Al-shifa Pdc Reply

POINTS FOR DISCUSSION (Draft)

AL-SHIFA TRUST

(Special school & centre for rehabilitation)

For the year ended June 30, 2009

Business Assurance Services Anjum Asim Shahid Rahman

Chartered Accountants

Anjum Asim Shahid Rahman Chartered Accountants AL-SHIFA TRUST ( SPECIAL SCHOOL & CENTRE FOR REHABILITATION )

For the period ended June 30, 2009

RESOLVED IDENTIFIED BY

ADJUSTING ENTRY

MANAGEMENT LETTER

BOARD LETTER REVIEWED BY AUDIT REPORT

OTHER(SPECIFY)

PARTNER

OINTS FOR DISCUSSION

P a g e | 1

Insurance cover of fixed assets

It is one of the primary responsibilities of management to safeguard the assets of the company. It has been noted that all assets of the organization (except for a negligible amount) have not been insured to cover risk of loss in case of any un-foreseen event or damage.

Management Comments Since Trust does not have ample funds, we are not meeting this optional requirement




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 2

Difference between fixed asset register and ledger

During the course of our audit we have identified differences between fixed asset register & ledger the details of which are provided in ANNEXURE-A.

Management Comments Adjusting entry




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 3

Previous audit reports not signatured

During the course of our audit we noted that previous audit reports of nine consecutive years which are listed below does not have signature of the partner of the firm because signing conditions were not fulfilled. This also includes the audit report of financial statements for the year ended June 30, 2008 from which we have taken our opening balances of balance sheet accounts. In the absence of signature the opening balances cannot be relied.

Management Comments Will be discussed with AASR Management




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 4

Other institution of the name of Al-Shifa trust

During the course of our audit we have noted that other institution of the name of Al-Shifa trust also operates in country. This issue may influence the decision of the users/stakeholders of the financial statements especially the donors. Appropriate steps should be taken to resolve the issue.

Management Comments AL-Shifa was the fist one to register with the name. There is no institution with the

exact name, there are, institution with the name of Al-Shifa Eye Hospital or PNS Shifa

but not exactly AL-SHIFA TRUST. An advertisement will be published in newspapers

regarding the registration of the Trust




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 5

Board approval for purchase & disposal of fixed assets

During the course of our audit we have noted that the fixed assets that have been purchased and disposed off during the current year have does not contain any approval from board of trustees.

Management Comments Minimum requirement as per Trust Deed is of Three Trustees and all our minutes are

signed at-least by three trustees




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 6

Investment in non compliance of trust deed

During the course of our audit we have noted that Al-shifa trust as per its addendum to the trust deed is in non compliance of its investment clause. Investment clause states that idle funds can only be invested in N.I.T units or government securities. Al-Shifa trust has made investment in a term deposit with Habib Metropolitan Bank.

Management Comments There was no investment avenue available for 3 months, in the institutes mentioned in trust deed.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 7

Standard practice not followed for additions & disposals in fixed assets

During the course of our audit we have not found any documentary evidence (except for a few) regarding obtaining at least three quotations from suppliers/ service providers for the assets which trust has purchased and different services which trust has obtained. This is a standard practice that is followed in organizations. Similarly while disposing the assets bids are obtained of which no documents have been found.

Management Comments Company rates are fixed & that can be checked on that date




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 8

Standard practice not followed for additions in investment

During the course of our audit we have found only one documentary evidence of obtaining rate of profit on investment from a different financial institution whereas at least three of such rate offers are required.

Management Comments From next time in writing offers will be obtained




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 9

Proper tagging not present on fixed assets

During the course of our audit we have noted that proper tagging is not present on the fixed assets.

Management Comments Fixed asset shall be soon tagged




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 10

Physical verification of donation boxes

During the course of our audit we were not able to physically verify the existence of all the donation boxes that have been added as fixed assets during the year.

Management Comments Due to problem of permission




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 11

Internal audit personnel

During the course of our audit we have noted that entity does not have any internal Audit Personnel.

Management Comments Trust does not have the resources




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 12

Provision for rent of land

During the course of our audit we have noted that the premises on which trust is built is owned by Civil aviation authority. Trust does not pay any rent for the space that it uses. Trust also does not have any express agreement with the authority for the land which it uses. In the absence of any express agreement it is our understanding that trust should create provision for rent expense based on the market rate for commercial property.

Management Comments In the early years, Al-Shifa Trust was paying rent to CAA regularly but since CAA

formed as an AUTHORITY they stopped charging us rent.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 13

Income booked without agreement

During the course of our audit we have noted that entity has booked an amount from Pakistan International Airlines as income that is receivable however entity does not have any such agreement from PIA.

Management Comments Documents will be provided




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 14

AASR Bills not paid

During the course of our audit we have noted that trust has not paid bills of Anjum Asim Shahid Rahman,Chartered Accountants of some of the previous years amounting to Rs.49,415 in respect of different services obtained from the firm.

Management Comments Will be paid soon




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 15

Inventory Card not maintained

During the course of our audit we could not find any inventory card system for maintaining in or out of inventory. Due to this inventory consumption expense during the period cannot be verified.

Management Comments This system is in progress




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 16

Prior Year Receivables

During our audit we find that some receivables from Aircrew medical Centre (ACMC) is not settled. Amount is due from last few years and it should be written off with board approval. Detail of amount is as under:

Description Year Amount

Bill No. 645 - ACMC

2003-4 1,300

Bill No. 550 - ACMC

2002-3 800

Bill No. 416 - ACMC

2001-2 1,400

Bill No. 475 - ACMC

2001-2 1,900

Total 5,400

Management Comments Can be write offadjusting entry may be passed




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 17

Gratuity Payable:

During the course of our audit we find that gratuity is payable to two employees who vacate their office but amount is still not paid.

Management Comments Case will be put up in next board of trustees meeting.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 18

Gratuity Provision:

Gratuity is applicable after five years for all employees from the date of joining. Provision of gratuity after five years creates heavy impact on liability side of Balance Sheet and contravention of matching principle of accounting. Gratuity provision should be made every year after joining employment; however, there should be a bar/restriction to attain gratuity facility before five years.

Management Comments Will be followed from next year




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 19

EOBI Contribution:

We, during our audit, found that Trust did not paid EOBI contribution within 15 days of every month. The unpaid amount is Rs: 166,318 and outstanding for more than two years. Trust is in violation of EOBI rule, i.e. Rule 2 state below:

Contributions falling due, at the end of the month, to which they relate, Shall be paid not later than 15th of the next month.

As per above stated rule, unpaid amount of Rs: 166,318 should be paid along with arrears to comply with EOBI rules 1976.This matter should be seriously looked into as this may expose trust to the penal action.

Management Comments We are in a process to finalize the matter with officials of EOBI




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 20

Group insurance of trust employees:

During the course of our audit we observed that the trust as per its rules and regulations framed is required to arrange for the group insurance to its employees. However no such insurance has been arranged.

Management Comments This matter will be put up in next board meeting for regularization.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 21

Medical facilities to employees:

During the course of our audit it has been noted that trust as per its rules and regulations framed is required to provide medical facilities to its employees however no such facility is provided. Management Comments This matter will be put up in next board meeting for regularization.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 22

Employee scrutiny at the time of appointment:

During the course of our audit it has been noted that trust as per its rules and regulations framed is required to check on the background (e.g. criminal record) and previous track record (e.g. references from previous employers) of its prospective employees at the time of appointment because as per rules no appointment can be made of an employee who was convicted of misconduct previously or moral turpitude.

Management Comments Will be done onward




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 23

Regulations not available:

During the course of our audit it has been noted that as per the rules of the trust it is preferred that regulations in respect of the following items shall be maintained however no regulations were available.

Qualifications to hold a particular office

Record of service for employees

Management Comments

Will be done onward




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 24

Documentary evidence in respect of ex-officio trustee:

During the course of our audit we have noted that as per the trust deed the certain members of the board of trustees be the ex-officio trustee. However so far we have not been provided any documentary support in respect of ex-officio trust members.

Management Comments Will be provided




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 25

Confirmations not received:

During the course of our audit we have not so far received the confirmations in respect of following:

Security deposit with Pakistan state oil (PSO)

Investment with Habib Metropolitan Bank (HMB)

Management Comments Will be followed up




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 26

Automation of accounting system and other subsidiary records:

During the course of our audit it was noted that many of the records which were required for audit purposes were not available in soft form. Those documents could have easily been maintained in soft form and audit could have been very speedily completed. Further more automation also reduces errors to almost negligible amount and decreases cost as well. Therefore we recommend that all such record which can be maintained in soft form should be maintained in that form.

Management Comments Will be done onward




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 27

Compliance with Civil Aviation Regulations:

During the course of our audit it has been noted that the premises on which the trust has been built is situated in the vicinity of airport and therefore comes under the jurisdiction of civil aviation authority (CAA). As per the terms of licensing the premises it has been found that compliance with the following laws are necessary.

Regulations for conduct at airports as contained in aircraft rules 1937 (amended)

Regulations for prevention of fire at Airports1949 Due to the non-availability of following regulations for our perusal we were unable to satisfy our self as to whether the trust is complying with the regulations.

Management Comments

Will be provided




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 28

Compliance with Licensor Contract:

During the course of our audit it has been noted that the premises on which the trust has been built is situated in the vicinity of airport and therefore comes under the jurisdiction of civil aviation authority (CAA). As per the terms of licensing the premises it has been found that trust shall provide in prominent place in the premises, Visitors and complaint book for members and visitors to record suggestions and complaints which shall be open to inspection by airport manager. However no such book was found to be available with the conditions prescribed.

Management Comments Due to the renovation work, the book was removed from there, now has been placed




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 29

Mode for calculation of gratuity:

During the course of our audit it has been noted that the trust does not use the actuarial valuation method for the calculation of gratuity which is the preferred, standard & reliable practice.

Management Comments Trust does not have enough resources




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 30

Provision of advances/advance salary to trust employees:

During the course of our audit it has been noted that the trust has provided

advances/salary in advance to certain employees. However following discrepancies

were found regarding this issue.

No policy was present

Advances/salary in advance were provided free of interest charge. Management Comments Policy will be made




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 31

Employee of the trust employed else where:

During the course of our audit it has been noted that as per the trust deed an employee of the trust cannot engage himself in other employment without the permission of competent authority however such case was found for one employee for which we have not seen the sanction /approval document so far.

Management Comments Will be put up in board meeting




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 32

Policy for maximum limit of cash payment:

During the course of our audit it has been noted that there is no policy for maximum limit of cash payment. We understand that there should be a policy formulated as to the maximum limit of cash payment and all payments above that amount should be made through crossed cheque.

Management Comments Some of the staff members are not maintaining their bank accounts, so we have to pay

them salary in cash.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 33

Employees Enrollment Procedure:

During the course of our audit we have observed that for the purpose of new appointments standard procedure for hiring the new employees does not exist. Management Comments This point has now been implemented




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 34

Hiring Of Employees:

According to Rule 8 of Trust Deed of Trust,:

All appointments, unless the competent authority decides otherwise,

shall be made by competent authority However it was observed that during the year all the employees hired were not according to Trust Deeds rule.

Management Comments Letter will be provided




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 35

Deposit bank account operations not in compliance with the trust deed:

During the course of our audit it has been noted that in order to strengthen the internal controls (check & balance system) the trust deed has a clause that there should be two bank accounts of following nature operated jointly by two trustees as per certain conditions of the deed.

Deposit Account

Operating Account The funds of the trust shall primarily be kept in deposit account and such amount shall be transferred from time to time into operating account for managing the daily affairs of the trust. However it has been observed that no such practice is followed and funds of the trust are kept in operating account.

Management Comments This practice will be followed onwards




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 36

Retirement of certain employees:

During the course of our audit it has been noted that the trust has certain employees who have attained the age of sixty years.As per the trust deed an employee will retire at the age of sixty. We understand that approval of board of trustees should be taken for this situation to continue.

Management Comments Matter will be put up in next board of trustees meeting




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 37

Appointment letter of trusts finance manager:

During the course of our audit we have so far not been provided appointment letter of Manager Finance Mr. Naveed Usman.

Management Comments This matter will be put up in next board of trustees meeting




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 38

Tax expense for the year:

During the course of our audit it has been noted that entity has not created any provision for taxation on its income from different activities for the current year.

Management Comments Tax consultancy is with AASR




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 39

Availability of approved tariff rates:

During the course of our audit it has been noted that approved tariff rates from board of trustees are not available for the following revenue sources

Treatment of CAA & PIAC employees

Workshop Income

Management Comments Alternative evidences have been shown to the auditors.




ADJUSTING ENTRY

MANAGEMENT LETTER


OTHER(SPECIFY)

PARTNER


P a g e | 40

Non-availability of revenue records in proper form:

Revenue is the most critical head in any organization and strict check & balances are in place on this area in any organization. Proper records in respect of revenue are not available for the management to take decisions and the auditors to have its proper verification in the limited time. We therefore recommend that proper record should be maintained as provided in ANNEXURE-C or some other more helpful format.

Management Comments Will be followed onward

ANNEXURE-A

DESCRIP

TIO

N

COST (AS AT JUL 1, 2008)

ADDIT

IONS

DELETIO

NS

COST (AS AT JUN 30, 2009)

DISPOSAL

WDV (AS O

N JUL 1, 2008)

CHARGE FOR T

HE YEAR

ACC. DEP AS O

N JUNE 30,

2009

WDV AS O

N JUNE 30, 2009

ACC. DEP O

F ASSETS

DISPOSED D

URIN

G THE

YEAR

BUIL

DIN

G

AS PER FIXED ASSET REGISTER

1,220,278

505,200 -

1,725,478 -

549,819

29,596

700,055

1,025,423 -

AS PER LEDGER 1,220,278

505,200 -

1,725,478 -

555,866

29,898

694,310

1,031,168 -

DIFFERENCE - - - - -

(6,047)

(302)

5,745

(5,745) -

PHYSIO

EQUIP

MENT AS PER FIXED ASSET

REGISTER 1,955,288

31,700 -

1,986,988 -

394,956

41,940

1,602,272

384,716 -


31,700 -

1,986,988 -

423,635

44,808

1,576,461

410,527 -


(28,679)

(2,868)

25,811

(25,811) -

WORKSHOP

EQUIP


REGISTER 179,086 - -

179,086 -

15,021

2,253

166,318

12,768 -

AS PER LEDGER 179,086 - -

179,086 -

15,366

2,305

166,025

13,061 -


(345)

(52) 293

(293) -

FURNIT

URES &

FIX

TURES


1,417,937

234,660

188,213

1,464,384

188,213

404,561

48,219

1,172,681

303,338

134,578

AS PER LEDGER

1,428,987 234,660

188,213

1,475,434

188,213

411,068

48,875

931,743

543,691

135,051

DIFFERENCE (11,050) - -

(11,050) -

(6,507)

(656)

240,938

(240,353)

(473)

VEHIC

LES


1,962,400

835,000

360,000

2,437,400

360,000

1,148,530

287,210

801,478

1,635,922

299,602


835,000

360,000

2,437,399

360,000

1,298,446

317,193

931,743

1,755,855

299,602

DIFFERENCE 1 - - 1 -

(149,916)

(29,983)

(130,265)

(119,933) -

COMPUTERS AS PER FIXED ASSET

REGISTER 132,150

130,300 -

262,450 -

34,908

15,779

113,022

149,428 -

AS PER LEDGER 132,150

130,300 -

262,450 -

132,150

4,260

4,260

258,190 -


(97,242)

11,520

108,762

(108,762) -

OFFIC

E

EQUIP


REGISTER 256,207 -

22,700

233,507

22,700

24,159

3,261

215,030

18,477

20,278

AS PER LEDGER 256,207 -

22,700

233,507

22,700

(70,980)

9,176

316,084

(82,577)

20,278


95,139

(5,915)

(101,054)

101,054

0

ANNEXURE-C

WORKSHOP RECEIPTS

Date Receipt record

#

Patient Name

Equipment name

Equipment quantity

Equipment Rate

Amount that

should be paid

Waiver / concession

Amount actually paid

Balance

TRANSPORT RECEIPTS

Date Receipt record #

Student name

Area Amount that should be

paid

Waiver / concession


Balance

TREATMENT RECEIPTS

Date Receipt record

#

Patient Name

Patient type

Patient age

Nature/type of treatment

Amount that

should be paid

Waiver / concession


Balance

ADMMISION RECEIPTS

Date Receipt record #

Student name

Amount that

should be paid

Waiver / concession


Balance