FINANCE MANUAL Draft 1.01

TransPeshawar – The Urban Mobility Company
Draft Finance Manual
TransPeshawar -
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The Urban
Mobility Company
Finance and Accounts Manual – Draft v 1.1

Draft Finance and Accounts Manual
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Abbreviations & Acronym
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1 Contents
Definitions................................................................................................................................................................... 9
1. Introduction.......................................................................................................................................................11
1.1 Overview of Finance function....................................................................................................................11
1.2 The Manual................................................................................................................................................11
1.3 Applicability and Update of the Manual....................................................................................................11
1.3.1 Applicability of the Manual................................................................................................................11
1.3.2 Update of the Manual........................................................................................................................11
1.4 Custody of the Manual...............................................................................................................................12
1.5 Using the Manual.......................................................................................................................................12
2. Core Accounting Policies and Principles............................................................................................................14
2.1 Chapter overview.......................................................................................................................................14
2.2 Basis of Preparation of Statutory Financial Statements.............................................................................14
2.2.1 Statement of Compliance...................................................................................................................14
2.2.2 Basis of Measurement.......................................................................................................................14
2.2.3 Functional and Presentation Currency...............................................................................................14
2.2.4 Significant Estimates and Judgments.................................................................................................14
2.3 Property and Equipment............................................................................................................................15
2.4 Loans and Advances...................................................................................................................................15
2.5 Grants........................................................................................................................................................15
2.6 Revenue.....................................................................................................................................................16
2.7 Taxation.....................................................................................................................................................16
2.8 Foreign Currency Transactions...................................................................................................................16
2.9 Financial Instruments.................................................................................................................................16
2.9.1 Financial Assets..................................................................................................................................16
2.9.2 Financial Liabilities.............................................................................................................................16
2.9.3 Off-setting of Financial Assets and Liabilities.....................................................................................16
2.10 Provisions...................................................................................................................................................17
2.11 Impairment................................................................................................................................................17
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2.12 Employee Benefits.....................................................................................................................................17

3. Structure and Mandate of F&A Department.....................................................................................................18
3.1 Departmental Structure.............................................................................................................................18
3.2 Finance Committee....................................................................................................................................18
3.2.1 Composition of the Committee..........................................................................................................18
3.2.2 ToRs of the Committee......................................................................................................................19
3.2.3 Meetings of the Committee...............................................................................................................20
3.2.4 Progress Reporting.............................................................................................................................21
3.3 The F&A Department.................................................................................................................................22
3.3.1 Structure of Finance Department......................................................................................................22
3.3.2 Placement of F&A Department..........................................................................................................22
3.3.3 Mandate and authority of F&A Department......................................................................................22
3.4 Job Descriptions.........................................................................................................................................23
3.4.1 CFO.....................................................................................................................................................23
3.4.2 Manager - Finance.............................................................................................................................24
3.4.3 Accounts Assistant.............................................................................................................................25
4. Accounting Records...........................................................................................................................................27
4.1 Chapter Overview......................................................................................................................................27
4.2 Objectives..................................................................................................................................................27
4.3 Data Management.....................................................................................................................................27
4.3.1. Responsibility.....................................................................................................................................27
4.3.2. Retention Period................................................................................................................................27
5. Chart of Accounts..............................................................................................................................................28
5.2 Objective of CoA........................................................................................................................................28
5.3 Design Methodology..................................................................................................................................28
5.4 Maintenance of CoA..................................................................................................................................28
5.4.1 Modifying CoA – Additions/ Modifications........................................................................................29
5.4.2 Modifying CoA – Account Blocking....................................................................................................30
5.4.3 Modifying CoA – Monitoring..............................................................................................................31
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6. Budgetary Mechanism.......................................................................................................................................32
6.2 Key Governing Policies...............................................................................................................................32
6.3 Components of Budget..............................................................................................................................32
6.4 Development of Annual Budget.................................................................................................................33
6.5 Budget Monitoring.....................................................................................................................................36
6.5.1 Budget Monitoring Framework..........................................................................................................36
6.5.2 Budget Monitoring Process – monthly basis......................................................................................37
6.5.3 Budget Monitoring Process – quarterly basis.....................................................................................38
6.5.4 Budget Monitoring Process – annual basis........................................................................................39
6.6 Budget Modification..................................................................................................................................40
7. Treasury Management.......................................................................................................................................43
7.2 Key Governing Policies and Principles........................................................................................................43
7.3 Cash Forecasting........................................................................................................................................43
7.3.1 Core Policy.........................................................................................................................................43
7.3.2 Forecasting and Monitoring...............................................................................................................44
7.4 Investment.................................................................................................................................................45
7.4.1 Core Policy.........................................................................................................................................45
7.4.2 Permissible Investments....................................................................................................................46
7.4.3 Investment and Divestment Decisions...............................................................................................46
7.4.4 Maintenance of Investment Certificates............................................................................................48
7.4.5 Monitoring the Investment Portfolio.................................................................................................49
7.5 Authorization Limits...................................................................................................................................49
7.6 Petty Cash Management............................................................................................................................50
7.6.1 Key Governing Policies.......................................................................................................................50
7.6.2 Key Cash Procedures..........................................................................................................................50
7.7 Bank Account Management.......................................................................................................................51
7.7.2 Opening and Closing of Bank Account...............................................................................................51
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7.8 Bank Payments..........................................................................................................................................52

7.9 Bank Receipts.............................................................................................................................................54
7.10 Cheque Book Management.......................................................................................................................55
7.11 Bank Reconciliation....................................................................................................................................55
7.11.2 Process Description............................................................................................................................55
8. Property and Equipment....................................................................................................................................56
8.3 Fixed Assets Additions...............................................................................................................................56
8.4 Fixed Assets Register..................................................................................................................................56
8.5 Coding of Fixed Assets...............................................................................................................................59
8.6 Issuance of Fixed Assets.............................................................................................................................59
8.7 Depreciation..............................................................................................................................................60
8.8 Writing Off of Fixed Assets.........................................................................................................................60
8.9 Disposal of Fixed Assets.............................................................................................................................61
8.10 Physical Verification of Fixed Assets..........................................................................................................61
9. Intangible Assets................................................................................................................................................62
9.2 Initial Recognition......................................................................................................................................62
9.3 Amortization..............................................................................................................................................62
9.4 Common Accounting Entries......................................................................................................................63
10. Current Assets................................................................................................................................................64
10.2 Advances....................................................................................................................................................64
10.2.1 Raise Request for Advance.................................................................................................................65
10.2.2 Review Request for Advance..............................................................................................................65
10.2.3 Recover/ Adjust Advance...................................................................................................................65
10.3 Deposits, Pre-payments and Other Receivables........................................................................................65
10.3.1 Report deposit/ pre-payments/ other receivables.............................................................................66
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10.4 Inventory....................................................................................................................................................66
11. Non-current Liabilities...................................................................................................................................67
11.2 Deferred Grants.........................................................................................................................................67
11.2.1 Restricted Grants...............................................................................................................................67
11.2.2 Deferred Capital Grants.....................................................................................................................67
11.2.3 Key Accounting Entries.......................................................................................................................67
11.3 Borrowings.................................................................................................................................................68
11.3.1 Key Governing Policies and Principles................................................................................................68
11.3.2 Obtaining Borrowing Facilities...........................................................................................................68
11.3.3 Key Accounting Entries.......................................................................................................................70
12. Current Liabilities...........................................................................................................................................71
12.2 Retention money.......................................................................................................................................71
12.3 Unearned Revenue....................................................................................................................................71
12.4 Trade payables...........................................................................................................................................72
12.5 Salaries and other employee benefits payable..........................................................................................72
12.6 Withholding tax payable............................................................................................................................72
12.7 Amounts Withheld.....................................................................................................................................72
12.8 Accrued Expenses......................................................................................................................................73
12.9 Provisions...................................................................................................................................................73
12.10 Journal Entries...........................................................................................................................................73
13. Revenue.........................................................................................................................................................75
13.2 Revenue.....................................................................................................................................................75
13.2.1 Bus Fare.............................................................................................................................................75
13.2.2 Government Grants...........................................................................................................................75
13.2.3 Rentals of Premises............................................................................................................................75
13.2.4 Advertisement on Buses and Corridor...............................................................................................75
13.3 Procedure to Collect Revenue....................................................................................................................76
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14. Expenditure Management – Payment Process..............................................................................................77

Expense Authorization Limits.............................................................................................................................77
14.1.1. Expenditure Categorization................................................................................................................77
14.1.2. Processing of Payment for Expenditures............................................................................................78
14.1.3. Additional Considerations while making payments...........................................................................83
15. Taxation.........................................................................................................................................................88
15.2 Relevant Taxation and Other Laws.............................................................................................................88
15.4 Ownership and responsibility....................................................................................................................88
15.5 Key compliance requirements of the Ordinance........................................................................................88
16. Financial Reporting........................................................................................................................................92
16.3 General Guidance......................................................................................................................................92
16.4 Internal and Statutory Reporting...............................................................................................................92
16.4.1 Financial Reporting....................................................................................................................................93
17. Audit and Accountability Support..................................................................................................................96
17.2 Support to External Auditors.....................................................................................................................96
17.3 Support to Internal Auditors......................................................................................................................96
17.4 Support to External Evaluation Missions...................................................................................................96
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Definitions
Consultancy means professional practice for the designing of mechanisms, processes and means for achieving an
objective or output and includes a wide range of activities such as policy advice, institutional reforms, management,
construction supervision, financial services, procurement services, social and environmental studies, and
identification, preparation, and implementation of projects.
Amortization is the systematic allocation of the depreciable amount of an intangible asset, in accordance with
applicable International Financial Reporting Standards (“IFRSs”), over the useful life of the asset.
Budget is the TransPeshawar’s short term budget which covers the coming financial year. The Annual budget is the
consolidation of the Revenue Budget, the Capital expenditure budget, the Human Resource Budget and the Program
Expenditure Budget along with the projected financial statements of the TransPeshawar for the coming financial
year
Capital Expenditure means an expenditure that meets the recognition criteria for capitalization as specified in
International Accounting Standard (“IAS”) 16 – Property, Plant and Equipment and the guidelines for recognition
provided in this Manual.
Cash Equivalents Cash equivalents shall include short term, highly liquid investments that shall be readily
convertible to known amounts of cash and which shall be subject to an insignificant risk of change in value.
Chart of Accounts is a list of all accounts tracked by the General Ledger, and is designed to capture financial
information in accordance with the needs of the management, regulators and other stakeholders. Each account in the
chart is assigned a unique identifier, typically an account code. Each account in the chart is classified into one of the
four categories: Asset, Equity and Liabilities, Revenue and Expense.
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset
at the time of its acquisition or construction or, where applicable, the amount attributable to an item of Property,
Plant and Equipment (“PPE”) when initially recognized in accordance with the specific requirements of this
Manual.
Current Assets Current asset is an asset that satisfies any of the following criteria:
 it is expected to be realized in, or is intended for sale or consumption, in the normal operating cycle;
 it is expected to be realized within twelve months after the balance sheet date; or
 it is cash or a cash equivalent asset unless it is restricted from being exchanged or used to settle a liability for
at least twelve months after the balance sheet date.
Current Liability A liability is considered as current, where full payment is likely to be required under normal
business circumstances within twelve months of the end of the financial year.
Depreciable Amount is the cost of an asset, or other amount substituted for cost, reduced by its residual value.
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.
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Direct Cost is an item or class of expenses which is directly allocable to an activity, department or a project.
Fair Value is the amount for which an asset could be exchanged or a liability could be settled, between
knowledgeable, willing parties in an arm’s length transaction.
Impairment Loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
Indirect Cost is an item or class of expenses which cannot be specifically identifiable to specific units of output.
These costs are jointly incurred by an organization for its various functions.
Investment is an asset held for the accrual of wealth through distribution (such as interest, royalties, dividends and
rentals) and for capital appreciation. Inventory and fixed assets do not fall within this definition. Short term
investment shall be intended for holding up to a period of One (1) year. Long term investment shall be held for a
period of more than One (1) year.
Journal voucher is the point of entry of financial transactions into the books of accounts. It is a chronological
record of transactions, showing an explanation of each transaction, the accounts affected, and corresponding
amounts.
Monetary Assets are cash or cash equivalents and assets to be recovered by an organization in fixed or
determinable amounts of money.
Net Book Value of Asset is the historical cost or re-valued amount of the asset, reduced by its accumulated
depreciation and accumulated impairment loss, as of the balance sheet date.
Non-current Asset is an asset that does not meet the definition of a current asset.
Non-Current Liability is the amount, or component of an amount, which is not likely or committed, to be paid
and/ or settled within twelve months, as of the balance sheet date.
Prepayments are payments which have been made for the period or periods beyond the balance sheet date.
Recoverable Amount Recoverable amount is the higher of an assets fair value less cost to sell and its value in use.
Residual Value The residual value of an asset is the estimated amount that the TransPeshawar would currently
obtain from disposal of an asset, after deducting the estimated costs of disposal, if the asset were already of the age
and in the condition expected at the end of its useful life.
Short Term Investment A short-term investment is an investment that is by its nature readily realizable and is
intended to be held for not more than one year.
Useful Life Useful life is the period over which an asset is expected to be available for use by the TransPeshawar.
Year end The cut-off point for the annual financial accounting period. i.e 30 June.
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1. Introduction
1.1 Overview of Finance function
The accounting and finance function play a key role in the day-to-day management as well as it also functions as an
important organizational unit in the implementation of an effective control environment. The financial impact of the
core policies and procedures, and operational activities are evaluated, summarized, recorded and reported by the
accounting and finance function. The accounting and finance function also ensures compliance with applicable
taxation and corporate laws during the normal and extra-ordinary course of business.
1.2 The Manual

The purpose of this Manual is to provide comprehensive set of guidelines and mechanisms for undertaking activities
mandated to the Finance and Accounts (“F&A”) department being performed at various institutional set-ups of
TransPeshawar.
This manual lays down the policies and procedures for the accounting and finance processes with the intent of
ensuring compliance, consistency and transparency within the accounting cycle. The policies and procedures
included in this Manual have been developed in accordance with the corporate reporting requirements and intended
activities of Transpeshawar, so that Transpeshawar’s accounting and finance functions are efficiently and
effectively performed, while also catering to donor requirements and complying to the maximum extent with the
best practices.
1.3 Applicability and Update of the Manual
1.3.1 Applicability of the Manual
The provisions of this Manual shall be applicable to the F&A department operating at the Head Office and any field
offices established afterwards. The Manual also specifies the roles and responsibilities of other departments that are
involved in the execution of various components of the policies and procedures specified in this Manual.
Although every attempt has been made to address the circumstances and requirements that may arise during the
performance of Finance & Accounts activities, circumstances may arise which might not be adequately covered in
the Manual or a situation may warrant deviations from the stated policies and procedures. These cases will be
resolved by the Finance Committee, if so authorized by the BoD, in order to prevent the appearance of prejudice or
bias which may occur if the decision is taken by any one individual.
1.3.2 Update of the Manual
The Manual shall be tested by the BoD for relevance after every Two (2) years or earlier, either on its own behalf or
if so recommended by the CEO upon due evaluation by the CFO.
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The Manager – Finance shall be responsible for timely and accurate modification/ update of the Manual, in
compliance with the directions and suggestions provided by the BoD and CFO. Every modification, once approved
by the BoD, shall be circulated to all departmental heads.
Accounts Assistant shall be responsible for maintaining an updated and accurate log of modifications. All updates
shall be submitted to the CEO within seven days of their approval by the BoD. Please refer Annexure A “Manual
Modification/ Updation Log”.
1.4 Custody of the Manual
In addition to the Manager – Finance, the following personnel shall be authorized to maintain a copy of the Finance
Manual in a printed form:
a. All members of finance team, stationed at Head Office and field offices (if any);
b. CFO; and
c. CEO.
The contents of the Manual shall be used for official purposes only. Contents of the Manual shall not be copied or
otherwise removed from the premises of Transpeshawar’s Head Office, without the written permission of the CFO.
1.5 Using the Manual

The Manual has been structured in a manner that allows systematic description of key processes, duly linked with
the relevant process owners, timelines and frequency of the activities. Below is a brief orientation of the Manual’s
contents
Chapter Listing Areas covered in the Manual

2 Policies with respect to the accounting and finance activities to be undertaken by the finance
department of TransPeshawar.
3 Overall structure of the accounting and finance activities within TransPeshawar.
4 Maintenance of Accounting Records.
5 Chart of acounts, design methodology and mechanism for update.
6 Policies and procedures with regards development of budgets, the reporting, monitoring and
update of the budgets.
7 Policies and procedures with regards treasury management including bank account
management, investments proposals, management of bank and cash payments/ receipts.
8 Fixed assets management including controls mechanism and measurement.
9 Intangibles management including controls mechanism and measurement.
10 Policies and procedures to effectively record, measure and control current assets, except for
cash and bank balances
11 Policies and procedures for accouning and reporting of non-current liabilities, and procedures
for evaluating borrowing proposals.
12 Policies and procedures for accouning and reporting of current liabilities including booking of
accruals for key account heads.
13 Policies and procedures for recording and reporting of income under various sources including
bus fare, rental income, profit on bank balances and investments, disposals and exchange rate
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fluctuations.
14 Policies and procedures for expense authorization and management.
15 Discussion on key provisions of Income Tax Ordinance, 2001.
16 Policies and procedures on financial reporting to internal and external stakeholders
17 Policies and procedures with regards provision of support to auditors and external evaluators.
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2. Core Accounting Policies and Principles

2.1 Chapter overview
This chapter sets out governing policies with respect to the accounting and finance activities to be undertaken by the
F&A department of TransPeshawar. The F&A department shall seek to achieve the below mentioned benefits in the
accounting cycle by applying the core policies and principles:
a. Transparency and integrity in the procurement process;

b. Safeguarding of assets;
c. Reliable financial reporting and analysis; and
d. Reliable cash and budget forecasting.
2.2 Basis of Preparation of Statutory Financial Statements

2.2.1 Statement of Compliance
The financial statements shall be prepared in accordance with the approved accounting standards as applicable in
Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS)
issued by the International Accounting Standard Board as are notified under the Companies Ordinance, 1984,
provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the
provisions or directives of the Companies Ordinance, 1984 shall prevail.
2.2.2 Basis of Measurement
The financial statements shall be prepared on the historical cost basis except [Fixed Assets/ Property & Equipment]
which shall be stated at [Revalued Amount].
2.2.3 Functional and Presentation Currency
The financial statements shall be presented in Pakistan Rupee (PKR), which is TransPeshawar’s functional
currency.
2.2.4 Significant Estimates and Judgments
The preparation of financial statements in conformity with approved accounting standards requires management to
make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated assumptions shall be based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making judgment about carrying values of assets and liabilities that are not readily apparent from
other sources. It shall be noted that actual results may differ from these estimates.
The estimates and underlying assumptions shall be reviewed on an ongoing basis. Revisions to accounting estimates
shall be recognized in the period in which estimates are revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
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Judgments made by management in the application of International Accounting Standards (IASs) that have
significant effect on the financial statements and estimates with a significant risk of material adjustment in the next
year are provided in the following paragraphs:
Investments: TransPeshawar shall determine whether investments are impaired when there is a significant or
prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires
judgment. In addition the impairment may be appropriate when there is an evidence of deterioration in the financial
health of the invested entity/industry and sector performance and operational financial cash flows. Management
shall consider all these factors in making the judgment of the investments impairment.
Receivables: TransPeshawar shall review the recoverability of receivables at each balance sheet date and shall
determine whether the receivables are impaired. The assessment of recoverability shall require judgment.
Property, plant and equipment: Estimates of residual values and useful lives of items of property, plant and
equipment shall be reassessed annually and any change in estimate shall be taken into account in the determination
of depreciation charge and impairment loss. Changes in estimates shall be accounted for over the estimated
remaining economic life of the assets.
2.3 Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Deprecation is charged to income statement as to write off the depreciable amount over estimated useful life.
TransPeshawar’s management shall determine the estimated useful lives and related depreciation charge for its
property and equipment. The said recommendation shall also include estimates with respect to residual values and
depreciable lives. Further, TransPeshawar shall review the value of assets for possible impairment on an annual
basis. Any change in the estimate in the future years might affect the carrying amounts of the respective item of
Property and Equipment with a corresponding effect on depreciation charge and impairment.
2.4 Loans and Advances

Loans and advances shall be stated at cost, net of provisions for impairment, if any.
2.5 Grants
Grants received for specific purposes and interest thereon shall be classified as restricted grants. Such grants shall
be transferred to income as grants to the extent of actual expenditure incurred there against. Expenditure incurred
against grant committed but not received shall be accrued and recognized in income and shall be reflected as
receivable from development partners. Unspent portion of such grants shall be reflected as restricted grants in the
balance sheet.
Expenses shall be recorded when incurred.
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2.6 Revenue
Revenue from bus operations is recognized when a passenger undertakes a trip. Consideration received from
passengers on account of ticket sales for trips they have not yet undertaken is recognized as unearned revenue.
When the passenger makes the trip, the relevant revenue recognized.
2.7 Taxation
2.8 Foreign Currency Transactions
Transactions in currencies other than Pak Rupee shall be recorded at the rates of exchange prevailing on the date of
transactions. Monetary assets and liabilities, denominated in foreign currencies, shall be re-translated at the Balance
Sheet date. Gains and Losses arising shall be taken to income currently.
2.9 Financial Instruments
Financial assets and liabilities shall be recognized when TransPeshawar will become a party to the contractual
provisions of the instrument. These shall be derecognized when TransPeshawar will cease to be the party to the
contractual provisions of the instrument. Any gain or loss on de-recognition of the financial assets and liabilities
shall be taken to income statement.
All financial assets and liabilities shall be initially measured at cost which shall be the fair value of the consideration
given and received respectively. These financial assets and liabilities shall be subsequently measured at fair value or
amortized cost, as the case may be.
2.9.1 Financial Assets

Financial assets shall include cash and cash equivalents, investments, loans, advances and receivables. Advances
shall be stated at their nominal value as reduced by appropriate provisions against doubtful advances, while other
financial assets excluding investments shall be stated at cost. Investments classified as held to maturity shall be
stated at amortized cost.
2.9.2 Financial Liabilities

Financial liabilities shall be classified according to the substance of the contractual arrangement entered into.
Financial liabilities shall include other accrued liabilities which shall be stated at their nominal values. Financial
charges shall be accounted for on accrual basis. Any gain or loss on the recognition and de-recognition of the
financial assets and liabilities shall be included in the net income and expenditure for the period in which it shall
arise.
2.9.3 Off-setting of Financial Assets and Liabilities

Financial assets and financial liabilities shall only be off-set and the net amount shall be reported in the financial
statements when there shall be a legally enforceable right to set off the recognized amount and TransPeshawar
intends either to settle on net basis or to realize the assets and to settle the liabilities simultaneously. Income and
expense items of such assets and liabilities shall also be off-set and the net amount shall be reported in the financial
statements.
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2.10 Provisions
Provisions shall be recognized when TransPeshawar has a present legal or constructive obligation as a result of past
events and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate of the obligation can be made. Provisions shall be reviewed at each balance sheet
date and adjusted to reflect current best estimate, if any.
2.11 Impairment
The carrying amount of TransPeshawar’s assets shall be reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication may exist, the recoverable amount of such assets shall
be estimated in order to determine the extent of impairment loss, if any. Impairment losses, if any, shall be
recognized in the income and expenditure account.
2.12 Employee Benefits
Salaries, wages and benefits are accrued in the period in which the associated services are rendered by the
employees of the Authority. Compensated absences are recognized as expense when they are due.
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3. Structure and Mandate of F&A Department

3.1 Departmental Structure
Under the overall supervision of BoD’s Finance Committee, the F&A department shall be administered by the CFO,
with direct reporting responsibilities to the CEO. The F&A department shall be responsible for undertaking
accounting, planning and budgeting, and financial reporting activities at the Headquarter and field office (if any).
At the day-today operational level, the activities of F&A department shall be supervised by Manager - Finance.
Below is the departmental structure and overall architecture of the finance function:
3.2 Finance Committee

3.2.1 Composition of the Committee
The Finance Committee shall consist of such members as may be deemed appropriate by the BoD. At any time, the
Committee shall comprise of at least three members, who shall be appointed for a maximum period of three years.
The Committee will be headed by the Chairman, who shall be appointed by the BoD. The BoD may designate such
other personnel, as it may deem appropriate, to act as advisor(s) and functionaries of the Committee with an
objective of supporting the operations of the Committee.
A member of the Committee who vacates his office as the director of TransPeshawar during the term of Three years
will be replaced by another director having similar background as the one who has vacated the office. The Chairman
of the Board of Directors of TransPeshawar shall appoint such a person for the remaining period.
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3.2.2 ToRs of the Committee

The Finance Committee will perform the following key duties:
 Assist the Board in its consideration for approval and on-going oversight of the TransPeshawar’s financial
structure and streams of funding;
 Regular review of fare and non-fare revenue structures, and advice Board on the revision;
 Develop and recommend appropriate policies and procedures to ensure sound financial and investment
policies and practices are in place and recommend revisions as required to assist the Board of Directors in
fulfilling its oversight responsibilities;
 Ensure that an effective framework exists for the financial management of the TransPeshawar, including the
approval of the financial policies and procedures;
 Participate in the review of the annual Financial Budget and the development of a Long Term Financial
Plan (i.e. rolling 5 years) and ensure that any Board of Directors approved staffing plan is properly funded;
 Monitor and review the overall financial strategies and performance of the TransPeshawar;
 Monitor and review the current and projected levels of income and expenditure across individual areas;
 Monitor and review performance against budget and suggest any action necessary to ensure that the
TransPeshawar remains within the annual budget approved by the Board;
 Devise and review implementation of Administrative and Financial Delegation of Powers for
TransPeshawar;
 Approve all banking arrangements;
 Devise and review implementation of Investment Policy for TransPeshawar for optimum parking of
available funds
 Oversee the financial implications of TransPeshawar operations, and advise Board with possible solutions
in a timely manner
 Advise the Board on the:
o Solvency of the TransPeshawar and the safeguarding of its assets;

o Overall financial strategy and financial forecasting;
o Annual estimate of income and expenditure;
o Capital Plan and Annual Capital Programme;
o Financial forecasts;
o Overall borrowing requirements including any overdraft facility;
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o
Financial implications of the acquisition and disposal of land and property, and proposals for the
development of the TransPeshawar’s estate;
 Additional duties as may be delegated to the Committee by the Board of Directors from time to time.
3.2.3 Meetings of the Committee

The Committee shall meet at least once during each quarter of a financial year, prior to the conduct of BoD meeting.
The meeting shall be attended by at least two members to complete the quorum of the meeting. The CFO shall act
as Secretary of the Committee.
The Secretary – Finance Committee shall be responsible for documenting the records pertaining to the proceedings
of the Committee. The record shall be kept in a secure custody and shall not be open to access for any
TransPeshawar staff.
The proceedings of the Committee meetings shall be duly documented through reports, presentations and minutes of
the meetings. Following process shall be followed in this regard:
3.2.3.1 Invitation for the Meeting
3.001.001 Circulate Notice of the Meeting Responsible Tool
MS Word;
At least 7 working days prior to the date of the Committee meeting, the
Secretary with due authorization by the Chairman of the Committee shall CFO MS Excel;
circulate the agenda of the meeting along with proposed date, time and venue
to all members and other personnel.
MS Outlook
3.001.002 Confirm Attendance Responsible Tool
MS Outlook
The invitees to the Committee meeting shall, within three working days, Members of
confirm their attendance or convey reservations through an appropriate Committee;
channel to the CFO.
3.001.003 Confirm Schedule Responsible Tool
Within two working days of receiving responses from all invitees, the CFO
CFO MS Outlook
shall circulate a confirmation or modification, if required, in the schedule of
meeting to all invitees.
3.2.3.2 Conduct and Record the Meeting
3.001.004 Conduct and Record Proceedings Responsible Tool

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The Secretary shall record minutes of the meeting and maintain record of the MS Word;
documentation and presentations made to the Committee. MS Excel;
CFO
The Secretary shall also maintain complete and accurate record of the MS Power
attendance. Point
3.001.005 Circulate Draft Minutes Responsible Tool
Within Five (5) working days from the date of the meeting, the Secretary
shall circulate the draft minutes to all members of the Committee. The draft
minutes shall be accompanied by complete documentation and Summary of Annexure B;
CFO
Key Decisions and Implementation Points for a formal endorsement by the MS Outlook
members. Please refer Annexure B: Summary of Action Points for the
template.
3.001.005 Incorporate Modifications Responsible Tool
The members shall submit comments along with necessary modifications, if

Members MS Outlook
required, to the Secretary within Three (3) working days.
3.001.006 Circulate Final Minutes Responsible Tool
Within 14 working days from the date of the meeting, the Secretary shall
update the minutes in accordance with the comments, if any, received from
the members, which shall be circulated to the Chairman for authorization. CFO MS Outlook
The authorized minutes shall be kept in a secured area.
3.2.4 Progress Reporting

The Finance Committee shall, on a quarterly and annual basis, prepare a report on its role and responsibilities and
the activities conducted by it during the period, in connection with the discharge of its roles and responsibilities for
inclusion in the annual report. Such a report shall include:
a. a summary of the role of the committee;

b. the number of committee meetings and attendance by each member;
c. an overview of strategic and other key decisions and recommendations made during the period;
d. an update on the outcome and impact (if applicable) of recommendations proposed by the committee;
e. any other area it may consider necessary for inclusion.
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3.3 The F&A Department

3.3.1 Structure of Finance Department
The structure of F&A department has been defined in section 3.1 of the Manual. The structure may be modified
and/ or strengthened on the basis of recommendations made by the Finance Committee in consultation with the
CEO.
3.3.2 Placement of F&A Department

The F&A department shall be placed at the TransPeshawar Headquarters. Notwithstanding, depending upon the
emerging circumstances and pursuant to approval by the CEO, the CFO shall be authorized to depute such number
of staff to a field office (if any) or other locations, as he may consider appropriate to effectively and efficiently
undertake accounting and finance activities.
3.3.3 Mandate and authority of F&A Department
3.3.3.1 Mandate of F&A Department

The primary mandate of the F&A department shall include, but not limited to:
a. maintaining an oversight and implement a mechanism of effective internal controls over the financial
transactions of TransPeshawar;
b. developing reliable and accurate budgets and financial strategies,
c. safeguarding of monetary and non-monetary assets of TransPeshawar through in-depth and objective
evaluation and verification of underlying documentation generated during implementation of programmatic
and administrative activities by various units of TransPeshawar;
d. ensuring timely and reliable financial reporting to internal and external stakeholders including CEO, BoD,
Development Partners and Regulatory Authorities;
e. implementing an effective funds flow mechanism enabling easy and transparent utilization and tracking of
Development Partners funds;
f. arranging independent audits and assessments on the financial records and departmental operations;
g. supporting the Internal Audit department in the assessment of design and operating effectiveness of internal
controls;
h. ensuring compliance with the provisions of applicable taxation and corporate laws
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3.3.3.2 Modifications in the Mandate of F&A Department

The Finance Committee either on its own behalf or upon recommendation made by the CEO, may modify the
mandate of the F&A department through addition, deletion and/ or modification in the existing mandate of the F&A
department.
A change in the mandate of F&A department shall be accordingly updated in the Manual, in accordance with the
mechanism specified in section 1.3.2: Update of the Manual.
3.3.3.3 Authority of F&A Department

In order to effectively discharge its roles and responsibilities, the authority of F&A department shall extend to:
a. a department or departments of TransPeshawar;
b. an existing or former employee of TransPeshawar;
c. an external party having business with TransPeshawar as a provider of goods, works and services; or
d. any other office or natural person that may be considered relevant for effective discharge of the mandate.
3.4 Job Descriptions

3.4.1 CFO
The CFO shall lead the strategic positioning of TransPeshawar’s accounting and financial operations. The CFO
shall serve as strategic support to the CEO in devising and implementing an effective control environment, liaising
with various external entities, and supervising the day-to-day accounting and finance functions. More specifically,
the CFO shall be responsible for:
 Ensuring that appropriate advice is given to the Board and CEO on all financial matters;
 Prepareing and presenting the financial statements, duly certified by CEO, for consideration and approval of the
audit committee and the Board.
 Provide leadership in the development for the continuous evaluation of short and long term strategic financial
objectives for the company;
 Ensuring compliance with all rules and regulations of Khyber Pakhtunkhwa Urban Mass Transit Act 2016,
Companies Ordinance, 1984, the Public Sector Companies (Corporate Governance) Rules and other applicable
rules and regulations;
 Ensuring the accounts of the Company are kept up to date, and in a form readily available for reporting to the
Board or Government of Khyber Pakhtunkhwa;
 Responsible for effective treasury management;
 Ensure relevant requests for financial information/briefings or submissions to be prepared for or on behalf of the
Company CEO or Board of Directors;
 Manage processes for financial forecasting, budgets and consolidation and reporting of the organization; and
 Ensure that effective internal controls are in place and remains effective.
 Develop and supervise implementation of financial policies and strategies in collaboration with other
departmental heads and under the supervision of CEO and Board;
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 Supervise the process of preparation of Annual Budgets of the organization, monitor and manage the cash flows,
expenses including contract service payments, staff salaries and benefits and Company operating expenses;
 Review the design and operating effectiveness of accounting and financial reporting controls within the
functional setup of organization;
 Create, coordinate, and evaluate the financial management system and supporting information systems of the
company;
 Develop and direct the implementation of strategic business and/or operational plans, finance and accounting
procedures and systems.
 Maintaining proper and effective system of internal financial control and exploring opportunities of maximum
benefits to the Company.
 Develop and implement accounting and financial policies and procedures in accordance with the best practices;
 Maintain in-depth relations with all members of the finance function;
 Manage the financial processes and all transactions in a transparent and auditable manner;
 Identify and conduct analysis of investment options and recommending most appropriate investment
opportunities to the Board
 Devise and implement investment policy of the organization;
 Assist the CEO and relevant Director in the contract negotiations for procurement of goods and services as may
be required to implement, manage and monitor the declared project or any part thereof.
 Prepare and provide the necessary financial management assistance for any PPP contracts which may be
considered beneficial to and are in accordance with the conditions of the Declared Project;
 Authorize bank reconciliation statements;
 Coordinate with tax, legal and other consultants from time to time to ensure the organization’s financial
operations are carried out in accordance with applicable laws and regulations;
 Ensure filing of statutory returns in accordance with applicable regulations;
 Authorize capital and revenue expenditure in accordance with the delegation of financial powers;
 Maintain a cooperative, inclusive, professional and outcome focused (CIPOF) team approach;
 In conjunction with the Managers of other Divisions, undertake regular audits of services rendered against the
accounts paid to ensure transparency of transactions; and
 Perform other such duties that may be assigned by the Board or CEO from time to time.
3.4.2 Manager - Finance

Manager - Finance shall serve as the key functional supervisor of the activities undertaken by the F&A department
on day-to-day basis. Playing key support role for the CFO, the Manager - Finance shall be responsible for:
 Assisting the CFO in the development and implementation of financial policies and strategies;
 Proposing addition(s) to or modification(s) in the design and operating effectiveness of accounting and financial
reporting controls within the functional set-up of TransPeshawar;
 Ensuring achievement of department’s performance objectives;
 Preparing quarterly and annual planning and budgeting activities from initiation through to finalization and
authorization by the BoD;
 Making budget revisions in accordance with the guidance provided by the CFO;
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 Generating reliable financial reports for internal management reporting, statutory reporting and development
partner reporting in accordance with applicable reporting frameworks and regulations;
 Assisting the CFO in the identification and analysis of investment options;
 Supporting the CFO during negotiations with the banks and financial institutions with the purpose of arranging
funds and various banking facilities;
 Supporting the CFO in conducting funding Gap Analysis on a quarterly basis through consultation with the
Resource Mobilization department and under the guidance of CEO;
 Preparing cash planning reports, prepared on a weekly, monthly, quarterly and annual basis;
 Supervising the provision of adequate and timely support to the internal and external auditors during the various
stages of respective audits;
 Participating in the meetings with internal and external auditors on various aspects of their functional domains;
 Conducting performance evaluation of sub-ordinate finance staff and making recommendations for staff
remuneration and rewards to the CFO;
 Preparing statutory returns in accordance with applicable regulations;
 Reviewing bank reconciliation statement(s) for authorization by the CFO;
 Reviewing and recommending authorization of vouchers and cheques;
 Running financial reporting close on a monthly, quarterly and annual basis; and
 Performing any other task/ duty assigned by the CFO or directly by the CEO.
3.4.3 Accounts Assistant

The Accounts Assistant shall be responsible for processing financial transactions. The Accounts Assistant shall be
responsible for:
 Preparing reports and reconciliations for periodic financial reporting close;

 Preparing and verifying appropriateness of financial transactions entered into the accounting system by
analyzing the appropriateness of the following:
a. account classification;
b. project allocation;
c. cost sharing requirements;
d. accuracy and completeness of amounts in view of underlying supporting documents;
e. compliance with applicable policies (for e.g. staff advances, per-diem, etc.);
f. authorization by competent authorities as defined in the Manual; and
g. allocation to appropriate period of accounting.
 Prepare bank reconciliation statements;
 Maintain petty cash and making petty cash payments on the basis of authorized vouchers to eligible parties;
 Maintaining custody of cheque books;
 Prior to preparing cheques, performing the following controls:
a. Checks to avoid duplicate payments have been made;
b. Cheque(s)/ fund transfer is being made in the name of eligible party and to the correct account, while taking
into account any instructions for executing the transfer;
c. Expenditure has been approved by authorized personnel, as defined in the Manual;
d. allocation to appropriate period of accounting.
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 Processing funds transfer instructions on the basis of approved activities and/ or expenses (for example: payroll
payments, funds transfer to field offices, etc.);
 Resolving issues with the banks in the ordinary course of business;
 Entering accurate payment transactions into the system;
 Obtaining/ retrieving bank statements on a fortnightly basis;
 Maintaining updated record of authorized signatories;
 Maintaining petty cash in accordance with the guidelines provided by the Manual; and
 Performing any other task assigned by Manager - Finance.
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4. Accounting Records
4.1 Chapter Overview
This chapter specifies the policies and procedures pertaining to the maintenance of accounting records.
4.2 Objectives
The accounting record shall be maintained with an objective to ensure:
a. The creation and capturing of authentic and reliable records to demonstrate evidence of accountability and
information about the decisions and activities carried out;
b. Secure the maintenance and preservation of access to accounting records, as long as they are required to
support the operations;
c. Secure the identification and archiving of accounting records considered worthy for permanent
preservation; and
d. Adherence to all legal obligations.
4.3 Data Management

4.3.1. Responsibility
The CFO shall be responsible for overall maintenance of accounting records and shall be accountable to the CEO.
The accounting records and supporting documents shall be maintained in compliance with the provisions of
Companies Act 2017.
4.3.2. Retention Period

The retaining period of vouchers and supporting documents shall be ten years while ledgers, audited accounts and
their supporting financial records shall be retained permanently for all accounts.
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5. Chart of Accounts
This chapter specifies the policies and procedures pertaining to the design, development, and modification(s) in the
Chart of Accounts (“CoA”).
5.2 Objective of CoA
The CoA shall be designed and maintained with an objective to ensure:
a. Complete coverage of financial aspects of each and every operational activity performed by the
TransPeshawar or any other person that may affect the financial statements of TransPeshawar, without
having regard to the materiality or frequency of a transaction;
b. Accurate and logical classification of an account balance or transaction/ class of transactions as an asset,
provision/ liability, income or expenditure;
c. Accurate and systematic identification of activity location; and
d. Accurate and systematic identification of relevant subsidiary account heads and sub-subsidiary account
heads.
5.3 Design Methodology
The CoA shall be developed and maintained in accordance with the following methodology:
Level Level Description Code Example

1. Main classification 01 Asset
2. Sub-classification 01 Current Asset
3. Control Account 01 Bank Balances
4. Subsidiary Account 0001 Bank Balances Saving
5.4 Maintenance of CoA
The CFO shall serve as the sole and permanent owner of the CoA. The powers of CFO in this regard shall not be
delegated, suspended or altered unless so authorized by the BoD in view of due consideration to a formal request
made by the CEO in this regard.
No addition, deletion and/ or modification in the CoA shall take effect without documented authorization by the
CFO.
5.4.1 Modifying CoA – Additions/ Modifications
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1.001.001 Raise Request for Modification Responsible Tool
The Accounts Assistant shall raise a request on a manual Account Code

Addition/ Amendment Form to open a new account code or amend the title or
classification of the existing account code in the CoA. The request shall be
raised using Annexure C: CoA Modification Form, adequately providing
reason for such modification Accounts
Assistant
In certain circumstances, the modification in CoA may be initiated upon MS Word;
directions provided by the CFO or Manager – Finance. In such circumstances, Manager -
the requirement of completing Annexure C shall be duly complied. Finance; or MS Outlook
Addition or deletions in the CoA may result from multiple factors, including CFO
but not limited to:
a. Changes in the funding structure;

b. Change in the accounting policy affecting an account head; etc.
1.001.002 Review request Responsible Tool
Manager – Finance shall review and verify the appropriateness of request by

assessing as to whether the modification would strengthen accurate,
transparent and effective recording and reporting of financial transactions.
While evaluating the request, the Manager – Finance may direct the relevant MS Outlook
Manager –
staff to modify the contents of request for appropriate representation of causes
and suggested modification, or may reject the request. The reason for Finance
rejection shall also be documented on the form.
In case a request is reviewed for further processing, the Manager – Finance

shall forward the request to the CFO within One (1) working day from the
date of receipt of such request.
1.001.003 Authorize Request Responsible Tool
Where the CFO is satisfied that the reason for modification in the CoA is
justified and due review and verification has been performed by the Manager
– Finance, the CFO shall authorize the request for modification in the CoA.
While authorizing the request, the CFO may direct the relevant staff to
modify the contents of request for appropriate representation of causes and CFO MS Outlook
suggested modification, or may reject the request. The reason for rejection
shall also be documented on the form.
A copy of authorized request shall be sent to the CEO for information

purposes.
5.4.2 Modifying CoA – Account Blocking
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1.002.001 Request for blocking an account code from the COA Responsible Tool
On an annual basis, the Accounts Assistant shall generate an ‘Inactive

Accounts Summary’ from the GL, detailing all account codes in which no
transactions were recorded during the latest completed year. The report shall
be incorporated/ attached with completed Annexure D: Inactive Accounts MS Word;
Summary. Accounts
Assistant
MS Outlook
The completed summary shall be submitted to the Manager – Finance within
Two (2) working days from the date of BoD meeting where annual financial
statements are authorized.
1.002.002 Review request Responsible Tool
Manager – Finance shall review and verify the appropriateness of request by

assessing as to whether the blockage would strengthen accurate, transparent
and effective recording and reporting of financial transactions.
MS Outlook
While evaluating the request, the Manager – Finance may reject the request Manager –
considering potential for reactivation of the account in short term. The reason Finance
for rejection shall also be documented on the form.
In case a request is reviewed for further processing, the Manager – Finance

shall forward the request to the CFO within One (1) working day from the
date of receipt of such request.
1.002.003 Authorize request Responsible Tool
Where the CFO is satisfied that the reason for account blockage is justified
and due review and verification has been performed by the Manager –
Finance, the CFO shall authorize the request for modification in the CoA.
While authorizing the request, the CFO may direct the relevant staff to
modify the contents of request for appropriate representation of causes and
suggested modification, or may reject the request. The reason for rejection CFO MS Outlook
shall also be documented on the form.
A copy of authorized request shall be sent to the CEO for information

purposes.
5.4.3 Modifying CoA – Monitoring
1.003.001 Submit Report Responsible Tool
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On monthly basis the Manager – Finance shall generate a Transaction Log for MS Word;
Changes made in Chart of Accounts from the GL Module and shall forward Manager –
the same to the CFO. Finance
MS Outlook
1.003.002 Evaluate Report Responsible Tool
MS Outlook
CFO shall review the Transaction Log to check that all changes to chart of
CFO
accounts are authorized and shall sign off the same as an evidence of review.
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6. Budgetary Mechanism
This chapter provides policy and procedural guidance with respect to the budgeting mechanism. The chapter
discusses the steps and timelines involved in the development of budgets, the reporting, monitoring and update of
the budgets.
6.2 Key Governing Policies

The budgeting process shall be governed by following key policies and principles:
a. Budgets shall be based on activity based budgeting principles, taking into account the expected inflow of
funds in the form of committed and other grants as well as other sources, the annual work plans, capital
expenditure requirements, expected staff levels and average expected staff cost rates and operational
activity volume;
b. Budget ownership shall be assigned to activity heads who shall be responsible for effective budget
management;
c. Budget monitoring reviews shall be performed on a quarterly basis at each level where the CEO shall
conduct the reviews at the managerial levels;
d. The annual programmatic budget shall be aligned with the corresponding project budgets; and
e. Final Draft version of Budget along with narrative reports and explanations shall be completed and duly
reviewed and verified by the CEO and recommended by the Finance Committee at least 10 days prior to the
date of BoD meeting in which the draft budget is to be placed before the BoD for approval;
f. The Annual Budget for the next financial year shall be authorized for implementation at the earlier of: a)
15th April of EFY, or b) during the BoD meeting held immediately preceding the commencement of next
financial year.
6.3 Components of Budget

The Annual budget shall comprise of 5 functional and 2, 3 departmental components. Separate budget codes shall
be assigned to the PMER and IA departments in view of their independent roles within the organization. A listing of
budget components and relevant budget owners has been provided in the below table:
S. no. Component Owner

1. Revenue budget Manager – RM
2. Office related Capital Expenditure budget Manager – Admin & HR
3. General & Administrative budget Manager – Admin & HR
4. Capital Expenditure budget – New Projects Senior Manager – Program
5. IA budget Manager – IA
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6. Information Technology Budget Manager – ICT
6.4 Development of Annual Budget

Following process shall be followed for the development of annual budget:
1.004.001 Determine Budget Ceiling Responsible Tool
The Manager – Finance, in consultation with the CFO and guidance provided Manager –
by the CEO, shall evaluate the available funding for the next financial year. Finance; MS Excel;
Where the CFO considers that a possibility of funding gap might arise during CFO;
the course of next financial year, he shall recommend a component-wise MS Outlook
budget ceiling to the CEO. CEO
1.004.002 Prepare Budget Instructions Responsible Tool
The Manager – Finance shall develop draft budget instructions by the 5th
March of the EFY. The budget instructions shall be developed using the
template provided at Annexure E: Budget Instructions. The budget
instructions shall be accompanied by the Annexure E1: Budget Template Manager – Annexure E;
and a Narrative Template. Finance
Annexure E1
Draft Budget Instructions shall be submitted to the CFO for review and
authorization.
1.004.003 Evaluate Budget Instructions Responsible Tool
The CFO shall evaluate the appropriateness of budget instructions, and shall
ensure that adequate and accurate information has been included in the
instructions, the timelines are aligned with the overall targets for completion Annexure E;
of budgeting process.
CFO Annexure
Where the CFO is satisfied that the budget instructions are appropriately
E1;
prepared, activity 1.004.004 is triggered. Where the CFO considers is
appropriate to modify the instructions to appropriately dilate the requirements
from respective budget owners, the CFO shall signify the deficiency to the MS Outlook
Manager – Finance. Activity 1.004.002 shall be re-triggered in such case.
1.004.004 Circulate Budget Instructions Responsible Tool
Upon authorization by the CFO, the Manager – Finance shall circulate the Annexure E;
Manager –
instructions to all budget owners. The instructions shall be circulated to
budget owners by 10th March of the EFY. Circulation of budget instructions Finance
Annexure
shall trigger activity 1.004.005. E1;
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MS Outlook
1.004.005 Prepare Budget Proposals Responsible Tool
Budget Owners
Respective budget owners shall prepare budget proposals in accordance with Annexure
the budget instructions and specific requirements of sub-ordinate departments CFO E1;
and projects.
Manager – MS Excel;
The Manager – Finance and CFO shall provide necessary support to the Finance
budget owners in the preparation of relevant budget components. MS Outlook
1.004.006 Submit Budget Proposals Responsible Tool
The budget owners shall submit the budget proposals to the Manager –
Finance in accordance with the deadline specified in the budget instructions. Annexure
Budget Owners
The budget proposals shall be accompanied by supporting analysis, E1;
evidence(s) for assumptions pertaining to unit rates, quantities and timelines
of costs. MS Outlook
1.004.007 Perform Budget Checks Responsible Tool
The Manager – Finance shall evaluate the accuracy of budget proposals. This
shall be performed through completion of budget review checklist, provided
at Annexure E2: Budget Review Checklist. The checklist shall be separately Manager – Annexure
filled for each budget proposal. Finance E2;
The budget checklists shall be completed within Seven (7) working days from
the date of receipt of budget proposals and shall be submitted to the CFO for MS Outlook
authorization.
1.004.008 Review Checklists Responsible Tool
The CFO shall review the completed checklists and perform his independent
checks to evaluate the budget appropriateness and reliability of points raised Annexure
in the checklist. The CFO may ask the Manager – Finance to perform CFO
E2;
additional checks to further evaluate the budgets.
MS Outlook
1.004.009 Hold Budget Sessions Responsible Tool
Once the review of checklists has been completed, the Manager – Finance
Budget Owners
shall invite the budget owners for conducting discussions on budget
proposals. During the discussions, the Manager – Finance shall present the Manager –
findings on the basis of review of budget proposals.
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These sessions shall also serve as a mechanism to further understand the

rationale for budget assumptions and clarify other queries.
Finance
Based on discussions with budget owners and where considered necessary on
the basis of budget discussions and findings of the budget review, the CFO CFO
may request the budget owners to submit revised budget proposals. The CFO
shall also specify an appropriate deadline for submission of revised proposals.
In case revised proposals are required, activity 1.004.006 is re-triggered.

Where budget discussions are successfully completed, activity 1.004.010 is
triggered.
1.004.010 Prepare Consolidated Budget Responsible Tool
Where budget discussions are successfully completed, the Manager – Finance

shall prepare a consolidated budget using template provided in Annexure E3:
Consolidated Budget. Manager –
Finance Annexure E3
The consolidated budget shall be prepared within Four (4) working days from
the date of authorization received from CFO in this regard.
1.004.011 Discuss Consolidated Budget Responsible Tool
Once the consolidated budget has been developed, the Manager – Finance Budget Owners;
shall invite the budget owners for conducting final discussions on budget MS Word;
proposals. Manager –
Finance
MS Outlook
These sessions shall also serve as a mechanism to obtain buy-in on
consolidated budget by respective budget owners. CFO
1.004.012 Present Budget Responsible Tool
CFO
The CFO shall present consolidated budget to the CEO for review and MS Outlook
recommendation.
1.004.013 Evaluate Budget Responsible Tool
The CEO may call upon joint sessions with the CFO and Budget Owners to
evaluate the proposed budget. The CFO and Budget Owners shall present Annexure
detailed explanation and justification for the proposed budget. The CFO shall Budget Owners; E3;
present the alignment of proposed budget with the shot-term strategic
objectives and targets of TransPeshawar. CFO; MS Power
The CEO may request for additional information and/ or modifications in the Point
CEO
budget during the course of evaluation. In case a modification is requested by
the CEO, activity 1.004.010 shall be re-triggered. MS Excel
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1.004.014 Submit Budget Responsible Tool
Once the draft budget is authorized by the CEO, the CFO shall submit the Annexure
proposed final draft of the budget to the members of Finance committee at CFO E3;
least 10 days prior to the date of BoD meeting in which the draft budget is to
be placed before the BoD for approval. MS Power
Point
1.004.015 Evaluate Budget Responsible Tool
The Finance Committee shall evaluate the appropriateness of proposed

budget, giving due consideration to the following:
a. Recommendations made by the CEO;

b. Alignment with short-term strategic objectives and targets;
c. Overall funding analysis; and Finance
d. Any other analysis considered necessary. Committee; Annexure E3
The Finance Committee may request for additional information and/ or CEO
modifications in the budget during the course of evaluation. In case a
modification is requested by the BoD Committee, activity 1.004.010 shall be CFO
re-triggered.
Subject to evaluation process and incorporation of modification(s) as

proposed by the BoD, the annual budget shall be authorized.
6.5 Budget Monitoring

Budget monitoring ensures that organizational resources are appropriately used for their intended purposes and are
properly monitored for effective and timely decision making while providing objective analysis and periodic
reporting to internal and external stakeholders.
6.5.1 Budget Monitoring Framework

Budget monitoring shall be performed at the following levels:
Level Description Key Tasks

1. Budget Owner level a. Ensuring budget utilization in accordance with approved budgets.
b. Monitoring Budget Utilization on a periodic basis and taking measures to

remain within budgetary limits.
c. Identifying areas and opportunities for permanent savings through

efficient employment of resources and effective negotiations with
suppliers.
d. Generating monthly, quarterly and annual budget monitoring reports as

36
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per defined templates.
2. CEO level a. Evaluating the budget utilization reports and investigating key variances.
b. Ensuring key decisions are made to achieve planned targets within

available resources.
c. Authorizing budget reallocations to priority/ emergency situations and

excess utilizations where considered necessary.
d. Submitting quarterly and annual analysis on budget utilization to the

BoD.
3. BoD level a. Evaluating the quarterly and annual analysis on budget utilization.
b. Making strategic decisions with regards budget monitoring and utilization

for aligining strategic direction and performance.
6.5.2 Budget Monitoring Process – monthly basis
1.005.001 Generate Budget Comparison Responsible Tool
Within One (1) working day from the date of the monthly financial closing,
the Budget Owner or his designated officer shall generate budget comparison
reports.
Annexure
Budget Owner/
The budget comparison report shall be imported into MS Excel Sheet in the Designated E4;
format provided in Annexure E4: Budget Monitoring Report. The report Officer
shall be completed by the designated officer which shall be submitted to the MS Outlook
Budget Owner within Six (6) working days from the date of monthly
financial close.
The Budget Monitoring report shall be submitted to the CEO within Seven
Budget Owner/ Annexure
(7) working days from the date of monthly financial close. E4;
Designated
The report shall cover the following areas: Officer
a. Budget category based explanation of key variances; MS Outlook
b. Budget line based explanation of key variances;
c. Project based explanation of key variances.
The report shall be accompanied by a list of cost savings made during the
month. The list shall specify the budget line, the amount saved and proposed
utilization of saved resources. In addition, the report shall specify the
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modifications in the scheduling of activities.
The CEO, in consultation with the CFO, shall evaluate the report. The CEO CEO;
or the CFO may require additional explanation to the variations and may
-
further investigate the variance(s), if considered necessary. CFO
1.005.004 Make Decision Responsible Tool
In view of explanations provided by the budget owner and supporting

analysis performed, the CEO may make appropriate decisions to ensure
achievement of targets or utilization of surplus resources. The decision may CEO -
necessitate budget modification, which shall trigger Process 1.008.000:
Budget Modification.
6.5.3 Budget Monitoring Process – quarterly basis
Within One (1) working day from the date of the monthly financial closing
pertaining to last month of a quarter, the Budget Owner or his designated
officer shall generate budget comparison reports.
Annexure
Budget Owner/
format provided in Annexure E5: Quarterly Budget Monitoring Report. The Officer
report shall be completed by the designated officer which shall be submitted MS Outlook
to the Budget Owner within Six (6) working days from the date of relevant
monthly financial close.
The Budget Monitoring report shall be submitted to the CEO within Seven
(7) working days from the date of relevant monthly financial close.
The report shall cover the following areas:

a. Budget category based explanation of key variances; Annexure
b. Budget line based explanation of key variances; Budget Owner/
Designated E4;
Officer
The report shall be accompanied by a list of cost savings made during the MS Outlook
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-
1.006.004 Make Decision Responsible Tool
In view of explanations provided by the budget owner and supporting

analysis performed, the CEO may make appropriate decisions to ensure
achievement of targets or utilization of surplus resources. The decision may CEO
necessitate budget modification, which shall trigger Process 1.008.000:
Budget Modification.
The quarterly report shall be submitted to the Finance Committee. Following

submission to the Finance Committee, the quarterly report shall be submitted CFO -
to the BoD within Fifteen (15) working days from the date of financial close.
6.5.4 Budget Monitoring Process – annual basis
Within Three (3) working days from the date of the monthly financial closing
pertaining to last month of the FY, the Budget Owner or his designated
officer shall generate budget comparison reports.
Annexure
Budget Owner/
format provided in Annexure E6: Annual Budget Monitoring Report. The Officer
report shall be completed by the designated officer which shall be submitted MS Outlook
to the Budget Owner within Ten (10) working days from the date of relevant
monthly financial close.
The Budget Monitoring report shall be submitted to the CEO within Twelve Annexure
Budget Owner/
(12) working days from the date of relevant monthly financial close. E6;
Designated
The report shall cover the following areas: Officer
a. Budget category based explanation of key variances; MS Outlook
b. Budget line based explanation of key variances;
The report shall be accompanied by a list of cost savings made during the
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-
The annual report shall be submitted to the BoD within Fifteen (15) working
days from the date of financial close. CFO -
6.6 Budget Modification

The budget modification shall be avoided in order to maintain an effective control over performance evaluation. No
modification in annual budget shall take effect unless authorized by the CEO. In case of a substantial modification,
the modified budget shall be authorized by the BoD.
A budget modification shall only be made where such modification is expected to support management controls
over the programmatic and operational activities. A budget modification may be made due to various factors,
including but not limited to the following:
a. Errors in the budgeting process due to arithmetical errors or lack of coverage of activities;
b. Unforeseen rise in unit rates;
c. Addition of projects and funding, not originally included in the budget;
d. Savings in unit rates;
e. Delay or rescheduling of underlying activities;
f. Decisions made during budget monitoring activities, etc.
A modification in the timelines or rescheduling of activities shall not require a formal authorization, however, the
budget owner shall be responsible to intimate the change as part of the next due budget monitoring report.
Following process shall be followed for modifying budgets:
1.008.001 Raise Request Responsible Tool
The relevant Budget Owner or his designated officer shall raise budget -
Budget Owner/
request. The request shall specify the following:
Designated
a. The contextual information affecting the modification; Officer
b. The rationale for modification;
c. Potential financial impact of the modification.
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The request shall be forwarded to the CFO for financial analysis.
Where the modification is made as a result of budget monitoring reviews by

the CEO or the BOD, a request shall not be required. In such circumstances,
activity 1.008.004 shall be triggered upon directions made by the CEO or the
BoD, as applicable.
1.008.002 Review Request Responsible Tool
Upon receiving the request, the CFO shall direct the Manager – Finance to
conduct the financial analysis of the request. The analysis shall comprise of
the following activities:
a. Verify the financial utilization;

b. Where an increase is requested, whether sufficient funding is CFO;
MS Outlook
available to meet the financial requirements;
c. Where surplus funds are identified, whether the alternate use merits Manager –
Finance MS Excel
such transfer (only where funding constraints are or expected to
arise).
Based on the analysis performed by the Manager – Finance, the CFO shall
accordingly make recommendation to the CEO/ BoD, as may be applicable.
1.008.003 Evaluate Request Responsible Tool
Once the recommendation is received from the CFO, the CEO shall evaluate
the allowability of the request by evaluating the following:
a. The recommendation made by the CFO;

b. The rationale provided by the Budget Owner.
CEO
Where the CEO is satisfied with the rationale, the CEO may grant -
authorization or submit his recommendation to the BoD, if applicable.
Recommendation to the BoD shall be accompanied by modified budget, and
will trigger activity 1.008.004.
Where the CEO considers that a modification may not be an appropriate

solution to the issue raised by the Budget Owner, he shall accordingly
communicate his decision to the CFO and the relevant Budget Owner.
The BoD, upon receiving the recommendation made by the CEO, shall MS Excel
CEO
review and analyze the rationale and modified budget. Where the BoD is
satisfied that the rationale is appropriate and the budget has accordingly been
modified, the BoD may authorize the request. While authorizing the request,
the BoD may attach certain conditions for compliance prior to or subsequent
to affecting a budget modification.
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Where the BoD considers that a budget modification is not justifiable in the
available circumstances, it shall discuss the matter with the CEO to reach
upon a conclusion.
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7. Treasury Management
This chapter explains the policies and procedural guidance for effectively managing and utilizing the available cash
resources of TransPeshawar. The chapter aims at ensuring development and implementation of an effective and
transparent mechanism for receiving, utilizing, tracking and reporting of funding provided by the development
partners and KP Government.
The chapter covers following key areas:
a. Periodic cash forecasting;

b. Utilization of surplus cash resources (Investment mechanism);
c. Establishment and maintenance of funds flow mechanism(s);
d. Authorization limits;
e. Petty cash management;
f. Bank account management;
g. Bank receipts and payments;
h. Cheque book(s) management;
i. Bank reconciliations.
7.2 Key Governing Policies and Principles

The treasury management function shall be performed under the broad guidance of following key policies and
principles:
a. The F&A department shall be the owner of treasury management function. It shall be the responsibility of
F&A department to maintain and strengthen controls over funds utilization;
b. Surplus funds shall be invested in profitable avenues, in accordance with the mechanism provided in this
Manual;
a. Dedicated bank accounts shall be maintained at the Head Office and field office (if any) Levels. The bank
accounts shall be operated in accordance with the requirements laid down in the respective funding
agreements.
c. Segregation controls shall be effected by distributing roles and responsibilities amongst staff for recording
of expenditure, authorizing of expenditure, payments and bank reconciliations;
7.3 Cash Forecasting
7.3.1 Core Policy

Cash forecasting shall be performed, covering following planning horizons:
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a. Annual forecast;
b. Quarterly forecast; and
c. Monthly forecast.
7.3.2 Forecasting and Monitoring
7.3.2.1 Annual forecasting
1.009.001 Gather Information Responsible Tool
The Manager – Finance shall prepare cash forecast for the annual planning
period, covering monthly and quarterly information. The forecast shall be
prepared using template provided in Annexure F: Cash Forecast. The
forecast shall be submitted to the CFO at least Ten (10) working days prior to
the commencement of next financial year. Manager –
Finance MS Excel
The forecast shall take into account the annual approved budget, the terms
and conditions agreed with the suppliers and expected flow of funds from
development partners. Other basis may be provided by historical trends.
1.009.002 Evaluate Forecast Responsible Tool
The CFO shall review the forecast and evaluate as to whether the forecast
appropriately and accurately quantifies the cash flows and their timing within
months and quarters.
During the evaluation, the CFO may ask for additional information or further
supporting analysis. While evaluating the forecast, the CFO may request for CFO MS Excel
submission of a revised cash forecast.
In case the cash forecast is considered appropriate, subject to review and

further updates, the CFO shall submit the cash forecast to the CEO at least
Five (5) working days prior to the commencement of next financial years.
1.009.003 Authorize Forecast Responsible Tool
The CFO shall provide adequate explanations to the CEO for conducting
evaluation of the forecast. Based on the explanations provided by the CFO,
and performing additional analysis, as deemed necessary, the CEO shall CEO MS Excel
authorize the cash forecast.
7.3.2.2 Forecast Reviews
1.010.001 Gather Information Responsible Tool

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The Manager – Finance shall prepare cash forecast review report using
template provided in Annexure F: Cash Forecast. The forecast review report
shall be submitted to the CFO at least Five (5) working days prior to the Manager –
Finance MS Excel
commencement of next month. The forecast review report shall provide
comprehensive explanation on the variances and provided updated forecasts
for review and authorization.
1.010.002 Evaluate Forecast Review Report Responsible Tool
The CFO shall review the forecast and evaluate as to whether the
explanations are appropriately provided and revised forecast, if applicable,
appropriately and accurately quantifies the cash flows and their timing within
remaining months and quarters.
During the evaluation, the CFO may ask for additional information or further
supporting analysis. While evaluating the forecast, the CFO may request for CFO MS Excel
submission of a revised cash forecast.
In case the cash forecast is considered appropriate, subject to review and

further updates, the CFO shall submit the cash forecast to the CEO at least
Two (2) working days prior to the commencement of next financial years.
1.010.003 Authorize Forecast Review Report Responsible Tool
The CFO shall provide adequate explanations to the CEO for conducting
evaluation of the forecast. Based on the explanations provided by the CFO,
and performing additional analysis, as deemed necessary, the CEO shall
authorize the cash forecast.
CEO MS Excel
Where the CEO and CFO are satisfied, on the basis of review of cash forecast
review report, that sufficient surplus funds are available for making
investment(s) into profitable ventures/ avenues, process 1.011.000 shall be
triggered.
7.4 Investment
7.4.1 Core Policy
 The BoD shall authorize investment(s) only in permissible investments (refer section 7.4.2), while ensuring that
only un-restricted funds are utilized for making such investment(s). Investment portfolio shall remain sufficiently
liquid to meet the operating requirements that may be reasonably anticipated. The investment portfolio shall be
managed with the objective of attaining a competitive rate of return, given the investment constraints.
 The members of Finance Committee, the CEO and CFO shall refrain from an activity, personal or official, that
could result in a conflict with proper execution and management of the investment portfolio.
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 The members of Finance Committee, the CEO and CFO shall disclose any material interest in financial
institutions in which they conduct business. They shall further disclose any personal financial/ investment
positions that could be related to the performance of investment portfolio.
 In case a conflict of interest exists, such interested member of Finance Committee, the CEO or the CFO, if
applicable, shall be disqualified for participation in voting related to decisions of investment.
 The total exposure in a single investment shall not exceed 20% of the total investment portfolio of
TransPeshawar. The limit shall not be applicable in case of investment in real estate.
7.4.2 Permissible Investments

Investments shall be made in the following permissible investments:
a. Defense Finance Certificate (DFC);
b. National Savings Certificates (NSC);
c. Pakistan Investment Bonds (PIBs);
d. Term Deposit Receipts (TDRs);
e. Fixed Deposits Receipts (FDR) and
f. National Investment Trust (NIT) units.
Investments shall be not made in the following permissible investments:
a. Shares listed on stock exchanges, in and outside Pakistan;
b. Commodities market; and
c. Any other investment not included in permissible investments.
The members of Finance Committee, if so unanimously authorized by the BoD, may authorize investment into an
investment, not specified above. The decision and evaluation made by the BoD shall be made part of the minutes of
the BoD meeting in which such decision is made.
7.4.3 Investment and Divestment Decisions
1.011.001 Prepare Investment Proposal Responsible Tool
The Manager – Finance shall develop investment proposal upon identification MS Excel
Manager –
of free cash flows during the performance of Process 1.010.000: Forecast
Reviews. Finance
The proposal shall perform an extensive analysis, which shall cover the
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following:
a. Evaluation of key economic, market and political risks associated

with the investment decision along with the relative likelihood and
potential value of loss;
b. Gather market reports, if available, regarding the potential investment

avenue;
c. Present value analysis of cash inflows and outflows associated

withthe investment decision;
d. Undertake scenario analysis by conducting scenario analysis.
The proposal shall be submitted to the CFO within Ten (10) working days
from the date of consensus made between the CEO and CFO in this regard, as
a result of Forecast Review process.
1.011.002 Evaluate Proposal Responsible Tool
The CFO shall evaluate the appropriateness of investment proposal. The CFO
shall also consider any significant developments, subsequent to development
of investment proposal that may have adverse/ counter effect on the
investment decision.
The CFO shall ensure that:
a. Evaluation of key economic, market and political risks has been

appropriately performed;
b. The cash flow evaluation has been accurately prepared, covering all CFO MS Excel
aspects of the investment decision;
c. The discount rate has been appropriately applied;
d. Funds are being allocated in a permissible investment; etc.
While evaluating the investment proposal, the CFO may require additional
information or analysis. Upon completion of review by the CFO, the
investment proposal shall be submitted to the CEO.
1.011.003 Recommend Proposal Responsible Tool
The CEO shall consider that the investment proposal is aligned with the MS Excel
CEO
strategic objectives of TransPeshawar, the benefits associated with the
investment exceed the costs, key risks are adequately safeguarded or their
likelihood is considered remote on the basis of professional judgment and
expert opinion available in the form of survey reports and market research.
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The CEO may require additional analysis to satisfy himself prior to making a
decision.
Where the CEO considers that certain adverse events have occurred
subsequent to principle decision of making an investment, which may
adversely affect the estimates of return and risks, the CEO may suspend the
investment proposal.
Where the CEO is satisfied that the investment proposal is appropriately

developed and events do not warrant a suspension of investment decision, he
shall forward the investment proposal to the Finance committee of the BoD
along with his analysis and recommendation.
The Finance Committee shall evaluate the investment proposal. It shall

consider whether the investment proposal is aligned with the strategic
objectives of TransPeshawar, the benefits associated with the investment
exceed the costs, key risks are adequately safeguarded or their likelihood is
considered remote on the basis of professional judgment and expert opinion
available in the form of survey reports and market research.
The Finance Committee may require additional analysis to satisfy itself prior
to making a decision. Finance
Committee MS Excel
Where the Finance Committee considers that certain adverse events have
occurred subsequent to principle decision of making an investment, which
may adversely affect the estimates of return and risks, the Finance Committee
may suspend/ reject the investment proposal.
Where the Finance Committee is satisfied that the investment proposal is

appropriately developed and events do not warrant a suspension/ rejection of
investment decision, it shall authorize the investment proposal.
If applicable, a divestment proposal shall be prepared in accordance with the directions made by the BoD on the
basis of recommendations made by the CEO and CFO.
7.4.4 Maintenance of Investment Certificates

The responsibility for maintenance of investment scripts and certificates shall rest with Manager – Finance.
Investment certificates shall be kept in a secure bank locker or other location, as authorized by the CFO.
7.4.5 Monitoring the Investment Portfolio

The CFO shall present an Investment Monitoring Report to the Finance Committee, evaluating the performance of
investment. The report shall be presented during each quarterly meeting of the Finance Committee. The key
contents of the report shall include, but not limited to, the following:
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a. Return on investment earned during the year;

b. Comparison with return of similar amount in other investment avenues;
c. Assessment on potential risks and their likelihood;
d. Key deviations, if any, from the assumptions made in the investment proposal;
e. Recommendations for maintaining/ disposing the investment along with rationale.
Activity No. Description Frequency Responsibility

1. Monitoring the market performance Weekly Manager –
Finance
2. Comparing actual results with expected returns Weekly Manager –
Finance, CFO
3. Preparing monthly monioring report for CEO Monthly CFO
4. Preparing quarterly monioring report for Committee Quarterly CFO
7.5 Authorization Limits

Below is the listing of authorized signatories, in respect of Head Office bank accounts:
Group At Head Office Level

1 CEO
Senior Manager – Program
Manager – Social Mobilization
2 CFO
Manager – Finance
The below table specifies the limits and authority for authorization of cheques:
S.no. Description At Head Office Level At District Level

Bank Signatories
1. Up to PKR 100,000 Joing Signature by: N/A
Any One Group 1 member and
Any One Group 2 member
2. Above PKR 100,000 Joint Signature by: N/A

CEO and CFO
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3. Up to PKR 50,000 N/A Joint Signature by:

and
4. Above PKR 50,000 N/A Joint Signature by:

Group 1 members
The CEO may modify the composition or authorization limits, in order to ensure efficiency, while giving due care
to the significance of maintaining effective controls over authorization of expenses and payments. While making
such modification, the CEO shall ensure that segregation controls are ensured through modification, if any.
7.6 Petty Cash Management

7.6.1 Key Governing Policies
Petty cash transactions shall be carried out where:
a. banking channels are not available;
b. the size of a financial transaction is less than PKR 15,000; and
c. Petty cash of PKR 100,000 will be maintned at head office.
No transaction, exceeding PKR 15,000 shall be carried out through petty cash.
While remaining within the maximum limit prescribed above, the CFO shall determine the petty cash limits in view
of the weekly average level of cash transactions. The management of petty cash shall be assigned to the designated
officer.
7.6.2 Key Cash Procedures
Below is the summarized explanation of key petty cash procedures:
S. no. Activity Description Tool Prepared by Reviewed by Authorized by

1. Approval of petty cash limits Annexure G Accounts Manager – CFO
Assistant Finance
2. Replenishment of petty cash Annexure H Accounts Manager – CFO
along with submission of Assistant Finance
expense detail Annexure I Accounts Manager – CFO
Assistant Finance
3. Handing over of petty cash Annexure J Accounts Manager – CFO
Assistant Finance
4. Recovering petty cash Accounts Manager – CFO
through settlement of cash/ Assistant Finance
bank advances
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7.7 Bank Account Management

Following key policies shall be followed for managing the banking operations:
a. Bank account(s) may only be opened, closed or suspended with due authorization by the BoD or other
person so authorized by it, and evidenced through minutes of its various meetings;
b. At all time, the bank accounts shall be operated through dual signatories;
c. Dedicated bank account shall be maintained for development partner. The bank accounts shall be operated
in accordance with the requirements laid down in the respective funding agreements;
d. Financial position and ratings issued by the State Bank of Pakistan (“SBP”) of banks shall be assessed on a
bi-annual basis to ensure that TransPeshawar’s funds are maintained with sound banking institutions.
Please refer Section 7.5 for bank signatories and authorization limits at the Head Office level.
7.7.2 Opening and Closing of Bank Account

The Manager – Finance shall monitor the financial position and performance of existing and other banks, operating
in the Head Office level. This may be performed through:
a. Review of half yearly/ annual financial statements;

b. Credit ratings issued by the SBP;
c. Review of banking surveys issued by various research organizations;
d. Comparison of rates and other terms offered by the banks;
e. Updates provided by the bank(s) to TransPeshawar along with its specialized terms and conditions.
If considered necessary to open a new bank account in compliance with the treasury management policies specified
in the Manual, the CFO shall request the Manager – Finance to complete an account opening form, upon receiving
authorization by the competent authority so designated by the BoD (if applicable).
Where the CFO considers that a bank account shall be closed in view of bank’s monitoring or scale of activity in a
bank account, approval shall be obtained from the competent authority for the closure of bank account.
Key Note: Immediate action shall be taken to transfer funds from a bank with negative performance indicators and
market reports.
The list of bank account(s) opened and/ or closed during a period shall be reported to the BoD for consideration and
formal ratification during its meeting.
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7.8 Bank Payments

Unless constrained by the funds availability or prior commitments, the bank payment process shall be carried out in
an efficient manner to ensure timely discharge of liabilities to internal and external parties. The payment process
may be run in daily batches of size to be determined by the Manager – Finance or the payments may be processed
on First-In First-Out basis. Following process shall be followed for undertaking bank payments:
1.012.001 Raise Payment Request Responsible Tool
The designated staff of the relevant department/ section shall raise a payment
request. The requesting staff shall accurately and completely enter data in the
required fields of payment request. The supporting documentation including
expense authorization, contract, activity report(s), invoice(s), calculations, Designated
Staff MS Outlook
etc. shall be attached with the payment request. Once the request is processed,
the designated staff shall send an email to the Accounts Assistant and
intimiate about the approval.
1.012.002 Review Request Responsible Tool
The Accounts Assistant shall check if the payment request is accurately

prepared. If the request is accurately prepared, the Accounts Assistant shall
signify his review. Accounts Assistant shall also perform checks to ensure
that payment is not duplicated and has been authorized by competent
authority.
Accounts
Assistant MS Outlook
Where a request is not considered appropriate, the Accounts Assistant shall
accordingly send an email to the concerned designated staff duly identifying
the deficiency.
The request shall be further processed once the deficiency is removed or

settled by the concerned designated staff.
1.012.003 Verify Request Responsible Tool
The Manager - Finance shall verify the request through review of supporting MS Outlook
Manager –
documentation and calculations, checks on compliance with the applicable
policies and procedures, review of evidence of expense authorization, etc. Finance
Where applicable, the Manager – Finance shall ensure that the tax has been
correctly withheld in accordance with the provisions of Income Tax
Ordinance, 2001, as specified in Chapter 15: Taxation.
Where a request is not considered appropriate, the Manager – Finance shall

accordingly send an email to the Accounts Assistant duly identifying the
deficiency.
Once the deficiency is removed, the Accounts Assistant shall update the
request and send an email of the updated request to the Manager – Finance
intimating the updation.
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Where the Manager – Finance is satisfied that the request has been prepared/
updated accurately, he shall assign REVIEWED status to the request. While
reviewing the request, he shall send an email to the CFO, requesting for
authorization of request.
The CFO shall authorize the payment request upon completion of his review.
The CFO may request for delaying the payment in view of cash position or
other circumstances. CFO MS Outlook
While authorizing the request, the CFO shall assign APPROVED status to the
request.
1.012.005 Prepare Payment Responsible Tool
The Accounts Assistant shall prepare Bank Payment Voucher (“BPV”),

which shall make reference to the payment request against which the BPV is
prepared. The Accounts Assistant shall correctly incorporate the payment
details including relevant account heads, amounts, parties, account heads, PO/
contract reference, etc. into the BPV. Meanwhile, the Accounts Assistant
shall also prepare crossed cheque in favor of payee for authorization by the Accounts
Assistant Cheque Book
competent authority.
Once the BPV is prepared, the Accounts Assistant shall send an email to the
Manager – Finance, identifying that the BPV for the particular payment
request has been raised.
1.012.006 Authorize Posting Responsible Tool
The Manager – Finance shall review and verify the accuracy of the BPV. He BPV
Manager –
shall asses//verify that:
Finance
a. The account heads are correctly charged;
b. The amounts are correctly charged;
c. Tax withholding has been correctly made in accordance with
prevailing tax rate(s);
d. The parties have been accurately identified, if applicable;
e. The reference to payment request is accurate;
f. Cheque number and bank have been correctly used;
g. Other fields have been correctly completed; and
h. Duplicate payment checks have been performed.
Upon satisfactory completion of checks, the Manager – Finance shall post the
payment into Books of Accounts. While posting the payment, the Manager –
Finance shall direct the Accounts Assistant to obtain signatures on the
cheque(s) in accordance with applicable cheque authorization limits.
The Manager – Finance shall maintain a memorandum record of postings

53
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made during a day specifying the cheque number, date, beneficiary name, and
amount.
1.012.007 Sign Cheque Responsible Tool
The Accounts Assistant shall submit the cheque book to the signatories within
One (1) working day from the date of posting by the Manager – Finance, duly
completing the folio fields. Accounts
Assistant; MS Excel
Upon signing of cheque, the Accounts Assistant shall scan the original cheque
and attach it with the BPV.
1.012.008 Issue Cheque Responsible Tool
Subsequently, the cheque shall be issued to the beneficiary with due

acknowledgement, where possible. If the terms with the beneficiary or
practice so require, the payment officer shall prepare funds transfer
instruction for the bank which shall be duly signed by the Manager – Finance
and CFO.
The cheque issuance or funds transfer shall be completed within One (1)
working day from the signing of cheque.
Accounts
The cheque dispatches/ funds transfer shall be logged through Annexure K_ Assistant; MS Excel
Cheque Dispatch Log. The Accounts Assistant shall submit the log to
Manager – Finance at the day-end.
The Manager – Finance shall check the accuracy of log through reconciliation
with the memorandum record of postings maintained under activity
1.012.006. If found correct, the Manager – Finance shall authorize the log.
The Accounts Assistant shall be responsible for maintaining complete log of
payments to ensure effective controls over duplicate payments.
7.9 Bank Receipts

Bank receipts shall be recorded in the Books of Accounts through regular monitoring of bank accounts. Bank
account monitoring shall be monitored through obtaining bank statements on a fortnightly basis or retrieving bank
statements through e-banking facilities (where available).
The Accounts Assistant shall identify transactions through review of bank statements. The Accounts Assistant shall
raise voucher for bank receipt by completing the Bank Receipt Voucher, along with supporting documentation. The
voucher shall be reviewed by the Manager – Finance and shall be authorized for positing by the CFO.
54
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7.10 Cheque Book Management
Cheque books for all bank accounts at the Head Office shall remain within the custody of Accounts Assistant. A
register of cheque books shall be maintained by the custodian. The Log shall be managed using template provided
in Annexure L: Cheque Book Log.
7.11 Bank Reconciliation

Following key policies shall be followed for processing bank reconciliation statements:
a. Monthly bank reconciliation statements shall be prepared for all bank accounts, regardless of the level of
volume in a bank account or the location of bank account;
b. Bank reconciliations shall be prepared prior to authorization of monthly financial close;
c. Cheques remaining outstanding for more than Six (6) months shall be reversed with due authorization by
the Manager – Finance and CFO.
7.11.2 Process Description

Following key policies shall be followed for processing bank reconciliation statements:
S. no. Activity Description Responsibility Timeline Tool

1. Preparation of bank reconciliation Accounts Assistant 5th of following Annexure M;
statement month Bank Statement(s);
2. Review of bank reconciliation Manager – Finance Prior to Monthly Annexure M;

statement Financial Bank Statement(s);
Closing
3. Authorization of bank reconciliation CFO Prior to Monthly Annexure M;

statement Financial Bank Statement(s)
Closing
Complete records of bank statements shall be maintained. The Accounts Assistant shall be responsible for
maintaining the authorized version of every bank reconciliation statement with the GL records.
55
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8. Property and Equipment

This chapter explains the policies and procedural guidance for managing the fixed assets, deployed within the
overall geographical domain of TransPeshawar.
 An expenditure shall be recognized as a tangible long term asset on the basis of recognition criteria specified in
Chapter 2 of the Manual.
 Depreciation of items of Property and Equipment, other than land, shall be depreciated at the rates specified in
section 8.7.
 Please refer Chapter 2 for accounting policies governing the subsequent measurement of items of Property and
Equipment.
 All items of Property and Equipment, whether owned or received as repatriable items, shall be assigned code in
accordance with the methodology specified in section 8.5.
 Insurance of all key items of property and equipment shall be obtained at an adequate value.
 All decisions regarding additions/ deletions and write-offs of Property and Equipment shall be ratified by the
BoD in its meeting where the annual financial statements are authorized.
8.3 Fixed Assets Additions
An expenditure shall be classified as a fixed asset in accordance with the prevailing accounting policies. Upon
delivery of an item of property and equipment and completion of inspection process, the Manager – HR & Admin
shall intimate the F&A department with regards: a) quantity and description, b) cost, c) PO/ Contract reference of
the asset. The Accounts Assistant shall record the asset in Fixed Asset Register as per the guidance provided by
Manager – Finance.
8.4 Fixed Assets Register

The Accounts Assistant shall be responsible for maintaining an accurate and updated fixed assets register. The fixed
assets register shall be authorized as part of monthly, quarterly and annual financial closing.
The fixed assets shall be updated within One (1) working day, from the date of following activities:
a. Addition of item(s) to property and equipment;

b. Addition or modification to the cost and accumulated depreciation of an item of property and equipment
due to revaluation, major repairs, etc.;
c. Deletion of item(s) from property and equipment;
d. Theft, permanent damage or other loss of an item of property and equipment;
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e. Transfer from one owner to another; and

f. Transfer from one location to another
The template for fixed assets is provided below:
57
Draft Finance Manual
_________________________________________________________________________________________________________________________________________________________
Particulars Date of Addition Deletion Cost Addition Disposal Writeoff Quant Dep Dep Dep Disposal Write Adjust Acc N
Acquisition Quantity Quantity Quantity ity Rate Period for the Dep off ment Dep B
Period Dep V
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8.5 Coding of Fixed Assets

Coding of an item of property and equipment shall be performed by the HR & Administration department. The
Manager – HR & Admin shall assign a team member to assign codes to the items of property and equipment upon
their addition to the accounting records. The coding shall be performed prior to issuance of asset to an employee or
its deployment at a particular location.
Fixed assets coding shall be performed as per following methodology:
Level Level Description Code (example)

1. Type of Asset 01
2. Location 01
3. Owner Department 01
4. Unique Code 0001
8.6 Issuance of Fixed Assets

Prior to commissioning or issuance of an asset, the asset shall remain within the custody of Manager – HR &
Admin, who shall be responsible for ensuring safe maintenance and custody of fixed assets. A fixed assets item
shall be issued upon due authorization of an asset requisition form by the Manager – Finance, which shall be
developed as per the following template:
Level
S.no. _______________________
Name of Requestor Signed: ___________________
Date of Request
Justification:
Asset Code
(to be filled by issuer)
Present Location
Physical Condition
Other notes (mileage,

useage, etc.)
Reviewed by: Date: _________________
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Authorized by: Date: _________________
Upon receiving the authorized Asset Issuance Form, the Manager – HR & Admin shall issue the asset to the
approved requestor, while a receipt acknowledgment shall be obtained on the requisition form. A serially numbered
record of requisition forms shall be maintained by the HR & Admin section.
8.7 Depreciation
An item of property, plant and equipment shall be depreciated in accordance with the accounting policies, specified
in Chapter 2 of the manual. Following depreciation rates shall be applied to class of items of property and
equipment:
S. no. Class of Asset Rate (%)

1. Land -
2. Buildings 5%
3. Furniture and fixtures 15%
4. Computers and ancillary equipment 33%
5. Office equipment 20%
6. Vehicles 20%
8.8 Writing Off of Fixed Assets

An item of property and equipment, considered no longer useful due to a permanent damage or loss, may be
demolished, destroyed, scrapped or disposed-off, subject to the recommendation of the “Asset Verification
Committee”, which shall be constituted by the CEO, comprising of following members:
a. One member from Programs Department;

b. One member from F&A department; and
c. One member from Administration department.
Where, upon completion of its review, the committee is satisfied that an asset shall be written-off, the committee
shall submit its recommendation to the CEO along with an estimated reserve price through Annexure N: Assets
Write-Off Form. The CEO shall review the recommendations made by the committee. Where the CEO is satisfied
that an asset may be written-off, he shall intimate the CFO in this regard. The CFO upon receipt of instructions,
shall request the Manager – Finance to accordingly record appropriate accounting entries. The asset so written-off
shall be included in the list of assets held of disposal.
Net book value of the asset shall be written off at the time of disposal of the respective asset. Resulting gain or loss
on the disposal shall be recorded accordingly. Assets with a residual market value shall be sold to a third party
through a tender process. Assets with residual market value below cost of tendering process shall be disposed off
through ordinary quotations enquiry process. Assets written off shall be disposed off / scrapped / sold within three
months of being written off.
8.9 Disposal of Fixed Assets
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Assets not in use shall be classified as “held for sale”. Assets identified as not in use (write-off cases) shall not be
subject to a depreciation charge. On disposal of assets, the Manager – HR & Admin or designated staff shall
complete Annexure O: Asset Disposal Form. The sale proceeds shall be obtained through crossed cheque in the
name of TransPeshawar. The completed form along with cheque shall be submitted to the Manager – Finance
within One (1) working day from the date of disposal transaction.
Based on the completed Asset disposal form, the designated staff shall record the disposal in the accounting system.
Any gains or losses on the disposal of assets shall be credited or debited to “Gain or loss on disposal of asset”
account.
Development partner’s regulations or guidelines, related to “asset disposition” (for donated assets or asset acquired
through grant assistance) shall be followed, where so specified by a development partner and not aligned with the
policies prescribed in the Manual.
8.10 Physical Verification of Fixed Assets

The F&A department shall perform a reconciliation of accounting and physical records of fixed assets on a bi-
annual basis. The activity shall be supervised by the Manger – HR & Admin, and shall be performed by the
designated staff. The nature and extent of physical verification procedures shall be determined by the Manager –
Finance in consultation with the CFO.
The physical inspection team shall comprise of:
a. Designated team member from Finance function;

b. One or more team members designated by Manager – Admin & HR;
c. One member of IA team (as an observer only).
The team shall complete its verification report using template provided at Annexure P: Physical verification
Report, within Three (3) working days from the date of completion of physical verification. Where differences are
identified by the team, the Manager – Finance shall submit the report to the CFO and Manager – Admin & HR,
along with his recommendation. Adjustments to accounting and physical records shall be made in accordance with
the directions made by the CFO.
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9. Intangible Assets
This chapter explains the policies and procedural guidance for recording and subsequent measurement of intangible
assets.
9.2 Initial Recognition

TransPeshawar shall recognize an intangible asset if the cost of the asset can be measured reliably and it is probable
that the expected future economic benefits will flow towards the entity.
The cost of a separately acquired intangible asset shall comprise of:
a. its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates; and
b. any directly attributable cost of preparing the asset for its intended use
The directly attributable costs shall include the following:
a. costs of employee benefits arising directly from bringing the asset to its working condition;
b. professional fees arising directly from bringing the asset to its working condition; and
c. costs of testing whether the asset shall be functioning properly.
Expenditure that shall not be part of the cost of an intangible asset includes:
a. costs of introducing a new product or service (including costs of advertising and promotional activities);
and
b. Administration and other general overhead costs.
The following costs shall also be expensed out:
a. Start-up costs;
b. Training costs;
c. Advertising and promotional costs; and
d. Relocation or reorganization costs.
9.3 Amortization
Intangible asset shall be amortized in accordance with the estimate of useful life. Amortization of an intangible asset
shall be charged to the profit and loss account using the straight line method so as to write off the cost of the assets
over its estimated useful lives.
Amortization on additions to intangible assets shall be charged from the month in which an asset is acquired or
capitalized while no amortization shall be charged for the month in which the asset is disposed-off/ retired.
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9.4 Common Accounting Entries
Section Transaction Debit (PKR) Credit (PKR)

8.2 Addition to intanible assets Asset (relevant A/c head) Bank
Addition to intangible assets Asset (relevant A/c head) Deferred Grant
8.3 Amortization of intangible asset Amortization Accumulated

(relevant A/c head) Amortization
(relevant A/c head)
Deferred Grant Grant Income

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10. Current Assets

This chapter provides policies and procedures to effectively record, measure and control current assets, except for
cash and bank balances, which shall be complied in the day-to-day management of current assets.
This chapter covers guidance on the following key account balances:
S.no. Account title Secion Refernce

1. Advances 10.2
2. Deposits, advances, prepayments and other receivables 10.3
3. Inventory 10.4
10.2 Advances
Advances shall comprise of the following:
a. Advances to staff – official;

b. Advances to staff – travel;
c. Advances to staff – against salary; and
d. Advances to suppliers.
Following activities shall be performed for the authorization, payment, recording and reporting of advances to staff:
S.no. Activity listing Tool Responsible

1. Raise request for advance Annexure Q; Relevant Staff
Advance Policy
2. Review request for advance Annexure Q; Department Head

Advance Policy
3. Verify advance request Annexure Q; Manager – Finance

Advance Policy
3. Authorize advance payment Annexure Q; CFO

Advance Policy
4. Make advance payment Annexure K Accounts Assistant

5. Record advance payment Manager – Finance
6. Recover/ adjust advance Annexure R Accounts Assistant
Supportings
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10.2.1 Raise Request for Advance

The relevant staff shall raise request for advance (payment request). The amount of advance shall be calculated in
accordance with the advances policy, however, where an advance is requested for official purpose, the amount shall
be calculated on the basis of expected cost estimate.
10.2.2 Review Request for Advance

The relevant staff shall submit the completed Annexure Q: Request for Advance to the relevant department head.
The departmental head shall review the appropriateness of request and may authorize the request if considered
appropriate. The departmental head may modify the amount of request, while reviewing the request.
10.2.3 Recover/ Adjust Advance

Advances against salary shall be recovered through salary deduction, which will be determined in accordance with
the guidance provided by relevant policy.
o Salary for maximum Two (2) months can be advanced to an employee which must be adjusted within 4
months period.
o Official advance to employees for operational and program activities including Travel advance would
be adjusted within 15 days of completion of activity in order to ensure that expense is timely charged to
the relevant budget line.
o Advance to suppliers/Service provider would be given to Supplier in special conditions only.
o Advances against official purposes shall be liquidated through Annexure R: Advance Settlement form.
10.3 Deposits, Pre-payments and Other Receivables

Following activities shall be performed for the authorization, payment, recording and reporting of deposits and pre-
payments:
S.no. Activity listing Tool Responsible Reference

1. Raise request for payment Annexure Q/ Contract/ Invoice Relevant Staff 7.9
2. Review request for payment Annexure Q / Contract/ Invoice Department Head 7.9
3. Verify request for payment Annexure Q/ Contract/ Invoice Manager – Finance 7.9
3. Authorize payment Deposit Request/ Contract/ CFO 7.9
Invoice
4. Make payment Accounts Assistant 7.9
5. Record payment Accounts Assistant 7.9
6. Record/ adjust advance Annexure R; Accounts Assistant 9.2.3/

Supportings 6.10
7. Report deposit/ pre-payment Financial Closing Manager – Finance 10.3.1
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10.3.1 Report deposit/ pre-payments/ other receivables

Pre-payments and other receivables shall be calculated in accordance with the contractual terms and expiry of time
period. Following shall form basis for calculation and reporting of other current assets:
S.no. Type of Account Balance Base Source Responsible Example

1. Pre-payments Expired Time Contract/ PO Manager-Finance Rent
2. other receivables Pending Amount Contract Manager-Finance Donor receivable
10.4 Inventory
Inventories are assets that are utilized or consumed during the implementation of program activities and undertaking
repairs and maintenance of fixed assets items.
The cost of inventories shall comprise all costs of purchase and other costs incurred in bringing the inventories to
their present location and condition. The cost of purchase comprises the purchase price, import duties and other
taxes (other than those subsequently recoverable from the taxing authorities) and transport, handling and other costs
directly attributable to acquisition. Trade discounts, rebates and other similar items are deducted in determining the
costs of purchase.
The inventory items procured for utilization during the implementation of programme activities does not meet the
recognition criteria as an inventory item. However, in order to exercise effective control over these inventory items,
the Manager – HR & Admin shall maintain complete record of additions, movement and consumption of inventory
items held for utilization during programme implementation.
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11. Non-current Liabilities

This chapter specifies key accounting policies and procedures for recording and reporting of non-current liabilities.
Non-current liabilities shall be classified, recorded and subsequently measured in accordance with accounting
policies specified in Chapter 2 of the Manual.
S.no. Account title Secion Refernce

1. Deferred grants 11.2
2. Borrowings 11.3
11.2 Deferred Grants
11.2.1 Restricted Grants

Grants received for specific purposes and interest thereon shall be classified as restricted grants. Such grants shall
be transferred to income as grants to the extent of actual expenditure incurred there against. Expenditure incurred
against grant committed but not received shall be accrued and recognized in income and shall be reflected as
receivable from donors. Unspent portion of such grants shall be reflected as restricted grants in the balance sheet.
11.2.2 Deferred Capital Grants

Grants utilized for capital expenditure shall be transferred to deferred capital grant and shall be amortized as income
over the useful life of the respective asset. Grants received from a donor without any conditions shall be recognized
as income during the year of receipt.
11.2.3 Key Accounting Entries

S.no. Process Flow Action System Debit Credit Timeline
1. Receipt of funds or Record GL Bank/ Asset Deferred Grant Upon receipt
asset as grant Deferred Module (as applicable, equal (as applicable, of funds/
Grant to amount of funds or equal to amount asset
assessed value of of funds or
asset) assessed value of
asset)
2. Expenses under grant Recognize GL Deferred Grant Grant Income Financial
(terms compliance) Grant Module (equal to amount of (equal to amount Closing
Income expense) of expense) (Monthly/
Quarterly/
Annual)
3. Utilization of fixed Annexure N GL Deferred Grant Grant Income Financial
asset Module (equal to amount of (equal to amount Closing
expense) depreciation (Monthly/
expense) Quarterly/
Annual)
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11.3 Borrowings
11.3.1 Key Governing Policies and Principles
Borrowings shall be avoided in all circumstances, and shall only be obtained if considered necessary as a result of
expected funding gap calculated in accordance with the Cash Forecasting procedures specified in Section 7.3 of the
Manual.
Borrowing facilities shall only be obtained subject to authorization by the Finance committee of the BoD.
11.3.2 Obtaining Borrowing Facilities
1.013.001 Prepare Proposal Responsible Tool
The Manager Finance shall develop borrowing proposal upon identification

of a funding need identified during the performance of Process 1.010.000:
Forecast Reviews.
The proposal shall perform an extensive analysis, which shall cover the
following:
a. Financial and Situational Analysis indicating funding gap;
b. A discussion on the likelihood of the funding gap and possible

alternatives;
Manager
c. Rationale for resorting to borrowing option; Finance MS Excel
d. A comparative analysis of various borrowing alternatives along with

recommendation for most feasible option and required tenure;
e. Cash flow forecast for the utilization of borrowed funds

demonstrating the financial benefits.
The proposal shall be submitted to the CFO within Ten (10) working days
from the date of consensus made between the CEO and CFO in this regard, as
a result of Forecast Review process.
The CFO shall evaluate the appropriateness of borrowing proposal. The CFO MS Excel
CFO
shall also consider any significant developments, subsequent to development
of borrowing proposal that may have adverse/ counter effect on the
investment decision.
The CFO shall ensure that:
a. The rationale has been accurately reflected in the proposal;
b. The expected cash flows including borrowing costs have been

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accurately prepared, using correct discount rates;
c. Options analysis is accurately performed;
d. Whether a divestment option would be more feasible instead of

resorting to borrowing facility; etc.
While evaluating the borrowing proposal, the CFO may require additional
information or analysis. Upon completion of review by the CFO, the
borrowing proposal shall be submitted to the CEO.
1.013.003 Recommend Proposal Responsible Tool
The CEO shall consider that the borrowing proposal is aligned with the
strategic objectives of TransPeshawar, the benefits associated with the
borrowing exceed the costs, and options have been adequately evaluated.
The CEO may require additional analysis to satisfy himself prior to making a
decision.
Where the CEO considers that certain other sources have been identified CEO MS Excel
subsequent to principle decision of obtaining a loan facility, the CEO may
suspend the borrowing proposal.
Where the CEO is satisfied that the borrowing proposal is appropriately

developed and events do not warrant a suspension of borrowing decision, he
shall forward the proposal to the Finance committee of the BoD along with
his analysis and recommendation.
The Finance Committee shall evaluate the borrowing proposal. It shall

consider whether the proposal is aligned with the strategic objectives of
TransPeshawar, the benefits associated with the borrowing exceed the costs,
options have been adequately evaluated.
The Finance Committee may require additional analysis to satisfy itself prior
to making a decision. Finance
Committee MS Excel
Where the Finance Committee considers that certain sources have been
identified subsequent to principle decision of obtaining a loan facility, the
Finance Committee may suspend/ reject the borrowing proposal.
Where the Finance Committee is satisfied that the borrowing proposal is

appropriately developed and events do not warrant a suspension/ rejection of
the decision, it shall authorize the borrowing proposal.
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11.3.3 Key Accounting Entries
S.no. Process Flow Action System Debit Credit Timeline

1. Receipt of borrowed Record loan GL Bank Long Term Upon receipt
funds receipt and Module (at principal amount liability of funds
liability of loan) (at principal
amount of loan)
2. Accural of interest Record GL Interest Expense Interest Payble Financial
accrued Module (at amount of interest (at amount of Closing
interest expense for the interest expense (Monthly/
reporting period) for the reporting Quarterly/
period) Annual)
3. Repayment of loan as Record Loan GL Long Term liability Bank Completion
per loan terms payment Module (at principal portion (at principal of payment
of installment) portion of transaction
installment)
4. Payment of interest Record GL Interest Payble Bank Completion
payment of Module (at amount of interest (at amount of of payment
interest expense for the interest expense transaction
reporting period) for the reporting
period)
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12. Current Liabilities

This chapter summarizes procedures for recording, measuring and reporting of current liabilities under various
account heads. Current liabilities are liabilities that are expected to be settled within next 12 months or within the
normal operating cycle of TransPeshawar.
Examples of the Authority's current liabilities include:
o Retention Money
o Unearned revenue
o Trade payable
o Salaries payable
o Withholding tax payable
o Amounts withheld
o Accrued expenses
o Provisions
12.2 Retention money
Retention money shall be withheld from the payments to suppliers of goods, services or civil works in accordance
with the terms and conditions specified in the relevant Contract/ Purchase Order.
12.3 Unearned Revenue
When a passenger tops up a metrobus card, the cash received represents unearned revenue until the passenger
consumes the balance. When cash is received, following journal entry shall be passed:
Dr Cr
Bank XXX
Unearned revenue XXX
When the passenger consumes the credit, the revenue is recognized:
Dr Cr
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Unearned revenue XXX

Bus fare revenue XXX
12.4 Trade payables

Company's trade payables arise from its contracts with different service providers such as bus operator, security
services vendor, etc.
Contracts with the vendors typically requires the Company to pay invoices within 21-28 days of receipt.
Manager Finance shall prepare a list of outstanding bills by 15 th of each month and identify reasons for outstanding
invoices. An ageing analysis shall be prepared and presented to the CFO.
CFO shall follow up with the respective head of department and GM Admin & HR Wing non-clearance of invoices
under intimation to CEO.
12.5 Salaries and other employee benefits payable
Company shall accrue salaries expense at the period-end.

Company has a leave encashment policy which entitles each employee to encash leaves not availed at the end of
each year of his employment contract. Company shall accrue the leave encashment expense and create a
compensated absences liability.
12.6 Withholding tax payable
Company is required to withheld income tax, sales tax and sales tax on services. Since the tax deducted is to be paid
to the tax authorities, it is a current liability of the Company.
12.7 Amounts Withheld
The Authority may withheld amounts from service providers due to non-performance. The withheld amounts are
released when the service provider fulfills those obligations.
When withheld Dr Cr
Amounts payable to service provider XXX
Adjustment Account i.e. amounts withheld XXX
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When Released Dr Cr
Adjustment Account i.e. amounts withheld XXX
Amounts payable to service provider XXX
12.8 Accrued Expenses
Accrued expenses are expenses recognized in the books but which are yet to be paid. They give rise to current
liabilities because they are expected to be settled within the current operating cycle.
Company's accrued expenses include:
o Rent: rent shall be recognized at the month end regardless of actual payment.
o Utilities: where utility bills are not received, an estimated expense shall be recognized.
o Accrued operating expenses: in case a vendor for services doesn't present its invoice by the period end,
an estimated amount shall be accrued based on the contract.
12.9 Provisions
Provisions are amounts set aside for probable but uncertain obligations.
Company's provisions may arise from Company's leave encashment policy or from litigation against the Company.
The Authority has a leave encashment policy which entitles each employee to encash leaves not availed at the end
of each year of his employment contract. The Authority shall accrue the leave encashment expense as part of
salaries and create a compensated absences liability.
12.10 Journal Entries
Liabilities arise when an expense is incurred but not yet paid or capitalized purchases are made which are yet to be
paid. Recognition of liabilities shall involve the following scheme of entries:
Dr Cr
Expense/capital expenditure XXX
Liability (accounts payable, accrued expense, etc.) XXX
Liabilities are extinguished through payment which is recorded as follows:
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Dr Cr
Liability XXX
Bank XXX
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13. Revenue
This chapter summarizes procedures for recording and reporting of income under various sources.
13.2 Revenue
Company’s income consists mainly of revenue from its bus operations, branding (advertisements) and renting out of
corridor premises at various designated places.
Revenues include:
o fare collected from passengers
o Government Grants (subsidies)
o Rentals of premises
o advertisements on buses
13.2.1 Bus Fare

Bus fare revenue is recognized when the passengers use the Metrobus System and not when they purchase the
Metrobus tickets. Ticket usage will be generated from the system, and will be furnished to Finance section at the
end of each day. Manager IT will extract the report and will share with GM Operations who will review and submit
to CFO for recording revenue.
13.2.2 Government Grants

Government grants against expenses is received to subsidize the metrobus operations. Government grants shall be
recorded based on the approved budget. Currently, the business model of TransPeshawar is based on subsidy-free
operations. However, the provision is made to accommodate for any unseen conditionalities. The Finance section
will follow the procedures stipulated by Government to obtain the grants (subsidies) in TransPeshawar company
account.
13.2.3 Rentals of Premises

Several areas of corridor are allocated to rent-out for shops. The rentals received from the tenants will be
recongnized as revenue in accordance with contract agreement.
13.2.4 Advertisement on Buses and Corridor

The buses in operation and Corridor will also be used for Advertisements of different brands. The revenue from
advertisement will be recognized in accordance with the provisions of contract agreement.
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13.3 Procedure to Collect Revenue
Funds to be received by TransPeshawar shall be deposited in branch of TransPeshawar without delay in designated
branch.
All the cheques received are properly recorded by the Manager Finance in the General Ledger through a bank
receipt voucher (BRV). Complete supporting will be kept for record purpose. The bus fare collected a specific day
will be deposited in TransPeshawar bank account, the following business day.
The record must include the date, name of sender, amount, and purpose of all cheques received. All BRVs shall be
uniquely numbered. Manager Finance shall make a copy of each cheque.
Manager Finance will prepare a letter of acknowledgement, for all receipts
Any person making a payment to TransPeshawar shall be entitled to receive proof of payment, through the issue of
an official receipt drawn and signed by the receiving officer.
All cash and checks received must be deposited promptly; preferably, within one or two working days. Manager
Finance shall reconcile all the cheque/cash receipts with bank statement for control purposes. Any variance shall be
timely highlighted and proper follow up shall be conducted with bank for resolution.
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14. Expenditure Management – Payment Process

This chapter summarizes procedures for authorization, payment, recording and reporting of expenses incurred.
Expense Authorization Limits

The authorization limits for incurring expenditure for a range of activities are set out in ‘Delegation of Financial
Powers’.
14.1.1. Expenditure Categorization
Based on the business model, TransPeshawar expenses can be categorized as Capital Expenditure, Operating
Expenses and General & Administrative Expenses
Capital Expenditure: It captures expenditure of capital nature, which results in creation of assets
(tangible/intagible) that have a useful life of more than 1 year and provide company with economic benefits.
Expenditure incurred on such activities is capitalized as an asset for the company in accordance with the
Accounting Policies described in Chapter 2.
Capital Expenditure includes, physical goods, intellectual property (software), civil works conducted to build
an asset (e.g. corridor) etc.
Operating Expenses: It captures expenses which will be associated with operating of buses and corridor.
Majority of the operations are outsourced, and therefore, expense categories will mainly include as follows:
 Service for Bus Operations (driving)
 janitorial services for the corridor
 security services for the corridor and control room
 janitorial services for control room
 Operations and Maintenance of Generator sets, platform doors escalators, etc.
 Operations and Maintenance of Security and Survillence systems
 Fuel
 Salaries of employees involved in corridor operations
 utilities for corridor
 corridor maintenance
General and administrative (G&A) expenses: General and administrative expenses will include expenses to be
incurred by TransPeshawar that are not directly related to operations of the metrobus system. Major expenditure
categories include:
 salaries of employees working in general and administrative functions
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 rent of the TransPeshawar's office premises (when not owned)

 fuel for office vehicles
 office utilities
 travelling
 communications
 publicity and advertisement
 office repair and maintenance
14.1.2. Processing of Payment for Expenditures
Budget Availability Check Performed

Prior to incurring any expenditure, or executing any activity, or procuring for any goods, services, non-consulting
services, the relevant departmental head will inquire regarding the budget availability for the specific activity, from
CFO, as following:
o Relevant Head of Departmental will check from CFO for the relevant activity’s budget availability,
before its initiation/execution. The relevant department shall formally send a request to finance
department for budget availability check.
o At Finance Department, Manager Finance will check and inform of the budget availability to CFO.
CFO will inform about the budget availability or otherwise to the relevant departmental head (under
intimation to CEO). Once the CFO confirms and approves the availability of budget for the requested
activity, relevant department can initiate the execution process.
o In case of non-availability of budget for any requested item/activity, Delegation of Financial Powers
will be followed for the re-appropriation of budget.
Payment Processing Process
Step 1. Invoice Step 2. Technical Step 3. Step 4. CEO

Receiving Vetting and Verification at Approval and
Request for Finance function Payment
Payment
The following section provides details of each of the steps summarized in the figure above:
Action Responsible Person When

Step 1: Invoice Receiving
The invoice will be received by administrative GM HR Upon Receipt of Invoice
department from the
consultant/contractor/supplier etc.
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Administrative department will send the

invoice to the respective head of technical
department or the concerned department e.g.
GM Planning and Construction, GM
Operations and Market Development, or
Manager IT etc.
Step 2: Technical Vetting and Request for Payment

Technical Vetting: Head of Concerened Within 10 days of receipt of
Upon receipt of invoice/bill from the Technical Department Invoice
Administrative department, the concerned
technical department will verify the technical
aspects of bill, and the associated
deliverables/goods supplies etc.
Request for Payment:

Upon technical vetting, technical department
will forward the request to Finance Section for
processing of payment through Inter Office
Memorandum.
Technical department will attach relevant

documents (see Box 1 for list), and with a
certification/endorsement that acceptable goods
and services have been delivered as per
contract/purchase order/supply order.
Step 3: Verification at Finance Section
Finance Section conducts verification and Chief Financial Officer Within four working days
validity checks for the concerned case, ensuring after receipt of complete
budget availability, arithmetical accuracy, request of payment from
compliance with contract, acceptable delivery relevant head of department
of goods / services/works, compliance with
applicable laws, rules and regulations,
endorsement/sign-off on the deliverable by the If it is received after 1 pm,
Technical department. the day of receipt will not be
counted in the processing
Finance Section will complete the checklist time.
covering at least the following:
a) Budget Availability
b) Approval of activity initiation by the
relevant forum as defined in Delegation of
Financial Powers
c) Certification by relevant head of
department that goods/services/works have
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been delivered as per contract.

d) Availability of requisite documents (as
listed in Box 1).
e) Arithmetical accuracy of the invoices and
calculations including withholding taxes.
f) Application of proper expenditure
category.
In case of deficiency, the case (on file) will be

reverted to the relevant head of department as
the case may be, highlighting the deficiencies
noted for removal or resolution.
Relevant head of department will remove the

deficiencies and resubmit the request to
Finance Section as outlined in Step 2.
Once the case is complete to seek approval, it

will be submitted to CEO.
Step 4: CEO Approval and Payment Release
The case will be approved for payment (on CEO Within3 business day upon
file), and the file will be reverted to Finance receipt of file for approval
Section for preparation and issuance of voucher
and cheque/payment instruction.
Preparation of Voucher and Cheques Chief Financial Officer Within 2 days after obtaining
(Payment Instruction): approval of payment
After approval:
(i) Manager Finance will prepare payment

voucher and withhold/deduct the applicable
taxes from the gross amount1.
(ii) Prepare cheques

 for the net amount (after deduction of
applicable taxes) in the favour of
service provider or supplier (as the
case may be)
 for the withheld tax amount in favor of
relevant tax authorities
(iii) CFO will review and sign the voucher and

cheques(s) and submit to CEO for counter
signing.
Approval of Voucher and Signing of CEO Same Business day
Cheque:
1
Guidance on deduction of applicable taxes is separately provided in detail in Chapter --
80
______________________________________________________________________________________________________
Approve the payment voucher and counter sign

the cheque(s), and return to Finance Section for
handing over of cheque(s) to the payee.
Issuance of Cheque and Receipt CFO Same Business day
Acknowledgement:
Finance Section hands over cheque(s) to the
payee2, obtaining acknowledgement receipt on
the photocopy of the cheque.
At the same time, Manager Finance records the
transaction in books of accounts and affixes
“PAID” stamp on the invoice (recording of
transaction is covered in next section of this
chapter).
The Payment voucher with original invoices,

Box 1: Indicative List of Supporting Documents Required for Payment Processing
sanction and recipient acknowledgement is
filed/archived by Manager FInance. TheDocuments
case Required for All Payments
file is then returned
1. Copyto the respective
of valid contract with amendment/Purchase Order;
department obtaining acknowledgement in the
2. Approvals of the relevant forum as defined in Delegation of Financial
payment processing register.
Powers
3. Original invoices and bills on standard templates required by law;
4. Certificates with respect to Registration of service provider with Tax
authorities (Filer/Non-Filer status); and Tax Exemption Certificates (if any)
Additional Documents Required for Payment Against Services Contracts
1. Approved Timesheets and or service delivery acceptance notes by Technical
Department;
2. Draft Reports and as per deliverable based on contractual terms, duly
approved and signed-off;
Additional Documents Required for Payment Against Goods
1. Approved Goods Receiving Note (GRN);
2. Extracts from inventory register, stock, stores and spares registers
evidencing receipt, entry and record of all equipment and consumables
procured;
Additional Documents Required for Payment Against Civil Works

1. Interim Payment Certificates;
2. Recommendation by the Construction Supervision Consultant (if hired)
For Repair and Maintenance expenditure, warranty checks and Monitoring &
Inspection Report for all repair and maintenance expenses will be required, log
books duly signed for every repair and maintenance
2 For POL
The cheque in favor payments,
of relevant log bookswill
tax authorities dulybe signed forinto
deposited every travel made
government withinfueling
treasury and oil
accordance with the timelines
stipulated in applicable
changetaxhistory
laws will be required.
81 For Training and Workshops, travel authorization specifying purpose of travel from
relevant authority together with necessary documentation and detailed back-to-
office (tour) reports, list of participants and attendance sheets
For Payroll Processing, approved payroll sheet of support staff by administration

section
______________________________________________________________________________________________________
82
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14.1.3. Additional Considerations while making payments
14.1.3.1. Payments to Foreign Consultants

Payment shall be made to a foreign consultant, only after taking necessary approvals from the State Bank of
Pakistan as per Foreign Exchange Regulations in addition to the internal approvals, After receiving a draft service
agreement / contract, CFO shall file a request letter via Company’s bank to the State Bank of Pakistan along with
the service agreement / contract for approval of foreign payment.
Foreign exchange gain / loss shall be calculated on the basis of difference of rates used at the time of preparing
purchase voucher (i.e. booking of liability) and payment voucher (i.e. on actual payment). CFO shall also review the
liabilities of the foreign consultants at each month end for any exchange differences and record the exchange
gain/loss accordingly.
14.1.3.2. Advance to Contractors, Consultants and Suppliers
The company shall issue advance to the contractors, consultants and/or suppliers on the basis of terms of contract
entered into between the Company with contractor / consultant / supplier.
Invoice / advance requests from the contractor, consultant or the supplier shall be entertained as per the terms of the
agreement. The advance payment request shall be supported by following –
 Mobilization Advance Bond/undated cheque by the vendor in favour of TransPeshawar
 Performance Bond
 Any other document as specified in the contract document
Technical Department shall verify that all the documents received from the vendor are in agreement with the terms
and conditions of the contract.
Payments shall be made on the basis of memorandum prepared by the concerned Technical Department duly
approved by appropriate authority.
Adjustment of advances shall be made as per the agreed terms of the contract.
14.1.3.3. Pre-payments
Effective monitoring and accounting shall be established for prepaid expenses to ensure appropriate measures are
taken when vendor does not meet its commitment in terms of delivery of goods or services.
Prepayments are those expenses where cash is disbursed against associated benefit, which are expected in future.
Finance department shall make the prepayments to vendors based on approved documentation. Few types of
prepayment are as follow;
 Subscriptions
 Rent
 Insurance
83
______________________________________________________________________________________________________
Manager Finance shall receive a written request with supporting documentation from concerned user department for
obtaining the required approvals and arrangements of payments. The standard procedures, as mentioned in the
follow sections shall be followed in making the payments
Manager Finance shall maintain proper record of all the documentations related to prepayments and monitor the
outstanding prepayment amounts and expenses respectively.
At each month end, the Finance Department shall follow up advances given to vendors outstanding for settlement.
At expiry, finance shall adjust the outstanding balances against the expenses and update the records accordingly.
14.1.3.4. Letter of Credit (L/C) Related Purchases
The objective of these procedures is to identify and set guidelines for payment against L/C related purchases.
Process Description Responsibility
1. Administration/Procurement Department and/or Technical/Project Department shall Technical/Project

call a Performa invoice from the foreign suppliers with whom the Company is Department and/or
intending to purchase goods. Administration
/Procurement
2. Performa invoice shall include the following:
Department
 Description of goods to be imported;
 Quantity of goods;
 Unit rate;
 Total invoice value; and
 Delivery terms
 Payment terms;
 HS Code of the item
3. After the selection of appropriate foreign supplier and preparation of purchase
order, designated personnel of Technical Department and/or Administration
/Procurement Department shall send the following documents to Finance
Department for opening of Letter of Credit (LC).:
 Letter of acceptance / Purchase order
 Performa invoice
 Copy of Contract; and
 Insurance cover to be obtained in close coordination with Finance
4. Manager Finance in Finance Department shall receive the above documents from Finance Officer
Technical/ Project Department and/or Administration /Procurement Department, as
applicable, and forward the same to the CFO.
84
______________________________________________________________________________________________________
5. CFO shall contact the selected banks (with whom company has the facility line CFO
available for LC) for opening of LC and shall obtain the charges / rates for opening
of LC and the nature and type/quantum of LC margin/ guarantee / collateral needed.
6. Based on the information obtained from different banks, Manager Finance shall
prepare comparison sheet of charges / rates and the requirement of LC margin/
collateral / guarantee by different banks.
7. A memo for selection of bank on the basis of comparison sheet prepared by the CFO
Manager Finance shall be reviewed by CFO.
8. Manager Finance shall fill the LC opening form of the selected bank. CFO shall CFO
review the LC opening form along with the supporting documents and send the
same to the CEO for approval.
9. Once the L/C form is signed, CFO shall send that signed L/C form along with the CEO
following documents to the selected bank:
 Request for issuance of LC

 Performa Invoice; and
 Insurance Cover;
10. After opening LC, copy of LC document, LC opening form and other related
documents shall be retained in a separate file by Finance Department.
11. The Bank shall intimate to the Company about the receipt of title documents (of Companies Bank
goods imported by the company) from the supplier. In case of LC sight, the bank
shall require the Company to pay the amount (invoice value, bank charges, LC
charges etc.) before releasing the title documents to the Company.
12. In case of LC usance, the bank shall release the title documents immediately to the
Company. In this case, the bank shall notify to the Company for payment at the
time of maturity of LC usance.
13. Manager Finance shall collect the documents from the bank and deliver the same to Manager Finance
the clearing agent for processing. The document received from the bank shall
include the following:
 Original invoice;
85
______________________________________________________________________________________________________
 Packing list;
 Bill of lading / Air way bill; and
 Any other related document.
14. Manager Finance shall generate the bank payment voucher. Bank Payment Voucher
shall be uniquely numbered and shall contain the following:
 Date and time;

 Voucher number;
 Voucher type;
 Account title;
 Narration;
 Project Code;
 User department; and
 Cheque number.
General
15. All other procedures shall be followed as mentioned above, as applicable.
16. Along with the title documents, the custom clearing agent may also require the Custom Clearing
company to release some advance for the expenses to be incurred related to release Agent
of goods. These advances shall be processed as mentioned above.
17. The agent shall pay charges to custom and other authorities for release of goods on
behalf of the company. The charges shall mainly include custom duty, advance tax,
clearing charges, sales tax, and excise duty etc.
18. Once the goods are cleared with the custom authorities and are received and
accepted in the premises of the Company, clearing agent shall send its invoice for
processing to the Finance Department. Invoice shall include the following :
 Clearing charges paid (supporting documents shall be attached)

 Clearing agent’s commission
 Advance received(if any); and
 Balance amount receivable / payable.
General
19. Invoice of clearing agent shall be processed in Finance department as per above
mentioned standard procedures.
86
______________________________________________________________________________________________________
87
______________________________________________________________________________________________________
15. Taxation
This chapter summarizes procedures for discharging obligations as applicable on TransPeshawar in accordance with
local/international tax statutes.
15.2 Relevant Taxation and Other Laws

Following laws and regulations may have an impact on the operations of TransPeshawar:
 Income Tax Ordinance, 2001 (“the Ordinance”);

 Income Tax Rules, 2002;
 Sales Tax Act, 1990 (“the Act”);
 Khyber Pakhtunkhwa Sales Tax on Services Rules, 2015; and
 Khyber Pakhtunkhwa Sales Tax on Services Special Procedure (Withholding) Regulation, 2015.

Compliance with the provisions of the Ordinance shall be governed by the following key policies and principles:
 TransPeshawar, been established under Section 42 of the Companies Ordinance, 1984, is exempt from income
tax3.
 TransPeshawar shall employ adequate tax expertise either through internal sources or through arrangement of
outsourcing services.
The emerging requirements of the taxation requirement shall be monitored on a regular basis to effectively
undertake adequate measures to ensure compliance with prevailing taxation and other relevant laws.
15.4 Ownership and responsibility
The CFO shall be responsible for ensuring compliance with the provisions of the applicable tax rules and
regulations.
15.5 Key compliance requirements of the Ordinance

Compliance with the provisions of the Ordinance shall be governed by the following key policies and principles:
Section Requirement for TransPeshawar Basis of deduction Rate

149 Withholding of tax on salary Division 1, Part 1 of 1st Rate applicable on expected
payments Schedule annual income of an
employee
152 Payments to non-residents for Division IV of Part I of the 15% of the gross amount
3
Application for obtaining the exemption status has been submitted to Commisioner Inland Revenue, Peshawar.
88
______________________________________________________________________________________________________
royalty or technical services First Schedule

152 Payment to non-residents on the Division II of Part III of the 7% of the gross amount
execution of: First Schedule payable in case a person is a
filer and 13% in case the
(a) contract or sub-contract under a person is a non-filer
construction, assembly or
installation project in Pakistan,
including a contract for the supply
of supervisory activities in relation
to such project; or
(b) any other contract for
construction or services rendered
relating thereto; or
(c) a contract for advertisement

services rendered by T.V. Satellite
Channels,
152 Payment to permanent Division II of Part III of the 4% (in case of companies
establishment in Pakistan of a non- First Schedule. with filer status)
resident person: 7% (in case of companies
with non-filer status)
(a) for the sale of goods (except
where the sale is made by the 4.5% (in case of other filers)
importer of the goods and tax 7.75% (in case of other filers)
under section 148 in respect of
such goods has been paid and
the goods are sold in the same
condition as they were when
imported);
(b) for the rendering of or providing 2% (transport services)
services; and
1.5% for filers (electronic
and print media for
advertising services)
12% for non- filers others

and 15% for non-filer
companies (electronic and
print media for advertising
services)
Other services:
8% (in case of filer
companies)
14% (in case of non-filer
companies)
Other services:
89
______________________________________________________________________________________________________
10% (in case of other filers)

17.5% (in case of other non-
filers)
(c) on the execution of a contract, 7% (in case of filer)
other than a contract for the sale 13% (in case of non-filer)
of goods or the rendering of or
providing services, shall, at the
time of making the payment,
deduct tax from the gross
amount payable (including sales
tax, if any)
153 Payments for goods Division III of Part III of the 4% (in case of companies
First Schedule with filer status)
7% (in case of companies
with non-filer status)
4.5% (in case of other filers)

7.75% (in case of other filers)
153 Payment for services Division III of Part III of the 2% (transport services)
First Schedule
1.5% for filers (electronic
and
services)
12% for non- filers others
and 15% for non-filer
companies (electronic and
services)
Other services:
8% (in case of filer
companies)
14.5% (in case of non-filer
companies)
Other services:
10% (in case of other filers)
17.5% (in case of other non-
filers)
153 Construction contracts Division III of Part III of the 7% (in case of filer
First Schedule companies)
12% (in case of non-filer
companies)
7.5% (in case of filer - others)
12.5% (in case of non-filer
others)
155 Rental payments Division V of Part III of the Multiple rates (please refer
First Schedule the ordinance)
90
______________________________________________________________________________________________________
160 Deposit of tax collected or Suppliers of goods, work or

deducated on payments made by services,
TransPeshawar Staff payments
164 Issuance of certificate of collection Suppliers of goods, work or
or deduction of tax services,
Staff payments
Chapter Advance tax provisions Cash withdrawals and
XII of trasactions with banks, vehicle
Ordinance taxation, utility bills,
communication costs, travel
costs,
Income tax Rates as extracted from Income Tax Ordinance, 2001 (amended upto June 30, 2017). The rates are subject to change any time by
the Government of Pakistan.
91
______________________________________________________________________________________________________
16. Financial Reporting

This chapter specifies the policies and procedures which shall be followed for generating periodic financial reports
for internal and external stakeholders including financial institutions and regulatory authorities.
Following policies and principles shall be followed for generating internal and external financial reports
i. The Financial year shall end on 30 June of a calendar year;
ii. Management financial reports shall be generated on a monthly, quarterly, bi-annually and annual basis;
iii. Annual financial statements shall be prepared in accordance with the accounting policies specified in
Chapter 2; and
iv. Development partners financial reporting requirements shall be complied in accordance with applicable
guidelines and formats.
16.3 General Guidance

The GL accounting shall be performed through Accounting System. All financial transactions shall be processed
through Accounting Software. Following key requirements shall be followed while undertaking day-to-day
accounting activities:
 Vouchers should be serially numbered, generated by the accounting system;

 Payment and receipt vouchers should be created by Accounts Assistant;
 Journal vouchers shall be created by designated Manager – F&A;
 Vouchers shall be posted by the Manager – F&A;
 Vouchers shall be reviewed and approved by the designated CFO.
16.4 Internal and Statutory Reporting

Internal and statutory reporting shall comprise of the following financial reporting frequencies:
 Monthly management reporting;

 Quarterly management reporting;
 Annual management reporting; and
 Statutory financial reporting.
92
______________________________________________________________________________________________________
16.4.1 Financial Reporting

Financial reporting activities shall be performed in accordance in the sequence specified in below matrix:
S. Financial Reporting Prepared by Reviewed by Authorized Closing by Deadline for Reconciliations Closing Check Companies
no. Type by reporting Act 2017
Check
1. Monthly reporting Manager – CFO CEO 7th of following 10th of following Yes Yes No
F&A month month
2. Quarterly reporting Manager – CFO CEO 10th of 15th of following Yes Yes No
F&A following month month
3. Annual reporting Manager – CFO CEO 15th of 20th of following Yes Yes No
F&A following month month
4. Statutory annual Manager – CFO/ CEO BoD 15th of Four months Yes Yes Yes
reporting F&A following month from the end of
FY
(subject to
completion of
external audit)
a. Reconciliations shall be performed using Annexure S: Closing Reconciliation. The reconciliation shall be prepared by Manager – F&A which shall be submitted
to the CFO along with draft financial statements.
b. Closing Check shall be performed by CFO using Annexure T: Closing Checks.
c. The Manager – F&A shall prepare Companies Act, 2017 checklist using Annexure U: Companies Checklist, 2017 checklist, which shall be authorized by the
CFO.
93
______________________________________________________________________________________________________
94
______________________________________________________________________________________________________
95
______________________________________________________________________________________________________
17. Audit and Accountability Support

This chapter specifies the mandate of F&A department while providing support to the internal auditor (in-house)
and external auditors, and external evaluation missions.
17.2 Support to External Auditors
Following support shall be provided by the F&A department to the external auditors:
i. Provision of required information and documentation in a timely manner;
ii. Providing overview of the financial transactions and explanation of key variances;
iii. Incorporating adjustments, if agreed, as per the suggestions made by the external auditors;
iv. Providing responses to Transmittal Letters issued by the external auditors;
v. Implementing internal controls improvements in accordance with the recommendations made by the
external auditors, subject to authorization by the CEO and availability of sufficient funds.
17.3 Support to Internal Auditors
Following support shall be provided by the F&A department to the internal auditor:
i. Supporting the IA team during the conduct of annual risk assessment;
ii. Provision of required information and documentation in a timely manner;
iii. Providing overview of the financial transactions and explanation of key variances;
iv. Incorporating adjustments, if agreed, as per the suggestions made by the external auditors;
v. Providing responses to IA reports issued from time to time on the F&A department;
vi. Implementing internal controls improvements in accordance with the recommendations made by the
internal auditors, subject to authorization by the CEO and availability of sufficient funds.
17.4 Support to External Evaluation Missions
Following support shall be provided by the F&A department to the external evaluation missions:
i. Provision of required information and documentation in a timely manner;
96
______________________________________________________________________________________________________
ii. Providing overview of the financial transactions and explanation of controls and systems;
iii. Providing overview on the financial performance of grants/ programmes;
iv. Assisting supervision missions/implementation support missions of development partners during field
visits.
v. Supporting CEO in compliance with the recommendations of Aide Memoires` issued by development
partners
97

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TransPeshawar – The Urban Mobility Company

Draft Finance Manual

Finance and Accounts Manual – Draft v 1.1

Abbreviations & Acronym

2.12 Employee Benefits.....................................................................................................................................17

7.8 Bank Payments..........................................................................................................................................52

14. Expenditure Management – Payment Process..............................................................................................77

1.2 The Manual

1.3 Applicability and Update of the Manual

1.3.1 Applicability of the Manual

1.3.2 Update of the Manual

1.4 Custody of the Manual

1.5 Using the Manual

Chapter Listing Areas covered in the Manual

2. Core Accounting Policies and Principles

a. Transparency and integrity in the procurement process;

2.2 Basis of Preparation of Statutory Financial Statements

2.2.2 Basis of Measurement

2.2.3 Functional and Presentation Currency

2.2.4 Significant Estimates and Judgments

2.3 Property and Equipment

2.4 Loans and Advances

Expenses shall be recorded when incurred.

2.8 Foreign Currency Transactions

2.9 Financial Instruments

2.9.1 Financial Assets

2.9.2 Financial Liabilities

2.9.3 Off-setting of Financial Assets and Liabilities

2.12 Employee Benefits

3. Structure and Mandate of F&A Department

3.2 Finance Committee

3.2.2 ToRs of the Committee

 Approve all banking arrangements;

 Advise the Board on the:

o Solvency of the TransPeshawar and the safeguarding of its assets;

3.2.3 Meetings of the Committee

3.2.3.1 Invitation for the Meeting

3.001.001 Circulate Notice of the Meeting Responsible Tool

3.2.3.2 Conduct and Record the Meeting

3.001.004 Conduct and Record Proceedings Responsible Tool

3.001.005 Circulate Draft Minutes Responsible Tool

3.001.005 Incorporate Modifications Responsible Tool

The members shall submit comments along with necessary modifications, if

3.001.006 Circulate Final Minutes Responsible Tool

The authorized minutes shall be kept in a secured area.

3.2.4 Progress Reporting

a. a summary of the role of the committee;

3.3 The F&A Department

3.3.2 Placement of F&A Department

3.3.3 Mandate and authority of F&A Department

3.3.3.1 Mandate of F&A Department

b. developing reliable and accurate budgets and financial strategies,

3.3.3.2 Modifications in the Mandate of F&A Department

3.3.3.3 Authority of F&A Department

a. a department or departments of TransPeshawar;

b. an existing or former employee of TransPeshawar;

3.4 Job Descriptions

3.4.2 Manager - Finance

3.4.3 Accounts Assistant