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During the course of audit, Income and Expenditure statement for the month of May-17
contains material discrepancies. The detail of these observations is as follows:-
1. Rebate Income:
FDPT is receiving rebate income from QICT Rs.500 per 20ft container and Rs.1000
per 40ft container against export consignment-by road.
During the audit, it is observed that accounts department did not account for rebate income
of Rs.1,007,500 from (July-16 to May-2017) and not reflect in the income and
expenditure statement for the same mentioned period. Although, FDPT received rebate
income amount Rs. 687,000 against July-16 to Oct-16 and Jan-17 to April-17.
Furthermore, Rs.106,500 rebate income for the month of May-17 not reflecting in
income and expenditure accounts of May-17 against same income. Details are as bellow:-
Recommendation:
Account department should be account for the rebate income monthly basis against export
containers which transport from FDPT to QICT.
2. Accrual Accounting:
During the course of audit, it is observed that accounts department did not account
for expenses Rs. 199,011/- according to the rule of accrual accounting. Due to this,
expenses are understated and income is overstated in the income and expenditure
statement for the month of May-17. Detail of these discrepancies is as follows:-
During the audit, QICT deducted payment of Rs. 46,530 against storage and
demurrage charges against train operation.
FDPT acquire services from QICT against Khawaja Steel, latterly party and QICT
both refused the claim of FDPT. Accounts department did not account for above
mentioned expenses and same are not reflecting in income and expenditure statement
for the month of May-17. Details of these charges are as follows:-
During the audit, it is observed that Washing and Repairing charges incurred
against train operation Rs. 47,000 and accounts department did not account for
these charges in income and expenses statement for the month of May-17 under
accrual basis. The detail of these expenses is as follows:-
Total: 47,000
c. LOLO empty container charges - Train Operation:-
During the audit, it is observed that LOLO empty container charges incurred
against train operation Rs. 81,000 and accounts department did not account for
these charges in income and expenses statement for the month of May-17 under
accrual basis. The detail of these expenses is as follows:-
Shipping
Party BL NO No of Cont Per Cont Amount
Line
SUNDAL TRADING LHV1590022 CMA 1 2,625 2,625
ABM CORPORATION LHV1597837 CMA 1 2,625 2,625
ABM CORPORATION RTM0769150 CMA 1 2,625 2,625
ABM CORPORATION 706148484 APL 1 2,625 2,625
KBS STEEL HODO105456 CMA 10 2,100 21,000
IKRAM STEEL INDUSTRIES LHV1566300 CMA 10 2,100 21,000
MAZHAR STEEL MSCUU5837762 MSC 12 1,900 22,800
MAZHAR STEEL MSCUU5837762 MSC 3 1,900 5,700
Total: 81,000
During the audit it is observed that account department did not book
expenses of Rs. 8,181 in the month of May-17 according to accrual accounting
and same are not reflecting in Income and expenditure statement for the month
of May-17. Detail of these expenses is as follows:-
Following expenses are related to month of April-17 which were not account
for in income and expenses statement of April-17 and same are reflecting in
income and expenditure statement for the month of May-17 which are
unjustified. The detail of these expenses is as follows:-
Following expenses are related to month of April-17 which were not account
for in income and expenses statement of April-17 and same are reflecting in
income and expenditure statement for the month of May-17 which are
unjustified. The detail of these expenses is as follows:-
Recommendation:
The accrual concept in accounting means that expenses and revenues are
recorded in the period they occur, whether or not cash is involved. The benefit of
the accrual approach is that financial statements reflect all the expenses
associated with the reported revenues for an accounting period.
Accounts department should be followed the accrual concept and present the
true and fair view of financial statements. i.e income and expenses statements,
Balance sheet.
3. General Observation:
1) SAPT Advance:
FDPT was paid advance for SAPT in Miss Hina Account (KTO). Before
opening of let pass account, ledger balance is negative (CR) Rs.16,531 as on
19.06.17.
Recommendation:
Accounts Department KTO and H.O should be properly reconciled this
account and present the fair position of SAPT.
During the audit, it is observed that Cash in hand KTO shows balance of Rs.
DR 929,223 and un-posted voucher Rs. 365,308. So net adjusted balance is Rs.
563,915 as on 06 July, 2017. It is enough balance to meet the KTO expenses. It
shows that accounts department is not timely account for expenses of KTO.
There are many chances of cash embezzlement and other financial risk. In this
regard, it has informed several times to Accounts department, Higher
Management.
Recommendation:
It is strongly recommended that accounts department KTO should dispatch
petty detail to H.O so transactions timely account for in accounts.
Recommendation:
Accounts department should be account for expenses against advance
immediately
4) Segregation of Account:
Recommendation:
Accounts department should be account for expenses in their relevant head
of account which make it easy to identify and analysis the expenses of
concerned head for improvement of profitability.