INDIVIDUAL ASSIGNMENT

ANALYSIS OF AUDIT REPORTS OF RECKITT BENCKISER

(BANGLADESH) LIMITED

SUBMITTED TO:

MOHAMMAD TARIQ HASAN (MTH)

ASSISTANT PROFESSOR

AUDITING (ACN 4340)

SCHOOL OF BUSINESS AND ECONOMICS

UNITED INTERNATIONAL UNIVERSITY

SUBMITTED BY:

NARSUDA BHUIYAN

ID- 111 172 019

SECTION- A

DATE: 13TH DECEMBER 2020

ABOUT RECKITT BENCKISER (BANGLADESH) LTD.

Reckitt Benckiser (RB) is a British-Dutch multinational company that was founded in 1999 by the
merger of two companies: British company Reckitt & Colman, and Dutch company Benckiser
N.V. It belongs to the consumer goods industry and produces mainly health, hygiene and home
products. The name of the company may not be as popular among the general population but the
brands of RB are very popular in each household from to higher class to the working class, and
they include:

 Antiseptic products - Dettol.

 Sore throat medicine - Strepsil.
 Hair removal brand - Veet.
 Air freshener - Air Wick
 Liquid cleaner – Harpic
 Insect spray – Mortein
 Fabric detergent – Vanish

Reckitt Benckiser was incorporated in the territory of pre-independence which now comprises of
Bangladesh, in 1961, under the name of Robinson Foods Ltd. After 1971, the company started
establishing its own plants in the country because imports of the products stopped, thereby
introducing its famous power brands such as Harpic, Dettol, Mortein, etc. After the merger of the
two British and Dutch companies, in the year 2000, the name was permanently changed to Reckitt
Benckiser (Bangladesh) Ltd.

According to the data of Dhaka Stock Exchange, Reckitt Benckiser has the highest cash dividend
declared than of any other company listed on the Dhaka Stock Exchange. The company has
recommended 1250% in cash dividends, the highest ever since listing on the DSE, for the year
ending December 31, 2019. This shows that it also has a very strong position in the market. As per
the statement of an official of the company, the company’s profit increased due to strong sales of
Dettol and Harpic. (“The Dhaka Tribune”, 2020)
FEATURES OF THE AUDITED ANNUAL REPORT
The audited annual report of Reckitt Benckiser (Bangladesh) Ltd has been prepared with great
scrutiny and have included these contents listed below:

 Corporate profile- The names of the people forming part of the board of directors, the Chief
Financial Officer, Company Secretary, those forming the Audit Committee, NRC Committee,
Share Committee and the Auditor and the Bankers have been listed.
 Key Operating and Financial Data- This section has tabulated some important financial
indicators and balance sheet items that provide an overview of the company, such as revenue
for years 2014 to 2019, dividends increase or decrease, net assets and some financial ratios in
chart form.
 Notice of Annual General Meeting- This notice described the agenda and venue of conducting
their annual general meeting on 26th July 2020.
 Chairperson’s Statement- This shows a brief introduction written by the Chairperson of Reckitt
Benckiser, Mr. Rahul Mathur, about the market and competitive environment, the business
performance including the growth in sales and turnover rate, dividend and a future outlook.
 Report of the Directors- This is a report describing some points highlighted by the directors
such as the company’s principal activities, related party transactions, risks and concerns,
extraordinary gain or loss, summary of financials, earnings per share, rules of corporate
governance, announcement of elections of directors, the auditors to be appointed, and
acknowledgement.
 Management’s Discussion and Analysis- This section lists the accounting policies and
estimation followed by the IFRS and Companies Act, comparative analysis of financial
performance of preceding five years and a balance sheet summary, and the risks and concerns
deemed vital by the management.
 Auditor’s Report- This is the report prepared by the independent auditors which we will discuss
in next topic.
 Statement of financial position, Statement of Profit and Loss, Statement of Changes in Equity,
Statement of Cash Flows.
 Notes to the financial statements
 CEO and CFO declaration- This is a letter by the CEO and CFO addressing the certification
of the financial statement for year ended 31 December 2019 without any bias and
misrepresentation and following all the guidelines and rules of the accounting bodies and the
company.
 Report of Audit Committee- This is a report of the Audit Committee of Reckitt Benckiser Ltd
in Bangladesh that highlights their members, their roles, and the major activities performed.
 Report of Nomination and Remuneration Committee.
 Certificate of Compliance to the Shareholders- This is the Compliance Audit Report.
 Attendance at Board Meeting- This section marks the number of attendance for each Director
and Board Member throughout the year and also their remarks.

CRITICAL EVALUATION OF AUDIT REPORT

The Audit report of Reckitt Benckiser Bangladesh Ltd is a Standard Unqualified Auditor’s report
that has been prepared by independent auditor, Rahman Rahman Huq Chartered Accountants. The
audit report contains the following elements:

Title of the report- Independent Auditor’s Report

Audit Report Address- To the Shareholders of Reckitt Benckiser (Bangladesh) Limited

In the introductory part, the auditor has stated that they have audited the statement of financial
position, statement of profit and loss and other comprehensive income, statement of changes in
equity and statement of cash flows of the company as at 31 December 2019. They have mentioned
their responsibilities under the standards described in the Auditor’s responsibilities for the Audit
of the Financial Statements section of their report. In this section it is mentioned that:

 Their objective is to obtain a reasonable assurance whether the financial statements are free
from material misstatement whether due to fraud or error and to give their opinion.
 They exercise professional judgment and maintain professional skepticism which means
that they have an attitude of questioning mind and they critically assess audit evidence.
 They obtain audit evidence that is sufficient and appropriate to provide basis for opinion.
 They obtain an understanding of internal control relevant to the audit to design audit
procedures.
  They evaluate appropriateness of accounting policies used and reasonableness of
accounting estimates and related disclosures made by management.
 They assess audit evidence and they conclude whether material uncertainty exists that may
cast significant doubt on the company’s ability to continue as a going concern. If they find
that there is uncertainty and the disclosures by management is not adequate, they will
modify their opinion.

As a scope, they stated that they conducted their audit procedures in accordance with International
Standards on Auditing (ISA) and they believe that the audit evidence they have obtained is
sufficient and appropriate to provide a basis for their opinion.

They have also mentioned the responsibilities of the company’s management, that is, the
management is responsible for preparing financial statements that give a true and fair view of IFRS
and that are free from material misstatement due to fraud and error. The management is also
responsible to disclose applicable information related to the going concern of the company.

Some key audit matters have been discussed and the methods of addressing the matters in the audit
have also been included.

For example, for revenue recognition, the auditors have evaluated and validated the company’s
sales processes, from contract approval and sign off, recording of sales, cash receipts and
customers’ outstanding balances. For doing so, they have used the sampling techniques by
examining relevant supporting documents including sales invoices and truck challans. They also
confirmed some customers’ receivables balances at balance sheet date slected on sample basis.
Some other key audit matters relate to recognition of deferred tax assets, tax provisioning,
valuation of inventory, employees benefit and litigation and contingent liabilities.

In the independent auditor’s opinion, the financial statements prepared by Reckitt Benckiser
(Bangladesh) Ltd gives a true and fair view of the financial position of the company as at 31
December 2019 and that its financial performance and cash flows were all in accordance with
IFRS.

Audit Report Date- 30 April 2020 marks the last day of the auditor’s responsibility for the review
of significant events that occurred after the date of the financial statements.
FEATURE OF COMPLIANCE REPORT OF CORPORATE GOVERNANCE
CODE
The compliance audit report is a certification to be done as per the condition of Bangladesh
Securities and Exchange Commission Corporate Governance Code. This report has been prepared
by independent auditor on compliance, Rahman Anis & Co. Chartered Accountants.

The auditor has examined the compliance status of Corporate Governance Code by Reckitt
Benckiser (Bangladesh) Ltd for the year ended on 31 December 2019. They are however limited
to the procedures and implementation adopted by the management in ensuring compliance with
the CG Code.

In the annexure, the status of compliance imposed by BSEC is prepared by the independent
Director (on behalf of the Board of Directors) in a tabular form indicating whether each conditions
have been complied or not, and giving any remarks if any. For example, one condition that has
been complied is that the number of Board of Directors should not be less than 5 and more than
20. The remark is that there is 9 Board members including 2 independent Directors.

The management has to make sure that compliance is done according to the Corporate Governance
Code, and with the provisions of relevant Bangladesh Secretarial Standards (BSS) as adopted by
Institute of Charted Secretaries of Bangladesh (ICSB). These standards should also be consistent
with the CG Code.

Therefore, after proper scrutiny and verification, the compliance auditors may give their certified
opinion that the company has complied with all the conditions and standards mentioned above,
proper book keeping and records are done as required by Companies Act and laws, and that the
governance of the company is satisfactory.

The last date of the audit responsibility was 23 April 2020.