Internship Report2

The Incharge internship Programme,
Department of Business Administration,

University of Education Lahore Compus ,
Multan.
Subject: - I N T E R N S H I P R E P O RT O N A U D I T A N D C O N S U LTA N C Y
D E PA RT M E N T O F WA Q A S A N D C O M PA N Y, C H A RT E R E D
A C C O U N TA N T S .
Dear Sir,
It is a great honor for me to present you the internship report as required for the completion of
MBA (Accounting and Finance) degree programme.
The staff and Principal of Waqas and Company, Chartered Accountants have been very
cooperative with me during my internship tenure i.e., Six weeks in providing me information
regarding the procedures and processes in practice. Due to certain constraints I have not been
able to gather all the facts and figures about the organization. Yet, the report is a comprehensive
one, containing a lot of information. The practical work during the internship period has been a
reworking and enlightening experience.
Yours truly,
Muhammad Rizwan.
Internship Report
on
Audit and Consultancy Department

of
Waqas and Company

Chartered Accountants, Multan
Submitted by
Muhammad Rizwan
Roll No. 5510
In partial fulfillment of the requirements

for the degree of
Master of Business Administration

in
Accounting & Finance
Department of Business Administration

University of Education Lahore Compus, Multan
Date of Submission: August 30, 2017

Waqas and Company Chartered Accountants
Preface
The purpose of this internship report is to explain what I did during my internship, which
is required to get degree of MBA (A&F). I start my Six weeks internship at Waqas and
Company (Chartered Accountants) after completing 30 August in Department of Business
Administration, University of Education Lahore Compus Multan.
This report is according to the best of my perception and knowledge gained via class
room lectures and practical experience.
I am thankful to all of my teachers, class fellows and friends whom cheerfulness and
guidance is an asset for me. I am especially thankful to my Parents, and Mr. Waqas
Khalid Principal of Waqas and Company, Chartered Accountants without their help and
guidance I may not be able to complete my internship and this report.
Internship Report | Preface ii

Summary
This internship report is about Waqas and Company Chartered Accountants. It contains
four main parts introduction to Waqas and company, task I performed at work conclusion
and recommendations.
Internship was a new experience for me as it’s a first step in the practical field so I have
learned a lot while working in Waqas and Company (Chartered Accountants). The key
areas in which I worked are Audit and Consultancy departments. In my first week of
internship I was placed in the Audit department where I was introduced to all the
concepts of Auditing and my basic tasks was the preparation of working papers,
reconciliation of vouchers and preparation of audit file. In this department I was suppose
to check all the files, note down the missing documents. Filling the self-audit checklist,
send confirmations to debtors and creditors and banks of the clients
In my sixth week of internship I was placed in the consultancy department where my
basic task was the preparation of feasibility report.
My report covers the practical experience and exposure that I gained at Waqas and
Company. At the end I can say that, the overall gap between university studies and
practical experience is minimized after such a good experience of practical work that will
always benefit to my future life.
Internship Report | Summary iii

Table of Contents
Chapter No. 1: Introduction
1.1 Subject 2
1.2 Purpose2
1.3 Scope 2
1.4 Description of the Place of Internship 2
1.5 Waqas & Company Profile 3
1.5.1 Establishment of Firm--------------------------------------------------------------------------------------- 3
1.5.2 Head Office---------------------------------------------------------------------------------------------------- 3
1.5.3 Firm’s Approach---------------------------------------------------------------------------------------------- 3
1.5.4 Firm’s Culture------------------------------------------------------------------------------------------------- 4
1.1.5 Firm’s Values-------------------------------------------------------------------------------------------------- 4
1.5.6 About Firm’s Principal--------------------------------------------------------------------------------------5
1.1.7 Departments--------------------------------------------------------------------------------------------------- 5
1.6 Waqas and Company Services 5
1.6.1 Audit Department-------------------------------------------------------------------------------------------- 6
1.6.1.1 Book Keeping & Maintenance of Accounting Records------------------------------------------6
1.6.1.2 Audit Services---------------------------------------------------------------------------------------------- 6
1.6.2 Tax Department----------------------------------------------------------------------------------------------- 7
1.2.2.1 Corporate Taxation----------------------------------------------------------------------------------------7
1.6.2.2 Partnership & Partners Taxation-----------------------------------------------------------------------8
1.6.2.3 Personal Taxation------------------------------------------------------------------------------------------ 8
1.6.2.4 Self Assessments------------------------------------------------------------------------------------------ 9
1.6.2.5 Sales Tax---------------------------------------------------------------------------------------------------- 9
1.6.3 Consultancy Department------------------------------------------------------------------------------------ 9
1.6.3.1 Feasibilities------------------------------------------------------------------------------------------------- 9
1.6.3.2 Forensic---------------------------------------------------------------------------------------------------- 10
1.6.4 Secretarial Department------------------------------------------------------------------------------------ 10
Internship Report | Table of Contents iv

Chapter No. 2: Task Performed At Work

2.1 Special Audit Engagements 13
2.1.1 Jinnah Pharmaceuticals------------------------------------------------------------------------------------ 13
2.1.1.1 Features/Requirements--------------------------------------------------------------------------------- 14
2.1.1.2 Problems--------------------------------------------------------------------------------------------------- 14
2.1.1.3 Work Done------------------------------------------------------------------------------------------------ 14
2.1.1.4 Audit Plan------------------------------------------------------------------------------------------------- 14
2.1.1.5 Audit Process--------------------------------------------------------------------------------------------- 15
2.1.1.6 Weakness-------------------------------------------------------------------------------------------------- 15
2.1.1.7 Recommendations--------------------------------------------------------------------------------------- 15
2.1.2 Greens Mills (Private) Limited--------------------------------------------------------------------------16
2.1.2.2 Work Done------------------------------------------------------------------------------------------------ 16
2.1.2.3 Stock Taking/Cut-Off Procedure---------------------------------------------------------------------17
2.1.2.4 Stock Taking File---------------------------------------------------------------------------------------- 17
2.1.2.5 Observation Sheet--------------------------------------------------------------------------------------- 18
2.1.2.6 The Audit Process--------------------------------------------------------------------------------------- 18
2.1.2.7 Work Done------------------------------------------------------------------------------------------------ 19
2.2 Consultancy Services 23
2.2.1 Feasibility Study-------------------------------------------------------------------------------------------- 23
2.2.1.2 Data Required-------------------------------------------------------------------------------------------- 23
2.2.1.3 Report outline-------------------------------------------------------------------------------------------- 24
2.2.2 Chart of Account-------------------------------------------------------------------------------------------- 25
2.2.2.1 Features---------------------------------------------------------------------------------------------------- 25
2.2.2.2 Problems--------------------------------------------------------------------------------------------------- 25
2.2.2.3 Recommendations--------------------------------------------------------------------------------------- 25
Chapter No. 3:
Conclusion 27
Chapter No. 4:
Recommendations 29
Internship Report | Table of Contents v

References 31
Appendix
1. Audit Observation Sheet 33
2. Movement Schedule of Raw Material 34
3. Audit Tick Chart 35
4. Cut-Off Procedure Check List 36
5. Cash Count Statement 37
6. Lead Schedule (Share Capital & Reserves) 38
7. Supporting Schedule (Transfer of Share Ownership) 40
Internship Report | Table of Contents vi

INTRODUCTION
INTRODUCTION
Internship Report | Introduction 1

1.1 Subject
As I have got internship in Chartered Accountants firm and their major fields are audit
tax and consultancy. When I join the firm as internee it was the end of financial year for
many companies therefore I got opportunity to work in audit and consultancy department.
The detail regarding both divisions is described in detail under the head of Waqas and
Company services in this chapter. Under this chapter the detail regarding other
departments and their services is also given for the reader’s knowledge. But in the rest of
the report only audit and consultancy services will be discussed as I spend my eight
weeks only in these two departments.
1.2 Purpose
The purpose of this internship report is to fulfill the requirement to in order get the degree
of MBA Finance and to explain what I have learned during my internship tenure (Six
weeks) at Waqas and Company.
1.3 Scope
This introductory chapter as described earlier will cover in detail regarding all the
services provided by Waqas and Company, but the following Chapters will only describe
what I have did in audit and consultancy division.
1.4 Description of the Place of Internship

Waqas and Company (Chartered Accountants) is firm of Chartered Accountants
registered with Institute of Chartered Accountants of Pakistan (ICAP) and is on the panel
of auditors with Securities and Exchange Commission of Pakistan (SECP). Recently the
company establishes its partnership relation with Mudassar Ehtisham & Company
(Chartered Accountants) Lahore.

During my internship period, in firm, I really enjoyed working with the staff. It was
almost impossible to work in all the departments within that limited time. But on my
request, the staff of the firm provided me the opportunity to work in the different
departments for the sake of practical knowledge. Doing internship in the firm was a great
experience for me. I never had been in the professional environment ever before. I learnt
a lot during my internship program. Peoples were very cooperative and they guided me
all through the way. I was sent to the different departments and there I learnt different
things from the experience of people working over there.
The departments which I selected for my Internship are audit and consultancy
departments. The main focus of the firm was to give me an opportunity to interact with
the clients as much as possible. As my internship is in these departments so I have
explained these departments in brief as compared to the other departments of the firm.
1.5 Waqas & Company Profile

1.5.1 Establishment of Firm
The firm was established in 2006 by Mr. Muhammad Waqas Khalid (ACA, ACMA,
APA), Principal of the firm. From that year to up till now the firm is creating its goodwill
very rapidly in the field of audit, tax and consultancy services.
1.5.2 Head Office

Its office is situated at Hajveri Arcade, Kutchery Road, Multan.
1.5.3 Firm’s Approach

Firm take pride in contributing to growth and adding values to the most important
business, Clients Business.
It transforms client’s conventional business into value business that adds to his
profitability, market share and long-term sustainable growth.
Its professional range of services are comprehensive enough to cover client’s entire
business interests and yet precise enough to cater client’s specific needs within his
existing business routine.
In view of firm track record and feedback from its clients’ satisfaction has motivated it to
further raise its standards to provide the best professional services to the industry, the
market has ever experienced.
In the complexities of the 21st century under the growing influence of globalization,
emerging technologies, ever changing laws, and above all increasing awareness and
demand of services from end-user, are compelling it to think in terms of global socio-
economic and political scenario to cater the needs of our civil societies, regarding mutual
obligations and rights.
Hence, firm believe in its commitment to integrity, excellence and professionalism in all
that it do and cultivate close working relationship with all the stakeholders, listening to
them and being sensitive and responsive to their needs.
Waqas & Company believes that best form of problem solving is prevention. Hence, its
approach is based upon comprehensive multi-disciplinary prevention strategies e.g.
“Operational Research”, “SWOT Analysis”, “Internal Controls”, “Benchmarking” and
“Risk Management” etc.
By that where it bring piece of mind to the business community i.e. Clients Business and
help to make most informed decisions, there firm also indirectly contribute towards
economic well being of general masses.
Waqas & Company is constantly striving to improve its performance and adapt to ever
changing requirements of the market through an ongoing process of self-evaluation and
development. The firm sees the future as a positive challenge to consistently enhance the
position of its services while playing a positive and professional role in the socio
economic development of Pakistan.
1.5.4 Firm’s Culture

A positive culture is critical to the success of an organization. Firm’s culture is based on
its values and characterizes everything it does. Firm’s culture represents the foundations
upon which its operations are based. The following values are reinforced by it workers in
their dealings with each other, with its customer and society at large.
1.1.5 Firm’s Values

 Excellence in Consultancy Services
 Customer Satisfaction through Professionalism

 Positive Work Environment

 Creativity, Passion, Motivation & Initiative
 Respect for Individuals, Ideas & Beliefs
 Vision, Leadership & Team Work
1.5.6 About Firm’s Principal

Mr. Waqas Khalid is the principal of the firm. He is Certified Public Accountant, Cost
and Management Accountant and Chartered Accountant. He is responsible for making
sure that all the financial statements (public & private) on which an audit report is issued
adhered to the requirements of Companies Ordinance, 1984, International Accounting
Standard applicable in Pakistan and firms internal quality standards, developing and
monitoring staff, developing business practice and advising clients on various audit and
business issues.
1.1.7 Departments
There are following four departments of the firm;
 Audit Department
 Tax Department
 Consultancy Department
 Secretarial Department
Figure No. 1.1. The Divisional Structure of Waqas and Company

1.6 Waqas and Company Services

Every client is unique and deserves a unique service. Firm’s philosophy is to put its
clients first - to understand their situation and provide a first class service tailored to their
specific needs.
Because it establishes a one-to-one relationship with each client therefore firm is able to
offer timely, individual advice on how to improve business or personal finances. As
leading edge accountants firm have developed the traditional bookkeeping, auditing, and
accounting services into innovative client-focused services that provide not only all the
reliable background support client would expect from a professional firm but also
forward-thinking advice on how to improve his situation. Firm has also developed a new
range of services to meet the needs of modern businesses, including a comprehensive
business advisory service. Whether client needs help with growing his business or advice
on optimizing his personal or family finances, Firm is here to help him get the best
results.
1.6.1 Audit Department

1.6.1.1 Book Keeping & Maintenance of Accounting Records
Firm can relieve client and his staff of an enormous burden by taking care of all its
bookkeeping and accounting needs, including the preparation of its annual accounts.
Firm’s first step is to work with client so it can gain a full understanding of his business.
Firm then tailor its approach to client requirements so that it can provide exactly that
which service client need.
Besides clients core bookkeeping, firm can also maintain his sales tax records, prepare
and audit his funds, and take on short-term projects to relieve client staff of any
temporary overload.
But perhaps the most important part of this service is the preparation of management
accounts. These are vital to the continued success of any business. Firm discuss client
requirements with him and provide him with tailored information and constructive advice
on a regular basis.

1.6.1.2 Audit Services

Though business owners traditionally regard the annual audit and preparation of annual
accounts as a cost centre - a necessary evil that adds no value to the business - firm strive
to transform it into a profit centre.
Besides helping them meet the statutory requirements, firm also take the opportunity to
conduct a review of client financial and management systems. This can often result in
identifying potential problem areas and recommending opportunities to improve their
business performance. Firm discuss the problems and opportunities with them and help
them implement any agreed solutions.
Firm see the preparation of client annual report as an opportunity to enhance his external
image. A well-prepared report can have a considerable positive impact on the perceptions
of investors, potential finance sources, customers, prospect, referral sources, and even
clients own staff - all of which greatly improves client business prospects for the future.
Firm provide following audit services to its clients.
 Special Audits
 Statutory Audits
 Internal Audits
 Income Tax Audits
 Sales Tax Audits
 Share transfer Audits
 Corporate Investigations
1.6.2 Tax Department

1.2.2.1 Corporate Taxation
Corporation tax represents a substantial part of a business trading costs. Moreover, the
increased reporting obligations, robust investigation policies on the part of the tax
authorities, and harsher penalties for non-compliance mean that an undue amount of
client time and resources can be taken up collecting revenue for the Government.
Firm offer a range of services to help business minimize his corporate tax exposure and
relieve him from the administrative burden of complying with tax legislation. These
include:

 Determining the most tax effective structure for client business

 Corporate tax compliance, reporting and filling of tax returns.
 Taking full advantage of tax opportunities and relief
 Withholding tax management and related compliance.
 Managing post-tax-return correspondence, representation before tax assessment
authorities including appeals and references.
 Acting on client behalf in discussions with the tax authorities
1.6.2.2 Partnership & Partners Taxation

Firm provide tax and financial planning for partners of professional and partnership
firms, as well as advice on partnership agreements and regulatory issues.
Partnerships can be difficult structures to manage, since the owners also act as
employees. Because partners are concentrating on giving excellent service to their clients,
they may end up neglecting their own future. Firm is conscious of these dangers and can
offer experience and objectivity to help partners develop planning methods so that their
partnership runs on a sound commercial basis.
Sometimes decisions have to be taken which involve conflicts of interest between
partners and in these situations, firm can act as external facilitators. And if mergers are
contemplated, firm will help client to strike the best deal.
The tax treatment of professional partnerships can be very complex. It is particularly
important to take into account the individual tax situation of each of the partners. Firm
can help them through this minefield and ensure that there are no nasty shocks at the end
of the tax year.
1.6.2.3 Personal Taxation

Complete range of services for income tax as well as wealth tax including tax planning
strategy, computation and filing of tax returns, finalization of assessments,
representations, objections, appeals and keeping clients updated on on-going
developments.
Firm really understand the personal tax issues of affecting locals and foreign nationals
living or working in the Pakistan and can advise them on how to avoid paying

unnecessary tax. Firm also help temporary Pakistan residents, and give tax advice to
Pakistani nationals who are going abroad, either permanently or temporarily.
Firm also encourage them to consider lifetime tax planning, focusing on the different
opportunities available to them at various stages of their personal and professional life,
such as starting their career, family commitments, planning for retirement or passing on
their wealth or business to others.
1.6.2.4 Self Assessments

The term 'self assessment' is proving to be one of the great misnomers of all time. Many
taxpayers struggle to understand the complex tax returns and complete them correctly.
The constant stream of changes to tax legislation means not only that the returns are
becoming even more difficult to understand but also that taxpayers risk incurring more
penalties through failing to complete their returns on time or correctly.
Firm can save a lot of time, worry, and money of taxpayer by handling their self
assessment for them. Firm will do all the necessary computations, complete their return,
and even offer advice on how they can minimize their tax liability.
Firm can act as taxpayer agent, dealing directly with the Inland Revenue on his behalf
and, should taxpayer be selected for a self assessment enquiry, act for him at any
meetings.
1.6.2.5 Sales Tax

The firm provides comprehensive advisory service in the field of sales tax which includes
structuring the sales tax system, implementation of sales tax system, filing of sales tax
returns, undertaking representations, objections & appeals and obtaining exemptions &
concessions wherever applicable
We provide efficient cost effective services, which include:
 GST registration, enrolment or enlistment and related legal formalities.
 GST compliance, reporting and filling of tax returns, representation in adjudication
proceedings including appeals and references.
 Educating for Sales Tax records, adjustment of Input Tax and exemptions.

1.6.3 Consultancy Department

1.6.3.1 Feasibilities
Firm provide its best professional competence for Pre-feasibility studies which are well
researched yet generic due diligence reports that facilitate potential entrepreneurs in
project identification for investment.
The main objective of the pre-feasibility studies is to provide information about
investment opportunities to the different scale enterprises. A typical pre-feasibility study
provides:
 Comprehensive information for investment opportunity in a business.
 Specific information regarding different business areas like, marketing, technical,
industrial information etc. for the existing entrepreneurs to improve their exiting
setup.
 Project investment information and financial projections to support viability of the
business.
1.6.3.2 Forensic
There is a good chance that at some point in future a person in his business or personal
life will find himself involved in a legal dispute over money. It could be any of the
following:
 Contractual dispute
 Contested business loss
 Professional negligence claim
 Tax enquiry
 Fraud investigation
In such cases firm can work and interpret the facts of the case in a professional manner.
Often our involvement at an early stage can result in the matter being settled out of court.
These services can considerably strengthen client’s case and cut his litigation costs.
1.6.4 Secretarial Department

Secretarial services include compliance of corporate formalities related to incorporation
and registration of new local and multinational companies and branch offices. Core
Corporate Secretarial Services include:

 Incorporation of companies including legal drafting of memorandum and articles of

association and allied documents.
 Allotment of shares, issuance of share certificates, and maintenance of all forms of
share registers/records.
 Company Secretarial Services includes regular maintenance of statutory records e.g.
conducting annual & extra ordinary general meetings, minutes of meeting, assistance
in election of general body or directors, appointment and renewal of statutory office
bearers, registration of mortgages & charges etc.
 Awareness on fiduciary role and obligations of directors and corporate management
under the regime of good corporate governance.
 Drafting various forms of contract, agreements, covenants etc. in day to day business
affairs of the company.


TASK
TASKPERFORMED
PERFORMED
AT
ATWORK
WORK
Internship Report | Task Performed At Work 13

Chartered Accountancy sector is the fastest growing sector of Pakistan and it is at first
number in finance field so I think it is a great opportunity for me to work with Waqas and
Company. In my internship tenure (six weeks) I have worked in “Audit and Consultancy
Departments”. I have tried my best to enhance my abilities and apply the knowledge that
I have gained during the studies. When I start my internship session it was peek working
period for Chartered Accountant firm, because it was the financial year end for most of
the companies/firms that are clients of Waqas and Company on my very first day at firm,
Principal Mr. Waqas Khalid give me training session about stock taking, audit cutoff
procedures and how to prepare feasibility studies he also share his practical experience
with me and give me some techniques of this process. It was my first day, and my
training starts in this way.
During my eight weeks internship in spend five weeks in Audit department & three
weeks in consultancy department and perform following tasks in both departments.
2.1 Special Audit Engagements

 Jinnah Pharmaceuticals
 Greens Mills (Private) Limited
2.1.1 Jinnah Pharmaceuticals

Jinnah Pharmaceuticals is a small partnership firm situated At WAPDA Chowk near
Reliance Mills (Private) Limited, Multan involved in the manufacturing and selling of
Medicines.
Jinnah Pharmaceuticals has four partners, two of which acts as managing partners and
others are sleeping partners. There are Forty Seven other employees. Twenty seven of
them work in the production department. One work in the store room, seven workers
work as mechanical and technical staff, one i.e. Mr. Yasir Saeed Malik as purchase
manager, two in the accounts department, nine as other administrative staff. The
managing partners take orders from customers and inform production manager regarding
the specifications i.e., item, quantity, dispatch date etc Purchase manager on intimation
by store incharge place order for the required material.
The partners appoint Waqas and Company as internal auditors.

2.1.1.1 Features/Requirements
 Determination of Net Profit from July 1, 2008 to June 30, 2008
 To identify the weakness in the internal control system and to recommend controls
2.1.1.2 Problems
 The accounts department was only preparing manual cash book and parties’ ledger
without mentioning folio numbers and no ledger is maintained for the nominal
accounts.
 All the major transactions involving cash were done through the personal bank
account of one of the managing partners.
 The accounting record was not maintained properly.
2.1.1.3 Work Done

I assist the audit manager in the preliminary meetings with partners and accounts
manager of the firm. It gives me a great opportunity to understand the nature of accounts
in a pharmaceutical firm. After that he ordered me draft possible audit plan. Which I
prepare with the help of seniors, I propose following audit plan;
2.1.1.4 Audit Plan

The audit team should consist of three people, two of which do vouching in first three
days and hand over the list of observed deficiencies to the accounts department and
managing partners so that the can remove and overcome these deficiencies in future. The
format of audit observation sheet is attached as appendix-1. Reconcile entries in the cash
book with vouchers and check posting in the ledger along with mentioning folio numbers
and prepare ledgers for nominal accounts within four days. After completing the above
said tasks prepare trial balance from the ledger, in order to prepare financial statement.
The third member on the first day must do meeting with the quality control manager,
production manager and store incharge in the presence of managing partners to determine
the quantity and type of raw material used to produce a particular medicine. After that he
should physically inspect all the assets of the company and prepare list of them with the
assistance of Chief Accountant of the firm. Check the stock physically present in store.
Obtain list of outstanding balances with the parties along with their addresses and
telephone/cell numbers. On the second day he should confirm balances with all the

parties on telephonic conversation and reconcile them if there is any difference by obtain
a copy of ledger from the particular party. After that he should prepare movement
schedule of raw material (attached as appendix-2) by inspecting store inward and outward
registered, concerned party file and production register. After completing this task he
should hand over all his working to his immediate senior.
The audit manager after some modifications accepts this audit plan and sends me as a
member of the audit team to conduct audit according to the modified plan.
2.1.1.5 Audit Process

On the very first day my senior assigns me the job to check cash payment vouchers and
guide me how to do so. He also gives me tick chart showing a particular sign to be used
for a particular task. The tick chart is attached as appendix-3. That was a great experience
for me I learn how to prepare vouchers and which type information they must carry.
After the completion of this task I assist him in checking the posting to appropriate ledger
account and prepare ledger for nominal accounts.
We complete the audit in given time and found following weakness in the internal control
system of the firm.
2.1.1.6 Weakness
 The vouchers were not properly prepared.
 No fixed assets register is maintained.
 No application of accounting principals and standards.
 No separate bank account in the name of firm.
 Record was not complete.
 Many of the vouchers were not authorized by the managing partners.
 Repair and maintenance of capital nature is also expensed out.
 There was cutting and over writing in the books of accounts at many places.
2.1.1.7 Recommendations
 The firm should hire a qualified person in order to maintain the books of accounts.
 Along with parties’ ledger, general ledger for nominal accounts must also be
maintained.
 The vouchers should be dated, numbered and signed properly and supporting
evidences should be attached with them.
 Proper fixed assets register should be maintained mentioning name, date of purchase,
voucher number, location where it is installed or being used and quantity.

 In order to make things easier and to maintain proper record a separate bank account
should be opened in the name of firm.
2.1.2 Greens Mills (Private) Limited

Greens Mills (Private) Limited is situated opposite to MAPCO Regional Training Center,
Khanewal Road, Multan. The company manufactures and sells Sultan Flour, Sultan
Maida, Sultan Bran and Sultan Suji.
Greens Mills (Private) Limited has three director one of which act as managing director.
There are Thirty five other employees. Twenty five of these work in the production
department and other in the administrative department.
The sales manager Mr. Waseem takes order from the customers and informs on daily
basis the production manager regarding the quantity and type of product to be shipped in
coming days. The managing director Mr. Aon Abbas Bappi him self contact the wheat
supplier and signs contract with them. Along with purchase of wheat from private
suppliers the company also purchases it from food department on quota basis. According
to quota system wheat in Kg’s is given to a flour mill depending on the number of bodies
a particular mill has. The quota is set and changed by the food department time to time
depending on the available stock of wheat.
The Company has twelve bodies all of them are registered with the food department.
Waqas and Company was appointed as external auditors of the company.
 To give an opinion on true and fair view of financial statements.
 To point out deficiencies in internal control system.
2.1.2.2 Work Done

 Stock Taking/Cut-Off Procedure
 The Audit Process
2.1.2.3 Stock Taking/Cut-Off Procedure

Stock taking process involves physical count of products actually held in stock as a basis
for verification of the stock records and accounts.
On June 30, 2008 after the closing of day shift the accountant manager and store incharge
in the presence of audit team (including me) starts physically counting

 The bags of wheat, all the bags contain one hundred kg of wheat which we check by
randomly selecting ten bags and taking their weight.
 The bags of flour, maida, suji and bran of different capacity i.e., twenty, thirty, forty
kg.
 The wheat empty bags which were divided in different classes usage (quality) wise
i.e., A class, B class, C class.
 The packing material.
 The store items
At the end of each stage we write down the particulars on the Cut-Off Procedure
Checklist attached as appendix-4.
After that we went to accounts department to perform further cut-off procedures. In it we
place our initials and Waqas & Company stamp on the last vouchers of all type and write
down the voucher numbers on the sheet, count the cash in hand and fill the sheet attached
as appendix-5.
2.1.2.4 Stock Taking File

It is important file which contain information helpful for the rest of audit process and
contain following documents;
a) Photo copies of the followings documents
 The last voucher of Cash receipt
 The last voucher of Cash payment
 The last voucher of Bank receipt
 The last voucher of Bank payment
 The last voucher of General voucher
 The last gate inward pass
 The last gate outward pass
 The last delivery challan
 The last purchase order
b) Presentation certificate regarding
 The cash in hand
 Stock in transit
 The value of closing stock (raw material, work in process, finished goods)
c) Other documents
 List of banks along with their addresses and account numbers
 List of debtor along with their addresses and outstanding balances
 List of creditors along with their addresses and outstanding balances
 Name and address of legal advisor and tax consultant.

To banks, debtors and creditors we send balance confirmation circulars and to legal
advisor and tax consultant confirmation certificate regarding pending or threatened
litigations.
2.1.2.5 Observation Sheet

In observation sheet, we write any point that we feel will help in audit of the company for
example during stock taking of Greens Mills (Private) Limited we observe that according
to stock register five hundred wheat bags are on hand whereas actual physical reveal that
five bags were missing the fact is recorded on the observation sheet and necessary
adjusting entry was made to reflect the effect in books of accounts.
2.1.2.6 The Audit Process

The audit process differs from job to job depending upon the nature and scope of audit.
We were appointed as external auditors of Greens Mills (Private) Limited so before
sending us to conduct the audit our Principal Mr. Waqas Khalid tell us in detail regard the
audit process and divide it in following three phases.
1. Planning Phase
In the planning phase audit objectives are defined and the audit tests to be used are
determined. Usually a meeting is scheduled with the accounts manager and internal
audit department (if any) of the client organization to get information regarding the
key internal controls, inventory valuation method, revenue recognition timing and
types of books of account being prepared by the entity. On the bases of this
information an audit program is prepared describing the number of audit team
members and task to be performed by each of them.
2. Execution Phase
In this phase the audit team starts the field work and the team members perform the
task assigned to them in the audit program. During the execution phase the auditors
get and test information including internal control structure and compliance with
applicable policies, procedures and regulations, to determine areas which may need
recommendations for improvement. When the execution phase is completed a
meeting is scheduled with the management to review to audit findings and answers
the quires found during the audit.
3. Reporting Phase

At the end of the audit the audit team hands over the working papers they have
prepared during the audit to the audit manager which after reviewing them issues the
audit report to the company.
2.1.2.7 Work Done

I was assigned to
 Check the capital
 Check existence of fixed assets
 Check opening balances of assets from the last year balance sheet
 Obtain necessary evidence for change in assets during the year
 Complete forms (given to us by audit manager) and prepare necessary schedules
for the both current and fixed assets of the company.
This work was full of knowledge about accounting rules and regulation that a company
must follow to maintain its accounting records. This work enhances my knowledge to a
great extent and guidance from the audit manger and principal help me to complete these
tasks successfully.
Following are the details regarding the tasks;
 Audit Program (Share Capital)

1. Check the number of shares and amount of authorized share capital from
memorandum of association. If there is any alteration from last year, then obtain
a copy of board resolution and altered copy of memorandum of association. If
there is no alteration, then check the same from our prior year’s working papers.
2. Check the number of shares and amount of issued, subscribed and paid-up share
capital from:-
a) Memorandum of association
b) Form ‘A’
3. For shares issued for cash, check the entries in bank statement.
4. For shares issued for consideration other than cash, check the amount of
consideration with supporting documents.
5. For shares issued as bonus shares: -
a) Check board resolution.
b) Check member’s register to ensure that changes have been made in number
of shares of each member.
6. Agree the amount of share capital with the general ledger.

The lead schedule for share capital is attached as appendix-6, and supporting schedule for
transfer of share ownership share is attached as appendix-7.
 Audit Program (Reserves)

1. Trace opening balances from last year’s audited financial statements and general
ledger.
2. Obtain board resolutions for transfers made during the year.
3. Check that any statutory requirements for creating any specific reserve have been
fulfilled.
4. Check that profits have been distributed only out of revenue reserves i.e. not out
of capital reserves.
5. Agree closing balances with general ledger.
 Audit Program (Surplus on Revaluation of Fixed Assets)

1. Examine the valuer’s report to ensure the correctness of revalued amount of fixed
assets and ensure independence of the valuer.
2. Check that increase in value of assets has been transferred to separate account
called "surplus on revaluation of fixed assets ", in accordance with Section 235 of
the Companies Ordinance, 1984.
3. Check that the surplus on revaluation of fixed assets has been applied:-
a) Only to the extent actually realized on disposal of revalued assets.
b) On setting-off any deficit arising from the revaluation of any other fixed
assets of the company.
4. Check that assets have been depreciated with reference to the revalued amounts.
 Audit Program (Tangible Asset)
1. Obtain schedule of property, plant and equipment showing beginning and ending
balances, acquisitions and disposals during the year, as well as, accumulated
depreciation at the beginning and end of the period, with charge for the year.
Check casting and cross casting of the schedule.
2. Trace opening balances from fixed assets register, general ledger and last year’s
working papers.
3. Make a selection of fixed assets held by client at year end and physically inspect
them to ensure that:
a) Asset is owned and held by client.
b) Remaining useful life appears to be correct
4. Trace the carrying value of selected assets with supporting documents i.e.
a) For purchases in current year, capital expenditure approvals and vendor’s
invoices.
b) Ensure that additions to fixed assets do not include any amount of a nature of
revenue expenditure.
5. To check depreciation expense:
a) Determine the reasonableness of accounting policy and depreciation method,
rates and their consistency with prior years.
6. Check calculation of depreciation of selected assets.
7. Inspect evidence of ownership e.g. Vehicle registration certificate
8. Trace closing balances with general ledger
 Audit Program (Assets Subject to Finance Lease)
1. For additions during the year, check from lease agreements that the lease is a
finance lease in substance.
2. To check depreciation on leased assets ensures that appropriate depreciation rates
have been used.
 Audit Program (Capital Work in Progress)
1. Obtain a schedule showing opening balances, additions to and transfers from
fixed assets during the year, and closing balances
2. Trace opening balances from general ledger.
3. For selected additions during the year: -
a) Check supporting documents like vendor’s invoices, contractor bills and other
evidences.
b) Check proper authorization and approval
4. For selected transfers to fixed assets during the year, check contractor certificates
of completion of project and proper approval thereof and examine the stage of
completion.
5. For items stuck-up for considerable period of time, inquire about its status from
the management. Compute provisions if required and ask for management
representations.
 Audit Program (Intangible Assets)
1. Ascertain the nature of each significant intangible asset by inquiry or reviewing
information contained in prior-year’s working papers.
2. Obtain a schedule of intangibles like goodwill, patents, copyrights and other
assets showing beginning and ending balances, additions to and deletions from,
during the current period, as well as accumulated amortization of costs at the
beginning and end of the period.
3. Match the balances with general ledger.

I perform all the tasks according to the above audit program and found following
problem/issues.
 The Company did not charge depreciation for the assets subject to finance lease
during the year
 The company did not amortize trade mark (intangible assets) during the year.
 The company did not maintain proper documentation for the work in progress i.e.,
construction of building for noodles plant.
2.2 Consultancy Services

In the consultancy division I perform following tasks:
 Prepare feasibility study
 Review chart of account
2.2.1 Feasibility Study

On the second day of sixth week I get opportunity to prepare the feasibility study of a
school i.e. The Educators. The Educators is a project of the Beaconhouse School System
under which there is a vast network of schools owned by network associates who have
the professional educational acumen to successfully run this school system, which is
committed to provide quality education at an affordable cost to the masses of our country
with full operations support by the company
The management of The Educators Shah-Ruken-e-Alam branch want to shift their school
form the rented building to their own for this purpose they need loan from a commercial
bank amounting Rs. 17 Million to finance the project having estimated cost of Rs. 58.54
Million.
2.2.1.2 Data Required

To prepare this feasibility report I assist Mr. Waqas Khalid in the preliminary meeting to
take the following data.
 Estimated strength of students in each class in first year.
 Estimated percentage increase in preceding five years.
 Maximum strength of student in a single section on a same level i.e., class.
 Fee structure for each class
 Percentage increase in coming years in the fee structure.
 The Grading of teachers and their salaries in first year

 Percentage increase in coming years

 Facilities to be given to students and teachers in the school
 Detail of other administrative staff along with their salaries in first year
 Estimated increase in the salaries of administrative staff in coming years
 Working days and hours of school
 Percentage of royalty to gross revenue to be paid to Beaconhouse each year.
 Markup rate, number of installment and grace period in any or loan amortization
schedule from the bank.
 Detail of required furniture and fixture.
 Building construction cost estimates from the builder.
 The map of the school
 Detail of fixed assets
2.2.1.3 Report outline

Depending on the information acquired by above mentioned questions I first prepare the
notes to the financial statements for five years and then prepare the financial projections
for the project. After that I prepare the rest of report keeping in view the following outline
provided by the seniors.
 Title page
 Table of contents
 Summary
 Educational system of Pakistan
 Market analysis
 Organizational setup
 Project justification
 The project
 Financial projections and underlying assumptions
 SWOT analysis
 Annexures
In this way I prepare the report and hand over it to the Principal for review which did
some modification in it.
2.2.2 Chart of Account

The management of Multan Medical and Dental College want to develop accounting
software for this purpose they prepare a chart of account and want to take opinion regard
it correctness and suitability.
The Principal assigns me this task and want me to submit the review report to him.

2.2.2.1 Features
The chart of account Multan Medical and Dental College has following fractures.
 It consists of two parts namely; account code and account description.
 The account code is further divided into three parts; namely control code-main code-
sub code i.e., for share capital the code was 010010001
2.2.2.2 Problems
 Some account titles were not proper for example, Deposits for Shares was written as
Share deposit money.
 No account title was created for unappropriated profit.
 Accumulated deprecation accounts for fixed assets have not been created.
 Preliminary expenses account was treated as current assets.
2.2.2.3 Recommendations
In the meeting with the accounts manager of Multan Medical and Dental College the
above mentioned problems were pointed out and the following recommendations were
given;
 Change the improper account titles to the proposed one.
 The accounts titles which were not present in the chart of account but were necessary
should be created.
 Preliminary expenses account should be transferred to it proper place i.e. current
assets.

CONCLUSION
CONCLUSION
Internship Report | Conclusion 26

3 Conclusion
In concluding remarks I would like to say Waqas and Company played a very vital role in
his field by providing attractive services to its valued customers. I have done internship in
Waqas and Company for a period of eight weeks which is quite a small period of time yet
I have learned a lot. Here I apply my knowledge and get a technical practice of my
knowledge. Now I know about the environment of an organization and who to
communicate with collogue and boss. I learn that how to use theoretical knowledge in
organization.
Waqas and Company is customer oriented as well as employee oriented company so it
provides a very friendly environment for the employee. Now I can prepare the accounting
records analysis financial reports and documents of the organization, can check the
accuracy of financial statements, can ensure that financial statement are drawn up on
international reporting standards.
In concluding all this I can say that Waqas and Company add a great value in my
professional life.
Internship Report | Conclusion 27

RECOMMENDATIONS
RECOMMENDATIONS
Internship Report | Recommendations 28

4 Recommendations
Following are my recommendations for Waqas and Company to increase the quality of its
services.
 Prepare a training manual to train new comer in a systematic and organized manner in
this way they can learn a lot in limited time.
 The hiring of employees and even internees should not depend on some reference.
Firm should hire on quality staff to improve it level of its services.
 Popper office timing should be maintained and followed by all employees.
 Establish an environment where great service is recognized and rewarded and poor
service is challenged and rectified.
 Do thing regularly to improve the work place.
Internship Report | Recommendations 29

REFERENCES
REFERENCES
Internship Report | References 30

5. References
 Waqas and Company Profile by Mr. Waqas Khalid

 http://educators.edu.pk/gp_gprofile.asp
Internship Report | References 31

APPENDIX
APPENDIX
Internship Report | Appendix 32

1. Audit Observation Sheet
Amount
Amount in
Sr. Voucher Voucher Account
Date in Ledger/ Difference Description Remarks
No. No. Type Title
Voucher Cash
book
Rs. Rs. Rs.

2 Movement Schedule of Raw Material
Received
Is paid
Sr. Name Date of Quantity Supplier Difference Date of Quantity in
Purchas for same
No. of Item e
Received Name (If Any) Issuance Issued production
Quantity department
Y/N Y/N

3 Audit Tick Chart
AUDIT
Sr # DESCRIPTION
TICKS
1 Opening Balances B 000.00
2 Closing Balances 000.00 B
3 Vouching 000.00
4 Posting 000.00
5 Casting 000.00
6 Cross Casting 000.00
7 Calculation 000.00
8 Carried Forward 000.00 C/F
9 Brought Forward B/F 000.00
10 Reconciliation ( Bank Book and Bank Statement) 000.00
11 Subsequent Clearance ( Bank Book and Bank Statement) 000.00
12 Confirmation Sent ( Banks, Debtors, Creditors ) C.S 000.00
13 Confirmation Obtained ( Banks, Debtors, Creditors ) 000.C00
Note:
 Use green pencil for ticking

 Use red pencil for referencing
 Use black pencil for lines and comparative figures
 Use blue pencil for current year figures
4 Cut-Off Procedure Check List

Client: Prepared By:

Accounting Period: Checked By:
Reviewed By:
AS
AS PER
PARTICULARS UNIT PER PHYSICAL DIFFERENCE REMARKS
BOOKS STOCK
TAKING
Cash In Hand
Head Office Rupees
Sales Office Rupees
Cash Equivalents Rupees
Gate Outward Pass
Head Office Number
Mills Number
Gate Inward Pass
Head Office Number
Mills Number
Delivery Challan
Mills Number
Store Issue Note
Head Office Number
Mills Number
Purchase Order
Head Office Number
Mills Number
Raw Material
Wheat Bags
Work In Process
Mills Kg
Finished Goods
Flour Bags
Maida Bags
Suji Bags
Bran Bags
Total Employees
Head Office Number
Mills Number
Store and spares
Head Office Rupees
Mills Rupees
Last Check Issued
Number
Number
5. Cash Count Statement

Name of Client
Year Ended
Date and time of Cash Count
Place of Cash
Count
DENOMINATIONS Nos: Rupees Ps
Notes: 5000 X
1000 X
500 X
100 X
50 X
20 X
10 X
5 X
Coins:
5 X
2 X
1 X
Stamps (Detail Enclosed)

Prize Bonds (Detail Enclosed)
Cheque (DetailEnclosed)
I.O. Us (Detail Enclosed)
Cash as per Physical Count

Cash As per Cash Book
I Declare That I have no other cash fund or stamps or prize bonds and any other kind of
securities
in my possession and that the above fund was counted in my presence and return to me intact.
Mr. Designation Signature .
Counter Signed
By:
Mr. Designation Signature .
(Note: Use separate cash count statement for each separate cash fund)
(Cut off procedure: Obtain last number of cheques, invoices, vouchers and other documents)

6 Lead Schedule (Share Capital & Reserves)
Client: File No:

Prepared by Date
Accounting Period: Checked by Date
Lead Schedule: Share Capital & Reserves Reviewed by Date
Sub Schedule :
Curren Previou
t s
Particulars Ref. Period Period
Rupees Rupees
Total
Option on un issued
Authorised capital shares
Number of shares - Available To:_______
Shares' face value (per
share) - Period From:________
Total Authorised Capital - Amount of option
Types of shares - Class of shares
- Issue
price
Issued, subscribed and Statistics Amount %
- Further _______
paid up capital issue ______
_______
Number of shares Verified ______
Amount (Total) Any restrictions on payment at
Types of shares dividend should be disclosed.
Value of each share Redeemable preference shares:
- Earliest date of
redemption
- Earliest date of conversion:
Continue-

Detail of shares issued

against - Terms of redemption / conversion:
Cash (a) - - Rate of dividend
Kind (b) - Preference. shares
Bonus '(c) - - Rate of dividend
Calls
unpaid
- By directors including chief
( a+b+c) - - executive
- By management agents
- By executives
- By
others
CONCLUSION
1. The audit has been completed in accordance with Audit program.

2. The working papers demonstrate that adequate work has been undertaken.
3. The working papers contain sufficient information, details of significant features and
notes of unusual matters to enable us to form an opinion on financial statements.
4. In my opinion above amounts are fairly stated and on a consistent basis with the previous period.
Job Supervisor :________________ Date ________________

7 Supporting Schedule (Transfer of Share Ownership)
Client: File No. Reference

Supporting Schedule: Prepared by: Date:
Transfer of Share Ownership Reviewed By: Date:
Accounting
Period:
Current Previous
Ref Period Period Other Detail
Rupees Rupees
(Name of Transferor)
Number of shares
Shares' face value (per share)
Total Value
Types of shares
(Name of Transferee)
Number of shares
Shares' face value (per share)
Total Value
Types of shares
Documents Attached
Transfer Deed
Form-29

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The Incharge internship Programme,

Department of Business Administration,

Audit and Consultancy Department

Waqas and Company

In partial fulfillment of the requirements

Master of Business Administration

Department of Business Administration

Date of Submission: August 30, 2017

Internship Report | Preface ii

Internship Report | Summary iii

Internship Report | Table of Contents iv

Chapter No. 2: Task Performed At Work

Internship Report | Table of Contents v

Internship Report | Table of Contents vi

Internship Report | Introduction 1

1.4 Description of the Place of Internship

Internship Report | Introduction 2

1.5 Waqas & Company Profile

1.5.2 Head Office

1.5.3 Firm’s Approach

1.5.4 Firm’s Culture

1.1.5 Firm’s Values

Internship Report | Introduction 4

 Positive Work Environment

1.5.6 About Firm’s Principal

Internship Report | Introduction 5

1.6 Waqas and Company Services

1.6.1 Audit Department

Internship Report | Introduction 6

1.6.1.2 Audit Services

1.6.2 Tax Department

Internship Report | Introduction 7

 Determining the most tax effective structure for client business

1.6.2.2 Partnership & Partners Taxation

1.6.2.3 Personal Taxation

Internship Report | Introduction 8

1.6.2.4 Self Assessments

1.6.2.5 Sales Tax

Internship Report | Introduction 9

1.6.3 Consultancy Department

1.6.4 Secretarial Department

Internship Report | Introduction 10

 Incorporation of companies including legal drafting of memorandum and articles of

Internship Report | Introduction 11

Internship Report | Introduction 12

Internship Report | Task Performed At Work 13

2.1 Special Audit Engagements

2.1.1 Jinnah Pharmaceuticals

Internship Report | Task Performed At Work 14

2.1.1.3 Work Done

2.1.1.4 Audit Plan

Internship Report | Task Performed At Work 15

2.1.1.5 Audit Process

Internship Report | Task Performed At Work 16

2.1.2 Greens Mills (Private) Limited

2.1.2.2 Work Done

2.1.2.3 Stock Taking/Cut-Off Procedure

Job Supervisor : Date