Accounting policies and_procedures 1 Tintoria Ltd manual

Prepared by Fred Mmbololo 1 | P a g e
TINTORIA LTD
SYSTEMS IN PLACE, ACCOUNTING POLICIES AND
PROCEDURES MANUAL
Adopted January 2019
COPYRIGHT
All rights are reserved. No part of this project or information herein can be reproduced, be
deposited in a retrieval system or be transmitted in any form or by recording, electronic,
photocopying, mechanical, or other ways, devoid of prior written permission of the author
or the Tintoria Ltd © 2019, Fred Toni M’mbololo

ABSTRACT
This an accounting manual prepared for Tintoria Ltd as part of establishing systems, structures
and generally accepted accounting practices in the company for the purposes of uniformity,
standardization and easy administration of company’s assets and properties.
It thus contains pertinent accounting rules and other information for the organization. This
accounting manual is internally developed and contains information specific to Tintoria Ltd-a
Laundry firm in Kenya for which it was developed.
It does list the positions or departments within the organization, a list of accounts, special
instructions for maintaining ledgers or records of transactions or other rules that need to be
followed by the accounting staff. It often may contain budgetary information or samples of forms
that need to be completed and maintained on-site for recording purposes or sent externally
reporting purposes. Principally, this accounting manual is an outline of all important accounting
information and procedures for this business.

Table of Contents
1.00 BACKGROUND INFORMATION .........................................................................................................................5
1.01 Business Purpose...............................................................................................................................................5
1.02 Services Provided ..............................................................................................................................................6
2.00 ACCOUNTING PRINCIPLES & PROCEDURES .....................................................................................................6
2.10 Systems ........................................................................................................................................................6
2.11 Policies...............................................................................................................................................................8
2.20 Procedures ...................................................................................................................................................8
2.21 Revenue Recognition...................................................................................................................................8
2.22 Matching of Revenues and Expenses........................................................................................................10
2.23 Fixed Assets and Depreciation ..................................................................................................................10
2.24 Data Cutoff ................................................................................................................................................11
3.00 CASH DISBURSEMENTS ......................................................................................................................................12
3.10 Policies............................................................................................................................................................12
3.20 Procedures......................................................................................................................................................12
3.21 Petty Cash transactions.............................................................................................................................12
3.22 Capital Acquisitions........................................................................................................................................13
3.23 Supplies, Services, and Other Invoices............................................................................................................13
3.24 Invoice Payment Procedures..........................................................................................................................14
3.25 Payroll Procedures .........................................................................................................................................15
4.00 CASH RECEIPTS ....................................................................................................................................................15
4.10 Procedures.......................................................................................................................................................15
4.11 Check received from Account Receivable in accounts....................................................................................15
4.12 Cash received in the shops via M-pesa...........................................................................................................16
5.00 BANK RECONCILIATION.......................................................................................................................................17
5.10 Policies.............................................................................................................................................................17
5.20 Procedures.......................................................................................................................................................17
6.00 STOCK CONTROL OF KEY OPERATIONAL MATERIALS.........................................................................................18
6.10 Procedures of Stock Control............................................................................................................................18
7.00 CUSTOMER’S STOCK RECONCILIATION AT THE SHOPS ......................................................................................19
7.10 Procedures of Customer’s Stock reconciliations at the shops........................................................................19
8.00 END OF MONTH ACCOUNTING PROCEDURES ...................................................................................................22

8.10 Policies............................................................................................................................................................22
8.20 Procedures......................................................................................................................................................22
9.00 END OF YEAR ACCOUNTING PROCEDURES.........................................................................................................23
9.10 Policies.............................................................................................................................................................23
9.20 Procedures.......................................................................................................................................................23
9.21 Financial Audit...........................................................................................................................................23
10.00 BUDGETING.......................................................................................................................................................25
10.10 Policies .......................................................................................................................................................25
10.20 Procedures .................................................................................................................................................25
11.00 COMPUTER AUTHORIZATION AND BACKUP ....................................................................................................26
11.10 Policies .......................................................................................................................................................26
11.20 Procedures .................................................................................................................................................26
11.21 Passwords..................................................................................................................................................26
11.22 Backup .......................................................................................................................................................26
11.23 Disaster Recovery.........................................................................................................................................27
12.00 ACCESS TO RECORDS AND RECORD RETENTION ..............................................................................................28
12.10 Policies .......................................................................................................................................................28
12.20 Procedures .................................................................................................................................................28
12.21 KRA Forms..................................................................................................................................................28
12.22 Personnel Records .....................................................................................................................................28
12.23 Financial Information ................................................................................................................................28
12.24 Records Retention .....................................................................................................................................28
13.00 MAINTENANCE OF ACCOUNTING POLICIES AND PROCEDURES MANUAL ......................................................30
13.10 Policies .......................................................................................................................................................30
13.20 Procedures .................................................................................................................................................30
14. PROPERTY AND EQUIPMENT INVENTORY............................................................................................................31
14.10 Policies...........................................................................................................................................................31
14.20 Procedures.....................................................................................................................................................31

1.00 BACKGROUND INFORMATION
1.01 Business Purpose
The following manual is a description of the accounting system and responsibilities for the
Finance Manager of Tintoria Ltd.
TINTORIA LTD is a laundry firm was started in the Year 1993 in Nairobi County, Kenya and in
the Year 2005; and a vibrant new management took it over and has expanded its operations
within the Nairobi County. The core business is the cleaning of garments and our team of
Laundry experts has been combining machinery technology with fabric science to create the best
laundry solutions for customers.
TINTORIA LTD dry cleaning is a concept of cleaning services available to individuals, families
and corporates which also include dry cleaning and laundry. TINTORIA LTD dry cleaning
ensures that affordable “luxury” cleaning to all. Quality is the focus of our business and
TINTORIA LTD is one of the best service providers in the market and this is line with the
current mission of the company which is: To offer professional dry cleaning and laundry
services and to maintain high quality standards and customer services at affordable rates.
The core business is the cleaning of garments and linen. Our professional team takes care of each
laundry garment with due diligence and precaution. Removal of the dirty spots, minor repairs to
torn garments and high quality finishing are some of the features that the cleaning, superb and
unique. To achieve our ambitions, we have recruited competent and energetic employees and
employed professional technology with good support, regular repairs and maintenance of the
laundry washing machines. TINTORIA LTD dry cleaning is that driving force.
TINTORIA LTD dry cleaning is a team of men and women working together to serve the
populace with a need of their garments being washed professionally. The skills and laundry
expertise of our team and it is customer oriented organization are the prime pillars of the
company. We operate several shops in strategic positions along various malls within the Nairobi
County.
TINTORIA LTD dry cleaners are built on a vision of the cleaning services while being
environmental friendly providing world class service and utilizing the state of art technology.

We have brought together the resources, expertise and the employees who want to share with the
company the eagerness and delight of accomplishing such goals.
Green standards policy:
As a responsible corporate citizen, we handle and dispose of all cleaning wastages and materials
after usage in accordance with the government regulations. Additionally, we use energy and
water efficient laundry machines, eco-friendly detergents, waste separation systems and energy
saving scheme to reduce natural resources consumptions and pollution. Our collection shops
encourage customers to return plastic hangers and re-use plastic packages for their dry cleaning
while picking and dropping of their laundry garments. All plastic packaging are bio-degradable
to support environmental protection.
1.02 Services Provided
The services that we offer are value adding which include;
Executive Dry cleaning for business attire, casual wear, ceremonial attire etc.
Laundry Services for commercial and corporate institutions, hotel industry, furnished
apartments, educational institutions, Launderette Services, Carpet cleaning, Curtains, Cleaning of
household, Office furniture, and car seat accessories.
Minor Tailoring and repairs, Office cleaning, Industrial cleaning, House cleaning,
Pest Control & fumigation, Garbage Collection, Car washing, Swimming pool cleaning
2.00 ACCOUNTING PRINCIPLES & PROCEDURES
2.10 Systems
In the shops at Front Offices, we use the Data Management Systems (DMS) to book all
customers orders, payments made and receipt issued are from this system. We are currently
doing an upgrade so that we can view all the transactions at the shop online.
The DMS system was initially developed using MS Vb6.0 with Ms Access as the principal
database and 32bit resolution. Over the years technology have change thus the need to at least
upgrade. It’s our wish to fully integrate the system into a fully web based s system, an ASP or an

ERP which can enable us to have all shops running from a single cloud or local server and with
real time transactions. Considering that this type of a system will need a complete change over in
terms of OS, hardware and Networks, we came up with the ideal of converting the DMS codes in
a VB6.0 .Net version which is still 32 bit and convert the database in MySQL Server form Ms
Access, this conversion level will allow as to keep the current network and hardware.
With this in place we have developed an advance application that will connect the current
database from the local machine in the shop to the cloud and from the cloud to a local machine at
the head office, thus allow a completed data flow from shops to the Head Office which is our
main aim. Thus the main areas converted are Code and Database. The other new application is a
reporting module which will allow the user to filter the received data and sort by date by shop,
all other data table will remain at the local shops.
Advantage of this database type is that any other development that may be done will work with
it, be it Desktop, Online or mobile based and that it’s compatible with other operating systems
and most windows versions. This system is being maintained and being developed by Mr
Francis Nderitu. At the back office, we use the quick book accounting systems, these two
systems that is DMS and QBKS are incompatible at the moment and Quick books systems is
maintained by Paul Mwaura who also maintains the Hardware systems of the company. Internet
solutions are supplied by Dan Mlango
DMS system and software is supported by Francis Nderitu
Quick book system and hardware is supported by Paul Mwaura
Internet, website, marketing application is supported by Dan Mlango

2.11 Policies
The accounting principles of Tintoria Ltd will be consistent with all applicable laws. These
include: Generally Accepted Accounting Principles, International Accounting Standards and
International Financial Reporting on the applicability of the accounting rules to SMEs.
Certain procedures resulting from these accounting pronouncements and releases are discussed
below.
2.20 Procedures
2.21 Revenue Recognition
Revenue – the gross inflow of economic benefits arising from the ordinary activities of an entity
that result in increases in equity, other than contributions from equity holders.
Fair value – the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length transaction.
Measurement
Revenue is measured as the fair value of the consideration received or receivable, taking into
account any trade discounts or volume rebates allowed.
If the inflow of cash or cash equivalents is deferred and the arrangement effectively constitutes a
financing transaction, the fair value of the consideration is determined by discounting all future
receipts using an imputed rate of interest. The difference between the fair value and the nominal
amount is recognized as interest revenue in accordance with IAS 39.
Amounts received on behalf of other parties (e.g. sales and valued added taxes, amounts
collected on behalf of the principal in agency arrangements) are not economic benefits flowing to
the entity and do not result in increases in equity. Therefore, they do constitute revenue.

Sale of goods
Revenue from the sale of goods is recognized when all the following conditions have been
satisfied: the entity has transferred to the buyer the significant risks and rewards of ownership of
the goods;
the entity retains neither continuing managerial involvement nor effective control over the goods
sold; the amount of revenue can be measured reliably; it is probable that the economic benefits
associated with the transaction will flow to the entity; and the costs incurred or to be incurred in
respect of the transaction can be measured reliably.
Rendering of services
Revenue for the rendering of services is recognized by reference to the stage of completion of the
transaction at the end of the reporting period, if the outcome of the transaction can be reliably
estimated.
This is the case when all the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity;
the stage of completion of the transaction at the end of the reporting period can be measured
reliably; and the costs incurred for the transaction and the costs to complete the transaction can
be measured reliably.
If the outcome of such a transaction cannot be estimated reliably, revenue is recognized only to
the extent that expenses recognized are recoverable.

2.22 Matching of Revenues and Expenses
In order to present accurate and consistent financial statements, the revenues and expenses
attributable to each period will be reflected in that period to the degree possible.
Generally, all entries required to accurately reflect the revenues and expenses of each period will
be made in that period. The organization records transactions on the accrual basis of accounting.
2.23 Fixed Assets and Depreciation
The general capitalization policy is that all equipment and other fixed assets costing in excess of
Kshs 50,000 will be recorded as an asset and for Land & Building any amounts which are in
excess of Kshs 100,000.
To determine if a repair or improvement will need to be capitalized, the following additional
factor needs to be considered: does the expenditure extend the useful life of the asset repaired or
improved? For example painting would not be capitalized, but replacing the boiler or repairing
the roof would be capitalized, if the value is in excess of Kshs 100,000.
All capital assets will be depreciated over their estimated useful lives. The reducing basis
method will be used, with depreciation charged beginning in end of the year that the asset is
placed in service. Some main estimated lives are:
Computers and related equipment -- 3 years
Office furniture -- 8 years
Plant and Machinery -- 8 years
Furniture and Fittings -- 8 years
The cost of a fixed asset should include capitalized interest and ancillary charges necessary to
place the asset into its intended location and condition for use.
Ancillary charges include costs that are directly attributable to asset acquisition
such as freight and transportation charges, site preparation costs, and professional fees.

Donated fixed assets should be reported at their estimated fair value at the time of acquisition
plus ancillary charges, if any. This estimation should be made on the basis of the best
documentary evidence available.
Examples of such documentary evidence would include independent appraisals,
market quotations, information on actual sales of similar assets within an appropriate time
frame, etc.
Assets not capitalized should be tracked for insurance and control purposes.
2.24 Data Cutoff
In order to meet the deadlines for producing reports as discussed in our management meeting the
gathering of information to use in making the month end entries must be cutoff by a certain date.
The monthly financial statements are due to the Board by three weeks after the month end. For
these reports a cutoff of two weeks will be used. Any payables or other information not
available by two weeks after a month end will be classified in the next period. The Finance
Manager may need to use estimates if final information is not available on a significant
additional transaction.
The year-end financial statements are due to the Board twelve weeks after year end. For these
reports a cutoff of four weeks will be used. Since the year end is the most important period
cutoff, the general ledger will continue to be held open for additional material transactions
through the conclusion of the financial audit fieldwork. The external auditors have to complete
their audit within six months before submitting these documents to Kenya Revenue Authority.

3.00 CASH DISBURSEMENTS
3.10 Policies
The positions authorized to sign checks are; Managing Director, Chairman and a Non-Managing
Director. Only one signature will be required on checks. Anyone signing a check must review
and initial the supporting invoice or other documentation. Individuals may not sign a check
payable to themselves.
The Assistant Finance Manager will maintain the accounts payable system. Prior to payment,
the Assistant Finance Manager will code each invoice, prepare the checks and organize the
documentation.
The Assistant Finance Manager will determine payroll amounts based on timesheets and
authorized rates which will be reviewed by the Finance Manager and Operations Manager . The
Assistant Finance Manager will also prepare the payroll checks.
3.20 Procedures
3.21 Petty Cash transactions
Petty cash payments are made only on the basis of suitably authorized voucher, which are either
signed by the Operation Manager or the Finance Manager but in case of unseen circumstances
either one of the Managers can approve all the relevant petty cash vouchers. The vouchers are
normally used in a sequential order. Where independent evidence is also available, for example
invoices and receipts, these are retained.
Ideally the company should operate an imprest system of petty cash accounting. This means that
the petty cash balance is maintained at specific amounts to ensure that we have petty cash for
daily office usage and emergencies like in the case of sudden machine breakdown. This is
supposed to be reimbursed at regular intervals on the basis of vouchers showing the payments
which were made during the period in question. Our float balance is usually around Kshs 150,
000 and reimbursed either weekly or fortnightly depending on our company daily needs.
However, due to unforeseen circumstances and at times dishonesty of the cashiers, our petty cash
needs for the day are serviced through the daily cash sales.

Our petty cash float is also subject to regular surprise counts by a responsible person not
involved with the petty cash system. The balance in-hand is reconciled to the available cash
balance by reference to the vouchers not yet reimbursed. A reconciliation is also maintained in
the computer system to ensure that only authorized vouchers are keyed in the system, in case of
unauthorized vouchers the concerned staff are charged accordingly unless there are exceptional
reasons for not adhering to the petty cash system of accounting.
The size of individual payments out of the petty cash is restricted to Kshs10, 000.00 unless if the
Directors authorize for more than that to be issued. Unusual or frequent breakdown of
machinery is investigated expeditiously to ensure that only genuine repa are catered for by the
petty cash system.
Staffs are not allowed to cash personal checks or borrow money from the petty cash.
3.22 Capital Acquisitions
Three bids are required for the purchase of budgeted capital. The management selects a bidder.
Board approval is required if the low bidder is not selected, or if bidding was not deemed
practical by the Managing Director. Any capital assets not budgeted by the Board must be
approved by the Board prior to soliciting bids.
3.23 Supplies, Services, and Other Invoices
Purchase requisitions may be generated by anyone in the office. The requisitions are turned in to
the Managing Director for approval and given to the office assistant for order placement. The
approved purchase requisitions are given to the Finance Manager and filed in the open order file.
When the goods or services are received, the Finance Manager pulls the purchase requisition and
compares the order received to the packing slip and the purchase requisition for accuracy. The
packing slip is attached to the purchase requisition and returned to the open order file until the
invoice is received.
Mail is received and opened by the office assistant. All invoices are routed to the Finance
Manager, who matches the invoice to the approved purchase requisition and the packing slip and
determines an account coding for the transaction. The Finance Manager gives the invoice and
support documentation to the Managing Director for approval to pay

The Managing Director initials the invoice indicating approval to pay, and approving the expense
account coding proposed by Finance Manager. The Finance Manager enters the approved
invoice into the A/P computer module and files all documents in the open invoice file until they
are paid.
3.24 Invoice Payment Procedures
As an internal control measure, before we make a payment we reconcile the supplier statement
with the outstanding invoices to make sure that all invoices are included in the supplier statement
and are all accompanied by the goods received notes (GRN). Invoices are paid after thirty (30)
days from the receipt of the invoices. Prior to generating checks, a pre-check report is generated
which lists all outstanding payables with the due dates and amounts
Payment vouchers are raised against the outstanding invoices and are cross checked and
approved by the director. We also raise remittance advices to accompany the payment vouchers.
A check register is also maintained recording all the checks payments made. The Assistant
Finance Manager will indicate which invoices need to be paid. This pre-check report will be
reviewed and approved by the Managing Director. Based on the approved pre-check report, the
checks are hand-written from the Account Payable list generated from the Quick books computer
system, attached to the approved support documentation from the open invoice files, and given to
the Managing Director for signature
A paid stamp is used to cancel all the paid vouchers, the paid vouchers are then filed in their
respective files attached with the remittances advice. Also once a check is written out it is
recorded in a book. The same information is also written in the check stubs for ease of future
reference. We further have a release check book to ensure that all check collected are properly
recorded for ease of reference and to avoid double payments.
The checks are approved by the check signer and the support documents are returned to the
Assistant Finance Manager to be filed alphabetically by vendor in their appropriate files. The
original/supporting documents used to raise the checks are also stamped paid and filed with
remittance advices to avoid wasting time trying to retrieve documents to verify payments.

3.25 Payroll Procedures
Payroll is processed monthly and is run and distributed by the 22nd of each month. The pay
rates used to prepare payroll will be based on terms of employment issued to each employee by
the Managing Director.
Payment is made only to bonafide employees who work for Tintoria Limited a review of a
sample of starters and leavers every month is done to ensure correct documentation is in place
and there are no ghost workers in the payroll and this is controlled by having a segregation of
duties between the Operations/Human Resources department and the accounting department on
the payroll functions.
Any changes in employment status of employees’ status (e.g. maternity, special leave, recalls
from leave for emergency and salary increments and bonus etc) are informed to the Operations
Manager and accounting department for further action on the payroll is processed printed and
presented to the Managing Director for review and signature to be forwarded to the Bank to be
credited to individuals accounts or checks are written out to the respective employees.
4.00 CASH RECEIPTS
4.10 Procedures
4.11 Check received from Account Receivable in accounts
The Office Messenger will receive and open the mail in the presence of the Assistant Finance
Manager in order to maintain dual control over receipts.
The Assistant Finance Manager will record all checks when received and record them in a check
received register before posting it in the Quick book accounting system.
The bank deposit will be made daily by the Office Messenger. If the Office Assistant is
unavailable to perform these duties, the Finance Manager will assign an employee other than the
Assistant Finance Manager to carry them out.
Pre-numbered receipts will be used for any monies received directly from an individual.

4.12 Cash received in the shops via M-pesa.
In each shop there will be a specific phone line to record the paybill number when the customers
pays, they will then show the Receptionists the reference number and then forward that reference
number to be later reconciled with the M-pesa paybill statements of the various shops to be done
by the Assistant Finance Manager.
The Actual cash received from the customers in the shop is recorded less petty cash commission,
airtime and parking charges expenses. The petty cash commission is supposed to be paid from
the net sales and other charges need to be approved in advance by the Finance Manager and the
Operations Manager.
The bank deposit will be made daily by the Receptionists before 9.00 a.m in the morning for all
shops with the exception of Soin Arcade and ABC shops which bank twice in the morning and in
the afternoon too.
Pre-numbered receipts will be used for any monies received directly from an individual.

5.00 BANK RECONCILIATION
5.10 Policies
The bank statements are forwarded to the Managing Director unopened.
Upon opening the statements, the Managing Director reviews the checks for unusual items or
changes. The Managing Director compares selected deposits on the bank statement to the copy
of cash receipts logs and reviews any account transfers.
The bank statements are to be reconciled by the Finance Manager on a monthly basis no more
than one week after receipt of the statement. The general ledger and the reconciled bank
statements will be adjusted to agree monthly.
5.20 Procedures
Upon receiving the bank statement from the Managing Director, the Finance Manager prepares
the monthly bank reconciliation. See Section 18 for the form used to prepare the bank
reconciliation. The bank reconciliations will reconcile the bank balance to the general ledger
balance. A journal entry will need to be posted each month for items on the bank statements
which are not already recorded in the general ledger. These reconciling items may include:
interest earned, service charges, NSSF checks, NHIF checks, direct deposits and other debit or
credit memos.
After the general ledger is reconciled to the bank statement, the monthly bank statement and
cancelled checks and other forms and the actual reconciliation form are filed in the bank
reconciliation file.

6.00 STOCK CONTROL OF KEY OPERATIONAL MATERIALS
6.10 Procedures of Stock Control
There are a number of different techniques employed by Tintoria Ltd to ensure stock control is
maximizing efficiency and profitability. Below are six key techniques of stock control for the
key materials like Hangers, Chemicals & detergents and packaging materials
Establishing Annual Stocking Policies
Management must decide the maximum and minimum level of stocks and supplies that need to
be kept in the warehouse or across the network of warehouse locations. Management must also
set optimized re-order levels, safety stock levels (below which supply must not be allowed to
fall) and an average stock level to ensure costs are contained.
Preparation of Stock Budgets
Many organizations have an annual stock budget and they are usually prepared well in advance
before stock is procured. Budgets should include the total cost of ownership to keep stock on
hand during that year’s account period. This includes materials cost, fixed operational costs,
carrying costs, logistics costs, redistribution costs and additional miscellaneous costs that
contribute to the total costs of ownership. However, in Tintoria Ltd the budget is usually based
on the previous year’s actual usage and then an incremental percentage is added on for the future
coming years.
Maintaining a Perpetual Stock System
Also known as “the automatic stock system”, this method is designed to keep a constant track of
the quantity and value of each stocked item. Many wholesale distributors leverage a combination
of an Enterprise Resource Planning (ERP) or Warehouse Management System (WMS) in
conjunction with an Stock Optimization solution, such as Eazy Stock, to optimize stock balances.
Most ERP and WMS technologies struggle to keep costs low and service rates high, which is
why optimization software can be so valuable to operations processes. However, Tintoria Ltd
uses the traditional method of maintaining stock balances by the use of bin cards and constant of
the stock on the floor.

Stock Turnover Ratio
This is a calculation used to determine how quickly stock is used up or “turned over” in a given
time period. The higher the ratio the shorter the shelf life of the stock and typically leads to
higher sales volume and profitability for companies with lower profit margins. Stock turnover
should be closely watched for every item in the warehouse. Over the course of the product’s life
cycle, demand will fluctuate and cause variability in the supply chain. Tracking demand patterns
are one way to ensure product replenishment calculations are accurate and optimized. However,
in Tintoria Ltd we sale Laundry and other services rather than stock hence we do not calculate
the stock turnover ratio.
Establishment of Optimized Purchasing Procedures
In order to ensure that stock is under adequate control, management must adopt purchasing
procedures that align with actual sales history and demand pattern data. All stock items that have
not had a stock turnover or have not been sold within an accounting period, typically 12 months,
should be classified as obsolete stock and should be liquidated from stock to eliminate
unnecessary carrying costs.
Any item with a declining customer demand should be flagged in the system and its safety stock
level thresholds and re-order point counts should be downwardly adjusted to mitigate risk of
obsolescence and cost. This is hardly applicable to Tintoria Ltd but we ensure we always made
the purchases of key stocks such as packaging materials, hangers and detergents so as to
minimize operations and production disruptions and time downs
7.00 CUSTOMER’S STOCK RECONCILIATION AT THE SHOPS
7.10 Procedures of Customer’s Stock reconciliations at the shops
Obtain stock reports for what is on the rack from the shops every Wednesday morning
Visit the shops daily/weekly to obtain DMS reports from the system and raise any concerns with
the Finance Manager and Operations Manager while liaising with DMS Expert and service
provider -Mr Francis Nderitu
Prepare a daily/weekly report on the bookings, receipts and what is on the rack

Review express items and stock over Kes. 5,000 and check in the daily reports for the payments
(paybill/ VISA/cash). Where unable to trace the payments, call the shops to confirm if they have
received the items from Soin or if they are yet to be collected from the respective shop by the
customer.
To liaise with the Receptionist to make sure uncollected laundry does overstay in the shops and
is paid promptly.
Chairman’s Propositions to add to existing duties:
Prepare weekly reports with more detail as follows:
Do physical stock taking daily/weekly with Toni. To arrange on how to go about it and ensure
stocks are moving and being paid for.
After stock taking, prepare a stock reconciliation/map/chart to be shared with the shops and the
management team – own & comply. The shop attendant to sign and the Assisting Stock
Accountant to co-sign these reports.
Prepare a matrix for the stock accountability
Send the Chairman the matrix together with the report.
Stock movement management at the shops should be closely monitored to avoid fraud, theft and
loss of funds through uncollected stocks and lost stocks. Every shop must have this stock report
filled daily. This was a main area of concern for the Chairman
Credit card reconciliations to ensure that the credit cards get the appropriate approvals and the
money is banked intact, this can be checked through the credit card statements reconciliation and
doing any other required shop reports.
Submit monthly Sales report of all the shops and their target and give explanations where targets
were not met.
Device a matrix schedule for stock accountability. Stock reconciliations charts or graphs which
should have 3 copies per shop, one copy for the chairman, one for the shop and one for Yvonne.

Reconciliations of MPESA, CREDIT CARDS, CASH & CHEQUES to be done on a daily basis
without fail.

8.00 END OF MONTH ACCOUNTING PROCEDURES
8.10 Policies
The Finance Manager prepares the monthly financial statements
The Managing Director approves the financial statements before being sent to the Board of
Directors. The financial statements should be to the Managing Director at least two days prior to
the mailing of Board packets in order to facilitate this review.
The Board of Directors approves the monthly financial statements.
8.20 Procedures
The cutoff for information in the monthly statements is two weeks after the month end.
Upon completion of the monthly bank reconciliations, the Finance Manager will formulate the
monthly journal entries. There are two types of monthly journal entries, those that remain
consistent from month to month (recurring) and those that are specific to that month. The
recurring journal entries are determined after the annual audit with the help of the CPA firm.
These include depreciation and expensing of prepaid insurance. The specific journal entries
include recording of principal/interest breakdown for the mortgage payment, interest and
dividend income, bank transfers, NSSF checks, NHIF checks, bank charges, accrued wages and
payroll taxes, receivables, etc.
The Finance Manager will maintain a file for each month which includes work papers which
document the balance of each balance sheet account. The file will also include copies of the
grant billings. All balance sheet accounts will be reconciled monthly to help ensure that accurate
statements are provided to management and the Board.
Once the final general journal entries are posted, the monthly financial statement is printed along
with a copy of the general ledger for that month as well as the general journal entries posted.
The adjusted financial statements are to be delivered to the Board of Directors within three
weeks after the end of the month.
The Finance Manager prepares a budget to actual expense report for the Managing Director and
the Board of Directors to be included with the monthly financial statements.

The year-end financial statements will be delayed for additional procedures
9.00 END OF YEAR ACCOUNTING PROCEDURES
9.10 Policies
The Finance Manager prepares the year-end financial statements.
The Finance Manager is responsible for preparing for the annual financial audit and for working
with the outside Finance Managers to complete the audit.
The Managing Director approves the financial statements before being sent to the Board of
Directors. The financial statements should be to the Managing Director at least one week prior
to the mailing of the Board packet in order to facilitate this review.
The Board of Directors approves the year-end financial statements.
The Finance Manager will arrange to move all records from the year which is closing to storage.
9.20 Procedures
The cutoff for December financial statements is extended to four weeks after year end.
Upon completion of the December financial statements, the preliminary year-end report is run by
the Finance Manager and given to the Managing Director for review.
The Finance Manager calculates the recurring entries (with the help of the CPA firm if needed)
for the New Year.
9.21 Financial Audit
The Finance Manager will contact the independent Finance Managers as soon as the Managing
Director signs the audit engagement letter to begin planning the scheduling and work needed to
complete the audit. The Finance Manager will ensure that adequate space is provided for the
independent Finance Managers to work in our offices. This would include one or more large
tables, space to keep our records provided to the independent Finance Managers, light and
electrical outlets.
The Finance Manager will work with the independent Finance Managers to determine what
confirmations will be required. This process will be completed as soon after year end as

possible. The Finance Manager will oversee typing the confirmations. The Managing Director
will sign the confirmations. The Finance Manager will mail the confirmations to the
independent auditors.
The Finance Manager will be responsible for preparing as many of the schedules which the
auditors will use as possible. The completed monthly reconciliations for December will partially
fulfill this requirement.
Some of the information which needs to be organized and made available includes: the complete
general ledger for the year, a chart of accounts, all bank statements and cancelled checks, all paid
invoices, all cash receipts logs, all payroll records, including timesheets, payroll summaries for
each pay period, Board minutes for the year under audit through the most recent minutes
available, grant contract files, printouts of the donor database, including all restricted donations,
lease agreements, insurance policies, documentation for fixed assets capitalized and recorded in
the general ledger.
The Finance Manager will be available at all times throughout the audit to facilitate the work of
the independent Finance Managers. The Managing Director will schedule some time to meet
with the independent Finance Managers as needed during the audit. The Office Assistant will
also be available for any work which the Finance Manager may delegate to them.
The Finance Manager and Managing Director will plan a meeting with the independent Finance
Managers at the end of the audit to discuss any issues raised, review the audit journal entries,
evaluate the audit process and plan improvements for the following year.

10.00 BUDGETING
10.10 Policies
The Board of Directors is responsible for guiding the budget process and for approval of the
annual budget.
The Managing Director and Finance Manager will be responsible for preparing the proposed
budget.
10.20 Procedures
The budgeting process will begin in September for the following fiscal year. This will allow for
eight months of results to be used in planning the budget.
All budget documents will be submitted to the Finance Manager by September 30 for
consolidation into an overall agency budget. The Managing Director and Finance Manager will
then review this to determine if there are any obvious areas which may need to be reworked.
The collated budget will be submitted to the Finance Committee by October 15 for review and
feedback. Any further revisions will be made and the budget presented to the Board by
November 15.
The responsibility for each area of the budget is as follows:
Managing Director -- Program revenues and expenses, fundraising revenues and expenses,
donations revenue, operations expenses, and capital budget.
Finance Manager -- Accounting expenses, investment income, projected balance sheet, Board
and committee expenses.
After completion and approval of the budget by the Board of Directors, the budget could still be
modified for subsequent activities.

11.00 COMPUTER AUTHORIZATION AND BACKUP
11.10 Policies
The accounting computer and software will have access controlled by passwords. The Managing
Director will control the master password. The Finance Manager will be given a complete
system password and will control which other personnel will be given passwords.
The accounting computer will be backed up regularly. The Finance Manager is responsible for
carrying out this backup.
The Finance Manager is responsible for maintaining the disaster recovery plan for the accounting
software and for periodically testing the plan.
11.20 Procedures
11.21 Passwords
The Finance Manager will maintain a record of all authorized users and the level of password
access each user has. Passwords will be changed once each year in June.
11.22 Backup
The backs up procedures are designed to maintain records of various periods until that period is
closed.
An annual tape backup will be maintained of the accounting data prior to the close. This tape
will be maintained until the subsequent year accounting data is backed up and closed.
A monthly tape backup will be maintained of the accounting data for each month until that
month is again backed up the subsequent year.
A weekly tape backup will be maintained of the accounting data for each week, as of Friday
evening until that week is backed up the subsequent month.
A daily tape backup will be maintained of the accounting data for each day that work is
performed until that day is backed up the following week.

A copy of all tapes will be kept in a fireproof tape safe in the office. A copy of the annual and
monthly tapes will be taken home by the Finance Manager for storage. The Managing Director
and the Finance Manager will have keys to the fireproof safe.
The Finance Manager will ensure that the appropriate backups are made at the end of each day.
11.23 Disaster Recovery
In the event of the serious damage to the offices of Tintoria Ltd arrangements have been made to
process certain accounting records at the offices. Since the disasters we are anticipating would
be localized in nature, such as fire , riots, thefts or tornado damage, we have not set up recovery
plans with other agencies in another part of the National government.

12.00 ACCESS TO RECORDS AND RECORD RETENTION
12.10 Policies
The records of Tintoria Ltd are generally open to public inspection due to KRA rules, open
records laws and the spirit of public service. However, certain information is not open to public
examination and may only be released with the permission of the Managing Director. Questions
in this area are to be resolved by the Managing Director. If the answer to a request is unclear the
Managing Director may contact the Chairman for a consultation.
Record retention is governed by various rules, statutes of limitations and common sense. Certain
documents must be retained indefinitely, while others may have little use after a year.
12.20 Procedures
12.21 KRA Forms
Payroll tax forms are not public information and will not be released.
KRA Forms P9 and Income tax return forms can be made available to anyone upon request but
can also be downloaded from the KRA website. The Assistant Accountant will keep a copy of
each form and make photocopies if requested.
12.22 Personnel Records
All requests for personnel records, job references and credit inquiries will be referred to the
Managing Director.
12.23 Financial Information
Financial statements and other financial information is regularly distributed to the relevant
stakeholders and the Board. This information is not to be made available to persons who are not
regularly authorized to receive that particular report. Any such requests for information must be
approved by the Managing Director.
12.24 Records Retention
A schedule of record retention follows. Any discarding of records should follow this schedule.
However, prior to discarding of records, the permission of the Managing Director and the

Finance Manager are required to ensure that they have no reason that an exception should be
made to the policy. All discarded documents are to be shredded or sent to our recycling
company, which has a confidentiality agreement with us.
For tax purposes, records should be maintained until the expiration of the statute of limitations.
Generally, that period expires three years after the later of the due date of the return or the date
filed. While there are a few exceptions to this rule, the three-year period normally should be
adequate.
For non-tax purposes, records should be maintained only as long as they serve a business
purpose or until all legal requirements are met. Unfortunately, there are not specific standards
that will cover all situations. The following are some of the factors that should be considered:
National government, Local government, and local statutes and regulations
Industry requirements or standards
Potential claims or litigation
Contract requirements

13.00 MAINTENANCE OF ACCOUNTING POLICIES AND PROCEDURES
MANUAL
13.10 Policies
The systems, accounting policies and procedures manual is critical to the accounting function of
Tintoria Ltd.
The Finance Manager is responsible for maintaining the manual.
All proposed changes must be approved by the Finance Manager and by the Managing Director.
The policies and procedure manual will be dated with the date of each approved revision.
13.20 Procedures
Each year the Finance Manager will review the manual and formulate proposed changes. This
update will be completed no later than October of each year. All changes must be approved in
writing by the Managing Director.. If the Finance Manager has no proposed changes, a memo to
that effect must be approved by the Managing Director.
Whenever changes to the accounting procedures are made, a review of the accounting policies
and procedures manual will be made by the Finance Manager to determine if a revision is
required. Any minor revisions to the manual which are not reflected in the manual immediately
should be kept on file to incorporate into the formal annual update.
The revised manual will be distributed to the Finance Manager, Managing Director and
Chairman for scrutiny and further action.

14. PROPERTY AND EQUIPMENT INVENTORY
14.10 Policies
An inventory of all property and equipment will be maintained. The inventory document will
contain sufficient information for insurance and grant requirements.
14.20 Procedures
The Finance Manager will maintain a database of all property and equipment owned by Tintoria
Ltd. The database will include: tag number, description, serial number, acquisition date, cost,
vendor, location and any grant or other restrictions. Equipment will be included in the database
using the definitions for capitalization in policy document.
This is an approval of an annual budget by the board of directors for the purchase of the non-
current assets. The budget is updated and reviewed regularly when new orders are made or the
necessity to buy a new order comes into action.
The property and equipment database will be consulted prior to sale of any item to determine if
there are restrictions. An annual inventory will be taken to verify the existence of the property
and equipment listed in the database.
Operational certificates and plant and machinery which were purchased when the business was
bought are still in use and were actually paid for by the company and belong to the company.
Informed people in the production department carefully assess the proper operation of the
machines and if there is a breakdown in the machines and also that repairs are made promptly to
ensure the operational effectiveness of plant and equipment.
The accounting department reviews the updating of the non-current asset register by the
production department and that only the accounting department has access to it.
Permanent identifications numbers recorded on the asset and purchase invoices for fixed assets
automatically updates the non-current asset registers as they are filed in the non-current asset
register. This register is also maintained in the quick book system in a soft copy. All equipment
will have a tag affixed with a unique identifying number

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