10 Birthday Greetings

10 Just for Laughs!

10 Go Green

As we are all aware, globalization in India is in the phase of stabilization. Being a very

large economy there is confusion about the concept of globalization itself. With

even the educated still struggling to get a balanced life in this transition economy,

the uneducated may not fully understand the concept of globalization though they get

direct benefit and possibly get directly affected. Cell phone, TV and Internet have

really brought parts of the world together and are able to reach and serve the last

person in the bottom of the pyramid. However, if you ask him whether the

quality of his life has improved, there may not be a very clear answer.

In every activity, the impact of globalization is being felt by us. Petrol prices

impacting the cost of vegetables, stock markets getting influenced by what is

happening in Europe and America, and so on. Up to 1990s, the Hollywood films

were released a few years after their release in West and electronic goods would

enter India much later. The times have totally changed now. We can now go to any shop in the world

and be familiar with most of the things sold there.

Does this mean that the globe is getting harmonized? Are all the citizens of the globe trying to talk,

express, emote and react in the same way at least to these material things? The answer seems to be

yes! Now extending logic and the framework to our work, can we exist in our profession if we are not

going to be global? Soon the answer will be no. Being global is not in terms of our size or brand name

or global presence, but in terms of the type, approach and quality of work. We can browse in the net

and identify a specialist working in part of Korea or Chile, who may not be big but who is very good in

his work. We need to be like him — we need to be a specialist company who deliver ‘world class’.

What does this call for? Absolute dedication to whatever we are doing. We need to get back to our

home after learning something new, doing something different and working more intelligently than the

previous day. This would imply absolute commitment and seriousness on our part. Seriousness does

not presuppose being stoic or cold; seriousness is condition of mind to be always focused on

whatever we do. You can be serious in a cool way! Let us spend the first and last ten minutes of our day

in office contemplating on these points. Focus on: doing differently, doing intelligently doing things new

(DIN)!

2 The Journey into IFRS (Part 3)

4 Process Documentation – A consultant's primer

6 Words Confused and Misused (23)

7 Growing Steadily

7 Excel Tips

8 News

8 Know Your Colleagues

9 Knowledge Snippet

Inside

September 2010 ● Volume 4, Issue 49

NCR Consultants Limited

Setting standards at global level - DIN

“Better than a thousand hollow words, is one word that brings peace.”

-Buddha

Values Beyond Consulting

R S Murali

Just Corns!

There was a farmer who grew superior quality corn. Every year, his corn won prizes in state fairs. One year a newspaper reporter interviewed him and discovered that the farmer shared his seed corn with his neighbours.

“How can you afford to share your best seed corn with your neighbours when they are entering corn in competition with yours each year?” The reporter asked.

The farmer replied, ”Didn’t you know? The wind picks up pollen grains from the ripening corn and swirls it from field to field.

If my neighbours grow inferior, substandard and poor quality corn, cross-pollination will steadily

degrade the quality of my corn. If I have to grow good corn, I must help my

neighbours to grow good corn.”

Success does not happen in isolation, it is a participatory and collective process.

So share good practices, ideas and knowledge with y o u r f r i e n d s a n d colleagues.

Page 2

“Imitation is the sincerest of flattery.”

The Journey into IFRS (Part 3) - AS 2 (Revised) Inventories (This exposure draft is issued pursuant to the decision to converge with IFRSs in respect of

accounting periods commencing on or after April 1, 2011. This is still in exposure draft stage and is yet to be issued as a full fledged accounting standard)

Objective of IAS 2

The objective of IAS 2 is to prescribe the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognizing an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to as-sign costs to inventories.

Scope Inventories include assets held for sale in the ordinary course of business (finished goods), assets in the production process for sale in the ordinary course of business (work in progress), and materials and supplies that are consumed in production (raw materials).

However, IAS 2 excludes certain inventories from its scope:

� Work in process arising under construction contracts (Dealt in IAS 11 – Construction Contracts)

� Financial instruments (Dealt in IAS 39 Financial Instruments: Recognition and Measurement)

� Biological assets related to agricultural activity and agricultural produce at the point of harvest (Dealt in IAS 41 Agriculture).

Also, while the following are within the scope of the standard, IAS 2 does not apply to the measurement of inventories held by: � Producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products,

to the extent that they are measured at net realizable value (above or below cost) in accordance with well-established practices in those industries. When such inventories are measured at net realizable value, changes in that value are recognized in profit or loss in the period of the change.

� Commodity brokers and dealers who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognized in profit or loss in the period of the change.

Fundamental Principle of IAS 2 Inventories are required to be stated at the lower of cost and Net Realizable Value (NRV).

Measurement of Inventories

Cost should include all: � Costs of purchase (including taxes, transport, and handling) net of trade discounts received.

� Costs of conversion (including fixed and variable manufacturing overheads).

� Other costs incurred in bringing the inventories to their present location and condition.

IAS 23 borrowing costs identifies some limited circumstances where borrowing costs (interest) can be included in cost of inventories that meet the definition of a qualifying asset.

Inventory cost should not include: � Abnormal waste.

� Storage costs.

� Administrative overheads unrelated to production.

� Selling costs.

� Foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency

� Interest cost when inventories are purchased with deferred settlement terms.

The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost.

For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory.

For items that are interchangeable, IAS 2 allows the FIFO or weighted average cost formulas. The LIFO formula, which had been allowed prior to the 2003 revision of IAS 2, is no longer allowed.

Charles Caleb Colton

Kishore

contd on next page

Page 3

“Every white will have its black and every sweet its sour.”

The same cost formula should be used for all inventories with similar characteristics as to their nature and use to the entity. For groups of inventories that have different characteristics, different cost formulas may be justified.

Write-down to Net Realizable Value NRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. Any write-down to NRV should be recognized as an expense in the period in which the write-down occurs. Any reversal should be recognized in the income statement in the period in which the reversal occurs.

Expense recognition IAS 18 revenue addresses revenue recognition for the sale of goods. When inventories are sold and revenue is recognized, the carrying amount of those inventories is recognized as an expense (often called cost-of-goods-sold). Any write-down to NRV and any inventory losses are also recognized as an expense when they occur.

Disclosure Required disclosures: � Accounting policy for inventories.

� Carrying amount, generally classified as merchandise, supplies, materials, work in progress, and finished goods. The classifications depend on what is appropriate for the entity.

� Carrying amount of any inventories carried at fair value less costs to sell.

� Amount of any write-down of inventories recognized as an expense in the period.

� Amount of any reversal of a write-down to NRV and the circumstances that led to such reversal.

� Carrying amount of inventories pledged as security for liabilities.

� Cost of inventories recognized as expense (cost of goods sold).

Key differences between converged AS 2 and existing AS 2

The Exposure Draft of AS 2 (revised) differs from the existing AS 2 in the following major respects:

1. On the lines of IAS 2, the exposure draft of revised AS 2 deals with the subsequent recognition of cost/carrying amount of inventories as an expense, whereas the existing AS 2 does not provide the same.

2. The Exposure Draft of revised AS 2 provides explanation with regard to inventories of service providers whereas the existing AS 2 does not contain such an explanation The existing AS 2 explains that inventories do not include machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular; such machinery spares are accounted for in accordance with Accounting Standard (AS) 10, Accounting for Fixed Assets. The Exposure Draft of revised AS 2 does not contain specific explanation in respect of such spares as this aspect is covered under revised AS 10.

3. The Exposure Draft of revised AS 2 does not apply to measurement of inventories held by commodity broker-traders, who measure their inventories at fair value less costs to sell. However, this aspect is not there in the existing AS 2.

4. Accordingly, revised AS 2 defines fair value and provides an explanation in respect of distinction between ‘net realizable value’ and ‘fair value’. The existing AS 2 does not contain the definition of fair value and such explanation.

5. The Exposure Draft of revised AS 2 provides detailed guidance in case of subsequent assessment of net realizable value. It also deals with the reversal of the write-down of inventories to net realizable value to the extent of the amount of original write-down, and the recognition and disclosure thereof in the financial statements. The existing AS 2 does not deal with such reversal.

6. The Exposure Draft of revised AS 2 excludes from its scope only the measurement of inventories held by producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products though it provides guidance.

Key ‘Process’ issues in implementation of AS 2 1) One of the major differences between the existing AS 2 and the converged AS 2 is that the service providers (such

as entities engaged in the business of consultancy) need to measure and recognize inventories (work in progress – akin to unbilled receivables) in accordance with these standards. The converged AS 2 states that “These costs consist primarily of the labor and other costs of personnel directly engaged in providing the service, including supervisory personnel, and attributable overheads”. These entities need to create and establish processes and a scientific costing system to capture costs and address overhead allocation issues, and need to recognize these as inventories at the end of the reporting period.

Thomas Percy

contd on next page

Page 4

“Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it

is the only thing that ever has.” Alexander Pope

Process Documentation – A consultant's primer

Introduction

Process definition and documentation are fundamental requirements for operational control, regardless of whether the business is a small unit or a large company. Apart from control, well defined processes enable the business to use its resources in the most productive manner resulting in a direct impact on the bottomline. Clearly laid down processes help employees understand their roles and responsibilities thus helping in performance monitoring.

Advantages of process documentation

It is not enough to define processes in detail. It is very important to document them properly. The best of processes, in the absence of proper documentation become a mere wish list and fail when implementation is attempted. Few advantages of good process documentation are:

� The sequential flow of activities is clear to the person who is expected to perform the activities;

� Job responsibilities can be linked to activities in the process document;

� Value adding and non-value adding activities can be determined which can lead to reengineering of the processes;

� Necessary controls can be put at appropriate places;

� When processes fail, it is easy to find out the exact activities where the

problems have occurred;

� Monitoring of process efficiency becomes easy by attaching process metrics

to each process;

� Good process documentation is a primary requirement to take up process

automation and ERP implementation.

Key elements of a process

Every sequence of activities to be called a process must contain certain key elements. These key elements in turn must be properly reflected in the process documentation. The key elements are:

1) Beginning and End – The sequence of activities must have a definite beginning and definite end. The beginning is generally the output of an earlier process.

2) Process outputs – A sequence of activities resulting in no output does not qualify to be called a process. Process outputs can be documents, decisions or triggers to other processes.

3) Process owner – While the activities per se in a process may be performed by different persons, there has to be process owner whose responsibility it is to see that the process is performed as documented. The process outputs will also be the responsibility of the process owner. For example, while the purchase order process will involve the activities of generation, approval and issue of PO performed by more than one person, the process owner will be the purchase manager.

4) Process infrastructure – In simple words it refers to the things required to perform the activities in that process. For example, for a manufacturing process, process infrastructure may refer to the machines used and the software used. Similarly, for a credit card issue process, it may refer to the card printing machine and the software used.

Ashok Rao

-contd on next page

2) Just like other IASs/IFRSs, the converged AS 2 deals with the Fair Value concept. This concept holds good mainly

for Agricultural produce harvested from Biological Assets. AS 2 read with IAS 41 – Agriculture, says that Agricultural

produce that an entity has harvested from its biological assets are measured on initial recognition at their fair value

less estimated costs to sell at the point of harvest. Net realizable value for inventories may not equal fair value less

costs to sell.

Hence these entities not only need to monitor the Net Realizable values (Entity specific), but also fair values (Market

driven). Thus there is a need to establish processes to monitor entity specific as well as market driven values for

recognition of inventories on an on-going basis.

-to be contd

Page 5

“Literary history and all history is a record of the power of minorities, and of minorities of one.” Ralph Waldo Emerson

5) Process metrics – Process metrics refer to the parameters on which the efficiency of the process will be measured. For example, for a data entry process, the process metrics will be the number of entries made and the number of errors. The process owner will focus on making maximum number of entries with minimum errors. Any process which cannot be associated with a metric is not a well defined process.

In addition to the key elements of a process discussed above, a good process document must have the following characteristics:

� The Big Picture – A master process document which groups individual processes into business phases. For example, order booking, procurement, production, quality control, dispatch, billing and collections can be different phases of the big picture with each phase showing individual processes;

� Process Code – Every process must have a process code with which it can be identified and linked up with other processes;

� Previous and next processes - For example, for a credit card issuance process, the previous process can be 'Approval and Printing of cards' and the next process can be 'Card Activation';

� Activity followed by Responsibility - For example, 'Issuance of card to customer by counter clerk' is preferable rather than 'Counter clerk issues card to customer';

� Icons to show the process infrastructure - For example, the activity 'Biometric authentication by employee' in an attendance tracking process can contain an icon alongside the activity representing the biometric device;

� Legend for all the icons used in that process document.

Steps in process documentation

Following the suggested sequence of activities in developing the process document can make the task of process mapping less painful for the consultant.

1) Establish the big picture – It is very important to get an overview of the business before embarking upon process documentation. The big picture needs to be documented and validated from the client before detailed process documentation. In most cases, the big picture undergoes significant change by the time of completion of process mapping. Preparing the big picture upfront gives an idea of the number of processes and the complexities involved;

2) Identify the process owners – These are the people who will provide information and subsequently validate the process document;

3) Brainstorm and document – This is best done by taking up each business phase (of the Big Picture) and discussing the activities in each process in that phase. It is always advisable to cover the core business phases (like procurement, production, sales etc.) first and then cover the allied processes (like finance, HR, IT and so on) The process owners will generally describe the activities in a crude manner. It is the job of the consultant to arrange the activities in a logical framework and document the same (more about documentation types later);

4) Validate and modify – The process flowcharts need to be validated with the process owners. This is when the deviations from the normal flow of activities come out. These deviations, if integral to the process need to be documented and re-validated;

5) Cross functional validation – There will be many processes which cut across functions. For example, an 'Insurance Application' process with Sales manager as the process owner might involve certain data entry activities performed by Centralized Operations. Such process charts need to be validated by both the departments before finalization;

6) Revise the Big Picture – Once the cross functional validation is complete, the process charts can be finalized. This is the time to revise the Big Picture based on the finalized process charts;

7) Process document – Though often ignored, for the process documentation to be complete, it is important to bring the Big Picture, process charts and detailed narratives, if any into one cohesive document. This becomes the process manual;

8) Establish protocols – Discuss and document the protocols for revisions to the process manual like who is authorized to make changes to processes, add new processes, delete existing ones and so on. A process revision cycle also needs to be established. The revision will generally be of a limited nature incorporating all the changes that have happened since the last revision.

-contd on next page

Page 6

“Knowledge is a treasure but practice is the key to it.” Proverb

Flowcharting

There are different methods of proc-

ess documentation available. Of all

the above, flowcharting is probably

the quickest and most easily

understood method. Most of the

other methods are in fact improvisa-

tions over flowcharting. A flowchart is

a diagrammatic representation of

activities in a process and uses

certain standard symbols to repre-

sent activities. Though flowcharts

have their limitations, they can be

generally overcome by smart usage

of the accompanying narrative text.

A sample flowchart for a 'Patient

Appointment' process in a clinic is

given alongside for illustration

purposes.

Common Symbols used in flowcharts

Below are some of the common symbols that are used in flowcharts. These symbols can be supplemented with icons

Words Confused and Misused (23)

People-Peoples

People is regularly construed as a plural except in the scientific sense of a body of persons united by a common character or culture, as “A people is known by its gods”; “Many peoples have come and gone.”

Perpetually-Continually

The adverb perpetually is often misused for continually or repeatedly, as “He is perpetually coming late to work” and “He is perpetually coughing.” Perpetually means endlessly or eternally.

Personnel-Personal

Personnel is the collective name of a body of persons, as the employees of a company or the members of a committee. Personal is an adjective pertaining to an individual human being.

Practice-Practise

The distinction between practice as a noun and practice as a verb persists in England. In present American usage, practice is preferred in both senses.

Principle-Principal

These words are often confused. Except for a rare use as a verb, principle is always a noun meaning truth, law, rule etc. Principal is usually an adjective meaning chief, highest or most important as “the principal languages, races, or cities.” As a noun, principal means one who is in charge. “The principal, who is a man of principle, says that his principal reason for investing the principal is to apply the principle that he advocates.”

to be contd

Start/Stop or Begin/End Process

Decision Document

Process Flow Connector

Page Connector Database

A

Page 7

“Knowledge is the antidote to fear.” Ralph Waldo Emerson

Growing Steadily

An important market entity most over-looked is ‘dividends’ which can be considered as the icing on your

stock portfolio. If an investor chooses a dividend - paying stock properly, he will reap the benefits for

years to come. Many of us have parents and friends living off comfortably on income from dividends. So

let us explore the fascinating world of dividends.

What is a Dividend?: When a company is making profits, it can either utilize its profits to reduce debts

or reinvest to expand the business further or distribute a part of its profits among the existing shareholders. Dividends

area portion of a company’s profit paid to its shareholders. Dividend received is directly proportional to the number of

share an investor holds. Hence, more the number of shares a person holds more the dividend he will get.

Dividend is calculated on the face value of the stock. So, irrespective of the current market price of the stock, the

investor will receive dividend in accordance with the dividend percentage of the face value of the stock he owns. For

instance, if the face value of a stock ABC is `10 and company declares a 20% dividend, then the stockholder will receive

`2 for each share of ABC owned by him.

Why do companies pay dividends?: It is basically a reward to investors for being faithful to the company and investing their hard-earned money in the company. It also acts as magnet to attract newer investors to the company. If a company

pays dividends regularly and consistently then, more and more investors will buy the share, resulting in the increase in

buying pressure and subsequent share price appreciation.

Different types of dividends:

There are two types of dividends:

(1) Interim dividend – which is declared by the board of directors of a company between two annual general meetings

of a company.

(2) Final dividend – which is declared at the annual general meeting of a company.

What is a dividend yield?: It is the true barometer of an investor’s return on investment, it is more important than the dividend amount. Say a person has 100 shares of a company XYZ, which is trading at the current market price of `500.

The face value of the share is `10. Now, the company declares a dividend of `5 per share. Then in the above case, the

dividend percentage would be 5 x 100/500=1%. So while the current value of the investor’s share portfolio is `50000, the

dividend of `500 is only 1%of the entire corpus. This is dividend yield. This is very important when a person need to

compare dividend returns from his share as against investment avenues such as bonds, stocks, fixed deposits and other

saving instruments.

Excel Tips

Convert

What Does It Do ?

This function converts a value measure in one type of unit, to

the same value expressed in a different type of unit, such as

Inches to Centimetres.

Syntax

=CONVERT(number,from_unit,to_unit)

Example

Name Code Name Code

Gram g Statute mile mi

Kilogram kg Nautical mile nmi

Slug sg Inch in

Pound mass lbm Foot ft

Ounce mass ozm Yard yd

Year yr Angstrom ang

Day day Pascal pa

Hour hr Atmosphere atm

Minute mn mm of Mercury mmHg

Second sec Liter l

Meter m Watt-hour wh

Abbreviations

to be contd

Subba Rao

Page 8

“Life is a great bundle of little things.” Oliver Wendell Holmes

Fun times at NCRCL® !.

Congratulations

to Deepak on

being blessed

with a baby Girl

on 20th Aug 2010.

Mohanty and Kishore at the 124th floor of Burj Khalifa in

Dubai

The 11th Annual General Meeting of NCRCL® was held on 23rd Aug 2010 at the conference Hall, Chennai Office

followed by a presentation and dinner at The Aloft, Chennai which was attended by all the members of the board,

shareholders and staff .

Deepak and Mamtha attended BBMP Budget

2010-11 presentation on 30th Aug 2010

The oldest and the youngest enjoying

a game of snooker after the AGM

Page 9

“Cause and effect are two sides of one fact.”

Know Your Colleagues

Ralph Waldo Emerson

Designation: Project Executive

Date of Birth: 24th November

Email: Suresh.r.yadav@gmail.com

Phone: +91 9900723868

Qualification: BA (Pursuing)

Name: Suresh.R

No Questions Your Answers

1. The meaning of your name. Lord of the Gods—Vishnu.

2. Nick name. Suri.

3. Your dream job. To be a good professional.

4. Your first impression of NCRCL® . Good roof for working.

5. What personal/emotional characteristic of yours do you want to change?

Being negligent.

6. Money or job satisfaction? Both.

7. Your stress buster. Listening to music

8. Do you have a small circle of close friends, rather than a large number of friends?

Large number of friends.

9. What do you most like about a person? Hard working.

10. What do you most hate in a person? Carelessness and laziness.

11. Team work Vs Individual work – your comments. Team work with individual efforts.

12. Do you make efforts to get others to laugh and smile?

Yes always.

13. Your heart rules your head or your head rules your heart?

Both or either way in some situations.

14. Special talent. Being humorous.

15. Hobbies. Playing cricket & travelling.

Page 10

NCR Consultants Limited

Bangalore Office:

#310, 3rd Floor, Rear Entrance, Swiss Complex,

33, Race Course Road, Bangalore 560 001

Ph: +91 80 65737503, +91 80 40914593

Fax: +91 80 22342238

email: bangalore@ncrcl.com

Website: www.ncrcl.com

“No man was ever great by imitation.”

Answer To last month’s Knowledge Snippet question: Answer To last month’s Knowledge Snippet question: Answer To last month’s Knowledge Snippet question: Answer To last month’s Knowledge Snippet question:

What is Tobin Tax and which market does it seek to stabilize?

Answer: Answer: Answer: Answer: It is a Tax levied on all spot conversions of one currency

into another. It seeks to stabilize currency markets.

Who invented the ‘Black Box’. After probing which crash

did he come up with this idea? When did he die?

Send in your answers to the editor at bangalore@ncrcl.com Regd Office:

2nd Floor, New No. 4, Old No. 23, C P Ramasamy Road, Alwarpet, Chennai 600 018

Ph: +91 44 2466 0955

Fax: +91 44 4218 5593

email: chennai@ncrcl.com

Samuel Johnson

Just for Laughs!

The right answer was given by Padmaja

!!! Congratulations !!!!!! Congratulations !!!!!! Congratulations !!!!!! Congratulations !!!

Knowledge Snippet

Birthday Greetings

Adjusting your thermostat is free, easy and can yield big savings. Every degree you raise your thermostat in the summer will reduce air conditioning bills by about 2 percent. Lowering the temperature by one degree in winter will save you 3 percent on heating bills. Regular maintenance and a tune up every two or three years will keep your heating, ventilation and air conditioning, system operating efficiently, saving energy and money. A programmable thermostat excellent for a family that spends a good part of the day at work or school

Go Green!

Archana - 4th Sep U.S.Mohanty - 4th Sep

R.S.Murali - 5th Sep Roopa Kamath - 22nd Sep