Accounting Challenges for the Mining Industry
Payroll is the largest expense in any mining operation. Mining payrolls have the distinction of being more complicated than most other industries because of the numerous benefits involved. These would include:
- Different pay rates per employee depending on work class
- Shift premiums
- Union dues
- Holiday pay
- Travel, meal and clothing allowances
- Jurisdictional issues when employees move from one country, province or state to another
Human Resource (HR) Management
Staff turnover is high in the mining industry. It is important to maintain complete recruitment and employment records on each employee as many will leave and then return at a later date. The Sage HR module integrates with the Sage 300 Payroll to provide greater accounting control over wage rates and benefits. An integrated HR application will add the following benefits:
- Manage all your employee-related information and processes in a single solution.
- Make stronger decisions faster with improved access to workforce analytics.
- Ensure government compliance to avoid company risk in meeting federal and provincial rules, regulations, and reporting requirements.
- Allow employees to access information and complete vacation and other training requests over the web using Employee Self Service(ESS)
- Closely monitor employee records and personnel actions, including recruitment, HR compliance, benefits administration and absence management.
Cash Flow Management
Cash flow is a challenge for many Not-For-Profit organizations. Not-For-Profits not only need to produce financial statements based on Generally Accepted Accounting Principles (GAAP) for external purposes but also need to generate cash flow statements for internal usage. The amount of cash inflows and outflows directly affects the organization’s programs as well as he board’s ability to manage it effectively.
Project accounting is widely used in the mining industry to break down large products into manageable components. These projects can be configured to comply with the standard Work Breakdown Structure (WBS) to facilitate actual to budget variance reporting based on industry guidelines.
Expenditure authorization takes on added importance in the mining industry because many of the expenditures are capital in nature and therefore quite large. This demands that approval workflows be implemented to control the purchasing function. Workflows ensure that:
- Requisitions are created only by individuals with that authority.
- Individuals can only requisition purchases for departments to which they have authority.
- Approvers are alerted to any requisitions made by departments or projects within their jurisdiction.
- Requisitions are restricted to projects that have available remaining funds.
- A complete log of the approval process for each requisition is maintained for audit purposes.
Inventory shrinkage rates tend to be higher in the mining industry because most parts and tools are maintained in remote, less secure, locations. The Sage ERP system is adept at controlling the movement of inventory in, out and between physical (and virtual) locations. A complete log of all inventory movement is maintained detailing what was removed, when it was removed and who removed it.
Capturing statistical data in tandem with financial transactional data allows for the easy extraction of operational Key Performance Indicators (KPI) using the Sage Intelligence, an Excel-based business intelligence tool that is part of the Sage ERP system. Cost per tonne (of ore mined), Cost per meter (drilled) and gallons of fuel (used per machine) are just examples of the type of data that should be available on-demand to gauge operational efficiency.