The Severstal-Gold management company is part of the Severstal group of companies. This company manages the gold mining assets located in Russia, Kazakhstan, and West Africa. Currently, the Severstal group of companies is the second largest gold mining company among Russian companies.
Business challenge
After the acquisition of six (3-production, 2-serving, and 1-trade) Kazakhstan companies was necessary to unify the accounting and management processes. Existed accounting systems were scattered and could not provide the proper level of detailed business processes, such as cost accounting, inventory, human resources, cash and settlement management.
Project objectives and tasks
It was decided to create a unified information system on a high-tech platform that would satisfy the information needs of each company, and thus provide:
- Interaction of management, accounting and tax reporting of all Kazakhstan companies.
- Accounting in accordance with the unified accounting framework of the Severstal gold mining division. Accounting framework is represented by various elements of the accounting policy, methodological approaches, rules and procedures of accounting, as well as organizational and technical aspects.
- Unification of the compliance accounting approaches in Kazakhstan companies. The areas of accounting are: VAT accounting, short- and long-term prepaid expenses, mining equipment amortization.
- Transparent scheme of cost allocation, semi-finished and finished product value calculation and work scheme of Kazakhstan companies.
- Reduction of terms of management reporting preparation for the management company.
- Accounting in accordance with the legislation requirements.
According to the results of the tender for assistance in problem-solving 1C-Rating was invited, proved to be a reliable partner in the creation of complex corporate systems in large enterprises and offer the best combination of price, the scope of work and terms of implementation.
“1C:Manufacturing Enterprise Management for Kazakhstan” business application was chosen for the project implementation. This application allows to create a comprehensive information system for management and accounting, to provide the accounting of financial and business activities in accordance with regulated legislation of Kazakhstan and corporate standards.
During the project, the 1C-Rating specialists conducted the analysis of business processes, completed system design and customization of business application, trained the Customer’s employees and implemented designed system. Before the implementation, the accounting of all companies was conducted in a separate information bases, master data was not unified. Moreover, the management company set the task of basic classifiers alignment with general corporate classifiers. This task was completed by joint efforts of Severstal-Gold`s and 1C-Rating` specialists. As result, nomenclature and materials, contractors and contracts, cost items and items of cash flow, fixed assets, construction sites, etc. were aligned to the unified coding. Data import from the previous systems to the new system was carried out in accordance with developed combined classifiers.
The Government carefully regulates all processes associated with gold production and trade, which entails special requirements for the accounting and the product cost calculation.
Before the implementation, only accounting units were satisfied with the scheme of cost allocation and semi-finished, finished product value calculation. During the project development, the process method scheme was developed, which satisfied the needs of the companies group’s economic planning and financial services, and the requirements of the management company. As a result of its development, the test case was modeled, which helped to ensure the correctness and reliability of the developed scheme.
Due to the specifics of gold production turnover accounting, supplementary accounting and reporting (of gold content in all products) were added. As a result, the goods balance is formed in the information system. This allows to control of gold accounting and far-sighted use of resources, on the other hand, the previous system allowed to manage only the beginning and the end of the production process.
“Contract liabilities execution management” developed subsystem was implemented to provide accounting mechanisms for accounting and control of debts to suppliers. This subsystem is developed on the base of existed “Mutual settlement management” and “Cash management” subsystems. The relevant experts gained the opportunities to analyze the concluded contracts, to manage the schedules of contract payments and to manage payments taking into account the scheduled stages. Thus, the control of funds expenditure was ensured at the Kazakhstan enterprises.
Integration of material, equipment suppliers and service providers were improved after the implementation of the purchase planning subsystem. At present, all employees use the system, the workload of departments is optimized.
Project results
Implementation of the “1C:Manufacturing Enterprise Management for Kazakhstan” solution has given new business opportunities:
- Cost allocation scheme, implemented in the “Production Management” subsystem. Allows to form a balance of raw materials and to control its rational use
- Control of logistics cost management, due to features of “Purchase management”
- More operative inventory management, due to direct data input at the warehouses
- Reduced cost of regulated reporting, due to the features of accounting and tax accounting
- Automated funds management (of the formation of consumption requests prior to the actual effecting payments) and ensured interaction with several “bank-client” systems
- Automated accruals calculation for management personnel and shift personnel working in remote locations, due to the HR and payroll accounting subsystem
- Monitoring of accounts payable under contract stages and scheduling of payments deadlines, due to the implementation of “Contract liabilities execution management” developed subsystem
- Monitoring of accounts payable/receivable accounting and its costs allocation (catering, mobile services, etc.), due to the implemented accounting of outsourced service
As the results of the project, the work of 6 companies are processed in the unified information space, reference data is unified and procedures of consolidation within the holding are accelerated.
Accounting unification within the Kazakhstan companies holding (unified accounting policy, working chart of accounts, document management, and business processes) allows eliminating duplication, to improve the information reliability and to organize system processes. The unified business solution ensures centralized maintenance under the legislation changes and the development of system functionality.
Nowadays the system works in production operation, with 68 automated workplaces.
