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The Incharge internship Programme, Department of Commerce, Bahauddin Zakariya University, Multan. Subject: -
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INTERNSHIP REPORT ON GHAZI (CHARTERED ACCOUNTANTS)
AND
COMPANY
Dear Sir, It is an immense admiration for me to present you the internship report as obligatory for the achievement of MSc (Accounting and Finance) degree programme. The team and Principal of Ghazi and Company, Chartered Accountants have been very supportive with me all through my internship possession in providing me information on the subject of the events and processes in practice. The report is a wide-ranging, containing a collection of information.
Yours faithfully, Maqsood Ahmad Roll No. 32 MSc (Accounting and Finance) Session (2008-2010)
INTERNSHIP REPORT ON
CHARTERED ACCOUNTANTS FIRM GHAZI AND COMPANY (CHARTERED
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ACCOUNTANTS)
SUBMITTED BY
MAQSOOD AHMAD ROLL NO. 32 M.SC (ACCOUNTING & FINANCE), SESSION 2008-2010
DEPARTMENT OF COMMERCE BAHAUDDIN ZAKARIYA UNIVERSITY, MULTAN
TO My Beloved parents
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& To All My Teachers
I owe a great many thanks to a great many people who helped and supported me during the writing of this Internship Report. The special thank goes to my helpful Coordinator,
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Dr. M.
Mutahir
Iqbal. The
supervision
and
support that he
gave truly help the progression and smoothness of the internship program. The co-operation is much indeed appreciated. I take immense pleasure in thanking Prof. Dr. Mujahid Ali, Chairman, and Younus Ghazi, Principal Ghazi and Company chartered Accountants. I wish to express my deep sense of gratitude to my Internal Guide, Junaid Khalid, Audit and Tax Manager, and the all other staff of Ghazi and Company. Finally, yet importantly, I would like to express my heartfelt thanks to my beloved parents for their blessings, my friends/classmates for their help and wishes for the successful completion of this Internship.
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I know it is dip in eternal space My inadequacies now stare in our face I hope for direction and the grace Praying for ability to hasten my pace
The purpose of this report is to explain what I did and learned during my internship period with chartered Accountants firm Ghazi and Company. It describes the working of an audit firm and also the work done by me during my training and concludes the improvement strategies for that company. This report is also a requirement for the fulfilment of Master of Accounting and Finance Degree and also it gives the scope of the working of an audit firm. How they work and what type of strategies they use. The report focuses primarily on the assignments handled, working environment, successes and short comings of the firm that I did when handling various tasks assigned to me by the supervisor. This report is according to the best of my perception and knowledge gained via class room lectures and practical experience.
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Abstract
This internship report consists of lot of information about audit firm Ghazi & Company chartered Accountants and also my personal experience of working with Ghazi and company. This report majorly consists of 6 parts which contain information. Basically this report shows the functions of an audit company and also the practical experience of me as a training student. I majorly work in audit and other departments of the company and learned different thing about the audit. I was placed in various departments and give me work and also instruction for doing work better and in more quickly. This report covers all of my practical experience which I receive during my internship period. This internship give me the practical experience of my Degree of M.Sc. and also great exposure about practical life.
TABLE OF CONTENTS Page No viii
Chapter # 1 Introduction………………………………………….
01-16
1.1
What is audit?...........................................................................
02
1.2
Elements of Audit……………………………………………..
02
1.3
Who are Chartered Accountants………………………………
1.4
What Do Chartered Accountants Do?............................................
04
04 Geographical List of Firms of Chartered Accountants (Multan)……
1.5
05 Ghazi & Company………………………………………………
1.6
06
1.6.1 Brief about Ghazi & Company…………………………………. .
07 1.6.2
Mission statement……………………………………………..
08
1.6.3
Objectives……………………………………………………..
09
1.6.4
List of Major Clients of Ghazi & company……………………
10
1.7
Departments……………………………………………………
11
1.7.1
Audit Department……………………………………………...
12
1.7.2
Tax Department………………………………………………...
13
1.7.3
Consultancy Department……………………………………….
15
1.7.4
Secretarial Department…………………………………………
16
Chapter # 2 Job Completed By ME………….…………………….
17-25
2 .1
My Work in This Period……………………………………….
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2.2
Book Keeping………………………………………………….
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2.3
Casting…………………………………………………………
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2.4
Stock Taking of Unilever Company…………………………...
20
2.5
Change in Memorandum of the Company……………………..
21
2.6
Preparing Accounts of the Companies………………………....
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2.7
Annual Stock Taking and Cutoff Procedures………………….
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Chapter # 3 Conclusion……………………….……………………. 3.1
Conclusion………………………………………………………
Chapter # 4 Recommendations……………….……………………. 4.1
Recommendations………………………………………………
Chapter # 5 References……….……………….……………………. ix
26-27 27
28-29 29 30-31
5.1
References………………………………………………………
Chapter # 6 Appendix...……….……………….…………………….
31 32-46
6.1
Cutoff Procedure………………………………………………..
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6.2
Cutoff Procedures – Banks………………………………………
35
6.3
Stock Taking Documents Checklist and Responsibilities……….
36
6.4
Audit Observations of Physical Stock Taking…………………..
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6.5
Cash Count Statement…………………………………………..
40
6.6
Significant Audit Ticks………………………………………….
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6.7
Application for Alteration in Memorandum of Association……
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6.8
FORM 26………………………………………………………..
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6.9
FORM 34………………………………………………………..
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1
What is audit? The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. Audit of financial statements, is the review of the financial statements of a company or any other legal entity including governments, resulting in the publication of an independent opinion on whether or not those financial statements are relevant, accurate, complete, and fairly presented. The word audit has two meanings. The first is the security audit, whereby a consulting firm comes in and validates a companies security profile. This is similar to how accounting firms review a company's books. The second term is infosec specific, and means an "auditing" subsystem that monitors actions within the system. For example, it may keep a record of everyone who logs onto a system. Such a record is known as an audit trail. Audits are performed to ascertain the Validity, Reliability in the books of accounts and also provide an assessment of a system's internal control. The term validity also called logical truth, analytic truth, or necessary truth. And reliability is the ability of a person or system to perform and maintain its functions in routine circumstances, as well as hostile or unexpected circumstances. Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
Elements of Audit Audit planning:
Firstly the audit plan the audit work means how the audit will be carried out during the period Working papers:
Auditors prepare the working papers about audit. It means the auditor write down all the work which will perform during audit Physical and environmental review 2
This includes physical security, power supply, air conditioning, humidity control and other environmental factors. System administration review This includes security review of the operating systems, database management systems, all system administration procedures and compliance. Application software review The business application could be payroll, invoicing, a web-based customer order processing system or an enterprise resource planning system that actually runs the business. Review of such application software includes access control and authorizations, validations, error and exception handling, business process flows within the application software and complementary manual controls and procedures. Network security review Review of internal and external connections to the system, perimeter security, firewall review, router access control lists, port scanning and intrusion detection are some typical areas of coverage. Business continuity review This includes existence and maintenance of fault tolerant and redundant hardware, backup procedures and storage, and documented and tested disaster recovery/business continuity plan. Data integrity review The purpose of this is scrutiny of live data to verify adequacy of controls and impact of weaknesses, as noticed from any of the above reviews. Such substantive testing can be done using generalized audit software. Audit Report Once all the data has been gathered, processed, and examined, an audit report will be produced. With the information provided, the company may then decide which areas to work on and prioritize according to the issues raised in the report.
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Who are Chartered Accountants A qualified professional accountant who is a member of an Institute of Chartered Accountants. Chartered accountants are qualified to audit company accounts and some hold management positions in companies. Someone who has met the specific academic and professional requirements of a body such as the Institute of Chartered Accountants of Pakistan. The Institute of Chartered Accountants of Pakistan (ICAP) was established on July 1, 1961 to regulate the profession of accountancy in Pakistan. It is a statutory autonomous body established under the Chartered Accountants Ordinance 1961.
What Do Chartered Accountants Do? Chartered Accountants are to be found at the heart of nearly all successful organizations. Their primary role is to evaluate the financial implications of key decisions and to ensure effective financial management. From that vantage point, they are in a unique position to advance their careers. Today’s C.A.’s are expected to give advice to their clients and employers on all aspects of business and to play a key role in information management. They become involved in such diverse areas as raising capital, financial planning, management information systems, taxation and marketing.
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Geographical List of Firms of Chartered Accountants (Multan) Mahboob Sheikh & Co.Chartered Accountants Near Auto Plaza, Dera Adda Multan.
M. Sajid & Co. Chartered Accountants Room # 4-5 First Floor Khawaja Centre, LMQ Road Multan.
Off. 515248, 589205 Fax. 588410
Off. 517850, 517950,0300-6301237
[email protected]
[email protected]
Waqas & Co. Chartered Accountants Room # 2425 Hajveria arcade Kacthehi Road Multan
Ghazi & Co. Chartered Accountants
Off. 0614500967
Ph# 061- 4518031 -4585960-61 Fax : 0614585961
Tawakkal Autos Plaza Chowk Civil Hospital Abdali Road Multan.
E-mail:
[email protected]
Ashiq & Co. Chartered Accountants 23-Auto Plaza, Dera Adda Multan.
Nazir Chaudhri & Co. Chartered Accountants
Off. 515031, 0303-6670544
Near Auto Plaza, Dera Adda Multan. Off. 515248, 589205 Fax. 588410
[email protected]
Asif Niaz & Co. Chartered Accountants
Abdul Sattar & Co. Chartered Accountants
105, Floor, International Plaza Bohra Street, Multan Cantt. Multan.
Opp.Govt. Pilot School Abdali Road Multan60000
Off.511842 Fax.783018
Off. 510031, 546467 Fax. 510031
[email protected]
[email protected]
Amer Haroon & Co. Chartered Accountants
M. Yousuf Adil Saleem & Co. Chartered Accountants
209-A, WAPDA Town Bosan Road By Pass Multan. Off. 0300-8633200, 221607,521607
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First Floor, 61-B Ali Imran Centre Abdali Road Multan. Off. 111552626, 785211-13 Fax. 785214
[email protected]
BRIEF ABOUT GHAZI & COMPANY 6
Ghazi & Company is an audit firm which performs all the activities of a chartered Accountant firm. Means it performs the audit work, financial advisory work, taxation work and also prepare the accounts of different banks and small companies. The origins of Ghazi & Company Chartered Accountants Stretch back as far as 1982 and, through successful growth; the firm today is in a strong and independent practice. The principle Mr. Younus Ghazi is a Chartered Accountant and has registered himself as “FCA” in Institute of Chartered Accountants of Pakistan. As one of the leading accounting practice in Pakistan in term of clients, staff and annual turnover, Ghazi & Company Chartered Accountants is well placed to offer a high quality service and wide range of expertise. Mr. Younus Ghazi is the principal of the firm. He is Certified Chartered Accountant. He is responsible for making sure that all the financial statements on which an audit report is issued adhered to the requirements of Companies Ordinance, 1984. Ghazi & Company Chartered Accountants the member of ICAP in Pakistan is one of the country’s leading professional services firms. With over 250 Clients located across the Pakistan, Ghazi & Company Chartered Accountants provides Services for, At this time the firm is not allowed for the audit of listed companies because the firm is not achieved QCR (Quality Control Review). The firm now applying for QCR (Quality Control Review) and after achieving QCR the Ghazi & Company firm will be able for performing the Audit of listed companies. Quality Control Review is the process issued by ICAP for quality audit. It means the firm which is QCR qualified they show the quality of the firm audit is awesome. The basic objective of QCR is to establish policies and procedures for the QCR program that ensures that firms carry out audits in accordance with the professional standards adopted by the Institute. The firm is now following the guidelines issue by the quality assurance department for improving the audit of the company. And after achieving it the firm will able to conduct the audit of the public limited company.
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Objectives
To provide Customer best and accurate information about their statements To grow as an institution keeping in mind prudent growth and halal profits. To provide customers the drawbacks in their books of accounts for future safety To continue being a socially conscious organization.
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List of Major Clients of Ghazi & company
Ayesha Flour Mills (Private) Limited
Shabbir Chicks (Private) Limited Rehmat Flour Mills (Private) Limited AAA Doublers (Private) Limited Khalid Modern Industries (Private) Limited Khawaja Tanneries (Private) Limited Indus Pak Advisors (Private) Limited Karmanwalay (Private) Limited Haniyah Tours (Private) Limited
Punjnad Textile Mills (Private) Limited
Nauroze Associates (Private) Limited S & S Home Textile Exports (Private) Limited Shujabad Industries (Private) Limited Husnain Industries(Private) Limited Ghazi Cotton Industries (Private) Limited ABCO Technical (Private) Limited Multan Chamber of Commerce & Industry Rohi Cotton Industries (Private) Limited Al-Faisal Industries (Private) Limited Bismillah Cotton Industries (Private) Limited Multan Cotton Association, Multan Attiqui Welfare Trust, Multan Oriel (Private) Limited Orbit Agro (Private) Limited Gascon (Private) Limited 10
Ghousia Ghee Mills (Private) Limited
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Departments There are following four departments of the firm
Audit Department External Audits Special Audits Statutory Audits Internal Audits Income Tax Audits
Tax Department Corporate Taxation Personal Taxation Indirect Taxes Trade and Customs
Consultancy Department Financial Advisory Services Risk Advisory Services
Secretarial Department
Audit Department 12
Audit of accounts is a statutory requirement as well as necessary for all sorts of modern business concerns. The firm is uniquely qualified to serve the statutory needs of both national and international clients, and reports on the financial statements of public and private corporations in accordance with the laws of the country and in accordance with International Accounting Standards, Auditing Standards and International Standards on Auditing, Prudential Regulations. In an audit not only the accuracy of the financial statements/business results is established but as a result of audit, the possible weakness/deficiencies, in the accounting and related internal control systems, are pinpointed. The firm calls upon a wide range of experience in the audit of organizations. The firm provides audit services which include annual audit, statutory audit, auditor’s certificate for revaluation of assets and auditor’s certificate for restructuring of loans. Audit quality is our top priority. Fulfilling this commitment to maintain the highest audit quality requires vigilance in making sure our audit complies with changing regulations and professional standards. Evidence of our commitment is clear. The audit methodology is designed to meet applicable national and international standards. The audit methodology also emphasizes the critical nature of substantive procedures and effective risk assessment and control testing activities. We provide opinions in accordance with national statutory requirements and in compliance with all relevant national and international regulations. A well-prepared report can have a considerable positive impact on the perceptions of investors, potential finance sources, customers, prospect, referral sources, and even clients own staff - all of which greatly improves client business prospects for the future. Firm provide following audit services to its clients. Special Audits Statutory Audits Internal Audits Income Tax Audits
Tax Department 13
An effective tax planning may enable the client to adjust according to the needs/requirement of the tax law thus avoiding major amounts of tax as well as complications in the tax matters. Moreover by providing proper consultancy, firm not only saves the client from legal actions against the Organizations but also adds to the government revenue through helping avoid Tax Evasion. The firm associates with the clients in their tax planning as well as other related tax matters. We offer a wide range of tax services including corporate and individual planning and compliance, as well as global projects that involve designing and implementing tax strategies to help produce sustainable long-term tax savings. We also offer advice in areas such as international corporate tax, mergers and acquisitions, transfer pricing, indirect taxes, trade and customs and international expatriate services. In our experience, tax strategies often serve as a change catalyst for a client's business affecting strategy, structure, people, culture, technology, processes and services and products. Understanding a client's appetite for change and risk is vital to implementing a tax plan that can help enhance shareholder value.
Corporate Taxation Firm offer a range of services to help business minimize his corporate tax exposure and relieve him from the administrative burden of complying with tax legislation. Corporation tax represents a substantial part of a business trading costs. Moreover, the increased reporting obligations, robust investigation policies on the part of the tax authorities, and harsher penalties for non-compliance mean that an undue amount of client time and resources can be taken up collecting revenue for the Government.
Personal Taxation Firm really understand the personal tax issues of affecting locals and foreign nationals living or working in the Pakistan and can advise them on how to avoid paying unnecessary tax. Firm also help temporary Pakistan residents, and give tax advice to Pakistani nationals who are going abroad, either permanently or temporarily. Firm also encourage them to consider lifetime tax planning, focusing on the different opportunities available to them at various stages of their personal and professional life, such as starting their career, family commitments, planning for retirement or passing on their wealth or business to others. Complete range of services for income tax as well as wealth tax including tax planning strategy, computation and filing of tax returns, finalization of assessments, representations, objections, appeals and keeping clients updated on on-going developments.
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Indirect Tax The firm provides comprehensive advisory service in the field of indirect or sales tax which includes structuring the sales tax system, implementation of sales tax system, filing of sales tax returns, undertaking representations, objections & appeals and obtaining exemptions & concessions wherever applicable. We provide efficient cost effective services, like GST registration, enrolment or enlistment and related legal formalities. GST compliance, reporting and filling of tax returns, representation in adjudication proceedings including appeals and references. Educating for Sales Tax records, adjustment of Input Tax and exemptions.
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Consultancy Department Financial Advisory Services Businesses facing critical investment and strategic decisions for building their market share or defending a market position need impartial advice, independent from financing sources. Our advice can extend to turnaround strategies for under performing companies, support throughout a transaction life cycle and a response to security related matters. Corporate Finance services include advice on financing, mergers and acquisitions to quoted, publicly unlisted, and private limited companies in the private and public sectors; divestitures; structured and project financing; leveraged buy-outs; initial public offerings; privatization; and valuations. Our Financial Advisory Services [FAS] network comprises:
Restructuring
Transaction Services
Forensic Services
Mergers, acquisitions and disposals
Valuations and fairness opinions
Structured and project financing
Debt advisory services
Initial Public Offering (IPO) sponsorship and advice
Businesses facing critical investment and strategic decisions for building their market share or defending a market position need impartial advice, independent from financing sources. Our advice can extend to turnaround strategies for under performing companies, support throughout a transaction life cycle and a response to security related matters.
Investment Advisory Services Advice on analyzing investment prospects and mode of doing business in Pakistan including advising on the form of legal entity, incorporation, obtaining of necessary permissions and help in dealing with local regulators. Our Investment Advisory Service professionals specialize in identifying risks arising from regulation, competition and macro economic forces and designing strategies to manage it to your advantage. Our range of services includes. All investment carries some risk and thus needs careful analysis and expert advice. The key to be a successful investor is to achieve appropriate risk/return trade off by identification of risks that exist and their proactive management.
Risk Advisory Services 16
Our Risk Advisory Services are able to help clients manage risk so they can focus on their core businesses. By intimately understanding each client's business we can convert knowledge into insights that can help clients improve performance and make decisions that strengthen their business. Advisory services like, Human
Capital, Internal Audit, Investment Advisory Services, Outsourcing, Human Capital
Secretarial Department Company also engage in preparing the final accounts of the company. Means firm complete all the book of accounts of their client firm. These firms are small in size and not hire their accountants then they pay the company for accounts. Different type of banks and madrasa prepare their accounts with Ghazi and Company. Secretarial services include compliance of corporate formalities related to incorporation and registration of new local and multinational companies and branch offices. Core Corporate Secretarial Services like, Incorporation of companies including legal drafting of memorandum and articles of association and allied documents, Allotment of shares, issuance of share certificates, and maintenance of all forms of share registers/records, Company Secretarial Services includes regular maintenance of statutory records e.g. conducting annual & extra ordinary general meetings, minutes of meeting, assistance in election of general body or directors, appointment and renewal of statutory office bearers, registration of mortgages & charges etc.
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In Ghazi & Company during my internship period I involved in many work with my seniors and as well as alone. My tenure was 6 weeks. In which different type of audit, consultancy, and secretarial work which assigned by me seniors. When I start the work at company the peek time of the company work was began to start and that’s why I was engaged in my activities. I performed major work at the office. And unfortunately not attend any audit because the term of audit start in august and my tenure ended in the last week of July. Irrespective of this phenomenon I learned many things in my period. The working staff was very corporative.
MY WORK IN THIS PERIOD: Book keeping Casting Stock Taking of Unilever Company
Change in Memorandum of the Company Preparing Accounts of the Companies Annual Stock taking and Cutoff procedures of the Client Companies
Khawaja Tanneries (Private) Limited International System Engineering & Services (Private) Ltd.
Vouching Work on QCR
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MY FIRST PROJECT BOOK KEEPING In first week of my internship the work assign to me was to maintain the book keeping of the company. For this purpose I maintain the cash book of the company and at this time company is not preparing its books of accounts and for QCR purpose it is necessary to prepare the books of accounts and that’s why my senior sign me the cash book work and ask me to calculate the receipts and payment of the company for the year ended 2008. This is services Provider Company at its major income comes from the receipts from client for their services. And the major expense of the company is the electricity expenses and stationary, and stipend of the workers and staff. My work was to record all the cash book of 2008 on computer after cross verifying it with cash book, voucher receipts, and bill register. Then record it on the computer system with the description. In this work one my senior also work with my and guide me but this work is related with my degree so not big tension I face The problem which was their in cash book it was not properly maintain and many entries were not even written but their voucher was passed. So this is a big problem with their books which I describe to the senior.
CASTING The other work which was assigned to me was checking the casting of the financial statements of the client. The company is involved in preparing the financial statements of the clients for their best interest. For this purpose company prepare all the financial statements of the company like, income statement, balance sheet, cash flow statement, and change in equity statement. After preparing the accounts they check is manually either it is prepare correctly or not and my task was to check the total or casting again and also the spell they used either it is correct or not. Companies pay for these services to the company. I check it with calculator and also check the carry forward and the schedule of depreciation either the carry forward amounts are correct and income correctly carried in balance sheet or not and other amount accurately carried forward. I have checked the statements of many companies. When I joined the company at this time the audit work was not started that’s why the work of preparing the accounts of the companies was sufficient. This work also related with my degree courses because the work is related with accounting type of the accounts which I make many times.
STOCK TAKING OF UNILEVER COMPANY 20
The Ghazi and company also a partner with the internal audit company of unilever Pakistan. My other assignment was on unilever. The internal auditor wants to conduct the surprise visit to check work of their employees at Multan warehouse. There are many warehouses in Multan also. My duty was on Raseed abad warehouse. My manager make different teams and I my team there were 6 people and 1 team leader which was the internal auditor from Karachi. We reached the warehouse early because the out going vans were not loaded yet. After arrival the leader of my group sings all the books because no further entry would be passed. Then he assigns me to verify the stock of Tea item. Stock taking process involves physical count of products actually held in stock as a basis for verification of the stock records and accounts. There were 35 kinds of tea with different taste and different weight and also different nature. There were carton of different tea of Tapal and supreme was available Different packets of tea Different size of tea was available means different weight And tea bags were also in different size and taste and company were available I was instructed to verify 100% not sample is taken because it is internal audit. And also check the physical condition of the stock and also the stand of the stock. Either the pallet (on which the stock kept) is in good condition or the stock on it is good or not. My team leader give us a brief overview about the stock taking and stock counting which give us much help during the physical count. During this count we are instructed to note down the Actual count and also write this figure to the store keeper because at the end it will verify from the stock register and at this time no problem exists. After the physical count the software copy of that stock provided me and it was disclosed to me to verify both statement and find out the surplus or deficit from that. At the end the differences which are found and all other material which was collected from that were signed and stamped by the store keeper.
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CHANGE IN MEMORANDUM OF THE COMPANY The next assignment which was assign to me with my senior Abdur Rehman was to change the Memorandum of Karmanwalay (Private) Limited. Karmanwalay (Private) Limited was incorporated in Pakistan on 29th August 1991 as a Private Limited Company. It is principally engaged in the business of manufacturing and sales of oil, laundry soap, cotton ginning, pressing and extraction of seed oil. The registered office of the company is situated at 10/68 G.T. Road Mian Channu. Our task was to change in the Object Clause of Memorandum. The Reason for alteration was the company lease all business to an other person and now they want to give power to the person for giving guarantee on the behalf of the company. The main purpose of this Alteration was To enable the Company to give any guarantee/ guarantees for and on behalf of the company to secure its liability or of any associated undertaking owned or controlled by directors of the company, in favour of any bank or financial institution and to offer company’s assets as security to said banks or financial institutions and also to authorize the company to do multifarious therefore, the company intends to amend its memorandum of association by the insertion of clauses from 01 to
32 of the object clauses enabling to guarantee the
performance of the contract and obligation of the company or any other person’s undertaking in relation to the payment of any loan, obligation or securities by or in favour of the company or any other person and to guarantee the repayment of loan, return of such investment or of dividend on any share of the company and also to authorize the company to do multifarious business. And for this Purpose we concerned Section 21 of Companies Ordinance 1984. Under this all procedure was given to alter the Memorandum. And Prepare a Complete Case File which Consist of Following Documents: Firstly an application was prepare under this section and the entire necessary
document which were needed written on it. This application is attach in appendix. Then a letter of reason for change is prepare and Then the Form 26 was fill it was compulsory to fill this form. It was named special resolution. After preparing form 26 Comparative Statement is prepare which consist of new Memorandum and Old Memorandum Existing Memorandum and Article of Association was Attached 22
Copy of amended Memorandum of Association was Attached which was prepare. Then one important document attached Form 34 this form is for the Pattern of
Shareholding. Which show how many share different share holder hold? Then Minutes of Meeting was prepare and Attached After it the Audited Copy of Audited Accounts were Attached which was prepare in the office. Bank Challan of 12000 was deposited and attached with it Affidavit was prepare and attached which show the willingness of director and chief executive to change in this Memorandum.
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PREPARING ACCOUNTS OF THE COMPANIES My next Assignment in my internship period was preparing the Accounts of the Client Companies. The firm is also engage in preparing the accounts of its client. It receives raw data from client and prepares accounts on computer with notes and according to the International Standards of Accounting. Firm can relieve client and his staff of an enormous burden by taking care of all its bookkeeping and accounting needs, including the preparation of its annual accounts. Firm’s first step is to work with client so it can gain a full understanding of his business. Firm then tailor its approach to client requirements so that it can provide exactly that which service client need. Besides clients core bookkeeping, firm can also maintain his sales tax records, prepare and audit his funds, and take on short-term projects to relieve client staff of any temporary overload. I have prepared the Accounts of Different companies and this work also related with my M.Sc. degree because I already know the accounting accounts and standards for preparing the accounts. I have prepared the accounts of Karmanwalay (Private) limited. It is principally engaged in the business of manufacturing and sales of oil, laundry soap, cotton ginning, pressing and extraction of seed oil. And also prepare the accounts of Shadab industries (Pvt.) Limited. It was incorporated in Pakistan on 22th September 1973 as a Private Limited Company. It is principally engaged in the business of cotton ginning. The registered office of the company is situated at Vehari road Hasilpur. The other company accounts which I prepare was Khawaja Tanneries (Private) Limited. It was incorporated on April 10, 1961 as a private limited company in Pakistan under the Companies Ordinance 1984. It is principally engaged in the business of leather, tanning and leather products. The registered office of the company is situated at Multan.
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ANNUAL STOCK TAKING AND CUTOFF PROCEDURES The accounting year of major clients of Ghazi and Company ends at 30th June. So the physical stock taking and cutoff procedures is necessary for next audit. Because by stock taking the auditor count the physical items at the last day of the year and then it will be matched with the records of that day. If it is matched then ok otherwise query raised. And cutoff procedures means the current ledgers and books must be cutoff before the next year starts and no further entry should passed. For this purpose the stock taking and cutoff procedures are adopt at the 1st of July. And teams were created for this purpose and I was also a member of one team for stock taking purpose. My tasks with my senior were the stock taking and cutoff procedures of Khawaja Tanneries (Private) Limited and International System Engineering and Services (Private) Limited. Khawaja Tanneries (Private) Limited was incorporated on April 10, 1961 as a private limited company in Pakistan under the Companies Ordinance 1984. It is principally engaged in the business of leather, tanning and leather products. The registered office of the company is situated at Multan. International System Engineering and Services (Private) Limited was incorporated in Pakistan on September 06, 2007 as a private limited company. The registered office of the company is situated at Islamabad. The company is principally engaged in the business providing services in the field of Engineering, Construction, Operation, and Maintenance & Engineering Consultancy in the field of Information Technology, Telecommunication / Electronics and related services. Our tasks were the stock taking of above companies. Firstly we were reached at Khawaja Tanneries and in Main office we Cutoff the Cash book and other main office documents. Then we visit and factory and physically count the stock of different chemicals and other raw material. And also write in on the different documented papers which are in appendix. And next day we visit the international system of engineering and services and repeat the process. And we also collect different photocopies of different necessary documents and signed and stamped from the authorized staff. The Detail of these Photocopies are:
The last gate inward pass The last gate outward pass The cash in hand Stock in transit 25
List of banks along with their addresses and account numbers
List of debtor along with their addresses and outstanding balances List of creditors along with their addresses and outstanding balances
Name and address of legal advisor and tax consultant. The last voucher of Cash receipt The last voucher of Cash payment The last voucher of Bank receipt The last voucher of Bank payment The last voucher of General voucher The last delivery challan The last purchase order
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Conclusion
At the end of this report and my internship I concludes that it was great pleasure and beneficial for me to work with the oldest firm of audit in Multan. I have completed my 6 weeks internship in Ghazi and Company my remarks about the company is that this is one of oldest and well reputed company. And play a very vital role in providing the services to the customer. Ghazi and Company is a company which gives more importance to its customers and also to its employees. It is also concluded that I have learned many thing in this tenure and also it give my awesome exposure about the difficulties of practical life and benefits of practical life. This was the chance to apply of bookish knowledge in practical field and learned how practical and bookish knowledge is different one. At the end I would like to thanks my department and also Ghazi and company for giving me opportunity for work in the good organization.
28
29
RECOMMENDATIONS
In this competitive world I recommend that they should spend more on the advertisement and publicity. The one major problem was there the rude behavior of the employees and this is due to the stipend need so it is also advised to help the employees and also motivate the employees of the company. The communication gap between officials and employees should be removed. There should be rule but not overruled for the employees.
There should be special training programmes for the staff. It is also advised that there should quality in the work of the employees. The environment of the office should be comfortable for staff.
30
31
32
Mr. Mohammad Younus Ghazi The principal of Ghazi and Company Chartered Accountants Mr. Junaid Khalid Audit and Tax Manager Mr. Imran Ghazi Audit Supervisor
www.icap.org.pk
www.ifac.org
33
34
CUT OFF PROCEDURE LIST NUMBER AND DATE OF VOUCHERS / DOCUMENTS USED CLIENT NAME: -________________________
DATE: _________
YEAR ENDED: ___________ 1:
Gate Inward Pass
________________________
2:
Gate Outward Pass
________________________
3:
Delivery Challan Mills
________________________
Head Office
________________________
4:
Store Issue Note
________________________
5:
Store Receipt Note
________________________
6:
Purchase Order No.
________________________
7:
Stock Requisition
________________________
8:
Store Internal Transfer ________________________
9:
Cash Memo No.
10:
Mills
________________________
Head Office
________________________
Bill Number Local / Export Head Office
11:
________________________
Payment Voucher Head Office
12:
________________________
Receipt Voucher Head Office
13:
________________________
Petty Cash Voucher
14:
Mills
________________________
Head Office
________________________
Cheque Number Head Office
15:
Pay in Slip Amount
16:
Last Cash Book Folio
________________________ ________________________
________________________ 17:
Total Number of Workers
35
________________________
18:
Total Number of Staff ________________________
19:
Last Person Employed/Card No. ________________________
20:
Last GRN for Purchase ________________________
21:
Last Issue No. ________________________
22:
________________________
36
Prepared By:
________________________
Audit Senior:
________________________
CUT OFF PROCEDURES – BANKS CLIENT NAME: __________________________ DATED: ___________ YEAR ENDED: _____________________ SR. #
BANK & A/C NO.
LAST CHEQUE NO. AMOUNT
LAST DEPOSIT SLIP NO. AMOUNT
PREPARED BY: CHECKED BY: REVIEWED BY:
GHAZI AND COMPANY 37
REMARKS
______________ ______________ ______________
CHARTERED ACCOUNTANTS STOCK TAKING DOCUMENTS CHECKLIST AND RESPONSIBILITIES Sr . #
Description
1
Bank confirmation
2
Debtors balance confirmations
3
Creditors balance confirmations
4
Related parties balance confirmations
5
Lease confirmations
6
Confirmation of tax matters
7
Confirmation of legal matters
Signature Client (Name of Person) Person)
Responsibility taken by ( Client / Auditors)
Remarks
Signature Auditor (Name of
AUDIT OBSERVATIONS OF PHYSICAL STOCK TAKING
38
Stock is normally one of the most significant items on the balance sheet. Stock taking is a very important part of the client’s internal control system. Besides testing client’s stocks and store as accounting records by applying various audit procedures, we test client’s application of stock taking procedures also. This is done by test counting the stock and store items . The performs report on such observation is designed ensure that all significant areas have been covered. Separate working papers should be prepared for notes and querries and for explanation to the answer given in the report. At the end of physical count a copy of duly signed inventory sheet should be obtained and items actually counted by our staff should be clearly marked. Last number of stock and store inward and outward documents should also be noted after the stock taking has finished. Upon conclusion all these with cash count sheets should be submitted in a separate file cover for review. Client Name-_________________________________________________ Period ________________________ Business _______________________ Observed on ___________________ At ____________________________ STOCK TAKING PROCEDURES 1. One hundred percent ____________________ 2. Test check indicate extent ____________________ 3. Instructions given in writing ____________________ 4. We have a copy ____________________ 5. We find the instructions adequate ____________________ 6. Stocks kept ready for Physical count ____________________ 7. Slow moving, damaged, obsolete and Substandard stocks separately kept ____________________ 8. Stocks held for third parties separately kept __________________ 9. Pre-numbered inventory sheets and ___________________ 39
10. Unused inventory sheets returned __________________ PHYSICAL COUNT 1. Done by the people not keeping it ____________________ 2. Done by the people competent to to understand the description and condition of stock items ____________________ 3. Extent of year end stock counting State that all items counted or estimation also done. ____________________ Indicate method of estimation ____________________ 4. Items physically counted correctly recorded on inventory sheets. ____________________ 5. Counted by one person and checked by another ____________________ 6. Inventory sheets have the evidence of Counting the checking. ____________________ 7. Are procedures adequate to take into Stock all recorded purchases and Excluded all recorded sales. ____________________ 8. Stock held for third parties counted And agreed to records. ____________________ 9. Procedure adequate to ensure that all Items in one department have been Counted. None is omitted or counted more than once. ____________________ 10. Main stock records, bin cards and 40
Inventory sheet balance agreed. ____________________ 11. Variances investigated and write Offs done after appropriate ____________________
approval.
12. Stock in bonded warehouse observed and copy or extract of register obtained. ___________________ 13. Certificate obtained and where possible Counted, stock with third parties and Checked with record. ___________________
OTHER MATTERS 1. Adequate controls exists against, Access by unauthorized persons, _______________ Fire
_______________
Deterioration and _______________ Other hazards _______________ 2. Store is in good condition with Adequate storage space and Properly packed.
_______________
3. Record keeping done by the persons Not involved in stock keeping or Stock counting. _______________ 4. Insurance cover exists. _______________ 41
Senior ______________Semi ____________
Senior
_____________Junior
CONCLUSION I am satisfied that the client has adequate stock taking procedures and such procedures were effectively put in operation. I am, therefore, of the opinion that the client observation of the stock taking can be relied upon subject to the clearance of the above mentioned matters. Audit Senior __________________________________________________
Cash Count Statement Name of Client Year Ended Date and time of Cash Count Place of Cash Count DENOMINATIONS Notes:
Nos:
5000 1000 500 100 50 20 10 5
X X X X X X X X
5 2 1
X X X
Coins:
Stamps (Detail Enclosed) Prize Bonds (Detail Enclosed) Cheque (DetailEnclosed) I.O. Us (Detail Enclosed)
42
Rupees
Ps
Cash as per Physical Count Cash As per Cash Book I Declare That I have no other cash fund or stamps or prize bonds and any other kind of securities in my possession and that the above fund was counted in my presence and return to me intact. Mr.
Designation
Signature
.
Counter Signed By: Mr.
Designation
Signature
.
(Note: Use separate cash count statement for each separate cash fund) (Cut off procedure: Obtain last number of cheques, invoices, vouchers and other documents)
SIGNIFICANT AUDIT TICKS Sr #
DESCRIPTION
1
Opening Balances
2
Closing Balances
3
Vouching
4
Posting
5
Casting
000.00
6
Cross Casting
000.00
7
Calculation
000.00
8
Carried Forward
000.00 C/F
9
Brought Forward
B/F 000.00
10
Reconciliation ( Bank Book and Bank Statement)
11
Subsequent Clearance ( Bank Book and Bank Statement)
43
AUDIT TICKS
B 000.00 000.00 B 000.00 000.00
000.00
000.00 12
Confirmation Sent ( Banks, Debtors, Creditors )
C.S 000.00
13
Confirmation Obtained ( Banks, Debtors, Creditors )
000.C00
Note:
• • • •
Use green pencil for ticking Use red pencil for referencing Use black pencil for lines and comparative figures Use blue pencil for current year figures
APPLICATION FOR ALTERATION IN MEMORADUM OF ASSOCIATION The Deputy Registrar, of Companies, Multan.
Ref.No.CI-63/Dated:
Subject: KARMANWALAY (PRIVATE) LIMITED- APPLICATION FOR ALTERATION IN MEMORADUM OF ASSOCIATION U/S 21. Dear Sir, It is submitted that our above mentioned client has passed a special resolution to change its objects clause, subject to the approval of the Securities & Exchange Commission of Pakistan. In this connection following documents/information are enclosed herewith:1)
2)
Name & address of the company Ltd.
:
Number and date of incorporation 1991
:
44
Karmanwalay (Pvt)
10/68, Mian Channu 0024975,Dated 29-08-
3)
Subscribed & Paid up capital
4)
Redeemable
5)
: :
Rs. 1,460,000
N.A.
Business actually being carried on : Cotton inning pressing & and the clauses in the Memorandum Oil Mills as Per clause justifying it. 1& 2 of the Memorandum of Association.
6)
Reason for the proposed alteration
7)
Special Resolution
8)
Statement in a comparative Form
:
Annexed.
9)
Existing Memorandum & Articles of Association.
:
Annexed.
10)
Amended Memorandum & Articles of Association.
:
Annexed.
11)
Pattern of holding of its shares in Form 34.
:
Annexed
12)
Name and address of each of its Creditors. NOC’s of creditors.
: :
N.A
13)
Interest affected
:
NIL
14)
Minutes of the Meeting
:
Annexed.
15)
Particulars of dissenting shareholders or creditors together with their objection.
16)
Copy of latest audited accounts
:
Annexed.
17)
Bank Challan for Rs. 10,000/- being application fee.
:
Annexed.
18)
Affidavit
:
Annexed.
45
: :
Annexed.
Form-26 Annexed.
:
NIL
It is requested that alteration in object clause of Memorandum of Association may kindly be confirmed and order may be issued at the earliest. Yours faithfully,
FORM 26 THE COMPANIES ORDINANCE, 1984 [Section 172] SPECIAL RESOLUTION Please complete in typescript or in bold block capitals. 1.
Incorporation Number
2.
Name of the Company 3. Fee Paid (Rs.)
1
0024975 KARMANWALAY (PRIVATE) LIMITED 0
0
0
Name & Branch of The Bank
MCB BANK, NISHTER CHOWK BRANCH, MULTAN
Day
4. Receipt No. 5. Date of Dispatch of notice 6. Specify the intention to propose the resolution as Special Resolution 7. Date of passing of Special Resolution
Month
Year
Date
2
(Bank challan to be attached in original) Day Month Year 0 7 0 6
2
0
0
1
1
0
1
0
0
To Insert New Clauses in Memorandum of Association
Day 0
Month 7
0
Year 7
2
0
8. Total Number of Members
2
Representing 14,600 shares of Rs.100/-
each
9.
2
Representing 14,600 shares of Rs.100/-
each
Members present in person and/or through proxy in the meeting
46
10. Members voted for
2
Representing 14,600 shares of Rs.100/-
11. Members voted against
Representing each
12. At a general meeting of the members of the said company, duly convened and held at
--
each
shares of Rs. --
10/68, Mian Channu (Mention the address)
13. Place (city)
Multan
14. Text of special resolution (attach copy, if space is insufficient to reproduce it)
--ATTACHED--
15. Signature of Chief Executive/ Secretary 16. Name of Signatory
Mehmood Ahmad Tariq
17. Designation
CHIEF EXECUTIVE
18. NIC Number
3
19. Date
6
1
0
7
0
4 0
7
9
4 2
8
5 0
7 1
3
6
- 9
0
FORM 34 THE COMPANIES ORDIANCE 1984 (Section 236(1) and 464)
PATTERN OF SHAREHOLDING Please complete in typescript or in bold block capitals. 1.
Incorporation Number
0024975
2.
Name of the Company
KARMANWALAY (PRIVATE) LIMITED
3. Pattern of holding of the shares held by the shareholders as at 4.
No of shareholders
Shareholdings
Total shares held
N.A.
shareholding from 1 to 100 shares
N.A.
N.A.
shareholding from 101 to 500 shares
N.A.
N.A.
shareholding from 501 to 1000 shares
N.A.
N.A.
shareholding from 1001 to 5000
N.A.
2
shareholding from 5001 to 10000
14600
N.A.
N.A. (Add appropriate slabs of shareholdings)
2
47
Total
14,600
5. Categories of shareholders
share held
Percentage
14,600
100
Companies, and related
N.A.
N.A.
5.1
Directors, Chief Executive Officer, and their spouse and minor children.
5.2.
Associated undertakings parties.
5.3
NIT and ICP
5.4
Banks Development Financial Institutions, Non Banking Financial Institutions.
N.A.
N.A.
5.5
Insurance Companies
N.A.
N.A.
5.6
Modarabas Funds
N.A.
N.A.
5.7
Share holders holding 10%
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
and
Mutual
5.8
General Public a. Local b. Foreign 5.9 Others (to be specified)
6.
Signature of Chief Executive/ Secretary
7.
Name of Signatory
8.
Designation
9.
NIC Number
10.
Date
Mehmood Ahmed Tariq CHIEF EXECUTIVE 3
6
Day 0 7
1
0
4 Month 0 7
-
9
4
2
8
5
Year 0 1
7
3
6
-
9
0
Note: In case there are more than one class of shares carrying voting rights, the information regarding each such class shall be given separately.
48
