Format of Report

7/29/2019 Format of Report

1/14

Internal Audit Report - PSO S/S 54

Sheharyar

Report Date: October 10, 2011

Internal Audit Department

Pakistan State Oil Company Limited

This report has been generated using CCH-TeamMate and isdigitally signed.


2/14

Internal Audit Report - PSO S/S 54 Sheharyar

Contents

Executive Summary ..................................................................... 1

Audit Objectives: ......................................................................... 2

Procedures adopted: ................................................................... 2

Limitations: ................................................................................. 2

Profitability Review: .................................................................... 3

Audit Issues and Observations: .................................................... 4

Audit Team

Manager Saad Amin , Senior Executive

Lead Furrukh Afzal , Senior Executive

MembersRiffat Ahmed Qadri, Senior officer

Raheel Asif Khan; Senior officer

Audit Period

September 2010 to June 2011

Visit Date

July 15, 2011

This report has been generated using CCH-TeamMate and isdigitally signed.


3/14


Executive Summary

# ObservationResponsibilit

yFurther Action

RequiredRisk

Rating

1. Abnormal product Testing COCO In-charge

BM - RF (Multan), High

2. General issues at site COCO In-charge


3. Rubber matt not available in

DB room

COCO In-charge


4. Short In Cash COCO In-charge


5. Unidentified Differences in

Receipt and Payment

COCO In-charge


6. Unidentified differences in

Statement of Affairs

COCO In-charge

DGM - FR & Tax, BM- RF (Multan),

High

7. Broken Lubricants Racks COCO In-charge

BM - RF (Multan), Moderate

8. Late dispatching ofProfitability Statement to FR

COCO In-charge

BM - RF (Multan), Moderate

Internal Audit Department P a g e | 1


4/14


Audit Objectives:- To ensure that the companys policies, procedures, requirements of accounting

manual and SOPs are complied with.- To ensure that the sales and other receipts are timely deposited into the bank.- To ensure that the books and records are properly maintained.- To ensure that the product losses are within limits.- To ensure timely reporting and remittance of margins to Head Office (HO).- To observe any apparent operational deficiency.- To identify cost saving measures.- To ensure that HSE issues are compliance with.

Procedures adopted:- Physically verified the stocks and cash in hand (sale proceeds of the day) as onthe date of audit.- Reviewed bank reconciliation statements for possible error or omission- Checked and reconciled physical stock with stock registers.- Checked and physically verified petty cash fund.- Verified the record of payment authorization slips- Reviewed bank statement (month) for verification of daily deposits, dishonoredcheques and balance etc.- Checked that the retail outlet complies with HSE directives.

Limitations:We have audited the overall financial and operational activities of the outlets byperforming walk through test on a sample of transactions. We have stated onlythose issues / findings, which have come to our notice during this audit.



5/14


Profitability Review:Following table represents the profitability of the COCO Site during the periodAugust-10 to June-11.

Month Profit Sales Gross Margin

ExpensesFrom SalesProceeds Other expenses

ProfitabilityRatio

Rs Rs Rs Rs Rs Rs Rs

Aug-10 60,878 18,220,045 476,035 58,373 221,400 0.33

Sept-10 43,886 18,053,468 469,507 51,634 299,867 0.24

Oct-10 23,167 19,142,649 372,346 60,914 257,730 0.12

Nov-10 76,202 17,481,122 542,667 78,038 262,960 0.43

Dec-10 (19,241) 12,071,120 235,836 78,742 256,914(0.15)

Jan-11 (25,883) 7,543,406 233,519 69,524 270,084 0.34

Feb-11 (39,481) 6,678,867 119,991 41,616 230,424 (0.59)

Mar-11 35,321 11,778,906 375,726 15,395 247,897 0.29

Apr-11 67,958 17,140,746 672,237 41,834 450,159 0.39

May-11 31,754 26,526,014 536,648 44,858 424,435 0.11

Jun-11 (5,983) 20,137,620 262,108 58,050 278,730 (0.02)



6/14


Audit Issues and Observations:

6.1

Abnormal product Testing

Risk Assessment High Moderate Low

Reported Earlier Yes No

ImplementationRequired Prompt Timely Regular

Observation:

While reviewing records for the period of August, 2010 to June, 2011 we observedextensive product testing at outlet without proper justification. Detail is as under:

S.No Month Product Testing in Liters

1 June, 2011 HSD 80

2 April, 2011 HSD 943 Sept, 2010 HSD 52

Please provide your comments for abnormal product testing.

Responsibility COCO In-chargeFurther ActionRequired

BM - RF (Multan),

Recommendation:

Proper justification for product testing should be provided by concerned COCO Incharge and COCO manager, furthermore efforts should be made to minimizeproduct testing.

ImplementationDeadline

October 25, 2011



7/14


6.2

General issues at site

Risk AssessmentHigh Moderate Low


ImplementationRequired

Prompt Timely Regular

Observation:

During audit we noted the following Housekeeping issues:1. Monolith tower is broken at site, as depicted below:

2. Shopstop is inoperative at site, resulting in financial loss to the company, asdepicted below:

3. Dispensing unit is in poor condition, resulting in bad image of company, asdepicted below:



8/14


4. Uneven approach of outlet that results in sales loss to the company as heavyvehicles are reluctant to enter the outlet as depicted below:

Please provide comments.


BM - RF (Multan),

Recommendation:

Above mentioned issues should be resolved as early as possible. This should betaken seriously and issues should be resolved as soon as possible. This reflectsvery negatively on the management of COCO sites.


October 25, 2011



9/14


6.3

Rubber matt not available in DB room





Observation:

Rubber matts were not available in DB room.


BM - RF (Multan),

Recommendation:

Rubber matt should be provided as early as possible to avoid any mishap.


October 25, 2011



10/14


6.4

Sales proceeds being used for PCR expenses





Observation:

while performing cash check activity at outlet we noted following abnormalities:1. Rs. 18 was found excess in cash while checking the cash count in respect of saleproceeds of the day.2. Rs 55,000 has been used from sales proceeds for petty cash expenses3. Salary amount of Rs. 12,386 was not paid by the outlet and was being used tomeet PCR expenses.Detail of cash position at site is as under:

Description Amount in Rs.

Total cash sale on 15th july, 2011 178,706

Actual Cash at site 136,110Total Short 42,596

PCR amount Used (55,000)

Excess amount 12,404

less salary payable (12,386)

Net Excess 18


BM - RF (Multan),

Recommendation:

This is strictly against the SOP and must be discontinued.


October 25, 2011



11/14


6.5

Unidentified Differences in Receipt and Payment





Observation:

Receipt and payments statement prepared for the period August 2010 to June2011 shows unidentified differences. Annexure A is attached.


BM - RF (Multan), DGM-FR

Recommendation:

The accountant should be advised to identify and remove the differences.


October 25, 2011



12/14


6.6

Unidentified differences in Statement of Affairs





Observation:

During the course of our audit we have observed that the statement of affairs as atJune 30, 2011 contains an un-reconciled amount of Rs. 12,946. It has also beenobserved that no proper books of accounts are being maintained at the site or atthe head office wherein double entry system can be reconciled. Please referAnnexure-B to the report.


DGM - FR & Tax, BM - RF (Multan),

Recommendation:

It is recommended that until the new accounting software is procured andinstalled, a proper Cash book and General Ledger may be maintained manuallywherein all accounting entries for sales, purchase, expenses, receipts, margins, etcmay be timely entered to ensure accountability and authenticity of the operationalrecords.

Implementation

Deadline

October 25, 2011



13/14


6.7

Broken Lubricants Racks





Observation:

Most of lubricants racks were found broken.

Responsibility COCO In-charge

Further ActionRequired

BM - RF (Multan),

Recommendation:

Lubricants racks were replace with new ones as they reflect a very negative imageof the Company.


October 25, 2011



14/14


6.8

Late dispatching of Profitability Statement to FR





Observation:

It was been observed that profitability statements of the following months were notreceived within stipulated time as mentioned in SOP.

Month Received

August-10 15-09-10

September-10 15-10-10

October-10 22-11-10

November-10 13-12-10

December-10 23-01-11

January-11 15-02-11

February-11 17-03-11

March-11 28-04-11

April-11 13-05-11

May-11 16-06-11

June-11 15-07-11


BM - RF (Multan),

Recommendation:

Compliance of SOP must be ensured.


October 25, 2011


Documents

Format of Report