May 2019 Examination

Transcription

1 Institute of Certified Management Accountants of Sri Lanka Incorporated by Parliament Act No.23 of 2009 May 2019 Examination Apex Level ICS 501 Integrative Case Study Scenario I No. of Pages: 12 CMA Sri Lanka May 2019 Examination Page 1 of 12

2 Sri Lanka Post Introduction Sri Lanka Post (SLP), operates under the ministry of Posts, Postal Services and Muslim Religious Affairs at present with 4,690 post offices and more than 25,000 employees. It was established in 1798 with five post offices under the East-India Company during Dutch ruling. It was named as Ceylon Post and Telecommunications Department in 1817 after the British took the control of ruling over Sri Lanka. Mail coach service was started by SLP in 1892 between Colombo and Kandy and that was the first ever such service in the Asia. Delivery of mails was done by foot initially and even now a postman delivering letters can be seen in remote hilly areas. Consequently, bicycles were introduced for delivering mails and during the 1950 s motor bicycles were also introduced. Concept of travelling post office was introduced in 1892 where vans operated between Colombo and Peradeniya. Membership of the Universal Postal Union was obtained by SLP in SLP has been evolving overtime by expanding the range of its products and services. Mission statement of SLP is read as to become the most distinctive institution in Asia to provide fully productive and quality Postal service based on modern technology as to customer delight. Hence, SLP wants significant changes in both institutional practices and attitudes of all employees so as to provide efficient and quality service as a flagship communication entity in the public sector in Sri Lanka. SLP has 4,690 offices throughout the country and a breakdown of those post offices is given in table 1 below. Meantime, SLP maintains more than 15,000 letter boxes throughout the country. The average Number of letters delivered by SLP to a person within Sri Lanka per year is 17 by a force of more than 7,750 postmen operating throughout the country. However, it has been noted that there is a general drop in use of postal services for both personal and business mails compared to the past. Table 1: Number of Post offices as at 30 th June 2018 Type of the office No. of Offices Post Office 653 Sub Post Office 3,409 Agency Post Office 523 Rural Agency Post Office 101 Estate Agency Post Office 4 Total 4,690 CMA Sri Lanka May 2019 Examination Page 2 of 12

3 Operations of SLP SLP offers various products and services to cater for both local and international demands. A summary of selected mail products and mail services of SLP is given in table Table 2: Mail Products and Mail Services Mail Product Mail Service Letter Post Registered Service (Local/Foreign) Parcel Post Business Mail Service Postcards Bulk Mail Service e-tel Value Payable Parcel Service (Local)- Printed Matters and Open packets Cash on delivery Small Packets (Foreign) Certificate of Posting Delivery Confirmation Business reply envelopes and cards Advertisement Mail Service Letter Post (Local and Foreign) Local mail with a maximum of 29 gram is delivered for a fee of Rs. 12/- per letter. SLP has decided to promote the use envelopes made to the specifications of Sri Lanka Standards Bureau for both local and foreign mails services from 01st October Accordingly, envelope manufacturers were requested to manufacture envelopes in line with such specifications while general public and business community were request to use such envelopes only. Further, the use of post code is being continuously encouraged to increase the efficiency and accuracy of letter delivery service and parcels as well. Foreign letter posts are delivered through airmail and sea mail. Airmail service is offered to all the countries and the countries have been divided into 8 groups for the purpose of specifying different rates. Rates applicable from June 2018 for airmail and sea mail services are given in tables 3 and 4 respectively. CMA Sri Lanka May 2019 Examination Page 3 of 12

4 Table 3: Foreign airmail Rates Type Range of Rates for 8 groups of countries (Rs.) Letters ( First 20 g) 55 to 110 Letters (For every additional 10g) 15 to 40 Printed Materials ( First 20 g) 50 to 105 Printed Materials (For every additional 10g) 15 to 40 Post cards 35 Aerogrammes 40 Small Packets ( First 100 g) 160 to 425 Small Packets (101 to 250 g) 325 to 995 Small Packets (251 to 500 g) 600 to 1,940 Small Packets ( 501 to 1000g ) 1,150 to 3,835 Table 4: Foreign Sea Mail Rates Type Rate (Rs.) Letters ( First 20 g) 55 Letters ( 21 g to 50 g) 90 Letters ( 51 g to 100 g) 150 Letters ( 101 g to 250 g) 325 Letters ( 251 g to 500 g) 620 Letters ( 501 g to 1000 g) 1205 Letters ( 1001 g to 2000 g) 2380 Post cards 35 Small Packets ( First 100 g) 165 Small Packets (101 to 250 g) 340 Small Packets (251 to 500 g) 635 Small Packets ( 501 to 1000g ) 1220 Parcel Post (Local) Parcels containing any item except prohibited items subject to a maximum weight of 20 kg per parcel are accepted to be sent by post. Special attention is required when packing parcels as per the guidelines given by SLP to preserve the contents from loss or damage in the post, and to protect other postal articles from being damaged. Parcels containing liquids and easily breakable items should have been clearly marked on the outside FRAGILE at the time of handing them over to SLP. CMA Sri Lanka May 2019 Examination Page 4 of 12

5 Phrase Parcel Post should be marked on the face of the parcel. Postage on a parcel includes additional registration fee, if the customer requires it. In addition, a warehouse fee of Rs. 50/- per parcel is charged on a local parcel if the parcel is held after the expiration of time given for holding. Fees are based on the weight of the parcel and the fee structure for local parcel delivery is given in table 5 below. In additional to this parcel service, speed post courier service, Logi Post and EMS are provided by SLP for parcel deliveries. Table 5: Fee structure of local parcel delivery Weight Range (g) Fee/ Fee Range (Rs.) , ,001 1, ,501 20, ,150 (fee Increases by Rs 150 for every additional 500 grams) Speed Post Courier Service Documents and other objects except prohibited articles subject to a maximum weight of 10 kg are delivered on urgent basis on the same day or following day within Sri Lanka through Central Mail Exchange. Items to be delivered are accepted at postal outlets in Sri Lanka. Delivery fee is charged based on the weight of the parcel as specified in table 6. Weight Range (Grams) Table 6: Fee Structure for Speed Delivery Fee Range (Delivery within Colombo or same Zone) Rs (Increases by Rs. 10 for every additional 20 g) (Increases by Rs 30 for every additional 20 g) (Increases by Rs 100 for every additional 1,000 g) Fee Range (Delivery outside the Zone) Rs (Increases by Rs. 10 for every additional 20 g) (Increases by Rs 30 for every additional 20 g) (Increases by Rs 100 for every additional 1000 g) Logi Post Under this facility, any article less than 40kg within Sri Lanka is delivered. Items with a maximum weight of 20 kg are delivered to doorsteps whereas the rest are sent to the nearest post office and the receiver should collect it from there. Articles can be sent in any packing dimensions as sender wishes. Postal charges for different weight categories of articles under Logi post are given in table 7. CMA Sri Lanka May 2019 Examination Page 5 of 12

6 Table 7: Charges for Logi post Weight Range of the item Price Range (Rs.) >0 =< 1 kg >1 kg =< 5 kg >5 kg =< 10kg >10 kg =< 15 kg 875 1,125 >15 kg =< 20 kg 1,190-1,140 >20 kg =< 25 kg 1,500 1,750 >25 kg =< 30 kg 1,810 2,060 >30 kg =< 35 kg 2,125 2,375 >35 kg =< 40 kg 2,440 2,690 Extended Mail Service (EMS) International EMS, is an express postal service for documents and merchandise to most of the countries. Delivery rates vary from country to country. Customers are advised to use A4 size envelopes for documents and strong cartoon box for packing merchandise items. Minimum charge is calculated for 250 grams and the maximum charge is for 30 kilograms after classifying them as document, merchandise or common. Rates specifying the names of countries with minimum and maximum fee are given in table 8 below. Table 8: Fees on EMS International Type Rate for < 250 g (Rs. ) Rate for g (Rs. ) Rate for g (Rs. ) For every additional 500g up to 10 kg For every additional 500g up to 20 kg For every additional 500g up to 30 kg Document 1,780(Nepal) - 1,855(Nepal) 2,000(Nepal) ,885(Germany) 3,125(Germany) 3,605(Germany) (Maldives)- (Maldives)- (Maldives)- Merchandise 2,085(Nepal) 2,155(Nepal) 2,300(Nepal) 1,430(USA) 1,380(USA) 1,330(USA) 3,330(Germany) 3,570(Germany) 4,050(Germany) Common 1,915(China) 2,190(China) 2,745(China) 4,435(Norway) 4,690(Norway) 5,195 (Norway) In addition to EMS, normal foreign parcel service is provided through both sea mail and air mail. CMA Sri Lanka May 2019 Examination Page 6 of 12

7 Normal Parcel Post Service (Foreign) Foreign parcel service is offered by covering 210 destinations through sea mail and 57 countries through air mail. Service charge varies from country to country. Maximum weight through sea mail is 20 kg per parcel whereas it is 30 kg through air mail. Minimum rate for a sea mail parcel with a weight up to 1 kg is Rs. 1,685/- (Nepal) and it increases by Rs. 425/- for every additional kilogram of weight. Maximum rate for the first kilogram in a sea mail parcel is Rs. 4,335/- (French Guiana) and it increases by Rs. 1,415/- for every kilogram. Minimum rate for an airmail parcel up to a kilogram is 1,525/- ( to Bangladesh) and additional Rs. 265/- is added on for every additional 500 grams. Maximum rate for an airmail parcel up to a kilogram is 3,470 (to Belgium) and Rs. 650 is added for every additional 500 grams. In addition to the above normal parcel service, other special services are also provided. Rates for those special services are given in table 9. Table 9: Special services for foreign sea mail and airmail Service Type Rate (Rs.) Warehousing Charges (Per day) 50 Express Charges 160 Withdrawal from the post 130 Packets handling charges 90 Parcels handling charges 160 Inquiry Fee (For Registered Articles, parcels and EMS) Free Registration Fee 200 Advice of delivery for registered article 90 Minimum Surcharge on Underpaid Articles 35 International Reply coupons ( Selling Price) 350 International Reply Coupons (Encashment in stamps) 110 (Max) Insurance fees upto Rs. 2400/- 65 Letters (for every Rs or part thereof) Insurance fees upto Rs. 2400/- 65 Parcels (for every Rs.645/- or part thereof) Fumigation Fees As decided by the Customs Late fees for Posting (Per item) 20 CMA Sri Lanka May 2019 Examination Page 7 of 12

8 E-Tel This service is to transfer urgent massages online within a short time from person to another. There is a fixed charge of Rs. 10/- per message and Rs. 30/- is charged for the first 10 words. Rs. 2/- is charged for every additional word. For issuance of certificate of delivery of message, Rs. 20/- is charged and Rs. 50/- is charged for issuing a certified copy of the message delivered. Printed Matters Printed matters can contain one or more of the following articles or documents but the weight of a packet should not exceed 2 kg. Books and other publications or works of a literary character Periodicals registered as newspapers in foreign countries Sketches, drawings, paintings, photographic prints, and engravings on paper Maps, plans and charts, on paper or some other substance ordinarily used for the purpose, provided Charges for a business mail range from a minimum of Rs. 12/- if the weight of the item is less than 20 grams and a maximum of Rs. 120/- per item if the weight ranges between 1.5 kg to 2 kg. Registered Service Main purpose of registered service is to increase the security of the article sent. However, the Post Office is not responsible for the loss or any damage to a registered article during the process of delivery. However, parcel post, speed post and Logi post are not registered. Fees charged for registration and selected services are given in table 10. Table 10: Charges for Registration and Selected Services Description of the Service Fee (Rs.) General Registration charge 30 Issuance of a certified copy of the receipt of registration 100 Insurance for the value of every Rs. 1,000/- upto maximum of Rs. 25,000/- 25 worth of item Daily warehousing (First 5 days are free of charge) 50 Tracking at the destination 25 Tracking in transit 35 Issuance of Postal ID normal 50 Issuance of Postal ID One day 100 Annual fee for a post box 5, 000 Sending Money Orders* (For Every Rs.100/- or part of it upto Rs.2,000/-) 3 Sending Money Orders (For Every Rs.1,000/- or part of it up to Rs.10,000/-) 12 Sending Money Orders (For Every Rs.1,000/- or part of it upto Rs.25,000/-) 10 Service of collecting Vehicle Fines 10% of the fine CMA Sri Lanka May 2019 Examination Page 8 of 12

9 Note * maximum amount of money orders through a post office is Rs. 50,000 whereas it would be Rs. 10,000 if the money order is sent through a sub post office. Business Reply Envelops and Cards This enables a person to obtain transmission, through the inland post, without repayment of postage, envelopes and cards addressed to self which may be distribute enclosed with advertising or other matter. A permit should be obtained from the post master general by paying Rs. 5,000/- per annum to operate this system. New parcel tracking system Now it is possible to track any parcel sent along with SLP through its Parcel Monitoring System. SLP issues a tracking number and the system provides online information on the status of the parcel and the shipment irrespective of the fact that whether they have been sent through post office services, express courier or air mail services. Further, the facilities have been arranged to send updated information about the parcel to a registered account of the customer as well. Financial Performance of SLP A summary of financial performance of SLP for the last five years ended 2017 is given in table 11 and it indicates that SLP has been reporting an increasing deficit over time. Table 11: Financial Performance (Rs. Million) Revenue 5,908 6,557 6,710 6,578 6,997 Expenditure 8,766 9,541 11,756 12,284 12,596 Deficit (2,858) (2,984) (5,046) (5,706) (5,599) Breakdown of recurrent expenditure reveals that employee related cost accounts for around 90% of total expenditure. A summary of actual expenditure for the years 2017 and 2018 and the estimated expenditure for the year 2019 is given in table 12. CMA Sri Lanka May 2019 Examination Page 9 of 12

10 Table 12. Recurrent Expenditure Summary (Rs. Million) Expenditure Salaries and wages 6,140 6,963 7,000 Overtime 885 1,075 1,000 Other allowances for employees 4,550 3,716 3,500 Travelling Office Supplies fuel and uniforms Maintenance Utilities Others Total 12,596 12,933 12,873 Compared to recurrent expenditure, capital expenditure is insignificant. Table 13 gives a breakdown of capital expenditure for the last three years. Table 13: Capital Expenditure (Rs. Million) Capital Asset Improvements Acquisition of Motor Vehicles Acquisition of other capital assets Staff Training (Capacity Building) Total Moves to improve the quality In line with the objective of improving quality of service delivery and achieving other objectives of SLP, management is in the opinion that leadership skills and professional competencies of managerial level employees should be developed on continuous basis through appropriate capacity building programs. This need was taken up for discussions at several meetings and requests were made to the ministry to provide adequate budget allocation for this purpose. In a technology driven world, it is unlikely that no industry or sector cannot survive without integrating its operations with technology. Being a public sector entity, SLP, has lots of administrative bottlenecks and issues so that pressure mounts against the management and the ways in which operations are carried out. These pressures come from political and social corners. CMA Sri Lanka May 2019 Examination Page 10 of 12

11 Post master general is in continuous discussions with political authorities, employees, trade unions and other stakeholders to introduce changes to increase the efficiency and quality of services of SLP provided to general public. Efficiency of operation is argued to be low as a result of high number of employees and many are unproductive. Therefore, authorities may tend to remove unproductive employees. However, such a move would create both political and social issues as SLP has strong trade unisons as well. On the other hand, there is an opportunity for SLP to expand its operations if proper plans are made and integrate them with emerging economic activities and needs of general public. Approved total cadre provision as of 30 th June 2018 was 47,580 employees and this implies the ability and capacity to expand the human resources within SLP if such plans are devised. A comparison of actual and approved cadre provision under different categories of employment is given in in table 14. Type Table 14: Actual and Approved Cadre for SLP as at 30 th June 2018 Senior Tertiary Secondar Primary Casual/ Level Level y Level Level contract Total Actual Cadre No ,096 12,784 4,120 25,118 Approved No ,584 25,648 4,947 47,580 Organizational structure Top management is headed by a post master general under authority of the secretary to the Ministry of posts, postal services and Muslim religious affairs. There are three deputy post master generals for administration, operations and development at the head office and 10 provincial deputy post master generals for each province where Western province has two as one for south and the other is for west. Pressure from Employees Employees of SLP are agitating that their rights and privileges are gradually curtailed and the government is in a process of privatizing the service step by step by introducing different plans. Employees wanted to abolish a circular has affected promotion and slashed their salaries. However, National Salary and Cadre Commission (NSCC) told the news press that the no adequate budget allocation to facilitated the demands of employees. They are in the opinion that authorities try to bring new technology not for the purpose of increasing the efficiency but rather to remove employees by replacing them with machines. A nationwide employee strike started in June 2018 lasted for more than two weeks. CMA Sri Lanka May 2019 Examination Page 11 of 12

12 Stepping on to Technology SLP initiated to facilitate online trading in 2018 in accordance with the Global Trade Facilitation Program introduced by the Universal Postal Union (UPU). Accordingly, facilities were arranged through bepost.lk, an electronic commerce platform and it planned to get 1,000 entrepreneurs registered in first three months aiming micro and small businesses. SLP was able to register only 200 entrepreneurs in the first three months but revised the target to be more than 3,000 entrepreneurs by the end of 2018 with more than 15,000 products that can be traded online platform. SLP expects a good commission income by providing this facility. As of now products grouped into eight categories namely bags, books & Stationary, decorations, fashion, Food & beverages, Herbal products, Household Items, and Religious Arts & crafts are made available for trading. Management is exploring the possibilities of using technology in all possible areas in the operations of SLP with a view to enhance the quality of services at a fair price by bringing the benefits to all the stakeholders in a just manner. -End of Scenario I- CMA Sri Lanka May 2019 Examination Page 12 of 12