Advertising Budget Control System

System Overview CTI Limited, a large multinational organisation, involved in the marketing of various consumer products (such as soaps, toothpastes, hair oils, etc.), is planning to have a computerised system for advertising budget control. The company is one of the largest spenders on advertising of products on various media, such as television, newspapers, cinema slides, hoardings, etc. The Vice-President (Marketing) of the company finalises the advertising budget for a financial year, which is from April to March. The budget gets finalised in the middle of March. The budget specifies product-wise, media-wise break-up of the amounts to be spent on advertising. For example: Product X Product X Product X Product Y Product Y Newspaper advertising Television advertising Hoardings Television advertising Cinema Slides 50 lakh 2 crores 1.25 crores 2.4 crores 75 lakh

Once the budget is prepared, it is communicated to the various Product Managers, who are free to take decisions about the actual release of advertisements. The Product Manager for Product X, for example, can decide when to release advertisements for which media, and for how much amount. The decision to release an advertisement is in the form of preparation of a Purchase Order. The Purchase Order is issued to a party, who is given the task of carrying out the advertising. The Purchase Order specifies the product and media for which the advertisement is to be executed, as well as the amount, and various other details, such as payment terms, etc. Each purchase order specifies only one product and media combination. While releasing purchase orders, it has to be ensured that the total purchase commitments during the financial year should not exceed the budget amount for the specified product-media combination. The party to whom the purchase order is issued, submits one or more bills against a purchase order to the Accounts department, and the Accountant will enter the bill data in the system. A bill has to be against one purchase order only. But there can be multiple bills against a purchase order, for partial installment payments. While accepting data from suppliers' bills, the system must ensure that the total billed amount against a purchase order does not exceed the order amount. The supplier bills are then sent to the concerned Product Managers, for their approval of the same. The Product Manager may approve the entire bill amount, or only part of the amount, or reject the bill altogether. Rejection of the bill amount, if any, is done for reasons of quality of work. Only the approved amount is then taken up for subsequent payment processing. If a bill has been rejected, another bill in lieu of that is not to be accepted by the system.

From time to time, the Accounts Manager goes through the list of pending supplier payments, and, depending on the funds position, etc., decides to release the payments. A single cheque may combine payments against multiple bills from the same supplier. However, there will be no splitting of one bill in two or more cheque payments. While entering data in the system, the user will specify a supplier for whom the payment is to be made, and then specify references of one or more bills from that supplier. When all the bills have been specified for the payment, the system has to determine if any TDS (Tax Deduction at Source) should be deducted from the payment. The Income Tax rules specify that if the total payments to a supplier during an assessment year (April to March) exceed a particular amount, then the payer must deduct tax at source. Currently, the structure for tax deduction is such that if the total payment to a party during a financial year is Rs 50,000 or more, then 5% of the total payments to that party during the year should be deducted as tax. The system will also be expected to generate a number of reports and on-line queries, such as: * Product-media-wise comparison between original budget amount, committed amounts and paid amounts * Printing of purchase orders * Register of purchase orders raised for a date range * Purchase order-wise statement of committed vs. billed amounts * Suppliers' bills register, for a date range * Statement of bills received but not yet approved / rejected * Statement of bills approved but not yet paid * Supplier-wise listing of bills pending for payment (approved only) * Printing of payment vouchers * TDS certificate to a party * Supplier-wise statement of bills and payments