Push Digits

Chartered Accountants

A member firm of
Push Digits Global

Introduction of the firm

Push Digits Chartered Accountants is a strategic partnership of professional and experienced
Chartered accountants, with an objective to achieve 100% client’s satisfaction by providing quality
services and adding value to the existing business operations at incredibly affordable and cost-
effective fee structure.
Our team not only possess an up to date knowledge of international standards and modern technology
but are also well-versed in various accounting software. With a set of core values, we aim at
empowering change and best practices in our staff members and our client organizations.

Customer: QNET GENERAL TRADING L.L.C

Assignment: The scope of our audit was to express an opinion on the financial statements for the year
ended December 31, 2019. Our audit was conducted in accordance with International Standards on
Auditing (ISAs). These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of any material misstatement. An audit
includes examining on test basis, evidence supporting the amounts and disclosures made in the
financial statements.

Problem statement:

1. Absence of Internal Audit Function

Risk is inherent in the decisions that an organization takes to manage and run its business. Internal
audit provides an independent assurance to the management, focuses on reviewing the effectiveness
of the governance risk management and control processes that management has put in place, and
advice the management on governance risk and control. However, internal audit function was not in
place during the period under review. Position of the internal auditor remained vacant during the said
period

Impact:

The absence of internal audit function would result in lack of control over the entities activities.
Management may remain uninformed about the risk management, control and governance process
deficiencies.

Recommendation:

Management should introduce the internal audit function in the organization, in order to maintain the
regular compliance of the governance and submit its report on periodic basis to management and
regulatory authority. This will ensure timely detection and correction of errors and improvement in
compliance with the management policies.

Management Response

The board of directors is considering various steps for improvement of internal audit function and
shall be implemented in near future.

Page 1 of 3
Push Digits
Chartered Accountants

A member firm of
Push Digits Global

2. Accounting Software

We observed that the Company is using Micro Soft Excel as an accounting software which due to its
own control limitations cannot provide effective control over financial reporting.

Implication

Keeping in view the size of the Company’s operations the Microsoft Excel may not generate
accurately the required financial information on a timely basis and therefore may affect the effective
decision making at senior level.

Recommendation

We recommend the management to arrange to develop an accounting software which is customized to

the need of the Company’s operations to effectively generate the reliable financial information. The
management may also choose an accounting software suitable to its need out of the range of the shelf
software available in the market.

Management Response

Noted for compliance

3. Control over recording of sale and purchase of commercial products from Related parties

During the audit we have identified certain unrecorded sales and purchases of commercial products
from related parties. According to the management of the Company these entries could not be
recorded due to ineffective coordination of the marketing department of the Company and delays in
receiving bills from related parties.

Implication

The untimely recording of sales and purchases would distort the financial results.

Recommendation

We recommend the management to assess the underlying reasons for omission of referred entries
and accordingly implement the revised mechanism and controls ensuring the timely and accurate
recording of accounting entries.
Management Response

The chief financial officer has been instructed to evaluate and recommend the procedures/controls to
correct the deficiency.

Page 2 of 3
Push Digits
Chartered Accountants

A member firm of
Push Digits Global

4. Pre-numbered Vouchers:

As part of effective internal control, vouchers should be pre numbered which ensures the
completeness of vouchers.

Impact:

In absence of pre-numbered vouchers, the completeness of vouchers cannot be ensured and a voucher
can also be replaced.

Recommendation:

The requirement for use of pre-numbered vouchers should be incorporated in Standard Operating
Procedures of organization.

Management Response:

Noted for future compliance

Disclaimer:

It is worth mentioning here that due to inherent limitations of audit together with the inherent
limitations of the system of accounting and internal controls, there is an unavoidable risk that some
material misstatements might have remained undetected. As part of audit we obtained an
understanding of the accounting and internal control systems sufficient to plan the audit and develop
an effective audit approach, but not for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control.

Result

Our review and evaluation of financial statement has revealed certain deficiencies in the system of
internal controls which though not material, nevertheless, were important to be brought into attention
of board of directors and would definitely strengthen the financial system of our client.

Our team of experts assisted client in preparation of financial statements in accordance with U.A.E.
Federal Commercial Companies Law No. 2 of 2015, International financial reporting standards
(IFRS) and other regulatory requirements.

(The End)
Page 3 of 3