Incorporating Internal Financial Controls over Financial Reporting Empirically- Series 4 –Logistic Process (Listed Companies Call)

As I already stated in my introductory part of this topic, any process will be parted into static and strategic meaning thereby one which is in as it is form and the other requires professional skepticism. Above that, static facts w.r.t. terminologies are also tuned here. Let us sail beyond statutory sections sight u/s 134, 143,177 of Companies Act, 2013 by carving into crux of Logistic Process.

Draft design depicted as:-

• Radical round
• Strata-static sphere
• Last lane
• Vocab wall

Radical Round

It starts with nature of client’s business and outreach of products /services it deals with. Only three mediums of transportation to be travelled thoroughly. This only is too wide to embed in itself supply chain management, insurance, order to cash, inventory and finance/accounts processes. On-boarding a vendor here majorly meets core criteria’s of dispatches and delivery at desired destination in due condition. Service level agreements (SLA), terms, valuations, methods, shipment creations, etc. are starting steps in this process. Then comes transit tour which makes us to unveil umbrella of Insurance along with water way, air ways and e-way bills. Finally desired delivery deadlines with dated details/reports draws towards dead-end.

♦ Strata- Static Sphere

Let us begin our journey in all three modes via strata- static road.

1. SOP

Logistic is lifeline for any line of business. SOP sight states ambit within which this lifeline lands to. Medium of transport mode, SLA with major vendors, reverse pickups, sync with system to ensure shipment track and satisfaction on destination, topped up with after service agreed aspects and regular robustness serves as riders from SOP.

2. Escalation ink

Are we talking about increase in petrol/diesel process; thereby increase in respective costs as part of escalation clause? Answer is Yes but not restricted to. List down the chain of cycle effected due to this clause beginning from budget bucket till balancing payment. It’s not everything agreed are part of escalations, try and understand implied aspect with example.

E.g. once goods arrive at customs with BOE, certificate of origin and agreed set of documents, but are pending duty clearance. There is a delay in doing so and fine is charged, because of reason yet to be rooted. Being listed company, matter may drill down to materiality marks, but one should decide at this point level of substantive procedure to be performed or ensure iteration of such instances where ultimately that charges/fines/penalty are born by company. These are also understood as inherent risk under implied escalation ink.

3. Transit track

It is of at most essence to trace transportation of goods. System sync here plays pivotal role. Irrespective of mode of transport, there has to be a place where goods movement can be monitored. Only after that book closure, re-order level, economic order quantity, Ind AS 115 , etc areas can be accurate. Inaccuracy instincts mingle with manual mix (only mail communications) will mess this process. So, system sync is must.

4. Dispatch, Delivery & Due Diligence

 Let this aspect be deliberated distinctly 1^st comes dispatch. Simply states that physically goods gone out of warehouse/stores. “I have done my job junction” is reached and hand-over of goods has to happen suitably.2^nd is delivery. Delivery reports, agreed TAT talks, POD’s, reconciliations, location wise logs, etc. are definite data to be shared and sampled out. 3^rd is due diligence. Derives its broader base in terms of demarcation of ownership of goods from various points of pickups till destination with assurance of same quality and quantity. All reports received to be reasoned out and divergent deep dive is demanded.

5. Isolating internal and external edges

There has to be demarcation of internal and external factors in entire process. How and in what way? Let us take land route to ride this recognition.

E.g. E-way bill, invoice copy, packing list and other statutory set of documents are pre-requisite for ready to make movement. However, vehicle which was supposed to enter capital of our country found to be incompliant w.r.t. High Security Registration Plate (HSRP).Fine levied and perishable goods poured in vehicle lost its useful life in transit itself due to delay by 3 hours. Factor seems to be external but attributable to vendor as well as company if contract states that vendor is supposed to submit latest doc’s on timely basis and this document forms part of KYC /vendor evaluation and not submitted. Then to be debited to vendor, if terms are silent, its negotiation nitty-gritties that decides upper hand.

Imagine if cyclone stops way forward, its attributable to Insurance company base on type of insurance availed. If goods dispatched are in damaged delegacy, then it is internal which is to be bared by company.

Isolation if internal and external factors hence are inevitable.

♦ Last Lane

Last lane for logistic loom finds fine art of commencing a journey via any mode till concluding it at suable stop. Freezing by, “Logistic links with legitimate leap lights the lamp of liveliness”

♦ Vocab Wall

Though it is web of words, will have only gist of basic blocks —