NUREC Finance Manual

NAKHEEL UNITED REAL ESTATE COMPANY
FINANCE
POLICIES & PROCEDURES MANUAL
FINANCE MANUAL
CONTENTS
CHAPTER 1 – INTRODUCTION
Policy FM 1.1 Introduction

FM 1.2 Company Policy
FM 1.3 Finance Policy
FM 1.4 Confidentiality
CHAPTER 2 – ORGANISATION STRUCTURE & AUTHORITY

Policy FM 2.1 Organization Chart
FM 2.2 Corporate Authority Matrix
CHAPTER 3 – CONSOLIDATED FINANCIAL STATEMENTS
Policy FM 3.1 Consolidated of Financial Statement

FM 3.2 Procedure for Consolidation
CHAPTER 4 – HOLDING COMPANY ACCOUNTING POLICIES
Policy FM 4.1 Holding Company Accounting Policies

FM 4.2 Chart of Accounts
CHAPTER 5 – MERGERS & ACQUISITION
Policy FM 5.1 Target Identification & Assessment

FM 5.2 Performing Due Diligence
FM 5.3 Integration Policies & Procedures
FM 5.4 Evaluation
CHAPTER 6 – INVESTMENTS
Policy FM 6.1 Investments Guidelines
FM 6.2 Types of Investment, Revaluation
FM 6.3 Equity Accounted Investments
FM 6.4 Accounting for Goodwill
FINANCE MANUAL
CONTENTS
CHAPTER 7 – BUDGETING & CAPITAL EXPENDITURE
Policy FM 7.1 Introduction to Budget

FM 7.2 Capital Expenditure
FM 7.3 Budgeting process - Holding & Subsidiary
FM 7.4
CHAPTER 8 – CASH & BANK & LONG TERM LOANS (Company /Subsidiaries)
Policy FM 8.1 Bank Accounts

FM 8.2 Cheque Receipt
FM 8.3 Cheque Payment
FM 8.4 Dishonored Cheques
FM 8.5 Post Dated Cheques
FM 8.6 Petty cash
FM 8.7 Cash Receipt
FM 8.8 Cash Payments
FM 8.9 Authorization to Incur Long Term Loans
CHAPTER 9 – PURCHASE AND PAYABLE
Policy FM 9.1 Requisition Handling

FM 9.2 Purchase Order Expediting
FM 9.3 Purchase Order Cancellation
FM 9.4 Receiving and Delivery of Goods
FM 9.5 Rejection of Goods
FM 9.6 Accounts Payable
CHAPTER 10 – PERSONNEL
Policy FM 10.1 Staff Salary
10.2 Staff Advance
10.3 Business Training & Travel
FINANCE MANUAL
CONTENTS
CHAPTER 11 – REPORTING
Policy FM 11.1 Reporting Objectives

FM 11.2 Subsidiary Reporting
FM 11.3 Consolidated Reporting
CHAPTER 12 – FILING
Policy FM 12.1 Filling of Documents

A0801 Supplier Performance Record
F101 Budgeting objectives
F 1201 Schedule of Reports
F 1202 Legal Cases
F 1203 Compliant Tracking
F 1204 Labour turnover
F 1205 Insurance Coverage
F 1206 Forex Risk
F 1207 Statutory Compliance
F 1208 Collection Report
F 1209 Limits Utilization
F 1210 Loan Tenor
F 1211 Profitability
F 1212 Critical Ratios
F 1213 Project Report
CHAPTER 13 – GENERAL ACTIVITIES & FILING
Policy FM 13.1 Filing of Documents

FINANCE MANUAL
CONTENTS
DEPARTMENT DATE PAGE NO:
FINANCE & ACCOUNTS MAY 2008 6of 148
SUBJECT POLICY NO:

FM 1.2
COMPANY POLICY
APPROVED BY:
This Manual is designed to explain and facilitate understanding of the Finance

Department organization of Nakheel United Real Estate Company, hereinafter referred
to as, its functions, policies and procedures, and to serve as a tool in managing finance
activities.
The policy statements contained in this Manual represent the basic intentions and goals of
the Company. They represent the permanent foundation upon which the company
operates. The policies and procedures mentioned in this manual should be in compliance
with Islamic principles and should adhere to the Sharia’a guidelines.
In this Manual, the word “Company” shall mean Nakheel United Real Estate Company
(NUREC). The word “employee” shall mean an employee of NUREC.
This Manual must be kept current and should include all Policy and Procedures Bulletins
issued by the Financial Controller and/or by the Management of NUREC.
This Manual should not be released outside without permission from the Executive
Committee of the Company.
SUBJECT POLICY NO:

FM 1.2
COMPANY POLICY
APPROVED BY:
1.2.1 Scope
This policy applies to all employees and those acting on behalf of NUREC.
1.2.2 Basic Policy for Finance & Accounts Department
1.2.2.1 It shall be the policy of and their employees to:
1.2.2.1.1 Strictly observe the laws and regulations of the State of Kuwait without
qualification or reservation in respect of all matters relating to statutory
compliance affecting the financial matters.
1.2.2.1.2 Observe all policies, rules and regulations established by NUREC with
respect to Finance & Accounts Department.
1.2.2.1.3 Maintain a high standard of professional ethics in their dealings.
1.2.2.1.4 Avoid all conflicts between personal and company interests.
1.2.2.1.5 Cooperate fully with other departments and individuals within the
company.
1.2.2.1.6 Make all legal and binding contracts by the designated Departments as
stated in the manuals.
1.2.2.1.7 Contracts must either be prepared and/or reviewed by the Legal Advisor if
required.
1.2.2.1.8 The Finance & Accounts Department shall review the legal documents
with respect to financial matters included in the contracts.
SUBJECT POLICY NO:

FM 1.3
FINANCE POLICY
APPROVED BY:
1.3.1 Objective
The objective of this manual is to set detailed accounting policies and procedures
required to be complied with by NUREC which ensure adequate financial controls
and systems to maintain the security of the Company's assets and all other
financial data pertaining to the Company. Its objective is to provide financial
policies and procedures for the holding company and guidelines to the subsidiaries
which should be followed by the respective subsidiaries in their financial related
matters.
1.3.2 Responsibility
It is the responsibility of all who have been delegated the authority to commit
Company funds to adhere to the Company policies contained in this Manual.
1.3.3 Introduction
This Manual has been prepared to provide information and direction to the various
departments of the Company and in particular to the Finance & Accounts
Department and guidelines to the Finance & Accounts Department of the
subsidiaries. Its primary purpose is to communicate policies and give guidance to
Finance personnel, personnel assigned to the accounting function, and others those
who are assigned to provide with management information to the top management
1.3.4 Policies and Procedures
1.3.4.1 The company policy is to ensure that all transactions are properly, promptly
and efficiently recorded, so that at any given time the books and records of the
Company give a true and fair view of the financial status of the Company.
1.3.4.2 In addition, adequate control systems must be in place to ensure the security of
all of the Company's assets as well as all financial information.
1.3.4.3 The procedures stated in this manual are intended as a guide to the all staffs of
the Finance & Accounts Department. However, different conditions may
prevail at different times and judgment will have to be exercised when
determining whether additional (or fewer) controls are required. Judgment
must always be based on the potential exposure of the Company.
1.3.4.4 The procedures stated in this manual are designed to be a concise statement of
the current best practices prevailing. It is therefore not exhaustive and covers
only the major systems that are used.
SUBJECT POLICY NO:

FM 1.3
FINANCE POLICY
APPROVED BY:
1.3.4.5 It is not intended that these procedures be an excuse for duplicating the
existing systems. If the controls and checks included in this section are already
in operation, then it should not be necessary to change the existing systems.
1.3.4.6 It is to be satisfied that the books and records are a true and fair record of the
transactions that have taken place. This must be done as economically as
possible, so that effort is applied where necessary and is not blindly following
age-old tradition.
1.3.2 Review and update of the manual
1. The manual is a statement of company’s current policies. These policies have been
established and will be reviewed periodically in line with the Company’s
philosophy, the Company’s own need and the circumstances prevailing in the
company’s area of operation at any point of time.
2. Amendments and revisions will take the form of revised policies, with the
amendment also specifying that it supersedes a previous policy. Such amendments
will be sent to the authorized list of managers with instructions regarding where
they are to be inserted and which, if any pages are to be removed, and destroyed.
3. Update instructions will be sequentially numbered and dated and the most recent
instructions should be filed at the rear of the manual, so that it may easily be
verified that the manual is up to date.
SUBJECT POLICY NO:

FM 1.4
CONFIDENTIALITY
APPROVED BY:
1.4.1 Purpose
To identify the nature of confidentiality of the transactions involved in Finance &

Accounts Department.
1.4.2 Scope
This policy applies to all employees of Finance & Accounts and all other
employees who are authorized by the management to use this manual.
1.4.3 General
1.4.3.1 The Finance Manual is an extremely confidential document. With the

exception of legal advisors and other persons authorized by the
management, no part of the contents of the manual is to be made available
to any person’s organization or institution.
1.4.3.2 This manual will not be freely circulated but will be made available to all
staffs of Finance & Accounts Department and to all managers as directed
by Financial Controller, Department Managers will be responsible for the
control and custody of the copies made available to them.
1.4.3.3 Finance & Accounts Department will maintain a distribution list for the
manual. Any amendments to the manual will be distributed by the Finance
& Accounts Department to all of them listed in the distribution list.
1.4.3.4 The Executive Committee must approve all additions and amendments to
this manual, where appropriate.
1.4.3.5 All files within the Finance & Accounts Department are to be maintained
in an up-to-date and confidential manner. Access to these files and any
other documentation found within this department shall be restricted to
those authorized by the Financial Controller.
1.4.4 Organization of the Manual
1.4.4.1 This manual is organized by topics (chapters). Polices have been

Holdinged together according to the subjects. Policies are divided into
sections and major policy areas are broken down into related activities.
1.4.4.2 The scope of each policy in terms of its applicability to various

Holding/grades of staff is indicated prior to the commencement of each
chapter.
SUBJECT POLICY NO:

FM 2.1
ORGANISATION CHART
APPROVED BY:
2.1.1 Policy
The organizational structure of the Department will be based on Personnel at

different cadres posted by the Management who will be guided by the job
descriptions assigned to them from time to time either by Management and / or by
the Manager.
As such the organizational structure shown reflects proposed structure for the
Finance & Accounts department and is liable for change in future.
Also description of “Personnel” shown in the manual are indicative in nature and need not
necessarily be confined to the function / designation mentioned therein.
Chairman & MD
Financial Controller
Manager, Finance and

Accounts
SUBJECT POLICY NO:

FM 2.2
CORPORATE AUTHORITY
MATRIX APPROVED BY:
2.1. Policy
Clear cut authority limits should prevail throughout the organization for various
financial transactions that creates financial obligation on NUREC and as well on
all investment decision of scarce corporate funds.
2.2. Purpose
The purpose of this policy is to assist the Management with visibility into key
areas/transactions and perceived risks. The thresholds for the identified areas will
depend upon unique characteristics of the transaction encountered.
2.3. General Procedures
This document sets out the basis and framework of authority delegation within the
finance function of NUREC.
2.3.1. Authority levels are generally characterized as:
Board of Directors
Chairman & MD
Chief Operating Officer
VP, Operations
Financial Controller
This framework of authority limits assumes that the delegated authorities are
exercised in accordance with the following principles:
2.3.2. Company policies and regulations and/to their amendments will require approval
by the Executive Committee. Any exceptions (other than as provided for by the
respective policies and regulations) will require specific approval of the same.
2.3.3. All commitments and/or expenses will be incurred within budgets duly approved
by the Board of Directors. The word budget may be used interchangeably to mean
either Capital or Revenue budgets.
2.3.4. Any commitments or expenses in excess of or outside approved budgets will

require appropriate authorization as follows:
SUBJECT POLICY NO:

FM 2.2
CORPORATE AUTHORITY
MATRIX APPROVED BY:
2.2.3.4.1. The authority for budget amendments rests with the Board of
Directors.
2.2.3.4.2. In respect of operating expenses (like services, repairs and
maintenance, etc.) in excess of the budgets, up to 10% per item
should be authorized by the Chairman & MD. Such authorizations
are not to exceed 2.5% of the overall operating cost budget.
Within above limits, internal allocation expense budgets should be

authorized by the Financial Controller subject to a maximum
reallocation of 5% of the overall operating cost budget.
2.3.5. Delegation of authorities during absence of authority level holders will be covered
by specific written instructions from the supervisor of the concerned officer.
2.3.6. The Chairman & MD is authorized to delegate some of his authorities to other
senior functionaries with specific limits for each item.
2.3.7. For the details of authority limits delegated to various authorities in the
company, please refer to approved Delegations of Authority for Nakheel United
Real Estate Company
SUBJECT POLICY NO:

FM 3.1
CONSOLIDATED FINANCIAL
STATEMENTS APPROVED BY:
3.1.1 Scope
3.1.1.1 In principle, the parent should consolidate all subsidiaries.
3.1.1.2 A parent company means a company that controls effectively other companies,
and the other companies are subsidiaries.
An effective control is a control over the decision-making body of a company. A

company that shows one of the following indications is assumed as a subsidiary,
unless any counter evidence supports that no effective control exists over the
decision making body:
a. A company holds effectively the majority of the voting interests in the other
company.
b. A company holds less than 50 percent but significant minority of the voting
interests in the other company, and there are certain facts that support the
existence of control over the decision making body of the other company.
3.1.1.3 If a parent and its subsidiaries or the subsidiaries control effectively other
companies, the other companies are assumed as subsidiaries as well.
3.1.1.4 A subsidiary that meets one of the following conditions should not be
consolidated:
a. The control over the subsidiary is temporal. However, there must be evidence that
the subsidiary is acquired with the intention to dispose of it within twelve months
and that management is actively seeking a buyer. In addition, the words “in the
near future” were replaced with the words “within twelve months”. When a
subsidiary previously excluded from consolidation is not disposed of within
twelve months it must be consolidated as from the date of acquisition unless
narrowly specified circumstances apply.
b. Even if the subsidiary does not meet the condition (a), consolidation of the
subsidiary would mislead significantly the judgments of the interest parties.
3.1.2 Purpose
The purpose of preparing consolidated financial statements is to report financial

condition and operating result of a consolidated business Holding, which is
assumed as one entity comprised of more than one companies (including entities
other than "companies") under a common control.
SUBJECT POLICY NO:

FM 3.1
3.1.3 General Principles
3.1.3.1 Consolidated financial statements should provide true and fair view of
financial condition and operating result of the NUREC.
3.1.3.2 Consolidated financial statements should be prepared based on legal-entity

based financial statements of the NUREC and subsidiaries that belong to
the NUREC, which are prepared in accordance with the generally accepted
accounting principles.
3.1.3.3 Consolidated financial statements should display clearly financial

information necessary for interest parties not to mislead their judgments
about the condition of the business Holding.
3.1.3.4 Policies and procedures used for preparing consolidated financial

statements should be applied continuously and not be changed without
reason.
3.1.4 Procedure for Consolidation
3.1.4.1 In preparing consolidated financial statements, NUREC should combine its

separate financial statements and its subsidiaries line by line by adding
together like items of assets, liabilities, equity, income and expenses. In
order that the consolidated financial statements present financial
information about the Holding as that of a single economic entity, the
following steps should then be taken:
 The carrying amount of NUREC ’s investment in each subsidiary and

NUREC ’s portion of equity of each subsidiary are eliminated (see Point
4.1.4.3 below, which describes the treatment of any resultant goodwill);
 Minority interests in the profit or loss of consolidated subsidiaries for the

reporting period are identified; and
 Minority interests in the net assets of consolidated subsidiaries are

identified separately from NUREC’s equity in them. Minority interests
in the net assets consist of:
 The amount of those minority interests at the date of the

original combination calculated in accordance with Chapter 6;
and
 The minority’s share of changes in equity since the date of the
combination.
SUBJECT POLICY NO:

FM 3.1
3.1.4.2 Additions to and Selling of Investments in a Subsidiary
 If a parent acquires an additional investment in a subsidiary, the portion of

the net assets that is additionally acquired should be eliminated from the
minority interest and the incremental parent's interest from the additional
acquisition (hereafter, "additionally acquired interest") should be offset
with the cost of the investment. If there is a difference between the
additionally acquired interest and the additional investment, the difference
should be accounted for as a consolidated adjustment.
 If a parent sells a portion of the investment (as far as the parent-subsidiary

relationship remains), the sold interest of the net assets of the subsidiary
should be transferred from the parent's interest to the minority interest. If
there is a difference between the transferred interest (hereafter, "sold
interest") and the sold portion of the investment should be accounted for an
adjustment to the gains or losses on the selling of the investment. The
already-amortized consolidation adjustments, if any, of the sold portion
should be accounted for in the same way.
 In such cases that the subsidiary raised capital at market value, any
difference between the additional investment and changes in the parent's
interest should be accounted for as a gain or loss. If such accounting may
mislead significantly the judgments by the interest parties, the difference
may be directly charged to the consolidated retained earnings.
 If there is a minority interest in the selling subsidiary, the unrealized gains

and losses should be allocated between the parent's interest and the
minority interest based on the proportionate ownership of the parent's
interest and the minority interest.
3.1.4.3 Goodwill
 Goodwill is initially measured at its cost, being the excess of the cost of
the business combination over NUREC’s interest in the fair value of the
identifiable assets, liabilities and contingent liabilities and recognized as an
asset at the acquisition date.
 Goodwill acquired in a business combination represents a payment made

by NUREC in anticipation of future economic benefits from assets that are
not capable of being individually identified and separately recognized.
SUBJECT POLICY NO:

FM 3.1
 After initial recognition, NUREC shall measure goodwill acquired in a

business combination at cost less any accumulated impairment losses.
 Goodwill acquired in a business combination shall not be amortized.

Goodwill should be subject to annual impairment tests and specific testing
whenever impairment is indicated. This applies to goodwill from new
transactions and to goodwill from previous transactions.
3.1.4.4 When potential voting rights exist, the proportions of profit or loss and
changes in equity allocated to NUREC and minority interests are
determined on the basis of present ownership interests and do not reflect
the possible exercise or conversion of potential voting rights.
3.1.4.5 Intra-Holding balances and transactions, including income, expenses and

dividends, are eliminated in full. Profits and losses resulting from intra-
Holding transactions that are recognized in assets, such as inventory and
fixed assets, are eliminated in full. Intra-Holding losses may indicate an
impairment that requires recognition in the consolidated financial
statements.
3.1.4.6 The financial statements of NUREC and its subsidiaries used in the
preparation of the consolidated financial statements shall be prepared as of
the same reporting date. When the reporting dates of NUREC and a
subsidiary are different, the subsidiary prepares, for consolidation
purposes, additional financial statements as of the same date as the
financial statements of NUREC unless it is impracticable to do so.
3.1.4.7 When, in accordance with paragraph 3.1.4.6, the financial statements of a

subsidiary used in the preparation of consolidated financial statements are
prepared as of a reporting date different from that of NUREC, adjustments
shall be made for the effects of significant transactions or events that occur
between that date and the date of NUREC’s financial statements. In any
case, the difference between the reporting date of the subsidiary and that of
NUREC shall be no more than three months. The length of the reporting
periods and any difference in the reporting dates shall be the same from
period to period.
3.1.4.8 Consolidated financial statements shall be prepared using uniform

accounting policies for like transactions and other events in similar
circumstances.
3.1.4.9 If a member of the Holding uses accounting policies other than those
adopted in the consolidated financial statements for like transactions and
SUBJECT POLICY NO:

FM 3.1
events in similar circumstances, appropriate adjustments are made to its

financial statements in preparing the consolidated financial statements.
3.1.4.10 The income and expenses of a subsidiary are included in the consolidated
financial statements from the date of acquisition. The income and
expenses of a subsidiary are included in the consolidated financial
statements until the date on which NUREC ceases to control the
subsidiary. The difference between the proceeds from the disposal of the
subsidiary and its carrying amount as of the date of disposal, including the
cumulative amount of any exchange differences that relate to the
subsidiaries recognized in equity, is recognized in the consolidated income
statement as the gain or loss on the disposal of the subsidiary.
3.1.4.11 An investment in an entity shall be accounted for as an investment

available for sale or investment in an associate in accordance with Chapter
on Investments of this manual from the date that it ceases to be a
subsidiary.
3.1.4.12 The carrying amount of the investment at the date that the entity ceases to
be a subsidiary shall be regarded as the cost on initial measurement of a
financial asset under the changed category.
3.1.4.13 Minority interests shall be presented in the consolidated balance sheet

within equity, separately from NUREC’s shareholders’ equity. Minority
interests in the profit or loss of the Holding shall also be separately
disclosed.
3.1.4.14 The profit or loss is attributed to NUREC shareholders and minority

interests. Because both are equity, the amount attributed to minority
interests is not income or expense ( it is a balance sheet item).
3.1.4.15 Losses applicable to the minority in a consolidated subsidiary may exceed

the minority interest in the subsidiary’s equity. The excess, and any further
losses applicable to the minority, are allocated against NUREC’s interest
except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses. If the subsidiary
subsequently reports profits, such profits are allocated to NUREC’s interest
until the minority’s share of losses previously absorbed by NUREC has
been recovered.
3.1.4.16 Preparation of Consolidated Statements of Retained Earnings

1) Changes in consolidated retained earnings should be calculated based on
legal-entity consolidated income statements and the appropriations of
SUBJECT POLICY NO:

FM 3.1
retained earnings of the parent and its subsidiaries, with eliminating inter
company payments and receipts of dividends among consolidated entities.
2) Consolidated amounts of appropriations of retained earnings should be

calculated based on the appropriations of the parent and its subsidiaries
that are performed during the consolidated accounting period.
3) A consolidated statement of retained earnings should display, in principle,

the beginning balance of consolidated retained earnings, additions to
consolidated retained earnings, deductions from consolidated retained
earnings, net income, and the ending balance of consolidated retained
earnings.
Deductions from consolidated retained earnings should be displayed with

categories of dividends (including interim dividends), executives' bonuses,
and transfers into stated capital.
3.1.4.17 Disclosure Requirements
The following disclosures shall be made in consolidated financial

statements:
(a) The fact that a subsidiary is not consolidated;
(b) summarized financial information of subsidiaries, either individually or
in Holdings, that are not consolidated, including the amounts of total
assets, total liabilities, revenues and profit or loss;
(c) The nature of the relationship between the parent and a subsidiary when
the parent does not own, directly or indirectly through subsidiaries,
more than half of the voting power;
(d) The reasons why the ownership, directly or indirectly through
subsidiaries, of more than half of the voting or potential voting power
of an investee does not constitute control;
(e) the reporting date of the financial statements of a subsidiary when such
financial statements are used to prepare consolidated financial
statements and are as of a reporting date or for a period that is different
from that of the parent, and the reason for using a different reporting
date or period; and
(f) The nature and extent of any significant restrictions (eg resulting from
borrowing arrangements or regulatory requirements) on the ability of
subsidiaries to transfer funds to the parent in the form of cash
dividends or to repay loans or advances
SUBJECT POLICY NO:

FM 3.1
SUBJECT POLICY NO:

FM 3.2
PROCEDURE FOR
CONSOLIDATION APPROVED BY:
3.2 Procedure for Consolidation
3.21 In preparing consolidated financial statements, NUREC should combine its

separate financial statements and its subsidiaries line by line by adding together
like items of assets, liabilities, equity, income and expenses. In order that the
consolidated financial statements present financial information about the Holding
as that of a single economic entity, the following steps should then be taken:
3.2.1.1 The carrying amount of NUREC ’s investment in each subsidiary and

NUREC’s portion of equity of each subsidiary are eliminated (see Chapter 6,
which describes the treatment of any resultant goodwill);
3.2.1.2 Minority interests in the profit or loss of consolidated subsidiaries for

the reporting period are identified; and
3.2.1.3 Minority interests in the net assets of consolidated subsidiaries are

identified separately from NUREC’s equity in them. Minority
interests in the net assets consist of:
3.2.1.3.1 The amount of those minority interests at the date of the

original combination calculated in accordance with Chapter
and
3.2.1.3.2 The minority’s share of changes in equity since the date of
the combination.
3.22 When potential voting rights exist, the proportions of profit or loss and changes in
equity allocated to NUREC and minority interests are determined on the basis of
present ownership interests and do not reflect the possible exercise or conversion
of potential voting rights.
3.23 IntraGroup balances, transactions, income and expenses shall be eliminated in full.
3.24 IntraGroup balances and transactions, including income, expenses and dividends,
are eliminated in full. Profits and losses resulting from intra-Holding transactions
that are recognized in assets, such as inventory and fixed assets, are eliminated in
full. IntraGroup losses may indicate an impairment that requires recognition in
the consolidated financial statements.
3.25 The financial statements of NUREC and its subsidiaries used in the preparation of
the consolidated financial statements shall be prepared as of the same reporting
date. When the reporting dates of NUREC and a subsidiary are different, the
SUBJECT POLICY NO:

FM 3.2
PROCEDURE FOR
subsidiary prepares, for consolidation purposes, additional financial statements as

of the same date as the financial statements of unless it is impracticable to do so.
3.26 The financial statements of a subsidiary used in the preparation of

consolidated financial statements are prepared as of a reporting date
different from that of NUREC, adjustments shall be made for the effects of
significant transactions or events that occur between that date and the date
of NUREC ’s financial statements. In any case, the difference between the
reporting date of the subsidiary and that of NUREC shall be no more than
three months. The length of the reporting periods and any difference in
the reporting dates shall be the same from period to period.
3.27 Consolidated financial statements shall be prepared using uniform

accounting policies for like transactions and other events in similar
circumstances.
3.28 If a member of the Holding uses accounting policies other than those
adopted in the consolidated financial statements for like transactions and
events in similar circumstances, appropriate adjustments are made to its
financial statements in preparing the consolidated financial statements.
3.29 The income and expenses of a subsidiary are included in the consolidated
financial statements from the date of acquisition. The income and
expenses of a subsidiary are included in the consolidated financial
statements until the date on which NUREC ceases to control the
subsidiary. The difference between the proceeds from the disposal of the
subsidiary and its carrying amount as of the date of disposal, including the
cumulative amount of any exchange differences that relate to foreign
subsidiaries recognized in equity. The Effects of Changes in Foreign
Exchange Rates is recognized in the consolidated income statement as the
gain or loss on the disposal of the subsidiary.
3.210 An investment in an entity shall be accounted for as an investment

available for sale or investment in an associate in accordance with chapter
7 of this manual from the date that it ceases to be a subsidiary.
3.211 The carrying amount of the investment at the date that the entity ceases to
be a subsidiary shall be regarded as the cost on initial measurement of a
financial asset under the changed category.
3.212 Minority interests shall be presented in the consolidated balance sheet

within equity, separately from NUREC’s shareholders’ equity. Minority
SUBJECT POLICY NO:

FM 3.2
PROCEDURE FOR
interests in the profit or loss of the Holding shall also be separately

disclosed.
3.213 The profit or loss is attributed to NUREC shareholders and minority

interests. Because both are equity, the amount attributed to minority
interests is not income or expense.
3.214 Losses applicable to the minority in a consolidated subsidiary may exceed

the minority interest in the subsidiary’s equity. The excess, and any further
losses applicable to the minority, are allocated against NUREC’s interest
except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses. If the subsidiary
subsequently reports profits, such profits are allocated to NUREC’s interest
until the minority’s share of losses previously absorbed by has been
recovered.
SUBJECT POLICY NO:

FM 4.1
HOLDING COMPANY
ACCOUNTING POLICIES APPROVED BY:
4.1.1 Policy
Accounting policies of NUREC are the specific accounting principles and

methods currently employed and considered most appropriate to present
fairly the financial statements of NUREC. These policies should be disclosed
as a part of notes to the financial statements of NUREC. Additional notes
specific to any consolidated subsidiaries should also be included in the
disclosure.
4.1.2 Procedures
4.1.2.1 Basis of Preparation
The financial statements have been prepared in accordance with Standards

issued, or adopted by the International Accounting Standards Board (IASB)
and interpretations issued by the International Financial Reporting
Interpretations Committee, and applicable requirements of Ministerial Order
No. 18 of 1990.
The financial statements are presented in Kuwaiti Dinars.
4.1.2.2 Principles of Consolidation
The consolidated financial statements include the financial statements of

NUREC “the Company” and the following subsidiaries (the Holding):
Name of Subsidiary Percentage of holding
Subsidiaries are those enterprises controlled by the Company. Control exists

when the Company has the power, directly or indirectly, to govern the
financial and operating policies of an enterprise so as to obtain benefits from
its activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control effectively
commences until the date that control effectively ceases. Equity and net
income attributable to minority shareholders' interests are shown separately
in the balance sheet and statement of income, respectively. Inter-company
balances and transactions, including inter-company profits and unrealized
profits and losses are eliminated on consolidation. Consolidated financial
statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances. The minority interests
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FM 4.1
HOLDING COMPANY
are measured by the proportion of the pre-acquisition carrying amounts of

the identifiable assets and liabilities of the subsidiaries.
4.1.2.3 Accounting Convention
The Financial statements are prepared under the historical cost convention, as
modified for the revaluation at fair value of investments available for sale and
investments held for trading.
4.1.3 Significant accounting policies:
4.1.3.1 Use of estimates
The preparation of financial statements in conformity with International Financial

Reporting Standards requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
4.1.3.2 Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash with original maturities up to three
months from the date of acquisition and that are subject to at insignificant risk of
change in value.
4.1.3.3 Investments
Investments are initially recognized at cost, being the fair value of the
consideration given, which is measured using the settlement date, including all
associated acquisition costs.
After initial recognition, investments held for trading and investments available
for sale are both measured at fair value. The fair value of investments traded in
recognized financial markets is their quoted market price based on the current bid
price. For investments where there is no quoted market price, a reasonable
estimate of fair value is determined by reference to the current market value of
another instrument that is substantially the same or is based on discounted cash
flow analysis or option pricing models. Investments whose fair value cannot be
reliably measured are carried at cost less impairment losses, if any.
Any gain or loss arising from a change in the fair value of investments classified
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FM 4.1
HOLDING COMPANY
as held for trading is recognized in the statement of income in the period in which
it arises, Any gain or loss arising from a change in the fair value of’ investments
classified as available for sale is recognized in equity. When an available for sale
investment is disposed of, any amount in equity that relates to that investment is
transferred to the statement of income in calculating the gain or loss. Amount in
equity are also transferred to the statement of income whenever the investment is
determined to be impaired.
4.1.3.4 Receivables
Receivables are stated at original invoice amount less a provision for any
uncollectible amounts. An estimate for doubtful debts is made when collection of
the full amount is no longer probable. Bad debts are written off as incurred.
4.1.3.5 Inventories
Inventories, except for spare parts, are stated at the lower of cost or net realizable
value. Cost comprises all costs incurred in bringing each product to its present
location and condition. Cost is stated at weighted average cost less provisions for
slow moving items. Net realizable value represents the estimated selling price less
the estimated selling costs.
Inventories of spare parts are held for the Company’s own use and are not
intended for sale. Spare parts are stated at weighted average cost less provision for
obsolete items.
4.1.3.6 Investments in associated companies
An associated company is one over which the Company has significant influence
but not control over its operations, generally accompanying, directly or indirectly,
a shareholding of between 20% and 50% of the equity share capital and is
accounted for by the equity method. Where such influence or ownership is
intended to be temporary the associated company is recorded as an investment
available for sale and carried at fair value.
Under the equity method, investment in an associate is initially recognized at cost

and adjusted thereafter for the post-acquisition change of the Company’s share of
net assets of the investee. The Company recognizes in the statement of income its
share of the total recognized profit or loss of the associate from the date that
influence or ownership effectively commenced until the date that it effectively
ceases. Distributions received from an associate reduce the carrying amount of the
investment. Adjustments to the carrying amount may also be necessary for
changes in the Company’s share in the associate arising from changes in the
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FM 4.1
HOLDING COMPANY
associate’s equity that have not been recognized in the associate’s profit or loss.
The Company’s share of those changes is recognized directly in equity.
The Company’s investments in associated companies include goodwill identified

on acquisition, which is treated in accordance with the accounting policy for
goodwill.
Unrealized gains on transactions with an associate are eliminated to the extent of

the Company’s share in the associate. Unrealized losses are also eliminated unless
the transaction provides evidence of impairment in the asset transferred. An
assessment of investment in an associate is performed when there is an indication
that the asset has been impaired, or that impairment losses recognized in prior
years no longer exist.
4.1.3.7 Investment Properties
Investment properties owned by the Company are held for rental purpose, and are
carried at cost less accumulated depreciation and impairment losses. Land on
which the investment property is erected is not depreciated. Depreciation is
computed on a straight-line basis over the estimated useful life of the building of
20 years.
4.1.3.8 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses. When assets are sold or retired, their cost and accumulated
depreciation are eliminated from the accounts and any gain or loss resulting from
their disposal is included in the statement of income.
Freehold land is not depreciated. Depreciation is computed on a straight-line basis

over the estimated useful lives of other items of property, plant and equipment as
follows:
Leasehold land - Period of the lease or 20 year’s whichever is less

Buildings - 30 years
Plant and machinery - 10 years
Motor vehicles - 4 to 7 years
Furniture and equipment - 3 years
The useful life and the depreciation method are reviewed periodically to ensure
that the method and period of depreciation are consistent with the expected pattern
of economic benefits arising from items of property, plant and equipment.
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FM 4.1
HOLDING COMPANY
4.1.3.9 Goodwill
Goodwill represents the excess of the cost of an acquisition over the Company’s
share of the fair value of the net identifiable assets of the acquired subsidiary or
associate as at the date of the acquisition. Goodwill arising on the acquisition of a
subsidiary is recognized as a separate asset in the balance sheet. Goodwill arising
on the acquisition of at associated company is included within the carrying amount
of the investment. Any excess, at the date of acquisition, of the Company’s share
in the fair value of the net identifiable assets acquired over the cost of the
acquisition are recognized as negative goodwill. In such circumstances, the
Company is required to reassess the identification and measurement of the net
identifiable assets and the measurement of the cost of the acquisition and
recognize immediately in profit or loss any excess remaining after that
remeasurement.
Goodwill is stated at cost less impairment losses. The balance of goodwill is

reviewed at each balance sheet dare and the recoverable amount is determined for
the cash-generating unit to which the goodwill belongs. If the carrying value
exceeds the recoverable amount an impairment loss is recognized.
4.1.3.10 Payables
Liabilities are recognized for amounts to be paid on supply for goods or services
received, whether billed by the supplier or not.
4.1.3.11 End of service indemnity
Provision is made for amounts payable to employees under the Kuwaiti Labour
Law and employee contracts. This liability, which is unfunded, represents the
amount payable to each employee as a result of involuntary termination on the
balance sheet date, and approximates the present value of the final obligation.
4.1.3.12 Treasury shares
Treasury shares consist of the Company’s own issued shares that have been
reacquired by the Company and not yet issued or canceled. The treasury shares are
accounted for using the cost method. Under this method, the weighted average
cost of the shares reacquired is charged to a contra account in the shareholders’
equity.
When the treasury shares are reissued, gains are credited to a separate account in
shareholders’ equity, (the “treasury shares reserve”), which is not distributable.
Any realized losses are charged to the same account to the extent of the credit
balance on that account. Any excess losses are charged to retained earnings then to
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FM 4.1
HOLDING COMPANY
the voluntary reserve and statutory reserve. Gains realized subsequently on the
sale of treasury shares are first used to offset any previously recorded losses in the
order of reserves, retained earning and the treasury shares reserve account. No
cash dividends are paid on these shares. The issue of stock dividends increases the
number of treasury shares proportionately and reduces the average cost per share
without affecting the total cost of treasury shares.
4.1.3.13 Income recognition
Sales represent the invoiced value of goods supplied and services rendered net of
returns.
Interest and rental income are recognized when earned, on a time apportionment
basis.
Dividend income is recognized when the Company’s right to receive payment is

established.
Gain on sale of investments is measured by the difference between the sale

proceeds and the carrying amount of the investment at the date of disposal and is
recognized at the time of the sale.
4.1.3.14 Foreign currency
Foreign currency transactions are recorded in Kuwaiti Dinars at rates of exchange

prevailing on the date of the transactions. Monetary assets and liabilities
denominated in foreign currency at the balance sheet date are translated to Kuwaiti
Dinars at rates of exchange prevailing on that date. Exchange differences are
reported as part of the results for the year.
Exchange differences arising from the retranslation of the Company’s investments

in associated companies are accumulated in a separate component of shareholders’
equity “foreign currency translation reserve” until the investment is sold.
4.1.3.15 Impairment of assets
The carrying amounts of the Company’s assets, other than inventories, are
reviewed at each balance sheet dare to determine whether there is any indication
or objective evidence of impairment. If any such indication or evidence exists, the
asset’s recoverable amount is estimated and an impairment loss is recognized in
income whenever the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of receivables is calculated as the present value of
expected future cash flows, discounted at the original effective interest rates
inherent in the asset. Assets with a short duration are not discounted. The
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FM 4.1
HOLDING COMPANY
recoverable amount of investments held for trading and investments available for
sale is their fair value. The recoverable amount of other assets is the higher of an
asset’s net selling price and its value in use. The net selling price is the amount
obtainable from the sale of an asset in an arm’s length transaction while value in
use is the present value of estimated future cash flows expected to wise from the
continuing use of an asset and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if it is not possible, for
the cash-generating unit. Reversal of impairment losses recognized in prior years
except goodwill impairment is recorded when there is an indication that the
impairment losses recognized for the asset no longer exist or have decreased. The
reversal is recorded in income.
4.1.3.16 Financial instruments
Financial assets and financial liabilities carried on the balance sheet include cash
and cash equivalents, investments, receivables, payables and loans. The
accounting policies on recognition and measurement of these items are disclosed
in the respective accounting policies found in this Note.
Financial instruments are classified as liabilities or equity in accordance with the

substance of the contractual arrangement. Financial instruments are offset when
the Company has a legally enforceable right to offset and intends to settle either
on a net basis or to realize the asset and settle the liability simultaneously.
4.1.3.17 Contingencies
Contingent liabilities are not recognized in the financial statements, but are
disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote.
Contingent assets are not recognized in the financial statements, but are disclosed
when an inflow of economic benefits is probable.
4.1.3.18 Segment information
A segment is a distinguishable component of the Company that is engaged either

in providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
4.1.3.19 Related party transaction
Related party transactions are carried out at arms’ length basis. All the terms and
conditions are required to be approved by the Board of Directors.
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FM 4.2
CHART OF ACCOUNTS
APPROVED BY:
4.2.1 Chart of Accounts
Chart of Accounts is a list of each account that the accounting system tracks. It
should be designed to capture the financial information that is needed to keep
track of the financial position and make good financial decisions. Only
information recorded with an account code from the chart of accounts will be
recorded into the financial records, and from there into financial reports.
The chart is to be divided into appropriate categories. Each account should be

assigned an identifying number for use within the accounting system. Aside from
certain conventions regarding numbering and the order in which information is
presented, the chart of accounts can be tailored to suit the Company's specific
needs.
In order to decide what is to be included in the Chart of Accounts, each of the

following questions need to be considered:
 What reports need to be prepared?
 What financial decisions, evaluations and assessments need to be made on

a regular basis?
 What levels of details are required?
 What is the Company's capacity in tracking financial information?
The best way to design a chart of accounts is to first consider what reports need to
be prepared to satisfy external requirements and help the Company with internal
management assessment and decision-making. It can then be determined as to
what categories can be included in the reports that are to be produced.
4.2.2 Features of a simple Chart of Accounts
4.2.2.1 Account categories should be presented in a standard order, beginning with

the accounts presented in the Balance Sheet. These are:
4.2.2.1.1 Assets
Assets are the tangible items an organization has as resources, including

cash, accounts receivable, equipment and property. Assets are usually
listed in descending order of liquidity. This means that cash and other
assets, which are easily converted to cash, are listed first, and fixed assets
such as property and equipment are listed last.
SUBJECT POLICY NO:

FM 4.2
CHART OF ACCOUNTS
APPROVED BY:
4.2.2.1.2 Liabilities
Liabilities are obligations due to creditors, such as loans and accounts

payable. Current liabilities, those obligations that fall due within the next
year, are usually listed first, followed by long-term liabilities. Accounts
payables are usually listed before other payables. Deferred revenue and
other liabilities are often further down on the list.
4.2.2.1.3 Shareholders’ Equity
Shareholders’ Equity reflects the financial worth of the company. They

represent the balance remaining after obligations are subtracted from a
company’s assets.
4.2.2.2 Income and Expense accounts.
4.2.2.2.1 Account numbers should proceed from the lowest to highest, with
room between numbers in each category. This allow for the
expansion of level of detail presented in the Chart of Accounts as the
activities of the Company grow.
4.2.2.2.2 Certain related accounts should be grouped together with related

numbers.
4.2.3 ADDITION/ DELETION OF ACCOUNT CODE IN CHART OF

ACCOUNTS:
4.2.3.1 The right to add/ delete an account code List should be restricted to the Financial
Controller. Circumstances may come for adding new codes or deleting an existing
code. Such addition/ deletion should be backed by proper approval from
authorized officials in the organization.
4.2.3.2 The Accounts staff should raise the request for creation/deletion of account code
to/ from the chart of accounts. Such request should be authorized by the Financial
Controller.
4.2.3.3 The request for addition of account code to Chart of Accounts should contain the
following details:
 Proposed Account Code.
 Description of item.
 Sub Holding in Chart of Account.
 Main Holding in Chart of Account.
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FM 4.2
CHART OF ACCOUNTS
APPROVED BY:
4.2.3.4 After approval by the Financial Controller, the request should be forwarded to IT
Department.
4.2.3.5 Manager IT should maintain a register to track the details of addition/ deletions
made to/ from the Chart of Accounts, which should contain the following detail:
 Date of addition/ deletion.
 Requesting Department.
 Account code.
 Description of Account.
 Account sub /main Holding.
4.2.3.6 Manager, IT should also prepare and sign report of changes for each approval
received, to document the changes made after making addition/ deletion and file it
along with the request / approval letter received.
4.2.3.7 Manager, IT should generate list of addition/ deletion to standing data of account
code at the end of each month which should be signed by him and then forwarded
to Financial Controller.
4.2.3.8 Financial Controller should check the list of changes to the approval documents
and confirm that all changes are backed by proper approval.
SUBJECT POLICY NO:

FM 5.1
TARGET IDENTIFICATION
APPROVED BY:
5.1.1 Policy
A merger or acquisition is a phased process that generally follows a series of steps

and starts with target identification which should be initiated with a view to create
a strategic alignment with the Holding’s plans, objectives and operations.
5.1.2 Purpose
Mergers and acquisitions are carried out to forge ahead of the competition, and
acquire skills and technologies. These transactions can be great vehicles for
promoting a company's growth or investment strategy. The purpose of this
procedure is to ensure that the target identification phase follows a uniform
process of assessing and reporting on possible targets.
5.1.3 Scope
These procedures are applicable to all business acquisition decisions.
5.1.4 Procedure
5.1.4.1 Establish a business case for undertaking Mergers or Acquisitions and Identify
potential target:
1. The Company's finance department should establish a business case for

pursuing an acquisition and then it must clearly outline a strategy for
achieving the desired objectives.
2. The finance division should initiate a planning process by articulating the

Holding strategy and goals. This would enable the Holding Company to
consider mergers and acquisitions as to fortify weaknesses, fill gaps or
take advantage of opportunities to jump ahead of the competition.
3. Before a search for a merger or acquisition target commences. A company

should establish its financial parameters and perform preliminary cultural
and operations assessments. Then, it should create a database of target
companies and a contact log.
5.1.4.2 Perform initial screening and assessment:
1. Once a specific target partner has been identified, the Holding’s agreed -
upon criteria should be used to set the specific goals and objectives of the
transaction. These goals will be used throughout the merger and
acquisition process to evaluate the transaction.
SUBJECT POLICY NO:

FM 5.1
APPROVED BY:
2. As part of the assessments, a short but high level risk assessment should
be conducted differentiating between external and operational risks. At
this stage, risk assessment is often more instinctual than quantifiable.
Risks assessment, if performed by the right people at the right level, is of
immeasurable value in determining whether negotiations should be
opened, and if opened, how those risks will be mitigated or managed
throughout the acquisition process.
3. External risks assessment would include analyzing competitive, regulatory

and shareholder environment, to name a few.
4. Operational risk assessment includes analyzing the cultural, financial and

management styles, to name a few.
5.1.4.3 Determine “Value Drivers”
1. “Value Drivers” refers to those advantages that could be inherited and/or

obtained from the proposed mergers or acquisition.
2. The value drivers could be new technology, process, human resources and
other synergies.
5.1.4.4 Develop Preliminary Bid Price
1. Based on the results of the risk assessment and identification of potential

value drivers, the analyst would be in a position to develop a preliminary
range of values for the target company.
2. For developing a preliminary bid price the analyst has to identify the
potential synergies the proposed acquisition or merger would bring in and
value the same using the discounted cash flow approach using the
company level Weighted Average Cost of Capital.
3. Besides other methods such as the market method and asset method
should also be used to establish a bid price for the target.
5.1.4.5 Develop key deal structure issues
1. Deal structuring would involve extensive exercise. Deals should be

structured in such a way that it appropriately balances the target
expectations and not should also be soft on the holding company.
SUBJECT POLICY NO:

FM 5.1
APPROVED BY:
2. Deal structuring could be a combination of cash and stock swap.

Valuation of each entity share value is a sensitive issue that should be
stage managed using strong valuation concepts.
3. The deal could be structured along the following lines:
a. Purchase of assets
b. Purchase of shares
c. Include Warranties, Indemnities and covenants
d. Earn out deals
e. Adjustments to consideration i.e. qualified deal
5.1.4.6 Identify a sponsoring manager for new company from the parent company.
1. The holding company shall identify for any acquisition, a manager from
its existing subsidiaries.
2. If the line of business undertaken by the target is entirely different from

that undertaken by any of the subsidiaries, the holding company shall take
decision to promote a new company under its hierarchy, with appropriate
staffing and other resources that may be needed including funding needs.
5.1.4.7 Target identification and assessment report shall be made out to Executive
Committee and upon approval of which subsequent steps like performing of
due diligence shall be carried out.
SUBJECT POLICY NO:

FM 5.2
PERFORMING DUE DILIGENCE
APPROVED BY:
5.2.1 Policy
Identified target shall be thoroughly reviewed by analyzing and validating

financial information in order to provide the Company with greater certainty over
the nature of its business and the characteristics of its cash flow.
5.2.2 Purpose
Mergers and acquisitions are carried out to forge ahead of the competition, and
acquire skills and technologies. These transactions can be great vehicles for
promoting a company's growth or investment strategy. The purpose of this
procedure is to ensure identified target’s financial, accounting and operational
matters are satisfactory with any resulting unusual transactions entered into or
carried out by the Company outside the ordinary course of business appropriately
investigated. Due diligence is a formidable task. It should start with the
foundation of information gained during the search, preliminary analysis and risk
assessment. Then the company should study operational matters under a
microscope and identify the challenges to making the merger or acquisition work.
The company should identify the spectrum of risk it will have to overcome in the
transaction. It may not have time to address all the details, but by bracketing the
scope of what it defers to address later, it can determine the true costs and barriers
to the next step, namely integration detailed in Policy 5.3.
5.2.3 Scope
These procedures are applicable to all business acquisition decisions where an in-
principle agreement has been reached with the potential target.
5.2.4 Procedure
5.2.4.1 Once approval from the Executive Committee has been obtained, the holding
company finance department shall arrange for conducting a full scale due
diligence on the identified target.
5.2.4.2 Wherever necessary, outside consultants should be involved particularly where

the due diligence needs to be conducted on certain specialized technical details.
5.2.4.3 During the due diligence process, financial statements are analyzed, assets
identified and projections made.
5.2.4.4 Due diligence should be made on the following areas:
1. Historical financial matters

SUBJECT POLICY NO:

FM 5.2
PERFORMING DUE DILIGENCE
APPROVED BY:
2. Matters related to projections

3. Legal matters
4. Insurance matters
5. Employment matters
6. Real estate and other property matters
7. Material contract related matters
8. Information system matters and its integration with holding company
system
9. Tax matters – if foreign acquisition, and
10. Other relevant matters
5.2.4.5 Operational due diligence should include a broad understanding of the target
company's cultures, systems and process. In today's environment, two areas in
particular require extensive review:
1. First, the company must develop a clear understanding of the target

company's technology. A target company's technology can provide a
strategic edge.
2. Second, the company often underestimates cultural differences. But the

holding company should investigate the strengths of an organization and
the values of its people.
5.2.4.6 During due diligence, the company should develop a formal process for
identifying bottlenecks. This will avoid situations in which staff find crucial
information but are afraid to bring it forward. Mergers embody a strong emotional
momentum driven by executives. The challenge for a company is to leave the
door open for staff to communicate operational challenges they discover.
5.2.4.7 At the end of due diligence, another risk assessment should be conducted and
documented.
5.2.4.8 The top ten risks should be brought to the attention of top management along with
risk-mitigation plans to be carried out during the integration process.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
5.3.1 Policy
All acquired business shall be integrated into the Company/Holding by aligning it

to the Holding’s strategic vision and objectives.
5.3.2 Purpose
To ensure a dedicated cross-functional integration team is formed and released

from usual duties to devote undivided attention to integrating an acquisition under
the Holding Company.
5.3.3 Scope
These procedures are applicable to all business acquisition decisions where a

business purchase agreement has been executed with the target.
5.3.4 Procedure
5.3.4.1 On execution of a business purchase agreement, process to integrate the target

shall be initiated.
5.3.4.2 The key steps to integrate a business are outlined hereunder:
1. Create committees, strategies and planning documents to organize and guide

the process.
2. Identify merger issues and report status
3. Develop organizational strategy for dealing with personnel issues
4. Define systems integration strategy
5. Consolidate physical facilities
6. Co-ordinate integration issues
7. Perform post-merger follow up and create a report.
5.3.4.3 Wherever necessary, outside consultants should be involved particularly where

the integration issues need specialized technical expertise.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
5.3.4.4 Creating committees, strategies and planning documents to organize and

guide the process. The process under this head are explained as under:
A) Create a merger committee.
Committee duties:
1. Select a merger coordinator who will report directly to Chairman & MD. This
individual will be responsible for planning the work, organizing the project
teams, and executing the merger.
2. Appoint individuals responsible for completing subsequent merger tasks.
3. Reviewing overall merger status.
4. Approving major policy/procedure changes.
5. Acting as a sounding board for integration assumptions/conclusions.
B. Develop a communication strategy
The communication strategy should take account of the following:
a. Major objectives
1. Communicate ideas, status or information
2. Improve morale
3. Support long-term commitment
4. Minimize uncertainty
b. Distribution guidelines
Different target audiences will be interested in the progress of the merger. Each
Holding may need different messages at different times.
c. Delivery mechanisms
Depending upon the audience to receive information and the information to be

published, different types of communication can be used including:
1. Memos
2. Letters
3. Articles
4. Newsletters
5. Telemarketing
6. Retreats
7. Presentations/seminars
d. Information content
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
The level of detail required will depend on the recipient
e. Style and format
Information may be communicated in a formal or informal fashion.
f. Frequency and Release Dates
Merger committee shall determine the ideal frequency and length of

communications.
g. Feedback/Action
Concerns and issues should be captured and acted upon in a timely fashion.
h. Review the communication plan with management
C. Prepare merger planning document
The merger planning document should include the following elements:
a. Corporate goals and objectives

Identify the organization's desired results and the factors that will be used to
measure success. For example:
1. Profitability
2. Opportunity
3. Efficiency
c. Merger objectives
Enumerate merger objectives and expectations and provide direction and focus to
the consolidation process. That direction can then be communicated to everyone
involved in the integration process.
c. Merger benefits
Identify benefits to be achieved from the merger, including quantitative benefits
(economic or other benefits that can be quantified and expressed numerically or
statistically) and qualitative benefits (subjective benefits, often referred to as
"intangible benefits.")
d. Potential risks
Identify potential risks and other areas of uncertainty associated with the merger
process. For example:
1. Legal/Regulatory
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
2. Economic/Financial
3. Competitive/Industry
4. People/Culture
e. Merger committee's role

The merger committee typically acts as a steering committee for successfully
accomplishing the merger.
f. Merger integration work plan
g. Implementation schedule
5.3.4.5 Identify Merger Issues and Report Issues Status
A. Develop project standards
Having a specific set of project standards ensures that all Holdings understand
what is expected of their review and analysis.
a. Report Status
1. Report overall progress to both senior and executive management. Senior
management refers to the office of the Chairman & MD of the Holding
Company and executive management refers to the Executive Committee
2. Submit periodic written progress reports discussing:
a. Problem areas
b. Bottlenecks of work
c. Reduced time availability of committed personnel
d. Potential problem resolutions and alternatives
e. Engagement accomplishments
f. Expected progress during coming period
b. Develop work plan and estimate resources

1. Identify standard action items that must be performed for each function.
2. Identify locations where work steps are to be performed.
3. Estimate the time required to perform the work steps.
4. Evaluate the skill levels and knowledge required of the personnel performing
the task.
5. Assign personnel responsibility for work steps.
6. Estimate the amount of time required to perform the work steps.
c. Plan inter-company communication

1. Require responsible individuals to report affirmatively that a task is
proceeding as planned.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
2. Schedule periodic meetings in a synchronized and tiered fashion to avoid

conflicts.
3. Establish a planning area where charges, lists, and schedules can be
maintained.
B. Organize work Holdings for each functional area
Work Holdings can help identify issues within each functional area that require
resolution. The composition and size of the work Holding will depend on several
factors, including
1. Impact of the functional area
2. Degree of risk associated with the merger in the functional area
3. Member participation and future responsibility
4. Available resources
C. Identify merger issues by functional area
Merger issues may effect requirements in one or more functional areas. The
following issues should be considered:
a. Functional requirements
Need to identify the key operating requirements necessary to operate the area after
the integration.
b. Resource requirements
Need to identify the human, financial, facility and support requirements necessary
to run the functional area smoothly.
c. Data processing requirements

Need to identify the system requirements for processing operating and
management data.
d. Functional area interface requirements

Identify automated or manual links between and among various functional areas.
e. Organization requirements
Highlight the reporting relationships and responsibilities within the integrated
organization structure.
f. Policies and procedures requirements

Identify the corporate policies and procedures which will be required to support
the operation of the functional area after the combination.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
D. Discuss and resolve each issue
Using the objectives and goals of the merger as a guide, functional Holding
leaders should identify each issue, and view these issues as tasks that need to be
resolved.
E. Prioritize issues
Prioritization serves to highlight those critical implementation concerns which

could affect the merger's success if not properly resolved. To accomplish
prioritization you can us the ABC ranking technique. Rank each issue with a letter
as follows:
1. A (High Risk): issues must be resolved prior to completing physical merger.
2. B (Low Risk): issues that should be resolved prior to completing merger.
3. C (Significant Issues): issues that may result in dollar savings but cannot be
completed prior to physical merger.
F. Identify interdependencies between issues
For example, you need to identify organizational changes that impact more than
one area, consolidations that can save resources (such as consolidation of data
processing) and policies that have been implemented in one area which may be
beneficial if implemented on a wider basis.
G. Assess the risks of the issues which have been identified within each
functional area
H. Develop a strategy for accomplishing the merger
The merger strategy should include a series of definable, controllable projects that
allow maximum utilization of the company's resources and that address the risks
and priorities that have been identified. The projects should include information
about the following items:
1. the nature of integration activity
2. the areas impacted by integration
3. interdependencies between areas
4. potential risk to company
5. resources required
6. time frame for integration project completion
7. major deliverables, if any
8. preliminary benefits
5.3.4.6 Develop organizational strategy for dealing with personnel issues.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
A. Provide clear channels of communication
To facilitate communication you may choose to initiate regular integration

meetings with an open discussion forum. The following types of personnel issues
need to be addressed and resolved:
a. Management Structure
For employees of the company, the management structure will affect:
1. Job security
2. Perceived organizational status
3. Authority and influence
4. Morale and motivation
5. Their commitment to the integration process
b. Management Process
In setting up a management process, provision must be made for management

planning, decision-making and communication activities.
c. Compensation/Benefits
This is a high priority issue. Any changes in compensation will affect employee
attitudes toward the merger.
d. Training/Professional Development
Employees should be provided with the opportunity to obtain new skills as

required by the merged organization.
B. Identify and retain required personnel

1. Identify personnel requirements for the merged companies
2. Prepare retention program for key employees (a combination of monetary and
non-monetary rewards should be used to retain key personnel)
3. Develop an attrition program. You can assist the natural attrition process by
creating incentives to depart such as:
a. Early retirement
b. Part-time employment
c. Involuntary terminations
d. Re-evaluate succession plans once decisions have been made about
who will remain in the consolidated organization. Succession
parameters should be evaluated.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
C. Define a development program for merging corporate cultures
Project team leaders should develop training programs explaining new policies
and procedures on a corporate-wide basis. Consider providing counseling for
employees affected by merger. This encourages employee acceptance of the
consolidation.
D. Review with management the resolution of personnel issues
5.3.4.7 Define systems integration strategy.
A. Identify system implications of the merger.
The company needs to decide whether the merging organizations will have a
partial, full or non-consolidation approach to systems integration.
B. Review systems affected by merger
Classify all systems within the merging organizations as one of the following:
1. Surviving System
2. Duplicate System
3. Terminated System
4. Replacement System
C. Gather data on potential system modification

D. Identify key system personnel
To facilitate integration of systems it is important to retain those employees with

systems expertise. Without these individuals the time-frame for integration can
increase significantly.
E. Discuss implications of systems integration with the merger committee
F. Prepare information plan to support the merger project
This plan should provide focus and direction to the project team responsible for
performing systems integration.
G. Provide checkpoints within the system consolidation/integration plan
Checkpoints will help ensure that objectives are being met and that project
implementation is on-schedule.
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
H. Implement Plan
5.3.4.8 Consolidate Physical Facilities
A. Develop overall physical consolidation approach
Prepare an inventory of physical facility assets. This should be a complete list of

buildings, warehouses, distribution centers, retail outlets or field offices. Evaluate
the impact of the move. Consider and plan for everyone who will be affected by
the move, including:
1. Employees
2. Customers
3. Suppliers
4. Miscellaneous contractors
Define new space requirements; and finally, present the move approach to
management.
B. Identify physical move considerations

1. Set up the move team and designate a move coordinator to be in charge of the
team
2. Define move objectives, time frame and move guidelines. Move guidelines
should include information about the following:
a. Level of participation -- determine who is required to participate and
when
b. Special equipment -- assess and make arrangements for required
equipment
c. Movers --determine whether it will be necessary to hire a professional
moving service
d. Problem resolution -- prepare contingency plans
e. Communication -- plan the channels of communication before and
during the move process
3. Identify strategies for physically combining the organizations. Try to minimize
disruption to existing or surviving operations.
4. Analyze operational liabilities. Identify all outstanding lease/contract liabilities
for both organizations.
C. Prepare Physical Move

1. Develop detail split strategies indicating who is to do what
2. Prepare physical move plan. Be sure to include the following elements in the
plan:
a. Materials to be moved
SUBJECT POLICY NO:

FM 5.3
INTEGRATION
APPROVED BY:
b. Plan for negotiating with movers

c. Schedule for move
d. Resources required
e. Preparations required at the new location
f. Schedule of responsibilities
g. Provisions for setting up a help desk
D. Execute Physical Move
5.3.4.9 Coordinate Integration Activities

1. Identify new issues and assign responsibility for resolving the issues
2. Report merger status to management
3. Communicate merger schedule to each department that will be affected
4. Develop a training strategy
5. Monitor progress of implementation effort. Convene regular progress
meetings that address:
a. New merger issues

b. Changes to the work plan/schedule
c. Attitudes
d. Personnel issues
e. Key problem areas
f. Overall project progress
5.3.4.10 Perform post-merger follow-up and create a report.
The purpose of performing follow-up is:
1. To unearth any lingering problems or open issues that may still exist.
2. To communicate a sense of security to senior management that all is well and
that the new organization is, in fact, meeting the goals and objectives of the
merger.
3. Six recommended follow-up procedures are:
a. Review the operations of merged departments.

b. Identify and resolve lingering problems, reporting any unfavorable
findings to the appropriate management level.
c. Revise policies, procedures, forms, etc. as required.
d. Prepare a final report on merger results and recommendations.
e. Continue to monitor actual results versus pre-merger projections.
f. Conduct an employee attitude/opinion survey to establish direct
communication between employees and management and to allow
employees an opportunity to share their feelings and concerns with the
new owners.
SUBJECT POLICY NO:

EVALUATION FM 5.4
APPROVED BY:
5.4.1 Policy
All Mergers and Business Acquisition transaction shall be properly evaluated to

determine success/failure in order to address key audiences including the Board of
Directors, Shareholders and the Financial markets.
5.4.2 Purpose
The purpose of this procedure is to determine the success measures and ensure
integration is in line with the Company’s original strategic objectives. In
evaluating acquisitions, holding company defines measures by looking back to the
strategic goals for acquisitions that were articulated in the planning phase.
5.4.3 Scope
These procedures are applicable to all business acquisition transactions that are
integrated to the Holding’s operations.
5.4.4 Procedure
5.4.1.1 Identify and prioritize the vital measures required to determine merger and
acquisition success. It could consist of both hard and soft measures and tie back
to the company's original strategic objectives.
5.4.1.2 Performance measures and evaluation metrics can be divided into four categories:
1. Financial
2. Customer
3. Operations, and
4. Human capital
5.4.1.3 Financial metrics include, but not limited to:

1. Revenues and operating costs relative to budget,
2. Return on assets
3. Return on equity , and
4. Strategic value added, which measures real profitability and is an effective
measure of wealth creation.
5.4.1.4 Customer measures include, but not limited to:

1. Customer satisfaction,
2. Customer retention, and
3. Customer profitability
SUBJECT POLICY NO:

EVALUATION FM 5.4
APPROVED BY:
5.4.1.5 Operational measures include, but not limited to:

1. Administrative and general expenses per employee, and
2. Operating margins
5.4.1.6 Human capital measures include, but not limited to:
1. Employee retention,
2. Average productive hours per day
SUBJECT POLICY NO:

FM 6.1
INVESTMENT GUIDELINES
APPROVED BY:
6.1.1 Policy
6.1.1.1 Investment guidelines shall always conform to and be within the Investment
Policy approved by the Board.
6.1.1.2 Each person responsible for or involved in managing any part of the Company’s
assets is required to read the investment policy and these guidelines carefully,
understand them fully and make sure that his proposed actions are within the
Policy and Guidelines. Each such person is also required to report, as of the end of
each quarter, non-compliance, if any, of the Guidelines during the quarter, with
respect to his area of responsibility with his reasons/explanations.
6.1.1.3 The guidelines are meant to ensure that the Company’s investments are, as far as
possible, within its risk tolerance, investment time horizon and other constraints.
They are drawn up in broad terms to allow for full expression of the Investment
Follow Up Committee’s creativity, ability to identify values and strategic insights.
They are open to review and revision as necessary with a view to
 Removing bottlenecks in the way of achieving higher returns within the risk
tolerance limit acceptable to the Company; and
 Plugging loopholes that could lead the Company into taking risks not justified by the
accompanying reward.
6.1.1.4 Each person responsible for managing any part of the Company’s asset is required
to report to the Investment Follow Up Committee, the investment that do not
conform to these Guidelines. The committee will examine such cases and
recommend, if any, to be taken with respect to them.
6.1.2 Executive committee
6.1.2.1 The Executive Committee is solely responsible for taking all kind of decision
regarding the investment and its disposal based on the recommendation received
from the Risk/ Investment advisor.
6.1.2.2 The committee has to take decision within the limit of budget available for
investment and any surplus available during the year may be invested after the
approval of the board.
SUBJECT POLICY NO:

FM 6.1
INVESTMENT GUIDELINES
APPROVED BY:
6.1.3 Investment portfolio
6.1.3.1 Investment may be made in portfolio held with any investment company.
6.1.3.2 General terms and conditions to be entered into as an agreement with such
company include the following:
i. Maximum limit for investing
ii. Authority of the investment manager
iii. Stop loss limits
iv. Limit for investment in any single company shares
v. Limit for investment in any single sector
vi. Limit for investment in any single country
vii. Prohibited investments
viii. Investment in treasury shares
ix. Custody of investment documents, share certificates, title deeds,
etc.
x. Duration of the contract
xi. Fees
xii. Valuation issues
xiii. Right to audit
xiv. Rules for liquidation of investments
xv. Law of jurisdiction
xvi. Other matters
6.1.3.3 Valuation reports should be obtained from the Risk/ Investment advisor in order to
assess the value of the portfolio.
6.1.3.4 Methods of valuation are given in the next section of the manual.
SUBJECT POLICY NO:

TM 6.2
TYPES OF INVESTMENT &
REVALUATION APPROVED BY:
6.2.1 Policy
6.2.1.1 To recognize income from the investment from time to time according to the
framework established by the company and prudent accounting practice.
6.2.1.2 To make revaluation of the investment once in every three months and to
mark up the investment to the market value.
6.2.2 Types of investments
Types of investment the company may deal with include:

- Shares (both quoted and unquoted)
- Bonds
- Portfolio (guaranteed and non guaranteed)
- Fixed deposits in banks
6.2.3 As per paragraph 9 of IAS 39 effective January 1, 2005 the

following are the four categories of financial instruments:
6.2.3.1 Financial asset or liability at fair value through profit

or loss
a. Held for trading
A financial asset or liability is classified as held for

trading if it is:
(i) acquired or incurred principally for the purpose of selling

or repurchasing in the near term.
(ii) part of a portfolio of identified financial instruments that

are managed together and for which there is evidence of a
recent actual pattern of short- term profit taking or
(iii) a derivative except for a derivative that is a designated

and effective hedging instrument
b. Upon initial recognition it is designated by the entity as at

fair value through profit or loss
SUBJECT POLICY NO:

TM 6.2
Any financial asset or financial liability within the scope of

this Standard may be designated when initially recognized
as a financial asset or financial liability at fair value through
profit or loss except for investments in equity instruments
that do not have a quoted market price in an active market,
and whose fair value cannot be reliably measured.
6.2.3.2 Held to maturity investments
Held-to-maturity investments are non-derivative financial assets

with fixed or determinable payments and fixed maturity that an
entity has the positive intention and ability to hold to maturity.
6.2.3.3 Loans and receivables
Loans and receivables are non-derivative financial assets

with fixed or determinable payments that are not quoted in
an active market, other than:
A. those that the entity intends to sell immediately or in the

near term, which shall be classified as held for trading, and
those that the entity upon initial recognition
designates as at fair value through profit or loss;
B. those that the entity upon initial recognition designates

as available for sale; or
C. those for which the holder may not recover substantially

all of its initial investment, other than because of credit
deterioration, which shall be classified as available for sale.
An interest acquired in a pool of assets that are not loans or

receivables (for example, an interest in a mutual fund or a
similar fund) is not a loan or receivable.
6.2.3.4 Available for sale assets

SUBJECT POLICY NO:

TM 6.2
Available-for-sale financial assets are those non-derivative

financial assets that are designated as available for sale or
are not classified as (a) loans and receivables, (b) held-to-
maturity investments or (c) financial assets at fair value
through profit or loss.
As per paragraph 105 of the revised standard, an entity is

permitted to designate a previously recognized financial
asset or liability as financial asset or liability at fair value
through profit or loss. Accordingly the entity can designate
previously recognized available for sale financial assets as
financial assets at fair value through profit or loss.
However, the following need to be taken into consideration:
a. Investments in equity instruments that do not have a

quoted market price in an active market, and whose fair
value cannot be reliably measured can not be
designated as financial assets at fair value through profit
or loss
b. An entity shall not reclassify a financial instrument
into or out of the fair value through profit or loss category
while it is held or issued.
6.2.4 Recognition of income
Revenue should be recognized on the following bases:
6.2.4.1 Interest should be recognized on a time proportion basis that takes into
account the effective yield on the asset;
6.2.4.2 When unpaid interest has accrued before the acquisition of an interest-bearing
investment, the subsequent receipt of interest is allocated between pre-
acquisition and post-acquisition periods; only the post-acquisition portion is
recognized as revenue.
6.2.4.3 Dividends should be recognized when the shareholder’s right to receive

payment is established.
SUBJECT POLICY NO:

TM 6.2
6.2.4.4 When dividends on equity securities are declared from pre-acquisition net
income those dividends are deducted from cost of the securities. If it is
difficult to make such an allocation except on a ordinary basis, dividends are
recognize as revenue unless they clearly represent a recovery of part of the
cost of the equity securities.
6.2.4.5 Income from portfolio is recognized at the time of maturity, which is the
difference between the cost as per the book and the value received at the time
of maturity.
6.2.4.6 Revenue is recognized only when it is probable that the economic benefits
associated with the transaction will flow to the enterprise. However, when an
uncertainty arises about the collectability of an amount already included in
revenue, the uncollectible amount, or the amount in respect of which recovery
has ceased to be probable, is recognized as an expense, rather than as an
adjustment of the amount of revenue originally recognized.
6.2.5 Review and Revaluation
6.2.5.1 Once in every three month Finance and Accounts department should make
revaluation for all the types of investment based on the latest bid price or
realizable value.
6.2.5.2 Information relating to the value of investment is obtained from stock

exchange, investment dealer or news papers.
6.2.5.3 The book value of the investments has to be restated based on the current
market value.
6.2.5.4 All investments should be valued at their fair values, without any deduction
for transaction costs it may incur on sale or other disposal, except for the
following financial assets:
(a) Loans and receivables shall be measured at amortized cost using
the effective interest method;
(b) held-to-maturity investments shall be measured at amortized cost
using the effective interest method; and
(c) Investments in equity instruments that do not have a quoted market
price in an active market and whose fair value cannot be reliably
measured and derivatives that are linked to and must be settled by
delivery of such unquoted equity instruments shall be measured at
cost.
6.2.6 Gains and Losses
SUBJECT POLICY NO:

TM 6.2
6.2.6.1 A gain or loss on an investment classified as at fair value through profit or

loss shall be recognized in profit or loss.
6.2.6.2 A gain or loss on an available-for-sale investment shall be recognized

directly in equity, through the statement of changes in equity, except for
impairment losses and foreign exchange gains and losses, until the
investment is derecognized, at which time the cumulative gain or loss
previously recognized in equity shall be recognized in profit or loss.
However, interest calculated using the effective interest method is
recognized in profit or loss. Dividends on an available-for-sale equity
instrument are recognized in profit or loss when the entity’s right to receive
payment is established.
6.2.6.3 For investments carried at amortized cost, a gain or loss is recognized in

profit or loss when the investment is derecognized or impaired, and
through the amortization process.
6.2.6.4 If an entity recognizes investments using settlement date accounting, any

change in the fair value of the asset to be received during the period
between the trade date and the settlement date is not recognized for assets
carried at cost or amortized cost (other than impairment losses). For assets
carried at fair value, however, the change in fair value shall be recognized
in profit or loss or in equity, as appropriate.
6.2.6.5 NUREC shall assess at each balance sheet date whether there is any
objective evidence that an investment or Holding of investments is
impaired. If any such evidence exists, NUREC shall determine the amount
of any impairment loss and account or the same.
6.2.7 Investment procedure
6.2.7.1 Finance & Accounts department should follow the investment related
instructions given by the Executive Committee from time to time.
6.2.7.2 Based on the investment decision taken; Finance & Accounts department
should arrange funds to be transferred to the investee concerns.
6.2.7.3 All documents related to investments must be kept in perfect condition and
in the safe. Since all these documents are extremely confidential in nature
no one without permission should be allowed to handle or to make
photocopies of these.
SUBJECT POLICY NO:

TM 6.3
EQUITY ACCOUNTED
INVESTMENTS APPROVED BY:
6.3.1 Policy
6.3.1.1 To recognize equity income from equity accounted investments from time to
time according to the framework established by the company and International
Financial Reporting Standards.
6.3.1.2 To account for investment in associates and subsidiaries and any resultant
goodwill in accordance with International Financial Reporting Standards.
6.3.2 Types of equity accounted investments
Types of equity accounted investment the company may deal with include:
- Investment in Associates
- Investment in Subsidiaries
6.3.3 Investment in Associates
An associate is an entity, including an unincorporated entity

such as a partnership, over which NUREC has significant
influence and that is neither a subsidiary nor an interest in a
joint venture.
6.3.2.1 Significant Influence
a) If NUREC holds, directly or indirectly (eg through

subsidiaries), 20 per cent or more of the voting power of the
investee, it is presumed that NUREC has significant
influence, unless it can be clearly demonstrated that this is
not the case.
b) Conversely, if NUREC holds, directly or indirectly (eg

through subsidiaries), less than 20 per cent of the voting
power of the investee, it is presumed that NUREC does not
have significant influence, unless such influence can be
clearly demonstrated.
SUBJECT POLICY NO:

TM 6.3
EQUITY ACCOUNTED
c) A substantial or majority ownership by another investor

does not necessarily preclude NUREC from having
significant influence.
d) The existence of significant influence by NUREC is

usually evidenced in one or more of the following ways:
(i) representation on the board of directors or
equivalent governing body of the investee;
(ii) participation in policy-making processes,
including participation in decisions about
dividends or other distributions;
(iii) material transactions between and the investee;
(iv) interchange of managerial personnel; or
(v) provision of essential technical information.
6.3.4 Investment in Subsidiaries
A subsidiary is an entity, including an unincorporated entity such

as a partnership that is controlled by NUREC.
6.3.4.1 Control
Control is the power to govern the financial and operating

policies of an entity so as to obtain benefits from its
activities.
6.3.5 Equity Accounting
6.3.5.1. An investment in an associate shall be accounted

for using the equity method except when:
(a) there is evidence that the investment is acquired and

held exclusively with a view to its disposal within
twelve months from acquisition and that ’s
management is actively seeking a buyer;
(b) the exception in paragraph 10 of IAS 27, allowing a

parent that also has an investment in an associate not
SUBJECT POLICY NO:

TM 6.3
EQUITY ACCOUNTED
to present consolidated financial statements, applies;

or
(c) the ultimate or any intermediate parent of produces

consolidated financial
statements available for public use that comply with
International Financial
Reporting Standards.
6.3.5.2. NUREC shall discontinue the use of the equity

method from the date that it ceases to have significant
influence over an associate and shall account for the
investment in accordance policy 6.2 from that date,
provided the associate does not become a subsidiary or a
joint venture as defined in this policy.
6.3.5.3. The carrying amount of the investment at the date

that it ceases to be an associate shall be regarded as its
cost on initial measurement as investment in accordance
with policy 6.2.
SUBJECT POLICY NO:

TM 6.3
MURABAHA
APPROVED BY:
6.3.6 Policy:
The policy of NUREC Real Estate relating to Murabaha investments are as follows:
1. Murabaha receivable is carried at cost less provision for possible losses. Provision
for possible losses on Murabaha receivables are done on an bi-annual basis, in
accordance with the guidelines administered by the Central Bank of Kuwait.
2. Short term Murabaha are financial assets originated and represent deal with high
credit quality local financial institution with a residual maturity of Up to 3 months
from the balance sheet date. There are stated at amortized cost and are subject to
an insignificant risk of changes in value.
3. Income arising from Murabaha transactions are recognized on an accrual basis
over the period of the transaction, so as to generate a constant periodic rate of
return when compared to the net receivable (internal rate of return)
6.3.7 Objectives
1. Murabaha deals are created only after obtaining appropriate approval in

accordance with the NUREC Approved Delegations of Authority Matrix.
2. Murabaha transactions are recorded and monitored periodically for income
recognition and for maturity management.
3. Providing for possible losses on Murabaha receivable on a bi-annual basis in
accordance with Central Bank of Kuwait Guidelines.
6.3.8 PROCEDURE
6.3.8.1. Operations Department should generate report showing funds available for
investment. The amount to be deposited should be subject to the approval of
authority as per Approved Delegations of Authority matrix. Based on the approval
contract should be entered into with the counter party.
6.3.8.2. Operations Department should generate deal slip for the transaction which
should specify:
a. Deal value and maturity dates;
b. Counterparty details;
c. Amount of investment;
d. Number of days, and profit of investment;
e. Counter party and NUREC's settlement instructions;
f. Source of funds.
6.3.8.3. The Finance Department has to clearly specify the source from which
funds are received.
SUBJECT POLICY NO:

TM 6.3
MURABAHA
APPROVED BY:
6.3.8.4. When the deal is negotiated, the respective Real Estate Management
Department should inform the Finance & Accounts Department and to Chief
Operating Officer regarding the expected cash flow and expected return on the
deal.
6.3.8.5. After obtaining confirmation from the counter party, the details of the deal
should be updated in accounting data base.
6.3.8.6. Only after obtaining the counterparty confirmation, steps shall be taken for
processing the payment for initial investment.
6.3.8.7. Accountant should prepare the Cheque/ Bank transfer letter to disburse the
amount proposed to be invested and forwards to Manager, Finance and Accounts.
6.3.8.8. Manager, Finance and Accounts after review initials it and forward to
Financial Controller, who after review, initials it and get is signed in accordance
with the approved DOA.
6.3.8.9. A track should be maintained for pending deals [i.e. deals that are not
materialized]. Proper follow up should be done by the Finance & Accounts
Department.
6.3.8.10. The Finance & Accounts Department should keep a track on maturing deals.
They should generate maturing deal report periodically.
6.3.8.11. Income on Murabaha contracts should be recognized on a daily basis by the

finance and accounts department. The report should be reviewed by the Manager,
Finance and Accounts.
6.3.8.12. The Accounts and finance department staff should prepare Murabaha receivable
report bi-annually. The report should be reviewed by the Manager, Finance and
Accounts and Financial Controller and quantify the provision of loss [if any]
required to be made in accordance with the Central Bank of Kuwait’s guidelines.
6.3.8.13. The provision quantified should be approved by the Chief Operating Officer.
6.3.8.14. The company should receive third party account statement every month. The
accountant should reconcile the statement of accounts received from third party
with NUREC records and initiates steps for clearing the un-reconciled items.
SUBJECT POLICY NO:

TM 6.3
IJARA TRANSACTIONS
APPROVED BY:
6.3.10 Policy:
6.3.1 Ijara transaction involving the purchase and immediate lease of an asset where the
lessor conveys to the lessee the right to use the asset for an agreed period of time
in return for a payment or a series of payments. At the end of the lease term the
lessee has the option to purchase the asset. Ijara receivables should be recognized
when the legal right to control the use of the underlying asset is transferred to the
customer.
6.3.2 To recognize income from the investment from time to time according to the
framework established by the company and prudent accounting practice.
6.3.3 Lease transactions shall be subject to periodic Sharia review.
6.3.10 Summary Of Guidelines:
6.3.1 The transaction should be processed only after obtaining approval from authorized
official as per approved Authority Matrix.
6.3.2 The credit request should be reviewed and approved in accordance with approved
credit policy.
6.3.3 Ensure that adequate collateral security is received for the finance amount.
Evaluation certification should be done before entering into contract with the
customers.
6.3.4 Fund disbursement should be done only after transferring the title deed in the
name of NUREC.
6.3.5 Contract for Ijara transaction should be signed by the customer.
6.3.6 Income arising on transaction is accurately recorded on a timely basis.
6.3.7 Adequate measures are taken to collect the amount due from the customer on a
periodic basis. In case of early settlement the appropriate accounts
adjustments should be made in the accounting records. Adequate provision
should be made in the books of accounts for possible losses on a quarterly
basis.
6.3.8 Evaluation of collateral security should be done on a quarterly basis.

SUBJECT POLICY NO:

TM 6.3
IJARA TRANSACTIONS
APPROVED BY:
6.3.11 Procedural Guidelines:
6.3.1 On receipt of written request from the customer for Ijara financing, the details of
collateral securities to be received should be obtained.
6.3.2 Finance and Accounts Department should ensure that the collateral securities
received ensure adequate coverage for the amount financed by NUREC. The
credit policy approved by the management should be looked into for securities
received.
6.3.3 In case finance is provided to the individual customer, his financial position
details should be received to ensure that he is financially strong and will be
able to repay the amount financed. For this the NUREC should prepare a
customer position which should be subject to the review of Finance and
Accounts Department. In the case of corporate customer, the NUREC should
receive the financial statements relating to the company.
6.3.4 The financial information received from the customer should be subject to the
review of Finance and Accounts Department. The Finance and Accounts
Department should also ensure that all documentations involved in the
transaction is complete and accurate. The following documentations should be
involved in every Ijara transactions:
- Customer Financial Position details.

- Collateral valuation forms.
- Customer account opening form.
- Credit Approval form,
- Funds booking notice.
6.3.5 The details collected by the Finance and Accounts Department should be subject
to the review of Legal Officer.
6.3.6 Once the deal is fixed a draft contract should be prepared by the Finance and
Accounts Department in coordination with the Legal department. The Legal
department after review should recommend for approval and signing the
contract.
6.3.7 The Finance and Accounts Department should recommend to the approving
authority [refer delegations of authority matrix] for approving and signing the
contract.
SUBJECT POLICY NO:

TM 6.3
IJARA TRANSACTIONS
APPROVED BY:
6.3.8 All the relevant documentations should be forwarded to the Accounts and Finance
Department for appropriate recording of transaction.
6.3.9 The Manager, Finance and Accounts should check the documentations for
completion and compliance with the approved credit procedures.
6.3.10 He should prepare a real estate check list and allot a customer account number in
the general ledger system.
6.3.11 The customer should make down payment based on the recommendation made by
Finance and Accounts Department.
6.3.12 The accountant on receipt of the down payment from the customer should issue a
receipt to the customer. The copy of receipt voucher is attached to the deal
file.
6.3.13 A promise to lease contract should be prepared and signed by customer which
should be kept along with deal slip. Accountant should update the real estate
check list and file original contract with the deal slip.
6.3.14 The NUREC should prepare purchase agreement with the seller for the purchase
of property under consideration of financing. Down payment made to the
seller should not exceed the value of collateral securities received from the
customers. In case it exceed then approval from the Chairman & MD should
be obtained prior to fund disbursement.
6.3.15 For the balance amount payable a pay order is handed over to the seller at the
ministry of justice after receiving the title in the NUREC's name. In case the
title is not registered in NUREC’s name, then assignment of title is obtained
from the custodian.
6.3.16 Manager, Finance and Accounts should coordinate with the seller prior to
obtaining the pay order.
6.3.17 The next stage is to create lease contracts in which customer is required to sign the
contract. The original copy of lease contract should be filed along with the
deal slip. The deal slip should be generated for the lease contract entered.
Lease contract should be approved in accordance with authority matrix.
6.3.18 Manager, Finance and Accounts should prepare lease pricing form which should
be approved by the Chairman & MD. Based on the lease pricing form the
lease contract is drafted.
SUBJECT POLICY NO:

TM 6.3
IJARA TRANSACTIONS
APPROVED BY:
6.3.19 The deal slip should be forwarded to the Accounts and Finance Department to
update the general ledger and deal slip is stamped posted. Accountant should
update the general ledger system which should be reviewed and approved by
Manager, Finance and Accounts.
6.3.20 Promise to buy contract should also be prepared in which the date by which the
property should be purchased by the customer is specified. The Promise to
buy the contract should be signed by the customer.
6.3.21 Manager - Finance & Accounts should ensure that Promise to Buy the contract
reflects the date and original purchase price.
6.3.22 Every half year Finance and Accounts Department should prepare a list of
collateral securities in hand.
6.3.23 The collateral securities should be subject to evaluation every half year. A report
on decline in the value of assets in hand should be prepared and forwarded to
the Executive Committee.
6.3.24 Executive Committee should recommend for necessary corrective actions.
6.3.25 Every week maturity report should be generated by the accounts and finance
department specifying accounts maturing in next 10 days. This report should
be forwarded to the Finance and Accounts Department for contacting the
customer.
6.3.26 The actual collection should be crossed check with the bank statement and advice
received from the bank. In case of delayed payment, the follow up actions to
be taken should be based on the recommendations received from the
Executive committee.
6.3.27 In the customer requires to settle on an earlier date, the Finance and Accounts
Department may determine the revised amount due to be settled by the
customer. The revised amount should be subject to the review of Executive
Committee and should be approved by the authorized officials involved in
approving the initial transactions.
6.3.28 The amount to be collected should be informed to the Accounts and Finance
Department by the Finance and Accounts Department. The Accounts and
finance department should ensure the collection based on the bank
statement/ advice received from the bank.
SUBJECT POLICY NO:

TM 6.3
IJARA TRANSACTIONS
APPROVED BY:
6.3.29 The accountant should file the original cancellation notice and contract with the
deal slip. He should input settlement details and prepare journal entries
adjusting the general ledger system.
6.3.30 Manager, Finance and Accounts checks the journal entries and make necessary
posting in the accounting system.
6.3.31 In case the customers intents to sell the property to a third party, the company
should be informed about the transaction. NUREC should enter into a
purchase agreement with the new owner. But the title should rest with
NUREC. In this case a lease cancellation notice and sales contract with the
third party is executed.
6.3.32 The title documents should be forwarded to the Accounts and Finance
Department. The Manager, Finance and Accounts should checks the title
documents to ensure completeness and correctness and update the real estate
check list.
6.3.33 If part of the property is sold to a third party the procedure set out in 6.3.11.20
should be followed. But a status report should be prepared and approved to
determine the amount to be collected prior to transfer of title.
6.3.34 An amendment sheet should be prepared to the lease contract showing the revised
lease rental income. The collateral register should be updated for the partial
transfer made by the customer.
6.3.35 In case of full settlement also a status report should be prepared and ensure that
the entire amount due from the transactions is collected from the customer.
6.3.36 Income on lease contract should be done on a daily basis. The Manager, Finance
and Accounts should review the report and make final posting of the entries.
6.3.37 Provision for loss should be made at the end of each quarter on each lease
transactions. Manager- Finance & Accounts should take a list of receivable
at the end of each quarter. The provision required as per CBK guidelines
should be prepared by the Manager, Finance and Accounts.
6.3.38 The report should be subject to review and approval of Chairman & MD.
6.3.39 The accountant should update the general ledger with the required provision.
SUBJECT POLICY NO:

TM 6.4
ACCOUNTING FOR GOODWILL
APPROVED BY:
6.4.1 Goodwill
6.4.1.1 Goodwill is initially measured at its cost, being the excess of the cost of the
business combination over’s interest in the fair value of the identifiable assets,
liabilities and contingent liabilities and recognized as an asset at the
acquisition date.
6.4.1.2 Goodwill acquired in a business combination represents a payment made by

NUREC in anticipation of future economic benefits from assets that are not
capable of being individually identified and separately recognized.
6.4.1.3 After initial recognition, NUREC shall measure goodwill acquired in a

business combination at cost less any accumulated impairment losses.
6.4.1.4 Goodwill acquired in a business combination shall not be amortized.
6.4.1.5 Goodwill should be subject to annual impairment tests and specific testing
whenever impairment is indicated. This applies to goodwill from new
transactions and to goodwill from previous transactions.
6.4.2 Negative Goodwill
6.4.2.1 “Negative Goodwill” is identified as “Excess of NUREC’s interest in the

fair value of acquiree’s identifiable assets, liabilities and contingent
liabilities over cost”.
6.4.2.2 Any negative goodwill left (excess remaining) after a reassessment of the
purchase accounting should be recognized immediately in income.
6.4.2.3 A gain recognized as per 6.4.2.2 could comprise one or more of the
following components:
 Errors in measuring the fair value of either the cost of the combination or
the acquiree’s identifiable assets, liabilities or contingent liabilities.
Possible future costs arising in respect of the acquiree that have not been
reflected correctly in the fair value of the acquiree’s identifiable assets,
liabilities or contingent liabilities are a potential cause of such errors.
 A requirement in an accounting standard to measure identifiable net assets
acquired at an amount that is not fair value, but is treated as though it is
fair value for the purpose of allocating the cost of the combination.
 A bargain purchase.
SUBJECT POLICY NO:

FM 7.1
INTRODUCTION TO BUDGET
APPROVED BY:
7.1.1 Policy:
Budget and budgetary control endeavors to provide important management tools that
will facilitates the timely and effective comparison with actual results and
management decision can be taken based on that to achieve the company’s overall
growth and potential.
7.2.1 Definition:
7.1.2.1 Budget:
Budget is an estimate of the amount of money to be received and the amounts to

be spent for various purposes in a given time. It’s a procedure based on an
estimate. It’s the allotment of expenses for various items for a period of time.
Budget is a financial and / or quantitative statement, prepared and approved prior
to a defined period of time, of the policy to be pursued during that period for the
purpose of attaining a given objective.
7.1.2.2 Budgeting:
Budgeting is the whole process of designing, implementing and operating budgets.

The main emphasis in this is short – term budgeting process involving the
provision of resources to support plans which are being implemented.
7.1.2.3 Budgetary control:
Budgetary control is the establishment of budgets relating the responsibilities of

executives to the requirements of a policy, and the continuous comparison of actual
with budgeted results, either to secure by individual action the objective of that policy
or to provide a basis for its revision.
7.1.2.2 Salient features of Budgetary Control:
(a)Determining the objectives to be achieved, over the budget period, and the
policy or policies that might be adopted for the achievement of these ends.
(b) Determining the variety of activities that should be undertaken for the
achievement of the objectives.
SUBJECT POLICY NO:

FM 7.1
APPROVED BY:
(c) Drawing up a plan or a scheme of operation in respect of each class or

activity, in physical as well as monetary terms for the full budget period
and its parts.
(d) Laying out a system of comparison of actual performance by each

person, section or department with the relevant budget and determination
of causes for the discrepancies, if any.
(e) Ensuring that corrective action will take where the plan is not being
achieved and, if that were not possible, for the revision of the plan.
7.1.2.3 Advantages of Budgeting:
(a) Budgetary control establishes a basis for internal audit by regularly

evaluating departmental results.
(b) Only reporting information, which has not gone accordingly, to plan, it
economizes on managerial time and maximizes efficiency. This is called
‘Management by exception’ reporting.
(c) Scarce resources should be allocated in an optimal way, thus

controlling expenditure.
(d) It forces management to plan ahead so that long-term goals are

achieved.
(e) Communication is increased throughout the firm and coordination should

be improved.
(f) An effective budgetary control system should allow personnel at all levels
to participate in the setting of budgets, and hereby have a motivational
impact on the work force. Individual and corporate goals are aligned.
(g) Areas of efficiency and inefficiency are identified. Variance analysis

will prompt remedial action where necessary.
(h) The budget provides a yardstick against which the performance of the
firm can be evaluated. It is better to compare actual with budget rather than
with the past, since the latter may no longer be suitable for current and
expected conditions.
(i) People are made responsible for items of cost and revenues, i.e., areas
of responsibility are clearly delineated.
SUBJECT POLICY NO:

FM 7.1
APPROVED BY:
7.1.3 Types of budget:
With regard to the operations at NUREC and its subsidiaries, the following types of
budget may be useful at both the Holding level and subsidiary level:
1. Revenue Budget (Income)
Which includes the components of the Company's revenue generated from the
services rendered to the clients/customers and the earnings from its
investments, which are expected to be realized during the budget year.
2. Operating Budget
Which includes the operating, revenue and administrative expenses incurred

by the Company, without which the budgeted revenues and profits will not be
realized?
3. Capital Expenditure Budget
Which includes expenditure related to the acquisition, expansion or

improvement of the fixed assets from which the Company shall derive a
benefit for a period of more than one year? Such expenditure is categorized as
follows:
a. Capital Projects Expenditure
Expenditure in respect of strategic projects which have a direct and effective

impact on the quality and efficiency of the infrastructure, the Company's
basic, present and future activities and its profitability.
b. Recurring Capital Expenditure
Capital Expenditure which cannot be classified under Capital Projects

Expenditure but which is necessary for maintaining the existing activities and
services. Such expenditure shall be monitored on the basis of the annual
approved expenditure for the concerned year. Unspent amounts shall not be
carried forward to the following year.
SUBJECT POLICY NO:

FM 7.2
CAPITAL EXPENDITURE
APPROVED BY:
7.2.1 Policy:
At least two or three months before the beginning of the fiscal year thought should
be given to the capital budget for the upcoming year. The budget ordinarily
corresponds to the Company’s fiscal year, which should be selected to reflect the
Company’s operating cycle.
7.2.2 Purpose
The purpose of this policy is to ensure that capital expenditure budgets are
finalized in time to ensure that the operating budgets do include the provision for
operating expenditure arising as a result of the capital expenditure. Thus this
policy highlights the importance of finalizing the subsidiary capital budgets well
before its operating budgets.
7.2.3 Scope
This procedure applies to all capital expenditure incurred in acquiring fixed assets
by purchase, leasing (or own manufacture) with the aim of improving or
maintaining the earning capacity of the business. Any new addition of a product
line or service segment is authorized by the Executive Committee and is outside
the scope of this procedure.
7.2.4 Procedure
7.2.1.1 All subsidiaries should on an annual basis prepare a capital expenditure budget
identifying the capital needs for maintaining and enhancing the service provision.
7.2.1.2 Each capital expenditure component in the budget should be itemized with each
item exceeding KD XXXXX accompanied with a “Capital Information Sheet” and
the following reflected in it:
1. Cost estimates including master plan. Estimates need to be supported by a

specialist/consultant estimate in case of specialized assets.
2. Funding means for those assets that satisfy the requirement for review by the
Company’s Executive Committee, i.e. sums exceeding 5% addition to the
prevailing asset base of the respective subsidiary.
7.2.1.3 The Chairman & MD of the Holding will authorize the capital budget for those
items that fall beyond the purview of the Executive Committee. For items that fall
within the purview of the Executive Committee, the Financial Controller shall take
necessary action to ensure tabling of the capital budget to the committee in line
with the procedures enumerated in Policy 3.2 of this manual.
SUBJECT POLICY NO:

FM 7.3
OPERATING BUDGET –
HOLDING SUBSIDIARY APPROVED BY:
7.3.1 Policy:
At least two months before the beginning of the fiscal year the operating budget
for NUREC and its subsidiaries should be made out for the upcoming year. The
budget ordinarily corresponds to the Company’s fiscal year, which should be
selected to reflect the Company’s operating cycle.
7.3.2 Purpose
The purpose of this policy is to ensure that operating budgets are finalized in time
to ensure that the revenue and administrative expenses incurred by the Holding
and its subsidiaries are duly budgeted in order to ensure budgeted revenues and
profits will be realized. The operating budgets should be finalized only after the
capital budgets have been laid out.
7.3.3 Scope
This procedure applies to all operating revenue earned and expenditure incurred in
the normal course of carrying on business.
7.3.4 Procedure
7.3.4.1 The subsidiary operating budgets are the prerogative of each subsidiary. The
operating budgets of the subsidiary are submitted for information purposes only to
the Holding in order to act as an input for preparing the NUREC operating budget.
However the subsidiary shall submit the budget together with the details of all
assumptions used in the preparation of the budget.
7.3.4.2 The analyst at the corporate finance department shall review the budgets presented
by the various subsidiaries and study for abnormal variations in the figures
presented. The analyst would conduct reviews to reassess assumptions used in the
preparation of the budgets and accordingly prepare his reservations about the
budget and submit it to the Manager, Finance and Accounts.
7.3.4.3 The Manager, Finance and Accounts & Accounts at shall on approval by the
Holding managing director raise questions addressed to the management of the
subsidiary about abnormal increases in expenses and in situations where there is
undercutting of revenue or improper allocation of resources.
7.3.4.4 Upon satisfactory completion of the various subsidiaries operating budget the
analyst at the corporate finance shall prepare the Holding operating budget. The
operating budget would specify the revenue sources and the related expenditures.
SUBJECT POLICY NO:

FM 7.3
OPERATING BUDGET –
HOLDING SUBSIDIARY APPROVED BY:
7.3.4.5 Besides, the Holding budget would also lay down the deployment of surplus funds
in accordance with the investment policy approved by the Board of Directors.
7.3.4.6 The operating budget of the Holding and the capital expenditure budget of the
subsidiary shall be presented to the Board of Directors for their review and
approval. The budget when approved shall be communicated to the subsidiary for
implementation.
SUBJECT POLICY NO:

FM 8.1
BANK ACCOUNTS
APPROVED BY:
8.1.1 Policy
This policy is designed to ensure that NUREC and its subsidiaries follow a uniform
system in operation of bank account. The bank account shall be opened only after
obtaining necessary approval from the authorized officials as per the approved
Delegations of Authority.
8.1.1.1 Accounts with any commercial / Investment bank shall be opened and / or
closed with the written approval of Chairman & MD along with minuted
approval of the Board of Directors. For Kuwait Operations the opening of
bank account shall be done by the official in charge for the operation in
accordance with the delegations approved by the Board of Directors of the
Company.
8.1.1.2 All transactions involving withdrawal / transfer – by any means – of funds

from the company’s bank / investment accounts requires the approval of
signatories in accordance with the Delegations of Authority depending upon
the transaction amount involved.
8.1.1.3 Any inclusion / deletion to the list of authorized signatories to the company’s
bank accounts – including amendments to the signatory limits – should be
approved by the Board of Directors.
8.1.1.4 For the normal banking operations involving issuance of cheques, the
company utilizes its own pre-printed and pre-approved (by concerned banks)
cheque forms.
8.1.2 General Procedures and Precautions to be followed by NUREC & its subsidiaries:
8.1.2.1 No blank cheques or any other forms of instructions to the Company ‘Bankers
should ever be signed by the signatories.
8.1.2.2 Pre printed cheques stationery boxes should be placed under safe custody
controlled by dual custody.
8.1.2.3 Cheques should generally be crossed ‘Account payee only’ and should be
opened only as directed or requested by the concerned departmental managers.
The discretion to issue an uncrossed cheque to any payee rests with Chairman
& MD.
8.1.2.4 Signed cheques should be issued to suppliers as soon as possible after

signature.
SUBJECT POLICY NO:

FM 8.1
BANK ACCOUNTS
APPROVED BY:
8.1.2.5 Cheques handed over directly should always be signed for as evidence of
receipt.
8.1.3 Bank Account Maintenance and Reconciliation to be followed by NUREC & its
subsidiaries:
8.1.3.1 The bank accounts should be monitored properly. Proper bankbooks should be
maintained for all the bank accounts maintained by the company. These books
should be updated on a regular basis and there should be no delay in the
updating the same.
8.1.3.2 The bank reconciliation procedures:
a. The balances shown by the bank and by company books should be

reconciled monthly for all the bank accounts maintained by company.
b. The reconciliation procedure for a particular month should be completed

within a week of the next month for all the bank accounts by the
accountant.
c. The reconciliation statement should be submitted to the Manager, Finance

and Accounts & Accounts and should be authorized by him.
d. The pending entries in the reconciliation, specially the cheques issued but
not presented to the bank by suppliers and the bank transfers not recorded
in the company’s books should be looked into regularly and action taken
with regard to them. Stale cheques, that are cheques issued but not
presented for more than 6 months, should be reversed to a separate account
titled “Outdated Cheque Reversal Account”. This will have in place a
control with respect to total cheques reversed till this date.
SUBJECT POLICY NO:

FM 8.2
CHEQUE RECEIPT
APPROVED BY:
8.2.1 Policy
To ensure that proper procedures should be followed for receiving and handling of
cheques are followed by the staff of NUREC & its subsidiaries in charge of the
same.
8.2.2 General procedure for receiving cheques to be followed by NUREC & its
subsidiaries:
8.2.2.1 The accountant of the finance & accounts department of concerned company
ensure that the cheques received are properly drafted, such as the name of the
company is correctly written and the instrument is correctly dated and bears the
signature of the payee.
8.2.2.2 That the cheques are made without any mistakes like overwriting, correction,
etc., and if any, ensure such mistakes are endorsed by the signature of the
payee at the place of correction.
8.2.2.3 Personal cheques can only be received against the approval of the Manager,
Finance and Accounts.
8.2.2.4 On the reverse side of the cheques, the customers’ name, telephone number
and address are to be written.
8.2.2.5 Post-dated cheques are to be sent to the Accounts and Finance Department.
8.2.2.6 Depositing of cheques is to be done by the authorized person and through

proper deposit slips provided by the bank for this purpose.
8.2.2.7 All the deposit slips are sent to the Accounts and Finance Department for
verification and filing.
8.2.2.8 Accounts and Finance Department is to prepare receipt voucher called

‘Receipt Voucher - Bank’ to record the same into the financial books.
SUBJECT POLICY NO:

FM 8.3
CHEQUE PAYMENT
APPROVED BY:
8.3.1 Policy
To follow the defined authorization levels for the issue of bank and cash payments
towards the settlement of following types of bills.
 Settlement for local purchase bills

 Settlement of trade payables
 Settlement of periodical services and contracts
 Settlement of insurance bills
 Settlement of dues to contractors/ sub contractors.
8.3.2 Authorization levels of the signatories for Cheque payments should be followed
in accordance with approved Delegations of Authority.
8.3.3 General Procedure for Issuing of Cheques to be followed by NUREC & its
subsidiaries:
8.3.3.1 All payments should be approved and documented in accordance with the
approved payment authority matrix.
8.3.3.2 All payments must be evidenced by the cheque payment voucher. Payment
vouchers are initialed by the persons signing the cheques as records of their
approval. Supporting invoices, LPOs and other relevant documents must be
attached. All supporting documents must be stamped as “PAID” along with
cheque number and date.
8.3.3.3 Cheques should be made payable to those mentioned in the LPO and Invoice
and/or credit note. If the cheques are to be issued in some other name, a letter
to that effect should be obtained from the relevant person/Company.
8.3.3.4 In no case cash cheque shall be issued to any body.
8.3.3.5 All cheques issued in local currency are to be generated through the systems
and should not be hand written. Foreign currency payments should be made
through bank transfer or in the form of Demand Draft.
8.3.3.6 Cheques are to be prepared on time, bearing in mind the credit period available
for the payment to various suppliers.
8.3.3.7 A computer generated listing should be taken for all cancelled cheques every
month and reasons for the cancellation should be marked against them. If any
SUBJECT POLICY NO:

FM 8.3
CHEQUE PAYMENT
APPROVED BY:
other cheque has been issued against cancelled cheques, the same must be
indicated as well.
8.3.3.8 At the time of preparation of cheques the relevant data is to be entered into the
system. (Simultaneous posting is usually made when the previous month
accounts are closed in the computer system.)
8.3.3.9 As a matter of practice, payment cheques are prepared once during the first
day of every week for those invoices for which 10 days credit periods are over.
SUBJECT POLICY NO:

FM 8.4
DISHONOURED CHEQUES
APPROVED BY:
8.4.1 Policy
To ensure proper follow up of the dishonoured cheque by the Finance & Accounts
department of NUREC & its subsidiaries if any.
8.4.2 Procedure
8.4.2.1 On receiving intimation from the bank on a cheque being dishonoured, the same is
to be entered in the cheque-dishonored register by Finance & Accounts
Department.
8.4.2.2 Finance & Accounts Department is to inform the head of the department of the
same immediately.
8.4.2.3 Financial Controller should authorize personnel from the Department to follow up
with the concerned customer for collection of fresh cheque in lieu of the
dishonoured one.
8.4.2.4 In the process of recovery, the Department may use its discretion in allowing a
“grace period” to the customer, for re-presentation of the same cheque and/or issue
of a fresh cheque to the Company. But approval should be received from the
higher authorities for allowing grace period.
8.4.2.5 All re-presented cheques and/or receipt of fresh cheques should be collected by
authorized persons and forwarded to Finance & Accounts Department who in turn
will issue a fresh receipt for the same and present the cheque to the bankers.
8.4.2.6 If upon the second presentation a cheque is dishonoured, the Finance & Accounts
Department has to follow up and to insist “Cash” only from the customer and
present the same immediately to the Accountant for receipt.
8.4.2.7 If still nothing is forthcoming, the matter has to be referred to the legal department
by the Finance & Accounts Department. The Departments, before doing so should
verify the status and client relationship of the customer with the Company and
take concurrence of General Management.
8.4.2.8 At the same time the Finance & Accounts Department should explore the
possibility of cancellation of Credit limit.
8.4.2.9 Legal notices should be served and case may be filed in fit and appropriate cases
as suggested by the General Management.
SUBJECT POLICY NO:

FM 8.4
DISHONOURED CHEQUES
APPROVED BY:
8.4.2.10 A weekly report of the pending cases under cheques dishonoured and their
status should be reported to the General Management by Finance & Accounts
Department.
SUBJECT POLICY NO:

FM 8.5
POST DATED CHEQUE
APPROVED BY:
8.5.1 Policy
8.5.1.1 As a matter of policy the NUREC & its subsidiaries if any formed does not
accept Post Dated Cheques (PDCs)
8.5.1.2 Where post-dated cheques are accepted as an exception to the above policy,
the same should be done so with the prior approval of the Manager – Finance
& Accounts.
8.5.1.3 Post-dated cheques are valuable and should be stored as securely as cash and
current cheques.
8.5.2 Procedures for receipt of Post Dated Cheques to be followed by NUREC & its
subsidiaries:
8.5.2.1 When the cashier receives a post-dated cheque, if authorized by appropriate

authority to do so, he should immediately forward it to the Finance &
Accounts Department without receipting it.
8.5.2.2 A register is to be maintained of the post-dated cheques, in order of their

maturity. The register should contain information about:
 The date of receipt of cheque.

 The customer’s name from whom the cheque has been received.
 The bank on which it is drawn.
 The date of maturity.
 The details of invoice(s) against which PDC is received.
8.5.2.3 The post-dated cheques should not be credited to customer’s account until
maturity.
8.5.2.4 On presenting of the cheque on the date of maturity, the same is to be struck
from the register and appropriate entries to be made.
8.5.2.5 The post-dated cheques received by the company are to be kept in a designated
secured place under the responsibility of the cashier.
8.5.3 Reconciliation
A month end reconciliation of the Post Dated Cheques issued and received should
be made against the register to establish that there are no discrepancies and that all
the necessary entries have been passed to set off the accounts properly.
SUBJECT POLICY NO:

FM 8.6
PETTY CASH
APPROVED BY:
8.6.1 Policy
To maintain cash in hand in a responsible manner, to spend cash as per the authorized
instructions only and to account for the same appropriately.
8.6.2 Petty cash balance and safe custody

8.6.2.1 As per the company policy the budget allocated for the petty cash is KD
2,000/- (Kuwaiti Dinars Two Thousand only). At no point of time the petty
cash balance should exceed the authorized limit.
8.6.2.2 Cash is to be kept in the safe, which is provided to the Finance & Accounts
Department for this purpose, and the key is to be kept under the custody of the
cashier only.
8.6.3 General procedure for petty cash

8.6.3.1 Whenever petty cash is expended fully further cash is to be asked for by the
Cashier with proper requisition.
8.6.3.2 Cash is to be paid by the Finance department only on the approval from
Manager – Finance & Accounts.
8.6.3.3 All payment should be approved and documented.
8.6.3.4 All payments must be evidenced by a payment voucher. Payment vouchers are
initialed by the person whose approval is necessary for paying cash and
supporting LPO, Invoice, and Cash memo must be attached.
8.6.3.5 Payment vouchers should be sequentially numbered.
8.6.3.6 All vouchers when paid must be cancelled (either by stamping or punching
“PAID”) so that there is no possibility of a duplicate payment.
8.6.3.7 Specified ground for which petty cash can be used
 Staff loan
 Repairing and Maintenance where the amount involved is small or in case
of urgency
 Suppliers’ or contractor demand for payment in cash where the amount
involved is small or the payment term is cash on delivery.
 Business travel expenses; specially for buying the tickets
 Any other payment with prior approval from Manager – Finance &
Accounts.
SUBJECT POLICY NO:

FM 8.7
CASH RECEIPT
APPROVED BY:
8.7.1 Policy
To ensure cash receipts are promptly deposited in banks and accounted for, to
reconcile cash receipts periodically wherever necessary and to make appropriate
receipt voucher.
8.7.2 General Procedure for NUREC & its subsidiaries:
8.7.12.1 All cash collections should be deposited on the same day or on the
following day.
8.7.12.2 In the event of the following day(s) being a holiday, cash should be kept in
the safe under the custody of the cashier after informing the Manager – Finance &
Accounts of the same.
8.7.12.3 Any shortages/excess must be recorded and reported to the Manager –

Finance & Accounts.
8.7.12.4 Cash should be counted at year-end, verified by an independent member of the

staff and a certificate confirming the amount must be signed by the authorized
personnel.
8.7.3 Procedure for cash receipt from revenue
8.7.3.1 Cash is collected for various types of revenue.
8.7.3.2 The cashier is responsible for the deposit in to the bank of the cash collected
during the course of the day.
8.7.3.3 On deposit of the amount into the bank, the Finance & Accounts Department
should forward the deposit slip along with the daily sales report to the Finance &
Accounts Department.
8.7.3.4 Finance & Accounts Department should cross check the amount deposited and
daily collection report.
8.7.3.5 Upon verification, accounts department should prepare one copy of cash receipt
called as “Receipt voucher – cash”.
8.7.4.1 The receipt should be signed by the authorized signatory and filed in the
appropriate file.
SUBJECT POLICY NO:

FM 8.7
CASH RECEIPT
APPROVED BY:
8.7.4 Cash receipt from sale of scrap
8.7.4.1 Whenever there are scraps to be sold, the management should inform Finance &
Accounts Department regarding the sales and the amount to be collected.
8.7.4.2 The buyer should pay the money to the Finance & Accounts Department to get the
necessary delivery order.
8.7.4.3 On receipt of the money, Finance department should prepare two copies of
‘Receipt voucher bank’.
8.7.4.4 Necessary approval should be obtained on the receipt voucher.
8.7.4.5 Buyer has to sign the receipt voucher and one copy of it shall be given to the
buyer.
SUBJECT POLICY NO:

FM 8.8
CASH PAYMENT
APPROVED BY:
8.8.1 Policy
To ensure proper authorization is being obtained and proper documentation of all
cash payments is being maintained.
8.8.2 General procedure for payment from petty cash for NUREC & its subsidiaries:
8.8.2.1 Whenever petty cash is expended fully further cash should be asked for by the
accountant with proper requisition.
8.8.2.2 No cash cheque is issued as a matter of policy to anyone.
8.8.2.3 Cash should be paid by the accounts department only on the approval from
Manager – Finance & Accounts.
8.8.2.4 All payment should be approved and documented.
8.8.2.5 All payments must be evidenced by a payment voucher. Payment vouchers are
initialed by the person whose approval is necessary for paying cash and
supporting LPO, Invoice, and Cash memo must be attached.
8.8.2.6 Payment vouchers are sequentially numbered.
8.8.2.7 All vouchers when paid must be cancelled (either by stamping or punching
“PAID”) so that there is no possibility of a duplicate payment.
8.8.3 Specified ground for which petty cash can be used

 Repairing and Maintenance where the amount involved is small or in case of
urgency.
 Suppliers’ or contractor demand for payment in cash where the amount involved
is small or the payment term is cash on delivery.
 Travel Advance; specially for buying the tickets
 Any other payment with prior approval from Manager – Finance & Accounts.
8.8.4 Specific procedure for cash payment

8.8.4.1 Where the cash payment is required to be made for the services or
contracts done for any department, the department concerned can collect
the cash from accounts for payment to the contractor or the service
provider.
SUBJECT POLICY NO:

FM 8.8
CASH PAYMENT
APPROVED BY:
8.8.4.2 The concerned department’s person should submit the related invoices or
the cash memo to Accounts Dept. after getting it approved from the
Manager of the department concerned.
8.8.4.3 Finance & Accounts Department should check the approval signature on
the invoices.
8.8.4.4 Then this should be sent for initial from Chairman & MD for approval of
payment.
8.8.4.5 At this stage data relating to the expenses are to be entered into the system.
8.8.4.6 After the payment approval, the Finance & Accounts Department should
pay cash to the employee and get the invoice signed from him for
receiving cash.
8.8.4.7 The department employee should pay the money to the contractor received
by him on behalf of the contractor.
8.8.4.8 Staff loan is covered under personnel manual.
8.8.4.9 For purchase of travel tickets the cash is paid based on the actual ticket
fare after the approval is obtained and the same to be entered in the
cashbook. Details of this procedure are covered under Personnel manual.
8.8.4.10 For all other payment whether small or emergency, proper documents such
as cash memo and invoice is required to be approved, before the cash entry
is passed in the system.
8.8.4.11 Proper filing of all the records is required chronologically for future
references and audit.
SUBJECT POLICY NO:

FM 8.9
AUTHORIZATION TO
INCUR LONG TERM APPROVED BY:
LOANS
8.9.1 Policy:
All loan request of the subsidiary if any should first be approved by the Chairman &
MD submitting the proposal to the Banking/Financing institution in order to ensure
adherence to Holding limits.
8.9.2 Purpose
The purpose of this policy is to ensure that all loan requests when made are within
the Holding credit limits prescribed by the various banks.
8.9.3 Scope
This procedure is applicable for all temporary and term loan requests made to any
banking/financing institution for working capital and/or funding capital
acquisitions.
8.9.4 Procedure
8.9.4.1 Subsidiary shall ensure that all loan requests are approval in accordance with their
internal procedures before forwarding the request to the Holding.
8.9.4.2 The Manager – Finance & Accounts shall analyze the current Holding exposure
and accordingly forward the application to the Chairman & MD with his
comments.
8.9.4.3 If the funding required by the subsidiary is in line with already approved capital
budgets/project expenditures then the manager shall make his comments
accordingly and forward the application to the Chairman & MD.
8.9.4.4 The Chairman & MD shall appropriately authorize those loan requests that have a
prior approval by the Executive Committee.
8.9.4.5 If the existing limits are not sufficient to cover the loan request then steps shall be
initiated to either increase the Holding limit or repay existing loans in order to
accommodate the current funding needs.
SUBJECT POLICY NO:

FM 8.9
AUTHORIZATION TO
INCUR LONG TERM APPROVED BY:
LOANS
8.9.4.6 If the loan request is for working capital needs, the Chairman & MD shall
authorize transfer of surplus funds from other subsidiaries to the subsidiary in
need and accordingly ensure optimum utilization of idle funds available in the
Holding.
8.9.4.7 Chairman & MD shall approve all loan request up to 5% of the overall Holding
limits. Amounts falling outside this limit shall be authority of the Executive
Committee that authorized spending and/or the Board of Directors.
SUBJECT POLICY NO:

FM 9.1
REQUISITION HANDLING
PRIORITIES APPROVED BY:
9.1.1 Purpose
To establish guidelines for the timely processing of purchase requisition for

contracting activities and other support services purchases.
9.1.2 Scope
This procedure applies to all purchases of NUREC & its subsidiaries.
9.1.3 Procedure
Purchase Requisition is received in general from the User Department. It is vital

to a smooth-functioning organization that purchase orders be processed in a timely
fashion. The following guidelines are established to aid Buyers (Divisions that
need materials) in establishing priorities:
9.1.3.1 Urgent telephone/personal requests: begin processing immediately.
9.1.3.2 Rush orders: begin processing within 24 hours.
9.1.3.3 Technical Operations requisition: start process within 2 days.
9.1.3.4 Inventory requisitions: start process within 3 days.
9.1.3.5 Requisitions offered to suppliers to bid: start process within 5 working days.
9.1.3.6 Annual contracts: process within 10 working days.
9.1.4 All delays that significantly exceed these processing guidelines are to be discussed
with the concerned department.
9.1.5 Processing includes system entry, sending out inquiries, Supplier selection and
Purchase Order award. The above time limits are considered maximum
permissible and most requisitions should be processed earlier.
9.1.6 For Real Estate Management all purchases should be made in accordance with the
estimated cost initially ascertained for each project.
9.1.7 For sub contracting activities the works that to be subcontracted should be first
identified by the Respective VP, Real Estate Management.
SUBJECT POLICY NO:

FM 9.1
REQUISITION HANDLING
PRIORITIES APPROVED BY:
9.1.8 The sub contractors to be selected should be done by the authorized officials in
accordance with the approved authority matrix. For this all necessary
documentation should be kept ready by the Respective VP, Real Estate
Management in coordination with the Manager – Finance & Accounts.
9.1.9 A tendering committee [if required] should be formed on the request of Manager
Contracting for reviewing the tenders received from the sub contractors and
awarding the contract to them.
9.1.10 Members of the tendering committee should be finalized by the Chairman & MD.
9.1.11 All the contracts should be finalized by the Tendering Committee.
9.1.12 The Financial Controller should compile all financial information required for
review in the tendering committee.
SUBJECT POLICY NO:

FM 9.2
PURCHASE ORDER EXPEDITING
APPROVED BY:
9.2.1. Purpose
To establish a uniform method of assuring prompt completion of purchase

requests.
9.2.2. Scope
This procedure applies to all purchases of NUREC & its subsidiaries.
9.2.3. General
To accomplish prompt receipt of materials as required by the user and efficient

purchase request closure, the Purchase Section shall maintain an updated and
accurate file in the system of a follow-up schedule and delivery status of
outstanding purchase orders. Reports generated from the computer file serve as
effective tools for use in timely systematic follow-up.
9.2.4. Detailed Procedures
Three types of input data are used to update an Expedition System – new purchase
orders, incoming correspondence and deliveries.
9.2.4.1 New Purchase Order –
1. Immediately after release, all new purchase orders are given to personnel in
the respective department for screening and verification.
2. The purchase order delivery date is checked to verify that it is in agreement

with the quoted delivery date. If not, the expeditor will return the file to the
concerned Buyer to reconcile the dates. To compute the delivery date, the
Buyer should allow 7 working days mail travel time for overseas orders, 3
days local, unless the order is telefaxed in advance. Further, in overseas
orders the quoted date may be estimated date of dispatch rather than delivery
date at .
3. The expeditor segregates orders which do not normally require follow-up:
a. Consignment Store Stock Purchases
4. The remaining purchase orders are logged into the Expediting Logbook of
New Purchase Orders. This serves as a permanent record and computer back
up data.
The log covers:

SUBJECT POLICY NO:

FM 9.2
APPROVED BY:
a. Date Received – The date the new order was received by the
expeditor.
b. Purchase Order Number – The key reference for the order.
c. Purchase Order Date – Date that the order was issued.
d. Delivery Date on Purchase Order – The delivery date assigned by

the Buyer as shown on the purchase order.
e. Supplier Name – From purchase order. If new supplier, the

information for Items f and g must be inserted from the Supplier
Master File. Otherwise, f, g and h may be copied from the previous
entry during the input process.
f. Fax Number – From Supplier file data, if available.
g. Contact Person – From Supplier file data.
h. Acknowledgement Date – This is the actual date that the purchase

order was received or confirmed by the supplier. Without an
acknowledgement, it is assumed to be 7 working days after the order
date for overseas orders and 3 working days for local orders.
i. Delivery Date Per Quotation – This is the delivery date quoted by

the supplier. For local orders this is the date to be delivered to . For
overseas orders, it is usually the estimated date of dispatch.
j. Approximate Delivery Date – This is the Purchase Section best

estimate of a realistic delivery date. It allows for suppliers quoted
time after receipt of the order, the estimated time for mailing order to
supplier, and adds 10 days for contingency in overseas orders to
arrive at the estimated dispatch date.
k. Follow-up Schedule – Three sequential follow-up steps are planned,

initial, intermediate and final follow-up. The follow-up is handled by
telefax or telephone or through electronic mails (e-mails). Telefax
and e-mail’s are preferred because of the hard copy record for
documentation purposes. Telephone calls must rely upon the
expeditor to enter the documentation of the substance of the calls in
to the purchase order file. All replies indicate the supplier’s
commitment to his specified delivery date.
SUBJECT POLICY NO:

FM 9.2
APPROVED BY:
From experience, three weeks ahead of the dispatch date is a reasonable time
for initial follow-up on overseas orders. The intermediate follow-up in turn
is sent one week later if no answer has been received on the initial follow-up.
The final follow-up is sent one week before the dispatch date.
Acknowledgement of the follow-up by the supplier confirming the dispatch
date will cause suspension of subsequent follow-up notices. The expeditor
does not initiate follow-up until he is confident that the supplier has received
the order. This is the reason for the added 10-day contingency for the
approximate Delivery Date, “k” above.
5. The expeditor will then update the computer file by inputting all the new
orders requiring follow-up into the follow-up schedule, “l” above.
6. Then, the expeditor returns all of the purchase order file folders and inserts
them in correct numerical sequence in the appropriate filing cabinet.
9.2.4.2 Incoming Correspondence –
The expeditor in the Purchase Section is provided with a copy of every

shipping notice, whether by letter, telefax or e-mails in order to update the
follow-up computer file. This prevents unnecessary repetitious follow-up on
orders with confirmed shipping delivery dates.
1. On receipt of incoming correspondence, the expeditor promptly inputs the

confirming shipping/delivery schedule in to the Computer File System.
2. All follow-ups scheduled for that purchase order is suspended after the
information is input into the system.
3. An initial overdue follow-up is scheduled one month after the new

scheduled delivery date. This serves as a reminder to the expeditor to
verify that the overseas orders have been received, or at least cleared
customs before tracing again.
9.2.4.3 Delivery of Materials –
To assure an accurate status of each order, all deliveries are monitored

regardless of whether partial or complete delivery.
1. The expeditor uses the Daily Transaction Report of Store Receipt Vouchers
from the Support Services section or the GRN’s raised during the day as a
reference.
SUBJECT POLICY NO:

FM 9.2
APPROVED BY:
2. All orders received, which are included on the expediting list of

outstanding purchase orders, shall be noted.
3. The expeditor inputs the information into the computer system file. All
follow-up scheduled thereafter is cancelled.
4. For partial receipts, another follow-up schedule is formulated as any other

outstanding order.
5. All deliveries made during the week are recorded for use in preparing the
report.
9.2.4.4 Reports
The following reports may be generated from the expedition system file:
1. Weekly Follow-up Schedule.

2. Weekly Delivery Schedule.
3. Outstanding Purchase Order Delivery Status.
4. Master List of Outstanding Orders.
The most important and useful report is the Weekly Follow-up Schedule,
which is generated regularly at the close of each week. It serves as a reminder
and schedule of follow-up activities during the forthcoming week and the
types of follow-up to be conducted.
9.2.4.5 Additional Reports:
1. Weekly Report – This is being prepared each Sunday to reflect the

expediting activities of the previous week. Included are complete and
partial deliveries, number of outstanding orders, overdue orders, new
orders as well as detailed actual compared to scheduled follow-ups. This
report provides a performance and workload report of the expeditor’s
efforts.
2. Monthly Report – This is a monthly summary of the four weekly reports
comprising the month of interest. The weekly report appears to be
adequate for routine use so the monthly report will only be prepared upon
specific request.
3. Supplier Performance Report – This report is intended to assist in the

evaluation of a Supplier’s reliability in meeting his committed delivery
schedules. It is expected that this report will be under continued
SUBJECT POLICY NO:

FM 9.2
APPROVED BY:
development until a simple clear-cut method of determining projected and

actual dates is established.
SUBJECT POLICY NO:

FM 9.3
PURCHASE ORDER
CANCELLATION APPROVED BY:
9.3.1 Purpose
To establish purchase order cancellation procedures.
9.3.2 Scope
Applies to all purchase order cancellations for NUREC & its subsidiaries.
9.3.3 Procedure
Cancellation of orders shall be in writing, using the formal purchase order form as
Change Order, or by use of a telefax notice. Distribution of the Change Order –
Cancellation shall be the same as original order so all parties will be advised of
status. The supplier should always be advised the reason for cancellation.
In the event that a supplier has begun production of a custom-made part or

product, or has secured for delivery to the Company an article that the supplier is
not likely to sell within the supplier’s normal scope of business, or if the supplier
has incurred costs in preparation for special or custom production, the company
shall accept such costs as supplier may incur as a result of this cancellation. These
costs might include payment for all custom-made part or products already
completed prior to cancellation, or re-stocking charges incurred for returnable
goods.
In all cases, the purchase order file should be documented and the requisitioner
advised. If a new order is placed, both cancelled and new order files should be
documented with the cross reference to other file.
Requisition cancellations are internal within and are handled with less formality.
The requisitioner signs the original requisition acknowledging its cancellation. All
cancelled requisitions are kept in same file for later reference.
The cancelled purchase order copy should be forwarded to the Finance &
Accounts department for reference and documentation.
SUBJECT POLICY NO:

FM 9.4
RECEIVING AND DELIVERY OF
GOODS & INSPECTION APPROVED BY:
9.4.1 Purpose
To establish a uniform method of receiving and accounting for all materials and
services purchased and delivered to the Company.
9.4.2 Scope
This procedure shall apply to all purchases of materials and services by the
Purchase Section.
It shall be the responsibility of the support services section to:
1.Validate delivery of materials by purchase order

2.Receive and temporarily store materials, or direct bulk shipments to the user
locations,
3.Advise the requisitioners of materials receipts,
4.Arrange inspection of materials by Concerned Department
5.Obtain authorized receiver signature on the Store Receipt Voucher (SRV)
6.Enter the receipts at the Stores Account Section with a copy to the Stock
Control Section. ,
7.Return the SRV to Purchase Section with a copy to the Finance & Accounts
Department for filing.
9.4.4 General
A broad range of materials is required for the operation of – contracts, small

purchases, spare parts, general stationery, equipment, vehicles, etc. The procedures
for handling specific types of items will be covered in the ensuing paragraphs.
Deliveries are accepted by between their official working hours during business
days with 24 hours advance notice. Deliveries are not accepted on holidays or
weekends without prior arrangements.
9.4.5 Procedure
The documentary support for receipt of materials is the SRV, Store Receipt Voucher,
signed by the Authorized Receiver at the time goods are issued, or delivered, to him or
within a very short time thereafter. Support for receipt of services by manpower or
equipment rental may be either the SRV, or original time sheets signed by the user at
the same approval level as the requisition. The SRV indicates the actual quantity of
SUBJECT POLICY NO:

FM 9.4
the delivery of each item and either acceptance or rejection, partially or complete, and
the reasons for any discrepancy.
9.4.5.1 Bulk Supplier Deliveries
As bulk deliveries arrive at the Company gate they are directed to a parking
area. The stores supervisor is assigned to handle the delivery and he obtains
the delivery documents, including invoices, delivery note and packing list.
He returns to the Section; locates the correct SRV and compares with the
supplier delivery documents.
If all appears to be in order, the requisitioner is notified of arrival and the

supplier truck is guided or directed to requisitioner’s designated unloading
point. The requisitioner verifies the quantity and inspects the goods. If all is
in order, the materials are unloaded and requisitioner accepts, signs and dates
the SRV.
After shipments have been collected, they are delivered to the
requisitioners/concerned department for inspection, count and acceptance.
The Stores Supervisor signs the supplier delivery note, retains a copy and
releases the supplier truck.
The Stores Supervisor makes one copy of the completed SRV for filing and
reference and forwards the SRV to the Stores Accounts for entry into the
computer system with a copy to the Stores Control Section.
Then, the original copy of the SRV is delivered to the Purchase Section for
forwarding to the Concerned Department/Accounts Department for
processing payment.
9.4.5.2 Small Package Supplier Deliveries
On arrival at the main gate, security notifies the Stores Supervisor of the
Supplier’s arrival. The Stores Supervisor is assigned to handle the delivery
and meets the Supplier to collect the delivery documents. The appropriate
SRV is compared with the supplier’s documents.
If all appears to be in order, the Stores Supervisor goes to the supplier truck
and inspects the delivery to verify that the goods are those ordered, match
the item description and quantity and are acceptable, without damage.
If all is in order, the Stores Supervisor signs the supplier delivery documents,
retains a copy and transfers the materials to the Warehouse. The supplier
truck is then released.
SUBJECT POLICY NO:

FM 9.4
After shipments have been collected, they are delivered to the

requisitioners/concerned department for inspection, count and acceptance.
The requisitioner signs and dates the SRV.
The original copy is given to the Purchase Section after making one copy for
Stores Account and Stores Control Section. A hard copy need not always be
given as the SRV is available for reference through the computer application
in use at and the purchase Section personnel can have ready access to it
anytime. It is still important to establish the practice of having in place the
hard copy to ensure whether approval signatures are present.
9.4.5.3 Discrepancies
From time to time deliveries are made which are not in compliance with
the purchase order. Such discrepancies may be discovered at the time of
delivery inspection carried out by the Requisitioner/Concerned Department
and may be rejected outright. Others may not be discovered until later and
thus require additional handling before it is resolved. Handling the various
types of discrepancies is discussed below:
a) Wrong Material – If obviously incorrect, local supplier deliveries are

rejected outright and the reasons noted on the supplier’s delivery note
and on the SRV. Overseas shipments or delayed discovery of defects on
local shipments require additional handling – the Requestor is notified
of the rejection and reasons. The Requestor then negotiates the return or
disposal of the materials and for their replacement.
b) No Purchase Order, Wrong Purchase Order Number – If the

materials delivered were not ordered, it is rejected outright and so noted
on the supplier delivery note. A copy is retained for reference. If the
material was ordered, but wrong purchase order number shown, the
correction is made on the delivery note and the SRV/delivery note is
processed in the regular manner.
c) Shortage – Local supplier deliveries are handled at the time of delivery

by noting the discrepancy on the supplier delivery note and also noting
the actual quantity received on the SRV. Overseas shipments or delayed
discovery of local shipments are handled as noted in ‘a – Wrong
Material’ above.
d) Overages – Local delivery overages are not accepted. The supplier

delivery note is noted and only the correct amount accepted and
SUBJECT POLICY NO:

FM 9.4
reported on the SRV. A copy of the supplier delivery note is retained for
reference. Delayed discovery of local delivery overages are handled by
the Stores Supervisor or referred to the concerned Requestor for
handling, as are overseas overages.
e) Partial Delivery – If all is in order except that only partial delivery is

made, the SRV is noted and processed. A new standby SRV is printed
for subsequent deliveries.
f) Damaged Shipment – Local shipments that are obviously damaged may

be rejected outright by the delivery coordinator, Storekeeper. The
supplier delivery note is signed with the reason for rejection and a copy
retained. Delayed discovery or overseas shipment damage is referred to
the Requestor/purchase Section for handling.
i. Reports – Two reports are required to be prepared routinely. The Daily

Report covers all material deliveries made during the day along with
any discrepancies discovered. It is used in follow-up and expediting
activities.
The weekly report is a summary of the daily receipts, and outstanding

purchase orders. It is used as a guide for expediting as well as to
monitor the performance of the Stores Section.
ii. Files – These are maintained primarily as working files of the Stores
Section. Most permanent documents are forwarded to Purchase Section
for filing in purchase order folders. Those files maintained and used by
Stores Section are:
a) Gate Pass – Copies retained for reference.
b) Acknowledgements of Rejection – Form used

to note delayed local, rejected or excess materials returned to
supplier and signed by supplier’s representative.
c) Inter Office Memo – Internal notice of

discrepancy from requisition indicating reasons for discrepancy
and action requested.
iii. Daily Report – Retained copy for reference.
iv. Weekly Report – Retained copy for reference.

SUBJECT POLICY NO:

FM 9.5
REJECTION OF GOODS
APPROVED BY:
9.5.1 Purpose
To establish the procedure for rejection of delivered materials.
9.5.2 Scope
This procedure applies to all unacceptable purchases.
It is the responsibility of the Purchase Section/ User department,

Buyer/Requisitioner, or Stores Section, to advise the Suppliers when materials are
found unacceptable.
9.5.4 Procedure
Shipments of merchandise may be rejected for several reasons – damage, non-

compliance, excess quantity or not ordered.
9.5.4.1. Damaged Goods
a) Local Deliveries: The Stores Supervisor along with the Concerned Department
makes a preliminary inspection before the items are unloaded from a supplier’s
truck. If the items are obviously damaged, broken, the package crushed or
leaking, the goods may be rejected outright. The Supplier delivery documents
are noted, with the reasons for rejection, signed, a photocopy made for Stores
Section records and returned to the supplier and the truck released. A
discrepancy report is prepared and forwarded to the Stores Accounts, Audit
Department and Stock Control Section. The SRV is noted and sent to
Purchase Section with a copy to the requisitioner.
b) Overseas Shipments: When overseas shipments arrive damaged, the condition

is noted on the SRV and the Purchase Section is advised. If the damage is not
significant, the shipment is accepted. If the damage is not acceptable, the
Purchase Section processes a claim with the insurer based on the insurance
provided by the / Supplier’s Insurance Cover.
Additional information covers the items damaged, or lost, extent of damage,

value, purchase order number and any other pertinent information. The respective
Department Manager signs the claim letter. The insurer may request supporting
documents such as the original insurance policy, original Bill of Lading, copy of
supplier’s invoice and a copy of the delivery order. When the cheque for the claim
SUBJECT POLICY NO:

FM 9.5
REJECTION OF GOODS
APPROVED BY:
is received, it is transmitted to Finance & Accounts Department for official

acknowledgement of receipt. Replacement of the damaged goods may be either on
the same purchase order as a Change Order, or a completely new order issued.
9.5.4.2. Non Compliance
If the goods are found not to meet the specifications on the purchase order
during preliminary inspection on delivery, the Stores Supervisor/Requestor
may reject the shipment immediately. Rejection documentation and
notification is handled as outlined above for damaged goods.
9.5.4.3. Goods Not Ordered
Occasionally a Supplier will mis-ship goods. When it is discovered that the

goods are not covered by a valid purchase order, the supplier’s delivery
documents are so noted, a copy retained for record purposes, and the shipment
is rejected.
9.5.4.4. Excess Quantity
Generally quantities of items delivered in excess of amount ordered are

rejected outright. The Supplier’s documents are corrected to show the amount
actually received and the SRV is so noted. If the excess is accepted, the SRV is
so noted and a change order is initiated to reflect the new total quantity.
9.5.4.5. Other Discrepancies
Other discrepancies in quantity ordered such as actual shortages and

intentional partial deliveries are discussed in Procedure, Receiving and
Delivery.
9.5.4.6. Delayed Discovery
Reasons for rejection may not be readily apparent to the Stores Supervisor and
requestor inspection may occur sometime after arrival. This is particularly true
for overseas shipments. The requestor’s inspection may reveal discrepancies in
dimensions, tolerances, color, damage, incorrect analysis or other reasons for
rejection. The SRV is noted if the inspection is made promptly. Otherwise, an
Inter Office Memorandum is prepared which relates the discrepancy observed
and the action requested.
In such cases, the Purchase Section is advised and negotiates with the Supplier
for return or disposition of the goods. When the goods are returned to a local
SUBJECT POLICY NO:

FM 9.5
REJECTION OF GOODS
APPROVED BY:
supplier, an Acknowledgement of Returned Materials Form is completed

which details the quantity and description of the goods and the reason for
return. This is signed by the Supplier to acknowledge receipt of the returned
goods. The original signed copy is retained as support by the Purchase Section
9.5.4.7. Rejection Files
Copies of all Supplier delivery notes covering documentation of rejections are

retained in a file binder by the Stores Section for reference purposes. A similar
file is maintained for Inter Office Memoranda. The purchase Section shall also
file copies of Returned Materials forms.
SUBJECT POLICY NO:

FM 9.6
ACCOUNTS PAYABLE
APPROVED BY:
9.6.1. Policy
Internal controls are required to ensure that only valid and authorized payables are
recorded and paid. Accounting procedures should be implemented to ensure the
accuracy of amounts, coding of General Ledger accounts and appropriate timing
of payments.
9.6.2. Purpose
To explain the practices for documenting, recording and issuing payments for
accounts payable transactions.
9.6.3. Scope
This procedure applies to all types of purchases including, those for goods and
services and any purchases related to contracting activities.
9.6.4. Background
Properly recording liabilities is generally a three-step process, particularly, for
merchandise purchases.
The first step is recording the liability upon receipt of merchandise, using the
purchase order estimates as a guideline. For accuracy and timeliness of data, a
liability should be recorded as soon as the company receives the purchased items
for all the departments. By necessity, this initial recording is usually an estimate
and can be finalized when the actual invoice arrives. This is why a Purchase
Order is so important for merchandise purchases. It documents the company’s
understanding of how much each item will cost, per the vendor's terms. This
includes estimates for freight and any other charges.
The second step takes place when the vendor's invoice is received. At this point,
the actual liability is finalized, with any necessary adjustments to the item costs,
freight, or other charges.
The third step involves the preparation, issuance of payment for the goods
received, and subsequent filing of all paperwork for easy retrieval.
9.6.5. Documenting Accounts Payable
The following documents should be forwarded to accounts payable for temporary

filing and subsequent matching to form an accounts payable voucher package:
 Receiving Report [Stores Receipt Voucher]. This may be from the concerned
operations department.
 Vendor’s/ Sub Contractors invoice
 Purchase Order with Purchase Requisition
Once the accounts payable section has received all of the above documents, the
following steps should be performed to ensure proper authorization, completeness
of purchased items received or services rendered and accuracy of amounts.
SUBJECT POLICY NO:

FM 9.6
ACCOUNTS PAYABLE
APPROVED BY:
 The vendor invoice should be stapled on top along with Receiving Report [SRV]
and followed by the purchase order and purchase requisition. For contract
payment the confirmation from the contracting manager should be received
before processing the steps for payment to the sub contractors.
 The purchase order should be checked for proper authorization and to ascertain
the terms of ordering.
 The invoice received from the supplier/ sub contractor should be compared to
the Receiving/ Confirmation Report. Any discrepancy must be followed-up and
resolved prior to commencing the payment processing.
 Calculations on the invoice should be recomputed such as quantities received,
unit price, values invoiced for each item received and casting of totals.
9.6.6. Recording Accounts Payable
Once goods have been physically received, and all documentation has been
reconciled with any discrepancies resolved, the accounting system must now be
updated to record the received goods. For sub contracting activities, after
receiving all confirmation from the authorized officials, the liability for payment
to the subcontractor should be recorded. The matched documentation required
consists of the original purchase order, receiving report and vendor’s
invoice/packing slips.
 If the purchase orders for goods purchased originated in the accounting system,
then the original purchase order should be brought up on screen and the specific
items and related quantities received are clicked off or recorded, based on the
actual receiving report.
 The immediate effect is that inventory or the cost of project is increased for the
items received as the payable to the vendor is recorded. In the case of contracting
activities, the cost of contract should be increased for the amount invoiced by the
sub contractors.
 If the Purchase Orders were prepared manually, then record on Purchase Order
Log the received status and then enter the purchase details in the accounting
system.
 On receipt of invoices in Accounts Department, the Accountant – Payable checks

whether the amounts shown as payable actually represent goods/services for
contracts received. The User department’s approval is also a must on the invoice
and/or on the attached Receiving Report [SRV]. If it is not matching the
Accountant should seek clarification from Receiving section, user or interact with
Purchase Manager for initiating the necessary action.
SUBJECT POLICY NO:

FM 9.6
ACCOUNTS PAYABLE
APPROVED BY:
 If the supports match to the goods received and vendors invoice, Accountant –
Payables should input entry in the accounting system, debiting inventory/other
head and crediting vendor’s account.

 Financial Controller should periodically reviews accounts payable Log and should
instruct Accounts Payable clerk to process payment based on due dates.
 Accountant should then prepare a REQUEST FOR PAYMENT /VOUCHER

PAYABLE [RFP] for making payments against vendors’ invoices. One or more
invoices of a vendor may be included under one R F P. Original invoices and all
other supporting documents should be attached with to the R F P.
 Financial Controller should check the RFP and supports for correctness and
approve it.
9.6.7. Payment Of Accounts Payable
 Extract an aging of the accounts payable and determine the “bills to

pay”. Examine the “bills to pay report” on a monthly basis. The Chief Accountant should
select the current week's bills to be paid based on the funds available and a projection of
cash flow or receipts over the coming week. Once the process is complete, print the
checks for the selected bills to be paid.
 Any vendor credits which are amounts owed to the company for
returns, price adjustments, should be applied to amounts currently owed to the vendor
when determining payment. These are normally received in the form of a credit memo or
adjusting invoice. These should be entered into the system like any other invoice and
applied to the next payment being made.
 The first element of control begins by using pre-numbered blank

checks and storing them in a secured area.
 Occasionally, it may be necessary to take a blank check and fill it out

manually. Special care must be used to maintain control over blank and manually
prepared checks. Make sure to enter all manual checks into the check register and or into
the accounting system immediately after use.
 Ensure that all checks signed and approved are correctly recorded in
the accounting system. Stamp the invoices “PAID” to document that these have been paid
and to prevent re-use. Note down the details of checks paid to the vendor, on the invoice
copy and attach the copy of the counterfoil of the check detached/check photocopy.
 Deliver the checks as soon as possible to the Vendors once checks

have been posted and "paid" by the system. It is not advisable to "hold" checks for
additional days after posting. This practice usually occurs when there are insufficient cash
flows. However holding checks increases the difficulty of projecting cash flow, reduces
SUBJECT POLICY NO:

FM 9.6
ACCOUNTS PAYABLE
APPROVED BY:
cash balance accuracy, and causes confusion when trying to reconcile accounts payable
vendor balances. None of these balances will be accurate if printed checks are held back
from mailing. If cash flow is insufficient to deliver the checks, then it is advisable not to
post and prepare checks and debit the vendor in the first place.
SUBJECT POLICY NO:

FM 10.1
STAFF SALARY
APPROVED BY:
10.1.1 Policy
To ensure correct salaries for the employees are credited/paid at the end of each
month. Salary being the monthly compensation for each of the employee’s hard work
that he/she puts into the company; any mistake in salary calculation will be deterrent
in hi/hers productivity. Hence utmost care should be taken for calculating salary.
10.1.2 Procedure
10.1.2.1 HR Section is responsible for the monthly salary calculation and

updating the company’s records in the system.
10.1.2.2 Finance & Accounts department has to ensure the correctness of the salary
calculation from the salary registered where all the relevant details about
the entitlement and deductions for each employee is available.
10.1.2.3 The salary register is to be updated every year.
10.1.2.4 Finance & Accounts department has to ensure that the salary deduction in
case of late coming to office and partial leave taken by employees are
correct and complied with company regulations. Since these calculations
are done manually by the HR Section extra care should be taken to cross
check the same.
10.1.2.5 Upon verification of salaries sheet, Finance & accounts department has to
prepare payment advice for bank to credit the respective employees
account.
10.1.2.6 For those employees to whom the salary has to be paid by cheque[ in the
case of new recruitment], the payment procedure specified in the cheque
payment should be followed.
10.1.2.7 The approval for payment should be obtained as per the approved
delegations of authority.
10.1.2.8 The Manager, Finance and Accounts & accounts should ensure that all
salary payments have been made without any delay.
SUBJECT POLICY NO:

FM 10.2
STAFF ADVANCE
APPROVED BY:
10.2.1 Policy
To make advance to staff from the fund as per request to eligible employees by
confirming to the Manager, Finance and Accounts policies of the company and to
collect the same as per the terms and conditions as specified in the said policies.
10.2.2 Procedure for disbursement
10.2.2.1 The Manager, Finance & Accounts has to process the application form
after receiving it from the employees. The application should be in a
format to be approved by the Financial Controller.
10.2.2.2 After the verification these are to be sent to Chairman & MD through COO
services for final approval.
10.2.2.3 After the final approval by the Chairman & Chairman & MD, eligible
applications shall be forwarded to the Financial Controller for
disbursement of loan.
10.2.2.4 On authorization by the Financial Controller, the accounts department has

to cross verify the application according to the prevailing rules.
10.2.2.5 Based on the approval, advance in cash will be paid to the respective
employee and his signature is obtained on the application on receiving the
advance.
10.2.2.6 Repayment schedule for each advance is to be intimated to the payroll-in-

charge.
10.2.2.7 In case where an employee resigns from the services of company or is

terminated, the company shall collect the entire amount of outstanding
premiums as at the date from the final settlement amount due to / due by
the employee.
10.2.2.8 Employees of the company are generally expected to utilize the normal
banking facilities available outside the company.
10.2.2.9 The company will – in no case – act as a guarantor in respect of

loans/overdrafts/advances/credit card account balances taken out by any
employee from any external source whatsoever.
SUBJECT POLICY NO:

FM 10.3
BUSINESS TRAINING
APPROVED BY:
10.3.1 Policy
10.3.1.1 The Managers and staff of NUREC and its subsidiaries may be required to
travel in the course of duty to meet the clients as well as to reach the destination of
training within Kuwait and abroad.
10.3.1.2 Employees are required to take training in their respective field to update their
knowledge and to increase their productivity from time to time for the benefit of
company.
10.3.1.3 The Company will ensure that travel does not unduly inconvenience the staff
and that proper facility for stay and meals are provided at the Company’s cost.
10.3.1.4 Travel may be by car for work within Kuwait and / or by air to other States in
the Gulf and/or outside Gulf.
10.3.1.5 All non-leave travel on Company business for managerial Personnel must have
the prior approval of the respective manager of the department and the Chairman
& MD for traveling by managers.
10.3.2 Training
10.3.2.1 The entire training programs for the employees are to be arranged by the
Company either in Kuwait or outside Kuwait.
10.3.2.2 The Manager, Finance and Accounts will finalize list of the participant
employee.
10.3.2.3 Before the employees are sent for training the availability of lodging and
boarding will be confirmed if required to do so.
10.3.2.4 Employees may be given the fixed daily allowance if he makes his own
arrangement for lodging and boarding.
10.3.3 Travel
10.3.3.1 Air tickets are to be arranged by the HR section and a memo for the entire ticket
price should be sent to accounts to arrange for the payment.
10.3.3.2 Air travel eligibility for economy / business classes shall be according to the HR
policies.
SUBJECT POLICY NO:

FM 10.3
BUSINESS TRAINING
APPROVED BY:
10.3.3.3 Managers / Staff accompanying senior managers on business travel may upgrade
and travel as per the entitlement of the Senior Manager concerned for that sector.
“Accompanying” means that the managers concerned are traveling to the same
destination to work jointly.
10.3.3.4 All hire car charges must be pre-approved by the Manager, Finance and
Accounts prior to the commencement of the trip.
10.3.3.5 Hotel accommodations will be provided along with the daily allowance as per
the company’s predefines allowance structure.
10.3.4 Procedure
10.3.4.1 A tour allowance structure has been established to and applicable for all the
employees of the company.
10.3.4.2 Any employees going on a business trip or training or education inside or out
side Kuwait are entitled for the allowance based on the nature of boarding and
lodging. Allowance structure should be approved as per HR policies and
procedure.
10.3.4.3 All costs associated with the business trip will be borne by the Company with
the exception of a “personal” nature and within the specified limit.
10.3.4.4 All air tickets must be purchased from the Travel Agent only. The request for Air
Tickets must be made through a Local Purchase Order (LPO) signed by the
Manager, HR and Administration and issued to the Travel Agent.
10.3.4.5 Business Travel Expenses will be paid based on the number of days the
employee will be on tour prior to his travel.
10.3.4.6 The payment shall be made one day before or on the same day of his journey.
10.3.4.7 Allowance structure shall be modified time to time based on the cost of living in
other countries within the limit of budget.
SUBJECT POLICY NO:

FM11.1
REPORTING OBJECTIVES
APPROVED BY:
11.1.1 Policy
A reporting structure commensurate with the level of operations of the

subsidiaries as well the holding company should be established to appraise the
Management of the Holding Company about the operations of its subsidiaries,
namely:
1. Performance,
2. Rights,
3. Obligations and
4. Other key performance indicators (KPIs)
11.1.2 Purpose
This procedure highlights the need for timely and periodic reporting across all its
subsidiaries in order to know and examine the current status, probe for inactions,
explore and plan for corrective actions, if needed.
11.1.2.1 MIS Reporting essentially involves:
1. Proper selection of data, which have been obtained for various purposes so
as to keep the volume of reports within the limits of usability.
2. Organization of data to put the information in a form that can be readily
assimilated by the managers concerned, and
3. Selecting the appropriate method of reporting.
11.1.2 Scope
These general procedures are applicable to all management information system

reports generated at various intervals other than the financial statements that need
to be generated at appropriate intervals.
11.1.3 Procedure
11.1.3.1 The Finance & Accounts department shall maintain a Reporting Schedule
detailing all reports that need to be submitted by the various subsidiaries together
with details such as the frequency of reporting and the deadline for submission. A
format of such schedule is available in F1201.
11.1.3.2 Reports should be geared to the needs of management decision-making.
11.1.3.3 All reporting needs should be communicated across to all subsidiaries

uniformly. Circumstances may require any particular subsidiary not to report
SUBJECT POLICY NO:

FM11.1
APPROVED BY:
because of the specialized/technical nature of the report, then that subsidiary

shall be excluded. However, reason shall be spelled out in the log the reason
for non-applicability to such subsidiaries.
11.1.3.4 In the course of business, new reporting needs may arise in line with the
growth of the business or the need to know about areas hitherto remaining
unreported. Needs assessment for such reporting together with the data
required shall be made by the Finance & Accounts Department.
11.1.3.5 The needs assessment should be approved by the Financial Controller. The
needs assessment together with a format for reporting should also be
accordingly made out and sent to the Chairman & MD for approval. The
Chairman & MD shall authorize all requests for newer reporting requirements
after ensuring the required needs are addressed.
11.1.3.6 The Finance Department shall then communicate to all subsidiaries of the
need to submit the report attaching along with it the prescribed format,
together with the following details:
1. Frequency
2. Deadline for submission
3. Authority responsible
Narrative data should support figure-type reports, wherever necessary.
11.1.3.7 On receipt of report, the log shall be updated as to the date of receipt of the
report and consolidated procedures shall be started. Financial Controller shall
be responsible for consolidating all subsidiary reports.
11.1.3.8 The consolidated reports must accompany the subsidiary reports submitted to
the management. The Financial Controller, shall be responsible to review all
reports before they are released, and shall accordingly initial all reports
submitted to management.
11.1.3.9 The accounting system should be modified wherever necessary to facilitate

effective error free report preparation. Reports should contain significant data
even if these are derived from records other than the books of accounts.
11.1.3.10 Information should be reported as promptly as possible using the “Flash

Reporting” technique whenever possible.
SUBJECT POLICY NO:

FM11.1
APPROVED BY:
11.1.4 Pre-requisites of an effective management information system:
The essential requisites of an effective management information system are as follows:
11.1.4.1 Information system should be properly designed and managed by

professionally trained persons.
11.1.4.2 Designing of the system should be carried out after taking into account the
information requirements of different levels of management. For example,
systems designed should find out from the various members of the
management team what type of financial, accounting and statistical
information they need. The system designer should particularly enquire as to
what extent management needs of information are met through informal
channels and the extent to which financial information are available
independently of the accounting department.
11.1.4.3 Information system should maintain a database to store all types of

information, required for making a variety of decisions. It should be capable
of meeting routine and special information requirement of the organizational
executives.
11.1.4.4 Information system should receive the support of top management in order for
it not to lose its value to the users.
11.1.4.5 Information system should have enough flexibility to meet the changing
information requirements of its executives.
11.1.4.6 System’s designer should ascertain from its users about the capabilities and
deficiencies of the system, for augmenting its capability in the future.
11.1.4.7 Information system should be supported by an effective reporting system,

which should be timely, accurate, economical and in proper format. It should
be periodically reviewed.
SUBJECT POLICY NO:

FM 11.2
SUBSIDIARY REPORTING
APPROVED BY:
11.2.1 Policy
All subsidiaries shall adhere at all times to the format and timeliness of reporting
specified in this policy.
11.2.2 Purpose
The procedure highlights the applicable reporting needs for various subsidiaries.
The reporting needs from subsidiaries are divided into those that need timely and
periodic reporting across all its subsidiaries in order to know and examine the
current status, probe for inactions, explore and plan for corrective actions, if
needed and other need based general reporting.
11.2.3 Scope

reports generated at various intervals other than the periodical financial
statements. Besides the below procedures are applicable to all reporting whether
periodic or need based reporting.
11.2.4 Procedure
11.2.4.1 General
The reporting package of the Subsidiary are divided into the following three
broad categories:
1. Risk Based Reporting

2. Fund Management Reporting
3. Key Performance Indicators Reporting (KPI’s)
Under each of the above broad heads there are a series of reports that needs to be
submitted to the Holding Company. The frequency of reporting is identified with
the following legends:
Legend Frequency Due Date
D Daily Next business day

W Weekly Within 2 business days
M Monthly Within 1 business week
Q Quarterly Within 2 business weeks
H Half-yearly Within 2 business weeks
Y Yearly Within 2 business weeks
SUBJECT POLICY NO:

FM 11.2
APPROVED BY:
11.2.4.2 Risk Based Reporting
The objective of Risk-based reporting is to identify those areas which if left uncontrolled
would result in either losses and/or bad reputation. Following are the reports that needs
to be generated by the subsidiary and the corresponding frequency.
FREQUENCY
NATURE OF REPORT
D W M Q H Y
A) RISK BASED REPORTING

1. Schedule of Legal Cases √
2. Compliants Tracking Report √
3. Labour Turnover Report √
4. Insurance Coverage Report √
5. Foreign Exchange Risk Exposure √
6. Statutory Compliance Report √
1. Schedule of legal cases: This report summarizes the status of existing as well as
other potential cases. The report should specify the standing of the subsidiary in
the case as well as the potential liability if a judgment detrimental to the interests
of the subsidiary is passed. A format of the report is enclosed in F1202.
2. Complaints Tracking Report: This report summarizes the total complaints

received and the action taken by the Subsidiary to address the same. The
objective of this reporting is to ensure no bad reputation befalls on the Holding
for slackness in reporting. A format of the report is enclosed in F1203.
3. Labour Turnover Report: This report summarizes the labour turnover in the
subsidiary. A high labour turnover might suggest a weak management or
unhealthy management practices prevailing in the subsidiary. A format of the
report is enclosed in F1204.
4. Insurance Coverage Report: This report summarizes the risks that have been
insured against and the status of claims made under the specified policy. This
report would insure whether all risks are insured against. A proper follow up on
the claim is also necessary to ensure fund position to acquire and replace
damaged/lost asset. A format of reporting is enclosed in F1205.
5. Foreign Exchange Risk Report: This report summarizes the rights and obligations
in the subsidiary for contracts denominated in foreign currency. The subsidiary
could undertake imports for which payments are denominated in foreign currency.
Besides, exports could also be where receipts are denominated in foreign
currency. The objective of this report is to ensure property hedging for these risks
SUBJECT POLICY NO:

FM 11.2
APPROVED BY:
and in the absence of which the possible loss. A format of reporting is enclosed in
F1206.
6. Statutory Compliance Reporting: This report summarizes the relevant statutory

report that needs to be submitted and the relative status of these. In the absence of
monitoring the statutory obligations, possible regulatory sanctions may befall on
the Holding that might risk reputation. A format of reporting is enclosed in F
1207.
11.2.4.3 Fund Management Reporting
The objective of Fund Management Reporting is to identify any excess/shortage of funds

and accordingly transfer/liquidate to/from investment.
FREQUENCY
NATURE OF REPORT
D W M Q H Y
FUND MANAGEMENT
1. Collection Report √
2. Limits Utilization Report √
a) Fund Based Limits
b) Non-Fund Based Limits
3. Loan Tenor Compliance √
1. Collection Report: This report provides the aging analysis of the receivables as
well as the amounts collected. A format of the report is enclosed in F 1208.
2. Limits Utilization Report: This report provides the extent of utilization of various
limits available to the subsidiary. The outcome from the report would be used for
analyzing utilization pattern and accordingly increase/lower limits and divert to
other deserving subsidiaries. A format of the report is enclosed in F 1209.
3. Loan Tenor Compliance: This report summarizes the loan principal repayments
schedules and the status of compliance to the loan tenor. A format of the report is
enclosed in F 1210.
11.2.4.4 Key Performance Indicators
The objective of Key Performance Indicators is to identify operational profitability as

well as the level of other ratios in order to determine the extent of the variations
SUBJECT POLICY NO:

FM 11.2
APPROVED BY:
FREQUENCY
NATURE OF REPORT
D W M Q H Y
KEY PERFORMANCE NDICATORS

1. Profitability Report √
2. Critical Ratios Report √
3. Project Report Need Based Reporting
1. Profitability Report: This report to be produced on a monthly basis summarizes

the turnover and the related costs of sale. A format of the report is enclosed in
F 1211.
2. Critical Ratios Report: This report highlights the various ratios that are critical in
order to evaluate the performance of the subsidiary. Control ratios are those that
aid in monitoring against established industry benchmarks, if any, else the
management’s performance objectives. A format of the report is enclosed in F
1212.
3. Project Report: This report is a need based report that needs to be generated and
submitted for approval as and when a new project is intended to be commenced
by the subsidiary. This report would be basis for the obtaining approval from the
Executive Committee. A format of the report is enclosed in F 1213.
SUBJECT POLICY NO:

FM 11.3
CONSOLIDATED REPORTING
APPROVED BY:
11.3.1 Policy
All reporting aspects by individual subsidiaries should be consolidated and a

consolidated reporting should be generated for use as a Holding reporting
procedures.
11.3.2 Purpose
To initiate and bring about Holding-wide reporting and monitoring process in

order to examine the current status, probe for inactions, explore and plan for
corrective actions, if needed.
11.3.3 Scope

reports generated by various subsidiaries.
11.3.4 Procedure
11.3.4.1 The Finance & Accounts department shall on receipt of each subsidiary
reporting pack shall review and analyze the information in order to ensure
consistency in reporting.
11.3.4.2 For clarification regarding any accounting information presented in the

subsidiary report, clarifications shall be raised with the holding company
accountant who is in charge for consolidation. If the queries cannot be
answered at the holding company level, the same has to be elevated to the
respective subsidiary company, who has furnished the report.
11.3.4.3 The report shall be consolidated, bearing in mind the following:
1. Consolidate reports and present in relation to the needs of information

expressed by management.
2. Ensure whether the quantity of data reported can be reduced without

sacrificing their usefulness for management purposes and the concept of
management by exception can be emphasized through the reports.
11.3.4.4 The consolidated reports should then be presented to the Financial Controller
who shall review the same.
11.3.4.5 The reports are then submitted to the Chairman & MD, who shall accordingly
appraise the Board and the Committees.
SUBJECT POLICY NO:

FM 12.1
FILING OF DOCUMENTS
APPROVED BY:
12.1.1 Policy
To ensure that the documents and the records, which are being generated in day
today basis, are preserved safely and can be retrieved whenever required.
12.1.2 General Procedure
12.1.2.1 Files are required to be maintained in different category wise and every
year these files need to be replaced by new files.
12.1.2.2 Contracts documents are divided in two categories. One of the categories is
maintenance contract (original are kept with purchase department) and
other one is original contracts with various customers. Separate files are
maintained for both the categories.
12.1.2.3 All the certificates, bonds and other valuable instruments along with the
original contract files are required to be kept in the safe.
12.1.2.4 All other working files are to be kept in the shelf / rack provided for in the
accounts department.
12.1.2.5 One-year-old files are to be kept in a separate store say storeroom ‘A’.
Files older than one year and beyond are kept in separate storeroom ‘B’.
12.1.2.6 As a matter of policy records up to five (5) years should be kept as backup.
12.1.2.7 Old records may be destroyed after the approval from COO or finance and
administration manager.
12.1.2.8 The storing place is required to be kept clean and dust free, pest free to
avoid any physical destruction of the records.
12.1.3 Specific procedure
12.1.3.1 Files to be kept for category wise and month wise wherever possible.
- Journal Voucher file
- Cheque payment voucher file
- Bank related journal voucher file
- Receipt file
- Cash payment file
- Any other type of file which the management recommends
to maintain or the accounts dept. likes to open separately for
better control.
SUBJECT POLICY NO:

FM 12.1
FILING OF DOCUMENTS
APPROVED BY:
12.1.3.2 Different colour labels should be used to mark different files. This will
help in locating and accessing proper files. Different colour labels
currently in use by the company is as follow:
- ‘Yellow’ for Journal voucher
- ‘Blue’ for cheque payment
- ‘Pink’ for bank JV and other bank related voucher
- ‘Green’ for receipt and cash payment
12.1.3.3 An index for each year files should be maintained separately. Each file
should be numbered so that it can be identifiable from the index and can
be easily picked up from the storerooms.
NUREC REAL ESTATE DEVELOPMENT COMPANY
BUDGETING OBJECTIVES
A 0801
In order to guide the Holding wide budgeting process, the management shall establish
policies to guide the budgeting process and to establish a financial framework within
which the budget will be developed. It is worth mentioning that there is no one size
fits all in budgeting and budgets should be developed, considering the below
mentioned objectives:
Specification and Communication of organizational objectives:
- Budget is a medium through which organization's objectives and policies are

reflected. Budgeting is used as a tool for implementing the organizational
objectives.
- It is essential to understand, specification and documentation of organizational

objectives before the managers start for budgeting the organizational activities.
- Following from a statement of objectives, a corporate long range or strategic

plan can be built up. Distinction may be drawn between current operating
activities and future strategic activities.
- Budgeting is a management tool used for shorter term planning and control.
- This classification of activities into short term and strategic long term and
communication to the managers will lay down a sort of guide for budgeting
the activities within the specified objectives and activities.
Determination of key success factors:
- The performance of every organization will be particularly influenced by

certain critical success factors.
- Key factor will influence the activities of an undertaking and it will limit the
volume of output and will have direct impact on the profitability of the
organization.
- Critical success factors may consists of a specified raw material, a specific

type of labour skill, a tool, a service facility, floor space, cash resources etc.
The limitation or shortage of such critical factors may result in restricting
capacity utilization.
- The limiting factors may shift from time to time due to external and internal
circumstances.
- In this organization productive capacity and consumer demand are the

important key factors.
- Because of this, the sales budget is usually the first budget to be prepared. It
will determine the content of other related budgets.
Establishment of clear lines of authority and responsibility:
An organizational chart defining the lines of authority and responsibility of the

managers responsible for accomplishment of organizational objectives is to be
prepared. The organizational chart should define the following:
- The responsibility of individual functional managers.

- Delegation of authority to the concerned functional managers.
- Inter – functional relationship of the organization.
Establishment of budget centers:
Budget center is a section of an organization for which separate budgets can be

prepared and control exercised. The entire organization is divided into different
segments, which are clearly defined for the purpose of budgetary control according to
responsibilities of departmental heads. These segments of an organization defined for
the purpose of budgetary control are technically referred to as budget centers.
Determination of Budget period:
Budget period is a period for which the budget is prepared. A budget can be a long-
term budget or a short-term budget. A short-term budget is generally prepared for one
year or lesser period. Quarterly, monthly or even weekly budget can be prepared for
certain operations of the company.
The short-term budget will generally not exceed the full accounting year. The long-
term budget, which extend to five or even more years. This long-term budget will
agree with the long-term forecast of sales, organizational schemes for expansion,
modernization, diversification etc.
The long-term budgets are used for planning whereas short-term budget is used for
implementation of long-range plans, activities, objectives and also for control
purposes. Capital expenditure budget and Research and development and expenditure
budget are the examples of long-term budgets. Annual sales budget, income and
expenditure budget are the examples of short terms budgets.
Establishment of budget committee:
The setting up of a budget Committee is necessary in case of large and complex

organizations. As the budget involves the various functional activities, the closest
association of functional managers is essential for satisfactory formulation and
implementation of the budget.
The budget committee will be composed of major functional heads. It can be an

effective medium for co-ordination and review of the budget programme. The main
functions of budget committee are as follows:
- To review the functional budget estimates.

- To recommend the functional budgets for revision.
- To review and advise on the general policies affecting more than one function
- To review, approval and adoption of revised budgets.
- To receive and analyze the periodic performance reports from budget centers.
- To examine the budget reports showing actuals compared with budget.
- To locate the responsibility for discrepancies between actuals and budgets, and
recommends the corrective action.
SUPPLIER PERFORMANCE RECORD
F 1001
Supplier Name
Supplier Code
Supplier Address
Products dealt
Items to be Comments
Reviewed
Compliance with
contract terms
Quality of Provided
Service
On Time Delivery
Others
Reviewed By Date Signature

F 1201
Name of the Subsidiary Company
Schedule of Reports
Reporting Due Date of Actual

S. No Report Name Applicable to Period of delay Comments
Frequency Submission Submission Date
_______________ ______________ ___________________

Prepared by Checked By Approved By
F 1202
Schedule of Legal Cases for the Quarter Ended
Name of Our Position Nature of Case Forum where Case Start Status Potential Proposed
Complainant (Plaintiff/ (Criminal/Civil) addressed date liability (KD) action/Remarks
(Plaintiff/Defendant) Defendant)
Prepared by ………… Checked by ………….

F 1203
Compliant Tracking Report for the Month Ended
.No.S Nature of Complaint No of No of complaints Potential Status/Remarks

complaints attended Liability, If any.
received
Prepared by…… Checked by…….

F 1204
Labour Turnover Report for the period ended – …….
Year to date
Description This Last This year Last year
Quarter Quarter
Average number of employees
Number of persons leaving
(Reasons stated below)
Labour turnover percentage (a+b)
REASONS FOR LEAVING:
(a) Avoidable causes:
(i) Redundancy
(ii) Dissatisfaction with job.
(iii) Dissatisfaction with remuneration.
(iv) Dissatisfaction with hours of work.
(v) Dissatisfaction with working
conditions.
(vi) Relationship with supervisors.
(vii) Relationship with fellow workers.
(viii) Other reasons
Total
Percentage
(b) Unavoidable causes:

(i) Personal betterment
(ii) Illness or accident
(iii) Move from locality
(iv) Discharge- unsuitable, insubordination, etc.
(v) Marriage.
(vi) National services.
(vii)Retirement.
(viii) Death.
(ix) Other reasons.
Total
Percentage
Special Remarks:
Personnel Manager
F 1204
F 1205
Schedule of Insurance Coverage
Type of Risk/ Insured Period of Pending claims

Premium Comments Remarks
Nature of Policy Amount Policy < 30 days > 30 days
____________________ ____________________ ___________________

F 1206
Name of the Subsidiary Company: XXXXXXX
Foreign Exchange Risk Monitoring Report
Imports
Forward
LC Value Amount Notional
Country Tenor Contract Comments Remarks
(KD) Paid Loss, if any
Booked Y/N
Exports
Forward
Invoice Amount Notional
Country Tenor Contract Comments Remarks
Value (KD) Received Loss, if any
Booked Y/N
____________________ ____________________ ____________________

F 1207
Schedule of Statutory Compliance Reporting
Statutory Concerned Due Date of Actual Period of Consequences of

S. No Comments
Report Authority Compliance Compliance Date delay delay
____________________ ____________________ ____________________

F 1208
Outstanding Collection Report for the Month ending
Actual Balance Ageing

Total
Name Collection Outstanding 30 – 60 60 – 180 Comments
Outstanding < 30 days > 180 days
KD KD days days
Customer
Name
Total
____________________ ____________________ ____________________

Prepared by Checked by Approved by
F 1208
Outstanding Collection Report for the Month ending
Actual Balance Ageing

Total
Name Collection Outstanding 30 – 60 60 – 180 Comments
Outstanding < 30 days > 180 days
KD KD days days
Customer
Name
Total
____________________ ____________________ ____________________

Prepared by Checked by Approved by
F 1209
Name of the Subsidiary Company: XXXXXXX

Limits Utilization Report – Fund Based and Non-Fund Based
A) Fund Based – Working Capital
Ratio
Working Capital Actual (KD) % Financed Comments Remarks
Norm Target
Inventory
Raw Material
WIP
Finished Goods
Total
Accounts Receivable
Domestic
Exports
Total
Level of Limit Utilisation
Excess
Limit Sanctioned Limit Availed Balance Comments Remarks
(Deficit)
Working Capital
Cash Credit/ Overdraft facilities
Bill Discounting
F 1209
Total
B) Fund Based – Term Loans
Repayment Period
Term Loans Limit Sanctioned Limit Utilized Rate of Interest Remarks
From To
Term Loan 1
Term Loan 2
Total
Limit Outstanding Overdue Excess Remarks
Term Loan 1
Term Loan 2
Total
C) Non-Fund Based
Validity Period
Term Loans Favoring Limit Charges Remarks
From To
Guarantees – Provide Details
Letter of Credits – Provide Details
Total
Level of Limit Utilization
Limit Outstanding Overdue Excess Remarks
Guarantees
F 1209
Letter of Credits
Total
D) Overall Limits Utilization – Fund and Non-Fund

Limit Limit Outstanding
Excess (Deficit) Comments Remarks
Sanctioned (KD) Availed (KD) Balance (KD)
Fund Based
Non-Fund Based
Total
_________________ ____________________ ____________________

Prepared by Checked by Action taken by
F 1210
Name of the Subsidiary Company:
Schedule of Loan Tenor Compliance Report
Principal repayment due Amount Paid Interest payment due Amount Paid
Loan Loan Status /
Amount Amount Amount
Type Amount Date Amount (Kd) Date Date Date Remarks
(Kd) (Kd) (Kd)
____________________ ____________________ ____________________

F 1211

Profitability Report for the Month Ended
Descriptions Product ___ Product ___ Product ___ Product ___
Volumes
Sales Realisation
Cost of Goods Sold:
Material Cost
Manufacturing Cost
Labour Cost
Other
Total
Contribution
Marketing & Selling Expenses
Net Contribution
Net Contribution/unit
____________________ ____________________ ____________________
F 1212
Critical Ratios for the Quarter Ended

Short term liquidity Current Quarter Previous Quarter Previous Yr.
Current ratio
Measures the ability to pay current liabilities out of current assets.
Current assets XX XX XX
/ Current liabilities XX XX XX
= Current ratio XX XX XX
Quick ratio (Acid Test)
Measures the ability to pay current liabilities out of the most liquid of current assets.
(Cash XX XX XX
+ Marketable secrities XX XX XX
+ Accounts receivable) XX XX XX
/ Current liabilities XX XX XX
= Quick ratio XX XX XX
Accounts receivable turnover
Measures the ability to collect from customers.
Annual net credit sales XX XX XX
/ Average net account receivables XX XX XX
= Accounts receivable turnover XX XX XX
Average collection period (Days Sales Outstanding)
Measures the average number of day that it takes to collect accounts receivable.
365 days XX XX XX
/ Accounts receivable turnover XX XX XX
= Average collection period (Days Sales Outstanding) XX XX XX
Inventory turnover
F 1212
Measures the saleability of inventory. Indicates the number of time inventory is sold or "turned" per
year.
Cost of goods sold XX XX XX
/ Average inventory XX XX XX
= Inventory turnover XX XX XX
Days sales in inventory
Measures inventory levels based on days sales.
365 days XX XX XX
/ Inventory turnover XX XX XX
= Days sales in inventory XX XX XX
Inventory to net working capital
Inventory XX XX XX
/ Net working capital XX XX XX
= Inventory to net working capital XX XX XX
Long term solvency
Debt ratio
Indicates the percentage of assets financed with debt or liabilities
Total liabilities XX XX XX
/ Total assets XX XX XX
= Debt ratio XX XX XX
Times interest earned - income (interest coverage)
Measures the ability to pay interest out of profits.
Net income before interest expense and taxes XX XX XX
/ Interest expense XX XX XX
= Times interest earned - income (interest coverage) XX XX XX
Times interest earned - cash flow (interest coverage)
Measures the ability to pay interest out of cash flow.
Cash flow from operations and interest XX XX XX
/ Interest expense XX XX XX
= Times interest earned - cash flow (interest coverage) XX XX XX
Total asstes to equity
Total assets XX XX XX
F 1212
/ Total stockholders equity XX XX XX

= Total assets to equity XX XX XX
F 1212
Total liabilities to total assets

= Total liabilities to total assets XX XX XX
Total liabilities to equity
/ Total stockholders equity XX XX XX
= Total liabilities to equity XX XX XX
Interest bearing debt to total assets

Interest bearing debt XX XX XX
= Interest bearing debt to total assets XX XX XX
Interest bearing debt to equity
Interest bearing debt XX XX XX
/ Total equity XX XX XX
= Interest bearing debt to equity XX XX XX
Long term debt to long term capital
Long term debt / XX XX XX
(Long term debt XX XX XX
+ Total equity) XX XX XX
= Long term debt to long term capital XX XX XX
Profitability Ratios
Return on assets
Measures the effectiveness of assets used to produce profits.
Net income XX XX XX
/ Average total assets XX XX XX
= Return on assets XX XX XX
Return on equity
Measures the profitability of owners investments.
Net income XX XX XX
/ Average stockholders equity XX XX XX
F 1212
= Return on equity XX XX XX
Gross margin
Gross profit XX XX XX
/ Sales XX XX XX
= Gross margin % XX XX XX
Operating margin
Operating profit XX XX XX
/ Sales XX XX XX
= Operating margin XX XX XX
Profit margin
Measures the % of each $1 of revenue that is left over as profit.
Net income XX XX XX
/ Sales XX XX XX
= Profit margin XX XX XX
Total asset turnover

Measures the efficiency of assets used to produce sales.
Sales XX XX XX
= Total asset turnover XX XX XX
Fixed assets turnover
Measures the efficiency of fixed assets used to produce sales.
Sales XX XX XX
/ Average fixed assets XX XX XX
= Fixed asset turnover XX XX XX
Current asset turnover
Sales XX XX XX
/ Average current assets XX XX XX
= Current asset turnover XX XX XX
DuPont Return on Investment
Net income XX XX XX
F 1212
= Return on investment XX XX XX
or
Net profit margin XX XX XX
/ Total asset turnover XX XX XX
= Return on investment XX XX XX
Modified DuPont - Return on Equity
Net profit after tax XX XX XX
/ Average stockholders equity XX XX XX
or
Average total assets XX XX XX
/ Average equity XX XX XX
= Equity mutliplier XX XX XX
x ROI XX XX XX
Other Ratios
Accounts payable turnover
Total purchases XX XX XX
/ Average accounts payable XX XX XX
= Accounts payable turnover XX XX XX
Days purchases in accounts payable

365 days XX XX XX
/ Account payable turnover XX XX XX
= Days purchases in accounts payable XX XX XX
Days in Cash Operation Cycle
Average collection period (Days Sales Outstanding) XX XX XX
+ Days sales in inventory XX XX XX
- Days purchases in accounts payable XX XX XX
= Days in Cash Operation Cycle XX XX XX
F 1213
Project Cost Benefit Analysis Report
Proposal No…………..
Date:…………………
To: Executive Committee.
From:
Particulars
1. Particulars of project (Schedule I) * KD
2. Costs involved (Scheduled II) (a)
(b)
(c)
Total Costs
3. Project Rationale
4. Project Implementation Duration
5. Benefits:
Costs savings …
Increase in Revenue …
Pay back period …
Rate of return …
Other benefits …
6. Special remarks:
* Details to be accompanied in a separate schedule
Prepared By: Checked By:

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NAKHEEL UNITED REAL ESTATE COMPANY

Policy FM 1.1 Introduction

CHAPTER 2 – ORGANISATION STRUCTURE & AUTHORITY

CHAPTER 3 – CONSOLIDATED FINANCIAL STATEMENTS

Policy FM 3.1 Consolidated of Financial Statement

CHAPTER 4 – HOLDING COMPANY ACCOUNTING POLICIES

Policy FM 4.1 Holding Company Accounting Policies

Policy FM 5.1 Target Identification & Assessment

CHAPTER 7 – BUDGETING & CAPITAL EXPENDITURE

Policy FM 7.1 Introduction to Budget

Policy FM 8.1 Bank Accounts

CHAPTER 9 – PURCHASE AND PAYABLE

Policy FM 9.1 Requisition Handling

Policy FM 11.1 Reporting Objectives

Policy FM 12.1 Filling of Documents

CHAPTER 13 – GENERAL ACTIVITIES & FILING

Policy FM 13.1 Filing of Documents

SUBJECT POLICY NO:

This Manual is designed to explain and facilitate understanding of the Finance

SUBJECT POLICY NO:

1.2.2 Basic Policy for Finance & Accounts Department

1.2.2.1 It shall be the policy of and their employees to:

1.2.2.1.3 Maintain a high standard of professional ethics in their dealings.

1.2.2.1.4 Avoid all conflicts between personal and company interests.

SUBJECT POLICY NO:

1.3.4 Policies and Procedures

SUBJECT POLICY NO:

1.3.2 Review and update of the manual

SUBJECT POLICY NO:

To identify the nature of confidentiality of the transactions involved in Finance &

1.4.3.1 The Finance Manual is an extremely confidential document. With the

1.4.4 Organization of the Manual

1.4.4.1 This manual is organized by topics (chapters). Polices have been

1.4.4.2 The scope of each policy in terms of its applicability to various

SUBJECT POLICY NO:

The organizational structure of the Department will be based on Personnel at

Manager, Finance and

SUBJECT POLICY NO:

2.3. General Procedures

2.3.1. Authority levels are generally characterized as:

Chief Operating Officer

2.3.4. Any commitments or expenses in excess of or outside approved budgets will

SUBJECT POLICY NO:

Within above limits, internal allocation expense budgets should be

SUBJECT POLICY NO:

3.1.1.1 In principle, the parent should consolidate all subsidiaries.

An effective control is a control over the decision-making body of a company. A

The purpose of preparing consolidated financial statements is to report financial

SUBJECT POLICY NO:

3.1.3 General Principles

3.1.3.2 Consolidated financial statements should be prepared based on legal-entity

3.1.3.3 Consolidated financial statements should display clearly financial

3.1.3.4 Policies and procedures used for preparing consolidated financial

3.1.4 Procedure for Consolidation

3.1.4.1 In preparing consolidated financial statements, NUREC should combine its

 The carrying amount of NUREC ’s investment in each subsidiary and

 Minority interests in the profit or loss of consolidated subsidiaries for the

 Minority interests in the net assets of consolidated subsidiaries are

 The amount of those minority interests at the date of the

SUBJECT POLICY NO:

3.1.4.2 Additions to and Selling of Investments in a Subsidiary

 If a parent acquires an additional investment in a subsidiary, the portion of

 If a parent sells a portion of the investment (as far as the parent-subsidiary