1

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.

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TABLE OF CONTENTS

ACKNOWLEDGEMENT 1

TABLE OF CONTENTS 2

PREFACE 5

CHAPTER - 01 6

INTRODUCTION OF STUDY 6

1.1) BACKGROUND OF THE STUDY 6

1.2) PURPOSE OF STUDY 6

1.3) SCOPE OF STUDY 6

1.4) LIMITATION OF THE STUDY 7

1.5) RESEARCH METHODOLOGY 7

CHAPTER - 02 9

INTRODUCTION 9

2.1) ABOUT CONSULTENCY FIRM 9

2.2) HEAD OFFICE 9

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

3

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

4

FINDINGS AND RECOMMENDATIONS 50

CONCLUSION 51

BIBLIOGRAPHY 53

5

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.

6

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.

7

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

8

d. Brochures

e. Relevant book

1.6) 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.

9

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.

10

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

11

2.5) GEOGRAPHICAL LIST OF CONSULTANCY FIRMS IN

PAKISTAN

S.NO CITY CONSULTANCY

FIRMS

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

Abottabad

Faisalabad

Gujranwala

Hyderabad

Islamabad

Karachi

Lahore

Mirpur (A.J.K)

Multan

Peshawar

Quetta

Raheem Yar Khan

Rawalpindi

Sialkot

Turbat Baluchistan

01

25

11

04

45

210

200

01

12

29

02

02

14

04

01

12

2.6) PAKISTANI CONSULTANCY FIRMS IN ABROAD

S.No Country CONSULTANCY

FIRMS

01

02

03

04

05

06

07

Afghanistan

Canada

Kuwait

U.A.E

U.K

Bangladesh

Malaysia

10

06

03

05

07

02

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 Non-

Governmental Organizations (NGOs).

Consultancy Firms provide professional services in the field of auditing, taxation,

and management consultancy to utmost satisfaction of their client. Today the

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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.

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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 .

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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.

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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.

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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.

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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

19

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

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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.

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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.

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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.

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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:

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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.

25

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

26

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

27

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,

28

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.

29

(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

30

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.

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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

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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

33

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.

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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

35

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.

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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.

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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.

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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.

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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.

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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.

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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 decision-

making 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.

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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) = %7.35100805,197,17

063,065,11805,197,17

Interest Margin (2013) = %6.40100990,755,15

947,351,9990,755,15

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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) = %32.2100805,198,17

180,399

Net Profit Margin (2013) = %61.3100990,755,15

950,568

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

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Return on Equity (2012) = %03.11100286,618,3

180,399

Return on Equity (2013) = %53.14100155,914,3

950,568

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) = %63.0100757,725,149

003,947

Return on Assets (2013) = %76.0100818,584,158

539,210,1

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.

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6) LOAN-DEPOSIT RATIO

Loans

Loan Deposit Ratio =

Deposits

Loan Deposit Ratio (2012) = 529.0807,821,123

219,514,65

Loan Deposit Ratio (2013) = 517.0164,336,130

574,432,67

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) = 45.0807,821,123

005,386,55

Investment Deposit Ratio (2013) = 35.0164,336,130

005,609,45

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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

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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.

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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.

52

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, e-

filling 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.

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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.

http://www.icap.gov.pk/ACKNOWLEDGEMENTTABLE OF CONTENTSPREFACECHAPTER - 01INTRODUCTION OF STUDY1.1)BACKGROUND OF THE STUDY1.2)PURPOSE OF STUDY1.3)SCOPE OF STUDY1.4)LIMITATION OF THE STUDY1.5)RESEARCH METHODOLOGYCHAPTER - 02INTRODUCTION2.1)ABOUT CONSULTENCY FIRM 2.2)HEAD OFFICE2.3)INTRODUCTION OF SR CONSULTANTS 2.4)ORGANIZATIONAL STRUCURE 2.5)GEOGRAPHICAL LIST OF CONSULTANCY FIRMS IN PAKISTAN2.6)PAKISTANI CONSULTANCY FIRMS IN ABROAD2.8 SERVICES RENDERED BY THE CONSULTANCY FIRMS2.8.1)AUDITING2.8.2)TAXATION2.8.3)CORPORATE SECTOR2.8.4)PROFESSIONAL CONSULTANCY2.8.5)MANAGEMENT CONSULTANCY2.8.6)TRADING AT STOCK EXCHANGE2.9 AUDITING2.9.1)ORIGIN OF AUDITING2.9.2)DEFINITION OF AUDIT 2.9.3)OBJECTIVE OF AUDIT2.9.4) TYPES OF AUDIT 2.9.5)AUDITING PROCEDURECHAPTER 3WHAT I LEARNED 3.1 DUTIES AND OBLIGATIONS OF STUDENTS AND PRINCIPALS IN CONSULTANCY FIRMHOW TO CONDUCT AUDIT7. AUDITORS REPORT2)AUDITORS REPORT TO THE MEMBER IN OUR OPINION 3) RECEIPT AND PAYMENT AUDITORS REPORT INTERNAL AUDITAUDIT PROCESSCHAPTER 4CRITICAL ANALYSISSWOT ANALYSISSTRENGTH:WEAKNESSESOPPORTUNITIESTHREATSRATIO ANALYSISTECHNICAL ANALYSIS FINANCIAL ANALYSISCONSIDERATIONS FOR PROJECT ANALYSISCHAPTER 5 FINDINGS AND RECOMMENDATIONSCONCLUSIONBIBLIOGRAPHY