Plan of action to improve internal controls of small scale manufacturing industries.

1. Modus Operandi to Improve Internal Controls of Small Scale Manufacturing Companies Presentation by: Vikas Kalyanshetty B Com, CA Final (Group I cleared)

2. Contents Organisation Chart Work Scope Authority/ Responsibilty SOPs ERP implementation Planning of sales orders Order wise status updates Determination of Overall Capacity 9. Evaluation of over/under employment 10. Allocation of Work 11. Co-ordination amongst Departments 12. Establishment of Costing System 13. Establishment of Internal Audit Department

3. Determination of overall capacity of the company Overall capacity with respect to the following: A) Capacity of No of employees B) Capacity of No of workers C) Production capacity This shall help in overall planning of annual budgets and recruitment of employees

5. Determination of work scope for all departments Written scope for each and every department All departments should work within their scope, requiring proper authorisation for exceeding the same.

7. Starting from the date of buying till the date of completion of order

8. Documentation of the plan in a pre-determined format

9. Approval of each plan with the senior management

11. Standard Operating Procedures (SOP) for each department Laying down of SOPs for every department These SOPs should be strictly followed Monitoring their execution by department heads

12. Preparing the ground work for ERP implementation Before implementation of ERP, system documents/ manual to be prepared Documentation of each SOP Preparation of Flow charts such as Flow of Documents, Process flow etc. Preparing Pro Forma of the input/output documents

13. Order wise status updates Each Department head to give order status updates to senior management fortnightly Format for such status update to be prepared Revision of targets considered in these meetings

14. Evaluating the need for employing new staff or reducing excess staff Evaluation of the need to hire more personnel in various departments Locating departments having excess staff and review the need for inter departmental staff transfer Appointment of qualified staff in order to improve the efficiency of strategically important departments such as Finance/Marketing.

16. Such adherence possible only when intra department allocation of work is properly performed

17. Every department head to give the names of their employees and their scope of work in writing

19. Establishment of Costing System Cost Plus method of pricing to be made standard for all the orders A proper system for costing to be established to avoid non recovery of costs due to improper estimation This system to be maintained by the Finance Department in co-ordination with Production Department.

21. Scope of Work:Preparation of System Manual containing all the SOPs, Flow Charts, Pro Forma of documents etc Preparation of Standard cost sheet pro forma Perpetual review of newly established system to ensure adherence to SOPs Directly report to the Managing Director of the company To work with senior management to improve the internal controls of the company.

22. THANK YOU