Professional Documents
Culture Documents
Chartered Accountants
Synopsis
The Institute of Chartered Accountants of Bangladesh (ICAB) is the National Professional Accounting Body of Bangladesh established under the Bangladesh Chartered Accountants Order 1973 (Presidential Order No. 2 of 1973). The Council of ICAB is the Supreme Authority responsible for the administration and management of the Institute. The Council is composed of 20 (twenty) members elected by the members of the Institute from its two regional constituencies in Bangladesh every three years. The Council is headed by an elected President who is the Chief Executive of the Institute. The President and the Vice-Presidents of the Institute are elected by the Council every year to manage the affairs of the Institute. The Council is assisted by various Standing and Other (non-standing) Committees. For the purpose of assisting the Council in matters concerning its functions, the Council is empowered to constitute Regional Committees. At the moment there are two Regional Committees in Dhaka and Chittagong and two Chapters - UK Chapter and North American Chapter. As on 01 July 2009, the Institute had 969 members (including 26 females) of whom 824 were resident in Bangladesh and 145 were resident abroad. Associate and Fellow memberships are offered by the Institute. Persons passing the qualifying Final Examination of the Institute are offered Associateship (ACA) while fellowship (FCA) is offered to members having at least five years post-associateship experience and fulfilling relevant other requirements. Out of 969 members, 305 are practicing as public accountants and the rest 664 are serving in various key positions in public and private organizations-both at home and abroad. As on the same date, there were 2719 articled students (including 115 females).
RRH is one of the most prominent firms in this sector. RRH, besides establishing an extensive accounting, auditing and tax practice, has extensive experience in multidisciplinary consulting assignments carried out solely, or in a consortium with international firms like KPMG, Arthur D. Little, Price Waterhouse, Deloittes etc. many of which were in the areas of banking, chemicals, food and agriculture, hydrocarbon, transportation and
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communication. A distinguishing feature of RRH has been its catalytic role in bringing under one umbrella the qualifications and experiences of top grade professionals available in the country.
Table of content
SI. No.
Chapter-One: Introduction 1 2 4 5 1.1 Origin of the Report Scope of the report 1.4 Limitations 1.5 Definition Chapter Two: Overview of Rahman Rahman Huq KPMG 6 7 8 9 10 11 12 13 14 15 2.1 Introduction about RRH KPMG 2.2 Recent information 2.3 Corporate Profile of the firm 2.4. Corporate Vision & Mission: 10 11 11 12 12 13 14 15 15 17 06 07 07 08 09
Topic
Page No.
2.5 Objective
2.6 Organization structure: 2.7 Core value of the organization 2.8 Clients of the RRH KPMG 2.8.1 Manufacturing Company 2.8.2 Bank and Financial institution
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16 17 18 19 20 21
2.8.3 Energy and Power 2.9 Service provided to their clients 2.9.1 Audit 2.9.2 Tax and Advisory 2.9.3 Financial Advisory 2.9.4 Risk and advisory Service Chapter 3 auditing of cash incentive
18 19 19 19 19 19
22 23 24 25 26 27 28 29 30 31
3.1 Introduction 3.2 Sectors of Auditing of Cash Incentives 3.3 Clients of RRH for cash incentives 3.4 Procedure of auditing of cash incentive (viyellatex ltd) 3.4.1 Collection of application 3.4.2 Collection of PRC 3.4.3 Checking application with the source documents. 3.4.4 Calculating the total claim amount 3.4.5 Preparation of Certificates 3.4.6 Preparation of Detail of Audit Case
20 20 20 21 21 22 23 24 26 27
Conclusion
28
Chapter l 1 l
Introduction
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Rahman Rahman Huq, with six active partners, is one of the leading accounting firms in Bangladesh and the only such firm in the country where all partners are members of The Institute of Chartered Accountants in England and Wales. The partners are supported by nearly 200 trained and experienced professionals including chartered accountants, MBAs, economists and MIS specialists, including software engineers. The firm operates from two offices in Bangladesh: Dhaka and Chittagong. RRH has a large number of clients. It has served a large number of local and multinational clients in Bangladesh. Beside this it has also full fill foreign assignment in different countries throughout the world considering kpmg permission its main objective is to Uphold professional integrity and honesty of its members Advise government on taxation, business law and related matters ,Maintain superiority in respect of professional competence, Meet the growing demand for qualified Chartered Accountants in Bangladesh, Create the environment of mutual cooperation ,Carry out continuous research and make in-depth study of related subjects and apply ,findings of research and study in the fields of accountancy profession.
University of Dhaka is the most popular and well known university in Bangladesh. It acquires and holds the first position of the university brand in Bangladesh according to brand zeal consultancy firm. It provides many courses both in graduate and post graduate program. Bachelor of Business Administration (BBA) is one of them. In the BBA program internship activities is compulsory for the students of Faculty of Business Administration. This internship program for BBA student is for 45 official days. However I was assigned at HSBC cash incentive audit segment. During this period I worked at HSBC head office (Anchor Tower), Pantho Path, Dhaka to complete the program. After completing the practical work I prepare the report. Rahman Rahman Huq is one of the leading auditing firms in Bangladesh which is also the member firm of KPMG, recruits me and assigned to the cash incentive sector. Under the supervision of two senior audit supervisor the report is made. The cash incentive sector is the most crucial audit engagement of RRH, because on behalf of Bangladesh Bank RRH is auditing total acquired by the bank as well as exporting organization(here Viyellatex in RMG sector and Pran foods ltd in food and agro sector). I have prepared this report on this topic by counseling with my honorable course supervisor and the staff of the RRH.
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Definitions
PRC BB BBC L/C BTMA BGMEA Association NOC : No Objection Certificate. : Proceed Realization Certificate. : Bangladesh Bank. : Back to Back L/C. : Letter of Credit. : Bangladesh Textile Mills Association : Bangladesh Garments Manufacturing and Exporters
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communication. A distinguishing feature of RRH has been its catalytic role in bringing under one umbrella the qualifications and experiences of top grade professionals available in the country.
ICAB). Senior Manager 1. Keshab Gupta FCA (ICAB). 2. Utpal Datta FCA (ICAI). 3. Mohammed Saif Uddin ACA (ICAB). 4. Snehasish Barua ACA (ICAB). 5. Abu H.M. Kibria ACCA (Uk). Post Fax
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Telephone Website
+880-2-9886450-2. www.Rahman-rahman-huq.com
Bangladesh
and apply
The mission:
The mission of is to provide leadership in the development, enhancement and coordination of the Accountancy Profession in Bangladesh in order to enable the profession to provide services of consistently high quality in the public interest.
Ensure sound professional ethics and code of conduct by its members Provide specialized training and professional expertise in Accounting, Auditing, Taxation, Corporate Laws, Management Consultancy, Information Technology and related subjects
Foster acceptance and observance of International Accounting Standards (IAS) and International Standards on Auditing (ISA) and adopt the same as Bangladesh Accounting Standards (BAS) and Bangladesh Standards on Auditing (BSA) respectively.
Keep abreast of latest developments in Accounting techniques, Audit methodology, Information technology, Management consultancy and related fields
Partner
Senior Manager
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Assistant Manager
Qualified (Serving Article) Tax Specialist IRM specialist Senior auditor Junior auditor
We are open and honest in our communicationsharing information, insight, and advice frequently and constructively and managing tough situations with courage and candor. We are committed to our communitiesacting as responsible corporate citizens and broadening our skills, experience, and perspectives through work in our communities. Above all, we act with integrityconstantly striving to uphold the highest professional standards, provide sound advice, and rigorously maintain our independence.
Advanced Chemical Industries Ltd. Amo Tea Co. Ltd. The Allynugger Tea Co. Ltd. The Chandpore Tea Co. Ltd.
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Bayer CropScience Bangladesh Ltd. (formerly Aventis CropScience Bangladesh Ltd.) Aventis Ltd. (formerly Rhne Poulenc Rorer Bangladesh Ltd.)
TATA (A Member of TATA Group of India) Bangladesh Edible Oil Ltd.(Subsidiary of Leverian Holdings of Singapore, manufacturers and markets edible oil.) Bangladesh Lamps Ltd.(Maker of Philips bulbs.) BASF Bangladesh Ltd. Bata Shoe Co. (Bangladesh) Ltd. BOC Bangladesh Ltd. (A member company of British Oxygen Group of U.K.) British American Tobacco Bangladesh Company Ltd. Cemex Cement Bangladesh Ltd. Coats Bangladesh Ltd. Dhaka Match Industries Co. Ltd. (A subsidiary company of Swedish Match AB, Sweden.) Holcim Bangladesh Ltd. Integrated Beverage Services Bangladesh Ltd. (Member of Pepsico group of USA.) Karnavphuli Fertilizer Company Ltd. Lenny Fashions Ltd. (Part of a major Hong Kong based garments producer.) Nestle Bangladesh Ltd. (Manufacturing and import of food and allied products. Subsidiary of Nestle SA of Switzerland. Group auditors: KPMG.) New Zealand Milk Products Bangladesh Ltd. (Multinational Company engaged in retail marketing of milk producer and allied products.) Organon (Bangladesh) Ltd. (Part of Akzo-Noble group) Premier LP Gas Ltd. (Subsidiary of Total Fina)
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Renata Ltd. (A listed public limited company engaged in manufacturing and marketing pharmaceutical products.) Roche Bangladesh Ltd. (Subsidiary of Hoffmann La Roche of Switzerland manufacturing medicine.) Saiham Cement Ltd. Saudi Bangla Fish Feed Ltd. (A company owned by SABINCO producing poultry and fish feed.) Scancem Bangladesh Ltd. Scancement International Ltd. (Member of the Norwegian cement group, this is a producer of high quality cement) Teesta High Fashion Ltd. (Member of Kukdong Group of Companies of South Korea engaged in production of garments for export.) The Baraoora Sylhet Tea Co. Ltd. The Consolidate Tea & Lands (Bangladesh) Ltd. The Deundi Tea Co. Ltd. The New Sylhet Tea Co. Ltd. The Noyapara Tea Co. Ltd. The Surma Vally Tea Co. Ltd.(These are Sterling Tea Companies, producing and selling tea in Bangladesh being fully owned subsidiaries of UK companies.)
Triumph
International
Bangladesh
Ltd.
(Garment
manufacturing
Arab Bangladesh Bank Ltd. Bangladesh Shilpa Bank (industrial bank). Bangladesh Shilpa Rin Sangstha (industrial credit finance institution).
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Citibank NA. Delta Brac Housing Finance Corporation Ltd. Dutch Bangla Bank Ltd. Federal Insurance Co. Ltd. United Insurance Co. Ltd. First Security Bank Ltd. Industrial Development Leasing Company of Bangladesh Ltd. Industrial Promotion and Development Company of Bangladesh Ltd. International Leasing and Financial Services Ltd. United Leasing Company Ltd. Agrani Bank, Janata Bank, Sonali Bank. Prime Finance Ltd. Saudi Bangladesh Industrial and Agricultural Investment Co. Ltd. Southeast Bank Ltd. Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Ltd.(HSBC)
ABB SAE SADELMI SpA (Branch operation, engaged in Civil Engineering connected with Karnafuli Hydro Power Plant Rehabilitation Project.) AES Haripur Private Ltd.
AES Meghnaghat Ltd.(Bangladeshs largest private sector land based power producers.)
BP Middle East Ltd. (Liaison office of BP of UK, involved in marketing of petroleum products.)
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BJ Services Company Middle East Ltd. (Branch operation of BJ Services of UK. Engaged as sub-contractor to oil companies.)
Brown and Root Bangladesh Ltd. (Subcontractor for exploration and development of oil and natural gas.)
Cairn Energy PLC (Contractor for exploration and development of natural gas in joint venture with Shell group of companies.)
Meghna Energy Ltd. (Subsidiary of Heidelberg group of Germany. Private sector captive power producer in Bangladesh.)
Khulna Power Company Ltd. (First private sector barge mounted power plant in Bangladesh. Subsidiary of El Paso Power of USA.)
Wartsila Bangladesh Ltd. (Subsidiary of the Wartsila group of Finland, this company markets power generating units in Bangladesh.)
RRH has full fill all kinds of auditing, advising, consulting type of activities for all of its clients. Most of the clients are multinational organizations. It is because all multinationals need to conduct their global audit report, so that in Bangladesh RRH is the only member firm of KPMG international global audit
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firm. For this reason most of the multinationals prepare their audit activities and report with the help of RRH.
2.9.2. Tax, legal and advisory services Corporate taxation, Mergers and acquisition, Payroll management, VAT, Taxation of individuals, International taxation, International contract structuring, Expatriate tax services, complete tax compliance review, company law.
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Country Specific Statutory Reporting, IAS Attest Reporting, US GAAP Reporting, Prospective Reporting, Other Forms of Attestation Reporting, Alliances and Joint Ventures, valuation.
2.9.4. Risk advisory service Internal Audit Co/Outsourcing, IT Audit Co/Outsourcing, Regulatory Assistance Services (incl.S-O)New Business / New Products, Capital Adequacy & Regulatory Reporting, Corporate Regulatory Compliance, Accounting Support, Process Improvement Service.
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the major responsibility of the RRH to audit all the exporting documents of both the viyellatex ltd and Pran foods ltd at the head office of HSBC bank.
Base documents: Base documents are the Application and Proceed Realization Certificates (PRC). Here the application format will provided
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by the audit firm (RRH) according to the guide line of Bangladesh bank to the exported organization.
Source documents: Source documents are the Master L/C (letter of credit), local back to back L/C, BTMA (Bangladesh Textile Mills Association) certificates of yarn, foreign back to back L/C, invoice, bill of leading, Export number/claim no. the PRC will prepared and provided by the inclined bank (HSBC) and it is also the source document. All of these source documents are compiled in one master file.
So using these documents cash incentive activities will be started. Procedures are given below: 3.4.1. Step-1 Collection of application: Application is the base documents with which the procedure will start. The application will contain the information of: a) In table 1: The following information will be provided. Master L/C no. Master L/C date. Master L/C value.
b) In table 2(column2): local back to back L/C of yarns following information will be given below;
Date Value
d) In table 3 (column 2): Total quantity exported. (Column 3): Total invoice value. (Column 4): Bill of lading date. (Column 5): Export number. (Column 6): Repatriated value. (Column 7): Repatriated date.
Then the local Back to Back L/C of the yarns weight, date, and value will be compare with the BTMA certificate. In this certificate total weight, date and value will be properly appearing.
Foreign Back to Back L/C includes L/C number, date, value and it will be compare with the PRC bank certificate. Then again compare it with the master files documents foreign Back to Back L/C document (which is in draft form).
The export number given in the application will be compare with the PRC documents where the bank will provide an unique number of the export. Again compare the repatriated value, repatriated date from the PRC documents. Then compare the information of piece/quantity exported and invoice value from the Master files invoice documents. Date of the bill of lading which is given in the application will compare with the Master files draft copy of the bill of lading. At last compare the fabric value which is given in the application with the documents of cost statement. This cost statement will be prepared by the exporting organization and will be approved by the responsible authorities. Here in the case of Viyellatex cost statement is approved by the BGMEA.
3.4.4.
Step-4:
Calculating
the
total
claim
amount
(cash
incentive).
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In this stage, RRH follow its own format for calculating the total claim amount along with the guide line of the central bank format. So the process of calculation is given below:
In excel sheet 1(ud-13): (Appendix: 1) At first allocate foreign back to back L/C value to all claim amounts. So make a summation of foreign back to back l/c value. Then make a summation of invoice value of all claims. After that, calculate the proportion of all claims. At last applicable value of foreign back to back l/c amount will be execute.
In excel sheet 2 (ud-13(n)(m)): (Appendix: 2) n is denoted here as the number of claim or file and m is the sub file of n . In excel sheet 2 the client (here viyellatex) will provide the net weight of output of total exported goods, its export number. On the other hand the exchange rate of those individual file or claim will also be given. In each claim or file, six export numbers is included, that means six individual exported lots make one claim. Now in order to calculate the exchange rate:
a) Take the exchange rates of the first exports, bill of leading
date from the six exp no. of each claim. b) Then take the exchange rates of the last exports bill of leading date. c) Now calculate the average of the two exchange rates.
d) If any exchange rates is not found then a requisition will send
In excel sheet 3 (ud-13 workings(n)(m)): (Appendix 3) This format of calculation is given by the BB.
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In calculation process:
a) Sheet 3 is comprised of two parts. These two parts have also
linked with the sheet 1 and 2. So the average exchange rate of sheet 2 and proportional amount of sheet 1 brings the change in total calculation process.
b) In calculation process type input weight from cost statement
given by the viyellatex in cell G29. c) Now make a link with the output weight from sheet 2 cell D9 to sheet 3 cell G30. d) Calculate the required shipped net weight by multiplying .16 with the input weight. Here 16% is the given markup by BB regarding the minimum wastage level.
dividing required shipment net weight (input) cell no. G 33 (comes from= G29*0.84) by the G 30.
f) Then write down the total repatriated export value of the
particular claim at the column numbering 3 in cell E7. But it is not the actual value; actual value will be executed after deducting 16 % wastage from the total repatriated exports. So in column 3 cell 10, 11 show the amount after deducting the wastage value.
g) Calculate the net FOB value after deducting freight charge
and commission.
h) In Column 7 (c&f value) link with the applicable foreign back
export earnings for proper utilization of imported materials 125% of col 7 will be deducted.
k) In column 10; for export earnings mentioned in col 9,
producers.
m) In column 12; Maximum acceptable cost (mentioned in para
of 12 and 13 whichever is lower, multiply OD sight rate applicable on export proceed realization date.
using the average exchange rate from sheet 2, related claim file.
Master L/C no. date, value taken from application. Total realize value. Applicant claim amount in taka which will collect from sheet 3. Export number, date, realized value. Actual payable cash incentive in taka from sheet 3 according to Bangladesh bank calculation process. At last type financial year from bill of lading date.
Address of the clients Master L/C no. date, value from application Invoice value form application. Realized value from application. Clients Claimed amount in taka. Repayable (actual calculated amount) cash incentive in taka. At last the calculations of audit fee. The audit fee generally claimed on the basis of clients claimed amount of cash incentives rather than the repayable cash incentive amount. So the calculation is;
i) if claimed amount is taka less than 500,000(<500,000) than audit fee
is 4000.
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ii)
if the claim amount is equal or more than 500,000 but less than
10,00,000 than audit fee is 5000. iii) And if the claim amount is more than 10, 00,000 than the audit fee will be 7000.
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