DBD Accounting Manual

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DORSCH BUSINESS DEVELOPMENT - JLT

ACCOUNTING

MANUAL

DBD Dorsch Business Development - JLTUnit 2901, JBC 5Jumeirah Lakes TowersP.O. Box 214953DubaiUnited Arab Emirates

Phone :Fax :E-Mail :Internet :

+971 (0) 4 362 9745+971 (0) 4 368 [email protected]

Head office: Dorsch Holding GmbHOffenbach, GermanyManaging Directors:Dipl.-Ing. Jrgen RderDipl.-Ing. Olaf HoffmannDipl.-Kfm. Andreas Rienecker


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DBD- Accounting Manual (draft)

Accounting Manual Page 2 of 47

DORSCH BUSINESS DEVELOPMENT - JLT

ACCOUNTINGMANUAL

SignaturePrepared by Farrukh Touheed Finance Manager May 30,

2012

Approved by Michael B Kadow CEO May 30,2012

This manual is intended for the sole use of DBD and is provided tocustomers for informational purposes only.

2012

The contents of this manual may not be reproduced or reprinted inwhole or in part without the express written permission of DBD, JLT.


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Table of Contents

1.0 PURPOSE ..................................................................................................... 7

2.0 SCOPE ........................................................................................................ 102.1 RESPONSIBILITY ....................................................................................... 10

3.0 MANAGEMENT RESPONSIBILITY ............................................................. 123.1 Accounting Organization .............................................................................. 12

3.1.1 Accounting Department Organization Chart ....................................... 123.1.3 Finance Manager Responsibilities ...................................................... 13

3.2 Management Commitment ........................................................................... 153.3 Management ACCOUNTING Policy............................................................. 153.4 Planning ...................................................................................................... 16

3.4.1 Accounting Objectives ........................................................................ 163.4.2 Accounting System Planning .............................................................. 16

3.5 Responsibility, Authority, and Communication ............................................. 16

3.5.1 Responsibility and Authority ............................................................... 163.5.3 Internal communication ...................................................................... 16

3.6 Management REPORTING .......................................................................... 173.6.1 General .............................................................................................. 173.6.2 Review Input ...................................................................................... 173.6.3 Review Output ................................................................................... 17

3.7 Business conduct......................................................................................... 173.7.1 Related Party Disclosure .................................................................... 18

4.0 ACCOUNTING MANAGEMENT SYSTEM ................................................... 204.1 Objectives .................................................................................................... 204.2 Requirements .............................................................................................. 20

4.2.1 Overview ............................................................................................ 20

4.2.2 Internal Controls ................................................................................. 204.2.3 Audit Findings .................................................................................... 21

4.3 Transactions ................................................................................................ 214.3.1 Authorization ...................................................................................... 214.3.2 Timing ................................................................................................ 214.3.3 Amounts ............................................................................................. 214.3.4 Accuracy ............................................................................................ 21

4.4 Documentation ............................................................................................ 224.4.1 Accounting Manual............................................................................. 224.4.2 Control of Documents ........................................................................ 224.4.3 Control of Records ............................................................................. 224.4.4 Accounting Transactions .................................................................... 23

4.5 Security ....................................................................................................... 234.5.1 Physical Security ................................................................................ 234.5.2 Disaster Security ................................................................................ 234.5.3 Information Security ........................................................................... 23

4.6 Cost Accounting .......................................................................................... 244.6.1 Costing Purposes ............................................................................... 244.6.2 Cost - Time Incurred .......................................................................... 244.6.3 Cost - Reaction to Changes in Activity Levels .................................... 254.6.4 Cost - Influence on Decision Making .................................................. 25


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4.7 BASIS of Accounting .................................................................................... 28

5.0 PROCESSES AND CONTROLS .................................................................. 305.1 General & Administrative .............................................................................. 31

5.1.1 Chart of Accounts ...............................................................................315.1.2 Files and Records Management .........................................................31

5.1.3 Travel and Entertainment ...................................................................315.1.4 Management Reports .........................................................................315.1.5 Period-End Review & Closing .............................................................325.1.6 Controlling Legal Costs.......................................................................325.1.7 Statutory fees and duties ....................................................................325.1.8 Confidential Information Release ........................................................325.1.10 Document Control ...............................................................................32

5.2. Treasury Management ................................................................................. 335.2.1 Working Capital ..................................................................................335.2.2 Cash Management .............................................................................335.2.3 Related Party Transactions ................................................................335.2.4 Foreign Exchange Management .........................................................33

5.2.5 Managing Banking Relationships ........................................................345.3 Financial Statements .................................................................................... 345.3.1 Financial Forecasting .........................................................................345.3.2 Financial Reporting .............................................................................345.3.3 Financial Statement Analysis ..............................................................355.3.4 Financial Management Review ...........................................................355.3.5 Financial Restatements ......................................................................355.3.6 Release of Financial Information ........................................................35

5.4 Internal Controls ........................................................................................... 355.4.1 Risk Assessment ................................................................................365.4.2 Risk Management ...............................................................................365.4.3 External Auditing ................................................................................365.4.4 Internal Auditing..................................................................................365.4.5 Corrective Action ................................................................................37

5.5 Cash Control ................................................................................................ 375.5.1 Cash Drawers .....................................................................................375.5.2 Cash Receipts and Deposits...............................................................375.5.3 Problem Cheques ...............................................................................375.5.4 Online funds Transfers .......................................................................375.5.5 Cheque Signing Authority ...................................................................385.5.6 Cheque Requests ...............................................................................385.5.7 Bank Account Re-conciliations ...........................................................38

5.6 Assets Control .............................................................................................. 385.6.1 Inventory Control (office supplies) ......................................................385.6.2 Inventory Counts (office supplies) .......................................................385.6.3 Fixed Asset Control ............................................................................395.6.4 Fixed Asset Capitalization & Depreciation ..........................................39

5.7 REVENUE.................................................................................................... 395.7.1 Agreements / Contracts Record ..........................................................395.7.2 Projects Acceptance ...........................................................................395.7.3 Terms of payment and stages of billing ..............................................40Project team is responsible to establish and agreed a favorable terms of billingand payment while signing agreement or contract with the clients. ....................40


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5.7.4 Invoicing and Accounts Receivable .................................................... 405.7.5 Progress Billing .................................................................................. 405.7.6 Account Collections ............................................................................ 40

5.8 Purchasing................................................................................................... 405.8.1 Vendor Selection ................................................................................ 415.8.2 General Purchasing ........................................................................... 415.8.3 Project Purchasing ............................................................................. 415.8.4 Receiving and Inspection ................................................................... 415.8.5 Accounts Payable and Cash Disbursements ...................................... 42

5.9 Human Resource compensation .................................................................. 425.9.1 Payroll ................................................................................................ 425.9.2 Paid & Unpaid Leave ......................................................................... 425.9.3 Insurance Benefits ............................................................................. 425.9.4 Healthcare Benefits ............................................................................ 425.9.5 Employee Retirement Scheme (Gratuity) ........................................... 42

6.0 Resource Management................................................................................ 446.1 Provision of Resources ................................................................................ 44

6.2 Human Resources ....................................................................................... 446.2.1 Accounting Staff ................................................................................. 446.2.2 Competence, Awareness, and Training .............................................. 446.2.3 Separation and Supervision of Duties ................................................ 44

6.3 Infrastructure ............................................................................................... 456.4 Work Environment ....................................................................................... 45


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1.0 PURPOSE

The purpose of this Accounting manual is to document the principles and policiesgoverning DBDs accounting practices.

The principles and policies provide:o A foundation for a system of internal controls

o Guidance in current financial activities

o Criteria for decisions on appropriate accounting treatment.

o Accounting officers with direction and guidance in connection with thoseaccounting transactions, procedures, and reports that should be uniformthroughout the Company.

When consistently applied throughout the company, these principles and policiesassure that the various financial statements issued by the company accuratelyreflect the results of the companys operations.

Internal controls provide a system of checks and balances intended to identifyirregularities, prevent waste, fraud and abuse from occurring, and assist inresolving discrepancies that are accidentally introduced in the operations of thebusiness.

All additional departmental or functional policies and procedures written shouldconform to and parallel the policies in this manual. All changes to policies andprocedures are required to be reviewed to ensure that there are no conflicts withthe policies stated in this Accounting Manual.


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2.0 SCOPE

The Accounting Manual is an official directive of the CEO. It is published andmaintained by the Finance Manager as part of the general responsibility forcompany accounting policy assigned to the office of the Finance Manager.

2.1 RESPONSIBILITY

The policies stated in this manual apply to all operations and activities at DBD. Itis the responsibility of all department managers to help implement and maintainthe procedures required by this manual and to ensure all processes conform tothese requirements.

It is the responsibility of all employees to follow procedures that implement thesepolicies and to help strive for continuous improvement in all activities andprocesses of DBD.

The goal is to make the Manual as clear and useful as possible. All users areencouraged to contact the company Finance Manager with any suggestions forrevising or improving the Manual.


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3.0 MANAGEMENT RESPONSIBILITY

The accounting department is headed by the Finance Manager.

3.1 ACCOUNTING ORGANIZATION

3.1.1 Accounting Department Organization Chart

The companys organizational framework provides the foundation forcoordinating and administrating the accounting management system. Adescription of the roles and responsibilities applicable to the accounting andoperations staff are provided. Responsibilities specific to certain procedures ortasks are presented in the related procedures.

CEO

Finance Manager

3.1.2 Chief Executive Financial and Accounting Responsibilities

The CEO is responsible for the following executive related tasks with regards to financeand accounts. These duties are in addition to his responsibilities as the head of theorganization. These responsibilities includes but not limited to the following:

o Providing the necessary leadership to position the company at the forefrontof the industry

o Developing a strategic plan to advance the company's mission andobjectives and to promote revenue, profitability and growth as anorganization

o Oversee company operations to ensure safety, efficiency, quality, service,and profitability

o Ensuring executives are achieving corporate objectives

o Performing performance evaluations of executives and key managers

o

Ensuring controls and compliance systems are in place

o Financial statements and business activity reports shall be reviewed todetermine organizations status and progress toward attaining the missionand objectives.

o Representing the company at different government or other high profileforums.


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o Building revenue or fundraising networks using the latest technologiesincluding social networking, personal contacts, direct mail, special events,grants, and foundation support

o Presenting an Annual Report at Annual Stockholder and Board of Directormeetings

o Directing company planning, policy development, and entity review efforts.

o Developing a strategic plan to advance the company's mission andobjectives and to promote revenue, profitability and growth as anorganization

o Approving all Expenditures

o Reviewing and approving all Cheques

o Review and approval of payroll summary of all employees and pays Chequeamounts

o Approve the Monthly financial reports.

o Annual Review of financial internal controls

o All accounts receivable write offs shall be approved by the CEO.

o Review and approval of budgets and forecasting.

o The CEO shall revise objectives and plans based on current conditions.

o Appointment of Auditors and consultants

3.1.3 Finance Manager Responsibilities

The Finance Manager directs the accounting and control functions, reporting theresults of operations and provides chronological systems. The Finance Manageris accountable to the CEO and supervises the accounting and administrativestaff.

Major Duties and Responsibilities:

o Finance Manager is responsible to focus on raising capital, debt and or equityappropriations, cash management, Treasury investments, fund balances, andmanagement activities.

o The Finance Manager is responsible to the CEO for all long-range financialmatters and to establish company-wide financial and administrative


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objectives, policies, programs, and practices, which insure the company of acontinuously sound financial structure.

o Develops and implements accounting policies, coordinates systems andprocedures, and prepares operating data and special reports as required,

including interim and year-end financial statements. Maintains the companyssystem of accounts and keeps books and records on all companytransactions and assets.

o Establishes, coordinates and administers, as an integral part of management,an adequate plan for the control of operations including, profit planning,programs for capital investing and financing, sales forecasts, expensebudgets and cost standards, together with necessary controls andprocedures to effectuate the plan.

o In conjunction with the CEO and Vice CEO of Finance, coordinates, reviews,

and endorses budget proposals, discusses proposed changes and significantchanges.

o Compares performance with operating plans and standards, and reports andinterprets the results of operations to all levels of management.

o Provides for the control and editing of all company orders, to insureconformity to established policies and procedures, and to facilitate datacontrol and retrieval of records generated by these orders.

o Supervises or coordinates the preparation of reports to government agencies.

o Coordinates all matters of financial business between the company and itstop management and associates and holding company.

o Provides other managers and departments with information required by themto carry out their assigned responsibilities eg. Time sheet, Project Schedulingreport etc.

o The Finance Manager controls the flow of cash through the organization andmaintains the integrity of funds, securities and other valuable documents.

o Assures protection for the assets of the business through internal control,internal auditing and assuring proper insurance coverage.

o Assists Business Development team in establishing and maintainingconsultancy and supervision services pricing policies.


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o Serves as a liaison between the company and legal counsel or outsideaccountant support. Recommends the appointment of Auditors andoverseeing their audit work.

o Provides advice on all matters to the CEO and the Dorsch Holding GmbH.

o Directs and organizes all general accounting activities and accounting staff.Prepares accounting and financial reports and ensures accurate accountingsystems and record keeping.

3.2 MANAGEMENT COMMITMENT

Top Management at DBD shows its commitment to the accounting managementsystem through the development and implementation of this accounting manual.

Additionally, management commitment is demonstrated through the CompanyAccounting Policy, the specific objectives that are set and reviewed during

Management Review Meetings and by providing the resources required to meetour objectives for continually improving the effectiveness of our operations andaccounting system.

The management team consisting of the CEO and all department Directors /managers is chartered with ensuring our accounting management system meetscustomer as well as statutory and regulatory requirements

3.3 MANAGEMENT ACCOUNTING POLICY

DBD has established an Accounting Manual that we feel is appropriate to ourorganization and meets the practices set forth in GAAP. This policy iscommunicated throughout the company. Department Directors and managersare responsible for ensuring all employees understand the policy. To ensure ourpolicy remains appropriate, it is reviewed at least annually at one of ourManagement Review meetings.

The Company Accounting Policy:

It is the policy of DBD to design and produce financial statements in keepingwith Generally Accepted Accounting Principles (GAAP) and InternationalFinancial Reporting Standards. Statements of Financial Accounting Conceptsare in compliance with all statutory and regulatory requirements. Weaccomplish this by adhering to our Accounting Management System and use

operational methods as documented in our Accounting Manual. We strive to continually improve the effectiveness of our Accounting

Management System by monitoring our performance against our establishedobjectives and through leadership that promotes employee involvement. Thisconcept represents DBDs commitment to quality accounting and theincreasing need to better serve our customers, shareholders, and employees.


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3.4 PLANNING

3.4.1 Accounting Objectives

DBD shall establish objectives on an annual basis. These objectives shall be

measurable and consistent with the Accounting Policy, and reviewed at leastannually at Management Review meetings.

3.4.2 Accounting System Planning

As part of annual strategic planning meetings, DBD establishes strategicobjectives and goals for revenue, profit, and expenses. These objectives aresupported by specific measures that track performance against those objectivesusing the budgeting process. Department managers in turn set departmentalobjectives with specific performance measures and targets that support thecompany objectives.

As situations arise that demand changes to the accounting management system,either to meet objectives or because of changing business conditions, allchanges will be reviewed by the management team to ensure the integrity of theaccounting system is maintained.

3.5 RESPONSIBILITY, AUTHORITY, AND COMMUNICATION

3.5.1 Responsibility and Authority

Responsibilities and authorities of each employees at DBD are defined in eachJob Description.

3.5.2 Management RepresentativeThe CEO has appointed the Finance Manager as the ManagementRepresentative with the responsibility and authority to:

a) Ensure that processes needed for the Accounting Management System areestablished, implemented and maintained.

b) Report to top management on the performance of the AccountingManagement System and any need for improvement.

c) Ensure the promotion of awareness of accounting requirements throughoutthe organization.

d) Serve as the liaison with external parties on matters relating to the

Accounting Management System.

3.5.3 Internal communication

In line with DBDs policy of leadership through employee involvement, DBDspersonnel policies have established open communication throughout theorganization.

The effectiveness of our Accounting Management System is evident throughInternal Audit results, Management Reports, and the departmental performance


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measures. Other than confidential information, company and departmentalperformance measures as well as Internal Audit results are shared atdepartmental meetings as appropriate.

3.6 MANAGEMENT REPORTING

3.6.1 General

The CEO and management team shall review the companys AccountingManagement System, on a semi-annual basis and more frequently if needed, toensure its continuing suitability, adequacy and effectiveness. This review shallinclude assessing opportunities for improvement and the need for changes to the

Accounting Management System, including the accounting policy and objectives.

The Finance Manager is responsible for maintaining records from managementreviews.

3.6.2 Review Input

The Finance Manager and department managers provide the followinginformation for Management Review meetings:

a) Results of audits

b) Employee feedback

c) Projects performance

d) Follow-up actions from previous management reviews

e) Changes that could affect the Accounting Management System

f) Recommendations for improvement

3.6.3 Review OutputRecords shall include the output from the management review and shall includeany decisions and actions related to:

a) Improvement of the effectiveness of the Accounting Management Systemand its processes

b) Improvement of processes related to accounting requirements

c) Resource needs

3.7 BUSINESS CONDUCT

Unethical business conduct, actions or even the appearance of unethicalbehavior is unacceptable under any conditions. The reputation of the companydepends on each employee applying common sense in situations where specificrules of conduct are insufficient to provide clear direction. A strong sense ofpersonal ethics, which should extend beyond compliance with applicable laws, isnecessary to guide the behavior of all employees.


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All employees should comply with the ethical standards of the company as setforth in this manual. If a situation feels awkward, then the employees should askthemselves:

o Is my action legal and ethical?

o Does my action comply with corporate policy?

o Is my action appropriate in the situation?

o Would my action be an embarrassment to the company, if known?

o Does my action agree with my personal ethics or behavior?

An employee should be able to answer yes to all of these questions beforetaking action or compromising themselves in the situation.

All Managers are responsible for the ethical business conduct and behavior oftheir employees. Managers should consider the appropriate courses of action interms of both ethical and economic factors. Each decision should be based onthe guidelines provided in this Accounting Manual as well as their own personal

beliefs of whats right and wrong.

3.7.1 Related Party Disclosure

The Company's policy regarding related-party transactions is that they arethoroughly reviewed prior to approval, to ensure that the best interests of theCompany are foremost. In addition, all related-party transactions are properlydisclosed and are in compliance with applicable disclosure regulations.


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4.0 ACCOUNTING MANAGEMENT SYSTEM

4.1 OBJECTIVES

Through this manual and associated procedures and documents, DBD has

established, documented, and implemented an Accounting Management System.The system is designed to result in improving the effectiveness of our accountingoperations and in our ability to satisfy stakeholders and auditor requirements.

4.2 REQUIREMENTS

Maintenance of the Accounting Management System is the responsibility of theFinance Manager in conjunction with the available concerned staff..

4.2.1 Overview

The Finance Manager maintains all documents that identify the sequence ofaccounting processes and, in conjunction with the appropriate department

managers, defines the interactions of the processes within the proceduresdefining these processes.

Processes for management activities, provision of resources, and measurementreporting are included. Procedures shall include the methods needed to ensurethat the accountability and control of processes are effective.

Top Management will ensure the availability of resources to support theoperation and monitoring of processes through regular interaction withdepartment managers and through review activities at Management Reviewmeetings.

Department Directors/ Managers and the Finance Manager will monitor,measure, and analyze processes and implement any actions necessary to

achieve intended results and continual improvement of the processes. Theseresults will also be monitored at Management Review meetings.

Any processes that are outsourced that may affect DBDs conformity torequirements shall be controlled. The Finance Manager and appropriatedepartment directors/ manager(s) are responsible for defining the methods tocontrol outsourced processes and procedures.

4.2.2 Internal Controls

Internal controls, procedures, and practices will be utilized to ensure that:

o Obligations and costs comply with applicable laws.

o All assets are safeguarded against waste, fraud, loss, unauthorized use, andmisappropriation.

o Revenues and expenditures applicable to company operations arerecorded and accounted for properly so that accounts and reliablefinancial and statistical reports may be prepared and accountability ofthe assets may be maintained.

o Programs are efficiently and effectively carried out in accordance withapplicable laws and management policy.


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o The Company meets its financial objectives;

o Effectiveness and efficiency of financial operations;

o Reliability of financial controls and reporting; and

o Compliance with applicable statutes/regulations.

4.2.3 Audit Findings

Managers are to promptly evaluate findings and recommendations reported byauditors and then determine proper actions in response to audit findings andrecommendations (e.g., develop corrective actions). Finance Manager and otherconcerned Managers should complete, within established time frames, all actionsthat correct or otherwise resolve the matters brought to management's attention.

The audit resolution process begins when the results of an audit are reported tomanagement, and is completed only after actions have been taken that correctidentified deficiencies, produce improvements, or demonstrate the audit findings

and recommendations are either invalid or do not warrant management actions.

4.3 TRANSACTIONS

All transactions recorded or posted into the Accounting Management Systemshould be properly authorized and accurately represent the activity beingdocumented. Both the timing and amount of the transaction should be inaccordance with company accounting policies defined in this manual.

4.3.1 Authorization

Transactions and other significant events are to be authorized and executed onlyby persons acting within the scope of their authority. It is the principal means ofassuring that only valid transactions and other events are entered into.

Modification or adjustment to previously recorded transactions requiresauthorization.

4.3.2 Timing

All transaction dates recorded in the company accounting system shouldaccurately reflect the date the transaction occurred. Revenues should berecognized when earned and expenses when incurred. Processing, cutoff andperiod-end closing schedules and procedures should be documented.

4.3.3 Amounts

Prior or related transactions should be checked for conformity with thetransaction being recorded (e.g., match invoice to purchase order). Amount ofposted transactions should be checked against source documents. Balanceswith third parties should be verified as appropriate (i.e. debtors, creditors, orcustodians of investments). Transactions should be recorded in conformity withdocumented policies in this manual.

4.3.4 Accuracy

Transactions should be recorded in the accounting system accurately. Anapproved set of general ledger and subsidiary accounts are maintained forassets, liabilities, revenues, expenses, budgetary accounts, and other accounts.


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All transactions should be supported by documentary evidence, which becomespart of the accounting records. Error transactions should be reviewed, resolved,and cleared in a timely fashion. Manually determined control totals should bereconciled with recorded results.

The Accounting Management System utilizes standard forms and provides

control and accountability over these forms. Supervisors should review postedaccounting transactions with source documents and processing documents.

4.4 DOCUMENTATION

This Accounting Manual and the associated procedures are intended to satisfythe documentation requirements for an Accounting Management System.

Department Directors and managers are responsible for identifying any additionaldocuments needed to ensure the effective planning, operation and control ofprocesses.

Procedures may vary in detail based on the size of the department ororganization involved and the type of activity performed. Procedure developers

shall consider this as well as the complexity of the processes and interactions,and the competence of the personnel involved.

Documents may be any medium including: software programs, electronic textfiles, or hardcopy documents for example.

4.4.1 Accounting Manual

This Accounting Manual provides the top-level organizational document for theAccounting Management System. The Accounting Manual defines the scope,policies and processes of DBDs Accounting Management system as well asManagements responsibility for the system.

4.4.2 Control of Documents

All Documents required by the Accounting Management System shall becontrolled. The Document Control Procedure defines the controls needed to:

a) Approve documents for adequacy prior to issue.

b) Review and update as necessary and re-approve documents.

c) Ensure that changes and the current revision status of documents areidentified.

d) Ensure that relevant versions of applicable documents are available at pointsof use.

e) Ensure that documents remain legible and readily identifiable.

f) Ensure that documents of external origin are identified and their distributioncontrolled.

g) Prevent the unintended use of obsolete documents, and apply suitableidentification to them if they are retained for any purpose.

4.4.3 Control of Records

Procedures define appropriate records to be maintained for the effectiveoperation of the Accounting Management System, including evidence of


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conformity to requirements. Records shall remain legible, readily identifiable andretrievable. The Files and Records Management Procedure defines the controlsneeded for the identification, storage, protection, retrieval, retention time anddisposition of records.

4.4.4 Accounting Transactions

All transactions and other significant events should be clearly documented,properly classified and readily available for examination.

This standard applies to:

o The entire process or life cycle of a transaction or event and includes theinitiation and authorization

o All aspects of the transaction while in process

o Its final classification in summary records.

4.5 SECURITY

Access to resources and records should be limited to authorized personnel only.Accountability for the custody and use of resources should be assigned andmaintained as well. Periodic comparisons should be made of the resources withthe recorded accountability to determine whether the two agree. The frequencyof the comparison shall be a function of the vulnerability of the asset. Restrictionsof access to resources shall also depend upon the vulnerability of the resourceas well as the perceived risk of loss, both of which shall be periodically assessed.

4.5.1 Physical Security

Physical security measures should be adopted to protect the assets andemployees of the Company from abuse, fraud, theft, or damage. Securityprocedures for the protection of assets and employees are addressed within thecompanys Security Manual.

4.5.2 Disaster Security

Disaster security measures should be adopted to enable the company tocontinue the operations of the Accounting Management System with limitedinterruption. Disaster procedures for operations recovery are addressed withinthe companys Disaster Manual.

4.5.3 Information Security

Information security measures should be adopted to protect the companysinformation assets from unauthorized access, abuse, tampering, theft, or use.Information security procedures for the protection and authorized use ofcomputer and network assets are addressed within the Companys InformationSystems Manual.


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4.6 COST ACCOUNTING

Cost is the financial measure of resources consumed or acquired inaccomplishing a specified purpose, such as performing a service, providing aproduct, or carrying out a project or program regardless of when the resourceswere ordered, received, or paid for. Cost can be defined in a variety of ways

depending on the objectives or information desired.

Cost accounting is defined as a technique or method for determining the cost of aproject, process, or thing. This cost is determined by direct measurement,specific assignment, or systematic and rational allocation. Central to costaccounting is the process for tracing various input costs to the product orservices of the company.

This section presents cost classifications based on such characteristics as timeincurred, reaction to changes in activity levels, and influence on decision making.

4.6.1 Costing Purposes

The Finance Manager should accumulate, distribute, monitor, and evaluate cost

information during each accounting period, when appropriate. Management willuse cost information for purposes such as:

o Making decisions and planning future operations with the knowledge ofthe costs of projects, programs, and other activities

o Assisting in establishing standards of performance based at least partiallyon past cost history

o Determining the efficient and effective distribution and use of resources

o Supporting performance evaluation based on actual costs versusbudgeted costs

o Recovering costs for products and services provided to entities

o Preparing reimbursable work and cooperative agreements

o Supporting budget formulation through responses to requests forinformation

Cost accounting is not applicable to all activities; however, for those activities thatdo use cost accounting, the principles in this section are designed to assure that:

o Cost accounting information is communicated consistently throughout thecompany

o Reviews to evaluate the cost/benefit of cost information for specificprograms are based on consistent criteria

o Only the highest level of aggregated information required formanagement decisions

The Finance Manager is responsible for ensuring that any cost informationmaintained to meet customer service requirements is minimized and thatrecovery of the cost to provide information to customers is maximized.

4.6.2 Cost - Time Incurred

Costs may be measured in relationship to the time the cost is incurred. In manycases, the measurement time for cost is specified in authorizing documents or


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contracts for a program. In other cases, the Finance Manager is responsible fordetermining which cost will be used for specific purposes, and for assuring thatsimilar activities are treated consistently within the company.

The three most common measurements are historical costs, current marketcosts, and budgeted costs.

o Historical Cost is the cash equivalent price of goods and services at thedate of acquisition. This cost does not change over time.

o Current Market Cost (also referred to as replacement cost) is the currentvalue of an asset. Depending on whether the asset is tangible orintangible and the availability of similar assets on the open market,current market cost may be measured by replacement cost, reproductioncost, sales value, net realizable value, or net present value of future cashflows.

o Budgeted Cost (also referred to as standard cost) is the cost that shouldbe incurred to produce a product or provide a service based on pastexperience producing or providing like-items. Thus, comparison of actual

costs with the predetermined benchmark alerts program managers tothose areas in which the actual costs appear excessive.

4.6.3 Cost - Reaction to Changes in Activity Levels

In any period, cost may or may not change in relationship to changes in levels ofactivity. Based on the relationship to changes in levels of activity, costs areclassified as variable, fixed, or mixed costs. Activity measures can includeproduction or service levels, man hours, or revenue. The way a cost reacts tochanges in activity is determined by how the total cost for the period, rather thanthe cost of a single unit of activity, changes when activity levels change.

The Finance Manager is responsible for developing cost projections and budgets

that identify costs by variable, fixed, or mixed categories. All managers areresponsible for minimizing variable and mixed costs and ensuring that fixed costsare minimized, and are fairly spread over all projects, whether or not thoseprojects incorporate cost accounting.

o Variable Costs are costs that vary in total in direct proportion to changesin levels of activity. If total cost varies in direct proportion to activitychanges, the cost per unit is constant.

o Fixed Costs represent all costs that remain constant within theCompanys relevant range of activity. A relevant range is a range ofactivity in which costs behave in accordance with the way they have beendefined, generally the normal operating range.

o Mixed Costs has both a variable and fixed component; it does notfluctuate in direct proportion with activity, nor does it remain constant withchanges in levels of activity.

4.6.4 Cost - Influence on Decision Making

The Finance Manager is responsible for classifying costs as either direct orindirect and ensuring that costs are consistently classified as either direct orindirect in similar situations.


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Direct costs are all costs that can be specifically or readily identified withproducing a specific product or providing a specific service. Direct costs includedirect employees engagement on project, travelling, boarding and lodging,equipment purchased for use on a project, and other direct costs. Direct labor isthe portion of base wages and salaries, which can be identified with and chargedto a particular activity. This includes:

o Fringe Benefits are those allowances and services provided to employeesas compensation in addition to wages and salaries, including retirement,health insurance, and life insurance. Fringe benefits are allocated as arate applied to direct labor costs. The Finance Manager is responsible fordetermining the fringe rate based on all labor and fringe costs, regardlessof where an employee works. A single fringe rate must be applied to allemployees in all projects, unless the Finance Manager has developedseparate cost pools that reflect a significantly different fringe cost amonggroups of employees.

o Overtime and Premium Pay are charged in the same manner as theregular wage portion of an employee's earnings for hours identified with a

specific activity.

o Other Personnel Costs are charged in the same manner as the relatedbase labor charge, e.g., allowances for offsite pay, location allowances,hardship pay, hazardous duty pay, and uniform allowances.

Equipment including software used in an activity for which costs are accumulatedcan be charged in either of two manners: a) charging for the full acquisition cost,or b) recovery of a portion of depreciation/ amortization. The Finance Manager isresponsible for determining whether equipment can be charged in full to aproject, and if not, for determining the rate and basis for charging equipmentusage to projects.

Other direct cost items that are incurred or consumed exclusively for thecompletion of a specific activity includes the following examples:

o Miscellaneous supplies and materials

o Equipment rentals

o Transportation

o Outsources services

o Printing and photographic reproduction

o Contractual services

Indirect costs are those costs, which cannot be specifically identified with

producing a specific product, or providing a specific service but which can beshown to bear some relationship to, result from, or be in support of, the productor service.

Indirect costs must be accumulated in indirect cost pools. The Finance Manageris responsible for clearly defining identifiable cost pools. Indirect costs mayinclude the following examples, if the item is not directly attributable to a specificactivity:

o Space rental


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o Utilities, including telephone expenses

o Postage

o Unemployment compensation benefit costs

o Data processing, management, and control

o

Equipment rentalso Miscellaneous supplies and materials

o Equipment costs (excluding those recovered as a direct costs)

o Training, employee development, and personnel transfers, including costsof travel and time in-transit

o Budget development and program planning

o Research and development activities

o Administrative support such as procurement, contracting, office services,property management, payroll, voucher processing, personnel services,records management, and document control

o Reports, including report preparation and distributiono Safety management, including inspection and training

The indirect cost pool will generally include costs that benefit both costrecoverable and non-cost recoverable work. Although indirect costs are notrequired to be allocated to non-cost recoverable work, an allocation basis mustbe used that would, if applied to all projects or activities, fairly distribute the costpool over the benefited activities. Cost recovery projects must not be undulyburdened with indirect costs.

The Finance Manager is responsible for developing and documenting theallocation method, using a generally acceptable and consistently appliedoverhead rate based on direct costs, identifiable cost pools, and the costelements that are charges to those pools.


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4.7 BASIS OF ACCOUNTING

There are two fundamental methodologies of accounting, each with assumptions,constraints and theories, which guide all financial recording, reporting, andmeasurement activities: Cash and Accrual.

o Cash basis accounting records financial events only when cash actuallychanges hands in an arms-length transaction.

o Accrual basis accounting records revenues when earned and expensesthe costs associated with the revenue earned when incurred.

The company requires the use of the accrual basis of accounting for financialtransactions unless otherwise stated in this manual.


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5.0 PROCESSES AND CONTROLS

The company has planned and developed the processes needed to properlydocument, track, record, control and report transactions for revenues, expenses,assets, liabilities, and equities as well as managed its treasury function properly.

The results of this planning are the processes and procedures defined in ourAccounting Management System documentation.

These processes and procedures include the accounting objectives andrequirements for DBD, the required verification, validation, and inspectionactivities specific to DBD and the criteria for order acceptance verification. Therecords needed to provide evidence that these processes meet Generally

Accepted Accounting Practices (GAAP) are defined in the procedures.

Consideration is given for the need to establish processes, documents, andobtain resources specific to new orders as they are developed or during contractor order review.

1- General and Administrative Procedure

2- Treasury Management

3- Financial Statement

4- Internal Control

5- Cash and Banking Procedure

6- Assets including fixed assets Procedure

7- Revenue procedures

8- Expense Procedures

9- HR compensation


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5.1 GENERAL & ADMINISTRATIVE

The General and Administrative procedures encompass a wide range ofmiscellaneous activities from defining the chart of accounts, maintaining files andrecords, to Period-End Review & Closing, Taxes & Insurance, and producingManagement Reports. The following General and Administrative Proceduresshould be utilized to control the companys miscellaneous accounting activities.

5.1.1 Chart of Accounts

To facilitate the record keeping process for accounting, all ledger accountsshould be assigned a descriptive account title and account number, also knownas a Chart of Accounts. The Chart of Accounts provides the organization ormethod for assignment and maintenance of the companys ledger accounts, inorder to produce meaningful financial data for the company.

5.1.2 Files and Records Management

The company will retain records in an orderly fashion for time periods that complywith legal and governmental requirements and as needed for general businessrequirements. To accomplish this policy, the company should outline themethods for filing, retaining and disposing of all business documentationgenerated by the company. However, this does not necessarily cover internal orcertain day-to-day business correspondence.

5.1.3 Travel and Entertainment

The company should provide guidelines for travel and entertainment expenses,account for all advances promptly and accurately and to communicate the

procedures for reimbursement. This applies to all departments and individualswho travel or entertain for the company.

The company recognizes that employees who travel far from home to representthe companys business interests must forego their living accommodations andmay forfeit personal time. Accordingly, the company will make efforts to providecomfortable and secure accommodations for lodging, meals and travel foremployees. However, these items are not intended to be perquisites and thecompany reserves the right to deny reimbursement of expenses that areconsidered lavish or extravagant.

All reservations required for business travel and entertainment should be madethrough the designated Travel Coordinator. Expenses are to be within

established company guidelines and will be reimbursed with properdocumentation. Employees are expected to spend the companys money ascarefully and judiciously as they would their own.

5.1.4 Management Reports

The company should provide the format and content requirements forpreparation of the Financial Reports. Department Managers will preparesummary reports of vital operating statistics for the company, including projects,sales, current debt, operating cash, accounts receivable and projected short-term


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cash flows. These reports are to be prepared in brevity and are to supplementdetailed monthly and quarterly financial reports and are to be used for timely"hands-on" management.

5.1.5 Period-End Review & Closing

An orderly, timely and comprehensive review of all general ledger accounts

should be performed or directed by the Finance Manager to ensure an accuraterepresentation of the companys financial statements. These practices are aimedat proving that the financial accounts are accurate, and if not, are properlyadjusted to make them accurate, prior to closing.

The company should provide a general overview of the process to be completedfor reviewing the accounting records at year-end or any particular month-endprior to closing. These practices apply to all accounts. Typically, all financialaccounts are reviewed and then closed out as of the companys year-end.

5.1.6 Controlling Legal Costs

All individuals with the responsibility for contracting legal services and/or

approving agreements, contracts, or any other legally associated transactionsshould employ various methods to manage and, whenever possible, minimizelegal expenses.

5.1.7 Statutory fees and duties

To ensure compliance with all Federal, state and free zone regulatory dutiesrequirements, the company should outline the general areas of payment to bemade as a checklist or guide in complying with statutory requirements related toeach specific location and organizational structure. This statement applies to allthe business activities of the company.

5.1.8 Confidential Information Release

The release of financial, statistical or other information that may be of a

confidential nature to the company should be controlled. Individual requestsshould be referred to the Chief Executive Officer, Finance Manager, orappropriate manager for disposition.

The company should provide a means for the control of information to banks,investors, investment houses, media, credit bureaus, or other agencies andorganizations. All requests by an outsider to an employee regarding financial,revenue, marketing, customers, personnel, vendors, or other companyconfidential information.

5.1.10 Document Control

All documents used to provide work direction or set policy should be reviewed,approved, distributed and controlled by the office of the Finance Manager. Thecompany should define the methods and responsibilities for controllingdocuments used to provide work direction or set policy, and to define methods fordocument revision, approval, and distribution. This applies to all documentsrequired by the Accounting Management System. Documents of internal orexternal origin are included.


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5.2. TREASURY MANAGEMENT

Treasury management (or treasury operations) includes management of an enterprise'sholdings in and trading in vehicles like: (a) government and corporate bonds; (b)

currencies; (c) financial futures; (d) options and derivatives; and (e) payment systems.Finance Manager must ensure that the company meets all requirements and thatimplemented controls are effective.

5.2.1 Working Capital

The Company's Finance Manager manages the working capital invested tooperate the business, by keeping working capital at the minimum level needed tomaintain ongoing operations. The goal is to make the best use of working capitalby setting goals and monitoring, reviewing, and improving working capitalperformance.

5.2.2 Cash Management

The Company has established and implemented a plan to manage its cash onhand and cash deposits in short, medium, and long-term accounts in a way thatbest meet its cash and liquidity needs (e.g., preventing cash shortfalls) whilemanaging risk. The Finance Manager oversees the cash management process,reviews performance, makes recommendations, and ensures that the cashmanagement plan is updated, as needed.

5.2.3 Related Party Transactions

The Company has established and implemented policies for review and approvalof related-party transactions, to ensure that the Company's best interests areforemost, that transactions are properly disclosed, and such disclosures complywith regulations. Our policy is that all potential conflicts of interest are reviewed,addressed appropriately, and disclosed. This policy is communicated to allaffected employees by the Finance Manager.

The Finance Manager reviews the Company's related-party transaction policyperiodically with the top management to ensure it is up to date and appropriate.

5.2.4 Foreign Exchange Management

The Company has implemented a foreign exchange management policy to guide

its dealings in foreign currency. The management analyzes risks and rewardsassociated with foreign currency exchange and sets policy. The FinanceManager identifies risks/rewards and makes recommendations to themanagement and carries out the policy.

The CEO and Finance Manager periodically review and, when needed, makechanges to the foreign exchange management policy to keep it relevant.


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5.2.5 Managing Banking Relationships

The Company CEO and Finance Manager manages relationships with financialinstitutions with an eye to the long term, cultivating the relationship on a personaland professional level in a way that ensures favorable treatment and terms andenables the Company to maximize returns while minimizing the cost of doing

business with those institutions.Top Management periodically reviews the Company's relationship(s) with itsfinancial institution(s) to ensure the Company is accruing the maximum benefitfrom the relationship. The Finance Manager periodically meets with the financialinstitution's contact (account manager, etc.) to maintain the personal side of therelationship, keeping the lines of communication open, and makes sure theCompany is aware of changes in the lending business that may impact theCompany, among others.

5.3 FINANCIAL STATEMENTS

Financial statements are formal records of the Company's financial activities, anoverview of the firm's condition in the short and long term. There are four basicfinancial statements: (1) the balance sheet, reporting the Company's assets,liabilities, and net equity at a point in time; (2) the income (orprofit and loss)statement, reporting on the Company's operational results over a specific periodof time; (3) the statement of retained earnings, which explains the changes in theCompany's retained earnings over a specific reporting period; and (4) thestatement of cash flows, the record of the Company's cash flow activities; inparticular, its operating, investing, and financing activities.

The Finance Manager is primarily responsible for monitoring financial activitiesand reporting on them periodically. Timely and accurate financial statements are

needed to effectively manage the business, required by lenders and investors,and often to demonstrate compliance with regulations.

5.3.1 Financial Forecasting

The Company conducts financial forecasting, creating pro forma financialstatements for financial planning and management. Predictions that are wellthought out regarding revenue and expenses that allow for capital planning,creating budgets, and financial management that aligns with overall Companyobjectives and strategies, and that help ensure the financial resources foroperating the business are in place.

5.3.2 Financial Reporting

The Company's financial reports are prepared and submitted in a timely manner,in accordance with applicable regulatory requirements and ethical standards andguidelines.

The Finance Manager is responsible for ensuring that financial reports accuratelyreflect the financial status of the Company at a given point in time (e.g., end ofquarter, end of fiscal year). In addition, the Finance Manager ensures that suchreports conform to applicable legal requirements, standards, and acceptedpractices (e.g., IFRS, GAAP). The CEO and Finance Manager review Company


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financial statements and, in accordance with accepted practices and regulatoryrequirements, attest to (a) the accuracy of those statements and (b) theimplementation of a system of internal controls.

5.3.3 Financial Statement Analysis

The Company monitors financial activity and analyzes financial statements in

order to better understand and manage and improvethe Companys overallfinancial performance. Information contained in Company financial statements ismade more understandable, meaningful, and useful by (a) ensuring consistencyand ease of use; (b) presenting information in terms of financial objectives,forecasts, and historical performance; and (c) using commonly acceptedanalytical tools and standards (e.g., financial ratios).

The Finance Manager analyzes and/or oversees analysis of financial statements,prepares reports and recommendations for the Dorsch Holding GmbH, andpresents this information to the Dorsch Holding GmbH on a periodic basis.1

5.3.4 Financial Management Review

The Company has implemented a plan for communication between TopManagement and the Dorsch Holding GmbH for the purpose of timely andeffective financial management (establishing and monitoring progress towardfinancial goals and objectives, documenting and implementing strategies,communicating progress and results, etc.). Top Management and the DorschHolding GmbH are responsible for maintaining, reviewing, and updating this plan,as needed.

5.3.5 Financial Restatements

The Company has established and implemented procedures for handling errorsdiscovered in submitted or published financial statements. The Finance Managerensures that errors are thoroughly investigated and addressed appropriately.The Finance Manager supervises the preparation and submission ofcorrected/revised financial statements accurately, in a timely manner, and inaccordance with accepted practices, standards, and regulations.

The Finance Manager ensures proper and timely communication of restatementsand their effect to interested parties. Finally, the Finance Manager ensures theimplementation of effective safeguards against errors that would lead torestatements, as well as the continued effectiveness of those safeguards.

5.3.6 Release of Financial Information

The Company controls the release of its financial information to outside parties.The Finance Manager reviews requests for financial information and approvesthe release of financial information to outside parties (e.g., creditors, customers)

on a conditional, as-needed basis.

5.4 INTERNAL CONTROLS

Internal controls are the measures the Company adopts to comply with internaland stockholder requirements (and, in some cases, regulatory requirements),


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promote operational efficiency and effectiveness; safeguard assets; and providereasonable assurance of the accuracy and reliability of financial and accountingdata to interested parties. Internal controls are an important part arguably, themost important aspect of the Company's risk management process.Developing and implementing a system of internal controls is crucial to ensuringand demonstrating compliance. Auditing, both internal and external, isconsidered the best method of verifying and ensuring the continued effectivenessof the Company's internal control system.

5.4.1 Risk Assessment

The Company periodically identifies, reviews, assesses, and prioritizes financialrisks to manage them effectively and efficiently, substantially decrease theopportunity for material weaknesses to go undetected, and reduce theCompanys risk exposure. The top management forms a Risk ManagementCommittee to identify and assess risks.

5.4.2 Risk Management

The Company has developed and implemented a risk management system thatenables, supports, and promotes: awareness and understanding of risks andtheir potential impact; demonstration of due diligence in decision making;exercising appropriate duty of care; innovation through calculated risk taking; andassurance that risks are managed according to exposure levels. The RiskManagement Committee is responsible for execution of the risk managementplan and reports periodically to Top Management on the adequacy of the planand the need for improvement.

5.4.3 External Auditing

The Company periodically undergoes a third-party (external) audit of its financialoperations to determine if they are in conformance and are achieving the desired

results. Third-party auditing is done by independent, accredited auditors, whosejob it is to determine if the Company is presenting financial information inaccordance with established criteria, is in compliance with specifiedrequirements, and has designed and implemented internal controls over financialreporting to achieve stated control objectives.

CEO is responsible to select an external auditor and to review and evaluate theaudit results.

5.4.4 Internal Auditing

Internal auditors (who may be Company employees or representative of DorschHolding GmbH) periodically evaluate financial and accounting processes

typically between third-party audits identifying material weaknesses(deficiencies) and recommending improvements to the Financial ManagementSystem.

The scope of internal auditing may be narrow or broad and may involve issuessuch as the efficacy of Company operations, the reliability of financial reporting,fraud, safeguarding assets, checking compliance with pertinent regulations andinternal policies and procedures. Internal auditors are not responsible forexecuting company activities or changes to them they merely advise Top


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Management and the Dorsch Holding GmbH on how they might better executetheir responsibilities.

The Internal Audit process is designed to assure Top Management and theDorsch Holding GmbH that the Company is in compliance with applicablestandards and regulations pertaining to internal controls and financial reporting.

5.4.5 Corrective Action

The Company ensures the ongoing effectiveness and security of its financialmanagement system by taking prompt corrective action when internal controlsare found inadequate or have been compromised. All Finance employees areempowered to initiate corrective actions. The Finance Manager tracks correctiveactions, ensures they are executed effectively and in a timely manner, andfollows up on those actions to ensure that they have been effective in preventingrecurrence of nonconformities.

5.5 CASH CONTROL

Adequate control over all cash receipts and disbursement are a vital element ofthe companys internal accounting controls. The following Cash Proceduresshould be utilized to control the flow of cash through the company.

5.5.1 Cash Drawers

Proper internal control is maintained over funds received by the Company at alltimes. The company has identified the practices for cash drawer control,including cash receipts, credit cards, special tender items, cash payouts andreconciliation with deposits.

5.5.2 Cash Receipts and Deposits

The company has established the methods to be followed for receiving, applyingand depositing cash receipts. This applies to all cash receipts received by thecompany. Accurate internal control of cash receipts and deposits is maintainedat all times. For example, Cash deposits are made on the same day as receipt.

5.5.3 Problem Cheques

The company should describe how problem Cheques should be handled beforedepositing, in order to save time in returning and following-up on unsignedchecks, checks marked "payment in full", or those returned by the bank. Thisapplies to all checks received by the company.

5.5.4 Online funds Transfers

The company has payment options to clients and sub/ joint consultants in orderto make funds immediately available to the Company. Online transfers aretreated with special care and accuracy to prevent loss to the company or thecustomer. The company has taken this facility for making payment to its vendors/sub consultants and employees.

The company has explained the steps necessary to ensure proper proceduresare followed when processing online transfer requests. This applies to clients


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who are sending or receiving online transfers and the financial institutions, whichprocess these requests.

5.5.5 Cheque Signing Authority

The company has authorized the CEO as the cheque signing authority.

While Finance Manager is responsible for entering bills, paying bills, and writingout cheque, and related documentation are presented to CEO for signing. Noone person or employee is allowed to enter invoices, select invoices for payment,then print and sign checks, to ensure the integrity of the accounting systemremains intact. This applies to all regular bank checking accounts of thecompany.

5.5.6 Cheque Requests

The company should describe the process for completing a cheque request formto ensure the efficient processing and record keeping of all cheques requests.

5.5.7 Bank Account Re-conciliations

The company has a practice for preparation of a monthly bank reconciliation andensure the accuracy of the companys bank account records by proving themonthly balance shown in the banks Account Register. This applies to all bankaccounts maintained by the company.

5.6 ASSETS

Accurate reporting, classification and valuation of inventory are critical elementsof internal controls because any changes in inventory and assets can have adramatic and material impact on the balance sheet and income statement. Thefollowing Asset Procedures should be utilized to account for and control all of the

companys various assets.

5.6.1 Inventory Control (office supplies)

The investment in physical inventory will be maintained at the lowest effectivelevel and supervised consistent with a common set of procedures and controls.The company should outline the actions taken for proper safekeeping andhandling of inventory to ensure it is saleable, usable, and traceable for quickselection and delivery. This applies to all inventory items including back roomand warehouse storage.

5.6.2 Inventory Counts (office supplies)

All physical inventories will be periodically and frequently counted and reviewedunder a common set of procedures and controls. The company should outlinethe actions to be taken to conduct an accurate physical count of all inventoryitems in order to verify the accuracy of the inventory ledger. This applies to allinventory items including back room, warehouse storage, off-site usage,demonstration, or customer loaner purposes.


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5.6.3 Fixed Asset Control

Proper control procedures will be followed for all capital asset acquisitions,transfers and dispositions in order to provide internal control of capital equipmentand to assist in reporting. The company should outline the procedures foracquiring, disposing and maintaining control of capital assets. This applies to all

capital equipment with a value of AED 1000 or more and with a useful life greaterthan one year.

5.6.4 Fixed Asset Capitalization & Depreciation

Asset acquisitions with a useful life expectancy of greater than one year and witha minimum threshold amount as specified by the Finance Manager should becapitalized by the company and depreciated.

The company should delineate the capitalization and depreciation methods forvarious asset groups. This applies to all acquisitions of capital assets for thecompany.

5.7 REVENUE

The proper identification and acceptance of all sales are an important element ofcontrols for the income statement and represents the primary source ofoperational cash flow. The following Revenue Procedures should be utilized toaccount for and recognize all sales of the company.

5.7.1 Agreements / Contracts Record

All clients agreement will be processed in an efficient and organized manner toensure accurate and prompt completion of services. The company should

summarize the preparation of documents, paperwork flow, and responsibilities byindividuals and departments for obtaining a contract.

Each individual involved in the projects should take the responsibility todetermine that all required and necessary activities and documents are properlycompleted. This applies to all individuals and departments involved incompletion of project including Project Manager, Architect, Draftsman, financeand others.

5.7.2 Projects Acceptance

To ensure the highest clients services levels and reduce potential orderproblems, projects are properly evaluated and approved prior to finalization ofcontract.

The company has outline the activities and responsibilities through a Customeracceptance or rejection form duly filled by the BD manager and endorsed byCEO This applies all projects taken by Business Departments.


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5.7.3 Terms of payment and stages of billing

Project team is responsible to establish and agreed a favorable terms of billingand payment while signing agreement or contract with the clients.

5.7.4 Invoicing and Accounts Receivable

Accounting is responsible for the timely preparation and distribution of invoices tooptimize cash flow and customer payments. Accounting should also maintainaccurate records over Accounts Receivable and abide by proper internalcontrols.

The company should explain the methods for the preparation of invoices andaccounts receivable records processing. This applies to all product sales andservices provided by the company.

5.7.5 Progress BillingProgress billings will be made to clients on a timely basis throughout the life ofthe project. These billings will be accurate and easily understood by both partiesinvolved.

The purpose for creating progress billings is to obtain payment for the portion oflabor and materials used up to a certain point in time and before the project arefully completed. This improves the cash flow typical of long-term projects orassignments. This procedure applies to all service agreements or projectsprovided by the company.

5.7.6 Additional billing

All variations and additional services shall be charged separately and this shouldhave been considered in the agreement signed with the clients. A mechanism isagreed with client for resolving any confusion in later stage.

5.7.6 Account Collections

All open accounts receivable with late or delinquent payment activity will behandled in a timely and effective manner to ensure maximum collections and anoptimum accounts receivable turnover ratio.

The company should provide the actions and methods for processing late or

delinquent payments. This applies to the Credit Department involved withcollection of past due accounts receivable. The Sales and/or ShippingDepartments may be involved in reference to shipping holds or special creditarrangements.

5.8 PURCHASING

Proper vendor selection and utilization assist in controlling expenses and providequailit inputs to the comapny. The following Purchasing Procedures should beutilized to account for and control all purchases and acquisitions of the company.


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5.8.1 Vendor Selection

The company ensures purchased products and services conform to specifiedrequirements. This starts with selection of appropriate suppliers including subconsultant that have the capability and systems to supply products, materials and

services to the companys specified requirements.

The company should strive to validate the performance capabilities of all vendorsand maintain the internal controls of the purchasing functions. Suppliers arecontrolled to the extent necessary based on the effect of the purchased items onthe quality of the companys products and services.

The company should provide the methods for determining, documenting and,when applicable, inspecting vendors for compliance with company policies andcontract purchasing requirements. This applies to all vendors of products,materials, and services that directly affect the quality of the companys productsand services.

5.8.2 General PurchasingThe investment in supplies, IT accessories and capital equipment will befacilitated through the Purchasing Committee, maintained at the lowest effectivelevel and supervised consistent with a common set of procedures and controls asrequired by all regulatory and customer contract requirements.

To outline the actions to be taken for 1) the procurement of all supplies andcapital equipment, 2) the continuous analysis of inventory usage and balances inorder to minimize the investment level, 3) the completion of related documents.

This applies to the purchase of all inventory items, supplies and capitalequipment for all departments within the company.

5.8.3 Project Purchasing

The companys Project team, if required is responsible for obtaining acompetitive price on materials in correct quantities in a timely fashion, so that theflow of construction is not interrupted or impeded, if required.

The company should describe the procedures involved in maintaining theordering, purchasing and receiving functions needed for projects in the field.This applies to the purchase of all materials, services, tools, supplies, equipmentand equipment rental for all development or construction projects.

5.8.4 Receiving and Inspection

All parts, components, goods and materials should be received in an organizedmanner and inspected for conformance prior to stocking to provide an initial

quality control inspection. Any items or shipments rejected will be properlyquarantined from other inventory items until disposition.

The company should outline the steps for the receiving and inspection ofmaterials, components, parts, finished goods, etc., and the stocking of theseitems or the disposition of rejected items. This applies to the receipt of allinventory items.


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5.8.5 Accounts Payable and Cash Disbursements

Internal controls are required to ensure that only valid and authorized payablesare recorded and paid. Accounting procedures should be implemented to ensurethe accuracy of amounts, coding of general ledger accounts and appropriatetiming of payments.

The company should explain the practices for documenting, recording andissuing payments for accounts payable transactions. This applies to allpurchases including, merchandise and non-merchandise purchases.

5.9 HUMAN RESOURCE COMPENSATION

The creation of a proper compensation and benefits system is the foundation forrewarding and incentivizing employee to achieve The Companys goals. Thefollowing procedures describe the methods and systems for compensatingemployees.

5.9.1 Payroll

The Company maintains payroll records, files, and forms in an orderly fashion fortime periods that comply with legal and governmental requirements and asneeded for general business requirements. The Company provides policies andprocedures relative to payroll matters including employee classifications, payperiods, record keeping, and privacy.

5.9.2 Paid & Unpaid Leave

The Company provides certain earned benefits to all eligible employees in orderto maintain a happy and productive workforce. The Company encourages allemployees to utilize all paid time off work.

5.9.3 Insurance BenefitsThe Companys insurance benefit plan is designed to assist employees and theirdependents by making available cost-effective insurance coverage through grouprates to employees' eligible dependents.

5.9.4 Healthcare Benefits

The Companys healthcare benefit plan is designed to help employees paycertain expenses and to make available cost-effective insurance coveragethrough group rates to employees' eligible dependents.

5.9.5 Employee Retirement Scheme (Gratuity)

The Company should implement and follow procedures necessary to maintain

compliance with the provisions of end services payments to comply withstandards for employee benefit plans.

The Finance Manager is responsible to process the payroll after considering theAttendance record and Leave record and make sure all required calculation on eachmonth end for making payment through banking channel and make sure the submitpayroll sheet for CEO approval.


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6.0 RESOURCE MANAGEMENT

6.1 PROVISION OF RESOURCES

During planning and budgeting processes, and as needed throughout the year,

the CEO and management team determine and ensure that the appropriateresources are available to implement and maintain the Accounting ManagementSystem and continually improve its effectiveness.

6.2 HUMAN RESOURCES

6.2.1 Accounting Staff

Managers and employees are to have personal and professional integrity and areto maintain a level of competence that allows them to accomplish their assignedduties, as well as understand the importance of developing and implementinggood internal controls.

This requires managers and their staff to maintain and demonstrate at all times:

o Personal and professional integrity

o A level of skill necessary to help ensure effective performance

o An understanding of internal controls sufficient to effectively dischargetheir responsibilities

6.2.2 Competence, Awareness, and Training

Accounting personnel shall be competent based on appropriate education,training, skills and experience. The minimum competencies required for eachposition at DBD are defined in each position's Job Description. HumanResources, department managers and supervisors are responsible for ensuring

job descriptions are current and adequate.Where otherwise qualified personnel require additional training or other action tomeet the minimum competency requirements, these needs are identified. Thedepartment provides task-specific training. General training or education isprovided or coordinated by Human Resources. The department should evaluatethe effectiveness of training or other actions taken as appropriate.

The department generates records of task-specific training.

Department managers are responsible for ensuring their employees are aware ofthe relevance and importance of their activities and how they contribute to theachievement of the accounting objectives.

6.2.3 Separation and Supervision of Du

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