Aspect of Financial disc

Aspects of financial Discipline.

To understand-. Meaning of Financial Discipline. Objective of the class.

LIC is a public sector Life insurance company formed with an objective of providing insurance cover to all sections of the society at reasonable cost..

Manuals describing procedures for the various functions..

Defined Roles, Responsibilities & powers of employees of various cadres facilitate division of work & flow of work involving checking of the papers processed.

QMA visits provide support , guidance to operating units as well as deviation in operations are detected early.

Role of Central Office. Central office in which departments are headed by Executive Directors is responsible for( apart from giving decisions & sanctions as per provisions of FPSO- policy framing on various operational aspects. Getting policy decisions implemented by investing in infrastructure ,issuance of circulars & implementation through modules Liaison with MOF, IRDAI , Other tax authorities/public authorities Submission to Regulators & various authorities Thus central office decides direction in which corporation as a whole has to operate & facilitate operations to get desired results by keeping statutory framework in view.

Divisional Office provide support to branch office & exercise control on branch working by-.

Budget is of revenue & capital expenses. It is called PPB( Planning & performance budget). Exercise for next FY starts in February on current FY..

Sanctioning of budget. At CO, on getting sanction of competent authority(board), concerned departments (F &A, OS, Engg, IT ) of Central office, allocate budget Zone wise & inform the same to zones Zonal office bifurcate budget division wise & inform to Divisions under its control Divisional office bifurcates it branch wise & inform the same to branches.

Budget control. Once budget is sanctioned for branches, Divisional office enters budget for the given account code branch wise Branch can incur the expenses to the extent of sanctioned budget For incurring additional expenses beyond sanctioned budget, branch office submit its requirement to divisional office with reasons On verification of facts, total budget sanctioned under concerned account code in increased.

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Budget review statement. This statement is generated from efeap for the account codes for which budget is sanctioned Statement gives percentage of actual expenses to term budget( budget upto the end of period for which statement is prepared) & sanctioned budget Explanation is required to be given when actual expenses has crossed term budget This statement is to be signed by budget review committee members Correction entries also to be passed when required.

Audit. Audit is conducted by team of Audit department to ensure financial discipline is maintained at operating unit Audit team verifies payment vouchers of various departments, collection effected at counter, bank & other reconciliations to ensure that there is no excess or wrong payment Audit is conducted by verifying points mentioned in Audit Questionnaire Remote Audit is also conducted.

Audit of F &A Deptt. Some important questions in Audit Questionnaire of F &A- Whether Outstation cheque is collected with bank charges? Whether Cheque dishonor action taken on time? Whether Bank Charges levied by bank are verified? Whether action is taken to purify Trial balance? Whether stale cheque/ NEFT rejection action taken on time Whether statutory payment lying in stale cheque account ?.

Audit of F &A Deptt. Whether follow up is done for cheque deposited but not credited for than one month? Whether credit for cash lodgment given on same day? Whether actions taken for closure of defunct bank account? Whether vouching done & action taken on observations? Whether old items pending in critical accounts? Whether review & transfer of surplus done daily?.

Inspection. Inspection team ensures that procedures are followed or not as non observance of procedures will result into mishap & loss Various registers like key movement etc are verified to ensure that they are maintained & updated daily. Office orders are updated Statements /returns are filed on time Whether compliance to Audit/ inspection given on time.

DVM(Data vigilance Module). DVM module gives output in which some abnormality/ variation is observed Action has to be taken on the various outputs as required e.g if bank charges are not covered when due it is to be recovered. This list is to be taken on periodical basis & action has to be taken Generally officials from higher office say DO check at the time of QMA as to whether DVM list is attended to ..

Statutory Audit. Every branch is audited by statutory auditors( A firm of CAs ) once in every three years. Various aspects such as vouching, surprise cash verification, scrutiny of schedules, bank reconciliations, observance of tax law provisions are covered in course of routine audit At the time of finalization, various provisions made with its supporting , schedules, final bank reconciliations with bank certificates are verified.

Vouching is to ensure that voucher accounted for is in order. i.e-.

Whether advance is deducted( if any) while making payment.

Thus we have a robust system of internal checks & control to avoid leakages & ensure economy in operations.

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