78010810 internship report audit firm pakistan
TRANSCRIPT
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Internship Report
Table of Contents
1. Title Page 1
2. Contents with Page Numbers 2
3. Main Page 4
4. Preface 5
5. Acknowledgement 6
6. Executive Summary 7
7. Copy of College permission letter for Internship
9
8. Internship Certificate Issued by Organization 10
9. History of Organization 11
10.Management of Organization 14
11. Firm’s Core principals and Values 15
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12.Field of Activities 17
13. 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 59
17.Observation about any dilemma faced by Organization
64
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18.Brief recommendation for improvement
66
19.Conclusion
68
20.References
69
21.Necessary annexure and documents
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INTERNSHIP REPORT
Submitted to: Prof. Muazzam Mughal
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Hailey College of CommercePunjab 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 LahoreEmail: [email protected]
Supervisors during the internship:
Khalid MehmoodAudit Manager
Tel: 0321-4893133
Sheikh Ali Mudassar General Manager Tel: 0300-8403220
PREFACE
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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 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.
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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.
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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
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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
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Internship Certificate
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Issued By Sheikh and Chaudhri Chartered Accountants
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BRIEF PROFILE OF SHEIKH & CHAUDHRI CHARETERED ACCOUNTANTS
NAME SHAEIKH & CHAUDHRI CHARTERED ACCOUNTANTS
YEAR OF ESTABLISH 1968
Owners/ Partners Mr. ABDUL ALI SHEIKHMr. M. SAEED MALIKMr. 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. PROJECT EVALUATIONv. MARKETING REASERCHESvi. ACCOUNTING SYSTEM AND CONTROLvii. ORGANIZATION OF COMPANIESviii. SYSTEM DEVELOPMENT AND
IMPLEMENTATIONSix. FINANCIAL ANAYLISISx. INCOME ESTIMATIONSxi. INVESTMENT ADVISORY
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xii. INCOME TAX ADVISOR/CONSULTANTxiii. 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
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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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Management of the OrganizationFirm’s Partners
(Partners
General Manager
Manager
Accounts
Manager
Audit
Manager
Income Tax
Department
Manager
Advisory Services
Manager Marketing
Marketing Co-
ordinatorTax Officer
Senior Accountant
Tax Co-ordinator
Junior Auditor
Student Auditors
(Articleship)
Senior Auditor
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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 multi-
disciplinary 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.
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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.
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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 tried-
and-tested methodologies clients need for efficient reporting
• Helps clients assess, improve and monitor their tax function’s
processes, controls and risk management
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• 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.
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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.
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
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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 between risk and performance improvement is an
increasingly complex and central business challenge, with business
performance directly connected to the 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.
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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
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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.
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.
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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.
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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
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• Advise clients company on how to meet ongoing SECP reporting
obligations
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
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.
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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:
Description of Work done by
Student and key roles and
responsibilities
• Risk strategy
• Market
• Credit
• Operational
• Enterprise wide
• Business process strategy and redesign
• Quantitative methods
• Risk assurance and accounting
• Transacting and risk systems
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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.
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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
2008 2007 2006 2005 2004 2003
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
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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) (000)
Profit/Loss before Depreciation 21,438 13,313
Depreciation (16,287) (17,002)
________ ________
Profit/Loss for the Year 5,151 (3,689)
Provision for the Taxation 9,435 1,999
________ ________
Profit/Loss for the year (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.
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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 2007
(0.40) (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.
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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".
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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 2007(Rupees) (Rupees)
Sales-Net 562,293,117399,787,077
__________ __________
Cost of Sales 534,757,812372,434,299
Gross Profit 27,535,304 27,352,778
Operating Expenses:Administrative 10,985,449
9,624,266 Selling 2,064,893 3,815,502
__________ __________ 13,050,343
13,439,768___________ ___________
Operating Profit 14,484,962 13,913,010
Other Charges:Financial 9,992,683
18,117,778Others -- 924
___________ ___________
4,562,279 (4,205,692)Other Income 588,291 516,402
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___________ ___________
Profit/Loss before Taxation 5,150,570 (3,689,290)
Provision for TaxationCurrent Year 2,815,952
1,998,935Deferred Taxation 6,618,939 --
___________ ____________ 9,434,891
1,998,935___________ ____________ (4,284,321)
(5,668,225)Accumulated Loss Brought forward (102,954,246)
(97,266,021)____________
____________Accumulated Loss Carried to Balance Sheet (107,238,567)
(102,954,246)
Earning Per Share (0.40) (0.53)
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) (Rupees)
Net cash used after investing activities 14,885,884
262,337
Cash flow from financing activities:
Repayment of long term loans 11,587,731 7,195,488
Custom Debentures --
(3,563,858)
Repayment of lease liabilities (2,474,458) (1,696,811)
__________ __________
Net Cash generated from financing activities (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 4,945,375
4,121,679
44
Statement of changes in Equity For the year
ended September 30, 2008
Share capital Accumulated Total
(Rupees) Loss/Profit
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 108,040,000 (107,238,567)
801,433
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 and
corresponding tax bases used in the computation of taxable profit.
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 2007
(Rupees) (Rupees)
Habib Bank Limited:
Finance against fixed assets -- 24,187,813
Demand Finance 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
5.2 Un-Secured
From Directors 93,003,914 79,103,914
From associated undertakings 17,000,000 17,000,000
Others --
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
2008 2007
(Rupees) (Rupees)
Opening Balance 6,071,637 6,450,448
Addition during the year 1,429,500 1,318,000
7,501,137 7,768,448
Less: Payments during year 2,474,485 1,696,811
5,026,679 6,071,637
Less: Current Portion 2,529,348 2,403,661
2,497,331 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
s
Minimum
Lease
Payment
s
Financia
l
Charges
Principal
outstandin
g
Minimum
Lease
Payment
s
Financia
l
Charges
Principal
outstandin
g
Not later
than one
year
3,013,33
2483,984 2,529,348
3,127,40
6723,745 2,403,661
Later
than one
year but
not later
than 5
years
2,604,87
4107,543 2,497,331
4,020,10
3352,127 3,667,976
Later
than 5
years
-- -- -- -- -- --
Total5,618,20
6591,527 5,026,679
7,147,50
9
1,075,8
726,071,637
7. DEFERRED LIABILITES
2008 2007
(Rupees) (Rupees)
7.1 Gratuity Payable
54
Opening Balance 4,219,535 3,374,114
Provision for the year 1,076,832 1,925,486
5,296,367 5,299,600
Payment during the year 1,478,186 1,080,065
3,818,181 4,219,535
7.2 Deferred Taxation
Prior 7,602,932 --
Current (983,993) --
6,618,939 4,219,535
8. Current proportion of Long Term Liabilities
Custom Debentures 1,485,000 1,485,000
Long Term Loans 9,585,191 21,833,230
Finance Lease 2,529,348 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 AI-
Falah carries interest @ 12.00%.
10. Creditors, Accrued and Other Liabilities
2008 2007
(Rupees) (Rupees)
Advances from staff 260,103 189,172
Advances from customers 5,984,330 9,728,479
Creditors 21,487,990 2,434,691
Accrued Charges 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 1,228,695 1,303,692
Olympia Industries Pvt Limited 13,173 --
Punjab Feeds Limited 4,237 40,174
1,246,106 1,343,866
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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 MehmoodAudit Manager
Tel: 0321-4893133
76
Sheikh Ali Mudassar General Manager Tel: 0300-8403220
Mr. Bashir AliSenior Accounts Officer
Tel: 042-6369306
Mr. BasharatOffice Assistant
Tel: 042-6303724
Documents consulted for making
report
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• 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