2
Internship Report
Table of Contents
1.
Title Page
1
2.
Contents with Page Numbers
2
3.
Main Page
4
4.
Preface
5.
Acknowledgement
6.
Executive Summary
7.
Copy of College permission letter for Internship
5 6 7
9 8.
Internship Certificate Issued by Organization
10
9.
History of Organization
11
10. Management
11.
of Organization
Firm’s Core principals and Values
14 15
3 12. Field
13.
of Activities
17
Work done by Student
28
14. Financial
analysis of Olympia Textile Mills Limited
31
15. Concluding
remarks for analysis
58 16. SWOT
analysis of Sheikh and Chaudhri Chartered
Accountants 17. Observation
59 about any dilemma faced by Organization
64
4 18. Brief
recommendation for improvement 66
19. Conclusion
68 20. References
69 21. Necessary
annexure and documents
70
INTERNSHIP REPORT Submitted to: Prof. Muazzam Mughal
5
Hailey College of Commerce Punjab University Lahore Prepared By: Ibrahim 03214981898
Duration of the Internship: 6 weeks (04-08-08 to 16-09-08) Organization: Sheikh & Chaudhri Chartered Accountants Department: Audit and Accounts Department Address: 109-C, Basement Jawa House GOR-1 Lahore Email:
[email protected] Supervisors during the internship: Khalid Mehmood Audit Manager Tel: 0321-4893133 Sheikh Ali Mudassar General Manager Tel: 0300-8403220
PREFACE
6
The transition between the student life and the professional life is an extremely important phase in one’s personality development. It is this very transition, in which, most of the people get disoriented and forget the prime purpose of entering in a professional setting. Internship plays a vital role in filling out that transitional gap. It draws out our inner abilities and brings the confidence in you to face the initial challenges of professional life. Hailey College of commerce, University of The Punjab is the place renowned for confinement of luminous business professionals. These immaculate graduates are equipped with the contemporary learning and sagacious experience. The internship program which is a fad of this glorious institute helps in creating highly skilled business professionals every year. In this regard, the management of this institute strives to broaden the vision of their learners by sending them in well-known multinationals and banks. I was sent to complete my internship program at Sheikh and Chaudhri Chartered Accountants 109-C Basement Jawa house GOR-I. I started my internship on 4th August, 2008. I had to report to the General Manager Mudassar Ali Sheikh. And after that I meet with Senior Accountant of firm Mr. Bashir, a nice personality having an immense experience of accounts sector. After a 15 minutes session with the manger and a visit of the whole firm, I officially commenced the internship. For the next period of six weeks, I never felt any boredom in that refreshing environment where I haven’t seen any dispute or ordinary organizational politics. Besides it, there was no managersubordinate discrimination among the staff members. The remarkable cooperation among the employees is one of the major causes of the success of the firm.
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ACKNOWLEDGMENT
First and Foremost I would like to thank the Almighty ALLAH. Who has bestowed and blessed me with the time and the dedication to complete this report.
I would like to thank my Parents for always supporting me in whatever I do.
I would also like to thank my firm Staff and fellow interns especially my Internship supervisor Ms. Khalid Mehmood (Audit Manager), Mr. Mudassar Ali Sheikh (General Manager), Mr. Bashir, Mr. Waqar, Mr. Ahmed, Mr. Usman and everyone at the branch who made these last six weeks of internship, an ultimate learning experience for me.
8
Executive Summary
INTRODUCTION AND PURPOSE:
This report will discuss my internship with Sheikh and Chaudhri Chartered Accountants. It will outline the following: 1) History and business description of Sheikh and Chaudhri Chartered
Accountants. 2) My role and responsibilities during the internship. 3) Work done by me.
4) Tasks accomplished and different kinds of procedures and techniques learned about Auditing. 5) Reflection Upon Company’s strengths, weaknesses, opportunities and threats using S.W.O.T analysis. 6) Field and scope of activities and marketing structure of organization.
7) Financial statements with fully detailed financial analysis of the firm. 8) Organization’s Crisis and Dilemma’s and recommendations, suggestions and Conclusions. The sources of information used during the preparation of this report included: 1) Personal experience working six times a week eight hours per day learning Sheikh and Chaudhri Chartered Accountants procedures and operations.
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2) Interviewing agency staff and principals. 3) Personal Observations and analysis during internship.
My internship at Sheikh and Chaudhri Chartered Accountants began at 04 August 2008. The General Manager of the firm after meeting me verified my internship letter issued by College and introduced me to the company’s staff. During my entire internship I reported to Mr. Khalid Mehmood (Audit Manager) and Mr. Sheikh Ali Mudassar (General Manager).
I was told to join Mr. Bashir (senior accountant). I was designated with the task to assist Mr. Bashir in his tasks and help him by carrying out his duties. With Mr. Bashir I was responsible for maintaining company’s accounts and financial statements and helped in maintaining the payroll and accounts receivables. I was also assigned duty to post journal entries from vouchers into general Journal and then post them to respectable Ledgers.
I was sent for Final Audit of Olympia Textile where I remained for about a month till the completion of audit. At Olympia Textile I was assigned the task and responsibilities of a Junior Auditor and assisted Senior Auditor (Saad Ali) and Audit manager (Khalid Mehmood) with their workings and operations. At start of the audit I along with audit team met the Finance Manager (Shakil Khan). In this meeting we were told the accounting systems and procedures used by the organization and personnel involved in accounting departments.
For the next period of six weeks, I never felt any boredom in that refreshing environment where I haven’t seen any dispute or ordinary organizational
10
politics. Besides it, there was no manager-subordinate discrimination among the staff members. The remarkable cooperation among the employees is one of the major causes of the success of the firm.
College Permission Letter for Internship
11
Internship Certificate
12
Issued By Sheikh and Chaudhri Chartered Accountants
13
BRIEF PROFILE OF SHEIKH & CHAUDHRI CHARETERED ACCOUNTANTS
NAME
SHAEIKH & CHAUDHRI CHARTERED
ACCOUNTANTS
YEAR OF ESTABLISH
1968
Owners/ Partners
Mr. ABDUL ALI SHEIKH Mr. M. SAEED MALIK Mr. SHEIKH ALI MUDASSAR
ADDRESS
JAWA HOUSE, 109-C (BASEMENT), COLLEGE ROAD, GOR I, LAHORE
TELEPHONE
042-6369306
FAX 042-6360196 AREA OF SERVICES i. EXTERNAL AUDITORS ii. INTERAL AUDITORS iii. FEASIBILITY STUDIES iv. v. vi. vii. viii.
PROJECT EVALUATION MARKETING REASERCHES ACCOUNTING SYSTEM AND CONTROL ORGANIZATION OF COMPANIES SYSTEM DEVELOPMENT AND IMPLEMENTATIONS ix. FINANCIAL ANAYLISIS x. INCOME ESTIMATIONS xi. INVESTMENT ADVISORY
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xii. INCOME TAX ADVISOR/CONSULTANT xiii. CORPORATE SERVICES
Introduction & History The firm Sheikh and Chaudhri, Chartered Accountants was established in 1968 by Mr. Abdul Ali Sheikh FCA and Late Mr. Sami Chaudhri FCA, simultaneously in Lahore and Karachi. After the death of Mr. Sami Chaudhri in 1989, the Karachi office was closed down. Mr. Farooq Ahmed ACA joined the firm in November, 1991 as Audit Manager and later became its partner in August, 1993. He remained with the firm as partner till 1996. Recently, Mr. M. Saeed Malik, FCA, joined the firm as partner w.e.f. January 2002.
PARTNERS: MR. ABDUL ALI SHEIKH, FCA
Mr. Abdul Ali Sheikh FCA is a senior member of the Institute of Chartered Accountants of Pakistan.
He qualified in 1960 from M/s Rahim Jan & Co,
Chartered Accountants and joined Hameed Chaudhri & Co., Chartered Accountants, soon after qualifying where he remained till 1964 when he retired to join the University of Engineering and Technology as Registrar. In 1969 he returned to the profession and along with Late Mr. Sami Chaudhri founded Sheikh & Chaudhri, Chartered Accountants. He carries rich
15
experience and in depth knowledge of taxation, corporate affairs and management consultancy.
MR. M. SAEED MALIK
Mr. M. Saeed Malik, FCA, a senior member of the Institute of Chartered Accountants, qualified in 1969, joined the Firm as partner in January, 2002. He retired from service after serving 30 years in Industrial Sector within and outside the country at very responsible positions. During service he gained a good experience in controlling matters regarding Accounts, internal and external audit, Income Tax, Sales Tax, Corporate Affairs, arrangements of loans and expertise advice to the management. In the Firm, he is controlling audit section and also carrying special assignments and consultancy work. Sheikh and Chaudhri Chartered Accountants is a global leader Auditing, taxation services, transaction and advisory services and management consultancy. Sheikh and Chaudhri Chartered Accountants aim to have a positive impact on businesses and markets, as well as on society as a whole.
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ManagementFirm’s of the Organization Partners
(Partners
General Manager
Manager
Manager
Manager
Audit
Accounts
Senior Auditor
Junior Auditor
Income Tax Departme nt
Senior Accountant
Student Auditors (Articleship )
Manager Advisory Services
Tax Officer
Manager Marketing
Marketing Coordinator
Tax Coordinator
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Sheikh and Chaudhri Chartered Accountants Core Principles and values
Working with firm’s clients
Sheikh and Chaudhri Chartered Accountants assemble the right multidisciplinary team for your business, drawing on our global network of professionals. Working with you in a collaborative style, Sheikh and Chaudhri Chartered Accountants gain a clear understanding of your organization and strive to identify issues before they become problems. You get the people you need, wherever in the world you need them, backed up by leading practices, methodologies and tools.
Developing people
Sheikh and Chaudhri Chartered Accountants attract talented people from diverse backgrounds. Our emphasis on inclusiveness matters more than ever today. As business challenges become more complex, Sheikh and Chaudhri Chartered Accountants need to call upon the widest spectrum of views and opinions to address them. Our open culture offers continuous personal and professional development. Because when our people grow and succeed, your company benefits.
18
Strengthening communities
Sheikh and Chaudhri Chartered Accountants help to improve regulatory regimes and company reporting models. Sheikh and Chaudhri Chartered Accountants promote transparency in financial reporting and use our influence to strengthen global corporate governance. Sheikh and Chaudhri Chartered Accountants encourage entrepreneurship, which leads to growth, jobs and prosperous communities. And our people share their business skills and knowledge with others in their communities.
Sheikh and Chaudhri Chartered Accountants are:
People who demonstrate integrity, respect, and teaming. People with energy, enthusiasm, and the courage to lead. People who build relationships based on doing the right thing.
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Field of Activities SERVICES OFFERED
The firm offers a vide range of services to its clients, including statutory audit of accounts, internal audit, corporate affairs, taxation matters, management consultancy and other sundry advisory services. To provide the above services to its clients the firm has the following departments.
AUDIT Performing a high-quality audit and sustaining the public trust Within Sheikh and Chaudhri Chartered Accountants large network of client member firms, the firm has robust audit tools, resources and procedures to provide the means for their professionals to deliver high-quality audit services. In delivering these services the firm adheres to the highest standards of independence, professional objectivity and technical excellence. The Firm’s audit approach is applied consistently around the calendar, while providing the flexibility to serve the unique circumstances and complexities of our clients. Firm’s audit approach focuses on understanding the clients’ global business and control issues from the inside out. It combines a rigorous risk assessment, diagnostic processes, and audit testing procedures as well as a continuous assessment of our clients’ service performance.
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The department is headed by Mr. M. Saeed Malik who is assisted by the Audit Manager Khalid Mehmood. In addition to the audit work, the department also carries out various assignments of consultancy work as and when assigned. Different kinds of audit services are carried out by the department such as internal audit, statutory audit, final audit, and interim audit. All kinds of audit services are offered to the companies willing to get their audit done by the firm. Strong independent Audit of companies provides critical information for investors and other stakeholders, a robust and clear perspective to audit committees and timely and constructive input to management.
Income Tax/Sales tax Returns Taxation Services
A successful tax function delivers a strong reporting foundation and sustainable planning to help the business achieve its growth potential. Customers need tax strategies aligned with its business drivers, built on effective compliance and open, transparent reporting. So Sheikh and Chaudhri Chartered Accountant create highly networked teams who can advise on planning, compliance and reporting and maintaining good relationships with the tax authorities.
This department works under the direct supervision of the senior Partner Abdul Ali Sheikh and is headed by Mr. Zulfiqar Ali Sheikh B.A.L.L.B. who has also passed the Chartered Accountants Intermediate Examination from Rahim Jan & Co., Chartered Accountants.
21
The main purpose of the tax department is the filing of Income Tax returns of local and multinational companies. Income Tax and Sales Tax returns are both filled by the persons assigned for this tasks and company’s most revenue is generated from these activities of filing income tax and sales returns. Mr. Zulfiqar enjoys an excellent reputation among the taxation circles. Income tax and wealth tax matters of client companies as well as their directors are handled by this department.
He is assisted by Mr. Muzaffar
Naqvi, another lawyer. Sheikh and Chaudhri Chartered Accountants deliver Tax advice that is perfect for the client’s organization. Sheikh and Chaudhri Chartered Accountants Business Tax services are designed to meet client’s business tax compliance and advisory needs, wherever in the world they are located. Sheikh and Chaudhri Chartered Accountants tax professionals draw on their diverse perspectives and skills to give client a seamless global service. Wherever
Clients
need
resources,
Sheikh
and
Chaudhri
Chartered
Accountants can be with them. Sheikh and Chaudhri Chartered Accountants strategic tax approach: •
Builds sustainable tax strategies based on technical knowledge, combined with practical, commercial and industry knowledge
•
Provides the deep accounting and compliance knowledge and triedand-tested methodologies clients need for efficient reporting
•
Helps clients assess, improve and monitor their tax function’s processes, controls and risk management
22 •
Supports clients in managing your relationships with tax authorities effectively
Sheikh and Chaudhri Chartered Accountants talented people, consistent global methodologies and unwavering commitment to quality service will help clients build the strong compliance and reporting foundations and sustainable tax strategies that help clients business achieve its ambitions.
Corporate Affairs
The department is handled by Mr. Muzaffar Naqvi, Senior Lawyer and over twenty years of experience in all sorts of corporate affairs of all sorts of companies.
23
Sheikh and Chaudhri Chartered Accountants Finance professionals (comprising in excess of 3 partners and 16 member staff) provide comprehensive financial advice
and
execution
expertise,
encompassing
mergers,
acquisitions,
divestitures, restructurings, private placements, privatizations and equity capital markets to clients ranging from corporations and private equity to financial
institutions
and
governments;
adding
value
for
their
clients
throughout all stages of the transaction process.
Critical to firm’s positioning as the first-choice financial advisory firm for their clients, their key strengths are: •
In-depth knowledge and understanding of local markets
•
Extensive nationwide reach
•
Strong industry sector expertise
•
The high caliber of clients with whom firm works
•
Expertise in highly complex transactions
•
Excellent local and regional league table positioning
•
Strong relationships with key stakeholders at all stages of the transaction
process
Firm’s unparalleled nationwide and industry wise relationships, combined with our extensive understanding of local economies and cultures and our industry sector expertise, help us consistently deliver value-added solutions to our clients, irrespective of the complexity of the transaction.
24
Business advisory services
To realize its full potential, every business must deal effectively with the three fundamental challenges of risk, performance and assurance. Without assessing risk they stand to make costly mistakes. Without improving performance they will cede ground to competitors. And without robust assurance they may limit the opportunities for future investment. Sheikh and Chaudhri Chartered Accountants bring the right people together to address all three tasks. Because firm operates assurance and advisory as a single business, firm’s people gain deeper insight into the key issues facing organizations today and our clients gain the benefit of a broader range of the best skills. The
relationship
increasingly performance
between
complex directly
and
risk
and
central
connected
performance business
to
the
improvement
is
an
challenge,
with
business
recognition
and
effective
management of risk. Whether your focus is on business transformation or sustaining achievement, having the right advisors on your side can make all the difference.
Sheikh and Chaudhri Chartered Accountants advisory professionals form one of the broadest global advisory networks of any professional organization, delivering seasoned multi-disciplinary teams that work with our clients to deliver a powerful client experience.
25
Sheikh and Chaudhri Chartered Accountants understand that to achieve company’s potential as an organization you require services that respond to your specific issues, so firm bring its broad sector experience and deep subject matter knowledge to bear in a proactive and objective way.
Tax Accounting and Risk Advisory Services
Today’s business and tax environment is increasingly complex, there are more and more demands for transparency, tax departments are under pressure to be more effective and highly qualified professionals can be hard to obtain. To help clients respond to these demands, Sheikh and Chaudhri Chartered Accountants provide assistance in three key areas:
•
Tax accounting: supporting quarterly and annual tax provision calculations, validating tax balance sheet accounts and implementing new accounting standards under ICAP and/or GAAP
•
Tax function performance: improving operating strategy and organization design, tax process and controls and data and systems effectiveness
•
Tax risk: identifying and prioritizing key risks and assisting with controls monitoring and remediation
26
Searching for a tax advisor who understands not only the intricacies of tax law, but also clients business? The answer is Sheikh and Chaudhri Corporate Tax
practice. Firm’s member
tax
professionals will
work
with
clients
to minimize client’s tax liability and ensure the organization complies with domestic and international tax law. As a gateway to the vast tax resources within firm, the firm can offer a fresh look at client’s tax position with an eye towards broader business objectives. Firm’s dedicated team of tax professionals works closely with clients to understand the organization's global goals and strategies and how industry and economic trends affect your business. Together, firm can develop tax strategies that work for your organization and industry and help streamline compliance processes. The scope and nature of firm’s services may differ depending on whether clients are an audit or non-audit client. What’s consistent is the high-quality service firm’s professionals provide to address clients unique needs, throughout the entire tax life cycle of planning, provision, compliance and working with the tax authorities. Firm’s talented people, consistent global methodologies and tools and unwavering commitment to quality service will help clients build strong compliance and reporting foundations, sustainable organizational strategies and effective risk management protocols, helping your business achieve its potential.
27
Initial Public Offerings Services
Growth-oriented companies need quick and efficient access to capital to fund their initiatives. For stock exchange listed registered and non-listed companies alike, the local securities markets represent a viable and relatively inexpensive way to attract significant capital. Yet, with this opportunity come challenges. Securities offerings in the Pakistan are complex, time-consuming and potentially risky. Any company that offers securities in the Pakistan must comply with accounting principles and disclosure requirements (GAAP), as well as the rules and regulations of the Securities and Exchange Commission of Pakistan (SECP). Failure to do so can mean significant time delays and possibly civil and criminal penalties for company officers.
Sheikh and Chaudhri Chartered Accountants Services team is comprised of highly experienced professionals who have successfully guided hundreds of companies through the initial public offering process. Beyond the technical knowledge necessary to help clients’ company launch its initial offering, firm provides practical and unique advice that can help client’s attain positive results, both immediately and in the long term. Sheikh and Chaudhri Chartered Accountants team includes dedicated partners and senior staff throughout the firm. With in-depth knowledge of GAAP, International Financial Reporting Standards (IFRS) and SECP rules and regulations, firm can help client’s company navigate the offering process, from initial strategy through implementation and follow-up.
28
For Registered Private limited company’s IPOs Sheikh and Chaudhri Chartered Accountants:
•
Provide seasoned insights throughout the course of clients transactions
and other members of
transaction team, such as your SECP officials,
underwriters and investor relations firms •
Participate with Clients in discussions with the SECP prior to filing
•
Help clients identify the financial statement requirements, including
footnote disclosures, financial statement schedules, pro forma financial statements and other separate financial statements •
Review drafts of the prospectus or offering memorandum, including
the financial statements •
Anticipate SECP comments and advise clients company on how to
address and resolve SECP comments •
Assist clients firm’s teams in their preparation of comfort letters
•
Provide training related to the implementation of and changes in GAAP
and the SECP's rules and regulations
29 •
Advise clients company on how to meet ongoing SECP reporting
obligations
Merger & Acquisition Services
Merger & Acquisition Services practice is recognized as a worldwide leader in providing high quality, comprehensive, and strategically focused tax, accounting
and
advisory
services
to
buyers
or
sellers
in
business
combinations. Through a network of nearly 20 dedicated professionals at Sheikh and Chaudhri Chartered Accountants member firms provides acquisition and merger
services
to
local
and
multinational
companies. Firm’s
multi
disciplinary approach teams finance professionals with technical, industry and geographic specialists to provide fact-based answers and independent advice geared to maximizing the value of a transaction.
Risk
Management
and
Capital
Markets
Services: Managing risk across Client’s organization What is acceptable risk? The need to effectively manage risk has never been more
important
for
companies.
Sheikh
and
Chaudhri
Chartered
Accountants capital markets practice at member firms worldwide helps
30
clients improve their capabilities for managing the risks associated with operating in the traded markets.
Using sophisticated tools and methodologies, firm can improve the reliability of risk management systems and processes. Through their member firms, firm’s professionals can help develop and implement enterprise wide, quantitative approaches to managing market, operational and credit risks.
With specialization in all areas of financial risk Sheikh and Chaudhri Chartered Accountants Financial Services teams include more than 4 former risk managers, traders, investment managers, regulators, middle office specialists, operations managers and IT applications specialists. Firm can help define client’s company's risk and then design and implement systems that allow you to monitor and balance control objectives with business goals and acceptable risks. Services offered include:
•
Risk strategy
•
Market
•
Credit
•
Operational
•
Enterprise wide
•
Business process strategy and redesign
•
Quantitative methods
•
Risk assurance and accounting
•
Transacting and risk systems
Description of Work done by Student and key roles and responsibilities
31
My internship at Sheikh and Chaudhri Chartered Accountants began at 04 August 2008. The General Manager of the firm after meeting me Verified my internship letter issued by College and introduced me to the company’s staff. During my entire internship I reported to Mr. Khalid Mehmood (Audit Manager) and Mr. Sheikh Ali Mudassar (General Manager).
First 3 to four days I was told to join Mr. Bashir (senior accountant). I was designated with the task to assist Mr. Bashir in his tasks and help him by carrying out his duties. With Mr. Bashir I was responsible for maintaining company’s accounts and financial statements and helped in maintaining the payroll and accounts receivables. I was also assigned duty to post journal entries from vouchers into general Journal and then post them to respectable Ledgers.
After 4 days I was sent for Final Audit of Olympia Textile where I remained for about a month till the completion of audit. At Olympia Textile I was assigned the task and responsibilities of a Junior Auditor and assisted Senior Auditor (Saad Ali) and Audit manager (Khalid Mehmood) with their workings and operations.
At start of the audit I along with audit team met the Finance Manager (Shakil Khan). In this meeting we were told the accounting systems and procedures used by the organization and personnel involved in accounting departments.
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First of all I assisted Senior Auditor (Saad) in preparation of working papers relevant for the audit of company. Then Comparative papers were made in which all accounts of the company were noted down and their balances with amounts (debit/credit) were written for the year 2007-2008.
Opening Trial balances were obtained and relevant audit procedures were carried out on it and then verification of expenses was done. All types of expenses weather admin expenses, salaries and wages, telephone, power and all types of expenses were verified.
After full verification of expenses through intensive sampling based techniques using actual vouchers and purchase invoices and bills to verify with the transactions. Any mysterious and fake invoice or bills were noted down and audit manager discussed with account managers and sorted it out.
Sales and Purchases invoices were verified with their respective ledgers and vouchers any discrepancies were noted down and told to audit manager who thereafter discussed with Finance Manager of Olympia Textile or the Accounts Manager.
Salary and wages Sheets and attendance registers were also verified and EOBI and gratuity payable of employees and overtime rate was also calculated and verified with subsequent accounts.
33
Balances of Customers and Creditors were verified by sending Balance Confirmation
letters to the respective customers/creditors
with their
balances. Confirmations of these letters were received to our firm after 1 or two weeks and no such discrepancy was found.
Markup on Loans and mortgages were also calculated using extensive checking of bank statements and interest charged by bank at that time. Lease Payments were also taken in consideration and calculated and finally verified.
At the end Balance Sheets and Income statements were checked and verified by our audit manager and clean report was issued to Olympia Textile.
My internship at Sheikh and Chaudhri Chartered Accountants ended at 16 September, 2008.This was just a brief summary of work done by me during internship. I thoroughly enjoyed my internship at Sheikh and Chaudhri Chartered Accountants and it was a great learning experience for me which will enhance my professional skills and help me while doing a job in corporate sector.
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Financial Analysis of Olympia Textile Mills Limited for year 2007 and 2008 Key Financial Data for Six Years 2007
2004
2008 2003
(Rs.)
(Rs.)
(Rs.) (Rs.)
2006 (Rs.)
2005 (Rs.)
35
Director’s Report The Directors have pleasure in presenting the 18th Annual Report of the Company along with the audited accounts for the year ended September 30, 2007.
Following are the Results of the Company: 2008
2007
(Rupees)
(Rupees)
(000) Profit/Loss before Depreciation Depreciation
(000) 21,438
13,313
(16,287)
(17,002)
________ Profit/Loss for the Year
________
5,151
Provision for the Taxation
(3,689) 9,435
________ Profit/Loss for the year
1,999 ________
(4,284)
(5,688)
Compared with last year, there is an improvement in the results of the company. The management's timely action has shown results even when some of the input costs have gone up.
36
Future Prospects: Because of failure of cotton crop in Pakistan and china the prices of cotton have gone up to Rs. 3600/- per mound. Which is about 50% increase from previous levels. European community is imposing antidumping duties, which will (adversely) affect the yarn price in the country. The Directors are hopeful of the future progress of the company.
Earning Per Share
2008 (0.40)
2007 (0.53)
Dividend
The Company is not in a position to pay Dividend because of loss after Tax.
Corporate Governance
The Company has followed the best practices of corporate governance, "wherever possible" as detailed in the listing regulations of KSE.
The financial statements prepared by the management of the Company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity.
37
Proper books of account of the Company have been maintained. Appropriate accounting policies have been consistently applied in preparation of the financial statements. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed. The system of internal control is sound in design and effectively monitored. There are no significant doubts upon the Company's ability to continue as a going concern.
Past six years company performance is annexed. There has been no material departure from the practices of corporate governance as detailed in the corporate governance scales.
There are no statutory payments on account of taxes, duties, levies and charges, which are outstanding and have not been disclosed in this report.
Related Parties:
The Board of Directors has approved the policy for transactions/Contracts between Company and its related parties on an arm's length basis and the relevant rates will be determined with the "Comparable Uncontrolled Price Method".
38
Auditors: The present auditors, "Sheik and Chaudhri Chartered Accountants retire and being eligible offers themselves for reappointment.
Profit and Loss Account for the year…… ended Sep 30 2008 (Rupees) Sales-Net 399,787,077
2007 (Rupees)
562,293,117 __________
Cost of Sales 372,434,299 Gross Profit 27,352,778 Operating Expenses: Administrative 9,624,266 Selling 3,815,502
__________
534,757,812 27,535,304
10,985,449 2,064,893 __________ 13,050,343
__________
13,439,768 Operating Profit 13,913,010 Other Charges: Financial 18,117,778 Others
___________ ___________ 14,484,962
9,992,683 -___________
924 ___________
4,562,279 (4,205,692) Other Income 516,402
588,291
39
___________ Profit/Loss before Taxation (3,689,290) Provision for Taxation Current Year 1,998,935 Deferred Taxation --
___________ 5,150,570
2,815,952 6,618,939 ___________ 9,434,891
____________
___________ (4,284,321)
____________
1,998,935 (5,668,225) Accumulated Loss Brought forward (97,266,021)
(102,954,246)
____________ ____________ Accumulated Loss Carried to Balance Sheet (107,238,567) (102,954,246) Earning Per Share (0.53)
(0.40)
Balance Sheet as at Sep 30 …. 2008
2007
40
41
Cash flow Statement for the year Sep 30, …. 2008
2007
42
(Rupees)
(Rupees)
2008
2007
43
(Rupees) Net cash used after investing activities
(Rupees) 14,885,884
262,337 Cash flow from financing activities: Repayment of long term loans
11,587,731
Custom Debentures
7,195,488
--
(3,563,858) Repayment of lease liabilities
(2,474,458) __________
Net Cash generated from financing activities
(1,696,811) __________
(14,062,189)
1,934,819 Net increase/ (decrease) in cash and equivalents
823,695
2,197,156 Cash and Cash equivalents at beginning of year 4,121,679 1,924,523 __________ Cash and Cash equivalents at end of year 4,121,679
__________ 4,945,375
44
Statement of changes in Equity For the year ended September 30, 2008
Share capital
Accumulated
(Rupees)
Loss/Profit
Total
Rupees (Rupees)
Balance as at Sept 30, 2006
108,040,000
(97,226,021)
(10,773,979) Loss for year Sep 30, 2007
--
(5,688,225)
(5,688,225)
___________
___________ ___________
Balance as at Sep 30, 2007
108,040,000
(102,954,246)
5,085,754 Loss for year Sep 30, 2008
--
(4,284,321)
(4,284,321) ___________
____________
____________ Balance as at Sep 30, 2008 801,433
108,040,000
(107,238,567)
45
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2008
1. THE COMPANY AND ITS OPERATIONS
The company was incorporated in Pakistan as a Private Limited company on March 7, 1989. The status of the company was subsequently changed to a public company on December 1, 1989 and is listed on the Lahore and Karachi Stock Exchanges in Pakistan. The company is engaged in the manufacture and sale of cotton yarn.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting Convention These accounts have been prepared under the historical cost convention.
2.2 Basis of Preparation
46
These accounts have been prepared, in all material respects, in accordance with the International Accounting Standards(lAS) issued by the International Accounting Standard Board (IASB) and interpretations issued by Standing Interpretations
Committee
(SIC)
as
applicable
in
Pakistan
and
the
requirements of Companies Ordinance, 1984.
2.3 Staff Retirement Benefits The company operates an unfunded gratuity scheme for its employees. Provision is made annually to cover the obligations under the scheme.
2.4 Taxation
CURRENT
The provision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credit available, if any.
DEFERRED
Deferred tax is accounted for using balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount
of
assets
and
liabilities
in
the
financial
statements
corresponding tax bases used in the computation of taxable profit.
and
47
The company has changed its accounting policy regarding accounting for deferred taxation and it will recognize deferred tax liability from current year. Had there been no change in accounting policy, profit for the year would have been higher by Rs. 6.619 million (note 7.2)
2.5 Operating Assets
These are stated at cost less accumulated depreciation except land which is stated at cost. Depreciation is charged on written down values at the rates as stated in the note 15, which are consistent with those of prior year.
Gain/loss on disposal of fixed assets is accounted for in the current income. Full year's depreciation is charged on additions made during the year whereas no depreciation is charged on assets disposed off during the year. Normal repairs and maintenance are charged to current income while major renewals and replacements are capitalized.
2.6 Assets subject to finance lease
Assets subject to finance lease are stated at lower of present value of minimum lease payments under the lease agreement and the fair value of assets. The related obligations of the lease are accounted for as liabilities.
48
Assets acquired under finance lease are amortized over the useful lives of the assets.
2.7 Capital Work in Progress
Capital work-in-progress is stated at cost and upon completion is adjusted and transferred to the relevant assets.
2.8 Stores and Spares These are valued at average cost.
2.9 Stock in Trade
These are valued as under: Raw Material at average cost. Work in process at manufacturing cost. Finished goods at lower of cost or net realizable value. Waste at realizable value. Realizable value signifies the selling price less costs necessary to incur the sale.
2.10 Revenue recognition Sales are recorded as follows: Exports Local on shipment of goods. On delivery of goods to customers.
2.11 Foreign currency Translation
49
Liability in foreign currency, if any, is translated into PakRupees at rates of exchange ruling on the balance sheet date. Gains/losses due to exchange fluctuations on principal loans are capitalized as part of the cost of plant and machinery acquired out of the proceeds of such 10ans.AII other exchange fluctuations are included in income currently.
2.12 Borrowing Cost Borrowing costs are charged to the income in the year in which they are incurred, except those incurred in respect of capital expenditure are capitalized up to the date of commissioning.
2.13 Provisions Provisions are recognized when the company has present legal or constructive obligations as a result of the past events; it is probable that an outflow of resources will be required to settle the obligation of which a reliable estimate can be made.
2.14 Financial Instruments
Financial assets and financial liabilities are recognized when the company becomes a party to the contractual provisions of the instrument. The particular measurement methods adopted are disclosed in the individual policy statements associated with each item.
50
2008
2007
(Rupees)
(Rupees)
3. Share Capital: Issued subscribed and paid up 10,804,000 ordinary shares of Rs. 10 each fully paid in Cash
108,040,000
108,040,000
4. Custom Debentures Custom Duties: Debentures at 14% Surcharge
1,485,000
1,485,000 Less: Current Portion
1,485,000
1,485,000 --
--
Debentures are payable in 5 yearly installments of Rs. 495,000 each commencing from November OS, 1996.
51
These debentures have been issued in favor of Collector of Customs in lieu of deferred customs duties on imported machinery and are secured by way of guarantees issued by Habib Bank Limited.
5. Long Term Loans 5.1 Secured
2008 (Rupees)
2007 (Rupees)
Habib Bank Limited: Finance against fixed assets Demand Finance
--
24,187,813
38,340,765
25,000,000
38,340,765
49,187,813
Less: Current Proportion
9,585,191
21,833,230
28,755,574
27,354,583
93,003,914
79,103,914
5.2 Un-Secured From Directors From associated undertakings
17,000,000
Others
17,000,000
--
14,640,683 110,003,914 110,744,597 138,759,488 138,099,180
5.1 SECURED LOANS The balance of FAF loan and Demand finance loan were restructured at 8% as demand finance for Rs. 38.340 million repayable in 12 equal quarterly installments commencing from 31 March 2008.
52
5.2 UN-SECURED LOANS Repayment schedules for unsecured loans have not been yet determined. These loans are interest free.
6. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
Opening Balance Addition during the year
2008
2007
(Rupees)
(Rupees)
6,071,637
6,450,448
1,429,500 7,501,137
Less: Payments during year
2,474,485 5,026,679
Less: Current Portion
2,529,348 2,497,331
1,318,000 7,768,448 1,696,811 6,071,637 2,403,661 3,667,976
The rate of interest used as the discounting factor, implicit in leases, ranges from 9.50 to 21.50 percent per annum (2002: 17 to 21.50 percent per annum) The Future minimum lease payments to which the company 'is committed at September 30, 2008 are as follows:
Particular
Rupees 2008
Rupees 2007
53
Minimum s
Lease Payment s
Not later than one year Later
3,013,33 2
Minimum
Financia
Principal
l
outstandin
Charges
g
483,984
2,529,348
107,543
2,497,331
--
--
591,527
5,026,679
Financia
Principal
l
outstandin
Charges
g
723,745
2,403,661
352,127
3,667,976
--
--
--
7,147,50
1,075,8
9
72
Lease Payment s 3,127,40 6
than one year but
2,604,87
not later
4
4,020,10 3
than 5 years Later than 5
--
years Total
5,618,20 6
6,071,637
7. DEFERRED LIABILITES
7.1 Gratuity Payable
2008
2007
(Rupees)
(Rupees)
54
Opening Balance Provision for the year
4,219,535 1,076,832 5,296,367
Payment during the year
3,374,114 1,925,486 5,299,600
1,478,186
1,080,065
3,818,181
4,219,535
7,602,932
--
(983,993)
--
6,618,939
4,219,535
7.2 Deferred Taxation Prior Current
8. Current proportion of Long Term Liabilities Custom Debentures Long Term Loans Finance Lease
1,485,000 9,585,191 2,529,348
1,485,000 21,833,230 2,403,661
13,599,539 25,721,891
9. Short Term Running Finance Secured: Habib Bank Limited
12,840,000
13,902,546
Bank Al-Falah Limited
24,815,151
8,008,674
Union Bank
2,087,387 39,742,535
21,911,220
---------------
55
Above Finances are secured against pledge of raw cotton, first equitable mortgage charge on fixed assets, hypothecation charge on stocks, charge on book debts and receivable of the company and personal guarantees of all the directors of the company. HBL carries interest @ 12.125% and Bank AIFalah carries interest @ 12.00%.
10. Creditors, Accrued and Other Liabilities 2008
2007
(Rupees)
(Rupees)
Advances from staff
260,103
Advances from customers Creditors
189,172
5,984,330
9,728,479
21,487,990
Accrued Charges
2,434,691
8,760,111
7,843,188
Accrued Mark up on secured loans
2,193,196
4,869,410
Workers' profit participation fund
2,846,255
2,846,255
Income tax payable
7,547,222
6,938,106
Other liabilities
1,105,493
702,335
Dividend payable
144,518
145,279
50,329,217
55,696,915
11. Due to Associated Undertakings Olympia Chemicals Limited Olympia Industries Pvt Limited
1,228,695 13,173
Punjab Feeds Limited
4,237 1,246,106
1,303,692 -40,174 1,343,866
56
12. Provision for Taxation Income Tax assessments up to 2007-2008 (year ended September 30, 2008) has been completed and assessment proceedings for the year ended September, 30, 2008 are in progress. 1) Counter guarantees given by the company to its bankers and outstanding as at the close of Business on September 30, 2008 amounting to Rs. 13.850 Million (2008: Rs. 13.850 Million). 2) The department is demanding additional surcharge of Rs. 10,907,863 out of this Government of Pakistan has already kept in abeyance surcharge of Rs. 5,846,908. The advisors of the company are of the firm opinion that department dose not have the power to levy such surcharges. The matter has already been taken up with the custom department. The company does not admit and recognize this liability. 3) The Sales Tax department has issued a show cause notice demanding Rs.18, 186,791/- being additional-sales tax on the late payment of Sales Tax to the Ginners. The company is disputing the demand because this is result of the late refund payments by the department. The company has also gone for Alternate dispute Resolution under Sec 47-A of the Sales Tax Act 1990.
Auditor’s Report to the Members We have audited the annexed balance sheet of OLYMPIA TEXTILE MILLS LIMITED as at September 30, 2008 and the related profit and loss account,
57
cash flow statement & statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: (a) In our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984.
(b) In our opinion:
58
(i) the balance sheet and profit and loss account together with the notes thereon, have been drawn up in conformity with the Companies Ordinance, 1984 and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied; (ii) The expenditure incurred during the year was for the purpose of the company's business; and (iii) The business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; (c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984 in the manner so required and respectively give a true and fair view of the states of the company's affairs as at September 30, 2003 and of the loss, and its cash flow & changes in equity for the year then ended; and (d) In our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
Sheikh and Chaudhri Chartered Accountants
59
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained in the listing regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. 1) The Election of the Board of Directors was held before the code of Corporate Governance became applicable. 2) The directors have confirmed that none of them is serving as a director in more than ten listed companies, including this Company. 3) All the resident director of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange. 4) The Company has prepared "Statement of Ethics and Business Practices", which have been signed by all the directors and employees of the Company. 5) The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of
60
particulars of significant policies along with the dates on which they were approved or amended has been maintained.
6) All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive director, have been taken by the Board. 7) The meetings of the Board were presided over by the Chairman and, in his absence, by a Director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 8) The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment, as determined by the CEO. 9) The Director report for this year has been prepared in compliance with
the requirements of The Code and fully describes the salient matters required to be disclosed. 10)
The financial statements of the Company were duly endorsed by
CEO and CFO before approval of the board. 11)
The Director, CEO and Executives, do not hold any interest in the
shares of the Company other than that disclosed in the pattern of shareholding.
61
12)
The Company has complied with all the corporate and financial
reporting requirements of the Code. 13)
The Board has formed an audit committee, which comprises of
three members, majority of whom is Non-Executive Director. 14)
The meetings of the audit committee were held at least once
every quarter prior to approval of interim and final results of the Company and as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. 15)
The statutory auditors of the Company have confirmed that they
have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistani that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 16)
The statutory auditors or the persons associated with them have
not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFACguidelines in this regard. We confirm that all other material principles contained in the Code have been complied with.
62
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Olympia Textile Mills Limited to comply with the Listing Regulations No.37 of the Karachi Stock Exchange & Chapter XIII of the Lahore Stock Exchange, where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extend where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and reports if it does not. A review is limited primarily to inquire of the Company personnel and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express
63
an opinion as to whether the Board's statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the company for the year ended September 30, 2008.
Sheikh
and
Chaudhri
Chartered
Accountants
Concluding Remarks for Financial Analysis of Olympia Textiles Now I will like to discuss and throw light upon my remarks upon the Financial Situation and overlook of Olympia Textile Mills Limited whose audit was being carried by Sheikh and Chaudhri Chartered Accountants. I as an internee at Sheikh and Chaudhri Chartered Accountants was a member of audit team that carried out audit of Olympia Textile Mills Limited. During my Internship I was able to highlight Company’s key financial matters: The Company has been sustaining heavy Loss since 2006. The Company has not paid any dividend since 2006.
64 The Company is on the brink of liquidation.
The Possible reasons for the company’s heavy loss are: High Prices of Cotton and Yarn Poor Economic and Peace Situation in the Country reducing Exports Increasing prices of fuel (oil, gas) and Electricity Reduced Subsidy for the firm High markup on loans obtained Possible Solutions to overcome heavy losses: Raising Enough Capital to meet operating activities of business. Improvement in Plant and Machinery and marketing techniques. The Final Conclusion that I have reached is that if Economic and Peace Situation in Pakistan improve then Olympia Textile has a realistic chance of generating profit and carry on its business without incurring heavy losses. We hope our very best for Olympia Textile Mills Limited in near future.
SWOT Analysis of Sheikh and Chaudhri Chartered Accountants
The following list of strengths, weaknesses, opportunities and threats was derived during the interview process and work experience with the staff members of Sheikh and Chaudhri Chartered Accountants. Additional information was pulled from the companies Business Plan.
Strengths
65
Long standing clients First name basis with large percentage of clients Large percentage of workforce is licensed and authentic Top quality staff Intelligent staff Focused workforce Work Ethic - Strong Dedication Fax Advantage (desktop faxing) High energy of management Cooperative environment Strong Relationships with Tax officers
Longevity of the company Flexible work environment Controlled growth Strong partnership relationship Young owners Family environment Partners mixture of expertise Organization gives opportunity for career path
66
Diversified markets Knowledge of Clients Dedication on behalf of Partners High Motivation levels of Employees Improved Corporate strategy Efficient and sound Marketing strategy Good Remuneration Given to Employees Knowledge of financial and Capital Markets Excellent Business Ethics Professionalism in every department of the Firm Firm’s Goodwill and Repute maintained over the years
Weaknesses
Lack of Auditing Services to clients More emphasis on business Taxation Services rather than audit Office Timings are very strict while entering but not so when office timings are off employees work late hours without being paid overtime. Limited knowledge of markets outside Lahore Shared office, no separate departments in the office
67
Time Consuming processes, only one draftsmen/computer operator Dependability of staff Audit team has very limited professionals disabling them to do many audits at a time Due to lack of audit staff only 2-3 audits can be carried at a time Management can be controlling The principles are stretched thin Most of the business is controlled by general manager rather than department wise reporting No Multinational Company is audit client No Multinational Company is Taxation Client Strict Policy for absenteeism among employees causing dissatisfaction Low morale of employees No Company Website
Opportunities
Firm can get more audit services from clients if proper marketing techniques are applied Develop benefit business
68 Add additional high quality audit and tax services to drive additional
business staff training on systems and new soft wares enabling them to perform
their duties well New more efficient staff
Consolidation of offices Create communication standards (team meetings, reports) within the
firm Team Building Prospect for new rendering of sales
Create an interactive web-site Better Computer equipment and accounting soft wares for staff Cross selling to current client base Focus on larger commercial lines policies More dedication towards auditing
Definition of commercial book small, medium and large Growth markets Retention of skilled employees Create Niche for High Value clients
Threats
69
Possible Turnover of employees due to excess of working hours Competition hiring staff Day by day increasing Competition in taxation and audit markets Turnover of customers to other firm’s Client handling is reactionary Loss of contingents Poor Economic conditions through out the country might be a cause of worry for companies countrywide, thus reducing auditor’s remuneration Loss of audit clients due to lack of audit team members Low motivation level amongst employees might result in less productivity of the firm Due to more emphasis on Taxation services the audit department is quite low in morale and thus clients are not satisfied with audit service No clear reporting standards in the firm Firm might be outdated due to lack of technology and employee’s technological orientation Staff dependability might create headache for management Management’s strict policy regarding employee absenteeism is main cause of reduced motivation levels
Dilemma’s Faced by Organization
70
Possible Problems
The possible Problems reflect constructive criticism about organization procedures and business weaknesses. During the course of my internship the possible problems faced by the organization are below and these need to change:
•
The employees are low paid which may cause dissatisfaction with regard to the responsibilities assigned and the salary received for those jobs.
•
Pending work may cause difficulties. More efficiency in manual work is needed to cater the faster pace of work.
•
Overall timings of entrance into the office for the employees are very strict but there is no time for them to leave the office and no over time is paid to them which may be significant reason of dissatisfaction for their jobs.
•
The Computer System almost doesn’t exist in the Organization. All most all of the work done by employees is manually. For instance, there are only two computers in the organization, one is for the General Manager and the other is for the computer operator, on whom all the drafting work depends upon.
71 •
The Audit procedures are very slow and time consuming. It takes almost more than one month to complete an audit of a medium size organization, and takes about 2 months to complete the audit of a company registered in Stock exchange, mainly due to less number of personals in the audit department consisting of only 5 persons which include audit manager, senior auditor, and 3 junior auditors. Internee students are there in the firm almost every time and also assist in audit and accounting department.
•
The firm maintains a very strict policy about punctuality. The management
continuously
strives
to
minimize
absenteeism
in
employees. The employees pay is being deducted on every absent from working day, and late comers to office are also penalized.
•
The firm’s main revenue source is from the services of Income Taxation and Sales Taxation. High profile companies rely on Sheikh and Chaudhri for their taxation and advisory services. More importance is given to the tax client that’s why it is overshadowing the audit clients and potential audit clients are being lost due to poor management and lack of auditors in the firm.
•
Employees lack training in respect of new softwares of accounting are being unable to perform audit of high profile companies due to lack of
72
knowledge of accounting softwares and ERP’s like Tally, SAP and other state of the art softwares.
Recommendations for the Improvement of Organization
During the course of my internship I had a chance to view Sheikh and Chaudhri Chartered Accountants firm’s possible problems and upon my careful observation during work and based on facts and my judgments I am being
able
present
the
recommendations
for
improvement
in
the
organization. The solutions to overcome above mentioned problems are as follows:
•
The Firm should develop an efficient and sound marketing department.
•
Employees should get market based remunerations and other fringe benefits.
•
Works which are pending over a long period of time should be given preference and done as quickly as possible.
•
Management should not be so controlling towards employees.
73
•
Management
should
be
co-operative
and
supportive
with
all
employees. •
State of the art head office should be designed and built.
•
More emphasis should be on Auditing services rather than Taxation.
•
New forms of technologies should be introduced to the firm.
•
New and energetic employees should be hired with blend of experienced one’s.
•
A formal Business strategy should be formed keeping in view all scenarios.
•
Office timings should be relaxed; late working hours should be discouraged.
•
Employee absenteeism should be revised and made more lenient.
•
Audit team should be expanded to get more audit services from clients.
•
Employees should be provided up to date orientation and on-job training.
•
Auditing department should be made vigilant.
•
Audit department should perform audits of companies in the specified time limit.
•
Organization should adopt new accounting and auditing techniques, tools and procedures which includes the implementation of new and up
74
to date accounting softwares and ERP’s. The company should move over from manual accounting system and be up to date with implementing latest technology. •
New and energetic auditors must be recruited to make the audit department more efficient and productive in company’s profitability.
•
Employee’s morale and motivation levels should be checked ad where necessary mentoring should be done.
• •
Clear reporting standards should be set. Clients should be regularly be visited by the marketing team for new promotions and offers, thus reducing clients turnover to other firms.
•
Potential clients should be targeted through proper channels.
•
Team work should be encouraged for success of the firm.
CONCLUSION
Conclusively, it is better to say that internship at Sheikh and Chaudhri Chartered Accountants was a good start of my professional experience. The friendly attitude of personnel has convinced me to work with such a dynamic environment, where peace and creativity are the key elements in driving the organization towards its success. This organization has professional oriented vision of doing business so the purity which lies in their ambiance is enough to impress any prospective business professional. Sheikh and Chaudhri Chartered Accountants since its
75
formation in 1968 has really come a long way through and has achieved a lot in this very short span. The firm has a great name in its industry and has phenomenal credibility and market value. The operations of firm are purely transparent and the services offered by this firm are in conformity with their business principles and corporate ethics. In a period of 5-10 years, the firm has really expanded into all business areas and has formed a huge network of clients which render firm’s auditing and taxation services. The firm has great variety of professionals who have enabled this firm to earn the repute that it is enjoying now days. It still has room for improvement and the steps to improving in the industry are quite simple and need dedication on behalf of partners and employees. I would like to thank Sheikh and Chaudhri Chartered Accountants firm Staff and fellow interns especially my Internship supervisor Mr. Khalid Mehmood (Audit Manager), Mr. Mudassar Ali Sheikh (General Manager), Mr. Bashir (senior accounts officer), Mr. Waqar, Mr. Ahmed, and Mr. Usman and everyone at the branch who made these last six weeks of internship, an ultimate learning experience for me.
References
Khalid Mehmood Audit Manager Tel: 0321-4893133
76
Sheikh Ali Mudassar General Manager Tel: 0300-8403220
Mr. Bashir Ali Senior Accounts Officer Tel: 042-6369306
Mr. Basharat Office Assistant Tel: 042-6303724
Documents consulted for making report
77
•
Final Reports of Olympia Textile Mills Limited for years 2006, 2007 & 2008
•
Sheikh and Chaudhri Chartered Accountants Profile brochure
•
Sheikh and Chaudhri Chartered Accountants business plan and corporate profile
•
Sheikh and Chaudhri Chartered Accountants Services brochure
