This proposal is being submitted in response to our meeting with Mr.

---------------
Managing Director & Mr. ----------------------------, Internal Auditor of ---------------------------
-Co., Ltd. (ABC). Our brief observations are:

CURRENT SITUATION

Our initial review and discussion with the Management on the proposed
assignment reveals that:

a) No fixed asset register is being maintained by the Company;

b) The Company is operating with two branches at the moment
i.e., Head Office and Peshawar branch;
c) The Company was operating with maximum of 24 (twenty-
four) branches in any of the previous years;
d) All the assets of the closed out branches are available with the
existing two branches;
e) Written down value of the list of assets provided to us does not
match with the WDV of the assets shown in the audited
balance sheet for the year ended December 31st 2016;
f) Accounting records are available with the Company from Year
2000 todate; and
g) Complete record for the disposal of fixed assets is available
with the Company.

Non maintenance of system generated fixed asset register may have increase the risk of mis-
appropriation of Companies assets.

SCOPE OF WORK

------------------ Co., Ltd. has fixed assets of Rs. --------------------/- at

cost/revalued amount as on 31st December, 2016, which includes land,
building, furniture & fixture, office equipment, computer equipment and
motor vehicles, etc.

The existing process of accounting for fixed asset is carried out in the
general ledger and manual fixed list is maintained at Head Office on
Excel spreadsheet which includes the following:
a) Historical Cost;
b) Depreciation charged for the year;
c) Rate of depreciation for each category of asset being acquired
and reported;
d) Additions and deletions of fixed assets during the year;
e) Adjustments and transfers; and
f) Written down value

We assume that physical verification of fixed assets has never been

carried out, resultantly there is a risk that the information provided by
the ABC may be inaccurate. Moreover, there is no proper coding for
identification of the entire fixed assets, which can result in a material loss
on account of misappropriation or otherwise.
YSC will perform the following tasks for verification of fixed assets:

1) Undertake a physical verification of fixed assets for the entire

organization except land and buildings;
2) Reconciliation of fixed assets record (ABC with YSC); and
3) Coding and tagging of fixed assets;

We shall perform the above tasks for assets located at the Lahore Head
Office and Peshawar (we assume and as confirmed by the Management
of ABC that verification at Peshawar Branch will take maximum of one
day) ABC Management has taken the responsibility of verifying fixed
assets at Karachi Branch internally by their own staff.
 DELIVERABLES

Deliverables shall be as follows:

1) Comparison of physical verification report and fixed assets

list provided by the Management.
2) Draft report to the Management incorporating the
discrepancies observed during the process of physical
verification of fixed assets and its related reconciliation
with the fixed assets list provided, impairment of assets, if
any with necessary details of rectification entries.
3) The physical verification report shall include under each
category, the following:
 Complete list of fixed assets along with their location
including list of fixed assets which have not been
found together with their relevant particulars i.e.,
asset code, description, book value, accumulated
 depreciation and WDV as on December 31st 2016.
 List of assets which are physically available but not
been found in the fixed assets list provided by ABC.
 List of details of all such fixed assets which have been
impaired or which are not in usable condition and
needs to be written off together with their Asset code,
Description, Book Value, Accumulated depreciation.
& WDV as on December 31st 2016.
 Verification of ownership documents of vehicles.
4) A discussion on the draft report will be held by YSC with
ABC for obtaining Management observations / comments
on all observations highlighted in the draft report.
5) After obtaining Management comments / observations,
YSC will submit the final physical verification report.
 FEE AND SOFTWARE COST

The cost/fees shall be as follows:

Ser Description Amount

no. Rs.
1 Verification & Tagging of Fixed Assets 350,000
Branch assets verification cost including tag placement etc.
2 Out of Pocket Expenses
Includes intra city and Peshawar travelling, boarding, lodging of
YSC staff members (10 %) 35,000
Total Cost 385,000

Rupees Three hundred & eighty five thousand only.

 PAYMENT SCHEDULE

All the prices quoted for software and professional services are denominated in Pak Rupees
and is payable as per following schedule:

Payment Stage Rate

Mobilization Advance 30%
On Draft Report 40%
On Final Report 30%

RESOURCES

We have professionally trained and experienced team to execute this

assignment and are able to analyze existing internal controls,
accounting software and data security applied, would be able to
suggest required improvements to ensure that the internal controls
are implied, financial reports prepared and presented to the
Management are reliable.

Qualified Chartered Accountant will supervise the team of one senior

(CA Intermediate) and one junior team members for the timely
execution of this assignment.

TIMELINE

Time to complete the assignment would be 3-4 weeks depending

upon the availability of information and records by ABC.
 QUALIFICATION

Yusaf Saeed & Company is enjoying satisfactory QCR (Quality Control

Review) rating, issued by the Institute of Chartered Accountants of
Pakistan. The rating ensures that the rated firms have adhered to the
professional standards in conducting the assignments of their clients.

We are providing financial & corporate consultancy, audit &

assurance and taxation services to a wide range of trading houses and
industries including manufacturing, construction, engineering,
communications, textiles, distribution, exporters, fashion designing,
service sector etc.

CONFIDENTIALITY OF INFORMATION

Yusaf Saeed & Co. respects and keep the confidential nature of any
information gathered or received in execution of any assignment, and
shall use such information only in so far as it is necessary for the
performance of the concerned assignment.

The Client shall commit not to disclose any information, report or any
portion thereof, submitted by YSC during the execution of
assignment, to anyone other than its own use and consumption.