Provident Fund Investments23!05!11

Internship Report On

Provident Fund A case study of Puls Trading Far East Ltd. Submitted to : Professor Shahjahan Mina Vice- Chancellor and Internship Supervisor Department of Business Administration Daffodil International University

Submitted by: Jalalur Rahman BBA 16th Batch ID No- 071-11-1609 Department of Business Administration

Letter of Transmittal May 27, 2011 Professor Shahjahan Mina Advisor, Department of Business Administration Faculty of Business & Economics Daffodil International University 102 Shukrabad, Dhaka-1204. Subject:- Submission of Internship Report Dear Sir, It gives me immense pleasure to submit my internship report on “Investment Methodology of Provident Fund as a case study on “Puls Trading Far East Ltd” as a requirement of the BBA Program. Apart from the academic Knowledge gained this internship program and preparation of report has given me the opportunity to acquaint myself with the new environment of ACNABIN Chartered Accounts Firm. I believe that the experience I acquired from this study will be an invaluable asset in my life. It expresses my gratitude to you for providing me the opportunity to learn about the Provident Fund. In spite of various shortcomings, I have devoted my best effort to the Puls Trading Far East Ltd in company visiting and monitoring as an advisor. I hope you will appreciate my endeavor and find the report up to your expectation. It has to be mentioned further that without your expert advice and cooperation it would not have been possible to complete this report. I shall be pleased to answer any sort of query you may regarding this report. Sincerely Yours, Jalalur Rahman ID No- 071-11-1609 BBA Program Department of Business Administration Faculty of Business & Economics Daffodil International University

ACKNOWLEDGEMENT First of all I would like to thank the Almighty of Allah for giving me the strength and the aptitude to complete this report. The intern gratefully acknowledges the guidance and assistance received from different people and organizations while carrying out the study. Professor Shahjahan Mina, Advisor (Faculty of Business & Economics) provided overall guidance, support and assistance during the internship period to the development of work plan and report outline, data analysis, and writing of this report. He carefully reviewed the draft report and made valuable comments and suggestions that were very helpful for restructuring and finalizing the report. I acknowledge his contribution and thank him. The intelligence, expertise, and labor of all the staff members of ACNABIN worked behind this study and invaluable contribution to its success. I take this privilege to thank them all. Without their support I was not be able to prepare this report. In this regard, I want to thank my in charges of different consultancy engagements Md.Mominul Karim (Partner), Md.Reazul Islam (Manger) & Md.Sahadat Hossain(HR Manager of Puls Trading Far East Ltd)for their wonderful support and contributions. All of them extended support towards the successful writing of this report by affording me their valuable time. I owe my profound indebtedness to all of them. I am deeply indebted to my supervisor, Professor Shahjahan Mina for assigning me such an interesting topic named “Investment Methodology of Provident Fund as Case Study of Puls Trading Far East Ltd”. Finally, I would like to say that working within the amicable environment of ACNABIN was a wonderful experience and this report is an outcome of the joint and cordial efforts of all referred to above.

.

EXECUTIVE SUMMARY

Provident fund is a compulsory savings plan contributed to by both employee and employer to provide the employee with a lump sum based on previous contribution records on termination of employment. Both, the employee and the employer, contribute a fixed percentage of the PF basis towards a Provident Fund. The minimum percentage contributed is as specified by the authorities. The overall approach of the report is a Descriptive one as it goes into the depth of Investment & Accounts Process of Liaison Company like Puls Trading Far East Ltd Provident Fund. Here both primary & secondary data were used. Interview was the basic techniques comply to collect data from any people within the organization. Different articles published on “Investment Methodology of Provident Fund”, Different websites regarding investment sectors, Different Annual Report on Provident Fund. Various Text Books related to provident fund helped me to gather data about the organization. The report contains four chapters. The first chapter of the report describes the introductory words of the internship report in which introduction of topic, origin the report, background of the study, objective of the report ,scope of the report, methodology & limitations, the second chapter contains the organizational part of “ACNABIN Chartered Accountants Firm”, organization structure of “ACNABIN”, vision, mission & services of “ACNABIN”, performance evaluation & description. In the chapter three, introduction of Provident Fund, various types of Provident Funds & Provident Fund Deed added. Recognition of Provident Fund, Investment techniques of Provident Fund, Risk Factors, Rate of Return, scope of investment of provident fund in Bangladesh have been described in that chapter. Different problems, suggestions, recommendations have come at the end of the report within the chapter four. ACNABIN has passed a long way since its providing services. Already it has earned a strong positioned in Bangladesh. To continue to hold the positions & be perfect in this sector it will have to keep more & more attention to its fair analysis.

Investment of Puls Trading Ltd Provident Fund

Acronyms

Commission CSE DSE

Securities and Exchange Commission of Bangladesh Chittagong Stock Exchange Dhaka Stock Exchange

Company

1994 bd.

Act EPS FC FI ICB Issue NBFI NBR Net Assets

Earnings Per Share Foreign Currency Account Financial Institution Investment Corporation of Bangladesh Public Issue Non-Banking Financial Institution National Board of Revenue The excess of assets over liabilities of the Scheme,

computed in the manner specified hereunder Net Assets Per unit value of the Scheme arrived at by dividing the net assets by the number of unit outstanding of Value(NAV) the Scheme.

TABLE OF CONTENTS Title Letter of Transmittal

Page No i

Acknowledgement

ii

Executive Summary

iii

Table of Contents

iv

SECTION - 1: STUDY BACKGROUND 1.1

Introduction

01

1.2

Objective of the Study

01

1.3

Scope of Study

02

1.4

Methodology of the Report

02

1.5 Limitations of the Study SECTION - 2: ORGANIZATION’S PROFILE

03

2.1

Profile of the Firm

04

2.2

Background

04

2.3

Associations

04

2.4

Membership

05

2.5

Existing Partners and Their Area of Specialization

06

2.6

External Activities of the Partners

06

2.7

Name of Partners and Their Academic And Professional Qualifications

06

2.8

Achievements of Firm

07

2.9

Human resources

08

2.10 Logistic Support

09

2.11 Area of Services

10

2.12 Analysis of Total Practice Turnover

10

2.13 Quality Control and Independence

11

2.14

Role of the Personnel

12

2.15

Non- Professional Staff

13

SECTION -3 : LITERATURE REVIEW 3.1

Definition Of Provident Fund

14

3.2

Distinction Between Provident Fund & Pension Fund

16

3.3

Requirements Of An Approved Provident Fund

17

3.4

Types Of Provident Fund

18

3.5

Short Notes of Provident Fund

21

3.6

3.5.1

Compulsory Deposit

22

3.5.2

Contribution

24

3.5.3

Basic Salary

25

Employee Provident Fund Scheme

26

3.6.1 How Employee Provident Fund Scheme works

26

3.6.2 Provident Fund Laws

28

3.7 Benefits of Employees

32

3.8 Provident Fund Calculation

32

3.9

34

Advantages of Provident Fund 3.9.1 Disadvantages of Provident Fund

34

3.9.2 Withdrawal

37

3.9.2

39

Nomination

SECTION -4 : Investment Methodology of Puls Trading Far East Ltd. Provident Fund :

44

4.1

46

Client Procedures

4.2 Investment Decision

48

4.2

Fund Management & Report

50

4.2.1 Structure of Provident Fund

53

4.2.2 Investment

55

4.2.3 NAV Calculation

55

4.3

56

Investment Polices by Puls Trading Far East Ltd. 4.3.1

Short-Term Fixed-Income Policy

57

4.3.2

Secured Fixed –Income Policy

57

4.3.3 General Fixed-Income Policy

58

4.3.4 Mixed Policy

58

4.3.4.1 Equity Policy

58

4.2.4.2 Provident Fund Accounting 4.2.4.3

Single Fund & Pooled Fund

PF Loan Policy

1.1 INTRODUCTION:

In today’s world academic education is not adequate to enable a student to compete with confidence and reach his/her goal without having experience with the outside world. In order to have an idea and gain experiences, we, the students of B.B.A Department of Business Administration, Daffodil International University (DIU) have to undertake 3 months internship program at any organization. As a part of my BBA Program, the 3 months internship program gave me the opportunity to have a practical knowledge on Provident Fund & its Investment. The assignment was how a liaison company maintains provident Fund & also to gain a knowledge and practical experience on how employees & employer is engaged in provident Fund, Accounts of Provident Fund & Report of Provident Fund & Investment sectors of provident Fund. To face much more complex and challenging business world in the challenging business areas, practical knowledge is essential to expand our theoretical base. To gather this practical knowledge, we were forwarded different organization after completing BBA Program. As I have an intention to become a chartered accountant, I was forwarded to ACNABIN, a prominent chartered accountancy firm in Bangladesh. This study gave me an opportunity to observe and perform real world knowledge about the Provident Fund, which is followed by the Liaison Company. In the internship period I could relate the theoretical knowledge of Provident Fund to practical exposure.

Origin of the Report: As an integral part of my B.B.A Program, I have enrolled myself in completing the Internship report. It requires me to submit a report on which I have worked. To fulfill this requirement, I have prepared this report & have chosen “Investment Methodology of Provident Fund a case study of Puls Trading Far East Ltd.” topic. We know theoretical knowledge makes better sense when it associates with practical experience. As I have been involved in the Chartered Accountant Firm, I am capable to analyze Provident Fund accounts & Investment criteria with the consideration of Risk Factor for a Liaison company in Bangladesh. This report represents the overall Provident Fund procedures, accounts & investment process by Puls Trading Far East Ltd & the facts & Challenges of Investment of Provident fund in Bangladesh. I have put enough effort on this report so that I can fulfill my objectives. 1.2 OBJECTIVE OF THE STUDY:

In our study period primarily we gain theoretical knowledge. But now a day, in the job market there is no substitute for work experience. Getting meaningful work experience in one major field of study or career interest should be a number one priority. After getting theoretical knowledge from university, it is all about the application of that knowledge in real world situations. It has immense importance to establish relationship between theory and practices in real world situation. In below I have mentioned the core objective behind the study:  Getting practical knowledge from the organization directly.  Adapting myself in an organizational environment.  Gaining practical knowledge and experience on how a chartered accountancy firm provides consultancy services and a how consultancy service is performed in corporations, companies and non-profit making organizations.  How to accumulate and process evidences to make provident fund accounts & its investment.  To implement the provident fund procedure strictly will ensure the quality of provident fund of corporations, companies and non-profit making organizations.  To be familiar with traditional and modern banking activities.  To know how a draft and final provident fund report is handed over to client.  To enrich the knowledge of provident fund procedure to apply my next level of education and practical field. 1.3 SCOPE OF The Report: I have been assigned in ACNABIN that gave me tremendous scope to familiarize with the provident fund procedure of the organization. Major parts of scope are point out below: a)

Background of the host organization and also their position.

b) Consultancy of provident fund procedure, which is followed by the organization for performing any Consultancy of provident fund. c)

Nature and importance of it has depicted in this study.

d) Provident fund methodology of the firm, which is followed by the organization for performing any types of provident fund. e)

Provident fund administration of the firm, which is followed by the organization for performing any investment of provident fund.

1.4 Methodology of the Report: Selection of the Topic: The topic selected for the study was chosen by me & approved by Professor Shahjahan Mina, Advisor, Faculty of Business & Economics Daffodil International University. Before assigning the topic, he discussed with me & emphasized me to do report on particular side of the organization so that it can be focus deeply & prepared well-organized report.

Morningstar Rating : This Morningstar-sourced information is provided to organization’s risk. Morningstar is not responsible for any damages or losses arising from any use of The Morningstar fund rating methodology are based on a fund's risk-adjusted return within a given Morningstar category.

Value Research Rating : Value Research Fund Ratings are a composite measure of historical risk-adjusted returns. In the case of equity and hybrid funds this rating is based on the weighted average monthly returns for the last 3 and 5-year periods. The Value Research Ratings are published in Monthly Mutual Fund Performance Report and Mutual Fund Insight. The Ratings are subject to change every month. The Rating is based on primary data provided by respective funds; Value Research does not guarantee the accuracy. In order to prepare the assigned project paper I have collected necessary information from two types of source as follows: 1) Primary sources information. 2) Secondary sources information. Primary sources information 1.

I have collected primary information by working with different consultant of provident fund team.

2.

Discussing with engagement partner, engagement team, manager, of stuff and articled student.

Secondary sources information 1.

I have also collected secondary information like annual of Gratuity fund report, management consultancy of Gratuity fund report, accounting system & report of provident fund working papers.

2.

The information was obtained from various corresponding files of the firm.

1.5 LIMITATIONS OF THE STUDY: The study is conducted with an objective to make a thorough study of external Consultancy of provident fund procedure. I have availed many facilities and faced some obstacles during my study. These obstacles may be termed as limitation of the study. These limitations are as follows: a)

Scheduled time span was not sufficient to cover all information.

b) As an independent consultancy of provident fund, the information of the case study is not adequate for this study. c)

To some extend the exact consultancy of provident fund procedure is not followed due to time and other constrains.

d) As the internship was the first practical experience, it was not possible for me to know all and everything of consultancy of provident fund procedure.

Firm’s Profile

2.1 PROFILE OF THE FIRM: Name of the Consultant of provident fund Firm : ACNABIN Chartered Accountants Date of Establishment

:

15th February, 1985

Address of the firm, Telephone, Fax & E-Mail:

BDBL Bhaban (13th Floor) 12, Kawran Bazar Commercial Area Dhaka-1215, Bangladesh Phone:

880-2-8144347-52

Fax #:

880-2-8144353-54

E-Mail: Web site: www.acnabin-bd.com. 2.2 BACKGROUND: Founded in 1985, ACNABIN started with seven partners. The name “ACNABIN” comes from the acronyms of the founder partners: A

= ABM Azizuddin

C

= Anwaruddin Chowdhury

N

= Abu Syed Mohammad Nayeem

A

= Mohammad Akhtaruzzaman

B

= ATMA Bari

I

= Iftekhar Hossain

N

= Mohammad Nurun Nabi.

At present the partnership comprises four founder partners and four new partners. ACNABIN represented BDO in Bangladesh during 1990-92 and Arthur Andersen from 1992 till the later collapse in 2002. 2.3 ASSOCIATIONS: a)

Associated with ASNAF-ASEAN Accounting Firms, Singapore since 18 February 2003.

b) USAID and EC Enlisted. In 1993 we have been enlisted by the United States Office of Regional Inspector General/Audit, Singapore to perform financial Audits of USAID fund recipients in Bangladesh. We have been also enlisted by the European Commission to conduct financial Audit of the recipient of their fund. c)

In July 2005 ACNABIN achieved “Representative Firm” status of BAKER TILLY INTERNATIONAL.

BAKER TILLY is an independent member of BAKER TILLY International. BAKER TILLY International is a network of high quality, independent accountancy and business service firms, all of whom are committed to providing the best possible services to their clients, in their own marketplaces, and across the world, wherever the client needs help. BAKER TILLY International is the 8th largest network in the world by fee income and is represented by 122 firms in 75 countries, with a global aggregate fee income of US $1.82 billion and 18,600 staff worldwide. In 2003, the network experienced a 17% growth in revenue.

2.4 MEMBERSHIP: ACNABIN is the member of: a)

Metropolitan Chamber of Commerce and Industries

b)

The Dhaka Chamber of Commerce and Industries

c)

American Chamber of Commerce in Bangladesh.

The firm has one office in the capital city of Bangladesh with four different Divisions to manage its day to day activities. The divisions are: ♦Provident Fund, ♦Income Tax, ♦Consultancy Services, and ♦Insolvency. 2.5 EXISTING PARTNERS AND THEIR AREA OF SPECIALIZATION: Name

Office

Area of Professional

ABM Azizuddin Mohammad Nurun Nabi Iftekhar Hossain

Dhaka Office Dhaka Office Dhaka Office

Primary Audit Audit Consultancy

Secondary Consultancy Consultancy Audit

ATMA Bari Md. Moniruzzaman

Dhaka Office Dhaka Office

Tax Audit

Audit Consultancy

Mominul Karim

Dhaka Office

Audit

Consultancy

Md.Rokonuzzaman

Dhaka Office

Audit

Consultancy

2.6 EXTERNAL ACTIVITIES OF THE PARTNERS Mr. ABM Azizuddin, FCA, one of the founder partners was the President of The Institute of Chartered Accountants of Bangladesh (1990) and presently a council member and the Chairman of Board of Studies. Three other partners are involved in different committees of the Institutes. MR. Iftekhar Hossain is now working as administrative partner of ACNABIN.

2.7

NAME OF THE PARTNERS, THEIR ACADEMIC AND PROFESSIONAL QUALIFICATIONS: Name

Education and Qualification

ICAB registration no. 46

ABM Azizudddin

B. Com. (Hons.), M.Com., FCA

Iftekhar Hossain

B.Com., FCA

150

Mohammad Nurun Nabi

B. Sc., FCA

370

ATMA Bari

B.Com., FCA , FCEA (London)

423

Md. Anwarul Karim

B.Com., FCA, CPA(USA), CFE(USA)

522

Md. Monirruzzaman

B.Com. (Hons.), M.COM., ACA

787

Md.Mominul Karim

B.Com. (Hons.), M.COM., ACA

936

Md.Rokonuzzaman

B.Com. (Hons.), M.COM., ACA

925

2.8 ACHIEVEMENT OF FIRMS: (i) A Brief statement on the outstanding activities and innovation by ACNABIN: ACNABIN Introduced stipend to attract brilliant students to the profession of accounting in Bangladesh. It has introduced and implemented several forms for an effective audit field work. It is considered to be the market leader in Audit and evaluation of microfinance organization. (ii) Services rendered abroad: Since its incorporation, ACNABIN has successfully performed the following overseas assignments:  Qinghai Micro-credit Project, China.  Consultancy assignment on Accounting in DPR of Korea.  Financial Analyst for Operational Performance of Nirdhan, Nepal, Funded by World Bank-CGAP  Study of Micro-Finance Institution Capacity Assignment, Kuala Lumpur, Malaysia.  Verification of Financial and Accounting System of Rural Credit Operations of Bhutan BDFC, Thimpu, Bhutan.  Vivekananda Sava Kendra O Sishu Uddayan, West Bengal, India.  Capacity Building of External Auditors for Micro-finance Audit, an ICPAU workshop held in Kampala, Uganda under the sponsorship of CGAP.  Training on external Auditor of micro-finance institution in Addis Ababa, Ethiopia, sponsored by the Association of Ethiopian MFIs (AEMFI). (iii) Hosting of International Internship: During October-November, 2001, ACNABIN has hosted an International Internship program for two (2) employees of Bank of Indonesia, Indonesia on External Audit Micro finance Institution in Bangladesh. (iv) Firm ranking by fee size for city and/or country: Bangladesh Bank, the Central Bank of Bangladesh Government has placed ACNABIN in the 2nd position out of 82 enlisted firms.

There are total 174 Audit firms in Bangladesh, of which five (5) firms have 6 or more partners and ACNABIN is one of those 5 firms. (v) Publication and manuals used internally by the firm: ACNABIN has developed the following two manuals which are extensively used by the ACNABIN staffs: a)

Audit Manual,

b)

Staff Manual

2.9 HUMAN RESOURCES: Number of personnel by function (primary area of practice): Description Audit Accounting Tax Management Services Insolvency Other Professional Secretarial, Clerical, etc Total

Partner

Staff 5 1 1 1 0 0 0 8

Total 60 5 16 2 1 2 11 97

Partners and Principals Managers and Supervisors C.A. Course Completed Students Articled Students Paraprofessional Clerical, secretarial Total

64 5 17 3 1 2 11 103

8 5+5 17 90 3 11 103

Number of qualified personnel in the firm (including partners) and their professional affiliation:  Partners-8, Directors-2, Audit Manager-2, 

All are Partners of the Institute of Chartered Accountant of Bangladesh;

 One Partner- Member of the American Institute of CPA;  One Partner- Life member of the Institute of CA of England and Wales.

We have ample equipment and appliances in our stock to give logistic support to our clients’ enhanced requirements. Office space

-

4500 sft.

Computer

-

44 nos.

Laptops

-

5 nos.

Laser Printer

-

5 nos.

Photocopier

-

2 nos.

Multimedia projector

-

1 nos.

Organizational Hierarchy of the ACNABIN The Organizational hierarchy of Puls Trading Far East Ltd. can be shown by the following diagram: Partners Directors Managers Deputy Managers Sr.Assistant Managers Sr. Articled Student Jr. Articled Student 2.10 LOGISTIC SUPPORT: List of important industries in which the firm has experience 1. Banks, 2. Micro-Finance Institution (MFI), 3. Non-Government Organization (NGO), 4. Donor funded projects e.g. projects funded by USAID, CIDA, DFID, NORDA, SIDA 5. Multi-National Companies. 6. Liaison Companies

At present ACNABIN have some 120+ Audit clients. As one of the top four firms in Bangladesh ACNABIN have Audit clients of all type, e.g. public, private, governmental, profit/non-profit organizations. ACNABIN have several clients with international operations. 2.11 SERVICES OFFERED COVER THE FOLLOWING AREAS:  Feasibility study  Management consultation/development  Statutory Audit  Accountancy  Taxation  Accountancy and management training  System development  Data processing with computer  Privatization consultancy (Include pre-privatization review, restructuring, valuation in particular and privatization assistance in general)  Other accounting ancillary services including investigation, internal and management Audit.  Micro- finance consulting.  Human Resource Development Issues  Organizational consulting services  Designing computerized systems for MIS and accounting and its implementation  Share/ business/ asset valuation.

2.12 ANALYSIS OF TOTAL PRACTICE TURNOVER: Audit Accounts preparation (including data processing and book-keeping) Tax Insolvency Financial Advisory Services Management Advisory Services Total

40% 5% 15% 10% 20% 10% 100%

2.13 QUALITY CONTROL AND INDEPENDENCE: i.

Hiring of professional staff:

Professional staffs are recruited based on their academic result, recruitment test, interview and referrals. ii.

Training:

In May 1994, two of our partners actively participated in a workshop on Supreme Audit Institution held in Singapore. In January 1997 also our firm participated in the training workshop held in Bangkok on USAID Rules and Regulations. In March 1998, partners along with two other senior staff members took the opportunity to participate in the training course on “Procedures for Procurement and Disbursement” under the World Bank’s “Financed Project” held at BRAC Centre, Rajendrapur, Bangladesh. This is a part of a continuous process for updating the knowledge in its concerned spheres of work and also to widen the horizon of latest know how. iii. Training of staffs on the firm’s Audit procedures: ACNABIN gives out a package on firm Audit procedure, office procedures to the newly recruited staffs. Also, through the weekly training classes’ partners / managers briefed new staffs about the firm and its procedures. The firm also makes available the information about current developments in professional technical standards to all professional staffs through office circulars and notice board display.  Firm’s Audit methodology is being taught through on the job training and through the weekly training classes presenting the real life situations, problem solutions and discussion on the current Audit clients.  Firm’s ethics and independence are being communicated to the staffs through the weekly classes, office memo and continuous monitoring by the senior partners.  Students, staffs are taught on the International Accounting Standards as adopted by SEC and ICAB and locally applicable GAAP in the weekly training class, on the job training and by the quality control review discussion.

 Students, staffs at ACNABIN are informed on the changes in Provident Fund and accounting standards through weekly class, office memo, distribution of related books and continuous monitoring by the senior partners. iv. Activities performed by ACNABIN to recognize that the quality is essential when performing the engagement: Partners personally work on the assignment, sometimes on a full time basis.  All Audit reports are reviewed by a “Concurring Partner” in addition to the “Engagement Partners”.  Disciplinary action is being taken in case of non-compliance of the uniform standards followed by the firm.  Students and staffs with quality performance are appreciated with better financial remuneration, assignment to important and quality clients.  Students and staffs who are guilty of non-compliance are subject to disciplinary action. v.

Review of the work performed:

 Supervisors, managers as well as partners perform field visits, review of work papers and make a list of review points.  Review on each and every Audit by second partner is done at the office after the preparation of draft report. The procedures documented and made available to all staffs. ACNABIN follows the professional standards issued by the International Federation of Accountants (IFAC) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB). ACNABIN has an Audit manual which incorporates all the principles and policies as issued by IFAC and translating those principles into procedures and forms. 2.14 ROLE OF THE PERSONNEL: i. Partners: The role of a partner is to get new clients and also sometimes the clients approach the partners themselves. The partners also make sure the existing clients are provided with the best possible

service. Partners guide their employees to prepare a proposal which is to be submitted to the client depending on what kind of service the client requires. ii. Audit manager: An Audit manager is a Chartered Accountant who assists the partners in various ways. He/ she review reports before signing by the engagement partner. iii. Supervisor: A supervisor may or may not be a Chartered Accountant. He has to complete the course and having some years experience in the field of accountancy therefore he designated as the Audit Supervisor of the firm. Audit manager briefs the Audit supervisor on where and when an Audit has to be performed and how the job is to be carried out. iv. Senior student: An Audit senior has some years of experience in the accountancy field therefore he has been designated as the Audit Senior of the firm. Audit senior is briefed by the Audit manager and supervisor about where and when an Audit has to be performed and how the job is to be carried out. v. Semi-Senior Student: A semi-senior student has to complete at least one year of article ship in the firm. Every time he is liable to his assigned senior/s. vi. Junior Student: Junior Students are the fresher who have just joined as an articled to the firm.

2.15 NON PROFESSIONAL STAFF: The numbers of non professional staffs involved with the firm are as follows:  General Manager (GM)  Manager, Administration  Accountant  IT Specialist

 Computer Operator  Photocopy Machine Operator  Receptionist.

4. Literature Review on Provident Fund ProceduresFinal; P-31

Definition of Provident Fund: In easy way, we can say, Provident Fund is a compulsory savings plan contributed to by both employee and employer to provide the employee with a lump sum based on previous contribution records on termination of employment. Provident Fund (PF) - Both, the employee and the employer, contribute a fixed percentage of the PF basis towards a Provident Fund. The minimum percentage contributed is as specified by the authorities. According to 1925 acts "Provident Fund" means a fund in which subscriptions or deposits of any class or classes of employees are received and held on their individual accounts, and includes any contribution and any interest or increment accruing on such subscriptions, deposits or contributions under the rules of the Fund. The Act provides three types of provident fund:  The Government Provident Fund,  Railway Provident Fund and  Contributory Provident Fund. The Government Provident Fund is constituted by the authority of the government for any class or classes of persons in the service of the republic. It also includes persons employed in

educational institutions or employed by bodies existing exclusively for educational purposes. Railway Provident Fund is established by the authority of the railway administration for any class or classes of its employees. In case of Contributory Provident Fund, contribution in any amount is credited in a provident fund by any authority administering the Fund. This is done to add to the credit of an individual account in the fund.

Types of Provident Fund: Government Provident Fund: means a Provident Fund, other than a Railway provident Fund, constituted by the authority of the Government] for any class or classes of persons in the service of the Republic] or of persons employed in educational institutions or employed by bodies existing solely for educational purposes, Railway Provident Fund: means a Provident Fund constituted by the authority of the railway administration for any class or classes of its employees. Knowledge Gained From Provident Fund Definition:  Provident fund is good for saving schemes for salaried people.  Employers and employees contribute a certain amount of money towards most of the provident fund.

Short Notes Explanation on Provident Fund: Employee Definition: "Employee" as defined in Section 2(f) of the Act means any persons who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any persons employed by or through a contractor in or in connection with the work of the establishment. Compulsory deposit: means a subscription to, or deposit in, Provident Fund which, under the rules of the Fund, is not, until the happening of some specified contingency, repayable on demand otherwise than for the purpose of the payment of permit in respect of policy of life insurance or the payment of subscriptions or premier in respect of a family pension fund, and includes any contribution and any interest or increment which has accrued under the rules of the Fund on any such subscription, deposit, or contribution, and also any such subscription deposit, contribution interest or increment remaining to the credit of the subscriber or depositor after the happening any such contingency; Contribution: means any amount credited in a Provident Found, by any authority administering the Fund, by way of addition to, a subscription to, or deposit or balance at the credit of an

individual account in, the Fund; and "contributory Provident Fund" means a Provident Fund the rules or which provide for the crediting of contributions; Dependant: means any of the following relatives of a deceased subscriber to, or a depositor in, a Provident Fund, namely, a wife, husband, parent, child, minor brother, unmarried sister and a deceased son's widow and child, and, where no parent of the subscriber or depositor is alive ,a paternal grand-parent; Membership: All the employees (including casual, part time, Daily wage contract etc.) other than an excluded employee are required to be enrolled as members of the fund the day, the Act comes into force in such establishment. Basic Salary: "Basic Salary" means all emoluments which are earned by employee while on duty or on leave or holiday with wages in either case in accordance with the terms of the contract of employment and witch are paid or payable in cash, but does not include a. The cash value of any food concession; b. Any dearness allowance (that is to say, all cash payment by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other allowance payable to the employee in respect of employment or of work done in such employment. c. Any present made by the employer. Excluded Employee: "Exclude Employee" as defined under para 2(f) of the Employees' Provident Fund Scheme means an employee who having been a member of the fund has withdraw the full amount of accumulation in the fund on retirement from service after attaining the age of 55 years; Or An employee, whose pay exceeds Taka. Five Thousand per month at the time, otherwise entitled to become a member of the fund. Explanation: 'Pay' includes basic wages with dearness allowance, retaining allowance, (if any) and cash value of food concessions admissible thereon. Employee Provident Fund Scheme: Employees' Provident Fund Scheme takes care of following needs of the members: (i) Retirement (ii) Medical Care (iii) Housing (iv) Family obligation (v) Education of Children (vi) Financing of Insurance Polices

Provident Fund Reports • • • • • • • • •

Provident Fund Ledger (With or Without IBB) Statements Of Accounts Interest Allocation Ledger Contribution List P. F. Ledger Card Abstract of Members Loan Ledger of the Members/ Employees Outstanding Interest Query on Accounts

Return Forms • • • •

P. F.& F.P.F. Returns EDLI Forms Appendix A Appendix B

Investments • • • • • • •

Movement of Investment Accrued Interest Investment Details Patterns of Investments Status of Mutuality Market Value Reports Promotion/Transfer History etc.

Transaction Entries •

P. F. contribution Entries (Location Wise, Voucher Wise)

How the Employees' Provident Fund Scheme works: As per amendment-dated 22.9.1997 in the Act, both the employees and employer contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month. The rate of contribution is 10% in the case of following establishments: •

Any covered establishment with less than 20 employees, for establishments cover prior to 22.9.97.

•

• •

Any sick industrial company as defined in clause (O) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction, Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and Any establishment engaged in manufacturing of (a) jute (b) Breed (d) coir and (e) Guar gum Industries/ Factories. The contribution under the Employees' Provident Fund Scheme by the employee and employer will be as under with effect from 22.9.1997.

. Benefits Of Employee: (A) A member of the provident fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 year. Full amount in provident fund can also be withdrawn by the member under the following circumstance: • • • •

A member who has not attained the age of 55 year at the time of termination of service. A member is retired on account of permanent and total disablement due to bodily or mental infirmity. On migration from India for permanent settlement abroad or for taking employment abroad. In the case of mass or individual retrenchment.

B) In the case of the following contingencies, the payment of provident fund be made after complementing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member: •

Where employees of close establishment are transferred to other establishment, which is not covered under the Act:

Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947.

5.Fund Registration : A contracted management company should act as a coordinator for the execution of fund registration or fund article amendment. There are two forms of provident funds as follows: 1) Single Fund: One provident fund for one employer whose fund size is relatively large. 2) Pooled Fund: One provident fund for multiple employers whose fund size ranges from small-to medium-sized. A pooled fund article consists of two parts, i.e., general conditions for all employers and specific conditions for individual employers.

6. Fund Management and Reports

Contribution remittance and member records Employer may assign the personnel department or the finance department to take responsibility for member records for contribution collection. Employer is bound to remit contributions into the fund within three business days after the date of wage payment. A violation would result in a monthly surcharge of 5% of the delayed amounts.

(A)Investment: Contributions remitted to the fund will be managed by one or more management companies under the supervision of the fund committee to ensure that the fund manager will invest in accordance with the fund management contract. The SEC has also extended the concept of “employee’s choice” to provide members with an opportunity to choose an investment policy that best suits their own risk tolerance and return expectations. Nevertheless, whether or not this concept can be successfully implemented depends on the members’ awareness and understanding of capital market investment.

NAV Calculation: The net asset value (NAV) of the fund is calculated upon the mark-to-market (MTM) practice. Market prices of different assets in the portfolio such as stocks and bonds determine the fair value of fund assets. The fund committee and the management company agree on the frequency of trade dates that must take place at least once a week. The NAV – initially assessed by the management company – is updated upon a specified trade date and verified by an NAV verifier to ensure accuracy.

Reports: The management company provides the fund committee with monthly and annual reports on the investment portfolio and returns. Members receive semi-annual statements of their contributions and benefits. Members’ queries concerning the fund management can be made through the fund committee.

0

What is Registered Provident Fund? Registered Provident Fund is the provident fund that is voluntarily set up by employees and employer(s) under Pillar III program. The purpose of the fund is to encourage and provide savings for employees' benefits and that of their respective families in the event of the employees retirements, disabilities, deaths, resignation from the company or the fund. Characteristic of the Fund Employee and Employer Contribution As stipulated in the Provident Fund Act B.E. 2530, the fund must consist of a percentage of employees' and employer's contributions. The contribution rate can start from the minimum of 2 to the maximum of 15% of the employees' salary. However, the employees' contribution rate must not exceed the employer's contribution rate. • Separate Legal Entity Registered Provident Fund is a juristic person, separated from both the employer and the fund manager. Besides, the fund is beyond any legal enforcement. None of them will have a right to claim on the fund. Therefore, in case that the company or the fund manager has financial problem or has to cease its operation, it is guaranteed that the employees will receive their money from the fund upon their resignation/retirement according to their entitlement and the fund regulations. •

Investment Policy As required by law, the investment policy of Registered Provident Fund must comply with the SEC's rules and regulations. •

Benefits of Registered Provident Fund Benefits of Registered Provident Fund for the employee - Tax deductible on employee's contribution up to 25%. - Tax-exempt on earnings of the fund - Deferred tax payment until resignation - Tax-exempt on the lump sum received in the event of retirement, death, or disability •

Benefits of Registered Provident Fund for the company - Tax deductible on company's contribution - Smoothen company's cash flow - Reduce the administrative burden - Another means of employee fringe benefit •

Fund Establishment: , the customer can choose to set up their own provident fund (Single Fund) or pool their money with our Pooled Fund.

Single fund A single fund comprises of only one employer. The appropriate size should be at least Baht 100 million to obtain benefit in terms of investment diversification into various financial instruments and in many financial institutions, which would consequently provide more opportunity to lower risk and earn a higher rate of return to the fund. Pooled fund (Central Provident Fund) is the first fund manager who initiated the Provident Fund which comprises of small and medium size companies joining together in one fund. Pooled fund can be classified into 2 types: 1. Group Funds: Group Fund comprises of affiliated companies or companies in the same group joining together. 2. General Pooled Fund General Pooled Fund comprises of any small and medium size companies joining together. The main objective of Pooled fund is to provide long-term capital appreciation for its members by means of combining together provident fund under management into a single entity. The main rational behind such move is to take advantage of the economy of scale that the Pooled fund can provide in terms of greater risk diversification, higher yields and lower expenses. Investment policies under Puls Trading Far East Ltd Provident Fund Management Investment policies can be classified into 5 policies each with distinctive objective and risk level as follows: 1.

Short-Term Fixed-Income Policy: This policy aims to sustain high liquidity, maintain very low risk and focus on the security of the fund. Therefore, it concentrates only in fixed-income instruments which are time deposits, Negotiable Certificate of Deposit (NCD), Bills of Exchange, Promissory Notes of large banks or large financial institutions and Government/State enterprise bonds, with the total investment duration of not exceeding 1 year. There is no investment in corporate debentures. The objective of this fund is to preserve the principal. The credit risk, market risk, and volatility of its return is very low.

2.

Secured Fixed-Income Policy This policy aims to preserve capital in long-term, sustain high liquidity, maintain low risk and focus on the security of the fund. Therefore, its investment policy concentrates only in fixedincome instruments which are time deposits, Negotiable Certificate of Deposit (NCD), Bills of Exchange, Promissory Notes of large banks, large financial institutions and Government/State enterprise bonds. There is no investment in corporate debentures. Therefore, this policy will expose to relatively low credit risk; however, the variation of interest rate is the factor that could affect the return.

3.

General Fixed-Income Policy This policy seeks a high level of current income by investing purely in fixed income instruments with zero exposure to the stock market and other equity instruments. The investment is merely in fixed-income instruments such as bank deposits, Government/State Enterprise bonds, Bills of Exchange, Promissory Notes and debentures issued by banks or financial institutions or private companies. Therefore, the yield performance moves in line with the interest rate trend. The factors that might variant the return of the fund include stability of issuers and interest rate fluctuation. The objective of this policy is to attain averagely moderate return in long-term at moderate risk of fluctuation of return.

4.

Mixed Policy This policy is managed with a view to increase the value of capital rather than a flow of income. Hence, in addition to investment in time deposits at Banks, Government/State Owned Enterprise bonds, Bills of Exchange, Promissory Notes and Debentures issued by banks, financial institutions, or private companies, the portfolio of this fund contains an element of equity investment such as common stocks, unit trusts as well as equity derivatives. And investment limit in equity instrument shall be under full discretion of TISCO. The return will be relatively high volatile in short term which is a result of such factors as variation of interest rate and SET index, including performance of the securities issuer. In the meantime, the chance to gain averagely high return in long term is relatively high as well.

5.

Equity Policy This policy focuses on investing in equity, in which at least 65% of the net asset value (NAV) has to be invested in equity. The rest of them could be invested in deposits or fixed-income instruments. It aims to attain averagely high return in long term and suits those who can withstand high fluctuation risk of return.

Remark: * For short-term fixed-income policy, the average duration of total investment does not exceed 1 year. Since members have diverse characteristics in expected return and acceptable risk level, only one investment policy may not suit all. Consequently, the Provident Fund law allows one fund to have multiple investment policies (“Master Fund”) in order to broaden the choices for members in the same fund to choose policy that match with their own profiles such as age, expected return, and acceptable risk level. From long experience of provident fund management for over 40 years, TISCO has rearranged all 5 investment policies stated above into standard options which believed to cover most of members’ needs and to facilitate fund committee in communicating with members. However, if the employer would like to provide more choices to members, TISCO can also fulfill those needs by providing free style option, in which members can combine all 5 investment policies upon their desire. Services Apart from funds management, we also provide full services as follows: Advisory Service Our experienced advisory team is always ready to help our clients design a vesting scheme, fund regulations, etc. Public Relations Service We are pleased to coordinate with the fund committee to arrange on-site seminar to educate the basis knowledge of the fund on the benefits of joining the registered provident fund as well as other relevant topics.

On Line Access The Fund Committee shall be able to access the reports of their fund via log on in the Account access menu in our web site. The reports consist of Fund Performance Report, and Statement of Provident Fund Account. THE IBN SINA TRUST EMPLOYEES PROVIDENT FUND RULES 1.

2.

Short Title and Commencement: (a) These Rules may be called`` the Ibn Sina Trust Employees Provident Fund Rules. (b) These Rules shall take effect from 1st July 1985. Definitions: In these Rules unless there is anything repugnant in the subject or context: (a) “Trust” means the Ibn Sina Trust. (b) “Fund” means the Ibn Sina Trust Employees Provident Fund (hereinafter referred to as ‘the Fund’). (c) “Board” means the Board of Trustees' of the Fund for the time being constituted under the Rules. (d) “Chairman” means he Chairman of the Ibn Sina Trust Employees Provident Fund who presides over a meeting of the Board of Trustees. (e) “Employee” means a regular employee of the Trust and includes an officer, a staff and a worker. (f) “Officer” means a regular employee of the Trust being a subscriber but does not include a staff or a worker. (g) “Staff” means a regular employee of the Trust being a subscriber. (b) “Worker” means a regular employee of the Trust being a subscriber. (c) “Subscriber” means a regular employee of the Trust who subscribes to the Fund. (d) “Subscription” means the amount paid by a subscriber out of his monthly salary or wages to his own account in the fund in accordance with the rules. (e) “Contribution” means the amount paid by the Trust monthly to the account of a subscriber to the Fund in accordance with the Rules. (f) “Trustees” means the Trustees of the Fund for the time being constituted /nominated as provided for by the Deed of Trust & the Rules and subsequent replacement thereof from time to time. (g) “Salary or wages” means only the basic salary or wages whether received by or accrued to each employee from the Trust and does not include any allowances, remuneration, profit, bonus and benefit, perquisites derived by the subscriber by any means in addition to his basic salary or wages. (h) “Children” means legitimate children and includes adopted children if the Trustees are satisfied that under the personal law of the subscriber, adoption of a child is legally recognized. (i) “Family” means:

i. In case of male subscriber, the wife or wives and children of the subscriber, and the widow or widows and children of a deceased son of the subscriber, Provided that if a subscriber proves that his wife has been judicially separated from him or has ceased under the customary law of the Trust to which he belongs to be entitled to maintenance, she shall henceforth be deemed to be no longer a member of the subscriber's family in matters to which the Rules relate unless the subscriber subsequently indicates by notification in writing to the Board that she shall continue to be so regarded. ii. In case of a female subscriber, the husband and the children of the subscriber and the widow or widows and children of a deceased son of the subscriber. Provided that if a subscriber by notification in writing to the Board expresses her desire to exclude her husband from her family, the husband shall henceforth be deemed to be no longer a member of the subscriber's family in matters to which the Rules relate unless the subscriber subsequently indicates by notification in writing to the Board that he shall continue to be so regarded. (p) “Dependent” means any of the following relatives of the deceased subscriber, namely; wife, husband, parents, child, minor brother, unmarried sister, deceased son's widow and children and a deceased daughter's children and in case the deceased subscriber was a widow or widower and where no parents of the subscriber are alive, paternal and maternal grandparents. (q)

“Year” means a calendar year beginning on the 1st day of January and ending on the 31st day of December following.

(r)

“Month” means a calendar month in accordance with the English calendar.

(s)

Words of ``Masculine gender" shall, unless a contrary intention appears, be taken to include the feminine and vice versa.

(t) Words of ``Plural gender" shall, unless a contrary intention appears, be taken to include the singular and vice versa. 3.

Constitution of the Board: (1)

The Board shall be constituted with 3 numbers of representatives of The Trust on the one hand and 2 numbers of the subscribers comprising the officers & staff and the workers on the other hand. The number of the Trustees shall not be less than 5 (five). The Trustees named below shall constitute the first Board of Trustees: - Commodore M.A.Rahman (R) Member Trust Trust Representative. - A.N.M.A.Zaher

Member Finance Trust Representative.

(2)

- Mir Quasem Ali Member Trust Trust Representative. - Saiful Alam Khan G.M Employees Representative. - Aminul Islam DGM Employees Representative. All are of Ibn Sina Trust House # 48, Road # 9/A, Dhanmondi, Dhaka Bangladesh. Except the first Board of Trustees constituted as aforesaid and any replacement thereto, subsequent Board of Trustees shall consist of where the total number of Trustees is 5 (five): (i) 3 (three) Trustees shall be nominated by the Board Members of the Trust from amongst the Board Members. (ii) 2 (two) Trustees shall be nominated by the subscribers of the Fund.

4.

Terms of office of the Board: The terms of office of each Board shall be 3 (three) years from the date of its constitution and subsequent Board shall be constituted as provided for hereinbefore.

5.

Vacancies of the Board: The office of a Trustee shall be vacated if he dies, or voluntarily resigns, or is found to be of unsound mind, or is adjudged an insolvent or is permanently absent from Bangladesh or ceases to be an employee of the Trust or a subscriber to the Fund or is withdrawn by the Trust in case of its representative. Notwithstanding any vacancy in the number of Trustees, the surviving or continuing Trustees shall be competent to act provided that their number does not fall below four. In the event of any vacancy as aforesaid in the office of Trustee before the expiry of the term of office of the Board, the vacancy shall, in the case of a nominee of the Trust, be filled by the Trust and in the case of a representative of the subscribers, by the subscribers, i. e. by the officers & staff or by the workers whom the aforesaid Trustee represented in the Board.

6.

Meeting of the Board : (a) The Board shall meet at such intervals as will be necessary for the management of the fund and matters connected therewith. (b) The presence of at least three Trustees including two representative of the Trust shall be necessary to form a quorum of the meeting for the transaction of business. (c) At every meeting of the Board, the representative of Trust shall preside over the meeting as the Chairman. (d) Each member of the Board shall have one vote and in case of equality of votes, the Chairman of the meeting shall have a casting vote. (e) A meeting of the Board for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers, functions and discretion by these presents vested in the Trustees generally.

7.

Constitution of the Fund : The Fund shall consist of Subscribers’ subscription and Trust contribution (including lapse and forfeiture) and of donations, if any, received by the Trustees, of accumulations thereof, and of

profit / income, credited in respect of such subscriptions, contributions, donations and accumulations, and of securities purchased therewith and of any capital gains arising from the sale, exchange or transfer of capital assets of the Fund, and of no other sums.

8.

Management and Administration of the Fund : (a) The Board shall manage and administer the Fund as per provisions of the relevant laws, the Deed of Trust and the Rules. (b) The Board may, from time of time with prior approval of the Board of Trustees and with the previous sanction of the appropriate income tax authority alter, vary, omit, modify, remake, rescind, cancel or add to any of the Rules of the Fund. (c) The Board shall have power to employ any person or persons (including any one or more of their number) to do any secretarial, legal, accountancy or other work which they may consider necessary or expedient in connection with the management and administration of the Fund and to pay there for in addition to all other ordinary or reasonable costs, charges, and expenses relating to the Fund out of the Fund. (d) The Board shall comply with and carry out all such directions as may be stated in any notice given to them by the Trust from time to time in respect of death, or resignation or retirement, or dismissal or otherwise from the service of the Trust and such notice shall constitute an authority to the Board and shall be conclusive to all facts stated therein, provided that every such notice shall be given to the Board in writing signed by the Member Administration or a person authorized to sign on behalf of the Trust and such notice shall be complete protection to the Board for any error or lack of authenticity in such notice.

9.

Secretary of the Fund : The Secretary shall be responsible for keeping all records and accounts of the Fund including the records of the decisions of the Board. He shall also be responsible to carry out all correspondences in relation to the operation of the Fund, and discharge other duties as may be assigned by the Board.

10.

Accounts of the Fund : The Board shall cause to be kept all necessary books of accounts of the Fund showing the receipts and disposal of the monies coming to their hands and shall maintain the accounts of the fund in such form and for such periods and the accounts shall contain such particulars as the National Board of Revenue may prescribe. The books of Accounts will be kept in Trust Head Office.

11.

Annual Statements of Accounts :

(a) The statements of accounts of the Fund shall be prepared annually as on 31st December every year and an audited statement of Accounts as on that date shall be submitted to a meeting of the Board to be held not later that 9 (nine) months from the date of annual closing of the Accounts of that year. The audited Accounts, if accepted by the board in that meeting or in any adjournment thereof shall be final and binding upon the subscribers and beneficiaries of the fund. (b) A statement of the audited accounts and a copy of the auditors’ report thereon shall be available to subscribers for their inspection at the Head Office of the Trust.

(c) The Board shall, thereafter, issue an annual statement to a subscriber showing the balance standing at the credit of his Provident Fund Accounts.

12.

Audit : The annual accounts of the Fund shall be audited by a firm of Chartered Accountants appointed by the Board at remuneration as may be fixed by them. The auditors shall certify the accuracy of the annual statements of Accounts.

13.

Membership of the Fund : (a) Every regular employee of the Trust shall be eligible to become a subscriber to the fund after 1 (one) year from the date of his regularization in the Trust service and may apply there for at his option in the Form ‘A’ appended hereto for enrolment as subscriber to the fund. (b) Every subscriber on joining the Fund shall be given a serial number. This number will be his Provident Fund Account number in the books of Accounts of the Fund.

14.

Rate of Subscription and Company’s Contribution : (a) Every subscriber shall subscribe to the Fund at the rate of 10 per cent of his monthly basic salary and such percentage shall de deducted from his salary at the time of payment thereof and shall, as soon as possible, be paid to the Trustees who shall credit the same to the subscriber’s individual account in the books of the Fund. (b) The contribution of the Company to the individual account of the subscriber in any year shall not exceed the amount of the subscriptions of the subscriber in that year and shall be paid to the trustees, who shall credit the same to the subscriber’s individual accounts at intervals not exceeding one year. (c) A subscriber absent on leave shall, for the period of such absence, subscribe to the Fund from his salary, if any, allowed to him as leave salary. If no leave salaries are allowed by the Trust, deduction of any subscription shall not be made and therefore here shall be no contribution by the trust in respect of the period of absence without salary. (d) A subscriber who in placed under suspension will not be eligible to subscribe to the Fund nor shall the company make any contribution to the Fund in respect of the period of suspension, unless he is reinstated honorably with the full salary, which he would have received if he were not placed under suspension.

15.

Entitlement to Trust Contribution : A subscriber shall be entitled to trust contribution toward his provident fund account and accretions thereto on completion of 3 (three) years’ Continuous regular service with the trust, except on the grounds as stated in Rule.

16.

Banking of the Fund : An Account or Accounts shall be opened with any schedule Islamic bank or banks in Bangladesh in the name of “the Ibn Sina Trust Employees’ Provident Fund” which shall be under the control of the Board and into which shall be temporarily paid (a) all monies subscribed by the subscribers, (b) all monies contributed by the Company under the Rules, and (c) all monies accruing by way of profit / income or otherwise to the Fund, till investment is made.

All monies standing to the credit of such account shall be dealt with only in accordance with the Rules and the laws. Any two Trustees authorized by a resolution of the Board shall operate the Bank Account or Accounts of the Fund.

17.

Investments : All monies subscribed by the subscribers and contributed by the Trust to the Fund from time to time and paid to the Trustees and accruing by way of profit / income or otherwise to the Fund and not immediately required for the purpose of the Fund shall from time to time be invested by the Board in accordance with the Provident Fund Law or Islamic Sarah as and when the law may permit such investment in future. Such investments shall be made in the name of the Fund by any two Trustees as may be duly authorized by the Board of Trustees and may, when the conditions of investments permit be made payable or transferable to the order of any two Trustees duly authorized by the Board in this behalf. The Board shall be at liberty to realize and sell any investments and to reinvest the proceeds as stated above.

18.

Distribution of Surplus Profit / Income : The Board shall at the end of each year ascertain the amount of profit / income available for distribution by taking the income of the Fund for that year and the monies from other sources as in the Rules provided including transfers from the Reserves of the Fund under the provisions of the Rules and deducting there from such expenses as are incurred for the management and administration of the Fund in accordance with the Rules and after transferring to the Reserve of the Fund such sums as the Board may in their discretion determine. The amount thus available for distribution shall be credited to each subscriber’s account as at the closing date of 31st December each year after considering year end total balance comprising accumulated portions of both of a subscriber and of the Trust with accretion thereto worked out on product basis taking (a) periodic withdrawals and (b) deposits (i.e. repayments of withdrawals, monthly subscriptions by subscribers and contributions by the Trust) for that year. Provided nevertheless that the Board shall have power in their absolute discretion to withhold income / profit altogether or partly in any year if, in their opinion, circumstances justify such a course.

19.

Withdrawals from the Provident Fund : (1) Withdrawals by subscribers shall not be allowed by the Trustees except on special grounds in the following circumstances or circumstances of a similar nature: (a) to pay expenses incurred in connection with the illness of a subscriber or a member of his family; (b) to pay for the passage over the sea or by air of a subscriber or any member of his family; (c) to pay expenses in connection with marriages, funerals or ceremonies, which, by the religion of the subscriber, it is incumbent upon him to perform and in connection with which is obligatory that expenditure should be incurred;

(d) to meet the expenditure on building or purchasing a house or a site for a house provided that such house or site is assigned to the Trustees of the Fund; (e) For the purpose of sub-rule (1) “family” means any of the following persons who reside with, and are wholly dependent on the subscriber, namely, the subscriber’s wife, legitimate children, step-children, parents, sisters and minor brothers.

(2) No such withdrawal shall exceed: (a) the salary or wages of the subscribers for three months or in the case of withdrawals for the purpose specified in clause (d) of sub-rule (1), the salary or wages of the subscribers for six months, or the total of the accumulation of exempted contributions and exempted profit contained in the balance to the credit of the subscriber, whichever is the less; (b) In the case of withdrawals for the purpose specified in clause (d) of sub-rule (1), eighty percent of the total of accumulation of the exempted subscriptions, contributions and exempted profit standing to the credit of the subscriber.

(3) Withdrawal of Provident Fund: (a) Save as provided in clauses (b), (c) and (d) of sub-rule (1), a second withdrawal shall not be permitted until the sum first withdrawn has been fully repaid; (b) A withdrawal may be permitted for the purposes specified in clause (e) of sub-rule (1) notwithstanding that the sum or sums previously withdrawn for the same purpose has or have not been repaid; (c) A withdrawal for any one of the purposes of sub-rule (1) other than that specified in clauses (d) of the sub-rule may be permitted notwithstanding that the sum or sums withdrawn for the purposes of clauses (d) of the same sub-rule has or have not been repaid.

(4) Repayment of withdrawals, etc : Where a withdrawal is allowed for a purpose other than that referred to in sub-rule (1), the amount withdrawn shall be repaid in not more than twenty-four equal monthly installment and shall bear no profit in accordance with rule 20 as efforts would be to follow the tenets of Islamic Sarah.

20.

Circumstances and manners in which accumulations are payable : (a) If a subscriber ceases to be an employee of the Trust for any reason, the amount standing to his credit in the fund including profit / income up to deductions authorized under Rule. Payment to the subscriber or his nominees, shall be made by two installments first installment comprising balance standing at the credit on the last annual closing date of the account shall be made within three months of the date on which the amount falls due, payment of second installment for the remaining dues shall be made within one month after audited accounts of the Fund for the current year are approved by the Board.

(b) In the case of the death of a subscriber who has no subsisting nominee, it shall be competent for the Board to pay the amount due to the natural heir or heirs of the deceased subscriber provided the Board is satisfied as to the heirship of the claimant or claimants.

21.

Deductions : (a) The Trust shall not be entitled to recover any sum whatsoever from the Fund, save in cases where the subscriber is dismissed for misconduct, or voluntarily leaves his employment otherwise than on account of ill health or other unavoidable cause before the expiration of 3 (three) years’ continuous regular service with the Trust. Provided that in such cases the recoveries made by the Trust shall be limited to the contributions made by it to the individual account of the subscriber, and to profit / income credited in respect of such contributions and accumulations thereof in accordance with the Rules of the Fund. (b) Deductions made under sub-rule (a) shall be treated as lapse and forfeiture and shall be credited to the Reserve Account of the Fund.

22.

Deduction of Income Tax : Income tax payable on the amount of the accumulated balance due to any subscriber shall at the time of payment of the same, be deducted in accordance with the provisions of paragraph 8 of PART-B (Recognized Provident Funds) of the FIRST SCHEDULE to the Income Tax Ordinance, 1984.

23.

Reserve of the Fund : The Board may from time to time at their absolute discretion set aside out of the income of the fund and from other sources including lapse and forfeiture as are by the Rules provided such sums as they may decided for the purposes of the Reserve of the Fund. The reserve of the Fund for the time being may be applied by the Board in their absolute discretion for : (a) the adjustment of diminution in the value of investment. (b) the equalization or adjustment of rate or higher rate of income / profit to be credited to subscribers; (c) any other purposes consistent with the objects of the Fund and with the Rules which the Board shall consider to be in the best interest of the subscribers.

24.

Nomination : (a) Every subscriber or if he is a minor, his guardian, shall make nomination conferring the right to receive the amount that may stand to his credit to the Fund in the event of his death occurring before the amount standing to his credit has become payable. (b) Provided that a subscriber or if he is a minor, his guardian may modify a nomination once made after giving written notice of his such intention. (a) The nomination shall, save as hereinafter provided be in favor of one or more members of the subscriber’s family and shall be made in the Form No. B appended hereto. If a subscriber or his guardian, as the case may be, nominates more nominees than one, he may apportion the amount in ratio that may stand to his credit in the Fund amongst his nominees at his own discretion. If at the time of making the nomination, the subscriber has no family, the nomination may be in favor of any person or persons, but if the subscriber subsequently

25.

26.

acquires a family, such nomination shall forthwith stand cancelled and the subscriber shall make a fresh nomination in favor of one or more members of his family. Secrecy : Persons connected with the administration and management of the Fund shall not disclose any information, facts and knowledge gained by him in the course of his duty as aforesaid except when required to do so in his official capacity in the course of the administration and management of the Fund. Principles : Activities and Functions of the Fund and as well as of the Trustee related to the Fund shall be carried out as far as practicable according to the tenets of Islamic Sarah.

FORM-A

APPLICATION FOR ENROLMENT AS SUBSCRIBER TO THE IBN SINA TRUST EMPLOYEES PROVIDENT FUND To The Chairman The Board of Trustees The Ibn Sina Trust Employee Provident Fund, Dhaka. Sir, I,.............................................................. son of ................................................... an employee of THE IBN SINA TRUST hereby apply for membership of the above Fund and I agree to be bound in all respects by the Rules of the said Fund. I also hereby authorize THE IBN SINA TRUST to deduct from my salary/wages such subscriptions as I am from time to time liable to pay under and in accordance with the Rules now in force, a copy of which I have read/has been read out to me to my full understanding and to pay the amount so deducted to the Board of Trustees of the said Fund. Name in full of the applicant Permanent address

: ............................................................................ : ............................................................................ ............................................................................ Date of Birth : ............................................................................ Date of Entry into service of the Trust : ..................................................................... Nature of employment : ............................................................................ Present Salary / wages : ............................................................................ Yours faithfully, ................................... Signature of applicant applicant

............................................................ Witness to the Signature of the

Dated this .............................. day of ............................... 19 The above particulars have been verified and certified as correct. FOR THE IBN SINA TRUST The above named applicant has been admitted to the Fund as from ........................... and allotted with Provident Fund No. ............... Dated ...........................

Secretary of the Fund.

FORM-B THE IBN SINA TRUST EMPLOYEE PROVIDENT FUND FORM OF NOMINATION I, .............................................., S/O. ............................................. hereby nominate the person(s) mentioned below to receive in the event of my death, the amount that may stand to my credit in the Fund, in the manner shown against his/their name (s). I hereby appoint the persons(s) named in column 5 to receive payment on behalf of nominee(s) who is/are minor(s) or is/are suffering from a legal disability. 1 Name & address of the nominee(s)

2 3 Relationship Age of with the nominee(s) subscriber

4 Amount of share of accumulat ion to be paid to each

5 Name & Address of the persons to whom payment is to be made on behalf of the minor or the person suffering from other legal disability

6 Sex and age of persons mentioned in col.5

Dated this ....................................... day of ....................200 at ............................. ......................................

Signature of the Subscriber

Two witnesses to signature of the subscriber who must sign in the presence of the each other and in that of the subscriber, all being present at the same time. Note : This column should be filled in so as to cover the whole amount that may stand to the credit of the member in the Fund at any time. 1.Signature ............................................ 2. Signature........................................ Name..................................................

Name.............................................

Designation .........................................

Designation ...................................

Address ..............................................

Address.......................................... ..................................... Secretary of the Fund

Investment objective: Seek to generate optimal returns with high liquidity by investing in Government securities. However there is no assurance that the investment objective of the scheme will be realized. Investment style: The Scheme propose to invest only in government securities with the aim of generating stable medium term returns

Provident Fund Investments: Classification: Investments made by a p/f is its just about the only source of income. Investments made are to be classified as: • Investments held for trading • Investments available for sale • Investments held till maturity

Investments: Accounting Policy: Investments held for trading: These are financial securities which are held with the intention of availing a profit from the short term fluctuations in prices.  All investments are initially recognized at cost, being the fair value.  Any surplus (deficit) made on disposal of such investments during the year is directly taken into profit and loss account as capital gain.  At the reporting date, the quoted investments are marked to market and the surplus (deficit) taken to the profit and loss account as surplus /(deficit) on remeasurement.

Investments available for sale:  These are financial securities which are intended to be held for an indefinite period but may be sold in response to the need for liquidity.  Subsequent to the initial measurement, investments in quoted securities are marked to market.  The surplus/ (deficit) arising on revaluation is shown separately on the balance sheet below shareholders’ equity.

Investments held to maturity: These are financial securities with fixed or determinable payments and fixed maturity that the Trust has a positive intent and ability to hold such securities to maturity.  All such investments are initially recognized at cost, being the fair value.  Return on such investments during the year is directly taken into profit and loss account.  At the reporting date, the investments are stated at fair value.

Investments: First Procedure: 1.

The Employees’ Provident Fund (Investment in Listed Securities) Rules,

1996 2. These Rules can also be downloaded from the web site of Securities & Exchange Commission of Bangladesh at www.sec.bd.gov.

Investment in Listed Securities: Total investment in listed securities shall not exceed [thirty] percent of the provident fund. Clause 3 (i) 1. Investment in shares or other listed securities of a particular company shall not exceed five percent of its paid up capital. Clause 3 (iii) 2. In case of investment in the shares of listed companies, it shall be made only where such companies1. Have a minimum operational record of five years, and 2. Have paid not less than fifteen per cent dividend to their shareholders during the three preceding consecutive years. Clause 3 (iv)

Investment in Listed Securities: Verification: 1. Condition 1>> Total investment in listed securities shall not exceed [thirty] percent of the [net asset value of the] provident fund. Clause 3 (i) 2. Condition 2>> Investment in shares or other listed securities of a particular company shall not exceed five percent of its paid up capital. Clause 3 (iii) 3. Condition 3>> In case of investment in the shares of listed companies, it shall be made only where such companies1. Have a minimum operational record of five years, and 2. Have paid not less than fifteen per cent dividend to their shareholders during the three preceding consecutive years. Clause 3 (iv) Investment Pattern April 1, 2003:

prescribed

for

Provident

25%

30%

Fund

Trusts

Central Govt State Govt.

Additional Avenues for Investments: Types of investments made by p/f: 30%

PSU 15%

Flexible

effective

1. 2. 3. 4.

Defense Savings Certificates Term Finance Certificates Open-ended Mutual Fund Listed Securities, subject to rules discussed earlier

Specifics: • Interest Payment • Investment Pattern • Valuation of Securities & Amortisation of Premium • Settlements during the year • Advances / Loans • Meetings • Submission of Returns • Health of Securities

Procedures of Investments: 1. All investments have been classified 2. All transactions have been accounted for properly 3. Remeasurement reflected properly 4. All returns due on investment have been recorded and reflected properly 5.

Investments: Defense Saving Certificates: 1. Verify investments physically [Number, date of issue, face value] 1. Verify DSC Schedule [Quantity for each Denomination] 1. Compute its fair value 1. Problem Area: Different rates, Broken period 2. Reduce closing fair value from its opening to verify/determine return for the period 2. Proper disclosure [classification, return

Investments: Term Finance Certificate: 1. Verify investments physically or obtain balance statement of Central Depository Co. [Script, date of issue, redemption schedule] 2. Verify TFC Schedule [Problem area: Verifying completeness of returns, splitting redemption into principal and return] 3.Compute its fair value [Problem Area: Broken period] [tracing subsequent clearance] 1. Proper disclosure [classification, return] Problem areas: • When return is not received

• •

Tracing that return was deposited in employer current account by error When the company issuing tfc goes bust and is unable to make repayments

Investments: Quoted Investments: 1. When there are many sale and purchase transactions [Finding profit (loss) on unspecified quantity lot] 1. When transactions are not routed through control account 2. To make sure the completeness of dividends received 3. Obtain ledger from broker and verify each transaction 4. Obtain Central Depository Co. statement of balance 5. Verify remeasurement from independent evidence such as stock market quote 6. Verify dividends through Invested Annual Report and or DSE Monthly Review.

Problem Area: Dividends Recognition : Revenue Recognition • Cash dividends on quoted investments are recognized on receipt basis as period income. Bonus shares on listed securities, on receipt, are added to the number of shares without any adjustment to the carrying value. • Return on bank balances and Term Finance Certificates is recognized on accrual basis. • Return on open-ended mutual funds is recognized on declaration of bonus units. Returns may be optionally reinvested. • A better practice may be to recognize cash dividends on listed securities on the date at which the Fund becomes eligible for dividend [rather than its eventual receipt]. • Recognizing dividends on receipts results in dividend income of one period recognized in the other

Transactions with Members : 1. Audit Objectives and Program 2. Contributions 3. Permanent withdrawals 4. Final settlement 5. Profit allocation 6. Refreshing nomination of beneficiaries 7. Loan to Members The transactions in Member Account for contribution, permanent withdrawal, final settlement, profit allocation, and forfeiture are free of errors and in accordance with the Rules and Recognized Policies. 1. Transaction processing errors. [Reason: Similar names. Result: Contribution of one member made to another, permanent withdrawal of one member charged to another] 1. Final Settlement

[Problem: How profit for the current period be allocated to the exiting members] 1. Forfeiture of member balance 4. Profit Allocation [Should the profit allocated on exact number of days or end of month product balance, net of permanent withdrawals?] 4. Permanent Withdrawal [Problem: Reasons allowed for permanent withdrawal are not normally adhered to] 4. Error affecting profit in previous year [Problem: Should the profit allocation be revised for error in earlier period?] 1. Straight-forward cases: No change in cash compensation during the period. 2. Problem area: Arrears 3. Verification strategy: 1. Scanning of member account 2. Payroll reconciliation [not done by many.

Provident Fund Investment in Bangladesh: Bangladesh is planning to invest the employees’ provident fund in the local bond markets to increase the balance of the funds. Trustee said the balance of the provident fund declined to around at the beginning of the current financial year from in the last fiscal year due to sharp increase in the rate of withdrawal from the provident fund in recent times. A reason for the increase in the rate of withdrawal from the provident funds may be that people are investing in the booming capital market. Bangladesh is planning to invest the provident funds in the bond market so that investors get good return as the interest rate of bonds is much higher than bank interest rates,’ said an official of the finance ministry adding that the fund was lying idle in the bank. A primary decision to invest the provident funds in bond markets was taken at a meeting of the cash and debt management committee, headed by a joint secretary of the ministry, last month.

The finance ministry would work out strategies for making the funds conducive for investment , the

meeting

decided.

The ministry would submit a report to the next CDMC meeting, said an official. He said there were some restrictions in investing the provident fund and Bangladesh Bank would appoint an actuary, who would recommend how the government could overcome the restrictions. The CDMC meeting also sought Bangladesh Bank’s advice in this regard. Officials said that they were encouraged by the Indian government’s move to invest provident fund in the local share and bond markets this year. ‘Besides, the Chile government invested the fund in the local share and bond market earlier, building up the fund equivalent to 68 per cent of the country’s GDP,’ said another official. A World Bank report said Bangladesh’s bond market represented the smallest in South Asia, accounting for only 12 per cent of the country’s GDP. With $7.35 billion, the size of the country’s bond market is far smaller than the banking assets, estimated at nearly $32 billion, equivalent to more than 50 per cent of the GDP, the bank’s report on ‘South Asian domestic debt market’ said. Sri Lanka has the largest bond market in the region based on the value of outstanding bonds as percentage of GDP, followed by India, Pakistan, Nepal and Bangladesh. India’s bonds amounted to 35 per cent of GDP while Nepal’s domestic bonds were 15 per cent.

Rules of PF Loan Policy: 1. A member shall be entitled to take loan 60% of Employer's and Employee's Contribution from the amount standing to his credit but he/ she will not be entitled to get any interest for that amount during the loan period. The trustees may, in their discretion, allow the same under the terms and conditions to be put by them on special grounds in the following circumstances or circumstances of a similar nature: a) To pay expenses incurred in connection with the subscriber or a member of his family, b) To pay expenses in connection with marriages, funerals or ceremonies which, by the religion of the subscriber, is incumbent upon him to perform and in connection with which it is obligatory that expenditure should be incurred, c) To meet the expenditure or purchasing a house or a site for a (louse or a ready made repairing the house/flat such house/flat/site is assigned to the trustees of the fund, 2. In time of loan sanction/approval the trustees will consider priority in the following two grounds: a) Employees with longer service period will get priority on loan sanction (applicable for the first loan)

b) Circumstances of applicant. Employee don't have long service period but having strong reason against the loan application will also have special consideration 3. A second loan approval shall not be permitted until the sum first withdrawn of loan has been fully repaid. Also there will be a 3 months gap between the first loan recovery months to second loan starting. 4. Applications pending for Taking First loan will get priority than the applications pending for second loan. For a second loan case the service length of employee will not be considered. 5.

There will be a priority list of the pending loan applications according to the loan policy.

6. The amount withdrawn as loan shall be repaid in not more than thirty six equal monthly installments subject to the condition that amount of each installment shall not be less than 20% of the basic salary of the employee availing of the loan. 7. Installments will be paid by post-dated cheques deposited by the employee to the fund. A maximum of 12 cheques will be taken from an employee, when finished a new set of 12 cheques should be submitted again. Same will continue till the loan is completely paid back. 8. Employee with less than two years service period will not be entitled to the loan. Special cases might get consideration subject to approval of the board of trustees. 9. The rate of interest on the loan amount is nil but during the loan period, member will not get any interest rate on his loan amount of PF fund. 10. Board of trustees will have the right to make an exception of the loan policy in special cases. N.B. # Term "Withdrawal" used in PF Deed is similar as the term "Loan" used in this loan policy. # This loan policy will be attached together with each loan application.