An Overview of Core System Integrator Finance Accounts

An Overview of Core System Integrator Finance & Accounts & Human Resources GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF POSTS OFFICE OF DIRECTOR OF ACCOUNTS (POSTAL) CPMG COMPLEX, MAHATAMA GANDHI ROAD AMBALA CANTT -133 001

DOP F & A PROCESS ARE DIVIDED INTO THE FOLLOWING MODULES • General Ledger • Account Payable • Account Receivable • Cash and Bank • Budget • Procurement • Inventory Management • Asset Accounting • Taxation • Controlling-Internal Audit • Profitability Analysis CSI Implementation will include ERP (Enterprise Resource Planning) SAP (System Applications and Products) modules in the areas of Financial Accounting, Fund Management, Business Intelligence Reporting, Payroll and Inventory Management, etc. General Ledger Account Payable Payroll Budgeting F&A Tax Process Account Receivable Cash and Bank Fixed Asset Accounting

DOP HR processes are divided into the following modules DOP HR (Human Resources) is structured as under § Organization Management § § Recruitment § Personal Management § Time Management § Payroll Management § Training & Development § Performance Management § § § § § Payroll & Legal Reporting Pension Management Remuneration Statement Payments (Statutory and Company) Reimbursements and Claims Manager Portal Employee Self Service Portal § § § § Payroll Self Service Objective Setting Online Self Appraisals Workflow Managers Employee Joining Process Promotion Transfer Confirmation Org. Mgmt. Exit Employee Establishment Administration Review Dept. Of Posts Performance Management § § Recruiting Time Management Learning Solution § § § Vacancy Management Cadre Management Direct/Agency recruitments Time & Attendance Shift Roster Planning Leave Management Leave Quota Work Schedules Training Calendar Training Attendance and Evaluation Feedback Nominations E-Learning

Few capabilities which are introduced as a result of the CSI under F&A module are given below: Key Capabilities Introduced Type of Change Each employee is assigned to a particular cost centre. Identification of all Do. P entities All transactions are posted by the post offices on the SAP system. as Cost Centre or Profit centre. Revenue or expense details are therefore available for each section in the offices on the system across the department. Introduction of Accrual Based Assessment of the performance and position of any post office across the country by recognizing transaction Accounting when they occur regardless of when the cash is actually transferred. Cash based accounting will remain for CGA reporting. Accrual based accounting will provide additional details to support performance of any post office. Automation of workflow Multi-level approvals for budget, transaction posting and others will be performed on the system. Regular alerts/reminders for the release of payment, pending cheques for payment and clearing pending approvals. Automation of document creation Automatic creation on the system of purchase orders, sales orders, inventory documents, goods receipt acknowledgements, invoices billing documents and clearing as per the entries recorded and approved on the system. Minimised Voucher Movement Time consuming and error prone movement of vouchers between various offices for accounting and reconciliation is reduced considerably as all information will be available on the centralised system for access by a Do. P user. New Payment modes Payment by debit card, credit card and funds transfer form POSB account will be possible. Customers for philately, logistics post, mail operations and franking will be greatly benefitted. Capturing of transactions at the Number of unaccounted transactions in the Suspense Account will reduce as transactions will be captured point of transaction. instantly. Classification of each transaction under the appropriate Head of Accounts at the point of transaction itself.

CSI F&A solution brings the following key changes and benefits.

The brief changes in process are tabulated as under:

The brief changes in process are tabulated as under:

Impact of change will be highest for Transaction Posting process when compared to other General Ledger Process. This is because of automation and integration of finance and accounting processes with other business processes. This will result in huge reduction of work for staff in accounts section of different offices including PAO. The degree of impact is the same across the four process as the impacted roles are largely the accountants across the Do. P.

ACCOUNTS PAYABLE: The accounts payable module basically is an integral part of purchasing process. It will record and manage accounting information for the vendors and will facilitate payment across all levels of Do. P. Under it, purchase request will be raised and tracked in the system. Payments made will be automatically recorded in the G/L and the different G/L accounts get updated automatically. Process Change Description Type of Change Automation of raising indent, budget check and document creation Procurement from DG S&D/ e. Market User at HO/SO will raise an indent of purchase requisition on the system to Competent Authority for goods. Budget availability is checked on the system and Sanctioning Authority will create purchase order on DG S&D website as in the past. Corresponding DG S&D purchase order, inventory document, goods receipt acknowledgment and invoice will be created on the system. Liability will be created on the system and kept open until the payment is made. Automatic Payment Program feature is available for executing the payment, which will automatically select open items pending for payment and display them to the user. Minimized booking of expense under suspense accounts

Process Change Description Procurement From External Vendors User at intending office will raise an indent or purchase requisition on the system to Competent Authority for goods. For orders between Rs. 15000 – 1 lakh, indent will flow to a predefined 3 member evaluation committee for approval through workflow on the system. For orders between Rs. 1 lakh – 25 lakhs, a limited tender will be floated on the system. For orders of Rs. 25 lakhs and above, an open tender will be floated on the system. Selection of bidders by the evaluation committee will be done outside the system. Corresponding purchase order inventory document, goods receipt acknowledgment and invoice will be created on the system. Liability will be created on the system and kept open until the payment is made. Note: In view of non-standardization of limits of authorized financial powers from delegated financial powers as codifed in the schedule of Financial powers of Do. P/Ho. C/Ho. D, etc. the procurement is not being used in pilot Karnatka Circle. Unless standardization is designed, usage of procurement module is not possible. However, procurement which are within Rs. 15000/- are being made thorough voucher posting as petty expenses. Provision exists for classification into plan and non-plan for MH 3201 revenue expenses. Provision exists for classification into asset accounting above Rs. 5000/- in case of MH 5201 Capital asset accounting. Rs. 15000/- to Rs. 1 lakh partial usage of procurement module is being done at Pilot offices. Type of Change Automation of raising indents, approval and document creation.

Process Change Description Type of Change Automation of request, approvals and claim processing. Employee claim Medical Advance, LTA, HBA, MCA and Employee Imprest Employees directly raises advance request on the ESS Portal (Non SAP) which will trigger approval workflow. Processing and approvals will be done on the ESS Portal. When the actual bills are received from the employee, expenses are booked for actual amount and balance amount to be paid /claimed to/from employee. In the present scenario employee account is not available and hence maintenance of recovery registers is still in practice. Note : Matter has been taken with the vendor for necessary charges. Recovery register maintenance not required.

ACCOUNTS RECEIVABLE: Accounts receivable module will record and manage accounting information for all services provided by Do. P to its customers such as individual, corporate and government. Booking of services will be possible either through the web portal and/or at the customer. Revenues will be classified into proper head of accounts at the point of transaction and it is possible to track their status information on the real time basis. Note: The booking of articles through portal is yet to be established. Process Philately Customer Change Description Type of Change Sale of philately customer will be through POS and Web Portal. Sales order, stationary/stamp issue document, billing document and invoice will be automatically posted on the system Billing/invoicing by Do. P is done on a monthly basis to its bulk customers and other government departments by settlement in the system. Invoice created through the system will be shown as open item till it is paid off/nullified with the payment transaction. Payment will be accepted through cash, cheque, demand draft, credit card and transfer of funds from POSB account. Automation of document creation. Note : Payment through credit card, debit card and integration with POSB yet to be established. New channel for sales (portal) New payment modes (debit card, credit card, funds transfer) Integration with CBS Ho. A classification at POS

Process Logistic Post Customer Change Description Type of Change A customer will be able to book any of the logistic post services online or at Logistic Post centre. Note : Booking of online services is yet to be established. Sales order, issue document, billing document and invoice will be automatically posted on the system. Invoice created through the system will be shown as open item till it is paid off/nullified with the payment transaction. Payment will be accepted through cash, cheque, demand draft, credit card, debit card and transfer of funds from POSB account. Automation of document creation. New channel for sales (portal) New payment modes (debit card, credit card, funds transfer) Integration with CBS

Process Mail Operations Customer Change Description Type of Change Mail Booking Engine in the SAP system provides Do. P with the functionality of booking accountable articles and selling retail post articles. The counter person books the article and accepts charges from the customer. Sales order and bill/invoice document is generated on the system automatically. Invoice created through the system will be shown as open item till it is paid off/nullified with the payment transaction. Payment is accepted through cash, cheque, demand draft, credit card, debit card and transfer of funds from POSB account. Automation of document creation New channel for sales (portal) New payment modes (debit card, credit card funds transfer. Integration with CBS Ho. A classification on POS Process Change Description This feature will provide Do. P with a formal structure for scheduling and tracking appointments for customers’ requests Mailer & (both individual and bulk) of pick up or drop of articles from Logistics their premises. Appointment Do. P portal will provide an online booking facility to the Scheduling citizens for accountable mail articles. Corresponding entries System for order booking, cancellation, payment and so on, will be on the system. Type of Change New Channel Automation

Process Franking Process Indian Postal Order Change Description Interested customer applies for a license to use a franking machine and deposit a license fees, this can be done at any PO or online through portal. If the user fails verification process (done outside the system), then the license will not be issued and the license fee deposit will be refunded to the customer. Once the license is issued, the user will deposit advance representing the amount of postage to be issued from that machine. Payment can be made by debit/credit cards or transferred from POSB account. Service order, billing document, invoice is posted in the SAP system for. Change Description On sale of an IPO through Po. S, sales order is automatically triggered and accounting entries are posted in the SAP system at the time of good issue, billing, payment receipt, discharge document of IPO Type of Change New channel for application (online). New payment modes (debit card, credit card, funds transfer) Automation of document creation Integration with CBS Type of Change Automation of document creation Integration with Po. S Retention of vouchers at respective HPO/Profit centre

Process Change Description Type of Change Maintenance of issued lists or paid lists are no longer required Money order Process On booking of a money order at any Po. S counter, accounting entries are automatically posted in the SAP system towards creating liability, billing, payment, delivery receipt and clearing. There would be no reconciliation work further, but a reduced team will remain for the purpose of audit. Note: Voucher audit would be done at the office of payment. Auto transfer of unpaid money orders to revenue after expiry of 3 financial years. Change Description Type of Change Process Western Union Money Transfer Process Biller Services All WUMT transactions will be captured in a separate system which will be interfaced with FSI. All the GL wise daily WUMT details will be updated in the SAP system through the interface with FSI. Note: Integration to SAP system yet to be established. Change Description Cash/Cheque receipt from a customer at POS is posted in the SAP system. The collection is then consolidated electronically and payment is made centrally to the concerned organisation which is also then posted on the SAP system. Automation No void concept No more voucher movements only MIS Integration with FSI Voucher audit at PAO Type of Change Migration to new system.

Process International Parcel Change Description International Outbound: When customer books an international parcel, on receipt of payment at Po. S, sales order and billing document is generated in SAP system. Once mail the is delivered, the foreign postal organisation will raise on invoice to Do. P for the service provided by them for delivering the mail. This will be posted in the SAP system. After due approval of the payment, the payment document will also be posted. International Inbound: After custom clearance, international mails are received at Do. P sorting Office. Once the mails are delivered at the respective locations, custom duty and other charges, if any, are collected from the customers. Data will be received from IPVS and invoice is posted. Note: Settlement of International parcel revenue to be tested. Type of Change Integration Automation

Process Change Description Type of Change Third party pension payments (invoice raising) For providing third party pension payment service, Do. P charges a commission from the respective government agencies (Do. T/Railways). To recover this amount of pension paid and commission receivable, Do. P raises a manual monthly invoice to the government agencies and a corresponding invoice on the system. On receiving PPO from Do. T/Railways, details will be entered into the system. Pension bills are processed monthly. Pension schedule and due commission will be generated automatically, and the information will flow to Account Current Section at PAO. RBI settlement will be outside the system. All claims will be settled within a month. Automation document creation, commission calculation and pension bill generation

Key Inferences The process related to mail operations, money order and philately will have high level of impact. There will be introduction of new channels for sales, new payment modes, integration with CBS for payments and automation of account classification and document creation. Repeated checking of vouchers for Ho. A classification & consolidation and manual records of corporate and bulk customers will not be required. These changes will also be complex. For money orders, besides automation of documentation, there will no longer be any reconciliation work for maintenance of issued/paid lists,

CASH AND BANK: The Cash and Bank module will provide solution for cash management in Do. P, starting from receipt of cash, payment of cash, remittance of cash, banking transactions, settlement Do. P and bank transactions in SAP at primary accounting unit and provides input of schedule of drawings from bank and schedule of remittances to bank electronically to PACS software being managed by Postal Accounts Office. Process Change Description Revenue Recognition of BO The Branch offices have not been computerized and full fledged RICT is under active progress. Till such time, accounts of the branch office being received in Hardcopy through BODA along with such documents are rebooked/ reposted in SAP system against the BO profit centre as if transactions happened at BO electronically. The system generates, replica of BODA with OB&CB of Do. P cash for confirmation. Type of Change Automated Ho. A classification through single entry at Po. S.

Process Change Description Revenue Recognition of SO The SO counter staff will capture the transactions at Po. S (classification under different Ho. A will be done here itself). The checker will approve the transactions. A list of transactions and SODA will be generated from the system. All vouchers will be stored in SO for internal audit purpose. If the value of a transaction is greater than 3000, the PAO personnel will post check the vouchers on rotational basis (every 15 days) Process Change Description Revenue Recognition of HO The Ho counter staff will capture the transactions at Po. S (classification under different Ho. A will be done here itself). The checker will approve the transactions. All vouchers will be stored in HO for internal audit purpose. If the value of a transaction is greater than 3000, the PAO personnel will post check the vouchers on rotational basis (every 15 days). Note : As a parallel check & balances, in Karnatka pilot offices it has been decided to submit all vouchers and connected documents to PAO Banagalore till system stabilizes. Type of Change Automated Ho. A classification through single entry at Po. S. No more voucher movements Type of Change Automated Ho. A classification through single entry at Po. S.

Process Change Description Initially, the banking transactions will be debited/credited to the clearing account and thereafter, once realized it will be Settlement of taken to respective drawing and remittance to bank G/|L. PO and Bank The transactions will then be reconciled with daily receipt transaction at scroll from dealing bank branch on the SAP system. The HO drawing and remittance schedule will be prepared on a daily basis and submitted to PAO as compared to monthly schedules being sent to PAO in the past electronically. Process Change Description PAO will receive the daily main scroll from FPB, verify the scroll and schedules for errors and return to FPB. PAO will receive schedules from HO on daily basis and upload the file into Bank reconciliation software. Objections, if any, will be sent to HO. Bank reconciliation process will be performed in the existing PACS application. All other feed files pertaining Settlement of to Bank branch scrolls, Date wise Monthly Statements (DMS) PO and Bank from FPB and Put Through Statements (PTS) from RBI are transaction at uploaded in PACS, will continue to be processed in the same PAO manner for the purpose of performing bank reconciliation. If any discrepancy is found in payment, receipt or main scroll, the same will be raised through existing PACS system. In the SAP system, user will have the flexibility to upload bank statements electronically from all banks dealing with Do. P (This is yet to activated). Type of Change Daily preparation of drawing and remittance schedule Automation Type of Change Automation Integration with PACS application PAO will receive schedules from HO daily.

Process Change Description User at SO/BO will park a demand request for a certain amount of cash in the SAP system. For he case of cash office within the jurisdiction of accounting office, through workflow, request will be approved by the concerned officer at HO, if not then SO/BO will reverse the parked document. Cash disbursal accounting document is automatically parked at HO. For the case of cash office not within jurisdiction of Cash transfer accounting office, through workflow, request will be between HO approved by concerned officer at accounting HO, if not then to SO/BO will reverse the parked document. Cash HO receives a notification regarding approved cash request and a cash disbursal accounting document is automatically parked at Cash HO. Remittance advice, also created automatically, will then be sent to an authorized person at accounting HO for intimation of cash disbursement at Cash HO. After receiving cash at SO/BO, authorized user will acknowledge receipt on the system and the cash disbursal document will get posted. Cash balances of all POs will get updated automatically. Type of Change Automation of request, approval, document creation and balance updates

Process ATM cash Change Description At the beginning of the day, HO will transfer cash from its cash chest to the ATMs located at HOs. Updating of balances through interface will be done electronically. There will be no manual input of balances. Type of Change New way of functioning. Key Inferences: The significant impact will be for the ATM cash process, as all postal customers having accounts will hugely benefit from the installed ATMs. Work practices for accountants and Postmasters of those respective offices will be affected and they will work towards availability of cash at ATMs. The most complex change for cash and bank processes will be for revenue recognition of HO/BO/SO, as there will be multiple changes in work practices and technology which will bring automation. A major internal policy change will be that all vouchers will be stored in the respective offices henceforth and will not be sent to PAO, the process of settlement of PO and Bank transactions at HO will impact only the accounts current sections at PAO.