Report On A Tm International Of Bangladesh (Aktel)

View with images and charts Report On A Tm International Of Bangladesh (Aktel)

1.1

Introduction

In this era of communication, cell phone undoubtedly has positioned itself in hearts of the consumers. That is why, consumers are the prime focus of all cell phone companies and thus the satisfaction level of consumers regarding the services offered by cell phone companies is the key success factor for them. Accordingly, this is vividly important to know and assess the satisfaction level of the cell phone consumers. This is because, upon this the sales figure of each and every company counts on and sales are the ultimate factoring which drives one company towards profit. Considering all these, this is very clear that the study of satisfaction level of cell phone subscribers carry a significant meaning.

1.2

The Organization in Brief (AKTEL at a Glance):

In this age of speedy communication, Bangladesh is not staying behind in terms of keeping pace with the rhythmic movement of this age of information. Among the key players who are having a significant role to fasten the growth of telecommunication in Bangladesh, AKTEL is the second market leader in the telecommunication sector in Bangladesh. With the beginning of 2005 the company completed its seventh year of business. The company achieved remarkable success during this period. It is now able to say that it has the second biggest subscriber base and more value added services than any other mobile phone operators in Bangladesh. AKTEL has a very strong competitive position in the telephone industry in the country.

1.2.1

Name and Organizational History of AKTEL:

AKTEL is the dynamic and leading end-to-end countrywide GSM mobile communication solutions of TM International (Bangladesh) Limited. The Ministry of post and Telecommunication of the Government of Bangladesh offered TM International (Bangladesh) limited a nationwide digital cellular license in 1996. TM International

(Bangladesh) Limited launched its services in Bangladesh on November 15, 1997 under the brand name AKTEL. Since the commencement of its operation, AKTEL has been a force to be reckoned with in the telecommunication industry of Bangladesh, being one of the fastest growing mobile communication companies offering comprehensive GSM mobile solutions to more than two million subscribers. In 1997, AKTEL boast the widest International Roaming service in the market connecting 315 operators across 170 countries. With a network covering all 61 (allowable) districts of Bangladesh, coupled with the first Intelligent Network (IN) Prepaid Platform in the country, AKTEL is geared to provide a wide range of products and services to customers all over Bangladesh.

Through aggressive investment to extend network coverage and improving call quality, AKTEL has been in constant motion to maintain its commitment to provide subscribers the best possible cellular service. This momentum enveloped all (allowed) puzzles by the end of 2005. AKTEL looks forward to massive investment to target 3 million subscribers by 2005, facilitated by more than doubling the number of the base stations. That is, the objective for AKTEL’s communication seems to generate sales and to approach toward building a strong and consistent brand image in the mind of the consumers to provide them a reason to select AKTEL over others.

1.2.2 Location of AKTEL: The head office of the company is situated in the BRAC CENTER, Mohakhali. CEO’s office, IT, Finance, Marketing, Technical, Human Resource divisions are located in the SILVER TOWER & UDAY TOWER, Gulshan-1, All together; there are eleven customer service centers. Among them five are in Dhaka (Gulshan-1, Gulshan-2, Motijheel, Dhanmondi, and Uttara), two are in Chittagong and one each in Cox’s Bazar, Comilla, Sylhet, and Khulna consecutively.

1.2.3 Founders of AKTEL: AKTEL is a joint venture company between Telekom Malaysia Berhad from Malaysia and A.K. Khan & Co. Limited of Dhaka, Bangladesh.

1.2.4 Vision of AKTEL: The vision of AKTEL is “To be a leader as a Telecommunication Service Provider in Bangladesh.”

1.2.5 Mission of AKTEL: To provide total customer satisfaction as the company strives to become the most preferred GSM cellular service provider in Bangladesh. TMIB will achieve this through developing people, products, and services of the highest quality and meeting the needs of its employees, shareholders and the nation.  Total quality objective  Total commitment to the needs of our customers,  Following the highest ethics standards,  Continual improvement of all work processes,  Continual improvement of all work processes,  Permanent improvement of all the employees knowledge and skills,  Securing quality of the service to match the quality of services offered by the world’s most successful companies in the field, Preserving the Company’s leading position in the national market of mobile telecommunications 1.2.6 Theme of AKTEL: AKTEL always strives to uphold the dictum “Customer First”

Customer Trend Analysis

Years

Customers(Milion) Increase Based

Customer Increase Trend

2002 2003 2004 2005 2006

0.080 0.161

101%

1.000

520%

3.051

205%

5.763

89%

Customer (milion)

on Last Year

8.000 6.000 4.000 2.000 0.080 0.000 2002

5.763

520% 101% 1.000 0.161 2003

2004

3.051 205%

2005

89% 2006

Years 2002-2005

1.2.7 The Business Slogan of AKTEL “Clearly Ahead” The whole is the sum of parts and when the best come together; the results can be truly spectacular. TMIB brings AKTEL Mobile phone service, a digital cellular phone service, which will prepare better for life in the fast lane. AKTEL GSM always keeps so near, even when so far.

1.2.8 Strategy of AKTEL: Product & Services:  Attractive product packages for segmented customers  Implementation of enhanced messaging and VASs like SMS, FAX & Data, Internet &WAP to increase for airtime usage.

Market Promotion & Communication:  Brand Management  Events Management  Advertisement & Promotion  Press Advertisement, Outdoor Advertisement in Strategic points, Point of Purchase (POP)

Sales & Distribution:  Focus on corporate sales through TMIB sales executive  Strengthen & build up the relationship with dealers & outlet holders  Increase sales outlets in strategic points  Re-alignment of distribution structure  Uniform profiling of sales outlets Customer Service Management:  Uniform for Customers Relation Executives  Implementation of One-stop Customer Services through improvised billing system  Strengthen fraud management through customized report from billing system

1.2.9 People of AKTEL: The most important key resource factor in TMIB is its efficient human resource. Moreover, its decisions are based on facts from market research and coverage survey. Moreover, the entire above can only be achieved through the right people. AKTEL has put its keen eyes in developing its employees through proper training, as they believe that the most important asset for TMIB is its staff members. As of June, 2006, TMIB has approximately 1,600 staffs composed of locals and expatriates to serve its more than 20, 00,000 subscribers. And, AKTEL is ensuring the quality services by quality people.

1.2.10 Technology of AKTEL: AKTEL’s Global System for Mobile or GSM technology is the most widely accepted digital system in the world, currently used by over 300 million people in 150 countries AKTEL in

Bangladesh use the 900 GSM technology because AKTEL are committed to give the customer the very best. Presently TMIB offers GSM digital cellular services in all divisional Headquarters and all major big districts.

1.2.10 Major Milestone of the AKTEL Business: AKTEL is a mobile operator in Bangladesh, which concentrates on offering GSM communication services for private and corporate customers. The company’s intention is to promote the wireless lifestyle - the complete mobile society. AKTEL is renowned for bringing new service offers in Bangladesh. Below, some of the first time offers are mentioned:  First time introduced the 'mobile Plus (PSTN Incoming Connectivity only) Product Services' in Bangladesh  First time introduced the Tele-ramadan (Timing of Iftar and Sehri during Ramadan) under Tele-info Services in Bangladesh.  First time introduced the Seamless Coverage thoughout the Dhaka-Chittagong Highway and named it as 'Chittagong Dhaka Corridor (CDC)'.  First time introduce the full fladged IVR based Customer Services (Call Center) in telecom market.  First time introduced cellular services in the most northern part of Bangladesh by launching AKTEL Service in Rangpur and Dinajpur in 2002.  Introduced the automatic system generated bill amount and payment request for the Post-paid subscribers in 2002. The automatic unbarring facility, after necessary payment making by the subscribers, is also a part of this system.  First time introduced electronic recharge facility called E-fill in Bangladesh  First time introduced message-greeting system with FunDose in Bangladesh  Introduced GPRS (General Packet of Radio Service) for the first time in Bangladesh.  First time introduced 30-second pulse rate in Bangladesh. Recently AKTEL has introduced 10-second pulse for the pre-paid users and 1 second pulse for the postpaid users.

ďƒ˜ First time introduced club membership offer for the exclusive users of AKTEL. The club is known as Club Magnate, which offers extra services with its Platinum, Gold and Sliver cards.

1.3 Products and Services of AKTEL: Telephone sector is a service-oriented sector. AKTEL offered various types of new and innovative telephone services to customer of Bangladesh during the last eight years. The power & Forty are largest innovations. Besides these largest ones AKTEL also introduced a number of value added services like the Short Message Service, international roaming facility, Voice Mail Service, SMS based content services, night bird talk plan, General packet Radio service (GPRS), etc.

The company is the pioneer in most of its services. Handsets or the phone-set and the SIM Cards are the only physical products provided by the company. AKTEL is able to reach telephones in many far-flung areas of the country and also connects those areas with the far foreign countries.

The prime services provided by AKTEL are broadly categorized in the two types: the Postpaid service, and the Pre-paid service.

Industry Life Cycle The industry is at its growth stage with demand increasing at 20% every year. It will be another 5 – 7 years before the industry reaches the maturity stage.

Development

Mobile Phone Industry

Growth

Graph: Industry Life Cycle From the graph it is apparent that the mobile telecommunication industry is in the growth phase of the market as a whole. Form analyzing the characteristics of the product life cycle the characteristic, marketing objective & strategies the companies are setting up to.

The sales in the mobile industry are rapidly increasing. The cost is average per customer.

Profits are marginally increasing. Customers are more or less early adopters. They are aware of the services that have been offered to them more precisely. The competitors are growing in number.The common marketing objective of all the companies are to maximize there market share.

On the market strategies segment the product strategy is on the offer product extensions and on service orientation. More and more offers of value added service and added features are included in the package. The pricing strategy is to penetrate the market. So they are all more or less following the penetration pricing strategy. In distribution strategy the industry is the building on intensive distribution. More and more emphasis is given on gaining the market.

So distributing the product to the far corners of the country has become a priority. In case advertising & promotional strategy the companies are all in aggressive advertising policy.

Using all the possible media uses to increase the market share & reaching potential customers in mass market. Lastly in sales promotion the companies are on a rampage. They are offering enormous amount of services with the same package & low cost rate with different events all round the year.

1.5 Shareholders of AKTEL: The Company AKTEL, with a full title being: TM International (BD) Ltd. (TMIB), was founded as a joint company of the Telekom Malaysia Berhad from Malaysia and the A. K. Khan & Co. of Dhaka, Bangladesh.

Shareholders of AKTEL

A K Khan & co 30%

Telecom Malaysia 70%

Figure 2: The shareholders of AKTEL It operates as a Limited Liability Company, where a founder and a majority shareholder, the TMIB- member of the Telecom Malaysia, owns 70% shares, while the minority shares of 30 % are being controlled by the A. K. Khan & Co. Bangladesh.

Organization Structure of AKTEL: AKTEL places a high value on human resource development and the contributions made by its employees. Because of the rapid expansions of AKTEL’s networks and enormous growth of its subscriber base, the company has increased its workforce. AKTEL has successfully hired some key senior managers who were recruited on the basis of their professional expertise and experience.

The organogram indicates that the top-level management consists of the MD, the COO and the CFO. The chief operating officer (COO) monitors the direct operations of the company, whereas the chief financial officer (CFO) monitors the financial matters of the direct operations. At the same time, they co-operate each other and report to the managing director (MD). The managing director is the direct supervisor of all the divisions and departments.

Currently, there are four divisions and four departments. The chief of the divisions are called the general manager (GM). Conversely, the chief of the departments are called the head of department. Every general manager has an assistant general manager (AGM) and the heads of the departments are on the equivalent rank of the AGMs. Divisions deal with the cor e activities of the company, whereas the departments deal with the supporting activities. Every division has precise units and there is a head for every unit. Below, a concise description of every unit is specified:

Organization Structure (Organogram) Managing Director (MD) Chief Financial Officer Chief Operating Officer

(CFO)

(COO)

Divisions (General Managers)

Departments (Departmental Heads)

Marketing GM → → → → → → →

Brand and A&P (Advertising & Promotion) Product Development Marketing Research & MIS International Roaming Corporate Salesirect Sales Dealer Management Customer Care

Finance GM

→ Account Receivable → Account Payable → Core Account → Revenue Assurance → Corporate Finance → Taxation → Reporting → Costing

IT GM

→ Billing → Value Added Services (VAS) → Rating (Post-Paid) → Customer Relations Management (CRM) → Pre-Paid → Product Configuration → Billing Operation Team

Technical GM

→ Planning → Infrastruct ure → Property Manageme nt

Human Resource (HR) Head

Corporate Strategy (CS)

Corporate Affairs (CA) Coordination Head

1.6.1

Finance Division

Financial division has eight units dealing with financial matters of the company.

•

Corporate Finance

Corporate finance unit consists of treasury management and L/C. Treasury management deals with the inflow and outflow of the company, whereas L/C (Letter of credits) deals with the L/C opening banks and other foreign banks.

•

Account Payable

This unit keeps track on the accounts payable of the company.

•

Accounts Receivable

This unit keeps track on the accounts receivables of the company while preparing the balance sheet. As TMIB is a large company with thousands of financial transactions everyday, a unit to keep track on the accounts is necessary.

•

Core Account

Core account is an important unit of the finance division dealing with the budget and fixed assets. The annual budget of various departments is prepared under the close observation of this unit.

•

Revenue Assurance

Revenue assurance unit consists of revenue assurance and fraud management. Revenue assurance monitors the transactions and assures full protection of the finances. On the other hand, fraud management protects the fraudulences take place in the daily transactions.

•

Taxation:

Taxation unit takes care of the tax, VAT and tariffs of the company.

•

Reporting

The reporting unit reports the entire financial transactions of TMIB to the parent company in Malaysia. •

Costing

This unit forecasts the costing of different departments and reports them regarding the expected expenditure of any alteration.

1.6.2

Coordination Department

The coordination department is responsible for the internal and external synchronization. At one hand, they coordinate with outside companies. Along with that, they harmonize among the divisions and departments inside the company.

1.6.3

Relationship among Different Division and Departments

An organization is like complex machinery consisting of different parts. Different functional divisions and departments are the different parts of this organizational machinery. Therefore, to make an organization a success, the divisions and departments must work accordingly. In AKTEL all the divisions and departments are closely tied with one another.

Sales unit makes sales forecast, identifies market’s potential opportunity and sends it to the technical division for doing the plan for new coverage area. These two divisions jointly plan for increasing the coverage area. If there is any complaint regarding the networks Customer Relation Management unit informs it to technical division for solving it. Again Customer Relation Management Unit informs marketing division about the problems and suggestions regarding the products and their selling procedure. Finance division is related with al the divisions for fund allocation and fund management of all shorts and giving salary to all the AKTEL employees. Human Resource Department meets the employee need of other divisions by conducting total recruitment process.

2. SAP AND ITS EFFECTIVENESS IN FIXED ASSET 2.1 Definition of Systems Application & Product in data processing (SAP) At actually who determines the success of a company? Is it the stock price, the revenue, or the products? Certainly, these are all important indicators, but they are in fact really just that

indicator which employees make a company valuable, uniquely valuable. Employees define a company and give it the qualities that ultimately translate into a competitive edge. At SAP, it is truly our employees who make our company what it is today – the world’s leading provider of business solutions. The exceptional quality of our products has been possible due to highcaliber employees who work in an environment that allows them to achieve their fullest potential. The creativity and individuality of every SAP employee manifests itself in everything we do. The result is innovation at all levels.

2.2 History of SAP In 1972, five systems analysts began working nights and weekends to create standard software with real time data processing. Twenty-five years later their vision is a reality: SAP is the world’s market and technology leader in business application software.

On April 1, 1972 five former IBM employees founded SAP as Systemanalyse und Programmentwicklung (“Systems Analysis and Program Development”) in Mannheim, Germany. Their vision was to develop and market standard enterprise software which would integrate all business processes.

2.2.2 R/2 System goes international SAP’s close relationships with customers led to continuous enhancements in the existing program modules, while important new additions were made, such as the Cost Accounting (RK) System. The R/2 System was now ready for the international market. New computers with drastically improved price/performance ratios helped expand the customer base, and SAP raised its profile still further by appearing at the Systems trade fair in Munich - the company's first-ever presence at an industry trade show.

In 1982, SAP celebrated its tenth anniversary, with sales soaring 48% to over DM 24 million.

By the end of the year, 236 companies in Germany, Austria and Switzerland were working with the SAP standard programs. Sales continued to climb in the following year, increasing by 45%.

In 1984 SAP took additional steps into the international arena with the founding of SAP (International) AG in Switzerland, whose focus was to increase sales of the R/2 System in

international markets. Development teams began work on two new applications, Personnel Management and Plant Maintenance, while the Production Planning and Control System was installed at its first pilot customers.

1985 was characterized by further expansion. The Walldorf headquarters had grown to 10,000 square meters of space, while at the Swiss subsidiary a new headquarters was occupied. SAP systems were now in use in most European countries, and SAP began to penetrate markets outside Europe - with customers in South Africa, Kuwait, Trinidad, Canada and the US. 2.2.3 SAP goes public SAP continued to grow in 1988 with the international sales network strengthened by the establishment of subsidiaries in Denmark, Sweden, Italy and the US. Other events included: the founding of SAP Consulting GmbH as a joint project between SAP and the consulting firm Arthur Andersen; the opening of an International Training Center in Walldorf; and the welcoming of Dow Chemical as SAP’s 1,000th customer. However, the most significant events of the year were the increase of SAP’s capital stock from DM 5 million to DM 60 million, the subsequent conversion of SAP GmbH into a stock corporation, SAP AG, and the flotation of SAP shares on the stock market. SAP shares were quoted on the securities exchanges in Frankfurt and Stuttgart.

During the next year, 1989, SAP shares began trading on the Zurich stock exchange. SAP expanded its alliance and strategic cooperation approaches by taking a majority investment in TOS GmbH in Freiberg. Through the "International User Conference" in Lausanne, Switzerland, and the first "SAPPHIRE" user conference in North America, SAP demonstrated its solid commitment to direct international customer contact. This crucial commitment was to become more and more important to SAP’s success in the coming years.

2.2.4 Over 1,000 employees SAP (International) soon grew to twelve subsidiaries, including Canada, Singapore and Australia. SAP's growing profile in 1989 was evidenced by a number of events: the large number of participants attending the first Annual Stockholders' Meeting, the strong employee growth to more than 1,000, and the expansion of the customer base. Recognizing this success

manager magazine named SAP "Company of the Year" – a distinction SAP would receive twice more in the next few years.

In 1990, SAP's capital stock was expanded to DM 85 million with the issue of preference shares. SAP strengthened its commitment to small- and medium-sized businesses by an investment in the software company Steep and the acquisition of software vendor CAS. In the same year, SAP and Siemens Nixdorf founded SRS GmbH in Dresden, gaining a firm foothold in the East German market. Sales grew strongly to over DM 500 million, and the number of staff grew to 1,700.

2.2.5 R/3 becomes Internet-enabled The success of R/3 has propelled SAP to the top of the global software market. IT is undergoing yet another revolution with the advent of the Internet, and SAP is again there with a solution: the latest version of R/3 provides the first comprehensive, Internet-enabled business application package. Release 4.0, which is already in development, further increases the attractiveness of the R/3 System by making it more user-friendly. Small and mid-sized businesses should specially welcome this development. The R/3 System is here to stay, and users can look forward to its continuing enhancement.

2.3 SAP FINANCING— THE PREDICTABLE IT COST SOLUTION 2.3.1 Facing the Total-Cost-of-Ownership Challenge To compete with the market leaders in your industry today, you need integrated IT solutions —like those provided by SAP®. Tight budgets place strategic IT investments out of reach for many companies; however, especially for small to mid-size firms these firms often compromise by purchasing software piecemeal from a variety of specialized suppliers.

Although this may seem cheaper in the short term, it can mean considerably higher costs for maintenance, support, and integration in the long run. Now, for the first time, you can buy integrated IT solutions through the SAP Financing service – in an all-inclusive offer that provides manageable, well-defined monthly payments.

2.3.2 Affordable IT’S Investments through SAP Financing SAP Financing offers a long-term alternative to lump-sum payments and unpredictable follow-up costs. The result: access to IT solutions previously available only to the largest

corporations through financing with monthly payments that are affordable and predictable, and processing that is fast and easy. As small and mid-sized firms find it increasingly difficult to finance their IT investments, SAP has filled the gap. The financing of an SAP project, including all related infrastructure and services, can start at € 15,000 – giving you greater financial flexibility for other strategic business areas.

“SAP Financing means that an up-front investment in SAP solutions— including all major project cost elements—is changed to affordable and predictable periodic payments.

Customers can even choose to start payments only when the IT project is deemed productive.

We recognized the market’s need for an all-inclusive financing service and are responding to this need with SAP Financing.”

SAP and its partners are uniquely positioned to offer an all-inclusive IT solution that includes long-term financing. SAP Financing can help you predict your total cost of ownership and provide up to eight years of maintenance and support. These capabilities address the needs of small to mid-size enterprises to plan precise IT costs in advance.

2.3.3 SAP Financing – Benefits at a Glance: With SAP financing you get:  An all-inclusive offer that includes fixed periodical payments to cover the entire SAP solution  A pay-as-you-use financing plan  Competitive finance rates  Leaves capital free for other strategic investments  Fast and easy processing  The experience of market leaders SAP Financing is an innovative service within the IT market. Complementing SAP’s broad range of solutions, the service provides comprehensive IT and financial support – all in one package. To learn more about increasing your competitive advantage through IT financing that is comprehensive, fast, and easy.

2.4 Assets: In business and accounting an asset is anything owned which can produce future economic benefit, whether in possession or by right to take possession, by a person or a group acting together, e.g. a company, the measurement of which can be expressed in monetary terms.

Asset is listed on the balance sheet. It has a normal balance of debit.

Similarly, in economics an asset is any form in which wealth can be held. Thus any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings.

From an accounting perspective, assets are divided into the following categories: current assets (cash and other liquid items), long-term assets (real estate, plant, equipment), prepaid and deferred assets (expenditures for future costs such as insurance, rent, interest), and intangible assets (trademarks, patents, copyrights, goodwill).

2.5 Classification of assets

•

Current assets Current assets are cash and other assets expected to be converted to cash, sold, or consumed either in a year or in the operating cycle. These assets are continually turned over in the course of a business during normal business activity. There are 5 major items included into current assets:

•

Cash - it is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, checks, bank drafts).

•

Short-term investments

- include securities bought and held for sale in the near future to

generate income on short-term price differences (trading securities).

•

Receivables - usually reported as net of allowance for uncollectible accounts.

•

Inventory - trading these assets is a normal business of a company. The inventory value reported on the balance sheet is usually the historical cost or fair market value, whichever is lower. This is known as the "lower of cost or market" rule.

•

Prepaid expenses - these are expenses paid in cash and recorded as assets before they are used or consumed (a common example is insurance). See also adjusting entries.

The phrase net current assets (also called working capital) are often used and refer to the total of current assets less the total of current liabilities.

•

Long-term investments Often referred to simply as "investments." Long-term investments are to be held for many years and are not intended to be disposed in the near future. This group usually consists of four types of investments: 

Investments in securities, such as bonds, common stock, or long-term notes.



Investments in fixed assets not used in operations (e.g., land held for sale).



Investments in special funds (e.g., sinking funds or pension funds).



Investments in subsidiaries or affiliated companies.



Different forms of insurance may also be treated as long term investments.

2.6 Intangible assets

Intangible assets lack physical substance and usually are very hard to evaluate. They include patents, copyrights, franchises, goodwill, trademarks, trade names, etc. These assets are (according to US GAAP) amortized to expense over 5 to 40 years with exception of goodwill.

2.7 Leased Assets Assets acquired under finance leases are included as property in the Balance Sheet.Finance leases effectively transfer from the lessor to lessee substantially all the risks and benefits incidental to the leased property. Where assets are acquired of mean of finance leases, the present value of the minimum leases payment is recognized as an asset at the beginning of the lease term and amortized on a straight line basis over the expected useful life of the leased asset. A corresponding liability is also established and each lease payment is allocated between liability and finance charge.As for operating leases, lease payments are charged •

Asset under construction

All expenditure incurred on asset under construction shall be capitalized as Capital Work in Progress. This expenditure shall include: 

Director expenses incurred in bringing the asset to its present condition or location up to completion. These include cost expense on planning and design, installation, testing and commissioning.



Interest on loans or borrowing specifically for financing asset to expense over the period of expected benefit.

2.8 Fixed assets Also referred to as PPE (property, plant, and equipment). Assets which are purchased for continued and long-term use in earning profit in a business. This group includes land, buildings, machinery, furniture, tools, wasting resources (timberland, minerals), etc. They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land). Accumulated depreciation is shown in the face of the balance sheet or in the notes.These are also called capital assets in management accounting, especially

2.9 Revaluation In general, Fixed Assets shall not be revalued on a regular basis. However, where the net realizable value of the asset concerned has exceeded its book value, BOD may revise the value of such asset.

However, interest on term loan obtained and used exclusively for the purchase, acquisition of Capital Assets be capitalized and depreciated alongwith the fixed assets. 

Exceeding one year,



Costing more than BDT 8,000/- per unit and



Intended to be used on a continuous basis and not intended for sale in the ordinary course of business.

2.10 Capital Work in Progress A Capital Project Accounting System shall be devised and implemented to record all capital projects. Each approved capital project shall be registered with this system and assigned a reference number.

Head of Division shall appoint the Project Manager for capital project within the Division.

•

Responsibility of Project Manager

A Project Manager shall be appointed for each capital project and shall be responsible for: 

Preparing monthly progress report.



Checking and verifying all invoices and bills against equipment supplied. work completed or service rendered.



Managing the project to ensure the work is progressing as scheduled.



Monitoring and controlling the capital budget approved and allocated to the project.



Ensuring that all terms and conditions in the contract are complied with.



Preparing a completion report upon satisfactory completion of the project.



Preparing a problem report to the MD where the project cannot be completed for whatever reasons.

Site Acquired to Construction Start Improvement

Construction Cycle Time Improvement Impact

Average of STO- INT

INT Month

Data

September/04 August/04 July/04 June/04 May/04 April/04 March/04 February/04 January/04 OLD

Average of CONS-INT

Average of STO-CONS

0

5

10

15

20

No of Weeks

25

30

35

2.11 Fixed Asset (OF AKTEL) AKTEL as a Telecommunication industry is a Fixed Assets intensive company. It has invested almost BDT 300 billion for Fixed Assets in the last couple of years. Fixed Assets Unit is playing a vital role of maintaining records of these huge Fixed Assets. The main responsibility of this unit is to ensure that fixed assets are acquired, controlled, accounted for and Fixed asset management unit belief that Telecommunication company posses huge asset for its operation, process & communication. So it is an asset base company. Proper recording, controlling and compliance is very important for value added with the company for its long time sustainability. It is in need to aware about property pant and equipment condition, implementation, deviation to the management. In FY-2006, we are disclosing major disposed off in the best interest of the Company. Maintaining accurate records helps to control theft, avoid excess insurance premiums, safeguard and facilitates the audit process.

2.11.1 Definition of Fixed Asset 

Asset which has more than one year service potential or economic benefits.



The asset value is equal or more than BDT 8,000 per unit.

Project costs shall be recognized

as Fixed Asset when the project is completed and ready to be used. Normally the capitalization exercise will be supported by the Certificate of Acce

2.11.2 Components of fixed asset of AKTEL (a) Telco assets (b) Non Telco assets (a) Telco Assets (I) Telecommunication equipment (II) Telecommunication infrastructure (III) IT infrastructure (IV) IT Applications (V) Support Systems (VI) Staff Handset (b) Non Telco Assets

(I) Billing Equipment (II) Office Equipment (III) Other Equipment (IV) Furniture & Fixture (V) Motor Vechile 2.02 :Fixed Asset Trend Analysis Years

1

2

3

4

5

6

7

8

9

Total

2002 2003 2004 2005 2006

0.06

2.06

2.75

12.45

1060.15

81.83

0.00

0.31

0.00

1,159.62

1.28

3.63

10.47

19.96

1934.61

130.28

0.36

0.65

0.00

2,101.24

28.66

5.79

17.16

21.20

1807.58

222.66

0.00

2.90

17.99

2,123.94

31.24 139.55

59.23 659.59

9996.84 1290.85

46.60

5.28

14.79 12,243.98

4.35 212.92

92.74 203.98

7801.07 1539.48

23.16

7.44

25.99

1 2 3 4 5

Furniture & Fixtures

9,911.12

6 Telecom Equipment-Infrustucture Office Equipment 7 Motor Vehicle Computer 8 Staff Handset Billing Equipment 9 Land Telecom Equipment-Tele-BSS/NSS/MW

Organogram of Assets Management – Existing

Imtiaz Lutful Baset AGM-Finance

Operation

Compliance

Arif Iftekhar Hossain Manager

Shahidur Rahman Deputy Manager

Ahmed Siddique Sr. Executive

Shamsul Arefeen Sr. Executive

Mujtaba Ali Sr. Executive

Helaludd in Executiv e

Ali Imam Executiv e

Finance Assistant 8

Finance Assistant 4

SUMMARY OF STAFF: Manager 01 Deputy Manager - 01 Sr. Executive 03 Executive – 02 Finance Asst. 12

2.12.1 Policy Procedures Review: Asset Management unit reviewed Financial Policy Procedures (FPP) and Fixed Asset Policy as well Proposal submitted for amendment as required with the concern of respective authority. Besides, Standard Operational Process reviewed for Asset Management Unit like Impairment, Disposal, Residual Value, Physical Verification etc. and th4.6.1 Cost Centre: Cost Centre accounting enables an enterprise to get information about the point of cost incurrence. It provides information with respect to all costs assigned for management decision making. It facilitates check/control of costs incurred for individual functional areas (cost centres).

Currently no cost centre is applicable as of the date in TMIB

TMIB has decided that not only various Departments, but also individual BTS sites will be consider as one cost centre to track the separate responsibility of cost involved.

TMIB Division Dept.

Unit

MSC BSC BTS

Cost centre to be created must belong to a node in the standard hierarchy in the controlling module. The standard hierarchy groups together cost centres according to their organizational standpoint. Cost centres will be required for planning of costs at the beginning of the year, distributing the costs periodically to reflect the total costs in various controlling objects.

SOP under process for finalization.

Cost Center Process Flow: Automatic Flow of Entries to CO from other Modules on online real time basis. Primary Costs are first posted / recorded in Financial Accounting and flows automatically to the Controlling component through the primary cost elements (equivalent to general ledger account in FI). For each controlling relevant business transaction two separate documents are simultaneously generated by the system in SAP for FI and CO modules

Automatic / Manual Accounting Posting

Cost Accounting Posting to Cost / Revenue Elements

Financial Posting to General Ledger Expense / Revenue codes

Profit Centre: Group of BSC/BTS sites as falling under one responsibility i.e. MSC will be consider as a base for profit centre determination 2.12.2 Overall List of activities perform by Fixed asset management unit  Settlement of project expenses to AUC  AUC Settlement to Final Asset  Depreciation run- Planned , Unplanned for TMIB, Group and Tax  Material master update  Creation of settlement rule by system/manual  Checking of Evaluation group, cost centre, Functional location & site code at the time of final settlement  Project monitoring from creation to Final settlement  Ensure all items have been capitalised as per FPP, fixed assets policy and procedures  Ensure all assets transfers have been properly recorded  Preparing Cost sheet to be calculated for every asset and affix on the top of the respective file.  Monthly reporting on Fixed Asset Schedule in TMIB and TMI level, CAPEX Schedule, CWIP schedule  Class wise breakup of Asset  Produce location wise asset list with value for Insurance purpose  Schedule as per IAS/IFRS monthly basis  Prepare schedule of Work in progress and transfer to assets on monthly basis

 Prepare schedule and checking of impairment, disposal and list of idle assets on quarterly basis  Schedule preparation of payable to vendor and tack down the payment  Ensure physical verification of assets have been done periodically.  Ensure all information found in the physical verification have been notified to the senior and effect given in the accounts.  Ensure all assets are properly tagged and IT affixed security seal 2.12.3 Activities under SAP  Settlement of project expenses to Asset Under Construction (AUC)  Settlement of AUC to Final Asset  To Run Depreciation and other month-ending procedures  Update Material Master  PO condition update  Checking of Evaluation Group, Cost Centre, Functional Location & Site Code at the time of final settlement  Location wise asset checking and update with actual, through physical verification  Invoice verification for Foreign PO  Project monitoring from creation to final settlement  Coordinating with other modules to implement project creation, PO issuance, GR, GI in time.

2.12.4 Reporting:  Preparation of Fixed Asset Schedule ~ Monthly  Preparation of Fixed Asset schedule as per IAS/IFRS ~ Monthly

 Preparation & checking of schedule for Impairment, Disposal and identify Idle Assets ~ Quarterly Others:  Conduct Physical Verification of Fixed Assets ~ Periodically.  Ensure all Asset are properly tagged  Prepare open box inspection report  Coordinate with other departments regarding Asset transfer, disposal, impairment 2.12.5 Achievements in 2006  Successfully implementation of Asset Module (AM) in SAP,  Integration of AM with PS, SCM, PM, GL and Other Modules,  Master Data Collection as well Physical Verification of all AKTEL assets,  Creation of Material Master, Equipment Master and Asset Master through uploading of Master Data,  Group Reporting implemented through SAP Asset Module,  Implementation of component level asset tracking based on serial number profile,  Impairment review of all AKTEL asset,  Identification of Disposable Assets,  Notification of technical obsolescence of 49 G2 BTS and subsequent buy back arrangement from the vendor,  FPP related to Fixed Asset has reviewed and amendment proposal submitted to Management,  Successfully implemented Asset Transfer Form for both Telecom and Non Telecom Equipments.

2.12.6 Key Challenges for 2007  Post SAP implementation work –

Conduct Physical Verification of Asset

–

Reconciliation of Physical data with SAP database

–

Updating SAP Database based on Actual

 Component level allocation of MSC, BSC and other Switching Equipments –

Data collection of all MSC, BSC and other switching equipments

–

Price allocation for uploading file preparation in SAP

–

Creation of material master, equipment master and Asset master

 Review and update of Fixed Asset Policy and Procedure  Review and development of SOP for Asset Management  Impairment Review  Disposal review and execution on quarterly basis  Full fledge implementation of project system in SAP  PO wise cost tracking in respect of assetization  Fixed Asset Policy Review & Update – By March 15,2007  SOP Development : Impairment, Dismantling, Residual Value, Restoring, Physical Verification, Disposal Process.  SAP Update regarding : Network Asset-Reconciliation of SAP data based on standard Non Telco- AssetReconciliation of SAP data based on physical

BTS –Based on Physical Verification of all sites BSC - Based on Physical Verification of all sites MSC - Based on Physical Verification of all sites Non Telco - Based on Physical Verification of all sites BSC 3.Capitalisation through SAP for the year -2007.  Training , orientation for SAP application  .Disposal Process execution quarterly  Impairment Review of Network and other than Network assets.  Transfer Process monitoring and awareness for smooth implementation.& MSC -Price distribution in component level.

2.13 Physical Verification of Telco Equipments Under SAP Physical Verification-Telco Equipments

Process flow-1

Start

BTS

1.1 Yearly Pan

MSC,BSC, HLR etc

Process Flow-2

1.2 Communicate with Tech & Confirm Assign Tech Person

1.3 Finalize Plan 1.4 Confirm Recourse Available

1.5 Assign Supervisor

1.6 Team formation

Description Physical verification is very important in order to ensure physical existence of the assets as well as update in SAP and batter control. We may divide into two parts of our assets i.e.

Telco Equipment and Non-Telco Equipments.

Therefore, Telco Equipments are divided into two categories for physical verification i.e.

BTS and other networking asset like MSC, BSC HLR etc.

1.1

Fixed Asset Management Unit will make a plan for BTS verification in January each year.

1.2

Asset Management Unit will communicate with the Concern Technical Core person in this issue. A meeting will be arranged with Technical so that a person is assigned for coordination of physical verification.

1.3

Technical person will finalize the plan and assist finance people in this issue.

1.4

Before starting verification, Resource person and logistic support to be confirmed as per plan.

1.5

A person will be dedicated as supervisor and will process and communicate with the management for update information.

1.6

Team formation is required to work simultaneously in entire country as per plan.

Number of team will be determined based on the available resources as instance in the next page.

2.14 Under SAP Physical Verification (Network Asset) Team formation

Team1 Report

Team2 Report

Team3 Report

Team4 Report

1.7 Compile Report-At a Glance

1.8 Meeting With Technical

Meeting Minutes

1.9 SAP Update (Immediately) & End

1.10 Report Submit to GMF/CFO

Description A guideline / instruction along with location wise SAP equipment master data to be provided by the supervisor to the resource person for the execution of physical verification. Each team will work individually

Verification team will discussed with the respective zonal in charge in case of any short/excess with the SAP data. Verification report/form will be certified by the respective zonal in charges and then they will submit report to the supervisor.

1.7

A report to be compiled by the supervisor after collection of verification report from the concern person.

1.8

A meeting will be arranged with the technical division for the next course of action i.e. update in SAP or any discrepancies solution.)

1.10

SAP to be updated by Technical division

1.10

Asset Management Unit submits a report to the GM-Finance / CFO.

Physical Verification Process Flow-2 Company Name Process Output Area Impacted Process Owner

TM International Bangladesh Limited Physical Verification SAP Update, Operating cost, Asset Net Book Values Fixed Assets Management – Finance Division -TMIB

MSC,BSC, HLR etc

1.1 Yearly Pan 1.2 Communicate with Tech & Confirm Assign Tech Person

1.3 Finalize Plan 1.4 Confirm Recourse Available

1.5 Assign Supervisor

1.6 Team Formation

Description Physical verification is very important in order to ensure physical existence of the assets as well as update in SAP and batter control.

We may divided into two parts of our assets i.e. Telco Equipment and Non-Telco Equipments. Therefore, Telco Equipments are divided into two categories for physical verification i.e. BTS and other networking asset as MSC, BSC HLR etc.

1.1

Fixed Asset Management Unit will make a plan for MSC, BSC, HLR etc verification in January each year.

1.2

Asset Management Unit will communicate with concern person. A meeting will arrange with Technical so that a person is assigned from coordination of physical verification.

1.3

Technical person will finalize the plan and assist finance people in this issue.

1.4

Before starting verification, Resource person and logistic support to be confirmed as per plan

1.5

A person will be dedicated as supervisor and will process and communicate with the management for update information.

1.6

Team formation is required to work simultaneously in entire country as per plan.

Number of team will be determined based on the available resources as instance in the next page.

Company Name Process Output Area Impacted Process Owner

TM International Bangladesh Limited Physical Verification SAP Update, Operating cost, Asset Net Book Values Fixed Assets Management – Finance Division -TMIB

Continuation from Last Page

Team formation

Team1 Report

Team2 Report

1.7 Compile Report-At a Glance

1.8 Meeting With Technical

Meeting Minutes

1.9 SAP Update (Immediately) & End

1.10 Report Submit to GMF/CFO

Description A guideline / instruction along with location wise SAP equipment master data to be provided by the supervisor to the resource person for the execution of physical verification. Each team will work individually. Verification team will discussed with the respective NSS in charge in case of any short/excess with the SAP data. Verification report/form will be certified by the NSS in charges and then they will submit report to the supervisor 1.7

A report to be compiled by the supervisor after collection of verification report from the concern person.

1.8

A meeting will be arranged with the technical division for the next course of action i.e. update in SAP or any discrepancies solution.)

1.10

SAP to be updated by Technical division

1.10

Asset Management Unit submits a report to the GM-Finance / CFO.

2.15 Asset Impairment of Telco Equipment Under SAP 2.15.1 Determination of Asset Impairment (Network Asset) The Technical Evaluation Committee reviewed all asset of TMIB and identified asset as require for impairment. Huge work done for process & communication by asset management to execute impairment evaluation.

Diagram-1 Impairment Loss (A)

Carrying Value (B)

Lower of

Recoverable Value (C) Higher of Fair Value Less Value in Use Cost to Sell

Diagram-2

Original Cost

***

Less: Acc. Depn.

***

WDV as of

***

Less; Impairment Loss

***

Carrying Value as of

***

About Impairment Based on IAS 36, An entity shall assess at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the assets.

The principles are derived from the basis asset measurement model, which can be portrayed as per diagram shown in this page Diagram-1 2.15.2 Determination of Asset Impairment (Network Asset-2)

Main Process Flow IAS 36– Determining Asset Impairment Start

1.1 Asset Impairment Indicators

No

Yes

1.3 Identify Asset

1.4 Retrieve Asset Information

1.2 No impairment action required

End

1.5 Determination for Loss of Impairment

1.6 Prepare & confirm Journal for Asset Impairment Loss

Description Based on IAS 36, An entity shall assess at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the assets.

1.1

Task force to quarterly review the Asset Impairment indicators as required under IAS 36 Para 12 and Para 110

Asset Review Committee to initiate and lead the task force meeting in 1st quarter & 3rd quarter.

Unit Responsible: Asset Review Committee Task Force will be formed & Task Force Members will be selected by the Asset Review Committee as required 1.2

No impairment required for favorable indicators.

1.3

Identify assets involved based on the assessed indicators.

The identified assets can be by:-- An individual asset

.

Unit Responsible: Technical Division 1.4

Retrieve the related asset information from asset data base.

Unit responsible: Fixed Asset Management

1.5

To determine impairment loss as per IAS-36.To determine the recoverable amount of the asset as per Diagram-1.

1.6

Verify the asset impairment listing, confirm and prepare manual journal form : If provision Asset Impairment Loss Dr. To Provision for Asset Impairment If Impairment is final Asset Impairment Loss Dr. To Asset ( As Impaired)

Unit Responsible: Asset Management Unit It is noted that the impairment shall be finalized within the reporting period. If not and carry the matter in the next year that will consider impact with Retain Earning as per IAS-8 2.15.3

Strategy of Determining Fair Value less Cost of Sell and Value in Use.

1.1 Collect List of Items

1.2 Identify the items

1.3 Assess the condition 1.4 Determine Fair Value and Value in Use 1.5 Determine Recoverable Amount

1.6 Prepare & Submit Proposal for Approval

Approved ?

No

Yes Diagram1

No Impair

Fair value less cost of Sale: It means the market price for sale and subtract the selling cost.

Here, we assumed that the market is hypothecation for selling cost .So we will not consider selling cost.

Value in Use: Mostly, we consider the value in use for a period i.e earning from the site/ components and consider as PV applying discounting factor/ rate.

1.1

Collect the Asset list as per asset items based on BTS, MSC, BSC, HLR from SAP.

1.2

Identify the equipment that will consider for impairment.

1.3

Assess the condition of component in details level 30% out of total

site/component. Based on 30% impact will be given for 1.4

identified

location/ site/components.

Determination of the fair value less cost of sales or value in use for each separate items i.e. BTS, BSC, MSC etc.

1.5

Calculation recoverable amount as higher of fair value & value in use as per items in header level.

1.6

Prepare & submit proposal for approval by head of Technical, CFO and BOD. Responsibility: Technical Unit (Assigned Person) and Finance will help closely.

Note: Incase of Non Telco Equipments, process will be same as above. And point 1.1 to 1.6 asset/ item/ component will be collected as per requirements of non Telco items and coordination will be made as and when required with the head of division.

2.15.4 Determination of Asset Impairment (Network Asset-3) Description 1.1

Verify the asset impairment listing, confirm and prepare the manual journal form.

Unit Responsible: Fixed Asset Management Unit Accounting Entries: For Impairment Loss Dr Asset Impairment Loss Cr Provision for Asset Impairment Impairment Gain (For reversing an impairment loss, if any ) Dr Provision for Asset Impairment Cr Asset Impairment Gain

1.2

To update General Ledger on asset impairment loss in SAP as well as per asset ID. Unit Responsible: Asset Management Unit

1.3

To disclose in the financial statement. Impairment loss will be shown separately in the Fixed Asset Schedule.

Unit Responsible: Group Account, Group Finance

1.4

Manual impact or reversal (journal) of the impairment will be done in SAP under unplanned depreciation column and tracking in excel/ manual copy to be maintained for financial report presentation separately.

1.5

To communicate and inform Group Finance unit on this issues.

Unit Responsible: Asset Management Unit

1.6

To reconcile the asset impairment loss and depreciation Unit Responsible: 1) Finance-Asset Management unit

Note: The new proposal for asset impairment loss is targeted to be submitted in 1st quarter and in the last quarter before one month of year closing date.

2.15.5

IMPAIRMENT INDICATIONS

In assessing whether there is any indication that an asset may be impaired, and entity shall consider, as a minimum, the following indications: External sources of information (a) During the period, an asset’s market value has declined significantly more than would be expected as a result of the passage of time or normal use. (b) Significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated. (c) Market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially.

(d) The carrying amount of the net assets of the entity is more than its market capitalisation.

Internal sources of information (e) Evidence is available of obsolescence or physical damage of an asset. (f) Significant changes with an adverse effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These changes include the asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite.

(Once an asset meets the criteria to be classified as held for sale (or is included in a disposal group that is classified as held for sale), it is excluded from the scope of this Standard and is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.) (e) Evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected 2.15.6

FAIR VALUE LESS COST OF SALE

Can be determined using the following: 1.

Asset traded in active market - Asset’s market price less the costs of disposal - Usually the current bid price - If current bid not available, shall be the price of the most recent transaction

provided that there is no significant change in economic circumstances between the periods.

Fair value less costs to sell does not reflect a forced sale, unless management is compelled to sell immediately.

Costs of Disposal shall include the followings:

- Legal Cost - Stamp duty and similar transaction taxes - Cost of removing the assets - Direct incremental cost to bring an asset into condition for its sale Value in use Consideration and Steps: 1. An estimate of the future cash flows the entity expects to derive from the asset.

2. The time value of money, represented by the current market risk-free rate of interest 3. Applying the appropriate discount rate to those future cash flows.

4. Estimating the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal; 2.16 Depreciation on Fixed asset (under SAP) Project TMIB- Determine Residual Value, Useful Life and Dismantling, Removing and Restoring Cost Process Flows and Action Steps Company Name

TMIB

FRS No.

FRS 116

Process Output

Determine Residual Value, Useful Life and Dismantling, Removing and Restoring Cost

Area Impacted

Depreciation

Process Owner

TMIB Finance Management Unit Process Flow

Division-Asset

Start

For each category of 1.1 ESOS, to perform Determine asset Residual calculation of ESOS Value and Useful Life expense

1.2 For each category of Determine asset ESOS, to perform dismantling, removing calculation of ESOS and restoring cost expense obligation

Any Obligation ?

No

Ye s For each category 1.3 of ESOS, to perform dismantling, calculation ofremoving ESOS Estimate expense cost and restoring

For each category 1.4 of ESOS, to perform calculation of ESOS Endorse on dismantling, removing expense and restoring cost

1.5 Update SAP

A

Description • •

Dismantlement, Removal and Restoration: That matter was whether the cost of an item of property, plant and equipment should include the initial estimate of the cost of dismantlement, removal and restoration that an entity incurs as a consequence of using the item (instead of as a consequence of acquiring it).

•

Residual Value:

•

Residual value is the net amount which the enterprise expects to obtain for an asset at the end of its useful life after deducting the expected cost of disposal.

(Here, we supposed to residual value is Zero.)

1.1

Technical will determine any new asset residual value and useful life. TEC needs to come out with the residual value and useful life table by asset category as per network items.

[ 1.2

Person responsible: Technical Division Cost centers need to determine the cost of dismantling and removing that item and restoring the site on which it is located to the extent the entity had recognized an obligation for the cost.

Person responsible: Respective Technical Zonal In charge

1.3

If YES, cost center/zone will estimate the dismantling, removing and restoring cost to be capitalized. If NO, proceed to process 1.5 Person responsible: Respective zonal In charge

1.4

TEC endorses the estimation of the dismantling, removing, restoring cost. Cost center to fill-in the FA form and submit to SSO for inputting

1.5

SAP will generate the accounting entry to incorporate the dismantling, removing and restoring cost that needs to be capitalized at the initial recognition of the assets.

Dr Property, Plant and Equipment Cr Provision

Subsequently, as and when the actual expenses take place SAP will generate the reversal entry.

Dr Provision Cr Bank / Cash SAP will incorporate the depreciation cost after considering the residual value, reviewed useful life and dismantling, removing and restoring cost of the asset items and update or interface to the General Ledger.

Process Flows and Action Steps Company Name

TMIB

Process Output

Determine Residual Value, Useful Life and Dismantling, Removing and Restoring Cost

Area Impacted

Depreciation

Process Owner

TMIB

Finance

Division-Asset

Management Unit Process Flow

A

1.6 Update General Ledger

1.8 Annual Review

1.7 Monitor provision on dismantling cost obligation listing

1.9 SAP incorporates new depreciation cost

1.10 Disclosure

End

Description 1.6

General Ledger will timely capture and updates data or information as and when interfaced in SAP. Responsible: Finance-Asset Management Unit.

1.7

Maintain and monitor the movement of provision account on dismantling, removing and restoring cost to ensure the account balances are substantiated.

Responsible: Finance-Asset Management Unit

1.8

TEC will analyze the asset items, review the residual value and useful life of the assets. Subsequently, the SAP will be updated to cater the newly revised and updated figure.

1.9

SAP will incorporate the asset items new depreciation cost taking into consideration the reviewed residual value and useful life of the assets.

SAP will generate appropriate transaction and update or interface to General Ledger accordingly.

1.10

Incorporate the new depreciation cost as a result of reviewed residual value and useful life of the asset as disclosure to the accounts.

Designation: Reporting Unit, Finance

2.17 Disposal of Fixed Assets(Under SAP) Process Flows and Action Steps for TMIB Asset Management Unit Company Name

TM International Bangladesh Limited

Process Output

Disposal of Equipments

Area Impacted

SAP Update, Acc.Depreciation, Loss/Gain in Income Statement, Asset Net Book Values

Process Owner

Fixed Assets Management – Finance Division -TMIB

Fixed

Assets-Telco

A number of asset recognized for disposal as impaired assessed by Technical Evaluation Committee. TMIB made provision against such disposal for Fy-2006. Now it is under process for finally dispose off from the warehouse as 2.17.1 Disposal of TELCO Equipments

Disposal -Telco Equipments Start

1.1 Identify idle/unused 1.2 A statement (Hard Copy) send to Asset unit 1.3 Confirm Equip ID # Cost, Acc.Depn, Carrying Value

1.4 Physical verification 1.5 Submit for Technical Evaluation committee approval

1.6 BOD approval 1.6 Approved

Yes

No

NO Disposal

A

Description Disposal means the asset is being written off from the books/SAP. Nothing will be rest as physical as well as in the Fixed Asset List.

The carrying amount of an item of property, plant and equipment shall be derecognized: •

(a)

on disposal; or

(b)

When no future economic benefits are expected from its use or disposal.

The gain or loss arising from the derecognizing of an item of property, plant and equipment shall be included in profit or loss.

We may divide into two parts of our assets i.e. Telco Equipment and Non-Telco Equipments.

Therefore, we may conduct disposal process in the same two categories.

1.1

Technical division will submit a unused/idle list of assets quarterly. The list of unused/idle asset to be identified from SAP on account of subsequent impact in SAP. The asset unit will closely help to technical in this regard.

1.2

The head of Technical will send Hard copy as well as soft copy to Asset Management Unit for the subsequent update in SAP and Journal entry.

1.3

The asset management unit confirm item wise disposable asset as per Equipment ID Cost, Accumulated Depreciation and Carrying value on that date.

1.4

Asset Management unit will make joint physical verification in collaboration with the respective process owner for ensue asset. The list of unused/idle asset will update as per physical verification. If there is any discrepancy then the team will communicate with the respective authority.

1.5

Asset Management units will raise an Approval Note to Technical evaluation committee for their approval.

1.6

After approval from Technical Evaluation committee the Asset management will prepare a board paper and submit to BOD through GMF/CFO.

1.7

After approval from BOD, then proceed for the next course of action. All the document related with approval to be kept in file properly.

Process Flow-2

Disposal -Telco Equipments A

1.8 Sale/Auction

1.9 Journal Entry

1.10 Approved By GMF/CFO

1.11 Update in SAP

End

Description 1.8

Asset Management units will handover file to the Administration Department for Sale/Auction process. A disposable committee will be available as BOD approved.

After sale/auction handover file to Asset Management unit.

1.9

Asset Management Unit will prepare a Journal Entry with all the evidence/ supporting for treatment in SAP.

1.10

Journal Entry to be approved by GMF and CFO. Asset management will help to reporting unit for proper presentation in the financial statement.

If the management decide to give impact as provision then: Loss for Disposal of Fixed Asset To Provision for Disposal of Fixed Asset

Note: When In transition period of reporting and Journal Entry.

If decision for sale / auction made Loss for Disposal of Fixed Asset Bank (as received) Accumulated Depreciation (Up to date) To Fixed Asset The gain or loss arising from the derecognizing of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item Note: being historical cost convention method followed.

1.11

In this stage, Asset management unit will update in SAP based on Journal Entry. (It should be considered for the last month of depreciation/ accumulated depreciation impact.)

Company Name

TM International Bangladesh Limited

Process Output

Disposal of Fixed Assets-Non Telco Equipment

Area Impacted

SAP Update, Acc.Depreciation, Loss/Gain in Income Statement, Asset Net Book Values

Process Owner

Fixed Assets Management – Finance Division -TMIB

2.17.2 Disposal of NON TELCO Equipments Disposal –Non Telco Equipments Start

1.1 Identify idle/unused Asset

1.2 A statement (Hard Copy) send to Asset unit

1.3 Confirm Equip ID # Cost, Acc.Depn, Carrying Value

1.4 Physical verification 1.5 Submit for Technical Evaluation committee approval

1.6 BOD approval 1.7 Approved

Yes

No

NO Disposal

Description 1.1

Respective division i.e IT, Admin will submit a unused/idle list of assets quarterly.

The list of unused/idle asset to be identified from SAP on account of subsequent impact in SAP. The asset unit will closely help to respective division in this regard.

1.2

The head of respective unit will send Hard copy as well as soft copy to Asset Management Unit for the subsequent update in SAP and Journal entry.

1.3

The asset management unit confirm item wise disposable asset as per Equipment ID Cost, Accumulated Depreciation and Carrying value on that date.

1.4

Asset Management unit will make joint physical verification in collaboration with the respective process owner for ensue asset. The list of unused/idle asset will update as per physical verification. If there is any discrepancy then the team will communicate with the respective authority.

1.5

Asset Management unit will raise an Approval Note to Technical evaluation committee for their approval

1.6

After approval from

Technical Evaluation committee the Asset management

will prepare a board paper and submit to BOD through GMF/CFO. 1.7

After approval from

BOD, then proceed for the next course of action. All the

document related with approval to be kept in file properly.

Process Flow-2 Disposal -NonTelco Equipments A

1.8 Sale/Auction

1.9 Journal Entry

1.10 Approved By GMF/CFO

1.11 Update in SAP

End

Description 1.8

Asset Management unit will handover file to the Administration Department for Sale/Auction process. A disposable committee will be available as BOD approved.

After sale/auction handover file to Asset Management unit.

1.9

Asset Management Unit will prepare a Journal Entry with all the evidence/ supporting for treatment in SAP.

1.10

Journal Entry to be approved by GMF and CFO. Asset management will help to reporting unit for proper presentation in the financial statement.

If the management decide to give impact as provision then Loss for Disposal of Fixed Asset

To Provision for Disposal of Fixed Asset Note: When In transition period of reporting and Journal Entry.

If decision for sale / auction made Loss for Disposal of Fixed Asset Bank (as received) Accumulated Depreciation (Up to date) To Fixed Asset The gain or loss arising from the derecognizing of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item Note: being historical cost convention method followed.

1.11

In this stage, Asset management unit will update in SAP based on Journal Entry. (it should be considered for the last month of depreciation/ accumulated depreciation impact.)

Note: For Non Telco Equipment Disposal process will be same as like Telecom Equipment but the information or statement faulty/ unusable/idle to be raised form the respective division /unit.

Depreciation of Fixed Asset shall be provided on all assets from the time the assets are brought into use and calculated by writing off the asset on a straight line basis over their estimated useful lives.

However, no depreciation shall be provided on freehold land and the addition to Fixed Asset for that year.

The estimated useful or economic lives, whichever is lower, and depreciation rates are as follows:2.18 Financial Year The financial year of the entity is from 1 January to 31 December. Any change in the financial year is subjected to the approval of the Board of Directors.

2.19 Monthly Financial and Management Report The Financial and Management report is to be produced on the monthly basis not later than the 7th day of the following month to the Board of Directors. These Financial Statements shall include Profit and Loss Account, balance Sheet and Cashflow Statement.

2.20 Annual Report The annual financial statement shall be produced not later than the end of March following the end of the financial year for audit. The audited financial statements must be presented to the Board of Directors not later than end of March of the following year 2.01: Capitalized in-Fy-06 Month wise Amount in Milion-BDT Months COST Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Add Fy-06

1

2

3

4

5

0.74 2.76 0.56 0.29

9.68 20.71 0.30 3.80 7.44 9.64 19.01 13.79 1.45 19.22 8.66 99.22

0.86 3.71 0.15 2.48 6.53 0.46 2.82 4.46 71.26

8.68 5.65 7.79 6.68 17.16 2.79 12.64 9.93 5.46 7.53 2.56 117.12

105.32 310.74 196.81 2,360.47 991.64 265.64 583.93 940.97 (5.13) 1,003.63 286.23 760.81

4.35

212.92

92.74

203.98

7,801.07

1 2 3 4 5

Furniture & Fixtures Office Equipment Computer Billing Equipment Telecom Equipment-Tele-BSS/NSS/MW

6

7

8

9

10

76.35 61.43 52.30 141.12 63.21 133.97 124.22 339.31 80.63 140.89 85.83 240.22

7.72 15.44

1.57 0.17 0.03 1.57 0.47 0.87 0.60 (0.60) 2.76

0.35 0.46 2.01 4.68 5.54 0.17 1.77 (0.03) (0.05) 11.09

3.18 2.15 0.10 0.87 6.07 2.35 7.20 2.00 0.02 0.57 0.20 0.14

1,539.48

23.16

7.44

25.99

24.86

6 7 8 9 10

Telecom Equipment-Infrustucture Motor Vehicle Staff Handset Land Building (Renovation)

Total 206 406 259 2,518 1,094 417 759 1,313 84 1,175 387 1,318 9,935.98

2.21 Objectives of Fixed Asset Register 

To provide complete and up-to-date records on all Fixed Assets acquired.

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To provide information for tax purposes (i.e. Capital allowances).

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For the calculation of depreciation charges.

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Security of Assets.

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To ensure that assets are in existence as per register.

2.22Audit 2.22.1 Internal Audit The Internal Audit duties will be performed by the Internal Audit Division in the Ventures Company. The auditors are authorized to question any employee of the Company in the course of audit. Information’s obtained through the audit process are strictly confidential and shall be used strictly for audit purpose only. All employees are required to co-operate with the auditors.

2.22.2 External Audit External Auditors are appointed by the Board of Directors in accordance with the provisions of the Company’s Act 1994.

2.22.3 External & Internal Audit Compliance  Asset Management Unit provided all information, explanation, statement, calculations as required to the external & internal auditors. They were very much pleased except

some issues which is related with policy procedures but we have ensured them that asset management working on such policy issues.

2.22.4 Group Audit Compliance Asset Management Unit smartly handled Group audit related with asset impairment, interest & force loss capitalization, disposal, renovation, day basis depreciation statement as well as calculation process and procedures. Besides FRS compliance month wise statement sent to reporting unit within the time frame for group requirement. ď‚Ą Asset Management Unit cooperation and support highly appreciated by the Group Auditor 2.23 JOB DESCRIPTION 2.23.1 Job Description of Fixed Asset Section: Regular Job: 1. Collection of Fixed Assets related work-order, vouchers, ledger balance, Supporting from accounts and identification of the location of the assets.

2. Maintaining coordination with L/C section of finance division to track down the arrival information of imported telecom equipments.

3. Valuation of imported telecom equipments considering the cost of purchase, freight, insurance, VAT, Tex and all other related cost.

4. Valuation & Pricing of other locally procured fixed assets in coordination with related division.

5. Maintaining coordination with the planning, implementation, & O&M of technical Division to collect information of installation, location & condition of telecommunication equipments.

6. Collected data are recorded and posted in our electronic fixed asset register.

7. Maintenance of different schedule of fixed asset.

8. Generation & Preparation of asset ID for all assets.

9. Physical verification and tagging of assets installed at different locations.

10. Preparation of physical verification report for management review.

11. Generation and delivery of different sorts of reports on fixed assets as required by management or any other units.

Special Job: 1. Specially Assigned job on physical listing & report on working condition, location, user etc.

2. Supply and delivery of different sorts of reports on fixed assets as required by management.

3. Required adjustment of fixed assets in case of any impairment, disposal or revaluation.

CONCLUSION Based on the above mentioned disclosure and activity it is assumed that the asset management unit executed overall operation, process & communication smartly in Year2006. As per plan 2007 it also deemed that huge activity, brain storming, hard work need to plan implementation. We hope that we will able to complete asset related task for continues value addition of the business.

FINDINGS 

Asset intensive industry Telecom industry is an asset intensive industry requiring huge investment in

fixed assets. 

Depreciation rate Determination of depreciation rate is very difficult in telecom industry. Telecom industry mainly uses hi tech hardware and software, depreciation rate of which is very difficult to determine because of varying economic life.

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Impairment Impairment is a regular practice in the telecom industry due to rapid change in technology. Also it occurs for physical damage and obsolescence.

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Asset transfer Frequent transfer of asset occurred due to technical and business requirement.

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Application of modern technology

Because of rapid growth, telecom industry is to adopt new technology on regular basis. 

Application of information technology To keep pace with highly competitive market and rising subscribers demands AKTEL has to apply more and highly sophisticated information technology.



First growing industry Telecom industry is a very first growing sector in Bangladesh comparing other industry.

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Investment intensive industry A telecom company has to manage a large and expensive setup and establishment.

Thus it to run the requires.

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Application of innovation and competency

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Efficient manpower The company is to pose efficient and qualified personnel resources to fill the organizational goal and future demand.

Prior to Implementation of SAP



They used Microsoft access software so calculation of depreciation for individual asset was quite impossible



They were Unable to generate monthly & yearly report according to their time period.



Analytical problem could not analyze.



A lots of system error was happened but could not be identified.



A lot of data was missing.

Post to implementation of SAP



Assets easily identified which transfer from one side to another side

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Controlling of the assets working as a safe guard of a asset (serial number, transfer form)



For using asset ID & Tracking for individual asset identified easily.

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Differentiate the asset according to their challan, delivery date & Open Box Inspection(OBI)

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Disposal written off & impairment amount of the asset determined easily. By using SAP integrated & negotiated with other department is one of the most important activity.

RECOMMENDATIONS 1. Economic source of financing: Mobile operator requires a huge amount of finance to reinforce the massive investment in telecommunication equipments and infrastructures. So they have to look for the cheapest source of finance to keep the cost of capital in optimum level.

2. Cost control: Rapid expansion results in comparatively additional cost in every field of operation. So the AKTEL should resort to some effective tools to control this additional cost.

3. Man power Huge expansion uses of hi tech equipments, uses of expansive device of information and communication tools and devices required welt rained and efficient manpower. So AKTEL as well as other mobile operator should employ its maximum effort to build well trained and dynamic human resources.

4. Product Prices: Mobile operator has to launch different products to increase the subscriber base. Moreover, it has to initiate different types of promotional campaign to stimulate different segments of subscribers. All of these activities involve a detailed analysis of cost involved and off course it is a complex task in mobile industry.

5. Share upgraded technological advantage To continue with this competititive era the company should stand on the latest technological opportunities and advantages, otherwise she will can’t project all facilitation needed at the time being.

6. Run on the information highways Whereas an organization to drive further is not possible for a respectable time without any participation of information theories and reasonable practice, the telecom company should subscribe on the information highways regularly.

7. Consultancy or under license program Because of huge investment, larger establishment, and at last results of impairment of assets the company can take another program alongside as a construction or technical invention

with considering her sub-division. This will help to reduce the stretching cost regarding this part.

Transparency amid the company Determining transparency on the strength of immense set up, the established should pose several projects with manipulation of foreign consultancy if possible, that results to clarifying the overall company management.

Lacking of expert In our country the operator of SAP is not available so expert operator is borrowed from foreign country with a huge cost so as quick as possible Bangladesh people should trained on SAP. In case of network error SAP could not identified the error so we should consider this problem and tried to find out the solution of this problem IT Equipment Transfer & Distribution Process Asset Management Unit closely worked with IT department for PC & laptop receiving and transferring in SAP environment. A number of meeting & rigorous communication and harmonious relation built up for proper recording and transferring IT equipment with management BIBLIOGRAPHY 

SOME FIANANCE AND ACCOUNTING RELATED ACADEMIC TEXTS

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FINANCIAL POLICY AND PROCEDURE OF AKTEL (FPP)

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PORTAL.AKTEL.COM (AKTEL HOME SITE)

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VARIOUS REPORTS

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VARIOUS MANUALS

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SEARCHING DIFFERENT WEB-SITES BY USING YAHOO, GOOGLE