«TransCom» group of companies improves the quality of budgeting control and reporting using the «Budgeting» module and «1C:Consolidation»

Date of publication: 14.08.2017

Company «1C-Rating» completed the development and implementation of the budgeting and financial consolidation system for the «TransCom» group of transport companies. Unified accounting system was created using «1C:Consolidation» and «1C:Accounting for Kazakhstan» with its «Budjeting» module that was developed by «1C-Rating» specialists. This system allowed to decrease the time for budget data registration time, reporting and acquiring operative access to the enterprise’s state up-to-date information.

«TransCom» LLP is a part of the world mining and metallurgical giant Eurasian Resources Group S.a.r.l.ERG»), which is a leading diversified natural resources company with the integrated mining, processing, energy, logistics and marketing operations. The company has been the logistics center of the Eurasian Group for over 15 years and provides solutions to all issues related to transport and cargo transportation. As a logistic 3PL-provider, it combines the functions of a railway operator and an international freight forwarder. It has more than 12,000 wagons and containers as its own fleet of railway vehicles.

Since 2015 «TransCom» LLP is a management company and has the following railway repair enterprises under its control:

  • «TransRemVagon» LLP (Rudnyi city) — performs capital, depot and current off-loading repairs of freight wagons of wide track.
  • «Bereke 2004» LLP (Ekibastuz city) — provides repair services for wagons, locomotives and track equipment.

Transport Group «TransCom» provides reporting for the Eurasian Group ERG management in the following formats:

  • annual budget;
  • 3-month rolling budget;
  • expected fact;
  • forecast for 3, 6 and 9 months;
  • management reporting (monthly fact of budget execution).

At the start of the project, the situation at the enterprise was as follows: reporting forms were generated manually in MS Excel files. Significant labor and time resources were required For the preparation of the necessary data and a reporting package. The lack of a unified automated accounting system for budget planning has led to an increase in preparation time of budgets and management accounts. It affected the quality of provided information and did not allow the rapid calculation of various scenarios in the planning. In this regard, the Company management decided to launch the project «Implementation of the budgeting and financial consolidation system».

Project goals

  • Reduction of manual labor in the budgets preparation by the budgeting process unifying and automating
  • Reduction of budgeting and reporting preparation time
  • Improvement of the quality of the planning and the information provided for the management
  • Ensuring the compatibility of planned and actual data using the uniform normative-reference information and unified calculation methods
  • Operative access to the actual data on all stages

The following software products were chosen for the implementation to satisfy the project goals:

  • «1C:Accounting for Kazakhstan»
  • «1C:Consolidation»

The perimeter of the project included 3 companies: «TransCom» LLP, «TransRemVagon» LLP, «Bereke2004» LLP. 63 users were announced for operating the system.

The company «1C-Rating» LLP was invited for the project implementation and further maintenance as it has extensive project experience and strong reputation confirmed be the reviews of large enterprises of various areas.

Project objectives

  • Formalization and unification of budget processes of the group of companies.
  • Formalization of rules of the reporting input.
  • Maximum automation of all budget processes such as repairs, income, expenses, purchases, receipts and cash outflows with the autofill of the required paramemeters (prices, norms, coefficients, rates, etc.). Autocompletion of the necessary analytics. Use of historical data.
  • Implementation of the cost allocation functionality by types separately for transportation and for repairs considering different distribution bases.
  • Data integration with other information systems (accounting data, management accounting of income and cost, data on payments, centralized purchases, import and export of Microsoft Excel files).
  • Control over the data entry in the system:
    • impossibility to change the previously approved data;
    • restriction of the access to edit predefined values;
    • use of the data versioning functionality.
  • Differentiation of the access rights to the information.
  • Conducting the plan-fact analysis.
  • Forming the reporting with the currency choise (KZT/USD) and comparative information (budget-budget, forecast-budget, previous year budget-fact, etc.).
  • Automation of consolidated reporting forming process with reconciling intra-group turnover.

Two subsystems / levels were allocated within defined objectives and performed works:

  • I level is the Subsystem for planning income, costs, purchases and cash flows by business units at the level of the «1С:Accounting for Kazakhstan» accounting system. This software includes functionality for calculation by the developed technique and reflecting planned and forecasted amounts for revenues, expenditures, purchases and cash flows with further formation of accounting forms for «1С:Consolidation».
  • II level is a subsystem for forming the budget/report forms at the level of the «1С:Consolidation» software that includes functions of providing auto-filling of planned, actual and forecast data in the reporting forms according to the developed methodology.

The following works within the project were performed for the I level:

  • Formalization and unification of the group budget processes. The list of budgetary forms required for implementation, its structure and the rules for their autocompletion were determined. The structure of budgetary forms were determined.
  • Formulation of the requirements to the normative-reference Information.
  • Development of 57 budget forms with full/partial autocompletion. The following processes were automates:
    • Registration of incoming balances in the context of planning scenarios.
    • Planning the scope of repair works and the formation of scrap / spare parts.
    • Planning the income from core and non-core activities.
    • Direct material costs planning.
    • Other standardized material costs planning.
    • Other non-standardized material costs planning.
    • Direct intangible costs planning.
    • Other intangible costs planning:
      • education and business trips;
      • third-party company services;
      • financial costs rise in inventories price.
    • Own production output planning:
      • producation volume;
      • producation costs;
      • purchases.
    • Future expenses planning.
    • Labor costs planning:
      • wages and other accruals to employees;
      • vacation payroll;
      • reserves for holidays;
      • payroll taxes.
    • Fixed assets amortization planning.
    • Tax planning:
      • property tax;
      • transport tax;
      • land tax;
      • environmental pollution fee;
      • MET (Mineral extraction tax);
      • VAT;
      • CIT (Corporate income tax) and Deferred CIT;
      • other taxes.
    • Purchase planning.
    • Investment program planning:
      • development;
      • financing;
      • amortization.
    • Funds outflow and inflow planning.
    • Formation of the financial budget in the context of rows with the possibility of loading a fact of execution of the financial budget in the context of similar analytics.
    • Calculation of planned prices of repairs.
    • Distribution of planned costs for transportation and repairs in basic analytics «Type of activity». Formation of the finished product planned cost.
    • Implementation of functionality for calculating weighted average prices for planned material costs.
  • Periodicity of planning is provided For each budgetary process. User manuals are prepared for each process:
    • year
    • month
    • forecast 1 (9 months)
    • forecast 2 (6 months)
    • forecast 3 (3 months)
    • 3-month rolling
  • Data integration with other information systems (accounting data, management accounting of income and cost, data on payments, centralized purchases, import and export of Microsoft Excel files).
  • User roles and additional data registers for determining the rights and a level of user access to the information.
  • Processing of group copying of documents for planning with the creation of documents on new scenarios (formation of budgetary Rounds) with the possibility of subsequent correction of the created documents.

The following works within the project were performed for the II level:

  • Formalization and unification of reporting forms. A list of the reporting forms required for implementation, their structure and composition of line analytics were defined.
  • Formalization of rules for the completion of reporting output forms for the following data types:
    • plan;
    • forecast;
    • fact.
  • 86 reporting forms and 105 rules for its processing.
  • Implemented functionality for adding extra rows of reports analytics (more than 5 standard) and improved functionality for analytics output in the report body.
  • Reporting regulations formed.
  • Rules for the formation of consolidated statements defined.
  • Intra-group turnover reconciliation report developed.
  • The possibility to output information on different scenarios in one form with the calculation of necessary deviations between the compared data (Relative, Absolute, Deviation without regard to the exchange rate) in the form of a summary table.
  • The possibility to register and store the comments on the deviations in the compared data was implemented. The possibility of automatic replacing last saved comments in the structure of the previously saved pivot table and the ability to select and substitute any previously registered comment.
  • Functionality of dividing the indicators of reports with the necessary comparison on the disclosure analytics was implemented.
  • Developed «User workspace» feature for convenient work with the reporting.
  • Improved functionality and «1С:Consolidation» exchange between information systems configured:
    • 1 — Central.
    • 2 — Subordinates.
  • The possibility of recalculation of a report separate (selected) indicators realized.
  • «1C:Consolidation» usel manual prepared.

Works performed within both subsystems:

  • The company’s staff training and education.
  • The customer's remarks were worked out within the system’s trial and production operation.

Project key results

  • The automation of formalized and unified processes leads to the manual labor reduction, reduces the budget data registration time and formation of reporting.
  • The transparency and accuracy of the planning was significantly improved through the use of pre-registered unified norms, indicators, prices and other normative-reference information used in planning.
  • Unified accounting systems for the budgetary data registration allow obtaining operative access to the up-to-date information at all stages and ensuring comparability of the planned and the actual data.

During the implementation additional tasks were identified. These tasks require works within «Budgeting» subsystem. Further system development and implementation of the agreement functionlity are planned for the year 2017.

The system is functioning in production operation since 01.01.2017. There are 63 automated workplaces.

Currently, the post-projest maintenance is performed. A working team was created especially for the user consulting and operative work throught comments on the previously developed objects.

«TransCom» LLP is multimodal transport operator that provides its customers with a wide range of freight-forwarding services. These services are all types of cargo transportation, customs clearance and other additional services. The company organizes the cargo transportation in its own rolling stock, which has more than 12 000 units. The necessary transport resources, qualified personnel, information technologies, quality management system can meet the needs of the most demanding customers. The annual traffic volume is more than 55 million tons of various cargo types.

Address: Kazakhstan, Almaty, Dostyk avenue 291 / 3A

Tel.: +7 (727) 258-18-18

Fax: +7 (727) 244-29-91

E-mail: info-tc@erg.kz