AIM

RD.020
CURRENT BUSINESS PROCESS
ACCOUNTS PAYABLES

The National Company for Glass Industries

Zoujaj
Oracle Applications Implementation Project
Release 12

Author: Padmaiah V
Creation Date: December 1, 2009
Last Updated: December 12, 2017
Document Ref: 1.0
Revision: 1.0

Approvals:

Mr Yousef Al Salman General Manager / Project Sponsor , Zoujaj

Mr Hatem Al Fadli Group Finance Manager , Zoujaj

Zulfiaqar Ali Najeeb Project Manager, Zoujaj

Sathyanarayana Sarma Project Manager, Sierra Atlantic

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 1

Document Control

Change Record
1

Date Author Version Change Reference

22-Dec-09 Padmaiah V Draft 1.0 No Previous Document

06-Dec-09 Sathyanarayana Sarma Draft 1.1 Draft 1.0
08-Dec-09 Sathyanarayana Sarma Draft 1.2 Draft 1.1
12-Dec-09 Sathyanarayana Sarma Draft 1.3 Draft 1.2
13-Dec-09 Sathyanarayana Sarma Version 1.0 Version Change

Reviewers

Name Position

Mr. Sathyanarayana Sarma Project Manager Sierra Atlantic

Mr. Balan Asst Group Finance Manager Zoujaj
Mr. Chandrasekhar Bhavaraju Oracle CoE, Sierra Atlantic

Distribution

Copy No. Name Location

Library Master Project Library

1

2 Zoujaj Project Manager Riyadh, Saudi Arabia

Note To Holders:

If you receive an electronic copy of this document and print it out, please write your
name on the equivalent of the cover page, for document control purposes.

If you receive a hard copy of this document, please write your name on the front
cover, for document control purposes.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 2

 Contents

Document Control...................................................................................................................2

Process Listing and Process Descriptions............................................................................4

Descriptive Overview for Accounts Payable......................................................................6

Process Descriptions for Accounts Payable.........................................................................7

Process Relationships for Accounts Payable.....................................................................18

Current Business Process Documentation.........................................................................22

Critical Requirements....................................................................................................22
Current Benchmark Activities......................................................................................22
Current Bottlenecks........................................................................................................22
Open and Closed Issues for this Deliverable....................................................................23
Open Issues......................................................................................................................23
Closed Issues...................................................................................................................23
Annexure 1 Supplier Classification in IFS Payables system........................................24

Annexure 2 Payment Approval Limits...........................................................................25

Appendix I Accounts Payable Questionnaire................................................................26

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 3

Process Listing and Process Descriptions

Zoujaj Accounts Payable department under the Finance Department handles all activities related to
trade payables, such as the recording Supplier Invoices, processing payments to suppliers,
contractors etc and also to record and pay the direct expenses and petty cash payments. This function
is to a certain extent computerized and is handled by the Finance department and has three persons
to handle the Accounts Payables functions and accounting. The Payables accounting is mostly on
accrual basis, but for the direct payments it is accounted on cash basis since most of these expenses
are for the current period.

The following are the major activities of the Accounts Payables Section at Zoujaj:

1. Invoice Processing: The invoices for procurements and services are entered and maintained in
the IFS (Industrial and Financial system) Payables system by the Finance Department. All
supplier invoices are sent to Zoujaj Accounts department directly. Trade related invoices may be
for purchases with PO or without PO. The AP invoices must be matched against PO and GRN (if
PO related to Goods), and an approval from General Manager obtained, before Zoujaj Finance
department can process the invoice for payment. Non PO purchases are routed though Petty
Cash maintained by the Purchase Department. For all non PO related purchases, a common GRN
is prepared at the end of the day for recording the inventory receipts and tracking. For Foreign
Currency Procurements, Invoices are entered in the IFS Payables system in the respective Invoice
currency, using the latest exchange rate for conversion to SAR.

2. Payment Processing: Payment is processed on the due date through a Payment Voucher. Zoujaj
Finance department prepares manual cheque, together with supporting documents and submits
to the Finance Manager for approval. Once the payment is approved, Finance Department will
record the payment in the IFS System and release the payment to the Supplier. In case of Supplier
Prepayments, the actual payment is recorded at the time of making the prepayment. (A fixed
exchange rate of 1US$ =3.75 SAR is used for conversion purposes). For Approval limits for
payments, pls refer to Annexure -II

Advance Payments to Suppliers / Contractors against Purchase Orders / Work orders is made in
very rare cases. Recovery of advances for non delivery / non execution is a very rigorous process
and hence Zoujaj generally avoids making advance payments. In case the advance amount is not
recoverable, necessary provision is made in the books of account after obtaining approval from
the General Manager / Competent Authority

Zoujaj also processes payments through Letters of Credit.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 4

 3. Petty Cash Payments : Accounting , settlement and processing of Petty Cash Payments

4. Reconciliation : Reconciliation involves the following activities:

a. Reconciliation of Supplier Advances and Balances with respective invoices.

b. Accounting and Reconciliation of Advances for Procurements, and Other Staff

advances given for business requirements.

c. Reconciling the IFS Payables Ledger balances with the IFS General Ledger

5. Reporting: The current IFS Payables system provides for Payables Reporting like :

a. Supplier Ledger Open Items

b. Supplier Aging Analysis

Zoujaj also prepares a Supplier Ledger Outstanding List in MS Excel at Corporate Level
incorporating all 3 divisions Riyadh, Dammam and Head Office. The information for this
reporting is obtained from the IFS Payables system.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 5

Descriptive Overview for Accounts Payable
The following is an overview of the Accounts Payable Function at Zoujaj:

Organization Structure

o Organization structure of the Finance Department

Master Files

o Supplier Master

o Bank Definition

o Employees

Invoice Booking

o Matching of Invoices to Purchase Orders and GRNs

o Invoice Accounting Local Procurements and Imports

o Freight Invoices

o Cancellation of Invoices

o Foreign Currency Invoices

o Debit Memos and Credit Memos

o Advances for Expenses

Payment Processing

o Supplier Payments

o Advance for Expenses

o Prepayments

o Letters of Credit

Petty Cash Payments

Posting to General Ledger

Period Closing Procedure

Reporting

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 6

Process Descriptions for Accounts Payable

Event Process Title Description of Process Output

AP RD 1.1 Organisation Define The Finance & Accounts department at Zoujaj is

structure Organization centralized at the Corporate Office in Riyadh and is
Chart responsible for all Financial Activities of the
Organisation. The Corporate office at Riyadh is the
main administrative office. Zoujaj has Manufacturing
Units / Divisions at Riyadh and Dammam.
The General Accounting, Budgeting, Banking &
Treasury Operations, are all handled by the Zoujaj
Finance Department at Riyadh. The Finance
Department is responsible for :
1. Centralised Payables and Receivable
transactions processing and accounting,
Payment and Receipt Processing, General
Ledger transaction processing.
2. Accounting of Raw Material, Consumables,
other warehouse inventory and Finished
Goods.
3. Recording and Capitalization of Fixed Asset
procurement and Capital Expenditures
4. Cash Management & Bank Reconciliation and
liaison with banks.
5. Generating Monthly Financial statements,
accounts and Reporting
6. Preparation of the Annual Budget, and the
administration of budgetary controls.
AP.RD 2.1 Master Files Supplier Suppliers are created during PO creation or invoice
Definition entry (for Non PO Invoices), if the supplier is not
found in the IFS system.
Suppliers are grouped by different types, example:
Raw Material Supplier, Packing Material Supplier,
Mould Supplier, Labels Supplier, etc. For full listing
of Supplier Classification in the IFS system refer to

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 7

 Event Process Title Description of Process Output

Annexure -1. The supplier classification(s) are handled

through a Manual number sequence in the IFS system.
Supplier Outstanding are categorized by their
Classification in the IFS General Ledger. Example:
All Raw Material Supplier are grouped under Account
number 06900, Spare Parts Suppliers grouped under
Account No 07200, etc in General Ledger.
AP.RD.2.2 Master Files Bank The Bank accounts of Zoujaj are defined in the IFS
Definition system and the relevant GL account codes are
assigned to the banks in order to facilitate the
generation of accounting entries at the time of
payment in the IFS system. The type of account is also
recorded in the system. For list of Internal Bank
Accounts maintained by Zoujaj, pls refer the
document - Zoujaj_RD20_CE_V1.0.
AP.RD.2.3 Master Files Employee In the IFS General Ledger, every employee is set up
Definition with a GL Subledger Account against which the
respective employee advances and recoveries are
tracked.
AP.RD.3.1 Invoice Matching of Before an invoice is entered into the IFS system, the
Booking Invoices to PO AP invoices are matched against PO and Receipt
(GRN) and an approval is obtained from the General
Manager, by Finance before releasing the payment on
the invoice.
Purchases at Zoujaj are categorized into two types :
1. Import
2. Local
Imports are processed as per the following options :
1. Letters of Credit
2. Cash Against Documents (CAD) through
bank
3. Advance payment to supplier
4. On Receipt of Goods
Local procurements are processed as per the following
options :
1. Monthly Invoice basis

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 8

 Event Process Title Description of Process Output

2. Individual Invoice basis

3. Petty Cash Procurements
All supplier invoices are sent directly by the Suppliers
to Zoujaj Finance department at Riyadh. The trade
related invoices may be for purchases with PO or
without PO. Invoices are matched against the PO and
GRN, before entering the invoices into the IFS system
for approval and payment processing. The invoices
along with Payment Advice / Cheque are sent for
General Managers approval for payment on the due
date by the Finance Department after verification.
Non PO related Purchases are treated as Petty Cash
Purchases for which a GRN for all purchases is
prepared for stock receipt and tracking.
AP.RD.3.2 Invoice Invoice Purchase orders for which the goods have been
Booking Accounting received and accepted by Zoujaj, but the supplier
invoice has not been received, the accounting entry is
based on a provisional valuation as set out in the
purchase order.
Dr. Inventories (for the value of purchase)
Cr. Supplier Account for purchases

Dr. Inventories (for the expenses relating to purchase)

Cr. Individual Supplier Account for Expense

Any differences in valuation will be charged/taken

back to the respective Inventory Account.
Dr. Supplier Account
Dr./Cr. Respective Inventory Account
Payments for such supplies will be made after the
receipt of invoice and matching the same with the
Purchase Order and GRNs.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 9

 Event Process Title Description of Process Output

AP.RD.3.3 Invoice Accounting For all Import procurements, the Procurement Entered
Booking for Import process, Invoice Booking and Payment Accounting is Invoice
procurements as follows:
Import through Letter of Credit
1. A Letter of Credit application is prepared by
Finance and processed for LC approval and
opening. On LC opening /approval, a copy is
sent to the respective supplier/beneficiary.
2. All Charges debited by the bank against the
Letter of Credit are tracked and maintained in
the IFS General Ledger Account - GIT
(Goods-In-Transit) Account.
3. If the shipment reaches before documents reach
the bank, a marine guarantee will be taken
from the bank, and the bank debits Zoujajs
respective Bank account for value of
documents.
4. Finance Department creates a Journal voucher
for the amount debited by bank.
5. Documents collected from the LC Processing
bank is sent to purchase department for
clearance.
6. Finance department will create an invoice in
IFS system by checking the quantity with GRN.
This entry will close the GIT Account with
the necessary transfer / updation to the
Inventory account.
Imports against Cash Against
Documents(CAD)
1. If the shipment reaches before documents reach
the bank, a marine guarantee is taken from the
bank. The issuing bank debits the Zoujajs Bank
account for value of the documents.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 10

 Event Process Title Description of Process Output

2. In case of Imports against CAD, the bank

informs Zoujaj through a Document Arrival
Advice- the Invoice Value, Details of Original
documents received by the bank like Invoice,
Bill of Lading, Packing List, Bank Charges, etc.
Bank obtains a Payment Authorization from
Zoujaj on the Document Arrival Advice. On
receipt of the signed Document Arrival
Advice, bank releases the payment to the
supplier and hands over the original set of
documents to Zoujaj.
3. Finance department creates an invoice in IFS
system by checking the quantity with GRN.
This ensures that GIT account will be closed
and Inventory account is updated.
Imports against Advance Payment
1. A Telex transfer is made as per PO terms.
2. Supplier Account will be Debited and Bank
Account Credited.
3. On receipt of the material, a GRN will be
prepared.
4. An Invoice is entered in IFS Payables system by
matching with GRN. This will ensure that
Supplier Advance Account is closed and
inventory account is updated.
Import on Payment Against Receipt of Goods
1. One receipt of invoice, Enter invoices after
verifying with GRN.
2. Payment will be made as per PO terms through
telex transfer.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 11

 Event Process Title Description of Process Output

AP.RD.3.4 Invoice Accounting Local Purchases Entered

Booking for Local 1. On receipt of Invoice Invoice is entered in IFS Invoices
procurements system after checking with GRN.
2. On due date, a payment voucher along with
invoice a Bill Approval Form will be
submitted for approval and Payment.
Purchase through Imprest cash
1. Small value items are purchased locally
through imprest cash, based on purchase
requisition from the concerned department by
the Petty Cashier.
2. When total purchase reaches SR 10000/-, a
statement is submitted to the Finance
Department at Riyadh with all supporting
documents.
3. On verification and approval by Finance
department, Invoices are accounted and a
cheque is issued for reimbursement.
Utility Supplies
Utilities Supplies relating to Electricity, from
SCECO (Saudi Central Electric Company) and
Natural Gas, Crude Oil from Saudi Aramco. For
Electricity Supplies, payments are processed as
follows: SCECO submits a Payment Advice for
the Electricity Bills directly to the Zoujaj
respective Divisional Bank. The bank makes the
payment of the bills and immediately debits the
respective Divisional Bank Account. There are
standing instructions to the Bank by Zoujaj to
settle the Electricity bills Direct. Upon receipt of
the Bank Advice, Finance Department verifies the
advice with the SCECO Bill before accounting for
the payment in the IFS system.
Saudi Aramco invoices for Crude oil are
received direct with 30 days credit and paid thru

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 12

 Event Process Title Description of Process Output

TT on the due date itself. Diesel supplier is Al

Sudais with 30 days credit and paid thru cheques.
For all utility services - Natural Gas, Crude Oil
and Diesel (other than Electricity) The Supplier
bill is paid after verification, through a
Telegraphic Transfer (TT) / cheque duly signed
by the Authorized Signatory of the Company.
AP RD 3.5 Invoice Freight Freight paid to transport vendors for delivering the Entered
Booking Invoices goods to customers are tracked against the products Invoices
delivered, and accounted. Upon receipt of the Invoice
from the Freight Carrier, an invoice is entered in IFS
system and compared with the quote. On the due date
the Payment is processed and accounted in the IFS
system.
AP RD 3.6 Invoice Foreign Foreign currency invoices are entered in the IFS Entered
Booking Currency Payables system in the respective invoice currency Invoices
Invoices and at latest exchange rate, for conversion to
Functional currency.
AP RD 3.7 Invoice Cancellation Any invoice created with incorrect details, the same is Cancel
Booking of Invoices cancelled and recreated in the IFS Payables system. Invoice
The Accounting entries are automatically reversed on Enter new
the cancellation of the invoice. Invoice
AP RD Invoice Debit Memos Suppliers are debited for certain misc. charges, Enter and
3.8 Booking and Credit handling charges, Goods returned etc. Process
Memos Zoujaj also receives credit note from Suppliers for Invoices
goods returned, short supply etc. Both debit and
credit note are entered into IFS System following the
similar process as invoices.
AP RD 4.1 Advances for Travel A Travel Application is submitted by the respective Enter and
Expenses Advance employee for Advance processing. The approval Process
hierarchy/ sequence for the travel advance request Invoices
is : against
1. Respective Department Head Travel
2. Personnel Manager Advance
3. Finance Department
4. General Manager
Travel Allowances and Expenses related to the travel
File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 13
 Event Process Title Description of Process Output

is matched with the travel request and after approval

by the Finance Department. is entered in IFS system
AP RD 4.2 Advances for Employee All Employees advances and recoveries are tracked, Process
Expenses Expenses processed / adjusted directly in the IFS General Employee
Ledger. expenses
AP RD 4.3 Advances for Employee All Employee claims for expenses etc not associated Process
Expenses Claims with any advance are processed in the IFS General Employee
Ledger directly. Employees expense claims are paid Claims
and a Journal voucher is passed in the IFS General
Ledger.
AP RD 5.1 Supplier Check All payments are manually processed through
Payments Payment cheques, or TT through Bank. .Once a cheque is
prepared, approved and payment processed, the
payment is entered and accounted in the IFS system.
All payments are processed as per the approval
matrix specified in Annexure -2.
AP RD 5.2 Supplier Issue of In the case where a supplier is to be paid by TT, the
Payments TTs/LC process is same followed for check payment. In case of
LC Payment, a Journal entry is passed in IFS GL to
record the bank charges, payment etc. The advance/
payment are adjusted against the supplier invoices,
once the goods and invoices are received from the
supplier/bank.
AP RD 5.3 Supplier Cross Supplier payments towards supplies, invoices etc are
Payments Currency also processed in a currency other than the Invoice
Payments currency. For example, an invoice entered and
accounted in USD and the payment is made in SAR or
vice versa. The IFS system allows to process cross
currency payment and automatically calculates the
exchange gain/loss while processing the payment.
AP RD 5.4 Supplier Cancellation Where a payment is cancelled, a new cheque is
Payments and Reissue of processed for the cancelled payment and recorded in
Payment the IFS system.
AP RD 5.5 Supplier Partial Zoujaj also makes partial payments against supplier
Payments Payments invoices, Purchase Orders / Work orders
AP RD 5.6 Supplier Prepayments Prepayment is recorded against the Supplier at the
Payments time of release. When the actual invoice is received,
Finance will enter the invoices in the IFS system, check
File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 14
 Event Process Title Description of Process Output

for any prepayment/ advance, adjust the prepayment,

and then pays the balance amount on the invoice to
the supplier.
AP RD 6.0 Payment Petty Cash The following is the process for processing /handling
Processing Management Petty Cash Payments at Zoujaj:

Purchase, Sales and Administration Departments in

Zoujaj maintain petty cash for meeting minor day to
-day petty expenses. Petty cash is currently recorded
in an Excel spreadsheet. The spreadsheet along with
the supporting expenses voucher, etc is sent to the
Finance Department for processing, adjustment.
Zoujaj Finance Department passes a summarized
journal in the IFS General Ledger fortnightly to record
expenses, advance adjustment / replenishment. Upon
submission / replenishment, a new Petty Cash
Advance request is sent by the respective department
to the Finance, and the Petty Cash Advance request is
processed accordingly.
AP RD 7.0 Period End Posting At Zoujaj, the transfer of accounting entries to the
Closing Process to General Ledger is done only once a month at the time
General of changing the Period status to Inaccessible.
Ledger
AP RD 8.0 Reporting List of Zoujaj prepares the following reports for Accounts
Reports Payables reporting , reconciliation etc :
1. Supplier Ledger Open Items Report
2. Supplier Aging Report
3. Supplier Outstanding List (Total for Riyadh,
Dammam and Head Office) in Excel Sheet on
a Quarterly basis.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 15

Process Relationships for Accounts Payable

1. Finance Department Workflow for Accounts Payable

2. Process Relationships for Invoice Payments

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 16
 Invoice is due for
payment

Prepare Manual
Cheque/TT/LC
AP Invoice
PO

Submit for
Other Approval & Sign
Cheque joint
signatory as per
Authority Matrix

Enter Payment

Audit & Post

3. Process Relationships for Employee Expense Claims

Employee's
Approved Submit for PM
Claims Yes
by HOD Approval

Yes

Approved Submit for Finance Approved By

Yes
by GM Concurrence PM

Employee
Yes Expense Claims
Process

Enter Invoices into

IFS System

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 17

 4. Process Relationships for Prepayments

5. Process Relationships for Debit Memo / Credit Memos Processing

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 18

 6. Process Relationships for Petty Cash payments and Processing

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 19

Current Business Process Documentation

Critical Requirements
Grouping of Supplier by Supplier Type Ex: Raw Material Supplier, Packing Material, Office Supplies
etc.
Supplier Numbering by Supplier Type.
o Manual Numbering for Suppliers. Example Raw Material Suppliers start with 1, Packing
Material Supplier 2 etc.
Flexibility to adjust Invoices for corrections, cancellations and reversal for cancellations.
Matching of Invoices with Purchase Orders and GRN, track variances etc
Enter and process Invoices in Multi Currency
Employee Expense Reports for processing Employee Advances for Expenses and Reporting
Process Cross Currency payments
Cancellation of Invoices
Matching of Debit Memos, Credit Memos to Supplier Invoices
Process Supplier Prepayments, Partial payments , Void Payments / reverse payments and
reprocessing of Payments for Invoices
Supplier information updation (bank a/c, supplier code, address, etc)
Enter and process Petty Cash Payments and Settlements
Reporting for Supplier Outstanding, payment Schedule, Supplier Aging , Invoice register, Supplier
Payment History Report, Void Payments

Current Benchmark Activities

Receipt of requests for payments
Processing of payments after approval by the department.
Reconciliation of payments upon receipt of bank debit advice
Monthly updation to General ledger.

Current Bottlenecks
Manual payments are still in practice
Invoice Approval process is Manual
Credit memo for returns are processed manually.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 20

Open and Closed Issues for this Deliverable

Open Issues

ID Issue Resolution Responsibility Target Date Impact Date

Closed Issues

ID Issue Resolution Responsibility Target Date Impact Date

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 21

Annexure 1 Supplier Classification in IFS Payables system

S.No Supplier Classification

1 Raw Material
2 Sleeve Material
3 Decorating Material
4 Packing Material
5 Moulds
6 Spare Parts
7 Consumables
8 Utility Services
9 Insurance Company
10 Freight Contractors
11 Fixed Assets

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 22

Annexure 2 Payment Approval Limits

Zoujaj has a joint signatory procedure for payment processing, before releasing the payments to
vendors. The cheques are signed by Finance Manager and co-signed by the General Manager.The
approval limits for payments as per Auth ority matrix are as follows-

S.No Amount Approval Authority

1 If the payment is < SAR 2 Millions
2 If the Payment is >= SAR 2 Millions
and < SAR 5 Millions
3 If the payment is >= SAR 5 Millions
and < SAR 10 Millions
4 If the payment is >= SAR 10 Millions
General Manager and Finance Manager.
Chairman and General Manager
Chairman(with Approval of Executive
Committee) and General Manager
Chairman (With Board Approval) and
General Manager.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 23

Appendix I Accounts Payable Questionnaire

Type = Setup Metric

Process Analysis Questions Application Response
Process Performance

How do you match purchase order information to AP invoice

information? Process AP, PO Match Qty, Price and Payment Term
How do you match vendor information to your fixed assets systems
when purchasing assets? Process AP, PO, FA Supplier name is entered against each asset.
Do you allocate or attribute overhead costs to projects? Process AP, PA, GL Yes
Do you want to be able to update or change the accounting
distribution information for line items in your purchase orders? Process AP, PO, GL Yes
What is the basis for your vendor category breakdown? Setup AP, PO Materials, Country, Currency
What type of vendor analysis do you perform? Process AP, PO Ref to Purchase Dept.
Are vendors categorized for reporting purposes? Setup AP, PO Yes.
Are vendors categorized for financial tracking purposes? Setup AP, PO No
How long do you do check reconciliation? Process AP One week
Do you get a tape from the bank for check reconciliation? If yes, can I
get the format of the bank tape? Process, Setup AP No
Is there a requirement to do on-line bank reconciliations? Process AP Yes
What are the requirements for reporting tax payments (e.g. company,
rate or tax authority)? Setup AP Reporting to Tax Authority
How do you record taxes within the GL? Setup AP, GL Tax Account in GL
C Setup AP Yes
Is there a requirement to support foreign currency bank accounts? Setup AP Yes
What disbursement (document) types are currently processed Bank Transfer (TT), Demand Drafts(DD),
through these bank accounts? Setup AP Cheques, L/C payments
How are your current payment terms structured? Setup AP In accordance with agreed upon terms
Do you use percentage due or amount due? Setup AP Both
Are due dates calculated based on a specific day of the month or on a
number of days from the payment terms date? Setup AP In accordance with agreed upon terms
Is there a provision for discounts within the current payment terms? Setup AP Yes
How are discount dates calculated - based on a specific day of the
month or on a number of days from the payment terms date? Setup AP Ref to Purchase Dept.

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 24

 Type = Setup Metric
Process Analysis Questions Application Response
Process Performance

Is there a requirement to use multiple discount levels at present or in

the future? Setup AP Ref to Purchase Dept.
How many different sites issue checks? Metric AP One
How many checks do you write/produce per period? Metric AP Depends on request (Approx. 40)
Is there a requirement to use Computer Generated checks? Process AP Yes
What is your policy to cancel checks? Process AP Original should be produced
Is there a requirement to use Electronic Funds Transfer? Process AP Yes
Is there a requirement to use Wire Transfers? Process AP Yes
Is there a requirement to process Automatic Payments? Process AP Yes
Is there a requirement to process Manual Payments? If so, is a
separate bank account used? Process AP Yes , but not from separate bank account
Is there a requirement to process Partial Payments? Process AP Yes
Is there a requirement to process Pre-Payments? Process AP Yes
Is there a requirement to process Recurring Payments? Process AP Yes
Is there a requirement to process Quick Checks? Process AP Yes
What is the current procedure for vendor advances? Process AP by maintaining separate Ledger Account
How are vendor advances reconciled when the invoice is submitted? Process AP Manually
Do you have a priority system for payments? Process AP Yes
Would you use a priority system for payments? Process AP Yes
What is your current payment cycle? (How often do you print
checks?) Process AP Every working day
If recurring payments are used, what is the normal period cycle for
these payments? Process AP Monthly
Are all invoices paid in local currency? Process AP No
Is/will there be a requirement to use multiple currencies? Process AP Yes
Do check payments have to be approved before they are run? Process AP Yes On line
Do you have a minimum or maximum payment amount per check? Process AP No
Do you have a minimum or maximum payment amount per run? Process AP No
What is the current check layout for computer generated checks? Setup, Process AP N/A
How many formats do you have? Metric AP Pre-Printed
Do you print the check number on the check/remittance or is it pre-
printed? Setup, Process AP We use ref Nos.& continues check Nos.
Should a remittance advice note be produced, and when? Process AP At the time of payment

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 25

 Type = Setup Metric
Process Analysis Questions Application Response
Process Performance

How should an overflow situation be handled? Process AP N/C

Is there any special sequencing of checks when printing? Process AP Yes
Is there a dedicated printer for checks? Setup AP No
What type of printer is used for checks? Setup AP Zoujaj does not print checks
What period types would be used for these reports, e.g. weekly,
monthly or quarterly? Process AP All Three
Where are the pre-printed checks stored? Process AP In Finance Dept Safe custody
Is there a requirement to restrict the access to the check printing
function? Process AP Yes
On request from requesting/authorizing
What is the policy/procedures for handling stop payments? Process AP dept.
What is the policy /procedures for handling void payments if they
have been recorded? Process AP Reversal entry with due authorization
What is the policy /procedures for handling void payments if they
have not been recorded? Process AP Maintain liability
Do you pay any vendors on a priority basis according to funds
available? Setup, Process AP Yes according to request
Is there a requirement to prioritize payments? Setup AP Yes
Do you require batch control to manage invoice entry? Setup, Process AP Yes
Who enters invoices and how often? Process AP Every day - finance dept.
Do you receive invoices at a central location? Process AP Yes, at Finance dept.
How do you physically store invoices once entered into the As Voucher serially numbered and stored in
computer? Process AP cabinets
Are invoices billed to distinct companies, cost centers or other? Process AP Yes
How many invoices per period do you enter? Metric AP Approx. 75
Do you have security requirements on who can enter data (invoice
processing, payment processing, and check processing)? Setup, Process AP Yes, Finance Personnel Only
How are invoices identified (numbered)? Vendors invoice number,
date, or next allocated number? Setup AP Monthly serial numbered
How many liability accounts do you use? Metric, Setup AP, GL For AP one only
Can you identify any frequently used expense distributions within
your current system (for example, rent or telephone payments)? Setup AP Yes
Are these recurring expenses for fixed or varying amounts? Setup AP Fixed & varying
Is there a requirement to match invoices to related purchase orders? Setup AP Yes
File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 26
 Type = Setup Metric
Process Analysis Questions Application Response
Process Performance

Automated between request, order, receipt

How are you currently matching invoices to purchase orders? Process AP & Payments
Will some invoices never have purchase orders? Process AP Yes
Matched completely as per the scheduled
Should invoices be matched completely, partially or both? Setup AP shipment part
Do you perform 2, 3, or 4 way matching of invoices? Setup, Process AP 4 way matching
Do you currently have any tolerance levels for matching? (Price
Tolerance, Quantity Ordered Tolerance, Quantity Received
Tolerance, or Tax Tolerance?) Setup AP Quantity & Unit price/Contracted price
Would you like to approve your invoices on-line, by batch or have
both options? Setup AP Yes (both)
What is the internal approval process for an invoice in your
organization at present? Process AP By the designated senior staff
Are there situations where an invoice needs to be placed on hold and
then manually released? Setup, Process AP Yes
Describe the approval process when invoices need to be placed on A request from Supplier / Authorizing
hold and manually released? Process AP Dept.
Where an invoice needs to be placed on hold and then manually
released, can these invoices be "posted" to the General Ledger? Setup, Process AP Posted to G/L through suppliers ledger
How often do you "post" information to your General ledger? Process, Metric AP, GL Every day - finance dept.
Do you use Cash or Accrual Based Accounting? Process AP Accrual Based Accounting
Do you post (or wish to post) in detail or in summary to the general
ledger? Process AP, GL In summary
When do you start your AP close? Process AP Before GL closing
Do you have any documentation on your AP close? Process AP Yes
Do you allow posting invoices back to prior periods? Process AP No
If you have multiple organizations, do they all close at the same time
or separately? Process AP Same Time
Is there a requirement to track duplicate vendor information within
the Payables system? Process AP Yes
What other audit requirements are needed? Process AP Saudi Accounting Standards
Do you need to restrict access to certain functions? Process AP Yes
Is there a requirement to group vendors for payment purposes? Setup, Process AP, PO Yes
Which vendors should be grouped and why? Setup,Process AP Based on Supply nature, Currency

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 27

 Type = Setup Metric
Process Analysis Questions Application Response
Process Performance

Is there a requirement to define vendor sites which can receive

payments and sites which cannot receive payments Setup AP Yes
Do you use encumbrance accounting? How do you use it? Process, Performance AP Yes by blocking entry or source of entry
For the purpose of Invoice Aging Reports, what aging periods are
currently in use? Process, Performance AP From date of Supplier Invoice
Is there a requirement to produce Key Indicators Reports to review
productivity and pinpoint problem areas? Performance AP Yes
Is there a need to define any additional aging periods? Process, Performance AP Yes
Do you have to pay other businesses in different Set of Books within
the same GL Setup AP Yes
Do you have a central registry of vendors which supports more than
one business? Process AP Yes
Will you need to make payments to businesses in different GL set of
books Process AP Yes
Is there a requirement to process employee expense reports? Process AP Yes
Is there a standard employee expense claim form? Setup, Process AP Yes
What is the current process to generate expense payments to
employees? Process AP As per the Travel policy
How frequently are employee expense claims processed? Metric AP Daily , based on request
How many employee expense claims are processed? Metric AP As and when submitted by Employees
Are these expense claims assigned a special pay priority - high or
low? (Before/after other vendor payments for example.) Process, Setup AP As normal
As per company policy, all Employee Salary
advances are routed through HR Deartment
What is the current procedure for employee advances? Process AP for GM Approval.
How are these reconciled when the expense claim is submitted? Process AP Matching each other
Do your employees have company credit cards? Process AP No
How are company credit cards handled? Process AP N/A

File Ref: Zoujaj_RD020_AP_1.0 Zoujaj / Sierra Confidential 28