Ayub Aslam & Co.

Internship Report On Ayub Aslam & Co.
Chartered Accountants
EXECUTIVE SUMMARY
The purpose of audit of a concern is to get an independent opinion about the creditability of
the Financial Statements whether it represents a true and fair view of the company financial
position or not.
I also have the chance to work in the audit firm AYUB ASLAM & CO., for the period of 2
months. This firm was established in 1989 Lahore. The Mission Statement of firm is "Innovative
solution through linked ideas".
AYUB ASLAM & CO. Provides the following services to the industry:
Assurance
Tax Consulting
Financial Consulting
Business Consulting
Business Process Outsourcing
These services cover the all spheres of the business. By this the firm provides all the services
under one roof. The management of the firm is well reputed and very experienced.
The definition of audit is Auditing is a systematic process of objectively obtaining and

evaluating evidence regarding assertions about economic actions and events to ascertain the
degree of correspondence between those assertions and established criteria and
communicating the results to Interested users."
University of Education lower Mall Campus Lahore
Internship Report On Ayub Aslam & Co. Chartered Accountants

The audit is conducted under the guidance of international standards of auditing. In the late
1970s the Council of International Federation of Accountants (IFAC) created the International
Auditing Practices Committee(IAPC) which would be a standing committee of the IFAC Council
and subsequently the IFAC Board (in May 2000 the IFAC Council was renamed the IFAC Board).
Between 1980 and 1991 the IAPC issued International Auditing Guidelines (IAG) and
addendums to these. The first International Standard on Auditing (ISA) was issued in 1991, and
this has remained the series to the present day.
The steps involved in conduct of an audit are as follows

1.
First of all the management of the audit firm check the internal control system of the
client, to check the weakness in the system and also to the extent of the test checking to
be applied.
2.
The next step in the audit is to prepare the audit plan. In this all the process and the
scope, the no of employees appointed, the timeframe, strategy of audit, system notes,
and important points of previous and current year are mentioned. It is the planning of
all the audit work to be conducted during the audit.
3.
The next step is to check the compliance of the management with the rules and
regulations.
4.
The next step is the conduct of audit according to the audit plan. In this vouching,
verification, stock take and other audit processes are conducted according to the time
frame provided for the audit.
5.
The next step is the analytical procedure in which the material differences and variance
analysis is conducted through checking of the matters of concern.
6.
The next step is to point out the errors, frauds and mistakes to the management of the
business and get their clarification on them.

7.
After that the audit team makes the reports of the errors and mistakes in the accounting
record for the review of the manager and the partner or owner of the firm.
8.
The partner completely examines the points of concern and then made them the part of
his report. This report is presented to the financial statements of the company.
9.
After that the audit team makes the file of the client and also accesses their
performance at the audit and also makes recommendations for the betterment of the
process.
INTRODUCTION OF SECTOR
ORIGIN OF THE REPORT
Internship is the part of MBA course and it is an opportunity to any fresh graduate gain
practical experience in corporate world. I had opportunity to work with Auditors of CA
Firm. With this company I tried to implement educational experience in this company.
Auditing section of CA firm support me to do audit in different type of organization
and share with me their experiences.
This research report is the reflection of my working experience at this company and
summary of my responsibilities that had been bestowed on me. The report topic is
Analysis on working of an Audit firm
SCOPE
I audited different types of company through this CA firm. I had scope to learn about
the groups activities while I came into contact with different departments. I had
opportunity to inform about the Audited Companys performance for auditing.
LIMITATIONS
There were few limitations in preparing this report. CA firm is working for other
company and they are concern about any information confidential and sensitive to

them. I have to submit an application to my firm supervisor Mr. Ayub Aslam, for his
prior consent in getting information to determine audit fees and for the time
limitation I was able collect only few data but those are important and enough for
analysis.
AUDIT
DEFINITION OF AUDIT
The general definition of an audit is an evaluation of a person, organization, system, process,
enterprise, project or product. The term most commonly refers to audits in accounting, but
similar concepts also exist in project management, quality management, and for energy
conservation.
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of correspondence
between those assertions and established criteria and communicating the results to interested
users.
Audits are performed to ascertain the validity and reliability of information; also to
provide an assessment of a system's internal control. The goal of an audit is to express
an opinion on the person / organization / system (etc.) in question, under evaluation
based on work done on a test basis.
Auditing is a vital part of accounting. Traditionally, audits were mainly associated with
gaining information about financial systems and the financial record s of a company or
a business. However, recent auditing has begun to include non-financial subject areas,

such as safety, security, information systems performance, and environmental
concerns. With nonprofit organizations and government agencies, there has been an
increasing need for performance audits, examining their success in satisfying mission
objectives. As a result, there are now audit professionals who specialize in security
audits, information systems audits, and environmental audits.
In accounting, an audit is an independent assessment of the fairness by which a
company's financial statements are presented by its management. It is performed by
competent, independent and objective person(s) known as auditors or accountants,
who then issue an auditor's report based on the results of the audit.
TYPES OF AUDITORS
Auditors of financial statements can be classified into two categories:
1.
EXTERNAL AUDITOR / STATUTORY AUDITOR
External auditor / Statutory auditor is an independent Public accounting firm engaged

by the client subject to the audit, to express an opinion on whether the company's
financial statements are free of material misstatements, whether due to fraud or
error. For publicly-traded companies, external auditors may also be required to
express an opinion over the effectiveness of internal controls over financial reporting.
External auditors may also be engaged to perform other agreed -upon procedures,
related or unrelated to financial statements. Most importantly, external auditors,
though engaged and paid by the company being audited, are regarded as independent
auditors.
2.
INTERNAL AUDITOR
Internal auditors are employed by the organization they audit. They perform various
audit procedures, primarily related to procedures over the effectiveness of the
company's internal controls over financial reporting. Due to the requirement of Section
also assess the effectiveness of their internal controls over financial reporting (as also

required of the external auditor); internal auditors are utilized to make this
assessment. Though internal auditors are not considered independent of the company
they perform audit procedures for, internal auditors of publicly -traded companies are
required to report directly to the board of directors, or a sub -committee of the board
of directors, and not to management, so to reduce the risk that internal auditors will
be pressured to produce favorable assessments. The most used Internal A udit
standards are those of the Institute of Internal Auditors.
HISTORY
HISTORY OF ICAP AND AUDIT IN PAKISTAN
The Chartered Accountants Ordinance, 1961, received the asset of the President of Pakistan on
March 3, 1961, and was published in Part 1 of Extraordinary Gazette of the Pakistan on March
10, 1961. The Institute of Chartered Accountants of Pakistan came into being on July 1, 1961. A
draft of the Chartered Accountants bylaws was also prepared and published for inviting public
comments.
The Institute of Chartered Accountants of Pakistan is now a statutory autonomous body and is
administered by a council of thirteen. The Chartered Accountants bylaws also provided for the
foundation of regional committee to look after the interests of their members. At present there
are two such committees, one each in Lahore and Karachi. The members are divided into two
classes namely Associates and Fellows (ACA, FCA).
REQUIREMENT OF LAW
According to the law every public limited company and every Private Limited company having
share capital of more than three million should get it books of accounts audited from a
Chartered Accountants as defined in Chartered.

APPOINTMENT OF AN AUDITOR
The management of a private company appoints the auditor while the auditor of the public
company is appointed in the Annual General Meeting by the Shareholders.
INTERNATIONAL STANDARDS OF AUDITING (ISA)

EARLY HISTORY
Groundwork for an international set of standards for auditing began in 1969with the
publication of a number of reports focusing on international auditing by the Accountants
International Study Group, comparing the situation in Canada, the UK, and US. A few years
later, the establishment of the International Accounting Standards Committee in 1973
generated many calls for a similar body to be set up on the auditing front. Amongst the many
calls was a well-researched argument from Maurice Moniz, Director of Accounting Research at
AICPA, in his 1978 book International Auditing Standards' which set out the case for a set of
standards, and went on to recommend the establishment of an International Auditing
Standards Committee (IASC). The title from Moonlit is useful in comparing the situation
worldwide prior to the adoption of an international set of standards, and in identifying the
various calls for international standards at the time. In the late 1970s the Council of
International Federation of Accountants(IFAC) created the International Auditing Practices
Committee (IAPC) which would be a standing committee of the IFAC Council and subsequently
the IFAC Board (in May 2000 the IFAC Council was renamed the IFAC Board).Between 1980 and
1991 the IAPC issued International Auditing Guidelines(IAG) and addendums to these.
The first International Standard on Auditing (ISA) was issued in 1991, and this has remained the
series to the present day.
19th July 2001
IFAC issued a press release reporting on the recommendations from the IAPC Review Task Force
which identified a need to "More clearly establish and communicate the authority of IAPC
International Standards on Auditing and other guidance".

2002
The IAPC was renamed as the International Auditing and Assurance Standards Board (IAASB).
Membership of the organization was widened to include non-auditors.
1st January 2010
The IAASB made available the full text of International Standards on Auditing for free on its
website and stated that all future final pronouncements would be published for free online.
Access to IAASB publications is available to users who register via the IFAC website.
21st May 2010
The European Commission issued the communication; "Reinforcing the Statutory audit in the
European Union" (COM/2010/286) on 21 May 2010which identified the requirement to use ISAs
for all EU statutory audits from2012 onwards as a short term priority. The communication was
issued with the press release Audit of company accounts: Commission sets out ten priorities to
improve quality and protect investors.
6th May 2011
The Auditing Practices Board (UK) issued a press release announcing their intention to adopt
the International Standards of Auditing (ISAs) issued by the International Auditing and
Assurance Standards Board (IAASB).
22nd December 2011
The APB issued International Standards on Auditing (ISAs) (UK and Ireland).The APB press
release stated that these would 'apply to all audits of financial statements for periods
commencing on or after 15 December 2011. The APBs previous standards, Statements of
Auditing Standards (SASs), are applied for audits of financial statements for periods
commencing before that date.
2012
The International Auditing and Assurance Standards Board (IAASB) completed a project (known
as the 'Clarity Project') to update and reformat the International Standards on Auditing (ISAs)
which sought 'to improve the understandability of the ISAs and make them more compatible

with regulatory frameworks, including the ECs Statutory Audit Directive.' The Clarified ISAs and
other related documentation (including FAQs) are available from the IAASB Clarity center.
THE ROLE OF ORGANIZATION IN ECONOMY

I.
THE CRITICAL ROLE AND MORAL OF THE AUDIT
Professional, skilled and independent auditors are key to helping investors in public markets
they separate the credible managers from the charlatans. By building a basis for confidence,
auditors reduce financing costs, and contribute to an efficient allocation of capital to fuel
economic growth.
The auditor, by representing the public interest in reliable information, forgoes popularity with
management and takes on risk. That moral choice makes the free market possible. In doing so,
the auditor also changes the conduct of management of the audited entity. In this role, the
independent auditor is the protector of free markets.
As the Scotsman and father of modern economics, Adam Smith, said, since company directors
manage other peoples' money, not their own, "it cannot well be expected that they should
watch over it with the same anxious vigilance with which the partners in private copartner
frequently watch over their own.
Thus the inspiration for the audit profession, created in the century after he wrote to enable
industrialists to amass the funds necessary for the great, capital intensive ventures of the
19th and early 20th centuries.
The rationalist says that reason should motivate the users of capital to further develop our
markets by supporting in iterative to enhance the scope, and independent validation and
analysis of, information.
But Hume's Treatise on Human Nature teaches that we are motivated not by reason, but by a
general, continually present desire for pleasure and the avoidance of pain.

Corporate managers don't necessarily want to provide more, or more insight AAC, information
about their stewardship, lest the spotlight reveal their own warts and blemishes.
As I said earlier, auditors may not necessarily want to tell it as they see it, lest they lose the
engagement. I was recently told by one accountant that the AYUB ASLAM & CO. CHARTERED
ACCOUNTANTS 's proposal to require identification of the engagement partner in the audit
report could, in his opinion, discourage new engagement partners from requiring restatements
when they find errors in past accounts, lest the partner become known to potential future
clients as a strict enforcer.
Adam Smith was known to say that it is not because of the benevolence of the baker that we
have bread, but because of his desire to make money. Auditing is a public good, but we do
harm to the public interest in that good when we forget that it is also a business.
We may wish auditors to be benevolent too, but they must act rationally, given the constraints
the system imposes.
II.
AUDITOR INDEPENDENCE, OBJECTIVITY AND SKEPTICISM

ARE CRITICAL TO EFFECTIVE AUDITS
After nearly ten years of inspecting the audits of issuers, the AYUB ASLAM & CO. CHARTERED
ACCOUNTANTS has identified hundreds of engagements that did not meet AYUB ASLAM & CO.
CHARTERED ACCOUNTANT standards in significant respects.
These are serious audit deficiencies that mean, essentially, that the auditor left insufficiently
audited an aspect of the financial statements that could include an undetected material
misstatement.
This is a hard message. It is to be expected that the inspection findings are a disappointment to
a profession proud of its reputation for, and substantial capital investment in, technical
excellence.
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Given this investment, I have no doubt that the profession as a whole is capable of delivering a
high level of assurance as to the fairness of public company accounts. Yet some firms have even
seen the number of findings increase in recent years.
It should not be surprising that auditor skepticism is both one of the most challenging issues in
auditing as well as one of the most important for audit regulators to protect.
In this respect, we are grateful for the leadership of Baroness Hogg and Stephen Had drill: we
always benefit from the consultation papers of the Financial Reporting Council, as well as the
publications of the Scottish Institute, the Institute of Chartered Accountants of England and
Wales and others.
In December 2012, the AYUB ASLAM & CO. CHARTERED ACCOUNTANTS issued a staff audit
practice alert on Maintaining and Applying Professional Skepticism in Audits to remind auditors
of the critical importance of professional skepticism to effective audits.
The Alert also describes a number of impediments to professional skepticism including, for
example, unconscious human biases and other circumstances that can cause auditors to gather,
evaluate, rationalize, and recall information in a way that is consistent with client preferences
rather than the interests of external users.
Academics tell us that auditor independence, objectivity and skepticism is all the more
important given the extraordinary amount of judgment that management is required to put
into financial reporting, at the behest of investors looking for more
According to Prentice, the more subjective the judgment, and the less certain the facts, the
more influential the self-serving bias is likely to be, but the bias is pervasive and unrelenting."
Other human biases also have the potential to impede professional skepticism. They are
behavioral concepts well-known to psychologists but not yet sufficiently acknowledged in audit,
such as obedience to authority, groupthink, over-optimism, over-confidence and escalation of
commitment.
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We should be attentive to research on the effects that switching to the issuer-pays model had
on the credit rating industry. A recent study published in the Journal of Financial Economics
found that switching to the issuer-pays model was associated with higher ratings after the
switch.
III.
THE INITIATIVES ARE AIMED AT ENHANCING THE

RELEVANCE,
CREDIBILITY
AND
TRANSPARENCY
OF
AUDITS
Against this backdrop, the AAC is pursuing several policy initiatives to consider ways to enhance
the relevance, credibility and transparency of public company audits.
We have many projects under way to improve specific procedures auditors perform,
procedures related to related parties, use of specialists, uses of other auditors in multi-location
and multi-firm audits. I would be happy to discuss these projects later in the evening.
But let me focus on three that most fundamentally go to the issues I've raised. They are
intended to consider and find ways to address impediments to audit quality that transcend the
auditor's procedures and are rooted in structural constraints.
They were each commenced with concept releases, meant to elicit and explore the best ideas
on the role of the independent audit in our financial system, economy and society.
IV.
AUDIT TRANSPARENCY
That leads me to the second of these initiatives. We have proposed certain transparency
measures, specifically to require disclosure in the audit report of the name of the engagement
partner as well as participating firms in the audit.
Today, the audit report typically includes only the name of the principal auditor. Yet we are
reminded, from time to time, that even sophisticated users of audit reports do not realize that
audits for large companies are often performed by consortiums of separate audit firms.
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It is the work of these undisclosed subsidiary auditors, and the rigor of the principal auditor's
oversight of their work, that provides financial market participants with assurance that the
necessary controls are in place and working effectively.
V.
AUDITOR INDEPENDENCE
Finally, in August 2011, the Board issued a Concept Release on Auditor Independence and Audit
Firm Rotation. The concept release notes the importance of auditor independence to the
viability of auditing as a profession and highlights the risk to independence arising from the
"client-pays" model.
The AYUB ASLAM & CO. Chartered Accountants has embarked on several public meetings to
engage prominent and though AAC commenters with various, often conflicting, viewpoints.
They have included some of the most authoritative and experienced voices to address the
subject of audit quality, auditor independence and the challenges to both. They offered varied
perspectives as investors, senior executives and audit committee chairs of major corporations,
chief executive officers of audit firms, academicians, and former regulators.
But as many academics who have participated in the AYUB ASLAM & CO. CHARTERED
ACCOUNTANTS 's public meetings have noted, it is questionable whether the findings from this
stream of research provide much useful guidance to policy makers' consideration of term limits,
because they focus on environments where auditor rotation is voluntary rather than
mandatory.
In particular, academics have observed that voluntary rotation may be associated with auditorissuer disagreements, aggressive accounting, or other financial reporting issues.
In a voluntary environment the auditor may have an incentive to please the client even in the
first year, i.e. to build a long-term relationship. In AYUB ASLAM & CO. CHARTERED
ACCOUNTANTS inspections, we have identified and documented the promises that some
auditors have made to prospective clients, to be a "trusted partner," to support the client's
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"desired outcome" in accounting matters, to tread a "reduced footprint" to lessen "audit
fatigue."
CORE PRINCIPLES AND VALUES

Working with firms clients
AYUB ASLAM & CO.s assemble the right multi-disciplinary team for your business, drawing on
our global network of professionals. Working with you in a collaborative style, AYUB ASLAM &
CO.s gain a clear understanding of your organization and strive to identify issues before they
become problems. You get the people you need, wherever in the world you need them, backed
up ending practices, methodologies and tools.
CORE PURPOSE
Our core purpose is to be a caring, professional firm deeply committed to our clients' success.
CORE VALUES
Ayub Aslam &Co. has been built on a number of core values.
BEING PROACTIVE
We take the initiative and actively seek solutions for our clients that require research and extra
effort. In the case of business clients, we will visit their premises at the start of our
relationship, to help ensure that we take into account everything that has a bearing on their
financial position.
CAPABILITY
We invest a significant amount of time and money in furthering the skills of our team. We do
so by engaging in a strong continuing professional development program, investing in research
resources and encouraging all members of our team to actively seek information and to come
up with ideas that will create superior outcomes for our clients.
CLIENT SERVICES
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AAC has built its reputation on integrity by providing excellent service to our clients. We
understand a professional accounting firm must be many things to its clientele - a
management and financial advisor, a business consultant, an investment counselor, a tax and
pension planner - in addition to providing the traditional accounting, auditing, payroll services,
preparing business certification, nonprofits startups and much more!
When asked, more than 99 percent of our clients stated that they were more than pleased
with the overall service (timeliness, capabilities, responsiveness, accuracy, and cost benefit)
they received at Ayub Aslam & Co. Inc. Ayub Aslam & Co is able to provide just the right
combination of consulting services and accounting skills to small business owners, individuals,
non-profits and large corporations. We stand behind our clients with on-going support,
training and development functions.
GOOD COMMUNICATION
We believe in promoting effective two-way communication between our clients and us. We
achieve this by being accessible to our clients so that they can have their questions answered
as quickly as possible, and by supplying information to them that is timely, accurate and easy
to understand.
GOOD VALUE FOR MONEY
At Ayub Aslam & Co. we do not have the overheads of the large accounting firms yet we
have a similar spread and depth of experience within our highly competent team. This means
we are able to offer an exceptional standard of service without the big end of town fees.
COMMITMENT
Ayub Aslam & Co. commitment in keeping your business in compliance with regulatory
requirements and providing excellent customer service for the progression of your business is
of the utmost importance. These commitments are made to YOU; our client, your employees,
and your organization as a whole. We are here to assist in your success.
15
CONTACT US
NAME
AYUB ASLAM & CO. CHARTERED ACCOUNTANTS
YEAR OF ESTABLISH
1989
OWNERS/ PARTNERS
Mr. AYUB ASLAM CHUGHTAI
Mr. ABDUL RAUF
Mr. CH ABDUL RASHID GILL
ADDRESS
33- F JOHAR TOWN LAHORE
TELEPHONE
042-36369306
FAX
042-36360196
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BUSINESS PHILOSOPHY
The certified public accounting firm AYUB ASLAM & CO. CPA was established to identify and
fulfill the financial and accounting needs of the small to large business client as well as high
profile individuals.
The Firm is dedicated to the monetary growth of businesses and individuals in the community
by providing them with the financial tools and services necessary to build their companies and
personal net worth. With 20 years of experience in public accounting, the Firm is committed to
the achievement of clients' financial goals through excellent service, personal attention and
guidance. Just a few of the services the Firm provides include accounting and bookkeeping;
payroll management and reporting; tax planning and return preparation; financial planning and
reporting; audits, reviews and compilations; and IRS representation and litigation support.
The success of an accounting firm depends upon how well it understands the needs of its
clients and how competently and efficiently it meets those needs. We are committed to
developing a relationship with each client that will foster an understanding of that client's
requirements and, above all, to maintaining the highest level of standards of our profession.
We pride ourselves in not being just another 'consultancy' organization. Our business
philosophy is to add value to our client's business by providing a solution most appropriate to
the business context, with specific emphasis on the implement ability of our recommendations.
We believe in building long term relationships with our clients, and it is no surprise that our
client retention rate is among the highest in the business.
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Our philosophy of client service boils down to:
Professional, high quality legal work for clients in Company secretarial matters, Income
Tax, Sales Tax, Accounting, Bookkeeping and registration of properties including solicitor
services
Zealous advocacy on behalf of clients
Personal attention to clients (returning phone calls/emails promptly, keeping clients
regularly informed about the status of their case and working with clients as
"teammates")
Reasonable billing rates
No charges for initial advise/consultation
We've followed this business philosophy since we began the firm, leading to our large base of
thousands of loyal clients who return to us for their legal and revenue needs.
Our firm receives the majority of its clientele as a result of referrals from other clients,
accountants and lawyers. We consider this to be the highest compliment our colleagues and
clients can ever give.
By practicing our philosophy of client services and achieving exemplary results, verdicts and
settlements, we meet the high standards we set for representing our clients (both individuals
and corporate).
The firm recognizes that every client is unique. We take special care to tailor the
representation of each of our clients to fit their specific needs and objectives in the short
and long term.
Before beginning work with regards to the context of the subject our staff meets with clients at
length to discuss and devise the most appropriate method to achieve the desired results. Our
firm is not only concerned with results; we are equally concerned with implementing the most
cost-efficient method to achieve those results.
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The firm strives to settle their clients disputes with the government departments promptly
and efficiently through preparedness, attentiveness and advocacy.
AUDIT AND ASSURANCE

QUALITY CONTROL SYSTEM
We have a very strong quality assurance system in place, the policies adopted in this respect
include involvement of an additional partner as advisory partner in every major audits,
dedicated team for specified sector, specialized training courses, engagement quality assurance
review programs and a formalized consultative framework. We bring to every aspect of our
service the highest levels of commitment, professionalism, energy, and enthusiasm.
KEY COMPONENTS OF QUALITY CONTROL

GLOBAL CLIENT SERVICE STANDARDS
We have 10 service standards we use to monitor and evaluate the quality of service provided
by member firms worldwide.
CLIENT ACCEPTANCE AND CONTINUANCE
To ensure that we do not incur unacceptable risks, we have rigorous client acceptance and
continuance procedures, which require review by a special quality-control group in memberfirm national offices.
COMMITMENT TO TRAINING AND SPECIALISATION
Our extensive curriculum covers ethics, independence, core and advanced technical matters,
and a variety of business advisory and management programmers.
INTERNAL PRACTICE REVIEWS
To help maintain a high level of consistency, partners and senior managers periodically
review the quality control standards and audit work of colleagues at other offices and
member firms.
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ENGAGEMENT QUALITY CONTROL REVIEWS
A partner who is not directly associated with the engagement but who is knowledgeable
about the clients industry reviews financial statements and deliverables we issue and select
work papers; this individual then consults on any technical accounting issues or significant
audit judgments.
TRUST & INDEPENDENCE
We focus on our core strengths of accounting, taxation and commercial advice, and refer
other technical advice to our business partner referral network. This ensures that we
maintain our independence, which builds trust with our clients. We hold the client/advisor
trust relationship as our highest principle.
BEST SOLUTIONS
With our business partner referral network our clients can achieve a best fit solution for all
of their commercial and professional needs. We have built and maintain strong alliance
partnerships with experts in the fields of law, property, IT, banking & finance, advertising &
marketing, business & personal risk insurance, and financial planning.
NETWORK OPPORTUNITIES
An extremely valuable outcome of our alliance partner relationships are the network
opportunities that result. Cross referral opportunities through our stable of quality clients
strongly adds to the network. Whilst intangible, this reputational network is a strong
commercial advantage enjoyed by our clients.
KNOWLEDGE TRANSFER
We focus on delivering commercial knowledge and education to our clients. With an
increased understanding of the market, and of their own businesses, our clients are
empowered to improve the quality of their business. We strive to transfer our technical and
commercial knowledge to our clients.
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PROFESSIONALISM
By combining our expertise and experience, we approach engagements from a team concept
utilizing the specialized experience of each team member to make sure each client receives
close personal professional attention. Through hard work, we have earned the respect of the
business, financial, and governmental communities.
VALUE
Although we are an accounting firm focused on serving the needs of our clients, we are also
a business in the truest sense.
We realize that clients, just as we do, search out a
combination of attributes in a professional service firm. The combined attributes of quality,

professionalism, and reasonable cost equates to creation of Value. The goal of every
engagement of the firm, from a simple tax return preparation to a risk based financial and
compliance audit, is the creation of Value in assisting our client reach their goals.
RESPONSIVENESS
Our firm is responsive. Companies who choose our firm rely on competent advice and fast,
accurate personnel. We provide total financial services to individuals, large and small
businesses and other agencies.
To see a listing of our services, please take a moment and look at our services page. Because
we get new business from the people who know us best, client referrals have fueled our
growth in the recent years.
CLIENT NEEDS
The needs of our clients are common and vary only in degree, depending on the complexity
of the organization. We believe that the main requirements are consistent, technical
excellence, service delivery to satisfy statutory and management scheduled requirements, in
adherence to timetable and budget.
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Our local engagement team would conduct on-site visits at significant locations throughout
your organization to perform in-depth business diagnostics of operations, accounting policies
and internal controls to assess business opportunities and audit risks.
This exercise will result in a report to top management with suggestions for action. The
dialogue around this report with top management will form the foundation of effective,
harmonious business relationship in the future. It offers the additional benefits of:
Familiarizing the engagement team with relevant audit risks, opportunities for
improving accounting policies and internal controls;
Providing an analysis of your key business systems, internal controls and procedures at
all important locations. The review will generate business oriented recommendations
for improved efficiency and cost saving;
Achieving timely and constructive communication with your local and corporate
management in issues and profit improvement opportunities;
Avoiding surprises and resultant reporting delays;
Providing early warning of concerns regarding the resilience of your essential control
and information infrastructure.
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VISION STATEMENT
We will be a customer-focused support organization that provides value-added audit and

consulting services to assist in the achievement of the goals and performance objectives and in
compliance with contract requirements.
We will be regarded as a valued resource by
management, staff, and our audit clients. We will
provide superior service and perform audits and
studies in a spirit of partnership with objectivity,
fairness, openness, and in accordance with the highest
professional and ethical standards. We will provide
Berkeley Lab with an institutional perspective on audit
issues to assist in the seamless integration of operational, administrative, and technical
resources.
We will work to deliver customer satisfaction. We believe in respecting our customers, listening
to their requests, understanding their expectations, and delivering products and services, in a
timely and cost-competitive manner that meet agreed-upon standards.
We will promote teamwork, efficiency, innovation, workforce diversity, and the development of
the individual by encouraging participation, mutual support, candor, creativity, personal
excellence, continuing education, and challenging standards of performance.
We continually improve our auditing and consulting programs and strive toward technological
and industry leadership. We will support the pursuit of professional advancement and the
sharing of knowledge and experience with our peers.
23
MISSION STATEMENT
Mission is to provide an unrivaled level of service and to contribute to the sustained growth of
the economy through the execution of vigorous, fair, and high-quality audits based on clear
leadership and creative teamwork.
CORPORATE OBJECTIVES
OBJECTIVES OF AUDIT
24

For a better understanding we could classify the objective of audit as:
1. Primary Objectives
2. Secondary Objectives
PRIMARY OBJECTIVES
To determine and judge the reliability of the financial statement and the supporting accounting
records of a particular financial period is the main purpose of the audit. As per the Indian
Companies Act, 1956 it is mandatory for the organizations to appoint a auditor who, after the
examination and verification of the books of account, disclose his opinion that whether the
audited books of accounts, Profit and Loss Account and Balance Sheet are showing the true and
fair view of the state of affairs of the company's business. To get a true and fair view of the
companys affairs and express his opinion, he has to thoroughly check all the transactions and
relevant documents of the company made during the audited period. This will help the auditor
to report the financial condition and working result of the organization. While carrying out the
process of audit, the auditor may come across certain errors and frauds. But detection of fraud
or errors is not the primary objective of the audit. They are come under the secondary
objectives of audit.
SECONDARY OBJECTIVES
In order to report the financial condition of the business, auditor has to examine the books of
accounts and the relevant documents. In that process he may come across some errors
and frauds. We may classify these errors and frauds as below:
1. Detection and prevention of Errors

2. Detection and prevention of Frauds
DETECTION AND PREVENTION OF ERRORS

25

Following types of errors can be detected in the process of auditing.
1. Clerical Errors
2. Errors of Principle
CLERICAL ERRORS
Due to wrong posting such errors may occur. Money received from Microsoft credited to the
Semens account is an example of clerical error. Even though the account was posted wrongly,
the trial balance will agree. We can classify clerical errors as below.
I.
Errors of Commission
II.
Errors of Omission
III.
Compensating Errors
I. ERRORS OF COMMISSION
These errors are errors caused due to wrong posting either wholly or partially in the books of
original entry or ledger accounts or wrong totaling, wrong calculations, wrong balancing and
wrong casting of subsidiary books. For example Rs. 5000 is paid to Microsoft for the supply of
windows program and the same is recorded in the cash book. While posting the ledger the
Microsoft's account is debited by Rs. 500. It may be due to the carelessness of the accountant.
Most of these errors of commission are reflected in the trial balance and can be identified by
routine checking of the books.
II. ERRORS OF OMISSION
When there is no record of transactions in the books of original entry or omission of posting in
the ledger could lead to such errors. Sales not recorded in the sales book or omissions to enter
invoices in the purchase book are examples of Errors of Omission. Errors due to entire omission
will not affect the trial balance. Errors due to partial omission will affect the trial balance and
can be detected.
26

III. COMPENSATING ERRORS
Errors committed in such a way that the net result of these errors on the debit side and credit
side would be nullifying the net effect of the error. For example, Ram's account which was to be
debited for Rs. 5000 was credited for Rs. 5000 and similarly, Account which was to be credited
for Rs. 5000 was debited for Rs. 5000. These two mistakes will nullify the effect of each other.
Unless detailed investigation is undertaken such errors are difficult to locate as both the sides
of the trial balance are equally affected.
2. ERRORS OF PRINCIPLE
While recording a transaction, the fundamental principles of accounting is not properly
observed, these types of errors could occur. Over valuation of closing stock or incorrect
allocation of expenditure or receipt between capital and revenue are some of the examples of
such errors. Such errors will not affect the trial balance but will affect the Profit and Loss
account. It may occur due to lack of knowledge of sound principles of accounting or can be
committed deliberately to falsify the accounts. To detect such errors, the auditor has to do a
careful examination of the books of account.
DETECTION AND PREVENTION OF FRAUDS

To get money illegally from the organization or from the proprietor frauds are committed
intentionally and deliberately. If it remains undetected, it could affect the opinion of the auditor
on the financial condition and the working results of the organization. Therefore, it is necessary
for the auditor to exercise utmost care to detect such frauds. It can be committed by the top
management or by the employees of the organization.
Frauds could be of the following types:
1. Misappropriation of cash
2. Misappropriation of goods
3. Falsification or Manipulation of accounts
4. Window dressing
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5. Secret Reserves
MISAPPROPRIATION OF CASH
Since the owner has very limited control over the receipt and payments of cash,
misappropriation or defalcation of cash is very common especially in big business
organizations.
Cash can be misappropriated by various ways as mentioned below:
a. recording fictitious payments
b. recording more amount than the actual amount of payment
c. Suppressing receipts
d. recording fewer amounts than the actual amount of payment.
MISAPPROPRIATION OF GOODS
Companies handling with high value goods are pray to this kind of misappropriation. Without
proper records of stock inward and stock outward, it is difficult for the auditor to find out such
fraud. Periodical and surprise checking of stock and maintaining the proper record of inward
and outward movement of stock can reduce the possibility of such fraud.
FALSIFICATION OR MANIPULATION OF ACCOUNTS
In order to achieve certain specific objectives, accounts may be manipulated by those
responsible persons who are in the top management of the organization. They prepare
accounts such a manner that they disclosed only a fake picture not the true picture. Some of
the ways used in manipulating the accounts are as follows
1. Inflating or deflating expenses and incomes
2. Writing off of excess or less bad debts
3. Over-valuation or under-valuation of closing stock.
4. Charging excess or less depreciation
5. Charging capital expenditures to revenue and vice-versa
28

6. Providing for excess or less doubt AAC debts
7. Suppressing sales and purchase or showing fictitious sales and purchases etc.
WINDOW DRESSING
The way of presenting the financial data in a much better position than the original position. It
is known as window dressing. Some of the reasons for doing window dressing are as follows:
1. To win the confidence of share holders
2. To obtain further credit
3. To raise the price of shares in the market by paying higher dividend so that shares
held may be sold
4. To attract prospective partners or shareholders.
5. To win the confidence of shareholders.
SECRET RESERVES
In secret reserves, accounts are prepared in such a way that they disclose worse picture than
actually what they are. The objectives of preparing accounts in this way are:
1. To conceal the true position from the competitors.

2. To avoid or reduce the tax liability
3. To reduce the price of shares in the market by not paying dividend or paying lower
dividend so that the shares may be bought at a much lower price.
It is very difficult to detect such frauds since these frauds are committed by those persons in
the organizations who are at the top positions like directors, managers, financial controllers
etc. To detect these kinds of frauds, the auditor must be vigilant and should make searching
inquiries to arrive at the true position.
OBJECTIVE
29

The objective of the auditor is to identify and appropriately assess the risks of material
misstatement, thereby providing a basis for designing and implementing responses to the risks
of material misstatement.
PERFORMING RISK ASSESSMENT PROCEDURES

The auditor should perform risk assessment procedures that are sufficient to provide
reasonable and designing further audit procedures.
Risks of material misstatement can arise from a variety of sources, including external factors,
such as conditions in the company's industry and environment, and company-specific factors,
such as the nature of the company, its activities, and internal control over financial reporting.
For example, external or company-specific factors can affect the judgments involved in
determining accounting estimates or create pressures to manipulate the financial statements to
achieve certain financial targets. Also, risks of material misstatement may relate to, e.g.,
personnel who lack the necessary financial reporting competencies, information systems that
fail to accurately capture business transactions, or financial reporting processes that are not
adequately aligned with the requirements in the applicable financial reporting framework.
Thus, the audit procedures that are necessary to identify and appropriately assess the risks of
material misstatement include consideration of both external factors and company-specific
factors. This standard discusses the following risk assessment procedures:
a. Obtaining an understanding of the company and its
b. Obtaining an understanding of internal control over financial reporting
c. Considering information from the client acceptance and retention evaluation, audit
planning activities, past audits, and other engagements performed for the company
d. Performing analytical procedures
e. Conducting a discussion among engagement team members regarding the risks of
material misstatement
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f. Inquiring of the audit committee, management, and others within the company about
the risks of material misstatement
This standard describes an approach to identifying and assessing risks of material misstatement
that begins at the financial statement level and with the auditor's overall understanding of the
company and its environment and works down to the significant accounts and disclosures and
their relevant assertions. In an integrated audit, the risks of material misstatement of the
financial statements are the same for both the audit of internal control over financial reporting
and the audit of financial statements. The auditor's risk assessment procedures should apply to
both the audit of internal control over financial reporting and the audit of financial statements.
OBTAINING AN UNDERSTANDING OF THE COMPANY AND ITS ENVIRONMENT
The auditor should obtain an understanding of the company and its environment
("understanding of the company") to understand the events, conditions, and company activities
that might reasonably be expected to have a significant effect on the risks of material
misstatement. Obtaining an understanding of the company includes understanding:
a. Relevant industry, regulatory, and other external factors;
b. The nature of the company;
c. The company's selection and application of accounting principles, including related
disclosures;
d. The company's objectives and strategies and those related business risks that might
reasonably be expected to result in risks of material misstatement; and
e. The company's measurement and analysis of its financial performance.
In obtaining an understanding of the company, the auditor should evaluate whether significant
changes in the company from prior periods, including changes in its internal control over
financial reporting, affect the risks of material misstatement.
31

INDUSTRY, REGULATORY, AND OTHER EXTERNAL FACTORS
Obtaining an understanding of relevant industry, regulatory, and other external factors
encompasses industry factors, including the competitive environment and technological
developments; the regulatory environment, including the applicable financial reporting frame
work and the legal and political environment; and external factors, including general economic
conditions.
NATURE OF THE COMPANY
Obtaining an understanding of the nature of the company includes understanding:
The company's organizational structure and management personnel;
The sources of funding of the company's operations and investment activities, including
the company's capital structure, noncapital funding (e.g., subordinated debt or
dependencies on supplier financing), and other debt instruments;
The company's significant investments, including equity method investments, joint

ventures, and variable interest entities;
The company's operating characteristics, including its size and complexity;
The sources of the company's earnings, including the relative profitability of key
products and services; and
Key supplier and customer relationships.
COMPANY OBJECTIVES, STRATEGIES, AND RELATED BUSINESS RISKS

The purpose of obtaining an understanding of the company's objectives, strategies, and related
business risks is to identify business risks that could reasonably be expected to result in
material misstatement of the financial statements.
The following are examples of situations in which business risks might result in material
misstatement of the financial statements:
32
Industry developments (a potential related business risk might be, e.g., that the
company does not have the personnel or expertise to deal with the changes in the
industry.)
New products and services (a potential related business risk might be, e.g., that the new
product or service will not be successful.)
Expansion of the business (a potential related business risk might be, e.g., that the
demand for the company's products or services has not been accurately estimated.)
The effects of implementing a strategy, particularly any effects that will lead to new
accounting requirements (a potential related business risk might be, e.g., incomplete or
improper implementation of the strategy.)
COMPANY PERFORMANCE MEASURES

The purpose of obtaining an understanding of the company's performance measures is to
identify performance measures, whether external or internal, that affects the risks of material
misstatement.
The following are examples of performance measures that might affect the risks of material
misstatement:
Measures that form the basis for contractual commitments or incentive compensation
arrangements;
Measures used by external parties, such as analysts and rating agencies, to review the
company's performance; and
Measures the company uses to monitor its operations that highlight unexpected results
or trends that prompt management to investigate their cause and take corrective
action, including correction of misstatements.
33

AUDIT
Performing a high-quality audit and sustaining the public trust
Within AYUB ASLAM & CO.s large network of client member firms, the firm has robust audit
tools, resources and procedures to provide the means for their professionals to deliver high
quality audit services. In delivering these services the firm adheres to the highest standards of
independence, professional objectivity and technical excellence. The Firms audit approach
is applied consistently around the calendar, while providing the flexibility to serve the unique
circumstances and complexities of our clients. Firms audit approach focuses on understanding
the clients global business and control issues from the inside out. It combines a rigorous risk
assessment, diagnostic
processes, and audit
testing
procedures as well
as
continuous assessment of our clients service performance.

The department is headed by Mr. M. Saeed Malik who is assisted by the Audit Manager Khalid
Mehmood. In addition to the audit work, the department also carries out various assignments
of consultancy work as and when assigned. Different kinds of audit services are carried out by
the department such as internal audit, statutory audit, final audit, and interim audit. All kinds of
audit services are offered to the companies willing to get their audit done by the firm
INCOME TAX/SALES TAX RETURNS TAXATION SERVICES
A successful tax function delivers a strong reporting foundation andsustainable planning to help
the business achieve its growth potential.Customers need tax strategies aligned with its busine
ss drivers, built oneffective compliance and open, transparent reporting. So AYUB ASLAM & CO.
Chartered Accountant create highly networked teams who can advise on planning, compliance
and reporting and maintaining good relationships with the tax authorities
The main purpose of the tax department is the filing of Income Tax returns of local and
multinational companies. Income Tax and Sales Tax returns are both filled by the persons
assigned for this tasks and companys most revenue is generated from these activities of filing
34

income tax and sales returns. Mr. Zulfiqar enjoys an excellent reputation among the taxation
circles.
Strategic tax approaches are:
Builds sustainable tax strategies based on technical knowledge,
combined
with
practical, commercial and industry knowledge

Provides the deep accounting and compliance knowledge and tried-and-tested
methodologies clients need for efficient reporting
Helps clients assess, improve and monitor their tax functionsprocesses, controls and
risk management
Supports clients in managing your relationships with tax authorities effectively AYUB
ASLAM & CO. talented people, consistent global methodologies and unwavering
commitment to quality service will help clients build the strong compliance and
reporting foundations and sustainable tax strategies that help clients business
achieve its ambitions.
CORPORATE AFFAIRS
Firms unparalleled nationwide and industry wise relationships, combined with our extensive
understanding of local economies and cultures and our industry sector expertise, help us
consistently deliver value-added solutions to our clients, irrespective of the complexity of
the transaction.
BUSINESS ADVISORY SERVICES
To realize its full potential, every business must deal effectively with the
three
fundamental
challenges of risk, performance and assurance. Without assessing risk they stand to make costly
mistakes. Without improving performance they will cede ground to competitors. And without
robust assurance they may limit the opportunities for future investment.
35

AYUB ASLAM & CO.s brings the right people together to address all three tasks. Because firm
operates assurance and advisory as a single business, firms people gain deeper insight into the
key issues facing organizations today and our clients gain the benefit of a broader range of the
best skills.
The relationship between risk and performance improvement is an increasingly complex
and central
business challenge,
with
business
performance
directly
connected
to
the recognition and effective management of risk.

Whether your focus is on business transformation or sustaining achievement, having the right
advisors on your side can make all the difference. AYUB ASLAM & CO. s advisory professionals
form ones of the broadest global advisory networks of any professional organization, delivering
seasoned multi-disciplinary teams that work with our clients to deliver a powerful
client experience.
TAX ACCOUNTING AND RISK ADVISORY SERVICES
Todays business and tax environment is increasingly complex, there aremore and more deman
ds for transparency, tax departments are underpressure to be more effective and highly
qualified professionals can be hard to obtain. To help clients respond to these demands, AYUB
ASLAM & CO. Chartered Accountants provide assistance in three key areas:
TAX PERFORMANCE
Improving operating strategy and organization design, tax process and controls and data and
system effectiveness
TAX RISK
Accounting supporting quarterly and annual tax provisioncalculations, validating tax balance
sheet accounts and implementing new accounting standards under ICAP and or GAAP
TAX FUNCTION
36

Identifying and prioritizing key risks and assisting with controls monitoring and remediation,
together, firm can develop tax strategies that work for your organization and industry and help
streamline compliance processes. The scope and nature of firms services May differ depending
on whether clients are an audit or non-audit client. Whats consistent is the high-quality
service firms professionals provide to address clients unique needs, throughout the entire tax
life cycle of planning, provision, compliance and working with the tax authorities.
Firms talented people, consistent global methodologies and tools and
unwavering commitment to quality service will help clients build strong compliance and
reporting foundations, sustainable organizational strategies and effective risk management
protocols, helping your business achieve its potential.
INITIAL PUBLIC OFFERINGS SERVICES
AYUB ASLAM & CO.s Services team is comprised of highly experienced professionals who have
successfully guided hundreds of companies through the initial public offering process. Beyond
the technical knowledge necessary to help clients company launch its initial offering, firm
provides practical and unique advice that can help clients attain positive results, both
immediately and in the long term. AYUB ASLAM &CO. Chartered Accountants team includes
dedicated partners and senior staff throughout the firm. Within depth knowledge of GAAP,
International Financial Reporting Standards (IFRS) and SECP rules and regulations, firm can help
clients company navigate the offering process, from initial strategy through implementation
and follow-up.
OUR CODE OF CONDUCT
Our single most important mission is the execution of vigorous, fair, and high-quality audits that
maintain the independence demanded of an auditor. It is likewise our great pleasure and
purpose to contribute to the long-term growth of clients through our high-quality audits.
Guided by these principles, each and every member of our teams and staff endeavors to:
We invest in teams and relationships
We share and collaborate with each other
37

We put ourselves in each others shoes
We focus on enhancing the value of our people
Given this solid foundation, we plan and execute high-quality audits that are based on a
comprehensive understanding of our clients strategies, objectives, and plans, to ensure that
clients will have an experience that is unrivaled.
ROLE OF PERSONAL
PARTNERS
The role of partners is to attract new clients for providing service and sometimes clients also
approach to the firm themselves. The partners must make sure that the existing clients are
provided the best service.
AUDIT MANAGERS
Audit managers must be Chartered Accountant who can assist partners in different way. He/
she should review the audit report before signing the audit report.
A) SUPERVISORS
It is not necessary for the supervisors to a chartered account. He can also be a course
complete student having some experience at the field of accountancy. He is being
supervised by the audit manager when and where an audit activity is performed and how
it is to be performed.
B) SENIOR STUDENT
An audit senior has some experience in the accountancy field before he is designated as
the audit senior of the firm. He is under the direct supervision of audit manager and
supervisor.
C) SEMI- SENIOR STUDENT
38

A semi-senior student must complete 1 year of article ship in the firm. He is liable to the
senior student of the firm when he doing any fieldwork.
D) JUNIOR STUDENT
Junior- Students are fresher who have joined the audit firm.
MARKET STANDING
The closely watched annual survey showed that the "AYUB ASLAM & CO." accounting firms PwC, Deloitte DLTE.UL, KPMG KPMG.UL and Ernst & Young ERNY.UL - took 67 percent of the
total 165.4 billion in fees which the sector earned in 2012, little changed from 2011.
Deloitte maintained its position as the second largest firm, just 210 million in fees behind PwC's
14.9 billion, while growth in income at the big firms collectively slowed to 6 percent from 8
percent in 2011.
"There have been almost no year-on-year changes in market share within the AYUB ASLAM &
CO.," the survey said.
Still, the fees gap between third-ranked Ernst & Young and fourth-placed KPMG rose sharply in
2012 to 1.4 billion, compared with only 170 million in 2011.
The sector is braced for potentially radical changes.
The UK Competition Commission is investigating whether there is enough competition in
auditing large firms and will report next month with possible reforms.
Meanwhile the European Union is working on a draft law to require a periodic "rotation" or
mandatory switching of auditors by clients; an idea U.S. regulator is also looking at.
The survey said client behavior is already changing in anticipation of these reforms.
MANAGEMNT SYSTEM
39

MANAGEMENT SYSTEM AUDITS
A health and safety management system audit is a comprehensive review of an employers
health and safety management system. A partnership in Injury Reduction recognizes the efforts
of employers who meet provincial standards by issuing Certificates of Recognition (COR). To
qualify for a COR, an audit must be carried out by a qualified auditor, and the auditor must use
an audit instrument that is: approved by Partnerships; and acceptable to the Certifying Partner.
The audit will cover the eight basic elements of a health and safety management system and
will include documentation review, interviews, and observation tours to verify the effectiveness
of the management system. An audit instrument is a written protocol that organizes audit
procedures into a sequence of steps and specifies the actions to be taken by an auditor. It
includes instructions to the auditor regarding use of specific verification techniques and scoring
in evaluating specific elements and questions. Certifying Partners have the flexibility to develop
their own audit instrument. However, all audits used in the Partnerships program must be
reviewed by Alberta Employment and Immigration and meet the provincial standards.
AUDIT CYCLE AND TYPES OF AUDITS
To achieve a COR, an employer is required to pass an external audit. Once they receive a COR, it
is valid for three years, as long as internal (maintenance) audits are conducted in the next two
years. In the third year, another external audit is required in order to renew the COR.
An external audit is a systematic review of the employers health and safety system carried out
by an independent auditor who does not work for the employer being audited. The auditor
selected cannot be involved in the development or implementation of the health and safety
system being audited.
In order to achieve, or renew, a COR, an employer contacts their Certifying Partner to arrange
for an external audit.
A peer audit is carried out by a qualified auditor working for another employer who is also
involved in Partnerships. It usually occurs in a situation where employers in similar industries or
common geographic community choose to arrange audits among themselves through a
common Certifying Partner.
40

The employer receiving the peer audit is expected to provide one of their employees (also
qualified as an auditor) to carry out an audit of another employer in the group.
Arrangements are made through the Certifying Partner for a peer audit, either as an external
audit to qualify for a COR, or as an audit to maintain a COR.
An internal audit is an audit of an employers health and safety management system conducted
by a qualified auditor who works for the employer being evaluated. There is no requirement for
employers to pass internal (maintenance) audits.
In order to maintain the validity of their COR, an employer is required to conduct an internal
audit within 12 months of the date the COR was issued. They are also required to conduct a
second internal audit within 24 months of the date the COR was issued.
If the employer does not have an employee who is qualified to carry out an internal audit they
will need to arrange for an external/peer audit each year. Some employers prefer to have all
their audits carried out by a third-party auditor.
ARRANGING FOR AN AUDIT
When an employer is ready to arrange for an external audit of their health and safety
management system they should contact an appropriate Certifying Partner and request a list of
auditors qualified to carry out the audit. The employer should discuss which audit instrument is
to be used with the Certifying Partner; and ensure that the auditor selected is qualified.
If the employer wants to use a particular auditor (e.g. someone the employer has had previous
experience with), they should ensure that the Certifying Partner will accept the audit for
review, prior to arranging for the audit.
ORGANIZATIONAL STRUCTURE
The office has established its organizational structure on a unique professional level based on
the following main supports.
First: the main technical and professional staff of the office: they work in the headquarter of
the office in Cairo, and assume the responsibilities of direct work as the analytical studies and
researches.
41

Second: assistant technical and professional staff: who are called to attend from within Egypt
and from abroad when needed to involve its members in the studies and consults that require a
high degree of specialization?
Third: experience houses and research centers: That are related in work relations with the
office and the office employs their experiences and potentials when needed to contribute to
achieve the studies that require their involvement.
Management
A management board comprising a Chief Executive Officer and other Executive Officers holds
responsibility
for
the
overall
management
of
the
firm.
Currently the Three board members are:

Chief Executive Officer:
Ayub Aslam
Chief Operating Officer, Assurance:
Ch. Abdul Rashid Gill
Chief Operating Officer, Advisory:
Ata ur Rehman
Executive Officer:
Babar Ali
Chief Quality Officer:
Abdul Rauf
42
MANAGEMENT HIERARCHY
A management board comprising a Chief Executive Officer and other Executive Officers holds
responsibility for the overall management of the firm.
The CEO heads this board and is the firms representative.
A manager's job is to maintain control over the way an organization does things, and at the
same time to lead, inspire and direct the people under them. In a company the shareholders
will elect a board of directors to represent their interests. A Managing Director will be
appointed who has overall responsibility for running the company. The managing director with
help from other directors will appoint senior managers to run the company. The type of
43

managers appointed will depend on the structure of the company. Possible structures will
include:
regional managers when an organization operates on a regional basis
functional managers when an organization is split up into various functions e.g. human
resources, finance, sales etc
departmental managers when an organization is split up into departments e.g. a school,

or a retailing outlet
General Managers - for example, an office or factory may have a general manager who
functional managers report to. Each manager in an organization is given an area of
responsibility. Typically they will have targets and objectives to meet which fit into the
organizations overall targets and objectives.
In the audit firm there are three layers of the staff and their responsibilities.
Above all are the Partners who are the owner of the business. Below the Partners there are
different supervisors who deals indifferent department of the business e.g. Tax, legal and Audit
supervisors who directly report to the Partners and they are responsible of their area. Below
the supervisors there are clerical staff and the trainees students who perform different tasks
assigned them by the supervisor. There are senior as well as junior student trainees. When an
audit team is formed, it consists of the senior, junior clerical and the Supervisor as well.
Hierarchy management is an essential aspect of master data management. The Hierarchy
Manager is a specialized interface for jobs dealing with hierarchical master data, such as
product hierarchies and categories or organizational structures, and allows users to
productively manage complex hierarchies spread over one or more domains.
Features include:
Efficient creation of hierarchies, including the definition of hierarchy nodes and the
relationships
44
The ability to attach domain golden records, or associated data records, to nodes within
hierarchies
Management of previously-configured hierarchies, such as cloning, merging, absorbing,

and updating
Tools to define and manage hierarchies
An intuitive interface for viewing and managing hierarchies
Configuration and storage of node-specific presentation information
COMPANY PROFILE
AYUB ASLAM & CO. Chartered Accountants was established in the year 1989. The firm is having
vast experience in Audits of public and private limited companies, NGOs, Firms and individuals
and handling taxation, company law matters and approvals from various government agencies,
for corporate and non corporate clients. The firm is having its offices in Karachi, Lahore
&Peshawar. The firms is having well experienced staff in all professional fields and
infrastructure equipped with modern technology to meet the business needs and expectations
of our valued clients in timely and qualitative manner.
At AYUB ASLAM & CO.., Chartered Accountants, we strive to implement the highest quality
professional services to meet our clients expectations. At AYUB ASLAM & CO.., Chartered
Accountants, the driving force is the blend of expertise and motivation.
45
Ethical business practices

Integrity
Efficiency and
Innovation
The Firm with high professional standing provides diversified quality services. The experienced
partners of the Firm are supported and assisted by a strong team of committed staff comprising
over 80 members, including foreign qualified chartered accountants in its offices in Pakistan.
In AAC, accountants, tax advisers and experts, lawyers and management consultants work
closely together, to provide the optimum advice and to bring depth of knowledge and
professionalism to fulfill client needs ranging from assistance on small, specific projects to
involvement in major, long-term negotiations and consultancy, thus providing a full spectrum of
our reputation in the community has been built by making our clients the most important
assets of our firm, deserving to have timely and competent attention paid to their affairs. Our
services are intended to complement our clients abilities in their chosen field. Their business
and financial problems are given individual and creative attention tailored to fit their needs.
OUR STAFF
We have professionally well qualified and trained personnel, who have been from time to time
provided with in-depth training for getting up to-date knowledge pertaining to the changing
financial & taxation scenario in the contemporary business community as well as in the
Qatar/GCC market, which helps them to evaluate and verify the audit files with an intention to
be free from any kind of inaccuracy in the process.
In addition to our own staff, we have the resources to pool expertise from all other companies
owned by us and also from our sister companies, which will cover all disciplines and areas of
specializations. This gives us an edge over other competitors in the field.
46
LIBRARY
We have also well equipped library which can be utilized for clearing doubts with respect to any
financial and accounting matters, thereby an error free report can be furnished to our valued
clientele and the authorities concerned. You will find in a business partner who can offer sound
advice, outmost satisfactory services and help you cut through the red tape of the business,
financial, and tax world.
ORGANIZATIONAL CHART
To illustrate our Management System and its working State-of the-art environment, we here to
draw up an organizational chart for our client to scrutinize.
REQUIREMENT OF LAW
According to the law every public limited company and every Private Limited company having
share-capital of more than three million should get it books of accounts audited from a
Chartered Accountants as defined in Chartered.
APPOINTMENT OF AN AUDITOR
The management of a private company appoints the auditor while the auditor of the public
company is appointed in the Annual General Meeting by the Shareholders International
Standards of Auditing (ISA).
The firm after getting appointed as the auditor, in the annual general meeting by the
shareholders or by the management, starts the audit. First it asks the management for the
Letter of Appointment. Then management is asked to give a list of all books of accounts
maintained by the client and a list of all officers of the company along with their designation
and authority. Previous years-audited accounts are also demanded. These documents are
studied to gain about the clients business. If the audit of the client was also done in the
47

previous year then these information's can be obtained from the working papers i.e. file
maintained by the audit firm containing documents received from the client.
THE SERVICES
We provide industryfocused services for public and private clients in order to build public trust
and enhance value through the application of our committed approach and methodology.
Whatever the size of the organization our services approach is guided towards client
satisfaction and our commitment towards excellence and perfection.
OUR VALUE
At Ayub Aslam & Co. for Auditing & Consulting we are dedicated to quality. It is through
offering our own expertise in various Assurance and Consulting services and maintaining an
ongoing system of quality review that we offer you professional services.
QUALITY POLICY
To build a solid base with flexible policies to create an environment for innovation and
development.
To deepen the meaning of quality to each member of the company regardless of his/her
job description.
To progress the standard level of commitment to customers in fulfilling their demands.
PROFESSIONALS
Currently, the Firms staff are composed of professional in addition to a pool of experienced
consultants in various fields to support the operation. The corporations Association with
International made their professional capabilities and resources to a creation degree unlimited.
To partners advocate a continuous staff professional development program to ensure the high
professional caliber of its staff is maintained. The Firm promotes its staff by encouraging them
to participate in training programs including those of International.
48

CLIENT SERVICE
AAC has a rigorous asset of client service standards. Following standards are followed
throughout the firm to ensure supreme quality service:
Gain an overall understanding of client to determine their exact requirements;
Develop Client Service Plan that clearly outlays the roles and responsibilities of AAC as
well as client;
Execute the plan in such a manner to make sure that all commitments are met and
problems are identified, communicated and sorted out at initial stage;
Ensure effective communication with client throughout the service period and avoid last
moment surprises;
Obtain frequent feedbacks from client for each service rendered so that deficiencies, if
any, can be improved; and
Charge reasonable remuneration that coincides with the services rendered.
SERVICES
LEA members throughout the world have a shared philosophy of providing a high quality,
professional and personal service to their clients, principally in the areas of auditing,
accounting, taxation, investigations, corporate financial re- organization, management
consulting, financial planning, mergers and evaluation of companies.
Ayub Aslam & Co. provides the full range of financial advisory services you would expect from
an international accounting organization, consistent with local professional or legislative
practice.
49

The services we provide are:
AUDIT SERVICES
We offer engagements to examine our client's financial statements and to evaluate the
fairness of presentation of the statements on conformity with international accepted
accountancy principles.
Our examination is conducted in accordance with international accepted auditing
standards, which include a review of the system of internal control and tests of
transactions to the extent we believe necessary.
TAX SERVICES
Our firm offers non-chargeable services concerning ordinary tax consultations. On the
other hand, we offer tax consultative services, tax planning assessment of taxable
income and tax reserves.
Also we offer management information related to aspects of forecasting projection of
operating results, different tax saving opportunities available to clients, preparing and
supervising the annual income tax declaration besides and other related services.
MANAGEMENT CONSULTING SERVICES
A full range of management consulting services is offered to business, industry and

governmental bodies including:
Design and implementation of administrative financial and accounting structures.
Administrative management studies, surveys procedures, evaluation if efficiency and

performance of personnel, sections and departments within the enterprise.
Design and implementation of management and job organizational charts.
Design of job description for personnel at all levels.
FINANCIAL CONSULTING SERVICES

50

Wide ranges of investment appraisal and investigation assignments are offered. Their
assignments include:
Preparation of feasibility studies.
Share & business evaluations, cash flow charts, projections and budgetary services.
Marketing consultations and studies.
Industrial consultations and studies.
Commercial arbitration.
Liquidation, bankruptcy, mergers and acquisitions
MANAGEMENT RESPONSIBILITIES
The purpose of the Audit function at the University is to provide the Board of Trustees and
senior University administration with an independent assessment of the Universitys system of
internal controls. The Audit Committee of the Board of Trustees first approved a Charter for
Internal Audit at its meeting on October 19, 1995 and revised it at its June 10, 2012meeting.
Administration has the primary responsibility for establishing and maintaining a sufficient
system of internal controls. The Office of Risk Management and Audit has responsibility for the
Internal Audit function with most internal audit services provided by an independent
accounting firm approved by the Audit Committee.
ROLES AND RESPONSIBILITIES
Meaningful internal auditing requires cooperation among Internal Audit, University
administration, and the audited. Each partys responsibilities in this regard include the
following:
Internal Audit
Examines and evaluates the controls, policies and procedures, and systems in place to
safeguard University assets.
51
Evaluates the reliability and integrity of information, and the efficient and effective use
of resources.
Reviews compliance with policies, procedures, laws and regulations.
Reports results and makes recommendations to administration and the Audit

Committee.
ADMINISTRATION
Supports Internal Audit and communicates this support within their units.
Participates in the audit process.
Provides appropriate, clear and consistent direction to the University community

through written policies and procedures.
AUDITEE
Cooperates with the audit process by providing unrestricted access to facilities, books
and records, information, and personnel.
Responds in writing, in a timely manner, to all audit recommendations.
Develops an acceptable response to each recommendation including designating a

person responsible for implementing the response and setting a target completion date.
If Internal Audit and the audited are unable to resolve disagreements over audit
findings, the audited may appeal to the Vice President for Administration and Chief
Financial Officer. Unresolved issues will be reported promptly to the Chair of the Audit
Committee.
Implements agreed-upon corrective action programs.
AUTHORIZATION AND ORGANIZATION
52

The Assistant Vice President for Risk Management and Audit or the accounting firm partner
responsible for its services are responsible to, and has direct access to both the Audit
Committee and the University President. For day-to-day operations, Internal Audit reports to
the Vice President for Administration and Chief Financial Officer. At a minimum, Internal Audit
should have the following schedule of private meetings: annually with the Audit Committee and
monthly with the Vice President for Administration and Chief Financial Officer. Additional
meetings may be scheduled as appropriate.
Internal Audit has no direct responsibility for or authority over, any of the activities, functions
or tasks they review. Accordingly, Internal Audit does not develop or write policies or
procedures that they may later be called upon to evaluate. They may review draft materials,
developed by management, for propriety and/or completeness.
AUDIT STANDARDS AND ETHICS
All audit work meets the auditing, professional standards and codes of ethics promulgated by
the Institute of Internal Auditors, the National Association of Certified Fraud Examiners, and the
American Institute of Certified Public Accountants. Everyone connected with Internal Audit is
expected to consistently demonstrate high standards of conduct and ethics as well as
appropriate judgment, independence and discretion. Members maintain a professional image
and protect audited confidences and confidential information.
Financial Officer, and reported regularly to the Chairman of the Audit Committee.
REPORTING
All audit work is summarized in timely written reports distributed to an appropriate list of
recipients. In general, reports are distributed to the President, the Vice President for
Administration and Chief Financial Officer, and the Universitys external auditor, as well as the
audited, their immediate supervisor, and other unit heads affected by audit findings. Reports
from special request audits may have more limited distribution
53
A short synopsis of each audit completed since the last meeting including key findings
and recommendations.
An update for each project listed on the annual Audit Plan, with appropriate explanation
for changes.
FOLLOW-UP
The Compliance Committee ascertains the implementation status of management action plans
to address key issues and reports these to the Audit Committee. The Office of Risk
Management and Audit conducts a periodic evaluation of the implementation status of
management action plans to address non-key issues and reports these to the Compliance
Committee on the status.
AUDIT PLAN
After getting the required information and documents the one of the seniors makes an audit
plan including audit program. The audit program includes the detail of the work to be done by
the audit team, estimated time
Period required distribution of work among the members of audit team. Then the audit plan is
discussed with the Principal of the firm and necessary changes are made in the audit plan to
carry on the work of audit most effectively and efficiently. After finalizing the audit plan the
senior makes an audit team. The senior gives the team member's necessary information's about
the client and the work to be done by them
54

In the audit planning the following things are discussed with detail:
Business address and Details.
Knowledge of business of the client.
System notes and areas
Audit program.
Risk assessment.
Timeliness and staff involved.
Materiality assessed by variance analysis.
Strategy.
Audit procedure.
Previous year's outstanding points.
FIELD OF ACTIVITIES
SERVICES OFFERED
The firm offers a vide range of services to its clients, including statutoryaudit of accounts, inter
nal audit, corporate affairs, taxation matters,management consultancy and
other
sundry advisory services. To provide the above services to its clients the firm has the following
departments.
AUDIT
PERFORMING A HIGH-QUALITY AUDIT AND SUSTAINING THE PUBLICTRUST
Within Ayub Aslam & Co. Chartered Accountants large network of client member firms, the firm
has robust audit tools, resources and procedures to provide the means for their professionals
to deliver high-quality audit services. In delivering these services the firm adheres to the highest
standards of independence, professional objectivity and technical excellence. The Firms audit
approach is applied consistently around the calendar, while providing the flexibility to serve the
unique circumstances and complexities of our clients. Firms audit approach focuses on
understanding the clients global business and control issues from the inside out. It combines a
55

rigorous risk assessment, diagnostic processes, and audit testing procedures as well as a
continuous assessment of our clients service performance.
The department is headed by Mr. M. Saeed Malik who is assisted by the Audit Manager Khalid
Mehmood. In addition to the audit work, the department also carries out various assignments
of consultancy work as and when assigned. Different kinds of audit services are carried out by
the department such as internal audit, statutory audit, final audit, and interim audit. All kinds of
audit services are offered to the companies willing to get their audit done by the firm. Strong
independent Audit of companies provides critical information for investors and other
stakeholders, a robust and clear perspective to audit committees and timely and constructive
input to management.
INCOME TAX/SALES TAX RETURNS TAXATION SERVICES
A successful tax function delivers a strong reporting foundation andsustainable planning to help
the business achieve its growth potential.Customers need tax strategies aligned with its busine
ss drivers, built oneffective compliance and open, transparent reporting. So Ayub
Aslam
&
Co. Chartered Accountant create highly networked teams who canadvise on planning, complian
ce and reporting and maintaining goodrelationships
with
the
tax
authorities. This
department works under the direct supervision of the senior Partner Abdul Ali Sheikh and
is headed
by Mr.
Zulfiqar
Ali Sheikh.
Who
has
also passed the Chartered
Accountants Intermediate Examination from Rahim Jan & Co. Chartered Accountants.
The main purpose of the tax department is the filing of Income Tax returns of local and
multinational
companies.
Income
Tax
and
Sales
Tax
returns
areboth filled by the persons assigned for this tasks and companys mostrevenue is generated
from these activities of filing income tax and sales returns. Mr. Zulfiqar enjoys
an excellent reputation among the taxation circles. Income tax and wealth tax matters of client
companies as well as their directors are handled by this department. He is assisted by Mr.
MuzaffarNaqvi, another lawyer. Ayub Aslam & Co. Chartered Accountants deliver Tax
56

advice that is perfect for the clients organization. Ayub Aslam & Co. Chartered Accountants
Business
Builds sustainable tax strategies based on technical knowledge, combined with

practical, commercial and industry knowledge
Provides the deep accounting and compliance knowledge and tried-and-tested

methodologies clients need for efficient reporting
Helps clients assess, improve and monitor their tax functionsprocesses, controls
and risk management
Supports clients in managing your relationships with tax authorities effectively

Ayub
Aslam
&
Co. Chartered Accountants
talented people,
consistent
global methodologies and unwavering commitment to quality service will

help clients build the strong compliance and reporting foundations and
sustainable tax strategies that help clients business achieve its ambitions.
BUSINESS ADVISORY SERVICES
To realize its full potential, every business must deal effectively with thethree
fundamental
challenges
performance
of
risk,
and assurance.Without assessing risk they stand to make costly mistakes. Without
improving
performance they will cede ground to competitors. And without robust assurance they may
limit the opportunities for future investment. Ayub Aslam & Co. Chartered Accountants bring
the right people together to address all three tasks. Because firm operates assurance and
advisory as a single business, firms people gain deeper insight into the key issues facing
organizations today and our clients gain the benefit of a broader range of the best
skills. The relationship between risk and performance improvement is anincreasingly complex a
nd central business challenge, with businessperformance directly connected to the recognition
and effectivemanagement of risk. Whether your focus is on business transformation or
sustaining achievement, having the right advisors on your side can make all the difference.
Ayub Aslam & Co. Chartered Accountants advisory professionals form one of the broadest
57

global advisory networks of any professional organization, delivering seasoned multidisciplinary teams that work with our clients to deliver a powerful client experience.
Ayub Aslam & Co. Chartered Accountants understand that to achieve companys potential as an
organization you require services that respond to your specific issues, so firm bring its broad
sector experience and deep subject matter knowledge to bear in a proactive and objective way.
INITIAL PUBLIC OFFERINGS SERVICES
Growth-oriented
companies
need
quick
and
efficient
access
fundtheir initiatives. For stock exchange listed registered and non-listed
to
capital to
companies alike, the
local securities markets represent a viable and relatively inexpensive way to attract significant
capital. Yet, with this opportunity come challenges.
complex, time consuming and potentially risky.
Securities offerings in the Pakistan are
Any company that offers securities in the
Pakistan must comply with accounting principles and disclosure requirements (GAAP), as well
as the rules and regulations of the Securities and Exchange Commission of Pakistan (SECP).
Failure to do so can mean significant time delays and possibly civil and criminal penalties for
companyofficers. Ayub Aslam & Co. Chartered Accountants Services team is comprised of highly
experienced professionals who have successfully guided hundreds of companies through the
initial public offering process. Beyond the technical knowledge necessary to help clients
company launch its initial offering, firm provides practical and unique advice that can help
clients attain positive results, both immediately and in the long term. Ayub Aslam & Co.
Chartered
Accountants
team
includes
dedicated
partners
and
senior
staff throughout the firm. With in-depth knowledge of GAAP.

For Registered Private limited companys IPOs Ayub Aslam & Co. Chartered Accountants:
Provide seasoned insights throughout the course of clients transactions and other
members of transaction team, such as your SECP officials, underwriters and investor
relations firms
Participate with Clients in discussions with the SECP prior to filing
58
Help clients identify the financial statement requirements, includingfootnote disclos

ures, financial statement schedules, pro forma financial statements and other
separate financial statements
Review drafts of the prospectus or offering memorandum, including the financial

statements
Anticipate SECP comments and advise clients company on how toaddress
and
resolve SECP comments
Assist clients firms teams in their preparation of comfort letters
Provide training related to the implementation of and changes in GAAPand the

SECP's rules and regulations
MERGER & ACQUISITION SERVICES

Merger
&
Acquisition
Services
practice
is
recognized
as a
worldwide
leader
inproviding high quality, comprehensive, and strategically focused tax,

accounting and advisory services to buyers or sellers in businesscombinations. Through
a network of nearly 20 dedicated professionals at Ayub Aslam & Co. Chartered Accountants
member
firms provides
merger services to local and multinational companies. Firms
acquisition and
multidisciplinary
approach
teams finance professionals with technical, industry and geographic specialists to provide factbased answers and independent advice geared to maximizing the value of a transaction.
POLICY FORMATION PROCESS
To fully appreciate the need for the existence of quality control policies and procedures in an
audit firm, students should focus on the assertion that auditing is a commercial activity. As
such, in order to achieve the objective of (at least) maintaining the profitability of an audit firm,
the audit partners need to:
59
make best use of the resources of the firm;
maintain a good level of service and quality of advice to clients;
minimize the risk of litigation against the firm arising from the poor performance of an
audit;
From careful analysis of the above points, it is reasonable to conclude that, as a commercial
organization an audit firm should operate clearly defined quality control policies. These policies
should ensure that the firms day to day procedures meet the needs identified above and so
help to ensure the continued profitability of the firm.
Quality control policies and procedure should be considered at two levels. First, at the level of
the audit firm and second at the level of individual audits.
A) AUDIT FIRM
Policies and procedures instigated at this level should ensure that all audits are properly
conducted in accordance with accepted best practice. They should include the following
matters:
i.
professional requirements, including adherence to professional ethics;
ii.
skills and competence of personnel;
iii.
acceptance and retention of clients;
iv.
assignment of audit work;
v.
delegation of audit work, comprising direction, supervision and review of work;
B) INDIVIDUAL AUDITS
60

It is vital that appropriate quality control procedures are applied to each audit assignment.
Further, any work delegated to assistants should be directed, supervised and reviewed in a
manner which provides reasonable assurance that such work is performed competently.
The direction of assistants, supervision and review are important aspects of quality control and
I would recommend that students should carry out further reading to ensure they have a sound
understanding of them. The aspects of direction and supervision seem to be more easily
understood by students who appear to be more at ease when confronted with questions about
them, as compared to questions about review of audit work. For this reason I shall not expand
further on the aspects of direction and supervision.
POLICY PROCESS ATTRIBUTES
The review of audit work forms an integral part of the audit process. Students should recognize
that the term review as applied to the work of assistants, normally describes the process
whereby audit working papers are subject to a detailed check. The detailed check preferably
carried out by an audit manager or partner, should seek to ensure that:
i.
the work has been performed in accordance with the audit programmed;
ii.
the work performed and the results obtained have been adequately documented;
iii.
any significant audit matters have been resolved or are reflected in audit conclusions;
iv.
the objectives of the audit procedures have been achieved; and
v.
The conclusions expressed are consistent with the results of the work performed and
support the audit opinion.
An effective policy process is one that is generally characterized by the following five attributes:
Issue Identification
Issue Analysis
61
Generating Solutions
Consultation
Performance
Monitoring
DEVELOPING
AN
AUDIT
STRATEGY
With a mindset of professional
skepticism, independent auditors seek to gather sufficient, appropriate audit evidence to
support their opinion about the financial statements. Because the facts and circumstances of an
audit typically vary dramatically between companies, the standards describe a principles-based
process and provide guidance to help independent auditors use their judgment in the
application of these principles on a particular engagement.
In developing an audit strategy, the independent auditor considers internal controls and
determines whether to rely on those controls for various components of the audit. The
independent auditor may decide to perform tests of the companys internal control over
financial reporting. An independent auditor assesses the desirability of adopting such a strategy
by considering factors such as cost/ benefit considerations, size
of the company, and prior year results of control testing. If test results indicate that the
companys internal controls are effective, the independent auditor may decide to reduce the
level of substantive tests that it performs as a basis for its opinion.
AUDIT PROCEDURES
In designing the audit strategy, judgments are made in the selection of the auditing procedures
to be performed. In doing so, the independent auditor considers three factors.
NATURE
62

The independent auditor can choose from a variety of audit procedures. Some are better suited
than others to address certain types of risks. For example, the physical observation of property
(e.g., building, land) is an effective procedure to establish the physical existence of the asset
reported on the companys balance sheet. It is not an effective procedure to address the risk
that the nancial statements do not reect the correct value of the asset. Choosing an audit
procedure that most directly addresses the identied risk is arguably the most important factor
in designing effective audit procedures. The independent auditor also recognizes that some
audit procedures result in more reliable audit evidence than other audit procedures.
For example, the independent auditors conrmation of account balances from third parties
may be more reliable evidence than inspection of internally generated company documents.
TIMING
Some of the independent auditors tests are performed as of the balance sheet date. For
example, the independent auditor may conrm with the companys lender the amount of a
loan balance at December 31. Often the independent auditor performs tests as of a date prior
to the balance sheet date.
EXTENT
Independent auditors must determine the extent of testing they will perform. For example, the
necessary extent of a substantive audit procedure will often depend on the materiality of the
account, disclosure, or transactions, the assessed risk of material misstatement, and the
necessary degree of assurance from the procedure. The nature, timing and extent of auditing
procedures are driven by judgments based upon the results of the independent auditors risk
assessment and planning processes.
TESTING CONTROLS
A companys system of internal control over nancial reporting is a system of processes
designed by a companys management so they may provide reasonable assurance, as required
63

by law, that their nancial reporting is reliable and that their nancial statements for external
purposes have been prepared in accordance with GAAP.
If the independent auditor chooses to pursue an audit strategy that relies on a companys
internal controls he or she will test the design of the companys relevant control systems to
assess the operating effectiveness of certain internal controls. In assessing the operating
effectiveness of a control, the independent auditor considers detected deviations or
deciencies in managements internalcontrol procedures, such as documents not properly
approved, reconciliations not regularly performed, or failure to enforce the appropriate
segregation of duties. Tests of controls typically involve:
Inspection of documents for evidence of proper approval or acknowledgement of the

performance of control procedures.
Observation of procedures to determine that proper procedures, particularly

segregation of duties, are being applied.
Reperformance of procedures to see they have been correctly performed.
Application of test data to computer programs or other procedures to determine that

programmed application controls are functioning properly.
PERFORMING SUBSTANTIVE AUDIT PROCEDURES

Substantive audit procedures provide evidence as to whether actual account balances are fairly
stated. The procedures are used to obtain audit evidence about particular financial statement
assertions by management.
Existence or Occurrence
Assets or liabilities of the company exist at a given date, and recorded transactions have
occurred during a given period.
64

Completeness
All transactions and accounts that should be presented in the financial statements are so
included.
Valuation or Allocation
Asset, liability, equity, revenue, and expense components have been included in the financial
statements at appropriate amounts.
Rights and Obligations
The company holds or controls rights to the assets, and liabilities are obligations of the
company at a given date.
Presentation and Disclosure
The components of the financial statements are properly classified, described, and disclosed.
The independent auditors substantive procedures include:
Substantive Tests of Details of Account Balances, Transactions and Disclosures.
The details supporting financial statement accounts are tested to obtain assurance that
material misstatements do not exist. Substantive procedures may be performed on asample
basis over an existing group of similar transactions. Sampling approaches can either be
statistical or non-statistical. A simple example of this type of audit procedure would be to
examine vendor invoices and bank statements to support a recorded expense. Independent
auditors can also select targeted samples to match specific risk criteria, as well as use the
results of sample testing, in some instances, to conclude on the population as a whole.
EVALUATING TEST RESULTS AND CONCLUDING
Professional standards define certain requirements and provide broad guidelines about the
evaluation of audit evidence. However, the independent auditor also is required to exercise
65

professional judgment to determine the nature and amount of evidence required to support
the audit opinion.
Depending on the test results, the engagement team may need to adjust its audit plan, modify
its tests, or perform additional procedures in response to this updated information as
warranted.
When the independent auditor discovers misstatements in the accounting records or financial
statements, he or she informs company management, who then decide whether and how to
make any adjustments. Management bears the ultimate responsibility for the financial
statements and may determine that some misstatements are immaterial in their judgment and
do not warrant a change to the financial statements.
The audit team summarizes any uncorrected misstatements and performs an independent
evaluation as to whether the uncorrected misstatements both individually and in the
aggregateresult in financial statements that are materially misstated. The independent
auditor cannot express an unqualified opinion on the companys financial statements unless he
or she is satisfied that there are no material misstatements
DOCUMENTATION
Independent auditors document the procedures performed, evidence obtained, and
conclusions reached. This documentation is intended to include sufficient information to enable
an experienced auditor with no previous connection with the engagement to understand
the nature, timing, extent, and results of the procedures performed, evidence obtained, and
conclusions reached as well as who performed the work, the date such work was completed,
who reviewed the work, and the date of such reviews.
ENGAGEMENT QUALITY REVIEW

66

The audit process includes quality control procedures prior to the audit firms issuance of its
report, among them a review of audit procedures that is performed by another professional
within or outside of the audit firm also known as an engagement quality review. The objective
of the engagement quality reviewer is to evaluate the significant judgments and conclusions
made by the engagement team in forming the overall conclusion on the engagement and in
preparing the independent auditors report in order to determine whether to provide
concurring approval on issuing the report.
PROCESS GUIDE
Process audits are highly focused, but their effective techniques are not always understood.
Because there is no sanctioned process audit standard, anyone can claim to be doing process
audits. Also, the use of process auditing techniques such as tracing is not limited to process
audits or process based management systems.
A few years ago when I was presenting information on process audits, a representative of a
major corporation told me it had been doing process audits for several years. When I asked him
to explain the auditors techniques, he said they took samples of the product at the end of the
line, and then measured the length, diameter and weight. Based on results, they approved or
rejected the lot.
Two months ago another representative of a major corporation explained its auditors did
process audits and did not use checklists. She sent a document used to audit one of her
corporations processes. The auditing documentation was not called a checklist but was a list of
regulatory and industry requirements by clause for a specific process, such as labeling. That
sure sounds like a checklist.
When the audit criteria are the specific requirements of a standard, only key elements or
critical controls are verified.
Requirements may include:
67
Written procedures.
Record keeping.
Verification of customer orders.
A process audit examines the resources (equipment, materials and people) used to transform
the inputs into outputs, the environment, the methods (procedures and instructions) followed
and the measures collected to determine process performance. A process audit checks the
adequacy and effectiveness of the process controls established by procedures, work
instructions, flowcharts, training and process specifications.
A process audit is an evaluation of the sequential steps and interactions of a process within a
system. The term is also used to describe techniques used when conducting an audit. For
example, an auditor may use process audit techniques during a management system audit.
By its very nature, process auditing implies an action such as transforming inputs into outputs.
Quality auditor and consultant, has always linked process auditing to an action verb such as
filling, stamping, purchasing, reacting or cutting.2 Process auditing is evaluating the steps and
activities that create the action or transform the inputs into outputs. This is a very useful
approach because it focuses on the work cycle and deliverables instead of isolated
requirements/controls.
The process model in Figure 1 shows inputs, outputs and sequential steps. Some process
models also show a feedback loop that is essential for control of a process.
68
AUDITING BY ELEMENT
Auditors use various auditing techniques to collect evidence based on the audit scope and
objectives. Auditing a process or system by element verifies compliance or conformance to
requirements. The value in this type of auditing technique is the direct linkage to license,
contract or regulatory requirements.
Auditing a process by element ensures people are aware of the requirements and the
organization is adhering to them. It helps prepare employees for external audits using the same
criteria. Auditing by element also ensures a state of readiness and compliance or conformance
to external requirements. It is a management tool for sustaining conformance to safety, health
or environmental and quality requirements.
AUDITING BY PROCESS
69

Auditing a process or system using process techniques verifies conformance to the required
sequential steps from input to output. Process auditors use models and tools such as simple
flowcharts, process maps
During the first part of the audit, auditors should record current customer names, order
numbers, routing numbers and project numbers so they can link and verify process steps during
the audit.
Processes can be described using the process elements
People involved.
Equipment needed.
Environmental requirements.
Measures to test or monitor.
Methods to follow.
Materials used or consumed.
70

The process elements are used to ensure all aspects of a process are being evaluated and serve
as an aid in developing a flowchart. These same process elements (also called causal groupings)
are used to create cause and effect or fishbone diagrams for evaluating the causes of problems.
A way to link the process elements and standard elements (requirements) is to create a tree
diagram (see Figure 3), so named because of the branching effect.
Another tool is a turtle diagram (see Figure 4), which combines the process diagram with the
process elements. It looks like a turtle with a head, tail and four legs.
71
When auditing a process, the auditor should also look for the plan-do-check-act (PDCA) cycle,
which is a good test to ensure the process can be controlled with or without a written
procedure.
The use of process techniques is a natural steppingstone from conformance to performance
auditing. When collecting evidence, auditors also will observe performance issues that would
be of value to management.
STATEMENT OF COMPLIANCE WITH THE CODEOF CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained
in the listing regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing
a framework of good governance, whereby a listed company is managed in compliance with the
best practices of corporate governance.
1)
TheElectionoftheBoardofDirectorswasheldbeforethecode
ofCorporate
Governance
became applicable.
2)
The directors have confirmed that none of them is serving as a director in more than ten
listed companies, including this Company.
72

3)
All the resident director of the Company are registered as taxpayers and none of them
has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a
member of a stock exchange, has been declared as a defaulter by that stock exchange.
4)
The Company has prepared "Statement of Ethics and BusinessPractices",
which
have
been signed by all the directors and employees of the Company.

5)
The Board has developed a vision/mission statement, overall corporate strategy and
significant policies of the Company. A complete record of particulars of significant
policies along with the dates on which they were approved or amended has
been maintained.
6)
All
the
powers
of
the
Board
have
been
duly
exercised
and
decisions
onmaterial transactions, including appointment and determination of remuneration and

terms and conditions of employment of the CEO and other executive director, have
been taken by the Board.
7)
The meetings of the Board were presided over by the Chairman and, in his absence, by a
Director elected by the Board for this purpose and the Board met at least once in every
quarter.
Written
notices
of
theBoard meetings, along with agenda and working papers, werecirculated
at
least
seven days before the meetings. The minutes of the meetings were appropriately
recorded and circulated.
8)
The
Board
has
approved
appointment
of
CFO,
Company
Secretary
andHead of Internal Audit, including their remuneration and terms andconditions
of
employment, as determined by the CEO.

9)
The Director report for this year has been prepared in compliance with the
requirements of The Code and fully describes the salient matters required to be
disclosed.
10)The financial statements of the Company were duly endorsed byCEO and CFO before
approval of the board.
73

11)
The Director, CEO and Executives, do not hold any interest in the shares of the Company
other than that disclosed in the pattern of shareholding.
12)
The Company has complied with all the corporate and financial reporting requirements
of the Code.
13)
The Board has formed an audit committee, which comprises of three members, majority
of whom is Non-Executive Director.
14)
The
meetings of
the
audit committee
were
held
at
least
onceevery quarter prior to approval of interim and final results of theCompany and as
required
by
the
Code.
The
terms
of
reference
of
thecommittee have been formed and advised to the committee forcompliance.

15)
The statutory auditors of the Company have confirmed that they have been given a
satisfactory
rating
under
the
quality
control
reviewprogram of the Institute of Chartered Accountants of Pakistani thatthey or any of

the partners of the firm, their spouses and minorchildren do not hold shares of the
Company
and
that
the
firm
allits partners are in compliance with International Federation of Accountants
and
(IFAC)
guidelines on code of ethics as adopted by Institute of Chartered Accountants of

Pakistan.
MARKETING MIX
The marketing analysis of audit firm focus the 4 Ps of marketing, i.e. product, place, price and
promotion.
74
PRODUCT
PREPARATION OF AUDIT PROGRAM (AUDIT PLANNING):
An audit program was prepared by our seniors, with due care and skill. It was decided to
conduct the audit under the supervision of a senior. During the conduct of audit, some notes
were prepared like:
A) AUDIT REVIEW NOTES:
To note the points that needs further discussion with the management.
B) AUDIT QUERIES:
To not all those vouchers that remains insufficiently vouched. Acomplete record as to how they
were cleared and all those, whichremained unclear and reported to management, is
maintained.
C) IMPORTANT BALANCES:
Notes of important closing balances particularly in respect of cash and bank accounts, stock etc.
COMPLIANCE TESTING
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In this part it is checked that the business comply with all its rules and regulations or not. For
this the article and memorandum of association is checked. The articles are checked to see the
general business practices and the commencement of the annual report and declaration of
dividend and bonus.
CHECKING OF BOOKS OF ACCOUNTS:
When the audit work starts first the books of accounts are checked for errors which may be due
to wrong entries, omission of transaction, wrong total, wrong carry and brought forward etc.
The checking of books of accounts may or may not include detail checking, it may involve test
checking. It depends upon the control system involved.
OPERATION OF AUDIT:
The audit was operated / conducted with the help of following techniques.
VOUCHING:
In vouching every transaction is checked with it documentary evidence. Documentary evidence
includes vouchers, invoices, and goods inward and outward notes, cash memos and receipts. It
is also checked that the transaction is authorized by a proper person having powers to do so.
VERIFICATION:
When vouching is complete then the verification of assets and liabilities takes place. Assets of
the firm are verified by checking them. For confirmation of major debtors a letter is written to
them to confirm the balance due from them. In order to check the stock of the client, stock
taking is done, where the members of audit team visits the storerooms of the factory and see
the counting of the stock done by the store keepers and if they find something wrong they
themselves count the stock.
TICKING:
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During the checking of various books, the entries that were checked were marked/ticked with
red ball pen indicating that the entry has been examined for certain purpose. Variously shaped
marks were used to denote checking of additions; postings carry forwards, balances etc.
POSTING CHECK:
Then it was checked whether the transactions are correctly and accurately posted to ledger or
not. Special care in checking posting to personal ledgers in needed as to names and titles of
accounts; otherwise a wrong posting may remain undetected.
CROSS CHECKING:
It is the comparison of entries in two or more books or of an entry in a book with its supporting
evidence or voucher. My seniors assisted me in this step. Accuracy of cross checking plays a
vital role in the process of auditing. Therefore, it should be made with due care.
TRIAL BALANCE CHECKING:
Then trail balance was checked and important balances were noted in the working papers for
reference use in further process. If during the course of audit different queries or unexplained
events are seen, then these are noted and explanations asked from management and they are
asked to make necessary adjustments. If during the course of audit some irregularity is
witnessed that is also reported to the management and reported in the auditors report.
ANALYTICAL PROCEDURE:
After the end of the audit analytical procedure is adopted in order to confirm the accuracy and
correctness of the results obtained from above procedures, Profit and Loss Account and
Balance Sheet. In analytical procedure results are compared with prior period results, ratios,
expected results and industrial information. Any major difference is looked into. At this stage
the stock valuation, Material variations, Financial Ratio, and Variance Analysis are done.
PROMOTION
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Decisions on price are shared with finance, and on products with operations and R and D,but
the area of promotion is the marketer's special province. Many still think, mistakenly, of
marketing and promotion as one and the same thing. This is incorrect and much too narrow
view, but promotion is the element of the marketing mix likely to absorb much of the marketing
resource and by which the effectiveness of the marketing function might be judged by
colleagues. It is also an activity which, without clear planning and control, can eat up scarce
resources for very little return. In the past there has been a tendency to build up a mystique
about promotion and how it works. Lord Leverhelmet is supposed to have said in1910 that "half
one's advertising is wasted I wish I knew which half". It may have been true then but today's
techniques are causing marketing managers to rethink radically their segmentation and
promotional policies and are also providing a very close control over the budget.
PROMOTION STRATEGY
All successful businesses need to actively promote their services. Accounting firms are no
different. Just like firms in other industries, accounting firms have skills and areas of expertise
that differentiate them from the competition. Highlighting those skills across a variety of media
can help you promote your business and generate more clients.
IDENTIFY YOUR BRAND
While accounting firms handle many types of tax and financial preparation, accountants looking
to promote their firms should identify their top areas of expertise or their niches in the local
market. To accomplish this, firms can draft a mission statement that outlines exactly what the
company does and what types of tax and financial services it provides. This can help executives
determine which areas of the business to promote. For instance, a firm that finds it is the only
company in an area that has expertise in business mergers should aggressively promote this
skill.
SALES LETTERS AND REFERRALS
Whether you're opening a new firm or running an existing agency that needs more clients,
sending out sales and referral letters can be a valuable promotion strategy. A sales letter builds
78

on your mission statement to tell potential clients exactly what you do and why they should
choose you for their accounting needs. A referral letter is more informal and is sent to friends,
acquaintances and family to ask if they know anyone who might require your firm's services.
Used in conjunction, these letters make a solid opening strategy by creating interest in your
firm and generating client leads.
ONLINE MARKETING
Once you've sent out sales and referral letters, you can expand your promotion presence by
advertising on social media networks like Facebook and Twitter. With more than 750 million
active users, Facebook is a huge market waiting to be tapped. Facebook ads can reach
segments of this market for less money than television advertising. By being active on social
media sites like these and maintaining a blog or website with tax advice or tax code
information, you can add value for potential customers and expose your business to more
people.
INFORMAL PROMOTION
Successful businesspeople are always on the lookout for opportunities. Accountants should be
no different. If you patronize local businesses, ask their staff and owners about the business'
accounting. They may be unhappy with their current accountant. Or they may be unclear about
what financial obligations they are dealing with. In that case, be ready to offer help where you
can. Offers like these are opportunities to showcase your firm's skills, while showing local
businesses and individuals why they might need your services.
PLACE
This is the P of "place" in the marketing mix. It is also the element which is treated less
creatively and less seriously by many marketing managers. Changes in distribution, though, can
79

affect the costs, positioning and revenue of a product. Decisions about distribution are critical
for the following reasons:
Without availability, customers cannot buy the product or service which has generated demand
but which, unsatisfied, will yield no profits
The benefit of products available when and where customers want them, provides
added value to the customer and can directly affect demand
Changes in distribution can open up new market segments
The length of the distribution channel selected will directly affect the control over the
marketing of a product and the amount of capital tied up in distribution
THE IMPACT OF TECHNOLOGY
Some of the most interesting changes currently taking place in marketing are in the area of
distribution, linked often to improved technology, for example:
The development of "just-in-time" manufacturing, which reduces stock levels to a
minimum
EPOS (Electronic Point of Sale) and EFTPOS (Electronic Funds Transfer at Point of Sale)
which improve the flow of information about distribution outlets, levels and trends,
allowing for more detailed analysis and control
The ability to deliver some products and services electronically has reduced the need for
some intermediaries for example, many airlines no longer sell tickets through travel
agents; they now sell tickets direct online
SELECTING DISTRIBUTION CHANNELS
The key is to transfer your products to the customer using the most cost-effective control. The
distribution decision is, therefore, always one of cost v. control .
Sell direct to the end user and youmaximize your control and distribution costs
Use intermediaries and a long channel of distribution and costs and control
areminimized.
80

At a strategic level, the important decisions are often about power in the distribution
channel:
If there are many small distributors, power and therefore control tend to stop with the
manufacturer
If there are a few powerful distributors, e.g. retail supermarkets, the power is held by
the retailers.
PRICE
Pricing is one of the key elements of the marketing mix, and pricing strategy is a key part of
planning and therefore must be carefully reviewed. This is because:
Price influences sales value through its effect on demand (most obviously where
demand is highly price elastic).
Price/volume relationship is one of the key control measures for marketing
management.
Prices obtained determine the margins and profits which the company can secure.
PAYMENT TOTHEAUDIT FIRM
Payment shall be made within 30 days after the delivery of audit report, financial statements
and management letter (includes suggestions and discussion with the top management of
Relief Pakistan on improving internal controls and financial system of the Organization) by the
audit firm. In case of any delay in submission of Audited financial statement 10% penalty will be
imposed on the total claim.
AUDIT FEES
The Audit Commission Act 1998 requires the Commission to prescribe scales of fees in respect
of the audit of accounts which are to be audited in accordance with the Act. Before prescribing
any scale of fees, the Commission has a statutory duty to consult with associations of local
authorities and organizations connected with the accountancy profession. We provide other
stakeholders and audited bodies with copies of our proposals to ensure that our consultation is
81

genuine and as productive as possible. Following consultation, we publish our work
programmed and scales of fees on our website each year, together with the scale fee for each
audited body.
The scale fees for individual audited bodies are normally based on the scale fee for the previous
year, reflecting the auditors assessment of audit risk and complexity. We would only expect
variations from the scale fee to occur where these factors are significantly different from those
identified and reflected in the fee for the previous year.
The Commission can approve proposed variations to the scale fee for an individual audited
body, to reflect changes in circumstances, before or at the completion of the audit. The
Commission obtains updated fee information from appointed auditors, and explanations for
any proposed variations from the scale fee, on a regular basis. The Commission will consider
the reasonableness of the explanations provided by auditors before agreeing to any variation to
the scale fee.
The scale fees are based on the expectation that audited bodies are able to provide the auditor
with complete and materially accurate financial statements, with supporting working papers,
within agreed timeframes.
The Commission will charge fees for considering objections, from the point at which auditors
accept an objection as valid, or any special investigations, such as those arising from disclosures
under the Public Interest Disclosure Act 1998, as a variation to the scale fee.
CERTIFICATION FEES
The Commission has a statutory duty to make arrangements for the certification of grant claims
and returns if so required by the body concerned. We only make such arrangements where
requested to do so. The Audit Commission Act 1998 requires the Commission to charge fees
for certification work that cover the full cost of the work.
82

We have replaced the previous schedule of maximum hourly rates with a indicative fee for
certification work at each relevant audited body. The indicative fee is based on the latest actual
certification fees available.
Because the number of schemes to be certified changes from year to year and the amount of
work needed varies at individual bodies, we need to review the indicative fee each year. We
therefore review and reset these fees annually.
The indicative fees for certification work are based on the expectation that audited bodies are
able to provide the auditor with complete and materially accurate claims and returns, with
supporting working papers, within agreed timeframes.
MINIMUM CHARGE OUT RATES AND MINIMUM FEE FOR AUDIT ENGAGEMENTS
The level of fee is to be mutually agreed between the auditor and
His client, which largely depends upon the volume of work
Involved and estimated time to be incurred on the audit
Engagement. the Council whilst recognizing this principle is
However, of the view that there has to be a minimum threshold of
Audit fee. To achieve the desired objective, the following minimum
Audit fee is prescribed (which may be increased by consent
Having regard to specific circumstances of an audit engagement).
Schedule of Minimum Audit Fee:
Type of entity Minimum
Turnover up to 500 million 250,000
Turnover over 500 million up to 1 billion 300,000
Turnover over 1 billion up to 5 billion 500,000
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Turnover above 5 billion 1,000,000
SWOT ANALYSIS
SWOT is the abbreviation of strengths weakness opportunities and threats. In the first two
strengths and weakness are the internal factors of the organization, to which an organization
can control. The other two factors areexternal factors which are beyond the control of the
organization.
The SWOTanalysis of AYUB ASLAM & CO.is as follows:
STRENGTHS
Time Consuming processes, only one draftsmen/computer operator
Dependability of staff
Audit team has very limited professionals disabling them to do many audits at
a time
Due to lack of audit staff only 2-3 audits can be carried at a time
Management can be controlling
The principles are stretched thin
Most of the business is controlled by general manager rather
t h a n department wise reporting
No Multinational Company is audit client
No Multinational Company is Taxation Client
Strict Policy for absenteeism among employees causing dissatisfaction
Low morale of employees
No Company Website
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OPPORTUNITIES
F i r m c a n g e t m o r e a u d i t s e r v i c e s f r o m c l i e n t s i f p r o p e r m a r k e t i n g tec
hniques are applied
Develop benefit business
Add additional high quality audit and tax services to drive additional business
staff training on systems and new soft wares enabling them to perform their duties well
New more efficient staff
Consolidation of offices
Create communication standards (team meetings, reports) within the firm
Team Building
Prospect for new rendering of sales
Create an interactive web-site
Better Computer equipment and accounting soft wares for staff
Cross selling to current client base
Focus on larger commercial lines policies
More dedication towards auditing
Definition of commercial book small, medium and large
Growth markets
Retention of skilled employees
Create Niche for High Value clients
THREATS
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Possible Turnover of employees due to excess of working hours
Competition hiring staff
Day by day increasing Competition in taxation and audit markets
Turnover of customers to other firms
Client handling is reactionary
Loss of contingents
Poor Economic conditions throughout the country might be a cause of worry for
companies countrywide, thus reducing auditors remuneration
Loss of audit clients due to lack of audit team members
Low motivation level amongst employees might result i
n l e s s productivity of the firm
Due to more emphasis on Taxation services the audit department is quite low
in morale and thus clients are not satisfied with audit service
No clear reporting standards in the firm
Firm might be outdated due to lack of technology and employees
technological orientation
Staff dependability might create headache for management
Managements strict policy regarding employee absenteeism is main cause of
reduced motivation levels
SITUATION ANALYSIS
Situation analysis refers to a collection of methods that managers use to analyze an
organization's internal and external environment to understand the organization's capabilities,
86

customers, and business environment. The situation analysis consists of several methods of
analysis: The 5Cs Analysis, SWOT analysis and Porter five forces analysis. The situation analysis
is the second step in the marketing plan and is a critical step in establishing a long term
relationship with customers.
A situational analysis is really a review of what has happened, is happening and what is likely to
happen in the environment in which the organization is operating. The environment is the
operating arena" and takes into consideration everything that affects the organization and its
operations.
The external environment covers those variables known as "uncontrollable" in that the firm
cannot always bring influence to bear upon them. All the firm can do is being prepared to adapt
and be ready to meet expected happenings.Some external forces will have a direct influence on
the operating procedures within theorganization (e.g. suppliers, customers, competition, etc.).
Other environmental forces (political, economic, etc.) will influence the organization in various
ways but may not have an immediate direct effect on its operational activities.
THE ENVIRONMENT
87

Those aspects over which the firm will have some, if not total, influence and control. A
situational analysis is a structured and systematic investigation involving close inspection of any
factors which can have an influence on operating systems, planning, decision making and, of
course, ultimate results.
During a full situational analysis, or marketing audit as it is often referred to, the outcomes of
previous activities will be studied. Those that were successful may be used again or adapted to
suit changed conditions of one kind or another; those that were unsuccessful will be studied in
order to see what went wrong and how the faults could be corrected. This also applies to
systems which were, or are, being used.
The information gathered in an audit allows an organization to see exactly:
Where it is (at the time of the audit).This information can then help the organization in
deciding:
Where it wants to be (objective setting), and How to get there (strategy formulation).To put it
another way, the marketing audit can be considered as providing the underpinning knowledge
for a lot, if not all, of the planning process.
SCOPE OF THE ANALYSIS
We have said that the marketing organization is affected by both internal and external
environmental conditions. This means that there can be a multitude of influencing factors
which need to be investigated periodically, both internal and external.
(A) INTERNAL ASPECTS
These relate to the organizational, financial, technological and human resources available, and
the current position with regard to operations and marketing for example:
Current organizational structure
Sales volume
88

Market shares held by different products
Profit margins gained
Systems / technology in use
Internal communication systems
Skills of the personnel and training carried out
Business Orientation
Resources that are available
Type and range of products
Level of stocks manufactured and held
Level of service given to customers
Systems for dealing with customers
Distribution methods and channels
Promotional methods
Pricing methods and policies
Systems for receiving payment
New product policy and processes
Employee behavior strikes, etc.
(B) EXTERNAL ASPECTS
The external environment may be broken down in a number of different ways. One approach is
to consider the general environment of the organization as well as the specific of the particular
markets in which it operates and the competition it faces.
89
(I) GENERAL ENVIRONMENT

The normal approach here is to analyze the environment under four headings, denoted by the
mnemonic "PEST" (or some variation such as PESTL or SLEPT).
Political and legal for example: Regulations on product quality Restrictions on contents Laws
on packaging or labelingIndustry practices and norms Tax issues.
Social and cultural for example: Population levels and trends Level of awareness of consumer
rights Changing tastes.
Economic for example: Recessionary times or otherwise Levels of disposable income Interest
rates Exchange rates.
Technological for example: New materials or components New or outdated technology New
production material or methods.
(II)THE MARKET
Size existing and potential
Trends
Products on sale
Accepted distribution methods
Standard levels of pricing
Communication methods used.
(III) THE COMPETITION
Number of competitors
Market shares held
90

Marketing methods used
Products offered
Management styles
Mergers/acquisitions
Strengths and weaknesses.
METHODS OF STRUCTURING THE ANALYSIS
You can see that the aspects to be investigated can be quite extensive. Because of this,
everyone must have a way of organizing the investigation so that no aspect is overlooked.
There are several methods that can be used.
LISTING
One method is simply to make lists under general headings for example:
External
Internal
Government policy
People skills
Competition
Resources available
Customers
Production capacity
Each item on the list can then be expanded to cater for any or all aspects which needs
investigation. For example, competition can be given sub-headings of:
Price range
91

Promotional activity
Distribution network.
COMPETITORS ANALYSIS:
IMPORTANCE OF UNDERSTANDING COMPETITION:
When a company launches its product in the market, it tries to position its brand uniquely
among other brands present in the market. Therefore it is critical to understand the strengths,
weaknesses, opportunities and threats of each of those competitors along with the industry
structure itself. This knowledge is important because its the competition that helps us to own
the unique benefit in our customer`s mind that our competitors have not addressed
and cannot easily address in the future.
RATIONAL BEHIND IDENTIFYING THE COMPETITORS:
Analyzing the competitors is an essential component of corporate strategy. Knowing about the
competitors and their profile will help the concerned organization in knowing its weaknesses
that it may exploit. A detailed profile of the competitors, helps an organization in getting an in
depth description of the competitors background, its unique selling proposition, financial
condition, its strategies, the products and the market share.
COMPETITION
Competitors fall into four primary categories; other firms, sole practitioners, licensed tax
consultants and bookkeeping services, and software.
Other CPA firms- A total of 5 firms conduct business in our area that is comparable to Franklin
& Moore in size and capabilities, including one that is a national firm. These firms have staff and
technology resources similar to ours, although their focus and areas of specialization vary.
Sole practitioners - An estimated 23 sole practitioners exist in the immediate area. These
ranges from individuals that have been in business for over 20 years to those are in their sixth
month. Their resources are limited in terms of staff and technology.
92

Licensed tax consultants and bookkeeping services - The "Type I" individual client, with straight
AAC orward and uncomplicated needs, often looks to licensed tax consultants and bookkeeping
services in lieu of the services we offer. This client type may consider these preparers on the
basis of "self-preparation avoidance" rather than from seeking proactive advice and counsel.
Software - Increasing competition from individual software, particularly Intuit's "Turbo Tax"
and H&R Block Financials' "Tax Cut."
DIRECT COMPETITION
The following companies are direct competition to Franklin and Moore. More about them are
discussed in the following tables and charts.
1.
Huber & Huber PC - Are our strongest competitors. they have a strong image and is a
very stable company growing at a good pace.
2.
Lang Pauls & Rowe - Come in a close second to H&H. They too are well known in the
market and offer quality services.
3.
Wright & Ellison - The biggest threat W&E pose to us is the strong strategic alliances that
they have. These alliances have positioned them to grow quickly and they could become
a bigger threat.
4.
Insight - This is our weakest competitor. They have not been around for very long and
struggle with providing quality services backed with expertise.
93

FINANCIAL STATEMENT ANALYSIS
The financial statements of the AYUB ASLAM & CO.(Chartered Accountants) were not available
as they are treated as secret documents of the company. Thats why I have done the financial
analysis of Mitsubishi Momentum Motors, in whose audit I have take part.
HORIZONTAL ANALYSIS
PROJECTED PROFIT AND LOSS

Pro Forma Profit And Loss
2010
2011
2012
Sales
160,977
193,172
231,807
Direct Cost of Sales
25,758
29,622
34,065
Other
Total Cost of Sales
25,758
29,622
34,065
Gross Margin
135,219
163,551
197,742
Gross Margin %
84.00%
84.67%
85.30%
72,000
77,000
86,000
Sales and Marketing and Other Expenses 6,897
9,500
13,000
Depreciation
2,500
2,500
Expenses
Payroll
2,400
94

Leased Equipment (incl. office rental)
2,400
2,500
3,000
Utilities (incl. office furniture, etc.)
1,800
2,000
2,500
Insurance
1,200
1,500
2,000
Rent
Payroll Taxes
11,520
12,320
13,760
Other
Total Operating Expenses
98,217
107,320
122,760
Profit Before Interest and Taxes
37,003
56,231
74,982
EBITDA
39,403
58,731
77,482
Interest Expense
Taxes Incurred
9,251
14,058
18,745
Net Profit
27,752
42,173
56,236
Net Profit/Sales
17.24%
21.83%
24.26%
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PROFORMA CASH FLOW

2010
2011
2012
Cash Sales
Cash from Receivables
149,782
188,617
226,341
Subtotal Cash from Operations
149,782
188,617
226,341
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
149,782
188,617
226,341
Cash Received
Cash from Operations
Additional Cash Received
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Expenditures
2010
2011
2012
Cash Spending
72,000
77,000
86,000
Bill Payments
66,312
69,717
85,791
Subtotal Spent on Operations
138,312
146,717
171,791
$0
2,895
Long-term Liabilities Principal Repayment 0
Purchase Other Current Assets
Purchase Long-term Assets
24,000
Dividends
Subtotal Cash Spent
165,207
146,717
171,791
Net Cash Flow
(15,425)
41,901
54,550
Cash Balance
77,226
119,126
173,676
Expenditures from Operations
Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal
Repayment
of
Current
Borrowing
Other Liabilities Principal Repayment
PROJECTED BALANCE SHEET

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The projected balance sheet information is presented in the table below.
Proforma Balance Sheet
2010
2011
2012
Cash
77,226
119,126
173,676
Accounts Receivable
22,776
27,331
32,797
Other Current Assets
1,158
1,158
1,158
Total Current Assets
101,160
147,616
207,632
Long-term Assets
30,948
30,948
30,948
Accumulated Depreciation
2,400
4,900
7,400
Total Long-term Assets
28,548
26,048
23,548
Total Assets
129,708
173,664
231,180
Liabilities and Capital
2010
2011
2012
Assets
Current Assets
Long-term Assets
Current Liabilities
98

Accounts Payable
4,094
5,877
7,156
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
4,094
5,877
7,156
Long-term Liabilities
Total Liabilities
4,094
5,877
7,156
Paid-in Capital
5,000
5,000
5,000
Retained Earnings
92,862
120,614
162,787
Earnings
27,752
42,173
56,236
Total Capital
125,614
167,787
224,023
Total Liabilities and Capital
129,708
173,664
231,180
Net Worth
125,614
167,787
224,023
BUSINESS RATIOS
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification - Auditing services, are shown for comparison.
Ratio Analysis
2010
2011
2012
Industry Profile
99

Sales Growth
-0.72%
20.00%
20.00%
8.60%
Accounts Receivable
17.56%
15.74%
14.19%
24.40%
Other Current Assets
0.89%
0.67%
0.50%
46.70%
Total Current Assets
77.99%
85.00%
89.81%
74.90%
Long-term Assets
22.01%
15.00%
10.19%
25.10%
Total Assets
100.00%
100.00%
100.00%
100.00%
Current Liabilities
3.16%
3.38%
3.10%
42.80%
Long-term Liabilities
0.00%
0.00%
0.00%
17.20%
Total Liabilities
3.16%
3.38%
3.10%
60.00%
Net Worth
96.84%
96.62%
96.90%
40.00%
Sales
100.00%
100.00%
100.00%
100.00%
Gross Margin
84.00%
84.67%
85.30%
0.00%
66.89%
62.95%
61.14%
83.50%
Advertising Expenses
2.05%
2.07%
2.59%
1.20%
Profit Before Interest and Taxes
22.99%
29.11%
32.35%
2.60%
Percent of Total Assets
Percent of Sales
Selling, General & Administrative

Expenses
100

Main Ratios
Current
24.71
25.12
29.01
1.59
Quick
24.71
25.12
29.01
1.26
Total Debt to Total Assets
3.16%
3.38%
3.10%
60.00%
Pre-tax Return on Net Worth
29.46%
33.51%
33.47%
4.40%
Pre-tax Return on Assets
28.53%
32.38%
32.43%
10.90%
Additional Ratios
2010
2011
2012
Net Profit Margin
17.24%
21.83%
24.26%
n.a
Return on Equity
22.09%
25.13%
25.10%
n.a
Accounts Receivable Turnover
7.07
7.07
7.07
n.a
Collection Days
59
47
47
n.a
Accounts Payable Turnover
14.37
12.17
12.17
n.a
Payment Days
33
25
27
n.a
Total Asset Turnover
1.24
1.11
1.00
n.a
Debt to Net Worth
0.03
0.04
0.03
n.a
Current Liab. to Liab.
1.00
1.00
1.00
n.a
Activity Ratios
Debt Ratios
101

Liquidity Ratios
Net Working Capital
$97,066
$141,739
$200,475
n.a
Interest Coverage
0.00
0.00
0.00
n.a
Assets to Sales
0.81
0.90
1.00
n.a
Current Debt/Total Assets
3%
3%
3%
n.a
Additional Ratios
RATIO ANALYSIS
I have not been provided by the financial statements of the firm thats why I have done the
financial analysis of the client. The following ratios are being calculated:
1. LIQUIDITY RATIOS
a) Net Working Capital
b) Current Ratio
c) Quick (Acid-Test) Ratio
2. ACTIVITY RATIOS
a) Cost of Goods Sold to Net Sales
b) Administrative Expenses Ratio
c) Inventory Turnover
d) Average Age of Inventory
e) Average Collection Period
f) Average Payment Period
102

g) Total Assets Turnover
3. DEBT RATIOS
a) Debt Ratio
b) Times Interest Earned
4. Profitability Ratios
a) G.P. Margin
b) Operating Profit Margin
c) Net Profit Margin
d) Earning Per Share (EPS)
e) Return on Total Assets (ROA)
f) Return on Equity (ROE)
g) Book Value per Share
NET WORKING CAPITAL
This ratio show the amount of the assets which the company uses to fulfill its day to day
expenses and activities. The more the positive difference the more company will be in better
position.
= Current Assets - Current Liabilities
2009
2010
2011
2012
38638001-
54363993-
50799914-
53874233-
54363993
3708761
5049434
11982010
103

-50500992
50655232
45750480
41892223
COMMENTS:
In 2009 the firm has shortage of working capital. For this it has to take loans from bank to meet
its day to day current assets requirement.
CURRENT RATIO:
This ratio measures the firm ability to meet its current obligation through current assets. The
higher the current ratio the firm will be considered greater liquid. Normally the current ratio of
2 or above is desired but it depends in the industry in which the firm operates. It is calculated as
follows:
Current Assets
-------------------Current Liabilities
2009
2010
2011
2012
38638001
54363993
50799914
53874233
7877392
3708761
5049434
11982010
4.91
14.66
10.06
4.5
104
Current Ratio
16
14
12
10
8
6
4
2
0
Current Ratio
2009
2010
2011
2012
Comments:
The overall current ratio is over the satisfactory level of 2 in all the years. This ratio is
extraordinary high in 2010 and 2011, which is over 10. This means that the firm had greater
current assets as compared to liabilities. It also means that the firm has greater investment
indulge in current assets.
QUICK RATIO
The quick ratio is similar to the current ratio except it excludes the inventory which is the least
liquid current asset. A quick ratio of 1 or greater is generally acceptable but it depends on the
industry. It provides better estimates in the business where it is difficult to sold inventory
quickly. It is calculated as follow:
Current Assets-Inventory
---------------------------------Current Liabilities
2009
2010
2011
2012
105

36351394
52012810
45085335
44746696
7877392
3708761
5049434
11982010
4.61
14.02
8.93
3.73
Quick Ratio
16
14
12
10
8
Quick Ratio
6
4
2
0
2009
2010
2011
2012
Comments:
The quick acid test ratio is same as the current ratio. It show the same trend as the current
ratio, which means that the firm has very little investment intact with the inventory. This ratio
shows that firm has excessive current assets, which are more than sufficient to pay the current
liabilities.
ACTIVITY RATIOS
Activity Ratios are used to measure the speed with which various accounts are converted into
sales or cash. These ratios are as follows:
106

Cost of Goods Sold to Net Sales
This ratio show the percentage of cost of goods sold to the sales. The lower the percentage will
be the greater will be the profit of the company. The formula of this ratio is as follow:
Cost of Goods Sold

=
x 100
Net Sales
2009
2010
2011
2012
12292226
19892985
21267257
31755455
22375508
36888310
33581356
37157872
54.94%
53.83%
63.33%
87.46%
Comments:
From the above table and graph it is clear that cost of goods sold is more than 50% for all the
years. It is minimum in 2010 and maximum in 2012 which is an alarming situation for the
company that its cost is more than 87%. The company should see it cost in 2012 to be safe from
further losses. This may be the reason for the losses in the year.
107

ADMINISTRATIVE EXPENSES RATIO
This ratio show the percentage administration cost incurred to net sales. The lower this ratio is
the greater will be the Net Profit of the company. The formula of this ratio is as follow:
= Administrative Exp x 100
Net Sales
2009
2010
2011
2012
9676690
10381069
9179643
9138463
22375508
36888310
33581356
37157872
43.25%
28.14%
27.34%
24.6%
Comments:
From the above chart and graph it is clear that administration cost is over 25% for all years. The
admin cost in 2009 is the highest which is above 43% of sales and the major contributor for the
losses in that year. After that management has control it remains below 30% which is a good
sign.
INVENTORY TURNOVER
Inventory turnover commonly measures the activity, or liquidity of a firm s inventory. The
greater inventory turnover is better for the company. It gives meaning full result when it will be
compared with the other firms operating in the industry. It is calculated as follows:
=
C.G.S
Inventory
108

2009
2010
2011
2012
12292226
19892985
21267257
31755455
2286607
2351183
5709579
9127537
5.38
8.46
3.72
3.48
Comments:
Inventory turnover for the years is volatile. It is above the satisfactory level of 2. It is 5.38 in
2009 and jump to 8.46 in the next year which show that the sales of goods increased but then it
came to normality of below 4 in the next 2 years. This is due to rapid increase in cost of goods
sold.
AVERAGE AGE OF INVENTORY
Average age of inventory show the time in which the inventory is within the organization. It
includes both the time to produce and to sell the inventory. The lower age of inventory is
beneficial for the company. It is calculated as follows:
=
365
Inventory Turnover
2009
2010
2011
2012
365
365
365
365
5.38
8.46
3.72
3.48
68 Days
43 Days
98 Days
105 Days
Comments:
109

The above graph and table show that the age of inventory is decreasing in the first 2 years and
then start increasing in later 2 years. The highest age is 105 days which means that the
inventory took 105 days to be sold after purchased which is an alarming situation for the
AVERAGE COLLECTION PERIOD
The average collection period, or average age of accounts receivable, is useful to evaluate the
credit and collection policies of the organization. Average collection period is meaning full only
in relation to the firm credit terms. It lower collection period is beneficial for the organization. It
is calculated as follows:
=
Accounts Receivables
Sales
2009
2010
2011
2012
4577477
9333690
27922602
4808380
22375508
36888310
33581356
37157872
75 Days
92 Days
303 Days
47 Days
Comments:
From the above graph and table it is clear that the collection system of the company is not
effective. It takes much longer to the company to collect money from its debtors. The minimum
is 47 days which are far higher than the average of 30 days in 2012. Before 2012 this time is
very long e.g. 303 days in 2011.
AVERAGE PAYMENT PERIOD
The average payment period is calculated in the same manner in which average collection
110

period is calculated. It depends on the credit terms extended to the company by its creditors.
The higher payment period is beneficial for the company. It is calculated as follows:
=
Accounts Payable
365
Purchases
2009
2010
2011
2012
5578325
2407678
1904819
1614940
10590252
15135426
21157494
32011655
192 Days
58 Days
33 Days
18 Days
Comments:
The higher payment period is better for the company, but in this case the payment period is
reverse which means that the company is paying their debts very quickly, which may cause
them in future. In 2012 this period is only 18 days which are less than the average of 30 days
period.
TOTAL ASSETS TURNOVER
The total asset turnover indicates the efficiency which the firm uses its assets to generate sales.
Generally, the higher the asset turnover the more efficiently its assets are used to generate
sales. It is calculated as follows:
Sales
Total Assets
111

2009
2010
2011
2012
22375508
36888310
33581356
37157872
116129655
131222999
127409292
129059318
0.20
0.28
0.27
0.29
Total Assets Turnover
0.35
0.3
0.25
Total
Assets
Turnover
0.2
0.15
0.1
0.05
0
2009
2010
2011
2012
Comments:
From the above graph and table it is clear that the total assets turnover is increasing but it is
increasing very slowly and it is very low. That means that the management is not using its
resources very efficiently to generate profits.
DEBT RATIOS
The debt position of a firm indicates the amount of other people's money being used in
attempting to generate profits. In general, financial analysts are most concerned with long-term
debts, because these commit the firm to paying interest over the long run as well as eventually
repaying the principal borrowed.Debt Ratios are following:
112
Debt Ratio
The debt ratio measures the proportion of the total assts financed by the firm creditors. The
higher this ratio greater the amount of other peoples money being invested in the business. It
is calculated as follows:
=
Total Liabilities 100

Total Assets
2009
2010
2011
2012
7877392
3708761
5049434
11982010
116129655
13122299
127409292
129059318
6.8%
2.83%
8.4%
8.72%
Debt Ratio
10.00%
8.00%
6.00%
Debt Ratio
4.00%
2.00%
0.00%
2009
2010
2011
2012
113

Comments:
Debt ratio should be minimum. In 2009 it is 6.8% which means that debts are 6.8% of the total
assets. In 2010 this percentage decreases but after that it increased very quickly to about 8.5%
in the next 2 years, which may cause liquidity problem to the company. Overall this ratio is
satisfactory.
TIMES INTEREST EARNED
It measures the firm's ability to pay its contractual interest payment. The higher this ratio will
be the greater the firm able to pay its interest payment. It is calculated as follows:
=
EBIT
Interest
2009
2010
2011
2012
406592
6614256
3134456
(3736046)
61754
32203
9524
8830
6.58
205.39
329.11
(423.10)
114
Times Interest Earned

400
300
200
100
0
-100
2009
2010
2011
2012
Times
Interest
Earned
-200
-300
-400
-500
Comments:
This ratio is the ability of the business to pay interest. This ratio is very good for the first 3 years
of the company, which means that they can pay their interest payment very easily and they did
not get any loan for that years as well. But in 2012 due to the loss the company will face
difficulty in paying their interest payment as this ratio becomes negative.
PROFITABILITY RATIOS
There are many measures of profitability. Each relates the returns of the firm to its sales,
assets, and equity or share value. As a group, these measures allow the analyst to evaluate the
firm's earnings with respect to a given level of sales, a certain level of assets, the owner's
investment, or share value. Without profits a firm could not attract outside capital.
G.P. Margin
The G.P ratio measures the percentage of profit remains after the firm has pay for its good. The
higher gross profit margin is better for the organization. This show the lower the cost is. It is
calculated as follows:
=
G.P
x 100
Sales
115

2009
2010
2011
2012
10083282
16995325
12314099
5402417
22375508
36888310
33581356
37157872
45.06%
46.07%
36.66%
14.54%
G.P. Margin
50.00%
40.00%
30.00%
G.P. Margin
20.00%
10.00%
0.00%
2009
2010
2011
2012
Comments:
From the above graph and table it is clear that the G.P ratio for the first two years is satisfactory
and above 45% of sales. But after that this percentage starts decreasing and reach to 15% in
2012 which is due to the cost of goods sold is increasing very quickly. The management has to
reduce cost to save the company from the losses in subsequent years.
PERATING PROFIT MARGIN
Operating profit margin measures the percentage of profit remains after deducting all expenses
except interest and taxes. It is called the pure profit of the organization. The higher operating
profit margin is preferred. It is calculated as follows:
116

=
Operating Profit
x 100
Sales
2009
2010
2011
2012
344838
6582053
3124932
(3749855)
22375508
36888310
33581356
37157872
1.54%
17.84%
9.3 %
(10.1)%
Comments:
In the first year operating profit is very low as compared to gross profit if that year is above
40%, which means that the company has incurred high amount of operating expenses in that
year which leads the company to the losses. After that operating profit of the next year is
satisfactory as it is above 17%, but it start decreasing from 2011 and in 2012 it become the loss
of10%, which is due to the low G.P. This should be controlled by the management.
NET PROFIT MARGIN
Net profit margin measure the profit remains after paying all the cost, expenses, interest, taxes.
The higher net profit is better for the organization. It is calculated as follows:
N.P
=
x 100
Sales
2009
(550123)
22375508
2010
4832089
36888310
2011
4845626
33581356
2012
(4282550)
37157872
(2.46)%
13.1%
14.43%
(11.53)%
117
Net Profit Margin

20.00%
15.00%
10.00%
5.00%
Net Profit Margin
0.00%
2009
-5.00%
2010
2011
2012
-10.00%
-15.00%
Comments:
The net profit of the company is not good as it show the loss in 2009 and 2012. This is because
of the higher operating and cost of goods. In 2010 and 2011 this ratio show profit, but this is
low as compared to operating profits of the year. The net profit is due to the other income.
EARNING PER SHARE (EPS)
EPS represent the number of rupees earned during the period on behalf of each outstanding
share of common share. It is generally of interest of present and proposed share holders. It is
calculated as follows
Net Profit after Tax (Available to Common Stock holders)

=
-----------------------------------------------------No. of outstanding common stock holders

2009
2010
2011
2012
(550123)
4832089
4845626
(4282550)
100000
100000
100000
100000
118
(5.5)
48.32
48.46
42.83
EPS
60
50
40
30
EPS
20
10
0
-10
2009
2010
2011
2012
Comments:
The above graph and table shows that EPS in 2009 is negative which means that it shareholders
are at loss. But after that the EPS becomes positive and above 40% which means that
shareholders earnings are increasing.
RETURN ON TOTAL ASSETS (ROA)
ROA measures the overall efficiency of the management in generating profit with its available
assets. It is also called return on investment. Higher ROA is better for the organization. It is
calculated as follows:
Net Profit after Tax
=
----------------------------
x 100
Total Assets
2009
2010
2011
2012
(550123)
4832089
4845626
(4282550)
119

116129655
131222999
127409292
11982010
0.47%
3.68%
3.8%
3.31%
Return on Total Assets
4.00%
3.00%
2.00%
Return on
Total Assets
1.00%
0.00%
2009
2010
2011
2012
Comments:
Return on total assets is not very good. It is below 4% which means that the company is
generating profit only 4% relative to the assets employed. The management should take active
steps to increase this percentage. This also shows that management is not effectively using the
assets.
RETURN ON EQUITY (ROE)
ROE measures the return on common share holder investment in the firm. Generally the higher
the return, the better off is the shareholders. It is calculated as follows:
Net Profit after Tax
=
----------------------------
x 100
Stock holders Equity

2009
2010
2011
2012
120

(550123)
4832089
4845626
(4282550)
11379713
15925059
20770676
16488126
4.83%
30.34%
23.39%
(25.97)%
Return on Equity
40.00%
30.00%
20.00%
10.00%
Return on Equity
0.00%
2009
-10.00%
2010
2011
2012
-20.00%
-30.00%
Comments:
ROE in the 2009 is relatively low, which is due to the net loss the company is facing. In 2010 and
2011 the return on equity is satisfactory and above 20% of the capital employed. But in 2012
the return become negative which means that owners are bearing heavy losses on their
investment.
BOOK VALUE PER SHARE
Book value per share measures the value of the share of the share holder in the company. It
includes both the current profit and the retained earnings as well. It is calculated as follows:
Common Stock holder's equity
= --------------------------------------No. of Outstanding Shares
121
2009
2010
2011
2012
11379713
15925059
20770676
16488126
100000
100000
100000
100000
113.79
159.25
207.71
164.88
Book Value per Share

300
200
Book Value per
Share
100
0
2009
2010
2011
2012
Comments:
This ratio shows that the book value per share is constantly increasing and the owner
investment in constantly increasing and they are at profit for their investment.
DIRECTORS REPORT
The Directors have pleasure in presenting the 18th Annual Report of theCompany along with
the audited accounts for the year ended September 30, 2010.
Following are the Results of the Company:
2012
2011
122

(Rupees)
(Rupees)
(000)
(000)
Profit/Loss before Depreciation
21,438
13,313
Depreciation
(16,287)
(17,002)
_______
_________
Profit/Loss for the Year
5,151
(3,689)
Provision for the Taxation
9,435
1,999
_______
_________
(4,284)
(5,688)
Profit/Loss for the year
Compared with last year, there is an improvement in the results of thecompany. The
management's timely action has shown results even when some of the input costs have gone
up.
FUTURE PROSPECTS:
Because of failure of cotton crop in Pakistan and china the prices of cotton have gone up to Rs.
3600/- per mound. Which is about 50% increase from previous levels. European community is
imposing antidumping duties, which will (adversely) affect the yarn price in the country. The
Directors are hopeful of the future progress of the company.
EARNING PER SHARE
2012
2011
(0.40)
(0.53)
DIVIDEND
123

The Company is not in a position to pay Dividend because of loss after Tax.
CORPORATE GOVERNANCE
The Company has followed the best practices of corporate governance,"whereverpossible" as
detailed in the listing regulations of KSE.
The financial statements prepared by the management of the Company, its state of affairs, the
result
of
its
operations,
cash
flows
and
changes
inequity. Proper books of account of the Company have been maintained. Appropriateaccounti
ng policies have been consistently applied in preparation of the financial statements.
International
Accounting
Standards,
as applicable
in
Pakistan,
have been
followed
inpreparation of financial statements and any departure there from has beenadequately disclos
ed.
The system of internal control is sound in design and effectively monitored. There
are no significant doubts upon the Company's ability to continue as a goingconcern.
Past six years company performance is annexed. There has been no material departure from
the practices of corporate governance as detailed in the corporate governancescales
There are no statutory payments on account of taxes, duties, levies and charges, which are
outstanding and have not been disclosed in this report.
RELATED PARTIES:
The Board of Directors has approved the policy for transactions/Contracts between Company
and its related parties on an arm's length basis and the relevant rates will be determined with
the "Comparable Uncontrolled Price Method".
AUDITORS:
The present auditors, "AYUB ASLAM &CO. Chartered Accountants retire and being eligible
offers themselves for reappointment.
124
PROFIT AND LOSS ACCOUNT FOR THE YEAR

Ended Sep 30
2012
2011
(Rupees)
(Rupees)
562,293,117
399,787,077
__________
_________
Cost of Sales
534,757,812
372,434,299
Gross Profit
27,535,304
27,352,778
10,985,449
9,624,266
Sales-Net
Operating Expenses:
Administrative
Selling
2,064,893
3,815,502
__________
__________
13,050,343
13,439,768
___________
___________
14,484,962
13,913,010
Financial
9,992,683
18,117,778
Others
9244,562,279
(4,205,692)
__________
___________
Operating Profit
Other Charges:
125

Other Income
588,291
516,402
___________
___________
5,150,570
(3,689,290)
Current Year
2,815,952
1,998,935
Deferred Taxation
6,618,939
--
___________
____________
9,434,891
1,998,935
__________
_____________
Profit/Loss before Taxation

Provision for Taxation
Accumulated Loss Brought forward (4,284,321)
(5,668,225)
(102,954,246) (97,266,021)
_______________________
Accumulated Loss Carried
Earnings Per Share
(107,238,567)
(102,954,246)
(0.40)
(0.53)
BALANCE SHEET
2012
2011
126
127
128
CASH FLOW STATEMENT FOR THE YEAR SEP 30,

2012
2011
(Rupees)
(Rupees)
129
INTER-COMPANY ANALYSIS WITH AT LEAST THREE COMPANIES

Transactions between units of an entity can take several forms and can occur between any
units of the entity. Transactions flowing from the parent to the subsidiary are commonly called
downstream transactions, transactions from the subsidiary to the parent are commonly called
upstream transactions, and transactions between subsidiaries are commonly called lateral
transactions.
EPS and ROE Ratios for AYUB ASLAM &CO, MZJ MUNIFF ZIADUIEN
JUNAIDY HORWATH HUSSAIN CHAUDHURY & CO.
MZJ(Muniff
Junaidy)
Ratio
Ziaduien
Horwath Hussain
Chaudhury & Co
AYUB ASLAM & CO
Earnings Per Share (EPS)
42.83
25.97
21.7
Return on Equity (ROE)
25.97%
$2.17%
18.62%
In the third week, I picked several profitability, solvency, and market value related ratios that
they believed would help them with their analyses (based on the accounting and finance
classes they have taken) and would help supplement the EPS and ROE values that had been
received from the broker.
I believe that reviewing additional financial analysis ratios will help them to better analyze the
two companies and will help them understand why the AYUB ASLAM & CO. and HORWATH
HUSSAIN CHAUDHURY & CO. EPS and ROE ratios seem to be out of kilter.
130

Selected Income Statement Data for AYUB ASLAM & CO. and HORWATH HUSSAIN
CHAUDHURY & CO. (2008-2012)
(Amounts in MillionsExcept for Per Share Data)
AYUB ASLAM & CO.s
2012
2011
2010
2009
2008
Sales
14,835
10,711
8,490
6,921
5,623
Net Income
476
190
359
588
35
EPS (diluted)
1.12
0.45
0.84
1.39
.08
2012
2011
2010
2009
2008
Sales
5,411
5,261
5,103
4,874
4,372
Net Income
136
151
147
143
152
EPS (diluted)
2.03
2.17
2.03
1.93
2.07
HORWATH
HUSSAIN
CHAUDHURY & CO.:
Selected Income Statement Data for AYUB ASLAM & CO. and HORWATH HUSSAIN
CHAUDHURY & CO. (2008-2012)
(Amounts in MillionsExcept for Per Share Data)
131

AYUB ASLAM & CO..:
2012
2011
2010
2009
2008
Sales
14,835
10,711
8,490
6,921
5,623
Net Income
476
190
359
588
35
EPS (diluted)
1.12
0.45
0.84
1.39
.08
2012
2011
2010
2009
2008
Sales
5,411
5,261
5,103
4,874
4,372
Net Income
136
151
147
143
152
EPS (diluted)
2.03
2.17
2.03
1.93
2.07
HORWATH
HUSSAIN
CHAUDHURY & CO:
They determined that the stock price for AYUB ASLAM & CO. was $92.64 on December 31, 2012
and the stock price for HORWATH HUSSAIN CHAUDHURY & CO. was $32.73 on February 2, 2008
(the end of each companys 2012 fiscal year).
Additionally, to help in the preparation of their financial ratios and to get a better handle on the
relative performance of AYUB ASLAM & CO. and HORWATH HUSSAIN CHAUDHURY & CO., I
prepared HHC & Co. abbreviated comparative financial statements for the two companies.
Specifically, they created comparative Income Statements, Balance Sheets, and Statements of
Cash Flows for fiscal 2012 for the two companies.
Note that AYUB ASLAM & CO.s financial statements are for the year ended December 31, 2012
132

and HORWATH HUSSAIN CHAUDHURY & CO.s financials are for the year ended February 2,
2008. For the comparative Income Statements, Suzy and Jose performed a vertical analysis
setting the sales for each company at 100.0%. Additionally, they performed a vertical analysis of
the comparative company balance sheets. Finally, they compared the relative cash flows of the
two companies during 2012.
Fiscal 2012 Income Statements for AYUB ASLAM & CO, HORWATH
HUSSAIN CHAUDHURY & CO and MZJ(MUNIFF ZIADUIEN JUNAIDY)
(Amounts in
Millions)
HORWATH
MZJ(Muniff
HUSSAIN
Ziaduien
AYUB ASLAM
CHAUDHUR
Junaidy)
& CO..
Y & CO.
Sales
14,835
100.0%
5,411
100.0%
9,807
Total Expenses
14,359
96.8%
5,275
97.5%
8,975
Net Income
476
3.2%
136
2.5%
832
133
Year 2012 Balance Sheets for AYUB ASLAM & CO. and HORWATH
HUSSAIN CHAUDHURY & CO.
(Amounts in
Millions)
MZJ(Muniff
HORWATH
Ziaduien
HUSSAIN
AYUB ASLAM
CHAUDHUR
& CO.
Y & CO.
Current Assets 5,164
Junaidy)
79.6%
1,922
59.1%
3,075
Noncurrent
Assets
1,321
20.4%
1,328
40.9%
1,298
Total Assets
6,485
100.0%
3,250
100.0%
4,373
Ayub Aslam
& Co.
Current
Liabilities
Noncurrent
MZJ(Muniff
Ziaduien
Junaidy)
Horwath
Hussain
Chaudhury
& Co.
& Co.
3,714
57.3%
1,590
48.9%
1,574
24.3%
585
18.0%
2,750
134

Liabilities
406
Total Liabilities
5,288
81.6%
2,175
66.9%
3,156
Stockholders
Equity
1,197
18.4%
1,075
33.1%
1,020
Total Liabilities
and
6,485
100.0%
3,250
100.0%
4,176
Stockholders
Equity
Statements of Cash Flows for AYUB ASLAM & CO, HORWATH HUSSAIN
CHAUDHURY & CO and MZJ(MUNIFF ZIADUIEN JUNAIDY)
(Amounts in
Millions)
Net Cash Flows from

Operating Activities
Net Cash Flows from Investing
Activities
Net Cash Flows from Financing
Activities
Foreign-Currency Impact on
Cash
Net Increase in
Cash
Add: Beginning Cash (and Cash
Equivalents)
Ending Cash (and Cash
Equivalents)
AYUB ASLAM
& CO.
HORWATH
HUSSAIN
CHAUDHURY &
CO.
MZJ(Muniff
Ziaduien
Junaidy)
1,405
435
625
42
(181)
22
50
(242)
(121)
20
1,517
12
526
1,022
349
869
2,539
361
1395
135
AYUB ASLAM & CO. versus HORWATH HUSSAIN CHAUDHURY & CO.2012 Financial Ratio
Calculations
(Amounts in millions--except per share

amounts)
I. Profit HHC & Co Proitability Ratios:
AA & Co.
HHC & CO.
Return on Equity:
39.8%
12.7%
Net Income
476
136
Stockholders' Equity
1,197
1,075
Profit Margin Ratio:
3.2%
2.5%
Net Income
476
136
Sales
14,835
5,411
Asset Turnover Ratio:
2.3
1.7
Sales
14,835
5,411
Total Assets
6,485
3,250
Leverage Ratio:
5.4
3.0
136

Total Assets
6,485
3,250
Stockholders' Equity
1,197
1,075
AA & Co.
HHC & CO.
26.6%
20.0%
Cash Provided by Operations
1,405
435
Total LiHHC & Coilities
5,288
2,175
Current Ratio:
1.39
1.21
Current Assets
5,164
1,922
Current LiHHC & Coilities
3,714
1,590
Debt to Assets Ratio:
81.5%
66.9%
Total LiHHC & Coilities
5,288
2,175
Total Assets
6,485
3,250
AA & Co.
HHC & CO.
82.7
16.1
II. Solvency Ratios:
Cash Debt Coverage Ratio:
III. Fair Market Value Ratio:
P/E Ratio:
137

Fair Market Value/Share
92.64
32.73
EPS (Diluted)
1.12
2.03
Note: The Fiscal Year End for AYUB ASLAM & CO.is December 31, 2012, while the Fiscal Year
End for HORWATH HUSSAIN CHAUDHURY & CO. is February 2,2012.
COMPARATIVE RATIO ANALYSIS
Mainly this analysis expresses the relationship among selected items of financial statement
data, and this relationship is expressed in terms of either a percentage, a rate, or a simple
proportion. Importantly ratios have been used to evaluate liquidity, profitability and solvency of
the companies since it is useful indicators of a firm's performance and financial situation. Single
ratio analysis cant provide very meaningful interpretations so in this report I have calculated
ratios under three primary headings over the three period of time and are then compared to
base year with AAC and four other companies (MZJ, HHC), and also with the industry average to
judge the performance of the company.
So the three primary ratios are
Liquidity ratios
Profitability Ratios
Solvency Ratios
Therefore these ratios are to be illustrated below with graphical presentation LIQUIDITY RATIOS
Liquidity ratios provide information about a firm's ability to meet its short-term financial
obligations and also to meet unexpected needs for cash. For intercompany analysis I have
chosen two liquidity ratios which are- Current ratio and cash ratio. Here, it is mentionable that
as I am evaluating financial institutions liquidity so here I have not calculating Quick ratio
138

because it gives same result like as current ratio.
CURRENT RATIO
2010
2011
2012
AAC
14.66
10.06
4.5
MZJ
6.88
8.8
8.69
HHC
4.73
8.27
10.72
16
14
12
10
8
6
4
2
0
2010
2011
2012
AAC
MZJ
HHC
It is the best known liquidity measurement where we find the relation firms current assets and
the current liabilities. The standard current ratio is 2:1. Last three years average current ratio
of AAC was 1.2:1.. The reasons behinds this low current ratio was higher current liabilities (term
deposits receipts, accrued & other liabilities though at that period firms current assets
139

increased in larger amount. On the other hand, we can see that MZJ Finance and HHC is good
state also above the industry average.
So we cannot come in to the point that AAC appears to be reasonably liquid.
PROFITABILITY RATIOS
Profitability ratios offer several different measurement of the success of the company at
generating profits. Significantly these ratios show the combined effects of liquidity, asset
management (activity) and debt management (gearing) on operating results. Therefore, it can
be said that the overall measure of success of a business is the profitability which results from
the effective use of its resources; also it affects the companys liquidity position and companys
ability to grow.
In case of Intercompany analysis here I have selected three different profitability ratios which
will help to evaluate the performance effectively. These are- Net profit margins, Return on
Equity (ROE), Return on Assets (ROA).
Net profit margin = net profit after taxes / sales
AAC
MZJ
HHC
2010
13.1
8.5
9.21
Unit %
2011
14.43
11.54
11.95
2012
11.53
9.52
8.72
140

The
ratio
relates after tax
net income
to sales/revenue.
It is a better
16
last
14
12
10
three
able
to
8
6
4
2
the industry
margin.
sign that over the
In
profit
2010
years AAC were
2011
maintain
2012
average net profit

FY2011, AACs net
margin
0
AAC
highest due
above
MZJ
HHC
to
lower
was
ratio
between net profit after tax and revenue. In FY2012, this ratio was lowest even though above
industry average because of high revenue.
Since the higher the Net profit margin the better it is for the company, so from the above
analysis it can be said that AACs position is better from four other Companies as net profit
margin is high among them as well as high in comparison with the industry average.
RETURN ON EQUITY
Return on equity = net profit after tax / stockholders equity
Unit %
AAC
MZJ
HHC
2010
2011
2012
30.34
21.86
15.45
23.39
22.24
13.55
25.97
23.69
18.62
141
35
30
25
2010
20
2011
15
2012
10
5
0
AAC
MZJ
HHC
This ratio is extremely important to the shareholder of the company because it shows the profit
attributable to the amount invested by the owners of the company. It also shows potential
investors into the business what they might hope to receive as a return. From the above graph
we see like Net profit margin, ROE of AAC remains higher. Noticeably, ROE of Three Companies
(AAC, MZJ and HHC) were high in comparison with industry average.
But if we look at the only AACs ROE which begins to decrease at FY2011 from the resulting
effect of slight increase of Net Income compare to much greater Shareholding Equity. It does
not indicate lower net income but the reason was higher shareholders equity.
RETURN ON ASSETS
Return on total assets. = net profit after / total assets
Unit
%
AAC
MZJ
HHC
2010
2011
2012
3.68
1.46
2.83
3.8
3.55
1.54
3.31
3.46
1.16
142
4
3.5
3
2.5
2
1.5
1
0.5
0
AAC
MZH
HHC
This ratio tells how much profit a company is able to generate for employing the invested assets
i.e. how effectively the firm's assets are being used to generate profits Over the last three years
(FY2010, FY2011 and FY2012) AACs ROA were 3.68%, 3.8% and 3.31% respectively. This
indicates a positive sign as the company, AAC, achieved above industry average ROA over the
years in 2011. In the consecutive years, it falls due to large volume of assets though at that time
firm's net income was gradually increasing. Comparatively, ROA of MZJ were up substantially in
FY2011 and in FY2012.
SOLVENCY RATIOS
It provides an indication of the long-term solvency of the firm. Unlike liquidity ratios that are
concerned with short-term assets and liabilities, this ratios measure the extent to which the
firm is using long term debt. Mainly it measures business risk, which tells us about the debtpaying ability of the company. Here, I have tried to analyzed three solvency ratios which areDebt-Equity ratio, Debt to total asset ratio, Interest Coverage/ Times interest earned ratio.
DEBT-EQUITY (D/E) RATIO
143

Debt equity ratio = long term debts / stock holders equity
2010
2011
Unittimes
2012
AAC
4.65
5.14
4.91
7.46
5.65
9.37
5.72
5.22
6.22
MZJ
HHC
10
9
8
7
6
5
4
3
2
1
0
AAC
MZJ
HHC
Mainly, it measures companies net worth as it indicates the proportion of debt compared to
the
Proportion of equity. A higher proportion of this ratio makes the earnings more volatile because
of financial leverage and consequently increases the probability of default. From the above
graph we can easily mark out that AACs debt-equity ratio were lower than the MZJ throughout
the year even though it was fluctuating over the year and now in slumped state i.e from
5.14(FY2011) to 4.91(in FY2012) so it is safer for AACs, this analysis indicates that the AACs
144

earnings is less volatile than the other firm in the same industry also the probability of default
the debt obligation is less with compared the other firms of the industry.
EBT-ASSETS RATIO
Debt ratio = total liabilities / total assets
Unit%
2010
2011
2012
AAC
2.83
8.4
8.72
MZJ
9.3
6.7
9.2
HHC
4.2
7.7
8.9
10
9
8
7
6
5
4
3
2
1
0
2010
2011
2012
AAC
MZJ
HHC
145

This ratio measures the percentage of total assets that are being financed by creditors; simply it
indicates the degree of leverage. Generally, no more than 50% of total assets should be
financed by debt. From the above graph we can interpret that only AACs debt to total asset
ratio is comparatively low also in comparison with the industry average. Noticeably, all
companys debt to total asset ratios is more than 50% in consecutive years. Since we know that
the higher the percentage of debt to total asset the greater the risk. Therefore, we can reduce
this ratio by paying off debt or increasing the value of assets.
INTEREST COVERAGE RATIO
Unittimes
2010
2011
2012
AAC
1.51
1.4
1.51
MZJ
1.27
1.31
1.27
HHC
1.45
1.35
1.28
1.55
1.5
1.45
1.4
1.35
1.3
1.25
1.2
1.15
AAC
MZJ
HHC
146
This is the ratio of a company's EBIT to its total financial expenses from interest payments. It
measures the company's ability to make interest payments as they come due. Here, ratio above
1 indicates that the company is able to pay its interest; while a ratio below 1 means that its
interest payments exceed its earnings.
From the graphical presentation of this ratio it is discernible that over the last three years AACs
interest coverage ratio was above 1 and also above the industry average where industry
average is fairly steady. In FY2011, we see that the interest coverage ratio was lowest (even
though above industry average) because of lower ratio between EBIT and interest expense. On
the other
hand, we can also notice that the interest coverage ratio of three other companies were above
industry average whereas this ratio of MZJ Finance over three period below the industry
average but greater than 1.Therefore it can be concluded that comparatively AACs interest
coverage ratio were high (greater than 1 and also industry average) throughout the year which
were 1.51, 1.4, and 1.51 in FY2010, FY2011, and in FY2012 respectively so the company is able
to pay its interest over the period of time.
RESULTS AND DISCUSSIONSOverall, from the Intra and Intercompany analysis we can come out with some significant
results which are very important to evaluate the financial performances of Ayub Aslam & Co.
Mainly from the Intra Company comparisons, Balance sheet which reveals that AAC expanded
its asset base those years which had been financed more likely by issuing additional long term
debt rather than by retaining income as it were up in small amount or small percent. Moreover,
from the vertical analysis we notice that AACs Profit trend continuously up and also more
successful and also vertical analysis of balance sheet reinforces the previous result of the
147

expansion of asset base which had been financed through issuing long-term debt rather than
retaining more income. Therefore AAC should retain more income to finance the expansion of
asset base besides issuing long-term debt in small amount.
Furthermore, from the Inter Company Analysis, where comparative ratio analysis tools have
been used, we have been able to evaluate the performance of AAC with two firms. Here,
basically to assess the firm's ability to meet its short-term financial obligation I have calculated
current ratio profitability ratio, debt equity ratio, assest ratio, interest coverage ratio
From the current ratio and Cash ratio calculation we find that AAC appears to be reasonably
liquid i.e. AAC has ability to meet its short term financial obligation but from the cash ratio we
see that it is not in favorable situation if immediate payments were demanded.
PROPOSED FINANCIAL PLANS
A financial audit, or more accurately, an audit of financial statements, is the verification of the
financial statements of a legal entity, with a view to express an audit opinion. The audit opinion
is intended to provide reasonable assurance, but not absolute assurance, that the financial
statements are presented fairly, in all material respects, and/or give a true and fair view in
accordance with the financial reporting framework. The purpose of an audit is provide an
objective independent examination of the financial statements, which increases the value and
credibility of the financial statements produced by management, thus increase user confidence
in the financial statement, reduce investor risk and consequently reduce the cost of capital of
the preparer of the financial statements.
In accordance with the GAAP, auditors must release an opinion of the overall financial
statements in the auditor's report. Auditors can release three types of statements other than
an unqualified/unmodified opinion. The unqualified auditor's opinion is the opinion that the
financial statements are presented fairly. A qualified opinion is that the financial statements are
presented fairly in all material respects in accordance with GAAP, except for a material
misstatement that does not however pervasively affect the user's ability to rely on the financial
statements. A qualified opinion can also be issued for a scope limitation that is of limited
148

significance. Further the auditor can instead issue a disclaimer, because there is insufficient and
appropriate evidence to form an opinion or because of lack of independence. In a disclaimer
the auditor explains the reasons for withholding an opinion and explicitly indicates that no
opinion is expressed. Finally, an adverse audit opinion is issued when the financial statements
do not present fairly due to departure from GAAP and the departure materially affects the
financial statements overall. In an adverse auditor's report the auditor must explain the nature
and size of the misstatement and must state the opinion that the financial statements do not
present fairly in accordance with GAAP.
Financial audits are typically performed by firms of practicing accountants who are experts in
financial reporting. The financial audit is one of many assurance functions provided
by accounting firms. Many organizations separately employ or hire internal auditors, who do
not attest to financial reports but focus mainly on the internal controls of the
organization. External auditors may choose to place limited reliance on the work of internal
auditors. Auditing promotes transparency and accuracy in the financial disclosures made by an
organization, therefore would likely to reduce of such corporations to conceal unscrupulous
dealings.
The auditor should properly plan the audit of internal control over financial reporting and
149

properly supervise the engagement team members. When planning an integrated audit, the
auditor should evaluate whether the following matters are important to the company's
financial statements and internal control over financial reporting and, if so, how they will affect
the auditor's procedures
Knowledge of the company's internal control over financial reporting obtained during
other engagements performed by the auditor;
Matters affecting the industry in which the company operates, such as financial
reporting practices, economic conditions, laws and regulations, and technological
changes;
Matters relating to the company's business, including its organization, operating

characteristics, and capital structure;
The extent of recent changes, if any, in the company, its operations, or its internal
control over financial reporting;
The auditor's preliminary judgments about materiality, risk, and other factors relating to
the determination of material weaknesses;
Control
deficiencies
previously
communicated
to
the
audit
committee 8/ or
management;
Legal or regulatory matters of which the company is aware;
The type and extent of available evidence related to the effectiveness of the company's
internal control over financial reporting;
150
Preliminary judgments about the effectiveness of internal control over financial

reporting;
Public information about the company relevant to the evaluation of the likelihood of
material financial statement misstatements and the effectiveness of the company's
internal control over financial reporting;
Knowledge about risks related to the company evaluated as part of the auditor's client
acceptance and retention evaluation; and
The relative complexity of the company's operations.
TRAINING PROGRAM:
INTRODUCTION
Before going on the audit we were given a brief introduction of the clients business, audit
program and plan. Then we were told about the work to be done at the client's office. Each one
of the audit team members was given a specific job and different signs were assigned to each of
us whom we had to put in front of the entry that was checked. We were also required to put
our initials on the audit program when we completed our assigned jobs.
INITIAL WORK
For the first week I was given the duty of checking the totals, costing, posting, carry forwards,
brought forwards, journal entries for wrong entries and their posting, in ledgers. During this
period I gained valuables about maintaining books of accounts. While checking the accounts
not all the entries were checked, only a limited number of entries were checked, it is called Test
checking. Only a sample of entries were checked, the size of the sample depend on different
matters like materiality level, efficiency of internal control system, possibility of occurrence of
error and other condition. Apart from applying test check method some transactions of unusual
nature or amounts were also checked to find out errors or frauds. If the errors in an account
exceeded from the expected level then that account was thoroughly checked and the method
of test checking was abandoned for that account. After checking ever entry a tick mark was put
against the entry to show that the entry has been checked.
151
ARTICLES OF ASSOCIATIONS
The existence of an asset was checked by seeing, weighting, measuring, and counting the
assets. If the asset could not be checked due to some unavoidable reasons then a certificate to
the existence of the asset was obtained from the management or a responsible person of the
organization. For this stock take is done. As we have to audit the past two years thats why we
have to work back the stock from the stores ledgers. This was new thing for me and I learn a lot
about it.
Special stress was laid upon the counting of the cash in hand and it was done on the balance
sheet date in the presence of the members of audit team. Bank balance was verified by
obtaining a certificate directly from the clients banker. My senior has work back the cash and I
assist him it also increase my knowledge.
Investments held were verified by physically examining them. Some of the investments held by
the bank on behalf of the client were verified by obtaining a certificate directly from the client's
banker. Investments held were verified by physically examining them. Some of the investments
held by the bank on behalf of the client were verified by obtaining a certificate from the bank
and confirming that the investment was not held as a security for a loan. After verification of
the existence of assets and liabilities, their value was examined. Assets were valued by using
different methods depending upon the type of assets. Usually fixed assets are valued at cost
less depreciation, while current assets are valued at lower of cost or net realizable values.
The ownership of an asset was verified by looking at the title documents of the assets or by
obtaining a certificate from the banker of the client if the bank held the asset. The liability
balances were confirmed by obtaining confirmation letters from the creditors. To see whether
the asset was disclosed according to the requirements of the law Company's Ordinance1984
and related IAS were consulted. The assets suffering from a charge were also disclosed in the
balance sheet.
152

It was also checked that the loan against the asset was obtained for the business and not by
one else for his personal use and the mortgage was in accordance with the provisions of the
Memorandum of Association and Articles of Association. If the assets were held by third party
then a certificate from the concerned party was obtained as the ownership of the asset.
During the course of audit if any information was needed then management was asked to
prove the required information which they are legally bound to provide. Errors discovered were
also noted and explanation and correction were asked.
1)
In Some cases while checking the salary sheet such names of employees appeared
which had no record their named even did not appeared on the attendance sheet. Mainly that
was due to the fraud of the management. The tax deducted by the management is of 12months
while the salary paid is only of 11 months.
2)
Most of the records maintained by the client were computerized so they had less errors
and faults in them.
3)
Most of the time the closing balance of the work in process was not properly
calculated and was usually based on approximation.
4)
Some times debtors make the payment and entry for the same is not written.
5)
Another mistake witnessed was the wrong distinction between the capital and
revenue expense and earning. For example an advertisement for the sale of asset was
added to the value of the said asset as cost of addition.
6)
Some expenses have neither the original nor the rough sporting especially the
entertainment expenses.
7)
Some fix assets are sold e.g. a BMW that has no record.
METHODOLOGY
I believe that adult learning is most effective when presented in a relevant context so that the
skills, strategy, and knowledge are meaningful to participants and can be applied directly in the
training. Therefore, our design philosophy is to customize our core programs using our effective
153

and efficient proprietary customizing process and tools. We incorporate participants real-world
challenges, sales tools, and processes into developing cases/exercises.
Our training methodology is based on the premise that participants/adults are not blank slates,
and we utilize a process of questioning and generating a dialogue before presenting concepts
and models. By doing this vs. lecturing, we gain participant involvement and buy-in before we
build models and teach learning points.
We use a learning by doing training methodology to support behavior change through highly
interactive training. Using our customized cases and exercises, we ensure that participants
apply the skills and strategies learned and receive intensive coaching and feedback. We utilize
role plays, drills, in-the-action feedback, and other application techniques. We supplement
learning by doing with some other teaching strategies, including small group discussion, drills,
flip chart development to capture participant opinions and ideas, and limited PowerPoint slides.
For Train-the-Trainer workshops, we not only provide Leaders Guides, but we also provide indepth Leader Notes for every case and exercise that provide additional insights and best
practices.
One of the unique training/coaching methodologies we use is called redirect. This is a
process in which the trainer stops the action and gives real-time feedback so participants are
not only supported in the role play, but it also fosters behavior change by allowing participants
to experience the impact of applying the new skills, models, and strategies as they increase
their effectiveness.
THE TRAINING PROCESS
Conducting a thorough need assessment of the organization so as to capture the details
of the training requirement.
Compiling the corresponding research information to ensure that the training program
hits the bulls eye.
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Customizing the training program as per the clients needs so as to deliver maximum
benefit to them
Getting the course contents & methodology signed off by the clients
Assessing the participants through scientific interviewing tools and preparing an in
depth pre-training assessment report ( as and when required by the training program /
client)
Training Delivery
Measure Participants learning and feedback during training
TRAINING METHODOLOGY:
CONVENTIONAL METHODS:
You learn the nuances and subtleties of the subject at hand with ease through:
Interactive Classroom Training
Lively dialogues
Question answer and brain storming sessions
Live case studies
Energizers& ice-breakers
Group Discussions
Audio / Visual inputs
Individual / Group Assignments
Psychometric tests ( As and where required)
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MANAGEMENT GAMES / ROLE PLAYS:
Management Games & Role Plays help to bridge the gap between "Knowing & Doing", "Insight
& Action" thus pushing you to hear more, see more, feel more and act more. The participants
are thus aligned with the concepts being taught and feel more alive as the exercise inspires
enthusiasm for learning. The exercises are designed to involve all types of learners:
Visual
Auditory
Kinesthetic
EXPERIENTIAL LEARNING
Our Outdoor Experiential Learning Division has been designed to tackle some of the most
pressing issues in organizations.
The objective of Outbound Training is to focus on the overall physical and mental development
of the trainee through experiential approach towards education. There has been tremendous
growth in outdoor education during the last few years due to its immediate results and
continued effectiveness.
In our residential outdoor training programs, we replace the participants typical home or work
environments and take them on a journey into the nature, where the earth, skies and
mountains serve as their black boards and power point presentations are replaced by self
serving physical and mental assignments. The outdoor experience is a key condition for outdoor
activities to become learning experiences; the unfamiliar environment facilitates participants in
developing new perspectives about themselves and their normal environments.
SCOPE OF WORK
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The scope of work of the Audit Department is to determine whether the District's network of
risk management, internal control and governance processes is adequate and functioning in a
manner to ensure that:
Risks are appropriately identified, managed and monitored.
Significant financial, managerial and operating information is accurate, reliable and

timely.
Employees actions are in compliance with policies, standards, procedures and

applicable laws and regulations.
Resources are acquired economically, used efficiently and adequately protected.
Programs, plans and objectives are achieved.
Quality and continuous improvement are fostered in the organizations control

processes.
DEPARTMENTAL DETAIL
ABOUT AUDIT DEPARTMENT LTD
Sharing Industry Best Practices for Continuous Improvement. At Audit Department Ltd, we act
as the extension to your internal audit team and assist you in performing independent reviews
and assessments. We are specialized in
Risk and Compliance Assessments
Post Implementation Reviews
Service Management Analysis
Service Improvement Programmes
Maturity Level Assessments
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Policy Development and Compliance
AUDIT DEPARTMENT CHARTER

The Mission of the Audit Department is to provide independent, professional and objective
assurance and consulting services designed to add value and improve Metropolitan's
operations. Metropolitan's Audit Department helps the District accomplish objectives by using
a proactive, systematic approach to evaluate and improve the effectiveness of risk
management, control and governance processes.
AUDIT AND ASSURANCE DEPARTMENT
In the purest sense, auditors assess a set of company accounts to determine if they are a true
and fair representation of the company's affairs on the accounts date.
The audit provides comfort ('assurance') to the users of the accounts that an independent third
party (the auditor) has examined the accounts and agrees with them.
Each individual line in a set of published accounts needs to be tested. Auditors do not test every
transaction that led to that figure. Rather they perform two kinds of testing:
Substantive testing
Control testing
SUBSTANTIVE TESTING
In substantive testing, an auditor will select a sample of transactions that go to produce a
certain figure. For example, if we are testing the sales figure, we might select a number of sales
and ask to see evidence of these sales. This might be copies of cheques from customers,
purchase orders from customers or correspondence or contracts with customers. Auditors will
test enough of these until they feel comfortable that the sales figure is correct.
CONTROLS TESTING
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A control is a process in a company which is designed to reduce the risk of error or fraud. A
good example is each payment requires two signatories, one person fills in the cheque and the
second person signs it.
TAX & CORPORATE DEPARTMENT
Preparation and submission of annual tax return
Compliance Services
Tax advisory services
Representation and litigation with tax authorities
Personal income tax services
CORPORATE TAX SERVICES

Managing the corporate tax department function is an ever increasing difficult task given the
multiple reporting requirements an organization is required to meet for federal and state tax
compliance. Each one of these issues can be complex independently but are made particularly
complex when trying to juggle strategy, planning and risk, in addition to meeting what can be
multiple filing obligations. The corporate tax team of Ayub Aslam & Co. Chartered Accountant
can help you make the right decision at the right time and ensure that taxation issues do not
end up running your business. We have extensive expertise in providing federal, multi-state,
and international tax compliance services to our clients. Our team can help with the following:
CORPORATE TAX COMPLIANCE (FEDERAL, STATE & INTERNATIONAL)
Preparation and review of federal and corporate and partnership returns
Preparation of disclosure requirements
Assistance with calculating federal and state estimated tax payments
Providing fast, efficient, cost-effective tax compliance processes
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U.S. tax return and information reporting for foreign business entities
Preparation of state and local returns including income/franchise, sales/use,

property tax and escheat
COMPUTER DEPARTMENT
Methods of Auditing Computer Systems
AUDITING AROUND THE COMPUTER
Auditing around the computer is generally the approach taken by our auditors in case they
audit in IT environment, which is rare till date as already explained. Our overall audit strategy is
substantive, i.e. we generally do not rely on controls, manual or computerized, given the
general lack of controls in the audited environment.
AUDITING THROUGH THE COMPUTER

We do not audit through the computer because we feel that we get efficient, effective (and
economical) results by auditing with the computer.
AUDITING WITH THE COMPUTER
Auditing with the computer is for which we have got a core team of auditors available, but we
have not yet got the chance to apply the knowledge on universal basis. For large audits, CAATs
may be developed and applied in order to complete the audit in the most efficient and effective
way. The auditors may also perform data extraction analyses.
POTENTIAL OF IT AUDIT
While applying an audit software, audit tests and evaluations are greatly supported by the use
of simple commands such as sorting, statistical analysis, totaling and subtotaling, grouping,
indexing and filtering. By using software, an auditor can carry out three types of audit checks:
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data input or validation checks through tests of sequential control, and use of
commands for scanning missing numbers and record counts
data processing or report validation checks through simple and standard reperformance tests; for example, reprocessing the debtors aging report using
software and comparing it with the auditees aging report
output control checks through distribution and access tests and verification of
exception reports
Similarly, investigation software can help an auditor to apply certain commands for detecting
duplicate invoices/ checks / payment vouchers. Even ghost recipients can be spotted and
certain software can even detect suppliers with the same addresses or telephone numbers, and
can perform interesting and effective tests for audit and fraud detection.
Such tests are usually not possible manually, especially in sophisticated computerized
accounting systems and where audit populations have massive amounts of data. Thus it may be
appreciated that auditors would not be able to conduct such tests without using sophisticated
computer tools.
However, the actual creativity, imagination and expertise of the auditor have not yet been
used, or if used, only marginally; auditors can scale greater heights and achieve much more
meaningful, penetrative and focused results if they build their own experience, foresight,
judgment and vision in the audit software.
Pakistan Audit Department is fully conscious of the potential of IT audit and our future strategy
places a lot of emphasis on this important dimension of audit.
CORRESPONDENCE DEPARTMENT
It handles with all the correspondence of the firm by sending the solicited and unsolicited
information from time to time. Effectively and efficiently manage the day-to-day operations of
the Correspondence. Interact with clients to resolve policy and customer issue. Identify trends
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and remove obstacles in Statement production and delivery by properly maintaining record of
all communication for future reference.
HR DEPARTMENT
This department is mainly concerned with the recruitment, hiring/firing of the firm and this
department presents the timely reports on effective utilization of the resources by the firm. A
purpose of the human resource is keeping the trained employees and recruit new energetic
staff to work. Another purpose of this department is to provide a good working environment
for staff and try to make by facilitating them and arranging some recreational activities for
them. HR knows the real worth of its employees so cares for them and motivate them to work
more efficiently and diligently.
The hierarchy adopted by Ayub Aslam and Co. is in accordance with the legal structure a CA
firm shall have. Although the ICAP rules permits of not having the supervisors and does not
make it mandatory having senior manager, yet this goes as additional benefit for the firm of
having such an extensive hierarchy.
Staff matters such as performance appraisal, staff development etc.
Assist the Project Director in day to day activities of the project management
Developed Finance and Accounting systems and controlling procedures.
Developed Administrative controls and procedures for HR and Admin Dept.
Compiled HR Policy Manual.
Designed Payroll system.
Office administration including Human resources and Information Technology.
On-the-job training and professional development of staff
Critical role in the motivation and career development of staff, and in the provision of
ongoing training to staff.
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ABOUT AUDIT DEPARTMENT LTD
Sharing Industry Best Practices for Continuous Improvement. At Audit Department Ltd, we act
as the extension to your internal audit team and assist you in performing independent reviews
and assessments. We are specialized in
Risk and Compliance Assessments
Post Implementation Reviews
Service Management Analysis
Service Improvement Programmers
Maturity Level Assessments
Policy Development and Compliance
Governance Efficiency Analysis
Asset Management Reviews.
Enabling you to add first class services to your internal audit departments service portfolio.
Please feel free to contact us to discuss your companys requirements.
SPECIALTIES
Offering independent products, services and personnel in specialized expertise areas which you
can include in your annual audit cycle. Following either your dedicated audit methodology or
applying our own dedicated audit methodology for you.
AUDIT PROJECT SELECTION OR "ANNUAL PLANNING"
Based on a risk assessment of the organization, internal auditors, management and oversight
Boards determine where to focus internal auditing efforts. This focus or prioritization is part of
the annual/multi-year audit planning. The audit plan is typically proposed by the CAE
(sometimes with several options or alternatives) for the review and approval of the Audit
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Committee or Board of Directors. Internal auditing activity is generally conducted as one or
more discrete assignments. A typical internal audit assignment involves the following steps:
1.
Establish and communicate the scope and objectives for the audit to appropriate
management.
2.
Develop an understanding of the business area under review. This includes objectives,
measurements, and key transaction types. This involves review of documents and
interviews. Flowcharts and narratives may be created if necessary.
3.
Describe the key risks facing the business activities within the scope of the audit.
4.
Identify management practices in the five components of control used to ensure each
key risk is properly controlled and monitored.
5.
Develop and execute a risk-based sampling and testing approach to determine whether
the most important management controls are operating as intended.
6.
Report issues and challenges identified and negotiate action plans with management to
address the problems.
7.
Follow-up on reported findings at appropriate intervals. Internal audit departments

maintain a follow-up database for this purpose.
Audit assignment length varies based on the complexity of the activity being audited and
Internal Audit resources available. Many of the above steps are iterative and may not all occur
in the sequence indicated.
INTERNAL AUDIT REPORTS
Internal auditors typically issue reports at the end of each audit that summarize their findings,
recommendations, and any responses or action plans from management. An audit report may
have an executive summary; a body that includes the specific issues or findings identified and
related recommendations or action plans; and appendix information such as detailed graphs
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and charts or process information. Each audit finding within the body of the report may contain
five elements, sometimes called the "5 C's":
1.
Condition: What is the particular problem identified?
2.
Criteria: What is the standard that was not met? The standard may be a
company policy or other benchmark.
3.
Cause: Why did the problem occur?
4.
Consequence: What is the risk/negative outcome (or opportunity foregone)

because of the finding?
5.
Corrective action: What should management do about the finding? What have
they agreed to do and by when?
The recommendations in an internal audit report are designed to help the organization achieve
effective and efficient governance, risk and control processes associated with operations
objectives, financial and management reporting objectives; and legal/regulatory compliance
objectives.
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Audit findings and recommendations may also relate to particular assertions about
transactions, such as whether the transactions audited were valid or authorized, completely
processed, accurately valued, processed in the correct time period, and properly disclosed in
financial or operational reporting, among other elements.
Under the IIA standards, a critical component of the audit process is the preparation of a
balanced report that provides executives and the board with the opportunity to evaluate and
weigh the issues being reported in the proper context and perspective. In providing
perspective, analysis and workable recommendations for business improvements in critical
areas, auditors help the organization meet its objectives.
MEASURING THE INTERNAL AUDIT FUNCTION
The
measurement
of
the
internal
audit
function
can
involve
a balanced
scorecard approach. Internal audit functions are primarily evaluated based on the quality of
counsel and information provided to the Audit Committee and top management. However, this
is primarily qualitative and therefore difficult to measure. "Customer surveys" sent to key
managers after each audit engagement or report can be used to measure performance, with an
annual survey to the Audit Committee. Scoring on dimensions such as professionalism, quality
of counsel, timeliness of work product, utility of meetings, and quality of status updates are
typical with such surveys. Understanding the expectations of senior management and the audit
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committee represent important steps in developing a performance measurement process, as
well as how such measures help align the audit function with organizational priorities.
RESPONSIBILITIES
The Audit Department shall carry out the following responsibilities:
Develop and present an annual audit plan to the Audit Committee for review and
approval. This plan should be developed utilizing a risk-based methodology and should
include risks or internal control concerns identified by the Board of Directors or
Management.
Report periodically to the Audit Committee and Management the status of the current
years audit plan and the sufficiency of department resources.
Issue an opinion on internal controls over financial reporting on an annual basis.
Submit audit reports to the Audit Committee and Management communicating the
auditors opinion regarding the internal control structure, identifying significant control
issues and providing related recommendations.
Evaluate the adequacy and timeliness of Managements responses to, and the
corrective action taken on, all significant control issues noted in such reports. Conduct
follow up reviews as necessary and periodically report to the Audit Committee the
status of Management's progress.
Ensure the selection, development and supervision of competent and professional audit
staff.
Meet or exceed the International Standards for the Professional Practice of Internal
Auditing set forth by The Institute of Internal Auditors. Comply with Metropolitan
policies and procedures, the California Government Code, and Government Auditing
Standards (GAGAS).
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Perform a Quality Assurance Program by which the General Auditor evaluates internal
auditing activities against professional standards. Obtain external quality assurance
reviews.
Perform consulting services to assist Metropolitan in meeting its objectives. Examples

may include facilitation, process design, training, and advisory services.
Evaluate additions or changes in internal control processes coincident with their

development and implementation.
Keep the Audit Committee informed of emerging trends and best practices in internal
auditing.
Assist in the investigation of significant suspected fraudulent activities within the

organization. Assure reporting to the Audit Committee on the results, as appropriate.
Coordinate with external auditors to minimize duplication of effort and to ensure that
issues raised, as a result of their review, are appropriately addressed.
This Charter shall be reviewed at least annually by the Audit Committee and the Board
of Directors.
PROFESSIONAL SERVICES
Professional services are broadly categorized as follows:
Assurance
Tax Consulting
Financial Consulting
Business Consulting
Business Process Outsourcing
ASSURANCE
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The role of assurance services in the running of a successful business has changed beyond just
fulfilling statutory requirements. We offer appropriate and timely advice in addition to
statutory reporting, which enable our clients to effectively handle issues requiring immediate
attention and further assist them in taking informed decisions on timely basis.
Assurance services include the following:
Corporate Reporting Improvement
Financial Statement Audit
Sustainability Reporting
Independent Controls & Systems Process Assurance
Internal Audit
Regulatory Compliance and Reporting
The salient features of each service are described below

CORPORATE REPORTING IMPROVEMENT
Reporting more comprehensively on important non-financial assets can often improve the
valuation of your company in the capital markets. Research shows that investors and analysts
consider financial reports by themselves to be of limited use in determining a company's
prospects AYUB ASLAM & CO. can assist organizations that need to ensure the quality and
credibility of internal management information and external disclosures and, in particular,
nonfinancial performance reporting, has not been limited to simply advocating reform. Instead,
AYUB ASLAM & CO. can help its client in the practice of nonfinancial performance reporting
with the development of Value Reporting the most comprehensive and robust approach to
reporting transparency available in the marketplace.
FINANCIAL STATEMENTS AUDIT
The financial statement audit has never been more important. In todays business environment
there is more scrutiny and skepticism of a company's financial statements than ever before. For
organizations that require an audit AAC or statutory or regulatory reasons associated with the
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filing of their annual and periodic financial information, AYUB ASLAM & CO. can provide high
quality audit services. AYUB ASLAM & CO.'s work takes into account all current and where
appropriate, prospective auditing, accounting, and reporting regulations and guidance.
SUSTAINABILITY REPORTING
Shareholders expect your company to generate profits. But, they also want your company to
assume its responsibilities to contribute to society while minimizing any negative effects on the
environment. For companies looking to improve business performance and create long-term
shareholder value, AYUB ASLAM &CO. can help develop a corporate social responsibility
(CSR)/sustainability strategy that focuses on key issues for your business and enhances
relationships with key stakeholder groups.
We can assist our clients in the areas of corporate governance and business ethics,
environmental health and safety management, social responsibility, strategy and economics,
responsible supply-chain management, and reporting and assurance of non-financial
information.
INDEPENDENT CONTROLS & SYSTEMS PROCESS ASSURANCE
Attention to the design, documentation and operation of controls is critical to ensuring the
accuracy and timeliness of information used for financial reporting and management decisionmaking. AYUB ASLAM & CO. provides services related to controls around the financial reporting
process, including financial business process and IT management controls.
INTERNAL AUDIT
Internal audit function in todays world needs to walk on a fine line between providing
assurance and consulting to management without impairing its objectivity and independence.
We can assist organizations that need help improving the quality and effectiveness of their
internal audit processes in a number of ways. First, by advising and assisting in the
development of internal audit and risk management methodologies, including assessing
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whether the internal audit function is delivering effectively to stakeholders. Second, by
providing internal audit resourcing solutions, including full outsourcing or complementing inhouse functions with specialist skills or geographical coverage. In addition, we can develop
training for internal auditors using our extensive market and industry knowledge to create
highly tailored solutions.
REGULATORY COMPLIANCE & REPORTING

Regulatory compliance and reporting needs to be viewed as a natural extension of the
governance duties entrusted on top management and corporate boards. For all organizations
engaged in activities that come under the control of a regulator, AYUB ASLAM & CO. provides
support, advice, and assurance to help you manage your regulatory risks. In an ever-changing
regulatory environment, we help ensure that you identify, manage, and control any existing
and future regulatory risks. A proactive rather than a monitoring approach to regulation is now
a full time strategic necessity.
AYUB ASLAM & CO. experienced regulatory risk specialists, who not only know the rules, but
have also, implemented and assessed compliance against them. Our people can help you at the
strategic level by maximizing any competitive advantages from regulation through to the
operational level and by minimizing the costs and disruptions to your business, thereby freeing
up management time in the process.
TAX CONSULTANCY
AYUB ASLAM & CO. is one of the market leaders for tax services. We assist businesses,
individuals and organizations with tax strategy, planning, and compliance, whilst also delivering
a wide range of business advisory services with
Dedicated tax professionals.
We take a holistic view, combining industry insight with the technical skills of financial and tax
professionals and our other in-house resources as necessary, to develop comprehensive
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integrated solutions. We have experience of working with an expansive and diverse client-base
comprising all types of businesses multinationals, local companies, privately-owned
organizations, entrepreneurs, family businesses, trusts, partnerships and private individuals.
Tax services include the following:
Income Tax
Corporate Taxation
Non Resident Taxation
Personal Taxation
Specialized Services
Indirect Taxation (Sales Tax, Customs & Federal Excise)
INCOME TAX
The objective of our tax services is to deliver integrated solutions that result in most tax
efficient structure. We also provide business advice tailored to meet the specific needs of
individual clients. We suggest doable options always keeping in view the fact that such options
should be within the legal framework.
CORPORATE TAXATION
Our range of services in the area of corporate taxation includes:
Preparation and filing of tax returns
Advisory services on interpretational issues in the tax laws
Determination of income and chargeability of tax.
Obtaining exemptions and withholding tax certificates on behalf of clients
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Assisting the client in preparation, review and filing of various statutory

statements.
Compliance services relating to corporate taxation including advance payment of

tax
Assisting the client in preparation of reply of notices issued by various taxation

authorities.
Representations before tax authorities and Central Board of Revenue

Representing the clients before various appellate forums.
NON RESIDENT TAXATION

The tax services are also provided to non residents and the partners are capable to handle
intricate tax issues involving nonresident taxation. The services interlaid include the following:
Advising nonresident on transactions before these are entered into
Advising on tax implications of stock options plans
Advising the tax implications under various Agreements for Avoidance of Double
Taxation (Treaties)
SPECIALIZED SERVICES
Our specialized services encompass the following:
Researching tax implications of proposed business transactions or of new businesses.
Assisting in the preparation of and in obtaining various approvals for employee
retirement schemes such as Provident Fund, Gratuity Fund and Pension Fund
INDIRECT TAXATION (SALES TAX, CUSTOMS & FEDERAL EXCISE)
Over the past few years, the indirect tax net has spread all over the economy, covering almost
all sectors of business. Lack of knowledge on the part of tax administrators / tax payers coupled
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with abrupt changes in law require the provision of timely and effective business advice to help
organizations plan and implement the required compliance measures.
FINANCIAL CONSULTANCY
AYUB ASLAM & CO.s Finance professionals provide comprehensive financial advice and
execution expertise, encompassing mergers, acquisitions, divestitures,
restructurings, private placements, privatizations and equity capital markets tour clients
throughout all stages of the process.
Financial Consulting services include the following:
Financial Performance Improvement
Financial Accounting
Accounting Valuation
Advice on Fundraising
Financial Due Diligence
FINANCIAL PERFORMANCE IMPROVEMENT

We support CEOs, CFOs, Controller and Treasurers to optimize the structure of their Finance
functions thus improving contribution to business. We structure our support to ensure that
Finance addresses the challenges of achieving appropriate standards of control, efficient back
office opportunities and support to the business through insight and challenge. Recently, the
emphasis of Finance has been control and efficiency characterized by a heavy focus on
compliance delivered through streamlined back office models.
FINANCIAL ACCOUNTING
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With the advancement in International Financial Reporting Standards (IFRS) for many of our
clients, financial accounting has become a lot more complicated. And if the past few years are
any guide, the future holds more regulations, new requirements, and an increasing compliance
burden.
ACCOUNTING VALUATION
International Financial Reporting Standards (IFRS) introduce significant changes to the way that
accounts must be prepared and presented, requiring a wider range of assets to be valued on an
annual basis.
Goodwill is now tested for impairment annually, and is marked down according to the
conclusions of that annual process.
A range of financial assets now also need to be valued under IFRS,including financial
instruments and insurance contracts. IFRS requires share options to be valued as they
are charged against the profit and loss account on an annual basis.
These considerable changes call for specialist valuation services that both understand
the specific accounting implications and the wider commercial context in which those
accounting valuations will apply.
ADVICE ON FUNDRAISING
Raising finance to fund expansion plans means examining a wide range of issues and answering
a complex set of questions. The capital markets have a challenging environment and selecting
the right location and structure requires considerable insight and experience.
AYUB ASLAM & CO. has experience of advising businesses on their fund raising plans in
all markets. Whether through a public or private market, through equity or debt
instruments, our experience covers all possible scenarios and our independence means
that we focus solely on identifying and structuring the best source of finance for our
client.
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We have understanding of local markets, and can help clients to negotiate the
challenges that may otherwise derail the unprepared. Our networks of contacts and
deep relationships with countless sources of finance place us in the best possible
position.
FINANCIAL DUE DILIGENCE

All businesses involved in an acquisition, as buyers or sellers, need to ensure that the financial
information they hold is as accurate as possible, not only to prevent paying too much (or in a
sellers case receiving too little) but also to ensure that their governance and risk management
objectives are met.
MERGERS & ACQUISITIONS ADVISORY
A merger or acquisition can add considerable value to a business, but making sure that each
stage of the transaction process from valuation to negotiation and completion is
successful demands considerable experience and knowledge.
Our services are designed to help our clients reach their strategic goals by Identifying
and then implementing opportunities to merge with or acquire other businesses.
Many drivers can affect a deal; from regulatory restrictions to tax issues.
PROJECT FINANCE
Funding for large projects (like infrastructure projects) is a complex area, and there are specific
challenges involved in creating the appropriate finance structures to manage risks effectively.
AYUB ASLAM & CO.has experienced professionals who have working experience with both
governments and private sector bidders.
We help the public sector develop the right approach to procurement.
We help private sector partners to get the best out of the process.
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STRUCTURING SERVICES
A number of different considerations can influence the optimal structure for a deal requiring a
balance between the objectives behind the deal and accounting, tax, regulatory and
commercial considerations. We help clients to identify the principal concerns that will
determine the right structure for a transaction.
We can assist with marshalling the complex range of factors including tax, legal,
accounting and regulatory issues that will need to be considered together.
We create a feasibility plan to assess the chosen structure and once this is
confirmed as the right choice we will provide continuous support
Throughout implementation.
BUSINESS CONSULTANCY
A more stringent regulatory regime. Shifting market demand and industry consolidation
Continuing pressure for better returns and more transparency. New opportunities in the
markets. Today's business world is fast-paced. To succeed, you must seize the opportunities
while also managing the risks. You need to move quickly, but you also need long-term
strategies to help ensure your business can cope with the demands placed on it today and
tomorrow.
AYUB ASLAM & CO.s business consulting practices:
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Take an objective, long-term view.
Deploy professional resources that can bring global knowledge to local issues.
Have an integrated approach to client service with teams of experienced professionals
with a breadth of specific technical and industry sector skills.
AYUB ASLAM & CO.provides advice and assistance to companies, corporations and other
concerns. Our services can help you respond to immediate needs as well as put in place the
strategies for the longer term.
Business consulting includes the following:
Business Recovery Services
Dispute Analysis & Investigations
Commercial & Market Due Diligence
BUSINESS PROCESS OUTSOURCING

Business Process Outsourcing (BPO) provides accounting, financial reporting and transactionintensive process support to clients. While your management concentrates on enhancing the
core business, our skilled professionals focus on your financial accounting and reporting.
We perform these functions efficiently and cost-effectively, using a broad knowledge of
business processes and financial software packages. These resources not only enhance our
ability to help clients with their finance, accounting and applications outsourcing, but also
assists them in selecting and implementing software systems; establishing company-wide
networks; writing policies and procedures; creating call centers; and, standardizing processing
after mergers and acquisitions.
Our transaction processing services cover payables, disbursements and expenses; receivables,
receipts and revenues; general ledger; and, payroll. Our approach to BPO is a highly
collaborative blend of client and firm strengths.
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We customize each engagement according to our client's processes, internal controls and
system requirements.
AUTHORITY
The General Auditor and Audit Department staff members are authorized to:
Have unrestricted access to all functions, records, property, and personnel, subject to
the requirements of safekeeping, confidentiality, and applicable process.
Have full and free access to the Audit Committee, subject to applicable law.
Allocate resources, set frequencies, select subjects, determine scopes of work, and
apply the techniques required to accomplish audit objectives.
Obtain the necessary assistance of personnel in units of the organization where they
perform audits, as well as other specialized services from within or outside the
organization
TRAINING PROGRAM
I started my internship as junior trainee. My two months trainingenabled me learn a lot about
accounting, taxation, auditing, managementconsultancy and corporate affairs.Although two
months is very short period to learn everything and to getperfect in the art of accounting and
auditing, Working at Ayub Aslam & Co. (Chartered Accountants) gave me a golden opportunity
to learnsome valuable things not only about auditing and accounting but also aboutCorporate
Law and Income Tax. My work at the firm made my concepts ofaccounting and auditing very
clear. The guidance of my colleagues andPrincipal of the firm was very helpful and they
provided all necessaryinformation to me.
INTRODUCTION:
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Before going on the audit we were given a brief introduction of theclients business, audit
program and plan. Then we were told about the work tobe done at the client's office. Each one
of the audit team members was givena specific job and different signs were assigned to each of
us whom we had toput in front of the entry that was checked. We were also required to put
ourinitials on the audit program when we completed our assigned jobs.
TRAINING:
INITIAL WORK
For the first week I was given the duty of checking the totals, costing,posting, carry forwards,
brought forwards, journal entries for wrong entriesand their posting, in ledgers. During this
period I gained valuables aboutmaintaining books of accounts.While checking the accounts not
all the entries were checked, only alimited number of entries were checked, it is called Test
checking. Only asample of entries were checked, the size of the sample depend on
differentmatters like materiality level, efficiency of internal control system, possibility
ofoccurrence of error and other condition. Apart from applying test checkmethod some
transactions of unusual nature or amounts were also checkedto find out errors or frauds.
CHECKING OF BOOKS OF ACCOUNTS
When the audit work starts first the books of accounts are checked for errors which may be due
to wrong entries, omission of transaction, wrong total, wrong carry and brought forward etc.
The checking of books of accounts may or may not include detail checking, it may involve test
checking. It depends upon the control system involved.
OPERATION OF AUDIT
The audit was operated / conducted with the help of followingtechniques.
VOUCHING
After checking of accounts vouching was done. Vouching is done to make sure that entry is
original and not a fictitious one. Different organizations maintain different types of documents
180

and there are different documents for different transactions. The selected transactions were
checked with their supporting documents. Not only the amount on each document was
compared with the entry but other thing like proper authorization by a responsible person,
name of the client etc. was also checked. Supporting documents includes sale and purchase
invoices, cash memos, bills, receipts, vouchers, minutes, goods in and out notes, freight
receipts, letter of credit in case of import, goods inward register, etc.
VERIFICATION
When vouching is complete then the verification of assets and liabilities takes place. Assets of
the firm are verified by checking them if the assets are held by others then a letter is written to
them to verify their presence and their title. For confirmation of major debtors a letter is
written to them to confirm the balance due from them. T confirm bank balance account,
statement is received from the client's banker. For the confirmation of liabilities letters to the
creditors is written to confirm their balance due to them. In order to check the stock of the
client, stock taking is done, where the members of audit team visits the storerooms of the
factory and see the counting of the stock done by the store keepers and if they find something
wrong they themselves count the stock.
TICKING
During the checking of various books, the entries that were checked were marked/ticked with
red ball pen indicating that the entry has been examined for certain purpose. Variously shaped
marks were used to denote checking of additions; postings carry forwards, balances etc.
POSTING CHECK
Then it was checked whether the transactions are correctly and accurately posted to ledger or
not. Special care in checking posting to personal ledgers in needed as to names and titles of
accounts; otherwise a wrong posting may remain undetected.
CROSS CHECKING
181

It is the comparison of entries in two or more books or of an entry in a book with its supporting
evidence or voucher. My seniors assisted me in this step. Accuracy of cross checking plays a
vital role in the process of auditing. Therefore, it should be made with due care.
TRIAL BALANCE CHECKING
Then trail balance was checked and important balances were noted in the working papers for
reference use in further process. If during the course of audit different queries or unexplained
events are seen, then these are noted and explanations asked from management and they are
asked to make necessary adjustments. If during the course of audit some irregularity is
witnessed that is also reported to the management and reported in the auditors report.
ANALYTICAL PROCEDURE
After the end of the audit analytical procedure is adopted in order to confirm the accuracy and
correctness of the results obtained from above procedures, Profit and Loss Account and
Balance Sheet. In analytical procedure results are compared with prior period results, ratios,
expected results and industrial information. Any major difference is looked into. At this stage
the stock valuation, Material variations, Financial Ratio, and Variance Analysis are done.
INCOME ESTIMATION
AYUB ASLAM & CO. (Chartered Accountants) also provides professional services in estimating
incomes of various businesses, small and medium in the organized and unorganized sectors for
disbursement of loans pertaining to car loan, house loans, business loan and other customer
finance products.
EXCEL
I have also learned the use of M.S Excel for the purpose of financial reporting, for reporting
errors, for making tax return forms and other purposes. I learn the different dimensions of
Excel.
WORK BACKING:
182

During my internship I also learn a new concept of work backing in which the latest record of
cash and stock is used to assess the cash and stock of the previous periods. In this all sales are
added and all purchases are minimized to reach the opening stock of the previous periods.
PREPARATION OF AUDIT PROGRAM (AUDIT PLANNING):
An audit program was prepared by our seniors, with due care and skill. It was decided to
conduct the audit under the supervisions of a senior. During the conduct of audit, some notes
were prepared like:
A) AUDIT REVIEW NOTES:

To note the points that needs further discussion with the management.
B) AUDIT QUERIES:
To not all those vouchers that remains insufficiently vouched. A complete record as to
how they were cleared and all those, which remained unclear and reported to
management, is maintained.
C) IMPORTANT BALANCES:
Notes of important closing balances particularly in respect of cash and bank accounts,
stock etc.
AUDIT PROCESS AND TECHNIQUES
For collection and accumulation of audit evidence, certain methods and means generally
adopted by auditors are:
1. Posting checking
2. testing the existence and effectiveness of management controls that prevent financial
statement misstatement
183

3. Casting checking
4. Physical examination and count
5. Confirmation
6. inspection
7. Re-computation
8. Tracing in subsequent period
9. Bank reconciliation
10. Vouching
11. Verification of existence, owners
12. imp, title and value of assets and determination of the extent and nature of liabilities
OTHER MATTERS OF CONSIDERATION:
PHYSICAL EXISTENCE OF ASSETS

Physical existence of assets, particularly stocks, was checked. It was also ensured that assets are
the property of business and that each asset is correctly valued and correctly stated in the
balance sheet. This check was made for the date of balance sheet.
CAPITAL AND REVENUE EXPENDITURES CHECKED
Distinction of capital and revenue expenditures was made and the accuracy of maintenance of
these expenditures was examined.
DEPRECIATION OF ASSETS
Provision for depreciation of assets was checked and tallied with the balancesheet.
AUDITORS REPORT TO THE MEMBERS
We have audited the annexed balance sheet ofOLYMPIA TEXTILE MILLSLIMITED
184

as at September 30, 2012 and the related profit and loss account,cash flow statement &
statement of changes in equity together with thenotes forming part thereof, for the year then
ended and we state that wehave obtained all the information and explanations which, to the
best
of
ourknowledge
and
belief,
were
necessary
for
the
purposes
of
our
audit.It is the responsibility of the company's management to establish andmaintain a system

of internal control, and prepare and present the abovesaid statements in conformity with the
approved accounting standards andthe requirements of the Companies Ordinance, 1984. Our
responsibility
is
toexpress
an
opinion
on
these
statements
based
on
our
audit.Weconducted our audit in accordancewith the auditing standards asapplicable

Pakistan.
These
standards
require
that
we
plan
and
perform
in
the
audit to obtain reasonable assuranceabout whether the above saidstatements are free of any
material misstatement. An audit includesexamining, on a test basis, evidence supporting the
amounts and disclosuresin theabovesaidstatements.Webelieve that our audit provides a
reasonable basis for our opinion and, afterdue verification, we report that:
(a) In our opinion, proper books of account have been kept by the companyas required by the
Companies Ordinance, 1984.
(b) In our opinion:
(i)
The balance sheet and profit and loss account together with the notes thereon,
have been drawn up in conformity with the Companies Ordinance,1984 and are
in agreement with the books of accounts and are further in accordance with
accounting policies consistently applied;
(ii)
The expenditure incurred during the year was for the purpose of the companys
business; and
(iii)
The business conducted, investments made and the expenditure incurred during
the year were in accordance with the objects of the company;
(c) In our opinion and to the best of our information and according to theexplanations given to
us, the balance sheet, profit and loss account, cashflow statement and statement of changes in
equity
together
with
the
notes
185

forming part thereof conform withapproved accounting standardsasapplicable in Pakistan, and,
give the information required by the CompaniesOrdinance, 1984 in the manner so required and
respectively give a true andfair view of the states of the company's affairs as at September 30,
2012ss andof the loss, and its cash flow & changes in equity for the year then ended;and
(d) In our opinion, no Zakat was deductible at source under the Zakat andUsher Ordinance,
1980.
Ayub Aslam & Co.
Chartered Accountants
FINANCIAL ANALYSIS OF OLYMPIA TEXTILEMILLS LIMITED

Key Financial Data for Six Years
2007 2008 2009 2010
(Rs.)
(Rs.)
(Rs.) (Rs.)
2011 2012
(Rs.)
(Rs.)
186
CONCLUDING REMARKS FOR FINANCIALANALYSIS OF OLYMPIA TEXTILES

Now I will like to discuss and throw light upon my remarks upon the Financial Situation and
overlook of Olympia Textile Mills Limited whose audit was being carried by Ayub Aslam & Co.. I
as an internee at Ayub Aslam & Co. was a member of audit team that carried out audit of
Olympia Textile Mills Limited.
During my Internship I was able to highlight Companys key financial matters:
The Company has been sustaining heavy Loss since 2009.
The Company has not paid any dividend since 2009.
187
The Company is on the brink of liquidation.
The Possible reasons for the companys heavy loss are:
High Prices of Cotton and Yarn
Poor Economic and Peace Situation in the Country reducing Exports
Increasing prices of fuel (oil, gas) and Electricity
Reduced Subsidy for the firm
High markup on loans obtained
Possible Solutions to overcome heavy losses:
Raising Enough Capital to meet operating activities of business.
Improvement in Plant and Machinery and marketing techniques. The Final Conclusion
that I have reached is that if Economic and PeaceSituation in Pakistan improve then
Olympia Textile has a realistic chance of generating profit and carry on its business
without incurring heavy losses.We hope our very best for Olympia Textile Mills Limited
in near future.
PROBLEMS & SUGESSTIONS

My recommendations for the improvement of the firms are as follows:
Since the most work of audit is done by the internees so the selection of probationers should
be such that the competent persons should be available.
Internees should be well versed with the knowledge of audit, International Accounting
Standards, Income tax and corporate laws. At least two new computers with latest software
and a printer should be immediately purchased for the Office. The staff must be asked to learn
operating the computers immediately. This would result in more efficiency is sending the
188

inquiry letters to the client and other parties. As most of the staff is students so, staff should be
provided itthe internet so that they can upgrade their knowledge and also know about the
latest trends. Internet is very important for their knowledge up gradation.
Audit staff should be according to the volume of business. Facilities to internees like 2-holidays
in a week and other fringe benefits should be given. Performance sheet should be prepared to
check the performance of the staff and internees. That sheet should be filled by the pears and
thesupervisor.The supervisor should be given the authority to take minor decisions, which will
save the partner precious time. The supervisor should also give extra monitory benefits to his
valuable contributions in the firmperformance.The firm should market itself to meet the
competition in Lahore and Karachi.
Audit planning is the integral part of the audit so all the audit should be well planned and the
audit team should be the part of the audit planning.
CONCLUSION
Conclusively, it is better to say that internship at AYUB ASLAM & CO.s was a good start of my
professional experience. The friendly attitude of personnel has convinced me to work with such
a dynamic environment, where peace and creativity are the key elements in driving the
organization towards its success.
This organization has professional oriented vision of doing business so thepurity which lies in
their ambiance is enough to impress any prospective business professional. AYUB ASLAM &
CO.s since its formation in 1968 has really come a long way through and has achieved a lot in
189

this very short span. The firm has a great name in its industry and has phenomenal credibility
and market value. The operations of firm are purely transparent and the services offered by this
firm are in conformity with their business principles and corporate ethics. In a period of 5-10
years, the firm has really expanded into all business areas and has formed a huge network of
clients which render firms auditing and taxation services.
The firm has great variety of professionals who have enabled this firm toearn the repute thatit i
senjoying now days.It still has room forimprovement and the steps to improving in the industry
are quite simple and need dedication on behalf of partners and employees.
I would like to thank AYUB ASLAM & CO.s firm Staff and fellow interns especially my Internship
supervisor
Mr.
Khalid
Mahmoud(Audit
Manager),
Mr.MudassarAliSheikh(GeneralManager),Mr.Bashir(senioraccountsofficer),Mr.Waqar,Mr.Ahme
d,andMr.Usmanand every one at the branch who made these last six weeks of internship, an
ultimate learning experience for me.
ANNEXURE
Related Links
www.Ayub Aslam & Co.com.pk
http://www.icaew.com/index.cfm/route/156349/icaew_ga/en/Library/Guides_and_pub
lications/Knowledge_guides/Knowledge_Guide_to_International_Standardon_Auditing_
ISA#history
Official document of Ayub Aslam & Co.
190

Company profile of Ayub Aslam & Co.
http://www.businessdictionary.com/definition/audit.html#ixzz0yTa EgqbQ
http://en.wikipedia.org/wiki/Audit
http://www.cof.org/files/Documents/Education_Collaborations/Audit
%20Conference%20Call%20Handouts/3_Levels_of_Attestation_Services_DefinedHANDOUT_3.pdf
Documents consulted for making report
Final Audit Reports of Olympia Textile Mills Limited for years 2012, 2010 & 2011
AYUB ASLAM & CO.s Profile brochure
AYUB ASLAM & CO.s business plan and corporate profile
AYUB ASLAM & CO.s Services brochure
The following documents are annexed:
Internship completion certificate.
GLOSSERY
Audit Firms: companies that have been evaluated and found competent to review whether
factories comply with the ICTI Code.
Auditor Training: individual auditors selected for accreditation in the training Process;
generally a two-day program
Brand: either a direct customer of a factory or a customer of a toy company supplied by a
factory. Often but not always a Member Company. May also be a retailer.
191

Acceptance sampling is sampling to determine whether internal control compliance is greater
than or less than the tolerable deviation rate.
Accounting and review services are official pronouncements covering compilation and review
engagements. Compilation is presenting in the form of financial statements information that is
the representation of management (owners) without expressing assurance. Review is inquiry
and analytical procedures to provide the accountant a basis for expressing limited assurance
that there are no material modifications that should be made to the statements for them to be
in conformity with U.S. generally accepted accounting.
Accounting data includes journals, ledgers and other records, such as spreadsheets, that
support financial statements. It may be in computer readable form or on paper.
Accounting estimates An approximation of a financial statement element. Estimates are

included in historical financial statements because some amounts are uncertain pending
outcome of future events and relevant data about events that have occurred cannot be
accumulated on a timely, cost-effective basis.
Accounting principles are alternative ways of reporting and disclosing information in financial
statements and related footnotes.
Accounts receivable Debts due from customers from sales of products and services. Normally a
current asset.
Adjusting entries are accounting entries made at the end of an accounting period to allocate
items between accounting periods.
Adverse An audit opinion that the financial statements as a whole are not in conformity with
U.S. GAAP.
192

Advisory services are a consulting service in which the CPA develops the findings, conclusions,
and recommendations presented for client decision-making. This differs from attestation,
where the CPA expresses a conclusion about a written assertion of another.
Aggregate (aggregated) Constituting the whole. Aggregate expenses include expenses of all
divisions combined for the entire year.
Agreed-upon procedures An engagement where the client specifies procedures and the
accountant agrees to perform those procedures. An accountant may accept an engagement to
apply agreed-upon procedures to financial statement elements, where the scope of the
engagement is not sufficient to express an opinion, if the users assume responsibility for
sufficiency of the procedures, and use of the report is restricted to specified users.
AICPA or American Institute of Certified Public Accountants The professional organization of

CPAs in the U.S. It is a private organization of CPAs, not an arm of the government. Each state
issues CPA certificates, not the AICPA. Since each state makes its own laws, each state could
prepare and grade their own CPA examination. However, each state uses the uniform CPA
exam prepared and graded by the AICPA.
Allocation Distribution according to a plan. Depreciation, amortization, and depletion are

methods to allocate costs to periods benefited.
Allowance for AAC accounts A contra asset account with a credit balance used to reduce the
carrying amount of accounts receivable to net realizable value. The allowance balance is the
estimated total of uncollectible accounts included in accounts receivable.
Allowance for sampling risk The difference between a sample estimate and the projected
population characteristic at a specified sampling risk. This allowance is also the difference
between the expected error rate and the tolerable deviation rate.
193

Analytical procedure A comparison of financial statement amounts with an auditor's
expectation. An example is to compare actual interest expense for the year (a financial
statement amount) with an estimate of what that interest expense should be. The estimate can
be found by multiplying a reasonable interest rate times the average balance of interest bearing
debt outstanding during the year (the auditor's expectation). If actual interest expense differs
significantly from the expectation, the auditor explains the difference in audit documentation.
Analyze Identify and classify items for further study.
Anticipated Expected.
Application control Programmed procedure in application software designed to ensure

completeness and accuracy of information.
Approve To authorize. A manager authorizes a cash payment by signing a voucher providing

approval for the disbursement.
Arms length transactions are transactions between people who have no relationship other
than that of buyer and seller. The price is the true fair market value of the goods or services
sold. If you buy or sell something to a close relative, you might give better terms than to an
unrelated party, so the price might not represent the true market value of the goods or
services.
Ascertain An audit procedure to determine or to discover with certainty. For example, to

ascertain the date on which an investment was purchased by examining source documents.
Assertion Management asserts financial statements are correct with regard to existence or
occurrence of assets, liabilities or transactions, completeness of information in the financial
194

statements, rights and obligations at a point in time, appropriate valuation or allocation,
presentation, and disclosure.
Assess To determine the value, significance, or extent of.
Assessed Determined. The level of control risk determined by the auditor, based on tests of
controls, is the assessed level of control risk.
Assurance The level of confidence one has.
attest (attestation) report In an attest engagement, a practitioner issues a written conclusion

about the reliability of a written assertion that is the responsibility of another party.
Attorneys letter is signed by the client's lawyer and addressed to the auditor. It is the auditor's
primary means to corroborate information furnished by management about litigation, claims,
and assessments.
Attribute sampling The characteristic tested is a property that has only two possible values (an
error exists or it does not).
Audit adjustment, whether or not recorded by the entity, is a proposed correction of the
financial statements that may not have been detected excepts through audit procedures.
Audit committee A committee of the board of directors responsible for oversight of the
financial reporting process, selection of the independent auditor, and receipt of audit results.
Audit documentation (working papers) is records kept by the auditor of procedures applied,
tests performed, information obtained, and pertinent conclusions reached in the engagement.
The documentation provides the principal support for the auditor's report.
195
Audit objective In obtaining evidence in support of financial statement assertions, the auditor
develops specific audit objectives in light of those assertions. For example, an objective related
to the completeness assertion for inventory balances is that inventory quantities include all
products, materials, and supplies on hand.
Audit planning is developing an overall strategy for the audit. The nature, extent, and timing of
planning varies with size and complexity of the entity, experience with the entity, and
knowledge of the entity's business.
Audit risk A combination of the risk that material errors will occur in the accounting process
and the risk the errors will not be discovered by audit tests. Audit risk includes uncertainties
due to sampling (sampling risk) and to other factors (no sampling risk).
Auditing Standards Board Statements on Auditing Standards are issued by the auditing
standards board, the body of the AICPA designated to issue auditing pronouncements.
Authorize (authorization) To give permission for. A manager authorizes a transaction by signing

a voucher authorizing the disbursement.
Backup A copy of a computer program or file stored separately from the original.
batch A set of computer data or jobs to be processed in a single program run.
Bedfords law is a mathematical law that applies to any population of numbers derived from
other numbers (such as the dollar amount of a sale, found by multiplying the quantity sold
times the unit price). It holds that 30% of the time the first non-zero digit of this derived
number will be one, and it will be a nine only 4.6% of the time. Benford's law is used by auditors
to identify fictitious populations of numbers.
196
bill of lading A document issued by a carrier to a shipper, listing and acknowledging receipt of
goods for transport and specifying terms of delivery.
Blind trust A financial arrangement in which a person avoids possible conflict of interest by
transferring financial affairs to a fiduciary that has sole asset management discretion. The
person establishing the trust also gives up the right to information regarding the assets.
Cancel supporting documents To mark supporting documents as having been used to support a
transaction so the same documents can't be used to support another transaction. An example
is stamping vouchers "paid."
Capitalized Recorded as an asset. A capitalized lease is in substance a purchase to the lessee.

An asset is recorded equal to the present value of the lease payments, which is also recorded as
a liability. Payments, partly interest and partly principal, are made on the lease liability. The
lease asset is depreciated by the lessee as though it were legally owned by the lessee.
Caveat A warning or caution.
Check digit A redundant digit added to a code to check accuracy of other characters in the
code.
Check register A listing of checks issued, normally in numeric sequence and in order by date
issued.
Classification Arrangement or grouping. Assets and liabilities are normally classified as current
or noncurrent.
Collateralize To pledge property as security (collateral) for a debt.

197
Collusion A secret agreement between two or more parties for fraud or deceit.
comfort letter A letter written by the auditor to an underwriter of securities, which expresses
an opinion about whether the audited financial statements and schedules in the registration
statement comply as to form with applicable accounting requirements of the Act and related
rules and regulations adopted by the SEC. Procedures performed are specified by the
underwriter.
Comparability Users evaluate accounting information by comparison. Similar companies

account for similar transactions in similar ways. Another goal is comparison of one company's
information from one period to the next (consistency). Operating trends should not be
disguised by changing accounting methods.
Comparative Financial statements of a prior period shown with those of the current period to
aid in comparisons between periods.
Compare (comparison) An audit procedure. The auditor observes similarities and differences
among similar items such as an account from one year to the next.
Compensating balance An offsetting balance. A requirement by some banks that a borrower

maintain a minimum balance in a checking or savings account as a condition of a loan. The
offsetting balance increases the effective interest rate to the bank since the net amount loaned
is reduced but the interest paid is unchanged.
Competence of an internal audit staff is a function of qualifications, including education,

certification, and supervision. Competent audit evidence is valid and reliable.
198

Compile (compilation) A compilation is presenting in the form of financial statements
information that is the representation of management without expressing assurance.
Compilation of a financial projection is assembling prospective statements based on
assumptions of a responsible party, considering appropriateness of presentation, and issuing a
compilation report. No assurance is provided on the statements or underlying assumptions. The
accountant need not be independent.
Completeness Assertions about completeness deal with whether all transactions and accounts
that should be in the financial statements are included. For example, management asserts that
all purchases of goods and services are included in the financial statements. Similarly,
management asserts that notes payable in the balance sheet include all such obligations of the
entity.
Compliance Following applicable rules or laws.
Comprehensive basis of accounting A complete set of rules other than U.S. GAAP applied to all
items in a set of financial statements. Examples include a basis of accounting required by a
regulatory agency, a basis of accounting the entity uses for its income tax return and the cash
receipts and disbursements basis.
Computer controls Internal controls performed by computer (software controls) as opposed to

manual controls. Also means general and application controls over the computer processing of
data.
Condensed financial statements are presented in considerably less detail than complete
financial statements.
Confirm (confirmation) Communication with outside parties to authenticate internal evidence.
199

Consignment Transfer of possession but not title to goods. Title stays with the consignor, while
the consignee has possession.
Consistency To achieve comparability of information over time, the same accounting methods
must be followed. If accounting methods are changed from period to period, the effects must
be disclosed.
Consulted Sought advice or information.
Consulting services performed
by
CPAs
include
consultations,
advisory
services,
implementation services, product services, transaction services, and staff and support services.
Contingency is an existing condition involving uncertainty as to possible gain (gain contingency)

or loss (loss contingency) that will be resolved by future events. Estimates, such as the useful
life of an asset, are not contingencies. Eventual expiration of the asset's utility is not uncertain.
Continuing auditor is the auditor of the current year who also audited the financial statements
of the client for the previous year.
Continuing accounting significance Matters of continuing accounting significance are those

normally included in the permanent audit documentation, such as the analysis of balance sheet
accounts, and those relating to contingencies. Such information from a prior year is used by the
auditor in the current year's audit and is updated each year.
Control accounts are general ledger accounts that report totals of details included in subsidiary
ledger accounts. For example, Accounts Receivable is a general ledger account with a balance
equal to the total of the individual receivables included in the subsidiary accounts receivable
ledger.
Control A policy or procedure that is part of internal control.

200
Control environment is the attitude, awareness, and actions of the board, management,
owners, and others about the importance of control. This includes integrity and ethical rules,
commitment to competence, board or audit committee participation, organizational structure,
assignment of authority and responsibility, and human resource policies and practices.
control policies and procedures Control activities are the policies and procedures that help
ensure management directives are carried out. Those pertinent to an audit include
performance reviews, information processing, physical controls and segregation of duties.
Control risk The risk that material error in a balance or transaction class will not be prevented
or detected on a timely basis by internal controls.
Controller An officer who supervises financial affairs of an entity. In internal control the
controller is often the person with record keeping (general ledger) responsibilities, as
contrasted with asset custody, management decision-making, and internal audit functions.
Corroborate (corroborating) (corroboration) (corroborative) To strengthen with other evidence,

to make more certain.
Count Enumerate some characteristic such as the number of items in inventory.
Cumulative effect of changing to a new accounting principle is the effect on retained earnings
at the beginning of the current period. It is included in net income after extraordinary items.
Only the direct effect (net of income tax effect) is considered.
Current ratio Total current assets divided by total current liabilities.
Custodian One who has possession or is in charge of something. Some entities entrust
investment securities to a bank, which is custodian of the company's securities.
201
Custody Possession.
Cutoff Designating a point of termination. An auditor uses tests of cutoff to obtain evidence
that transactions for each year are included in the financial statements of the appropriate year.
Defalcation To misuse or embezzle funds.
Deficiency An internal control shortcoming or opportunity to strengthen internal controls.
Detection risk The risk audit procedures will lead to a conclusion that material error does not
exist when in fact such error does exist.
Detective control A control designed to discover an unintended event or result.
Deviation Departure from prescribed internal control. Often expressed as a rate at which the
departure occurs.
disclaimer (disclaim) A statement that the auditor is unable to express an opinion as to the
presentation of financial statements in conformity with U.S. GAAP.
Disclosure Revealing information. Financial statement footnotes are one way of providing
necessary disclosures.
Discovery sampling Acceptance sampling (sampling to determine whether internal control
compliance is greater than or less than the tolerable deviation rate) when the expected
attribute occurrence rate is zero.
Document (documentary) (documentation) Written or printed paper that bears information

that can be used to furnish decisive evidence. Could also be a recording, computer readable
information, or a photograph.
202
Dual date If a major event comes to the auditor's attention between the report date and
issuance of the report, the financial statements may include the event as an adjustment or
disclosure. The auditor dual dates the audit report (as of the end of fieldwork, except footnote
XX, which is dated later).
Dual-purpose test Audit procedures are classified as substantive tests or tests of controls. If a
procedure provides both types of evidence it is a dual-purpose test.
EDI or Electronic Data Interchange is the use of communication between an entity and
customers or suppliers to transact business electronically. Purchase, shipping, billing, cash
receipt, and cash disbursements can be completed entirely by exchanging electronic messages.
Edit check Reasonableness, validity, limit, and completeness tests that are programmed
routines designed to check input data and processing results for completeness, accuracy and
reasonableness.
EDP or Electronic Data Processing Processing of information by computer as opposed to

handwritten records.
Effective income tax rate The income tax provision (expense) shown on an income statement
divided by pretax income. This differs from the statutory rate because of deductions, credits,
and exclusions.
Effective internal control Reasonable assurance that the entitys operational objectives are
achieved, that published financial statements are reliably prepared, and applicable laws and
regulations are complied with.
203

Effectiveness Producing a desired outcome. An audit procedure is effective if the evidence
supports a correct conclusion.
efficiency The ratio of the audit evidence produced to audit resources used.
Embedded control performance deals with unexpected changes to data.
Embezzlement To take assets in violation of trust.
Encryption is scrambling data so it is meaningless to anyone but the intended recipient, who
has the key to unscramble the data.
Engagement letter A letter that represents the understanding about the engagement between
the client and the CPA. The letter identifies the financial statements and describes the nature of
procedures to be performed. It includes an explanation of the objectives of the procedures, an
explanation that the financial information is the responsibility of the company's management,
and a description of the form of report.
Environment The control environment is the attitude, awareness, and actions of the board,
management, owners, and others about importance of control. It includes integrity and ethical
rules, commitment to competence, board or audit committee participation, organization
structure, assignment of authority and responsibility, and human resource policies and
practices.
error Unintentional misstatements or omissions in financial statements. Errors may involve
mistakes in gathering or processing accounting data, incorrect estimates from oversight or
misinterpretation of facts, and mistakes in application of principles relating to amount,
classification, presentation or disclosure.
Estimation sampling is sampling to estimate the actual value of a population characteristic

within a range of tolerable misstatement.
204
Evidence (evidential matter) includes written and electronic information (such as checks,
records of electronic fund transfers, invoices, contracts, and other information) that permits
the auditor to reach conclusions through reasoning.
Examination is evaluating the preparation of prospective statements, support underlying

assumptions, and presentation. The accountant reports whether, in his or her opinion, the
statements conform to AICPA guidelines and assumptions provide a reasonable basis for the
responsible party's forecast. The accountant should be independent, proficient, plan the
engagement, supervise assistants, and obtain sufficient evidence to provide a reasonable basis
for the report.
Examine (examining) As an audit procedure, to examine something is to look at it critically.
Except for A qualified opinion. An auditor can qualify the audit opinion for both departures
from U.S. GAAP in the financial statements and restrictions on the scope of the audit. The
opinion paragraph of the qualified report is worded "In our opinion, except for..."
Execute (execution) To carry out an internal control procedure, such as to sign and mail a check
after inspecting supporting documents.
Existence Assertions about existence deal with whether assets or liabilities exist at a given date.
For example, management asserts that finished goods inventories in the balance sheet are
available for sale.
Expenditure Cash paid or liability incurred.
Explanatory A paragraph added to an audit report to explain something, such as the reason for
a qualified or adverse opinion.
205

explicitly Fully and clearly expressed, leaving nothing implied.
Extend means to multiply one number by another (to test extensions is to test the accuracy of
multiplication done by the client). To extend audit procedures is to apply additional audit
procedures to obtain more evidence.
FASAB or Federal Accounting Standards Advisory Board An organization that sets GAAP in the
U.S. for federal government entities.
FASB or Financial Accounting Standards Board A nongovernment private organization that sets
GAAP in the U.S. for profit making entities and not-for-profit nongovernmental organizations.
Field work The performance of audit procedures outside the CPA's office. Much field work, but
not all, is done in the client's offices after the balance sheet date.
FIFO or First In First Out inventory cost flow.
Financial forecasts are prospective financial statements that present expected future financial
position, results of operations, and cash flows based on expected conditions. A financial
forecast is of the most likely future scenario.
Financial projections are prospective financial statements that present, given one or more
hypothetical assumptions, an entity's expected financial position, results of operations, and
changes in financial position. A financial projection includes several alternative scenarios while
a forecast is the single most likely scenario.
Financial institution confirmation request A confirmation sent to the client's bank or other
financial institution asking the bank to confirm directly to the auditor information about
balances at a particular date.
206
Flowchart A schematic representation of a sequence of operations in an accounting system or

computer program. Also called a flow diagram or flow sheet.
Foot a column is to add a column of numbers.
Fraud A deliberate deception to secure unfair or unlawful gain. False representation intended
to deceive relied on by another to that person's injury. Fraud includes fraudulent financial
reporting undertaken to render financial statements misleading, sometimes called
management fraud, and misappropriation of assets, sometimes called defalcations.
GAAP or Generally Accepted Accounting Principles According to Rule 203 of the AICPA Code of
Professional Conduct, GAAP for nongovernment entities include (in a conflict the source earlier
in the list prevails): 1. FASB Statements and Interpretations, APB Opinions, ARBs. 2. FASB
Technical Bulletins, AICPA Guides and AICPA Statements of Position. 3. Positions of the FASB
Emerging Issues Task Force and AICPA Practice Bulletins. 4. AICPA accounting interpretations,
FASB staff "Qs and As", and widely recognized industry practices. 5. FASB Concepts Statements,
textbooks, articles.
GAAS or Generally Accepted Auditing Standards The ten auditing standards adopted by the
membership of the AICPA. Auditing standards differ from audit procedures in that "procedures"
relate to acts to be performed, whereas "standards" deal with measures of the quality of the
performance of those acts and objectives of the procedures.
GASB or Government Accounting Standards Board A nongovernment private organization that

sets GAAP in the United States for governmental entities.
207

General controls Policies and procedures to assure proper operation of computer systems,
including controls over data center and network operations, software acquisition and
maintenance, and access security.
General journal A book of original entry in a double-entry system. The journal lists transactions
and indicates accounts to which they are posted. The general journal includes all transactions
not included in specialized journals used for cash receipts, cash disbursements, and other
common transactions.
General ledger A record to which monetary transactions are posted (in the form of debits and
credits) from a journal. It is the final record from which financial statements are prepared.
General ledger accounts are often control accounts that report totals of details included in
subsidiary ledgers.
General standard In the ten U.S. generally accepted auditing standards there are three general
standards: 1. The examination is to be performed by a person or persons having adequate
technical training and proficiency as an auditor. 2. In all matters relating to the assignment, an
independence in mental attitude is to be maintained by the auditor. 3. Due professional care is
to be exercised in performing the examination and preparation of the report.
generalized audit software Packaged computer programs used on a variety of computers

during audit field work to read computer files, select information, perform calculations, create
data files, and print reports in a format specified by the auditor.
going concern assumption assumes the company will continue in operation long enough to
realize its investment in assets through operations (as opposed to sale). Presenting assets at
historical cost is justified by assuming productive assets will be used rather than sold. This
makes market values irrelevant and supports accounting methods that match the actual cost of
an asset to periods benefited.
208

Government Auditing Standards A book issued by the comptroller general of the United States,
sometimes called the "yellow book." Government Auditing Standards contains standards for
audits of government organizations, programs, activities, and functions and of government
assistance received by contractors, not-for-profit organizations, and other nongovernment
organizations. These standards, which include designing the audit to provide reasonable
assurance of detecting material misstatements resulting from noncompliance with provisions of
contracts or grant agreements that have a direct and material effect on determination of
financial statement amounts, are followed when required by law, regulation, agreement,
contract, or policy. For financial audits, Government Auditing Standards prescribes fieldwork
and reporting standards beyond those required by GAAS.
Gross margin percentage The gross margin from an income statement divided by net sales
revenue.
hard copy A printed copy of information as opposed to information stored in computer
readable form.
hardware A computer and associated physical equipment involved in data processing or
communications functions as opposed to software (the computer programs that provide
instructions the computer follows).
Hardware control Computer controls built into physical equipment by the manufacturer.
Hash total A control total that has no meaning in itself except for control, e.g., total social
security numbers of employees paid.
Hedges protect an entity against the risk of adverse price or interest-rate movements on its
assets, liabilities, or anticipated transactions. A hedge avoids or reduces risk by
counterbalancing losses with gains on separate positions.
209

Image-processing systems scan documents into electronic images for storage. Reference and
source documents may not be retained after conversion.
Immaterial Of no importance. Something in financial statements that will not change decisions
of investors.
Implicitly Implied or understood even though not directly expressed.
Implied control performance deals with expected changes to data.
Incompatible duties Internal control systems rely on separation of duties to reduce the chance
of errors or fraud. Duties are incompatible if they should be separated for control. For example,
one person should not be in a position to both embezzle funds and to hide the embezzlement
by changing the recorded accountability.
Incorrect acceptance The risk of incorrect acceptance is the risk the sample supports the
conclusion that the recorded balance is not materially misstated when it is materially misstated.
Incorrect rejection The risk of incorrect rejection is the risk the sample supports the conclusion
that the recorded balance is materially misstated when it is not materially misstated.
Independent In all matters relating to the assignment, an independence in mental attitude is to

be maintained by the auditors. This means freedom from bias, which is possible even when
auditing one's own business (independence in fact). However, it is important that the auditor
be independent in appearance (that others believe the auditor is independent).
Information systems consist of infrastructure (physical and hardware components), software,

people, procedures (manual and automated), and data.
210

Inherent limitation The potential effectiveness of an entity's internal control is subject to
inherent limitations. Human fallibility, collusion, and management override are examples.
Inherent risk The susceptibility of a balance or transaction class to error that could be material,
when aggregated with other errors, assuming no related internal controls.
input control Computer controls designed to provide reasonable assurance that transactions
are properly authorized before processed by the computer, accurately converted to machine
readable form and recorded in the computer, that data files and transactions are not lost,
added, duplicated or improperly changed, and that incorrect transactions are rejected,
corrected and, if necessary, resubmitted on a timely basis.
Inquire (inquiry) Ask questions of client personnel.
Inspect (inspection) As an audit procedure, to scrutinize or critically examine a document. As

part of a CPA firm's quality control system, to monitor the effectiveness of the system.
Integrated test facility A "dummy" unit (e.g., a department or employee) is established. Test
(fictitious) transactions are posted to the dummy unit during the normal processing cycle. If test
transactions are processed correctly that provides evidence that transactions of other units are
processed correctly as well.
Integrity Consistent adherence to an ethical code. If client management lacks integrity the
auditor must be more skeptical than usual.
Interim audit procedures are done during the year under audit, before year-end.
Interim financial information is financial statements of a time period less than a full year.
211

Internal auditors are employees of the client responsible for providing analyses, evaluations,
assurances, recommendations, and other information to the entity's management and board.
An important responsibility of internal auditors is to monitor performance of controls.
internal control Policies and procedures designed to provide reasonable assurance that specific
entity objectives will be achieved. It consists of: the control environment, risk assessment,
control activities, information and communications, and monitoring.
Internal control questionnaire A list of questions about the existing internal control system to
be answered (with answers such as yes, no, or not applicable) during audit fieldwork. The
questionnaire is a part of the documentation of the auditor's understanding of the client's
internal controls.
Internal control weakness A defect in the design or operation of internal controls. A material
weakness is a reportable condition that does not reduce to a relatively low level the risk that
material errors or fraud would not be detected in a timely manner by employees in the normal
course of their duties.
Introductory paragraph The first paragraph of the auditor's standard report, which identifies
the financial statements audited, states the financial statements are the responsibility of
management and that the auditor's responsibility is to express an opinion on the financial
statements based on the audit.
Inventory tag A tag attached to inventory items that identify the inventory items to aid in
counting the physical inventory.
Inverse The opposite or reverse. An inverse relationship between two variables means that
when one increases the other decreases.
212

Investee The company in which an investment is held. Often used to describe an equity method
investment, in which the investor reports a share of the investee's net income.
Invoice An itemized list of goods shipped or services rendered with costs.
213

Ayub Aslam &amp; Co.

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Internship Report On Ayub Aslam & Co.

The definition of audit is Auditing is a systematic process of objectively obtaining and

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

The steps involved in conduct of an audit are as follows

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

EXTERNAL AUDITOR / STATUTORY AUDITOR

External auditor / Statutory auditor is an independent Public accounting firm engaged

Internship Report On Ayub Aslam & Co. Chartered Accountants

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

INTERNATIONAL STANDARDS OF AUDITING (ISA)

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

THE ROLE OF ORGANIZATION IN ECONOMY

THE CRITICAL ROLE AND MORAL OF THE AUDIT

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

AUDITOR INDEPENDENCE, OBJECTIVITY AND SKEPTICISM

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

THE INITIATIVES ARE AIMED AT ENHANCING THE

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

CORE PRINCIPLES AND VALUES

Internship Report On Ayub Aslam & Co. Chartered Accountants

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

AYUB ASLAM & CO. CHARTERED ACCOUNTANTS

Mr. AYUB ASLAM CHUGHTAI

Mr. ABDUL RAUF

Mr. CH ABDUL RASHID GILL

33- F JOHAR TOWN LAHORE

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

AUDIT AND ASSURANCE

KEY COMPONENTS OF QUALITY CONTROL

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

We realize that clients, just as we do, search out a

combination of attributes in a professional service firm. The combined attributes of quality,

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

Avoiding surprises and resultant reporting delays;

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

We will be a customer-focused support organization that provides value-added audit and

University of Education lower Mall Campus Lahore

Internship Report On Ayub Aslam & Co. Chartered Accountants

Internship Report On Ayub Aslam & Co. Chartered Accountants

1. Detection and prevention of Errors

DETECTION AND PREVENTION OF ERRORS

Internship Report On Ayub Aslam & Co. Chartered Accountants

Ayub Aslam & Co.

Ayub Aslam & Co.