ACKNOWLEDGEMENT

While showing my interest in Consultancy Firm so many people support my idea and
many others helped me in preparing this comprehensive report. This is now completed.

I am thankful to my family how really support me and my ideas, without which I cannot
take a single step. I am also thankful to my respected teachers who guides and provides me
skills on which I have completed the report.

I am very thankful to SR Consultants. Principal and Staff, which adds value of

professionalism to my personality and polished my skills further. Especially i want to
mention the names without which it would very difficult for me includes Mr. Rashid
Siddique (Income Tax Practitioner), Mr. Anwazeb (Sales Tax Manager), and my other
colleagues share useful views and suggestion in preparing my report.

TABLE OF CONTENTS
ACKNOWLEDGEMENT

TABLE OF CONTENTS

PREFACE

CHAPTER - 01

INTRODUCTION OF STUDY

1.1) BACKGROUND OF THE STUDY

1.2) PURPOSE OF STUDY

1.3) SCOPE OF STUDY

1.4) LIMITATION OF THE STUDY

1.5) RESEARCH METHODOLOGY

CHAPTER - 02

INTRODUCTION

2.1) ABOUT CONSULTENCY FIRM

2.2) HEAD OFFICE

2.3) INTRODUCTION OF SR CONSULTANTS

10

2.4) ORGANIZATIONAL STRUCURE

10

2.5) GEOGRAPHICAL LIST OF CONSULTANCY FIRMS IN PAKISTAN

11

2.6) PAKISTANI CONSULTANCY FIRMS IN ABROAD

12

2.8 SERVICES RENDERED BY THE CONSULTANCY FIRMS

12

2.8.1) AUDITING

13

2.8.2) TAXATION

14

2.8.3) CORPORATE SECTOR

14

2.8.4) PROFESSIONAL CONSULTANCY

14

2.8.5) MANAGEMENT CONSULTANCY

15

2.8.6) TRADING AT STOCK EXCHANGE

15

2.9 AUDITING

16

2.9.1) ORIGIN OF AUDITING

16

2.9.2) DEFINITION OF AUDIT

16

2.9.3) OBJECTIVE OF AUDIT

17

2.9.4) TYPES OF AUDIT

18

2.9.5) AUDITING PROCEDURE

19

CHAPTER 3

20

WHAT I LEARNED

20

3.1 DUTIES AND OBLIGATIONS OF STUDENTS AND PRINCIPALS IN

CONSULTANCY FIRM

20

HOW TO CONDUCT AUDIT

21

IN OUR OPINION

25

INTERNAL AUDIT

26

AUDIT PROCESS

33

CHAPTER 4

39

CRITICAL ANALYSIS

39

SWOT ANALYSIS

39

STRENGTH:

39

WEAKNESSES

40

OPPORTUNITIES

41

THREATS

42

RATIO ANALYSIS

43

TECHNICAL ANALYSIS

48

FINANCIAL ANALYSIS

48

CONSIDERATIONS FOR PROJECT ANALYSIS

49

CHAPTER 5

50

FINDINGS AND RECOMMENDATIONS

50

CONCLUSION

51

BIBLIOGRAPHY

53

PREFACE
In this special report an attempt has been made to contextualize the scenario by pooling
scattered information on Consultancy Firm.
After the completion of four years course of M.COM (Finance) all the students are must
be prepare a Report of the practical experience. For this purpose student are to be allowed
to do an Internship of two months from any business organization i.e. banks, factory or
any Institution.
The members of CONSULTANCY Firms are authorized for public are the real sources
where the activities of the profession are originates and flourished.
Therefore, I have highlighted almost all relevant topics including giving background of the
accounting profession in the country areas of work being performed by a firm of chartered
setup it has to maintain and also by fairly describing the terminologies generally found by
the commerce and management students in their books.

CHAPTER - 01
INTRODUCTION OF STUDY
1.1) BACKGROUND OF THE STUDY
A firm runs by one or two more partners authorized by to conduct internal and
external audit of public and private limited companies, NGOs

and other

organization.
CONSULTANCY firms assist the organization in legal and financial matter. They
assist him in making their statement up to international standard of accounting.
They provides consultancy of Sales Tax, Income Tax of the organization compute
their tax and submit the report to the concerned authority.
SR Consultants was established as a Consultancy Firm in 23rd April 1990. This
firm has provided useful services to the Govt. Private and other Institutions.

1.2) PURPOSE OF STUDY

The purpose of the study is to give a comprehensive review of the Consultancy
Firm and to analyze its financial aspects. Besides that, the purpose of the study is
to compare the theoretical knowledge with the actual practical work.
In short the study will be a yardstick to determine how tasks should be
performed and carried out and how is they being performed in reality.

1.3) SCOPE OF STUDY

The time duration of eight weeks is quite insufficient for conducting complete
study and observation of a large firm. Being a student specializing in finance,
the main focus of my study research was to get maximum knowledge and
practical know how of conducting audit and tax dealing of the firm.

1.4) LIMITATION OF THE STUDY

Nothing is perfect except Allah, since this is a sincere effort. No matter how
efficiently the study is conducted, it cannot be perfect in all respects. This study

is

conducted in accordance with its objectives of the study. Thats May not include broad
explanation of facts and figure due to nature of the study.

Secondly the limitation, which

affects the study, is the restriction on mentioning every fact of the CONSULTANCY firms
due to the problem of secrecy.

1.5) RESEARCH METHODOLOGY

For writing this report the information has been collected by following ways.
There are two types of data used for report writing.
i-

PRIMARY DATA
The data, which is collected for the first time and exist in raw form, is called
primary data.
It includes:
a.

Personal observation

b.

Discussion with staff

c.

Informal interviews with senior auditor

ii-

SECONDARY DATA
The data gathered from existing sources are called secondary data. They are in
processed form.
The main sources of secondary data are:
a.

Annual reports of SR Consultants

b.

website/ internet

c.

Monthly newsletter of ITMP

1.6)

d.

Brochures

e.

Relevant book

SCHEME OF STUDY
The scheme of study of the report is as under
Section one is about the introduction of the study, which includes its
Background, Purpose and Scope of the study Research methodology and
the Scheme of study.
Section two is about the literature review, which includes services
rendered by Consultancy Firm Taxation, Consultancy services and
corporate sector services.
Section three is about the financial analysis of the company, which
includes the swat analysis, Ratio analysis, and Project consideration.
Section four include finding & recommendation prescribes for the
Consultancy Firm to further improve its functioning and conclusions.

CHAPTER - 02
INTRODUCTION
2.1) ABOUT CONSULTENCY FIRM
A firm runs authorized by institute of Consultancy of Pakistan to provide the
services of taxation & legislation to public and private limited companies, NGOs and the
other organization.
Consultancy firms provide tax, audit and advice on other legal matters to the
financial aspect of the organization under the rule and regulation of the consultancy by
laws of the Institute of Financial Consultants(USA/Canada).
The main aim behind the establishment of the institute of Financial Consultants
was to conduct the training of students and provided

highly

dedicated

professionals

through a process of conducting and passing specific examinations successful students

were then admitted the members of the institute and after the fulfillment of certain
conditions, eligible

members were entitled to practice and were allowed to train

CONSULTANCY students. With the passage of time the institute of Consultancy is

playing its role as one of the most organized professional body of the country.
SR Consultants was established as a Consultancy Firm in 23rd April

1990.

This firm has provided useful services to the Govt. as well as private department
and other institutions.

2.2) HEAD OFFICE

The head office of SR Consultants is in Room no 686/f Saddar Road Peshawar
Cantt.

2.3) INTRODUCTION OF SR CONSULTANTS

The principal of this Consultancy Firm is Mr. Rashid Siddique At present time SR
Consultants constitute 15 staff Members out of which 9 are the students of this
firm and the remaining staff consists of Mr. Rizwan (Income Tax Practitioner), Mr.
Anwazeb (Sales Tax Manager), Umer is Internee, Mr. Mansoor Khan acting as
Accounts Manager.
In case any complexity they take guidance from General Manager who is
specialist of tax and management affairs.

2.4) ORGANIZATIONAL STRUCURE

The SR CONSULTANTS current organizational structure as follows:-

Head of the Firm (Principal)

General Manager

Audit Manager

Tax Manager

Corporate Manager

STUDENTS

10

2.5) GEOGRAPHICAL LIST OF CONSULTANCY FIRMS IN

PAKISTAN
S.NO

CITY

CONSULTANCY
FIRMS

01

Abottabad

01

02

Faisalabad

25

03

Gujranwala

11

04

Hyderabad

04

05

Islamabad

45

06

Karachi

210

07

Lahore

200

08

Mirpur (A.J.K)

01

09

Multan

12

10

Peshawar

29

11

Quetta

02

12

Raheem Yar Khan

02

13

Rawalpindi

14

14

Sialkot

04

15

Turbat Baluchistan

01

11

2.6) PAKISTANI CONSULTANCY FIRMS IN ABROAD

S.No

Country

CONSULTANCY
FIRMS

01

Afghanistan

10

02

Canada

06

03

Kuwait

03

04

U.A.E

05

05

U.K

07

06

Bangladesh

02

07

Malaysia

02

2.8 SERVICES RENDERED BY THE CONSULTANCY FIRMS

Chartered Accountant Firms render various types of services to their clients

according to the type and nature of the clients. The nature of service also differs
from firm to firm, which includes corporate services, feasibility report,
professional consultancy etc. Firm has also been widened individuals,
corporations, association of persons, nonprofit making organizations and NonGovernmental Organizations (NGOs).
Consultancy Firms provide professional services in the field of auditing, taxation,
and management consultancy to utmost satisfaction of their client. Today the

12

service rendered by a CONSULTANCY firm in such a wide variety has made it

more and more worthwhile. The detail of services by the CONSULTANCY firms
in the various fields is below.

2.8.1) AUDITING
An audit is the independent examination of financial statement or related
information of an entity, whether profit oriented or not, and irrespective of its
size, or legal form, when such an examination is conduct with a view to
expressing an opinion thereon
An audit is the independent examination of books of account and all the public
and private limited company under company ordinance 1984 are mandatory
that the Consultancy must sign their books of accounts
All the NGOs And welfare trust also examine their books of account from
Consultancy Firm because the govt. and their donors have trust on the
certificate of Consultancy
The audit process include the checking of trial balance then the entry in trail
balance are reconciled with the entries in Ledger accounts and the amounts of
ledger are reconciled with the Journal voucher(JV) with supporting evidence.
After this process then they express their opinion upon the accuracy or
inaccuracy of the accounts. They write an audit report and also mention the
various transactions, which are not duly verified. They also write audit report
to the management in which they express any weakness of the management
how to control these weaknesses. They are rendering for such services charges
some fee.

13

2.8.2) TAXATION
Under income tax law tax could be defined as t Tax means any tax imposed
under the income tax law. It also includes any penalty, fee or other charge or
any sum or amount livable or payable under income tax ordinance 2001
The Consultancy Firm have specialized department for taxation as I

early

mentioned and some firms only in tax related matter.

The client who needs the services regarding to tax pay fee for such services
and the auditor gives him a very useful service by the tax returns.

2.8.3) CORPORATE SECTOR

This field deals with the Security exchange commission of Pakistan (SECP),
that includes the services registration of partnerships, Companies. License from
S.E.C.P for commencement of business. Changing in the article of

association and

memorandum of association, and many other services.

2.8.4) PROFESSIONAL CONSULTANCY

CONSULTANCY firm provide professional consultancy services to its valuable
customer, The staff may not have professional auditor but he has all the
necessary skill and professional education so they analyze the organization ,
identify the sick unit for privatization, and also for the establishment of the
organization .

14

2.8.5) MANAGEMENT CONSULTANCY

CONSULTANCY firms provide management consultancy to their clients. In
management consultancy include development and implementation for accounting
system, manuals and management information system. In order to make their
management efficient they appoint staff may or may not have a professional
auditors qualification. Sometimes the company independent auditors to conduct
the internal audit of their accounts. The auditor checks the system and the policies
of the management along with the books of accounts. The auditor has to report to
the management whether the policy and plans of activities prescribed by them have
been implemented, whether the internal check and internal control established are
adequate, whether the actual result are obtained and varying form the estimates,
and to enable the management to achieve the objective of the company in a
planned manner.

2.8.6) TRADING AT STOCK EXCHANGE

Some firms have specialized department which deals in stock exchange. The staffs
appointed are certified financial analyst and have great experience. They have
competitive edge because they are aware of the clients status and invest their idle
money in high yield securities on request of clients. They are trading at multiple
stock exchanges and also benefit from arbitrage.

15

2.9 AUDITING

2.9.1) ORIGIN OF AUDITING

Usually origin of audit is traced to the middle ages, but infect the introduction of
large scale production gave birth to audit, after the industrial revolution during the
18th century.
In the beginning there was small-scale production technology was simple and has
a low capital. But with the passage of time, these things were all improved and
enlarged and thus proper checking of them became very much necessary in the
form of audit.

2.9.2) DEFINITION OF AUDIT

The word audit has been derived from the Latin word AUDIRE which means
To Hear. In the past whatever the owner of the business suspected fraud, they
appoint certain persons to check the accounts. Such persons would hear the
accountants whatever they had to say in the connection with the accounts.

The international standards of auditing (ISA) have defined as An audit is the

independent examination of financial statements or related information of an entity
whether profit oriented or not, and irrespective of its size, or legal form, when such
an examination is conducted with a view to expressing an opinion thereon.

16

2.9.3) OBJECTIVE OF AUDIT

The Main Objective Of Audit Are As Follows.

2.9.3.1)

TO VERIFY STATEMENTS
The auditor has to verify the accounts and financial statements prepared by the
clients and his staff. The auditors responsibility and respect to his appointment
is to verify each and every transaction thoroughly.

2.9.3.2)

TO DISCOVER ERRORS AND FRAUDS

The auditor has to discover errors and frauds, if any, which might have been
committed intentionally or unintentionally. Intact it is a very difficult task to
discover intentional errors and frauds. Sometimes the clients may not provide
actual fact and figure and in such case its so difficult for the auditor. As a matter
of fact this was the primary object of auditing but now it is considered to the
secondary object.

2.9.3.3)

TO PREVENT ERRORS AND FRAUDS

Detection of frauds is considered to be one of the most important duties of an

auditor. As a matter of fact originally audit was conducted mainly with a view
detect fraud whenever it was suspected. The system of internal check aims at the
prevention of fraud. In this way if the staff of the account deportments knows that
the accounts prepared by them are subject to audit, they are very careful to see that
no fraud or errors is committed.

17

2.9.4)

TYPES OF AUDIT
There are two types of audit, which are as follows.

2.9.4.1) INTERNAL AUDIT

Internal audit is the independent appraisal of activity within an organization for the
review of accounting, financial and other business practices as a protective and
constructive arm of management. It is a type of control, which functions by
measuring and evaluating the effectiveness of the other type of controls.
In other words internal audit consists of continuous critical review of financial and
operating activities by a staff of auditors functioning as full time salaried
employees. Internal audit implies an audit of the accounts by the employees of the
business. A separate staff that may or may not have professional audit qualification
does the work. The function of the internal auditor is same as that of an auditor.

2.9.4.2)

EXTERNAL AUDIT

External audit is conducted to report to the shareholders of the company. It is

obligatory audit in which the shareholder appoints external auditors. The auditors
only check the system and policies of the business. He has only to check the
accounts and express their opinion about the accuracy or inaccuracy of the
accounts and reports the facts and figures of audit to the shareholders of the
company.

2.9.4.3)

MANAGEMENT AUDIT

An independent review and examination which is concerned with the identification

of those functional and operational areas where management has failed to achieve

18

the required standards of performance, and the evaluation of management

decisions with the aim of monitoring and improving the total efficiently and
effectiveness of the organization.

2.9.4.4)

PRIVATE AUDIT

Private audit is not a statutory audit but is performed by an independent auditor

because the owners, proprietors, members, trustees, etc, require it.

2.9.5) AUDITING PROCEDURE

The audit procedure includes the following steps
Examination of the accounting system
Evaluation of internal controls
Simple checking of vouchers
Verification of assets and liabilities
Submission of auditor reports

19

CHAPTER 3
WHAT I LEARNED
3.1 DUTIES AND OBLIGATIONS OF STUDENTS AND
PRINCIPALS IN CONSULTANCY FIRM
The duties and obligations of a student in a CONSULTANCY firm are
I.

He will throughout his term of training serve in his principals office on his
principals business of public accountant or occupation.

II.

He will not at any time during the said term destroy, cancel, spoil, embezzle or
take copies of books, papers, plans, documents, monies of his principal, partner
or for his clients.

III.

He will at all times keep the secrets of the principal or his partner or of their
clients.

IV.

He will readily obey and execute the lawful and reasonable commands of the
principal during the said term.

DUTIES AND OBLIGATIONS OF A PRINCIPAL IN A CONSULTANCY FIRMS

I.

He will be the best means in his power and to the most of his skill and
knowledge instruct the trainee student and afford him such reasonable
opportunities as may be required to enable him to acquire the art, science and
knowledge of accountancy.

II.

He will at the expiration of the said term use his best means and endeavors at
the request, cost and charges of the trainee student to cause to be admitted on
the register of members, pursuit to the chartered accountant ordinance 1961.

20

HOW TO CONDUCT AUDIT

THE OPERATION OF AUDIT
The audit work is operated with the help of the following techniques:
.1)

TICKING.

.2)

CASTING.

.3)

CALLING OVER

.4)

VOUCHING.

.5)

VERIFICATION.

.6)

REPORTING.

1. TICKING
Ticking indicates the placing of a mark against an entry in the book to denote that
the auditor has examined it for a certain purpose. Variously shaped marks are used
to denote checking of additions, posting, carry-forward, tracing, extraction of
balances etc. Ticks are generally put in indelible pencil, although some auditors
also use pen and ink for this purpose.
2.

CASTING
Casting refers to the checking of additions of books of accounts and financial
statements. It is essential that arithmetical accuracy be checked so that frauds or
errors (if any) may be detected. A junior member of audit staff normally does this
job. Most of the auditors use mechanical appliances or adding machines to check
the casting of the books of accounts.

21

3. CALLING OVER
Some part of audit work consists of comparison of two or more books of accounts
with supporting documents; this is usually performed by two members of staff.
One Member is reading the item and the other is reconciled. Here the precaution is
that check complete evidence/supports not only the amounts the books, checking
and posting of the personal ledger, names and title of accounts, otherwise the error
may not be detected clarity of voice is essential.

4. VOUCHING
A voucher is a documentary evidence which proves the accuracy or otherwise of
transaction appearing in the books of accounts.
The different types of voucher are follows
Cash receipt
Cash payment
Purchases
Sales
Purchase return
Sales return
Journal entries

Vouching means and includes the examination of every business transaction wit
its supporting documentary evidence, the checking of which satisfy the auditor that
transaction is in order. If the auditor failed to vouch the item correctly he must be
held negligent in the performance of his duties.

22

5. VERIFICATION
The process of vouching enables an auditor to confirm the acquisition of an asset
or the assumption of a liability on a stated date.
Sub section 3 of section 255 of the require and auditor to submit his report to
shareholder specifically mentioning whether or not the balance sheet exhibits a true
and fair view of the state of company affairs according to the best of his
information and the explanation given to him true as shown in the books of the
company
The auditor discharge his duty after due verification. The techniques of verification
are followings.

He satisfies himself of the existence of and asset or liability.

Correct valuation of the assets and liability.
Question of ownership is valid and true in respect of and asset and liability.
Each time of asset and liability disclosed as legally required under the law.

6. REPORTING
Performing the above duties the auditor has to submit a report. The report of the
content depends upon several factors.
E.g. the legal status of the appointing authority
The audit is performed under the companys ordinance 1984. Banking ordinance
1962, insurance act 1938.
The audit report to be submitted after the annual audit of account of company in
prescribed form 35-A annexed to the companies rules 1985
Modern trends follow the under noted sequence:

23

 Examination of the accounting system.

Evaluation of internal controls.
Sample checking of vouchers.
Verification of assets and liabilities.
Submission of auditors report.

7. AUDITORS REPORT
The auditor after checking the books and record of the company or any type
organization write an audit report. The auditor report is very essential for man
people for example. The credit institution, which gives credit to the company
dependent upon the auditor reports similarly the government institution, which
gives donation to the NGOs, depends similarly the auditors reports.

1)

AUDITORS REPORT TO THE BOARD OF DIRECTORS:

We have examined the annexed consolidated financial statements comprising
consolidated Balance Sheet of ________ Limited and its subsidiary companies as
at ___________ and the related consolidated profit and loss account and
consolidated cash flow statement to gather with the notes forming part therefore
for the year ended __________ we have also expressed separate opinions on the
financial statements of __________ Limited and its subsidiary companies except
for _________ Limited and __________ Limited, which were audited by other
firms of Consultancys; whose report has / have been furnished to us and our
opinion in _______ so far as it relates to the amounts included for such company,
is based solely on the report of such other auditors.

24

These financial statements are the responsibility of the Holding companys

management. Our responsibility is to express an opinion on these financial
statements based on our examination.
Our examination was made in accordance with the generally accepted auditing
guidelines an accordingly included such tests of accounting record such other
auditing procedure as we considered necessary in the circumstances. In our opinion
the consolidated financial statements examined by us represent fairly the financial
position of ________ Limited and its subsidiary companies as at ________ and the
results of their operation for the year then ended.
Place ______________ Consultancys.
2)

AUDITORS REPORT TO THE MEMBER

We have audited the annex balance sheet of _________ Limited as at _______ and
the related profit and loss account, when cash flow together with the notes forming
part therefore for the year then ended and we state that we have obtained all the
information and the explanation which to the best of our knowledge and our
believe were necessary for the purpose of our audit and we after the verification
therefore we report that: in our opinion, proper books of accounts have been kept
by the company as required by the companies ordinance 1984.

IN OUR OPINION
The balance sheet and profit and loss account together with the notes there on have
been drawn up in conformity with the books of account and are further in
accordance, 1984 and are in agreement with the books of account and are further in
accordance with the accounting policies consistently applied.

The business

25

conducted investment made and the expenditure incurred during the year were in
accordance with the objects of the company. In our opinion and to the best of our
information and accounting to the explanation give to us, the balance sheet, profit
and loss account and cash flow statement together with the notes forming part
thereof, given the information required ____ and of the profit and cash flows for
the year then ended: an in our opinion no Zakat was deductible at source under the
Zakat and Ushr ordinance, 1980.
3) RECEIPT AND PAYMENT AUDITORS REPORT
WE HAVE AUDITED THE ANNEXED RECEIPT AND PAYMENT
ACCOUNT OF

for the year ended June 30,2013we

report that the annexed receipt and a payment account are in agreement with the
books and record of ___________________.

INTERNAL AUDIT
Internal Audit
Internal Auditors help the organization to succeed and success looks different depending
on the aims of each organization. We do this telling the managers and governors wither
the systems and processes that make sure the organization is on track are themselves
working well. That is assurance! But we do more than that: we also we also help the
managers to improve to those system and process where necessary.

The official definition of Internal Auditing says all that:

Internal Auditing is an independent, objective assurance and consulting activity designed
to add value and improve an organizations operations. It helps an organization

26

accomplish its objectives by bringing a systematic, disciplined approach to evaluate and

improve the effectiveness of risk management, control.

Internal Auditors' roles include monitoring, assessing, and analyzing organizational risk
and controls; and reviewing and confirming information and compliance with policies,
procedures, and laws. Working in partnership with management, internal auditors provide
the board, the audit committee, and executive management assurance that risks are
mitigated and that the organization's corporate governance is strong and effective. And,
when there is room for improvement, internal auditors make recommendations for
enhancing processes, policies, and procedures."
The main purpose of internal audit is to determine whether the quality management system
conforms to the planned arrangement to the requirement of the international standard and
to the quality management system requirements established by the organization and is
effectively implemented and maintained.

History and Background

The Internal Auditing profession evolved steadily with the progress of management
science after World War II. It is conceptually similar in many ways to financial auditing
by public accounting firms, quality assurance and banking compliance activities. Much of
the theory underlying internal auditing is derived from management consulting and public
accounting professions.
In 1930s, growth and expansion made it increasingly difficult for organization to maintain
control and operational efficiency. The World War 2 further expanded organizations
responsibilities for scheduling, managing with limited materials and laborers, complying
with government regulations, and an increased emphasis on cost finding. It was difficult
for management to observe all the operating areas or be in touch with everybody. Then,

27

special staff was appointed to report on happenings in the company who later came to be
known as Internal Auditors.
The internal auditing function varied greatly between organizations and a number
of internal auditors pushed vigorously for greater understanding and recognition of the
internal auditing function. One such person was John B, Thurston, head of the internal
auditing functions at the North American utility company. He is credited with being the
person most responsible for the creation of the Institution. He was joined by Robert B.
Milne, general auditor of the Columbia Engineering Corporation, and Victor Z. Brink, a
former auditor and Columbia University Educator who authored the first major book on
internal auditing. They gather friends and associate from the utilities industries, public
accounting firms, and other industries, 25 of whom are agreed to participate in forming a
new organization for internal auditors.

Objectives of Internal Auditing

(a) Independence
The internal auditor should have the independence in terms of organizational status and
personal objectivity which permits the proper performance of his duties
(b) Staffing and Training
The internal audit unit should be appropriately staffed in terms of numbers, grades,
qualifications and experience, having regard to its responsibilities and objectives. The
internal auditor should be properly trained to fulfill all his responsibilities
(c) Relationships
The internal auditor should seek to foster constructive working relationship and mutual
understanding with management, with external auditors, with any other review agencies
and, where one exist, the audit committee.

28

(d) Due Care

The internal auditor should exercise due care in fulfilling his responsibilities.
(e) Planning, Controlling and Recording
The internal auditor should adequately plan, control and record his work.
(f) Evaluation of the internal control system
The internal auditor should identify and evaluate the organizations internal control system
as a basis for reporting upon its adequacy and effectiveness.
(g) Evidence
The internal auditor should obtain sufficient, relevant and reliable evidence on which to
base reasonable conclusions and recommendations.
(h) Reporting and Follow-Up
The internal auditor should ensure that findings, conclusions and recommendations arising
from each internal audit assignment are communicated promptly to the appropriate level
of management and he should actively seek a response. He should ensure that
arrangements are made to follow up audit recommendations to monitor what action has
been taken on them.

Scope of Internal Auditing

The external auditors have to express an opinion accuracy and fairness on financial
information. The scope of internal audit is much wider than the scope of statuary/ External
audit. It should ideally cover all the activities of the organization.
They include:
Financial Audit Accuracy, Completeness and fairness of financial Statements
Operational Audit Effectiveness and Efficiency of operations
Safeguarding of Assets
Review of Projects

29

Management Audit
Fraud Deletion Developing fraud exposures for every Audit and deletion red
Flags
Review of effectiveness of internal Control
Compliance with laws, regulations, policies and procedures
Preservation of ethical culture Monitor the ethical climate and report and red
flags that may compromise ethics
Providing advice on reducing waste or inefficiency

Purpose of internal Audit

Its the responsibility of the Board to ensure that risks are managed and controlled.
This task is delegated to the executive management which are:
Determines the risk appetite of the organization
Establishes the risk management Framework
Identifies potential threats and assesses risk
Decides on response to risks like implementation of control
Monitors and coordinates the risk management processes and the outcomes
Provide assurance on the effectiveness of risk management process

Role of Auditors
The auditors opinion on the truth, fairness, accuracy etc. of the financial
statements imposes a larger responsibility on the auditor, which transcends the relationship
with the client. The external auditor has to maintain the total independence from the client.
The auditor is supported to be a watchdog. Government, creditors, investors, business and
the financial community rely on the independency, objectivity and integrity of the auditors
for maintaining confidence in operations of a company.

30

Roles and Responsibilities of Auditor

Internal Auditor
Internal auditor is a service to management.
Its functions include examining and evaluating internal control and providing
assurance to the management.
It is a part of the organizations system of internal control and its scope includes all
aspects of internal control, not just financial control.
The scope of the internal audit is wider than the external audit.
It covers all the organizations activities ideally.
External Auditor
External auditors have to express an opinion on accuracy and fairness of financial
information.
An external audit program encompasses a full-scope financial statements audit.
An attestation of internal controls over financial reporting
A typical Report includes inter alias, information on:
o Whether they have obtained all the necessary information
o Whether the companies has kept all the requisite books of accounts
o The financial statements are in conformity with books of accounts
o The financial statements present a true and fair view of the state of affairs
o Proper records for assets, inventory, loans etc. have been maintained by the
company
o Adequacy of internal control procedures
o Existence of internal audit system commensurate with nature and size of business

31

Although internal and external auditors have different and clearly defined roles they do
share the same board purpose of serving the public by help to ensure the highest standards
of regularity and propriety for the use resources and in promoting efficient, effective and
economic administration.

Organizational independence and Objectivity

The internal audit activity should be independent from the activities it audits. It should
also be free from interference in determining the scope of its work, in performing its duties
and in communicating the result. The audit committee should safeguard internal audit
independence by regularly reviewing and approving the internal audit charter and
mandate.
Administrative matters relate to the organizations management structure; and the
reporting line for them should facilitate the activitys day-to-day operations. The activity
has to safeguard its independence by getting involved in functional activities like setting
the risk appetite for the organization, decision making, and implementation of responses.

Professionalism
In the current scenario, the demand for professionalism, knowledge and integrity has
increased manifold. To be effective, auditors must serve as objective assurance providers
and advisors to the other participants in the governance process like Board of Directors
and the audit committee; provide guidance on improving operational efficiency and
control; evaluate risk and advise the management on risk identification, risk tolerance and
risk management.
Proficiency
Internal auditors need to have the knowledge and skill to perform their individual
responsibilities. If the knowledge, skill, or other competencies needed to perform all or

32

part to the engagement are not available within the internal audit staff, then the chief audit
executive should obtain competent advice and assistance from outside the activity.
Due Professional Care
The internal auditor is expected to apply due professional care which is expected from a
reasonably prudent and competent internal auditor. The internal auditor should exercise
due professional care by considering the:
Extent of work
Adequacy of risk management, internal control procedures
Probability of errors, misstatement or irregularities
Cost incurred in relation to expected to expected benefits

AUDIT PROCESS
Every successful audit is based on sound planning and an atmosphere of constructive
involvement and communication between the client and the auditor. I see quite a few
organizations that include a web based explanation to their clients how the audit process
work. The purpose of providing this page is for those audit organizations that have not
explained to their clients how, in general, the audit process works. It is also design to
provide a resource of for sharing tools and techniques for each of the distinct phases of the
audit process.

Audit Process
Although every audit project is unique, the audit process is similar for most
engagement and normally consists of four stages: Planning (Sometimes called survey or
Primary review), field work, audit report, and follow up Review. Client involvement is
critical at each stage of the audit process. As in any special project, an audit results in a
certain amount of time being diverted from your departments as usual routine. One of the
key objectives is to minimize this time and avoid deputing ongoing activities.

33

Planning
During the planning portion of audit, the auditor notifies the client of the audit,
discusses the scope and objectives of the examination in a formal meeting with
organization management, gathers information on important processes, evaluates existing
controls, and plans the remaining audit steps.

Announcement Letter
The client is informed of the audit through an announcement or Engagement letter
from the internal audit director. This letter communicates the scope and objectives of the
audit, the auditors assigned to the project and other relevant information.

Initial Meeting
During this opening conference meeting, the client describe the unit or system to
be reviewed, the organization, available resources (Personnel, facilities, equipments,
funds) and other relevant information. The internal auditor meets with the senior officer
directly responsible for the unit under review and any staff members s/he wishes to
include. It is important that the client identify issues or areas of special concern that should
be addressed.

Preliminary Survey
In this phase the auditor gather the relevant information about the unit in order to
obtain a general overview of operations. S/He talks key personnel and review reports,
files, and other sources of information.

Internal Control Review

The auditor will review the units internal control structure, a process which is usually
time-consuming. In doing this, the auditor uses a verity of tools and techniques to gather

34

and analyze information about the operation. The review of internal control helps the
auditor to determine the areas of highest risk and tests to be performed in the fieldwork
section.

Audit Program
Preparation of the audit program concludes the preliminary review phase. This
program outlines the fieldwork necessary to achieve the audit objectives.

Fieldwork
The fieldwork concentrates on transaction testing and informal communications. It
is during this phase that the auditor determines whether the controls identified during the
preliminary review are opening properly and in the manner described by the client. The
fieldwork stage concludes with a list of significant findings from which the auditor will
prepare a draft of the audit report.

Transaction Testing
After completing the preliminary review, the auditor performs the procedures in
the audit program. These procedures usually test the major internal controls and the
accuracy and propriety of the transactions. Various techniques including sampling are
used the fieldwork phase

Advice and Informal Communications

As the fieldwork progresses, the auditor discusses any significant findings with the
client. Hopefully, the client can offer insights and work with the auditor to determine the
best method of resolving the finding. Usually these communications are oral. However in
more complex situations, memos and emails are written in order to ensure full
understanding by the client and the auditor.

Audit Summary
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Upon Completion of the fieldwork, the auditor summarizes the audit findings,
conclusions, and recommendations necessary for the audit report discussion draft.

Working Papers
Working papers are a vital tool of the audit profession. They are the support of the
audit opinion. They connect the clients accounting records and financials to the auditors
opinion. They are comprehensive and serve many functions.

Audit Report
Our principal product is the final report in which we express our opinions, present
the audit findings, and discuss recommendations for improvements. To facilitate
communication and ensure that the recommendations presented in the final report are
practical, internal audit discusses the rough draft with the client prior to issuing the final
report.

Discussion Draft
At the conclusion of fieldwork, the auditor drafts the report. Audit management
thoroughly reviews the audit working papers and the discussion draft before it is presented
to the client for comments. This discussion draft is prepared for the units operating
management and is submitted for the clients review before the exit conference.

Exit Conference
When audit management has approved the discussion draft, internal audit meets
with the units management team to discuss the feelings recommendations, and text of the
draft. At this meeting, the client comment on the draft and group works to reach an
agreement on the audit findings.

36

Formal Draft
The auditor then prepares a formal draft, taking into account any revision resulting
from the exit conference and other discussions. When the changes have been reviewed by
audit management and the client, the final report is issued.

Final Report
Internal audit prints and distributes the final report to the units operating
management; the units reporting supervisor, the vice president for Administration, the
University Chief Accountant, and other appropriate members of senior University
Management. This report is primarily for internal university management use. The
approval of the internal audit director is required for release of the report outside of the
university.

Client Response
The client has the opportunity to response the audit findings prior to issuance of
the final report which can be included or attached to our final report. However, if the client
decides to respond after we issue the report; the first page of the final report is a letter
requesting the clients written response to the report recommendations.
In the response, the client should explain report how report findings will be resolved and
include an implementation timetable. In some cases, managers may choose to respond
with a decision not to implement an audit recommendation and to accept the risk
associated with an audit finding. The client should copy the response to all recipients of
the final report if s/he decides not to have their response included/attached to internal
audits final report.

37

Client Comments
Finally, as part of internal audits self-evaluation program, we ask comment on
internal audits performance. This feedback has proven to be very beneficial to us, and we
have made changes in our procedures as a result of clients suggestions.

Audit Follow-Up
Within approximately one year of the final report, internal audit will perform a
follow-up review to verify resolution of the report findings.

Follow-Up Review
The client response letter is reviewed and the actions taken to resolve the audit
report findings may be tested to ensure that the desired results were achieved. All
unresolved findings will be discussed in the follow-up report.

Follow-Up Report
The review will conclude a follow-up report which lists the actions taken by the
client to resolve the original report findings. Unresolved findings will also appear in the
follow-up report and will include a brief description of the finding, the original audit
recommendations, the client response and the current condition.

Internal Audit Annual Report to the Board

In addition to the distribution discussed earlier, the contents of the audit report,
client response, and follow-up report may also communicated to the audit committee of
the board as part of the internal audit annual report.

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CHAPTER 4
CRITICAL ANALYSIS
SWOT ANALYSIS
Consultancy Firm at its Strengths, Weaknesses, Opportunities and Threats

STRENGTH:
I. INCORPORATION
Experience of operations, as the firm was incorporated / established in 1961.
II. AUDIT
SR Consultants has a qualified staff for audit all the work is based on manual as
well as computer.
III. INCOME ESTIMATION
Has a good team for income estimation.
IV. GOOD INFRASTRUCTURE
The infrastructure of SR Consultants is very much probable and effective. Progress
work carried out time to time to maintain the standard up to the mark.

V. RELIABILTY
Strong centralized & reliable system controlled by Institute of Consultancy of
Pakistan.
VI. REWARD TO STUDETNS
Offering good stipend for article ship students and for internees for their hard
work.

39

VII.

GOODWILL

Good reputation among customers & have got honorable good will amongst all.
VIII.

FINANCIAL RESOURCES

It has adequate financial resources which fulfill his basic requirements to maintain
current status in the society.

IX. BUSINESS ATITUDE

The company has good competitive skills to compete with the other companies.

X. RUNING WITH TIME

By small means we adapt our programmed each year to meet our members
requests.
XI. COLLABORATION
SR Consultants mpany have a very good & friendly environment among the staff
members and with the honorable clients.

WEAKNESSES
I. PUNCTUATION
Delay in report delivery to companies.

II. LESS NUMBER OF STAFF MEMBERS

Less number of staff members providing services to number of clients, which
causes delay in work to be done on time.
III. COSTLY SERVICES
Provides costly services to customers as compared to other companies.

40

IV. MARKET VALUE

SR Consultant have low market presence or reputation.

V. COMPETITVE SKILLS
SR Consultant is never as competitive as compared to its clients.

OPPORTUNITIES
I. PROGRESSIVE RESULT
SR Consultant clients are increasing with the passage of time.

II. FINANCIAL SERVICES

Trying to provide financial services that have a wide use in this field.

III. ACCURACY
In comparison of SR Consultant with its competitors has an edge to make an
accurate and error free report.

IV. SUPPORTING BODY

The SR Consultant has the facility to give coverage even the small retailers for
income estimation who want to take loans from.
V. QUALIFIED STAFF
The company has mostly professional educated human resources, which are the
biggest threat for their competitors.

41

VI. DETERMINATION & SELF CONFIDENCE

The total economy of the company continues to be strong and we believe our typical
clients will continue to flourish.

THREATS
I. CHALLENGING ENVIRONMENT
SR Consultant has many competitors under certain circumstances
These companies may have an act as major threat to the organization. Change in
ITMP policies can act as a threat for Consultancy Firms.

II. FLUCTUATION IN MARKET POSITION

A small change in focus of a large competitor might wipe out any market position,
SR Consultant achieve.

III. FBR POLICIES

Sudden change in the policies of FBR urges ITMP to change its policies which put
extreme pressure on Consultancy Firms to level their current status.

42

RATIO ANALYSIS
A ratio is a quantitative relation between two magnitudes of the same kind. In ratio
analysis, the financial ratios of the firm are compared to that of its competitors.
This comparison allows the firm to detect major operating differences, which, if
corrected, will increase its efficiency. Another very popular method of ratio
analysis is to compare the firms financial ratios to industry averages.
Before discussing financial ratios, three cautions are in order:
I.

A single ratio does not generally provide sufficient information to judge the
overall performance of the firm. Only when a group of ratios is used, a
reasonable judgment concerning the firms overall financial state can be made.

II.

An analyst, when comparing financial statement, should ensure that

predetermined uniform standards are used for this purpose.

III.

It must be ensured that the data used in calculating financial ratios have been
developed in the same manner and are sound and reliable.
There is no doubt that financial ratios are a useful guide for managerial decisionmaking but these are not exact and definite. Ratios only suggest the questions that
need to be answered and provide no answers.
Let us now calculate some of the key financial ratios of Taj syringes (pvt) Ltd for
the years 2008-2012, and try to answer the questions that these ratios suggest.
These ratios are calculated from the Balance Sheet and Profit & Loss Account
of TAJ SYRINGES (PVT) LTD.

43

1)

CURRENT RATIO

Current Assets
Current Ratio
Current Liabilities
Current Ratio (2012) =

20671907 / 13156669 = 1.32

Current Ratio (2013) =

23393169 / 42097696 = 5.5

Current ratio of the Abdul Salam Jan & Co. has increased to 4.18 in 2012-12. This
shows that liquidity of the company has increased. But it should also be kept in
mind that too much liquidity decreases the profitability. The reason is that the cash
on hand is the most unproductive asset and the surplus cash should be invested in
short-term ventures.
2)

INTEREST MARGIN

Int. Income Int. Expense

Interest Margin =

100
Int. Income

Interest Margin (2012) =

17,197,805 11,065,063
100 35.7%
17,197,805

Interest Margin (2013) =

15,755,990 9,351,947
100 40.6%
15,755,990

44

The interest margin of the company has improved from 35.7 percent in 2012 to
40.6 percent in 2013. This suggests managements efficiency to attract less costly
deposits and make higher-yield investments.

3)

NET PROFIT MARGIN

Profit after Taxation

Net Profit Margin =

100
Interest Income

Net Profit Margin (2012)

399,180
100 2.32%
17,198,805

Net Profit Margin (2013)

568,950
100 3.61%
15,755,990

The net profit margin of Taj syringes (pvt) Ltd has also shown an improvement as
its raised to 3.61 percent in 2013 as compared to 2.32 percent in 2012. These
signals towards higher efficiency and lower administrative costs of the company
during 2013.
4)

RETURN ON EQUITY
Profit after Taxation
Return on Equity

100
Share holders Equity

45

Return on Equity (2012)

399,180
100 11.03%
3,618,286

Return on Equity (2013)

568,950
100 14.53%
3,914,155

The return on equity has increased to 14.53 percent in 2012 as compared to 11.03
percent in 2013. The return on equity replicates the net profit margin trends, with
the company registering good performance because of better efficiency.
5)

RETURN ON ASSETS
Profit before Taxation
Return on Assets

100
Total Assets

Return on Assets (2012)

Return on Assets (2013)

947,003
100 0.63%
149,725,757

1,210,539
158,584,818

100 0.76%

The return on assets has improved to 0.76 percent in 2013 as compared to 0.63
percent in 2012. This indicates the success of management to utilize the assets of
the company efficiently.

46

6)

LOAN-DEPOSIT RATIO

Loans
Loan Deposit Ratio

Deposits

Loan Deposit Ratio (2012)

65,514,219
0.529
123,821,807

Loan Deposit Ratio (2013)

67,432,574
0.517
130,336,164

The loan deposit ratio of the company has declined to 0.517 in 2013 as compared
to 0.529 in the 2012. This shows that the company has concentrated more on
recovering of stuck-up loans and therefore, was hesitant to go for more lending.

7)

INVESTMENT-DEPOSIT RATIO:
Investments
Investment Deposit Ratio
Deposits

Investment Deposit Ratio (2012)

55,386,005
0.45
123,821,807

Investment Deposit Ratio (2013)

45,609,005
0.35
130,336,164

47

The investment-deposit ratio of the company has also dropped drastically during
2013. This suggests a tilt of the company towards higher risk and consequently
higher-yield investments, rather than undertaking less risky loaning activity.

TECHNICAL ANALYSIS
Technical analysis is mainly concentrated in the following areas:
I.

Material and Input Utilities

II.

Manufacturing Process and Technology

III.

Product Mix

IV.

Plant Capacity

V.

Site and Location

VI.

Machinery and Equipment

VII.

Structures and Civil Works

VIII.

Charts and Layouts

IX.

Project Implementation Schedule

FINANCIAL ANALYSIS
The following schedules are prepared to judge the project from the financial angle:
I.

Cost of Project

II.

Means of Financing

III.

Estimates of Sales and Production

IV.

Cost of Production

V.

Working Capital Requirements

VI.

Break Even Point

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VII.

Projected Cash Flow Statement

VIII.

Projected Balance Sheet

CONSIDERATIONS FOR PROJECT ANALYSIS

I.

To Identify Promising Business Opportunities

II.

To Develop a strategy for Sustainable Competitive Advantage

III.

To Forecast Realistic and Incremental Cash Flows

To Calculate the Net Present Value of a Project

49

CHAPTER 5
FINDINGS AND RECOMMENDATIONS
Following are my recommendations to increase the quality of service
I.

Its my suggestion for Consultancy Firm to maintain superlative planning

from start to end.

II.

Its my suggestion for Consultancy Firm to maintain computerized

system in the firm for different task.

III.

Allocate duties and responsibilities to member of the firm.

IV.

Create department in the firm.

V.

Create definable organizational structure for different operations

VI.

Create top to bottom information system.

VII.

Create definable financial structure

VIII.

Look at all complaints about your service as an opportunity to improve.

IX.

Establish an environment where great service is recognized and rewarded

and poor service is challenged and rectified

X.

Have a fun staff meeting where good service elements are discussed and
role played.

XI.

Ensure that your staff feels they are an important part of your success.

XII.

Do things regularly to improve the workplace.

50

XIII.

Create a sort of enthusiasm you want to inspire in your employees. Their

enthusiasm will naturally pass on through their service.

XIV. Be sure your employees are aware of your expectations .clear service guide
lines and knowledge of the companys mission are necessary.
XV.

Hire the right people for the right job

XVI. To improve the loyalty of employees with the organization it is necessary

that proper incentive must provide to each level of employees.
XVII. It is necessary that the management must continuously develop technical
and managerial skills at all levels.
If all the above suggestions are seriously considered. It will help to develop long
run relations with the clients and they will become brand loyal forever.

CONCLUSION
In the conclusion remarks I would like to say something that SR Consultant is the
profitable organization SR Consultant played very vital role in his field by
providing attractive service and packages to the customers.
SR Consultant has very wide network coverage national and international with
latest technologies and provide services to its valued customers. I have done
internship in SR Consultant for a period of six weeks and this period is quiet a
small period of time yet I have learn a lot.

51

Here I apply my knowledge and get a technical practice of my knowledge. Now I

know about the environment of organization and how to communicate with
colleagues and boss.
I learn that how to use theoretical knowledge in organization my communication
skills are improved my decision making power is improved now I have power to
decide about the future.
SR Consultant is a customer oriented as well as employee-oriented company so it
provides a very friendly environment for the employee any internee like me has a
good chance of learning new things and techniques and increases his confidence.
Now I have the advance knowledge and analytical and problem solving skills
needed to be a truly effective part of todays business environment. Now I can
prepare the accounting records analyses financial reports and document of an
organization check the accuracy of financial statement can ensure that the
documents represented are drawn up on correct accounting principles can maintain
cost auditing records, compiling cost information and performing cost audits.
Taxation involves dealing with direct taxes like income tax assessment of taxes, efilling of returns and providing advice on indirect taxes, investigation includes
expert examination of specific aspects of business for the information of interested
parties on new issues of share capital, the purchase, sale or financing of a business
and for reconstruction.

In concluding all this I can say that SR Consultant add a great value in my
professional life.

52

BIBLIOGRAPHY

www.ITMP.gov.pk.

Auditing Books.

Income Tax Books.

Wikipedia.

ITMP Newsletter.

ITMP Brochures.

Annual Report of ITMP.

Business Magazines

Personal Interview form seniors.

53