase may be delayed to any quarter subsequent to the

original quarter, if required.

22 22
 NON-PROJECT CAPITAL BUDGET

Guidelines/ financial parameters Instructions for preparing & completion

The Basis From EVP FP & T of non-project capital budget
(In-line with the Master Plan) From EVP Admin

Non-project capital expenditure

SM Administrations compiles
requirements communicated to SM
requirements alongwith estimated cost
Administration at location
Preparation

Entry of requirements into Investment

Management module by SM Admins

Review Review by GM at location for Review

consistency and reasonableness by EVP Administration

The existing non-project capital assets at locations be assessed against new requirement

23 23
 EXPENDITURE BUDGET

The Expenditure Budget provides the management of

the company a detailed projection of the operating
expenditure for the coming fiscal year which can be
used to measure the performance of the company.
The Expenditure Budget shall include operating
expenses and shall not include items that form part of
the Capital Expenditure Program and the Non-Project
Capital Budget.
The Expenditure Budget shall be prepared month
wise.

24 24
 EXPENDITURE BUDGET
Instructions for preparing & completion
of non-project capital budget
The Basis From EVP FP & T

Operating expenditure requirements Financial evaluation of requirements

communicated to SM Finance at by SM Finance at location and review
location by regional GM
Preparation

Evaluation and consolidation by SM (operating

Budget)

GM (Budgetary Controls)
Review SEVP Finance
EVP Financial Planning & Treasury

The Expenditure Budget shall be in conformity with the overall expansion in networks
and growth targets as planned for in the Capital Expenditure Programme and Revenue/ HR
Budgets recommended for approval.

25 25
 REVIEW AND APPROVAL
 Annual Corporate Budget is prepared by Finance
Department by consolidating all budgets.
 Review/ recommendation by SEVP Finance in
conformity with Master Plan.
 Review/ recommendation by Audit Committee
 Reviewed/ recommended Master Plan & Annual
Corporate Budget presented to BoD for approval.
 Any adjustments / amendments that are proposed and
agreed by any of the reviewers shall be made in each
budget location wise.
 Approved Adjusted Corporate Budget shall be broken
location wise and forwarded to each location through its
respective Head of Department for control purposes
26 26
 BUDGET TIMELINES
DESCRIPTION START FINISH RESPONSIBILITY
Master Plan – Strategic Novemb Decemb Corporate Affairs
goals er er Department
Master Plan – Financial Decemb Respective
January
Impact er Departments
Commercial/
Decemb Februar
Revenue Budget Corporate Affairs/
er y
Finance Department
Capital Expenditure Decemb Februar
Technical Department
Program er y
Cost Centres/
Human Resource Decemb Februar
Budget er y HR & Admin
Department
Cost Centres/
Non-project Capital Decemb Februar
Budget er y HR & Admin
Department
Decemb Februar Cost Centres/
Expenditure Budget
er y Finance Department
Februar Finance
Corporate Budget March
y Department/Mgmt.
27 27
 BUDGETARY CONTROLS
PERIODIC CONTROLS

 Monthly variance reports

 Variance analysis by departments and report to
EVP Financial Planning & Treasury.
 Budget Utilization Report.
 Development & Project Coordination committee
(DPC)

28 28
 BUDGETARY CONTROLS
TRANSACTION LEVEL CONTROLS

 Sub-project Control Number (SCN)

 Expenditure subject to approval as per
authority matrix
 Approval of re-appropriations
 Unforeseen non-project capital expenditure
 Expenses above Petty Cash limit to be
incurred against approved Purchase
Requisition (PR)
 Budget availability check through SAP

29 29
 Finan ce & Acc ou nt ing M anu al
Cash Management

30
 Cash Management
1. Introduction & Definitions
2. Petty Cash Management
3. Cash Management, Forecasting & Reporting
4. Funds Investment
5. Foreign Currency management
6. Reconciliation statement
7. Management reports
8.Feedback and Questions

31 31
 Introduction
Cash is the very essence of any commercial business. The
business strength and weakness is gauged by the volume of
cash it own. The business efficiency is measured by the
stability, consistency and growth of the cash flow the
business generates.

Unlike other asset, Cash is very vulnerable asset and requires

strict managment from its originating point till its ultimate
consumption, due to its inherent weakness of low volume,
easy portability and title transfer on delivery.

32 32
 Introduction
The Chapter on Cash Management in Accounting and
Finance Manual is a systematic attempt to:

• harmonize the thought of the players in the timely

and effective handling of cash,
• gauging performance,
• guide key players when and how to execute cash
activity
• assisting in fixing accountability
• removing hurdles causing delay in the activities.

33 33
 Definition
Collection Account
Banks account used for collecting revenue from subscribers.
Collection account is not used for payment.

Drawing Account
Banks account used for disbursing payment to payees. These
account are usually limit accounts where physically cash is
not available. The payment through these accounts are
replenished on actual payment from main NBP account.

34 34
 Definition
Credit Ceiling

The amount of credit limit authorized by PTCL treasury for a

bank account for a DDO/Cost centre or Budgeting unit. The
ceiling is maintained in the NBP branch where the DDOs
maintain their bank account.

Investment
The short term investment by PTCL treasury to generate
extra mark up from surplus funds.

35 35
 Definition
Cash Imprest

A cash float created for use in miscellaneous urgent or

unplanned expenditure of minor nature.

36 36
 Petty Cash Imprest
• Imprest will be allowed within limit (i.e Rs 50,000 Hqs &
Rs 25,000 Region) as approved by Headquarters.
• New or revision to imprest limit will be recommended by
SM Finance and regional GM for approval of EVP FPT.
• The system will prompt cashier when the petty cash limit
drop below replenishment level i.e Rs 10,000 & 5,000.
• Cashier will be responsible to maintain the balance of
physical cash available reconciled with the system balance.
• There will be surprise cash checking and counting by an
officer of DDO office to ensure accurate cash balance.

37 37
 Annual Ceiling management
• The ceiling limit will be within the provision of the annual
approved budget for operating and capital expenditure.

• The SM Opex and SM Capex will generate annual

requirement for Opex & Capex for approval of GM PT
based on approved budget.

• The system will check the regions monthly ceiling

requirement against the annual approved limit.

• Any revision to ceiling limit will be initiated by the region

for the approval of GM BC.

38 38
 Ceiling management
• The System will prompt zonal SMF when the ceiling limit
touches replenishment level i.e 25%.

• SMF will generate ceiling requisition, to approved by

Zonal GM for SM Treasury H/Qs

• SMT will instruct NBP to increase the ceiling limit of

requisitioning region/zone.

• Cheque will be issued strictly within the limit of availing

ceiling limit.

39 39
 Finan ce & Acc ou nt ing M anu al
Questions

40
 Is Annual Corporate Budget a long term plan?
Yes
No

No, Annual Corporate Budget is the company’s short

term budget, to be prepared annually in consistency with the
target set in the Master Plan.

41 41
 What are names of budgets that are annually
prepared to form Annual corporate Budget?

Following budget are prepared annually to form integral part

of Annual Corporate Budget:
• Revenue Budget
• Capital Expenditure Budget
• Human Resource Budget
• Non-Project Capital expenditure (Admn) Budget
• Operating expenditure budget

42 42
 Can any item of Non Project Capital Budget
be purchased before projected quarter?
No: Any item due to be purchased in a specific quarter shall not
be purchased before that quarter.

However, purchase may be delayed to any quarter subsequent

to the original quarter, if required.

43 43
 Which Department (SEVP) at HQs will
consolidate the Annual Revenue Budget of
the Company?

SEVP Commercial.

44 44
 Which Department (SEVP) at HQs will
consolidate the Annual HR Budget of the
Company?

SEVP HRA

45 45
 Which Department (SEVP) at HQs will
consolidate the Annual Capex Budget of the
Company?

SEVP Technical

46 46
Can the collection account be used for payment?

47
 No. Collection account is used for revenue collection and not for
payment.

48 48
 What is the limit of petty cash
imprest?

Rs. 25,000/- at region.

Rs. 50,000/- at HQs

49 49
 What is the replenishment of cash
imprest?

When the balance reaches Rs. 5,000/- at region & Rs. 10,000/-
at HQs

50 50
 When should region initiate demand
for ceiling?

At month end or when the region’s ceiling is utilized upto 75%

51 51
52