SHAPES

(Private) Limited

ACCOUNTING MANUAL
BORROWINGS
(Section 12)

Developed By: SALARIYA & CO., Chartered Accountants

SHAPES
(Private) Limited
Accounting Manual Borrowings

Table of Contents
Page Borrowing for Working Capital.......................................12.1 Borrowing for Financing an Asset...................................12.1 Procedure (including Controls).......................................12.2

Developed By: SALARIYA & CO., Chartered Accountants

SHAPES
(Private) Limited
Accounting Manual Borrowings

BORROWINGS
This section shall define the policy of borrowing and its management. The borrowings obtained by the company shall be strictly in accordance with the borrowing powers given to directors under Articles of Association of the company. The amount to be borrowed could be for financing working capital or for investing into an asset determined of the basis of requirement at a given point in time. BORROWING
FOR WORKING CAPITAL

The Assistant Manager Planning and Budgeting will determine, on a quarterly basis, the amount that is required to finance the working capital. He will then submit his recommendations to the Chief Financial Officer. Once the Chief Financial Officer is convinced that the company will need to fund its working capital, he will ask the Assistant Manager Planning and Budgeting to prepare a proposal to be put on table in the coming meeting of Board of Directors. BORROWING
FOR FINANCING AN ASSET

If a department considers it necessary to purchase a major asset, or if the Board or any other competent individual in the company feels that the company needs an asset, that department, Board or individual shall ask the Assistant Manager Planning and Budgeting and budgeting to evaluate the need of asset. If the manager considers that the asset is required, he shall prepare estimates and will then consult the Chief Financial Officer for advice. Once the Chief Financial Officer is convinced that the company requires an asset and that amount needs to be borrowed for purchase, he

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(Private) Limited
Accounting Manual Borrowings shall ask the Assistant Manager Planning and Budgeting to forward a proposal. PROCEDURE (INCLUDING CONTROLS) The said proposal, whether for working capital financing or for asset, will be presented to the Board. The Board will then decide whether to borrow or not. If the Board proceeds to borrow, it will designate a competent management staff to make borrowing arrangements. The Board can delegate its powers of it wishes to do so. The staff that will be assigned will make arrangements with banks. Such arrangement may require for documentation, arranging for guarantees, registration of charges and approvals of various parties. For this purpose, the delegated staff can employ or co-operate with any individual in the company who may assist in the procedure. Once the documentation is complete, it shall be forwarded to Internal Audit Department. The internal auditor will then ensure whether all the requirements have been fulfilled or not and that whether all the terms and conditions have been complied with or not. Once confirmed, the said documents will be forwarded to the Chief Financial Officer. After a final check, he shall forward the documentation to the bank either himself or through a designated individual. A copy of the documentation shall be retained in a separate file maintained for each borrowing from each bank. This documentation will be kept by Manager Accounts, Finance and Tax. Once the approval has been received from the bank and the bank has issued a letter to the Chief Executive Officer of grant of facility, the documents received will also be
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(Private) Limited
Accounting Manual Borrowings filed in the same file. At this stage, a charge, if required, will be registered at the Securities and Exchange Commission of Pakistan. Registration of charges shall be the responsibility of the Company Secretary. A separate sub-code shall be opened in the General Ledger system by Manager Accounts, Finance and Tax and all concerned shall be informed. An entry to the effect will be incorporated in the ledger. The Chief Financial Officer will ensure that a staff member is aware of his duties for arranging for payment prior to the due date. The master documentation shall be kept in safe whereas the running documentation shall be kept in a separate file kept by the individual duly authorized by the Chief Financial Officer or the Manager Accounts, Finance and Tax in this regard. A record of all payments shall be maintained. It will be responsibility of the Internal Audit Department to ensure that all payments are made in accordance with the terms and conditions and that no variations remain unaccounted for. If there is an unknown variation detected by the Internal Audit or any other individual, it shall be discussed and settled with the bank by an authorized and competent individual or the Chief Financial Officer himself. The adjustments shall be noted and Manager Accounts, Finance and Tax will ensure that these are accounted for. While settling the borrowing, Internal Audit Department will make sure that all events have been accounted for and that the final payment determined by the bank is in accordance with company records. Any differences will be reconciled by the accounts department prior to making

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(Private) Limited
Accounting Manual Borrowings the final payment. Once paid, a request shall be forwarded to the Company Secretary for release of charge from the SECP. Once done, the file shall be closed.

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