1 ORGANIZATION STRUCTURE

Requirements / Expectations
The Organization Structure / Units are used to structure business functions and to
enable reporting with seamless interface.

The organizational needs of Financial Accounting are to report for external

purposes, that is, they fulfill requirements that the business is subject to from
external entities, and internal reporting requirement.
General Ledger

Requirements

The FI application component fulfils all external reporting requirements that must
be met by the organization whether national or international.

General Ledger

The central task of GL accounting is to provide a comprehensive picture for external

accounting and accounts. Recording all business transactions (Primary posting as
well as settlement from internal accounting) in a software system that is fully
integrated with all the other operational areas of HPCL ensures that the accounting
data is always complete, and accurate. Accounts Payable, Accounts Receivable,
Asset etc., will be categorized as subsidiary ledgers.

The GL forms the backbone of all the financial systems. It will provide a
comprehensive picture of the transactions and accounts. It would capture all
business transactions through seamless integration with other operational areas of
the company to ensure that accounting data is always complete, consistent and
accurate.

General Explanations

Preparation of Financial Accounts at HPCL Level:

HPCL Ltd generates comprehensive financial statements in the format required by

the Companies Act, 1956 on a quarterly basis. The following activities are carried
out during Financial Report Preparations for external reporting:

• Prepare Profit & Loss Account along with Balance Sheet & Schedules as per
Schedule VI – Prescribed format.
• Variation analysis is carried out for major variations.
• Valuation of stocks.
• Confirmation of Balances.
• Notes to the accounts & Director’s Report prepared.
• Cash flow & Audit.
• Preparation of draft Annual Accounts.
• Approval by Auditors.
• Approval by Audit Committee.
 • Approval by Board & Auditors.
• Preparation of Final Annual Report.
EXPLANATIONS OF FUNCTIONS AND EVENTS

The events in this process are:

• Generation of accounting documents either automatically or manually.
• Generation of periodic reports at various hierarchical levels.
• Capture of all transactions in GL.
• Posting of sub ledgers to GL.
• Bank Reconciliation Statement.
• GL Planning data maintenance and reporting.
• Reconciliation and finalization of accounts.
• Interbank transfers.
• CIN related transactions.
• Various Reconciliation Statements.
• Generation of financial statements and MIS.

The functions involved in GL are:

• Receipt of data based on automatic account assignments.
• Period closing activities.
• Generation of financial statements and MIS.
• Reconciliation Statements.

CHANGES TO EXISTING ORGANIZATION PROCESS

While considering the organizational requirements and existing structure, the

following changes have been proposed.

• This new scheme of Chart of Accounts & GL Master data will consider the
future expansion & diversification plans for HPCL as a whole thus
incorporating new GL accounts that may not be used now but in the future.
• Financial entries are updated from the Sub Ledger to the Main Leger online
automatically.
• A number of accounting transactions will be carried out by way of automatic
account assignments. For example, inventory account is updated and a
provision created in GL at the time of raising a GR in MM.
• Taxes are automatically posted to GL accounts as per the pre-defined posting
rules from the condition records which are available in the PO and Sales
Pricing. Manual Postings may not required.
• A host of General Accounts will be introduced that are specific to SAP e.g.
GR/IR account. These accounts are used automatically by the system during
Goods Receipt and Invoice Verifications Processes.
 • Costing and MIS will be handled through controlling module within SAP.
Hence the GL accounts, Department codes and Auxiliary codes used for
Costing will be discontinued.
• Consolidation of accounts at Management level will be eased because the
system will be integrated.
• Use of numerous standard reports in SAP will cater to various reporting
requirements.
• Creation of GL accounts in SAP has to be centralized and the Change
Management team has to consider the commonality aspect.
• Financial Statement Versions will help in reporting for various requirements
like Companies Act and any other format required by the organization etc.

DESCRIPTION OF IMPROVEMENTS