“Computerized Accounting”

ZEALOUS
Rent a Car Pvt. Ltd.

Submitted to:
Mr. Muhammad Amir

Submitted by:
Name Roll#

Muzamil Arafat 202

Uzair Saleem 204
Syed Haris ul Islam 207
Asim Aslam 210
Rana Usman Ali 222
Uzair Ejaz 230
M. Shoaib Qureshi 236
Jawad Abbas 238
M. Ubaid 239

Section D (morning)
B.Com (HONS) 8th Semester
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Table of Contents
_____________________________________________________________

Topics Page

Vision and Mission Statements 3

Memorandum of Association 4

Articles of Association 5

Brief Introduction 7

Organizational Structure 8
Departments of the Company
9

Basic Information “QuickBooks Accounts” 12

Chart of Accounts 13

Internal controls 16

5 Components of Internal Control 16

Receipts, Expenditure and Assets 19

Operations Control 23
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VISION STATEMENT

Our vision is to become the most popular rent a car company of Pakistan.

MISSION STATEMENT

We will provide a vast variety of advanced and comfortable vehicles to

middle and elite class people of Pakistan. While working in a highly
ethical manner, we will provide an opportunity of growth to our
employees. We will value our shareholders and investors by using funds
in most profitable manner.
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MEMORANDUM OF ASSOCIATION

• The name of the company is “ZEALOUS Rent a Car Pvt. Ltd.”.

• Registered office of the company will be situated in province of the

Punjab at Lahore.

• The objective of the company is to provide vehicles on rent on

daily, weekly, monthly, and annual basis, to individuals,
organizations, institutions, and visitors all over Pakistan. Second
hand vehicles would also be sold by the company.

• The liability of the shareholders is limited up to the nominal value

of the shares they have purchased, whether paid in full or not.

• The share capital of the company is thirty billion (3,000,000,000)

rupee, divided into three hundred million (300,000,000) share of
ten rupees each
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ARTICLE OF ASSOCIATION

• Members:
The members of the company with which it are proposed to be
registered are 20. But the directors of the company my register
other members as the company required.

• General meetings
Annual general meeting will be held every year after the close of
the year. The auxiliary meeting can be called by the directors. . The
CEO the company will be the chairman of the meeting. The
quorum of the meeting will be 18 members, but the directors have
the right to appoint any person as a chairman of the meeting.

• Procedure at general meetings

Every member will be provided by the initial information about the
meeting 12 days prior of the meeting date. The information will
consists of the agenda of the meeting the time and place of the
meeting and others as may be required by the directors.

• Votes of the members

Every member of the company will hold one voting right. Every
member will have one vote.
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• Directors
The number of the first directors and the name of the first directors
shall be determined in writing by the subscribers of the
memorandum of association, so, however, that such number shall
not in any case be less than as specified in section 174 of company
ordinance 1984.

• Power and duties of the directors

The business of the company shall be managed by the directors,
who may exercise all such powers of the company as are not by
ordinance required to be exercised by the company in general
meeting.

• Chief Executive Officer

The CEO shall be appointed by the directors for such terms, at such
remuneration and upon such conditions as they may think fit.

• The Seal
The director shall provide for the safe custody of the seal. It shall
be used as the signature of the company and is affixed on all
necessary documents of the company. Mr. Jawad Abbas the
director of the company will be the custodian of the seal.
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Introduction

The Zealous Rent a car Company will be the largest company in the Pakistan. It will
provide a vast variety of vehicles to individuals, institutions, organizations and the
visitor though the Pakistan. It will provide luxurious vehicles to the people of
Pakistan in all provinces. Vehicles for special purposes shall also be provided, Such
as on the wedding ceremonies, tours etc.

The company will also provide online booking all over the major cities of Pakistan to
facilitate its customers. Company has large number braches all over Pakistan.

The company believes in providing best quality services to its customers.

Following Are the Major Strengths of the Company

Green Revolution: Zealous follows the international going green policies in

maintaining its cars. This strategy will be cost effective for its customers and it will be
Environment friendly as well.

Quality: Company meets its specifications and provides reliable, durable and
Aesthetic Vehicles, and Quality services.

Customizations: The Company provides customized accessories i.e. Music, Media,

Interior looks in accordance with the specifications of the customers.

Online Connectivity: Having provided the facility of online easy reservations and
booking all over the Major cities of Pakistan.

Marketing and Innovations: The Company’s aggressive marketing and its

innovative products and services attract customers and fulfill their quality standard
(Esteem Needs) needs.
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Organizational Structure

CEO

CAO CMO COO CFO

Financial General
Special Finance Tax Budget
Accountan Manager Manager Manager
Reporting Reports
t
Manager
Asst No
Asst No Asst No Asst No Asst No Asst No 1
1 1 1 1 1

Asst No Asst No Asst No Asst No Asst No

2 2 Asst No
2 2 2 2

Advertisin Maintenanc
Research Marketing Operations Purchase
g e
Manager Manager Manager Manager
Manager Manager

Human Resource
Manager

Recruitment Personnel
& Selection Planning

Training &
Compensation
Development
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The Departments of the Company

1. The Sales and Marketing Department

2. Human Resource Department
3. Operations Department
4. Finance Department
5. Accounts Department

The Sales and Marketing Department

The head of this department would be the Marketing Manager.

He would be responsible for:

1. Marketing Research- To identify the changing needs of present and

potential customers
2. Developing New Products- As needed by the Industry (New Vehicles to be
purchased)
3. Advertising- To give a know how to the customers about our Products and
new features of old products
4. Setting Price in accordance with the industry needs and requirements

The following persons will work under the marketing manager

Assistant Marketing Manager for Customer Servicing

Assistant Marketing Manager for Disseminator

Finance Department

The CFO would the head of this department.

He would be responsible for:

• Arranging the credit Policy – To what extent the credit is allowed to the
customers
• Making contracts for getting loans
• Mobilizing the additional funds
• Setting the safety Margin on Inventories
• Making in time payments to the Creditors
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The following persons will work under the CFO

1. Finance manager
2. Manager Taxation
3. Manager of planning and budget

Finance Manager
It would be responsible for:

• Approving fund up to Rs.40,000

• Keeping the record of payment of fund to each department
• Financial Forecasting

One assistant mangers and one clerk will help him in his work.

Manager Taxation
He would be responsible for:

• making tax returns

• keeping record of about deferred tax
• paying sales tax
• dealing with property tax

Two persons will help him in his work.

Manager of Planning and Budget

He would be responsible for:

• Preparing annual budgets of different departments with the involvement of

their representatives
• keeping the record of matching their actual record with the estimated
• keep the fuel average of each vehicle estimated
• keeping the repair and maintenance expense estimated

Two Assistant Managers:

They will assist the manager of planning and budget in his duties in such a way:

 Getting information from other departments

 On the site investigation to gather data for estimation
 Inspection of inventory for budget preparation.
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Accounts Department

The CAO would the head of this department.

He would be responsible for:

• Forming policies about Maintenance of Accounts

• Approval of Purchase orders
• Communicating with higher management
• Motivating subordinates

The following persons will work under the CAO:

Accountant Manager
Financial Reporting Manager
Special Reporting Manager

Accounts Manager

• Maintaining books of accounts in accordance with the Company’s Ordinance

1984
• Recording the transactions in the general Journal
• Keeping proper record of vouchers
• Recording adjustment entries

The two assistants will help him in his work.

Financial Reporting Manager

• Preparation of financial statements in self decrypted form

• Providing the notes along with the financial statements

The two assistants will help him in his work.

Special Reporting Manager

• Presenting fair interim reports to top management

• Preparing special reports for the decision makers to assist in their decision
making process. Such as: number of products supplied by one vendor and the
vendor providing the same product
• Analyzing accounting record

The two assistants will help him in his work.

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Basic Information
“QuickBooks Accounts”

Company Name: Zealous Rent a Car Private Limited

Company Head Office

Address: 106 A, Model Town, Lahore

Company Organized: Regular Private Company

Fiscal Year Starts: January

Accounting Method: Accrual based

Posting Method: Real Time

We Sell: Services only

Sales Tax: No

Billing Statements: Yes (monthly)

Invoices: Yes

Cheques: Yes

Bank Account: Zealous Rent a Car (1-000-1788)

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Charts of Accounts

ASSETS

Cash and Equivalents

Cash in hand
Cash at Bank
Cash in transit
Cash investments

Receivables
Account Receivables
Lease and rent accounts
Retail vehicles
Allowance for doubtful Receivables
Other receivables

Vehicles
Rental Vehicles
Driver training Vehicles

Prepaid expenses
Prepaid Expenses
Prepaid Rent
Prepaid Insurance on Vehicles
Life and Disability Insurance
Other prepaid

Fixed Assets
Land and Improvements
Building and Improvements
Computers
Laptops
Furniture and fixture
Company Vehicles
Other fixed assets
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Accumulated Depreciation
Acc Dep. - Land and Improvements
Acc Dep. – Building and Improvements
Acc Dep. – Computers
Acc Dep. – Laptops
Acc Dep. – Furniture and fixture
Acc Dep. - Company Vehicles
Acc Dep. - Other fixed assets

Other Current Assets

Life & Disability and insurance
Vehicle insurance
Accounts Receivables
Markup Receivable

LIABILITIES

Accounts Payables
Trade Creditors
Customers Deposit
License and Registration Fee
Other Accounts Payables

Accrued Liabilities
Interest Payable
Salaries, Wages and Commission Payable
Insurance payable
Payroll Taxes Payable
Sales Tax Payable
Income Tax Payable
Other Taxes Payable
Employees Bonus Payable
Dividends Payable
Profit Sharing Payable
Other Payables
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Other liabilities
Long term Debts
Notes payable of affiliated companies
Mortgage payable
Deferred Income Tax
Other liabilities

STOCKHODER’S EQUITY
Capital Stock
Additional paid in capital
Retained earnings
Dividends
Investments
Profit & Loss Current
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Internal Controls

“Internal Controls are policies and procedures used as internal checks and balances
over an organization’s assets and financial statements”. These controls:

♦ Reduce the misuse of assets.

♦ Reduce the risk of misstatement of the financial statements.
♦ Help to determine fraud and errors.
♦ Help to provide effective and efficient operations.
♦ Help the organization maintain a good reputation.

The Five Components of Internal Controls:

♦ Control environment
♦ Information and communication
♦ Risk assessment
♦ Control activities
♦ Monitoring

Now, considering the above mentioned Internal Controls’ Components. We’ll design
the internal control for our “Zealous” Rent a Car Company.

1. Control Environment

• Ethics based environment shall be provided from the top management to the
lower management.
• Board of directors will provide proper direction.
• Structure of our rental company would be efficient.
• Proper methods shall be used in assigning duties and responsibilities
• All Employees hired by the company shall be accountable for their actions.
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2. Information and Communication

It’s simply related to the flow of Information about the internal controls.

• Our board of directors provides Governance and guidance; create policies,

rules and regulations.
• CEO is responsible for controlling all activities; he will provide leadership,
direction to senior management.
• Senior management is responsible for implementing internal control policies
and procedures.
• All lower management and employees are also responsible for implementing
internal controls. Also they will communicate weaknesses in our system to
management.

3. Risk Assessment

It is related to the identification and management of risk those are faced by our rental
company.
The most common risks related to protecting our organization’s assets and preventing
misstatement of the organization’s financial statements. These risks occur due to
following events:

• When our rental business expands or grows to other cities.

• Hiring of new employees (Higher or lower management, especially in
leadership).
• Launching new services and activities.
• If we change our internal environment.

4. Control Activities

These are the actions our company will take to deal with the risks we face in running
our business.

This includes:

• Insurance of Cars

• GPS system
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• We’ll save our assets (cars) from loss or unauthorized use by implementing
controls to minimize opportunities for the employees or others to misuse them.

• Taking control the flow of information and accuracy of the transaction. We’ll
record day to day transactions on correct amounts, proper classification,
specific accounting periods and financial statements.

• Management would do accurate financial reporting of the organizational

activities.

• We shall divide or separate duties by proper allocation of tasks, so that anyone

does not get the chance to commit errors or do fraud and then cover it up.
Especially when it comes to recording transactions, one individual can not
control all phases of the process (one who record transaction can’t directly
involve in actual cash handling). Also we’ll do job rotations time to time
(change guards, drivers).

• Also still some duties (management related) can’t be completely separated (as
we have low employee strength initially). So for solving this, we’ll reconcile
the bank statements time to time, remove variances, reviewing reports and
most important is to compare physical inventory (tires, materials, tools, office
equipment inventory) with the accounting records.

5. Monitoring

Monitoring internal controls is a process that assesses the quality of the organization’s
internal controls over time. Deficiencies are reported and addressed.
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Controls over Receipts, Expenditures and Assets

Receipts

♦ We’ll keep background check on all employees involved

♦ Mail opening should not be done by accountant who processes transactions or

has access to the accounting software

♦ Cheques would be deposited as soon as they are received

♦ For Bank Deposits:

o A list of cash receipts should be prepared for all cash receipts

o The list of cash receipts should be compared to the bank deposit
o Keep receipts, not deposited, in secured locked location

♦ For cash:

o We use a separate person to record transactions into the

accounting system than those who physically handle the cash receipts

♦ Revenue Recording:

o Separate documentation of non-cash contributions

o Approval would be needed and also documentation for
adjustments, write-offs, rent reductions and other items reducing
revenue or accounts receivable
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♦ Other:

o We’ll make vacations mandatory to avoid embezzlement or

fraud which takes time
o Training employees
o Rotating job assignments periodically
o Training persons who assist in the cash receipts function

Expenditures

♦ Purchase Orders:

o We deal with only approved vendors initially. Only our

management will approve all changes to the vendor list
o Purchase orders will be compared to the approved budget
before processing
o Vendor invoices will be compared to authorized purchase
orders before processed
o Pre-numbered purchase order forms should be used

♦ Vendor invoices:

o Mathematical accuracy of vendor invoices will be checked.

o We’ll mark invoices paid once processed
o Using QuickBooks accounting software to recognize duplicate
invoices

♦ Cheques:

o We’ll make all disbursements by cheques or electronic transfer

o We’ll not allow writing of cheques to “cash” or “bearer”
o We’ll not allow signing blank cheques
o Severely restrict the use of manual cheques
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o Using pre-numbered cheques and periodically checking their

sequence
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o Keeping unused stocks of documents (cheques, purchase

orders, and receiving reports) locked up
o We are using software controls (passwords) and limit assess
within the software so that only required authorized person can use it
o Accountants and others that process transactions in the
accounting software should not be signers of cheques.
o We use dual signatures for large disbursements (CEO, BOD
etc)
o Reviewing invoices, etc. before signing cheques. And make
sure cheques issued to vendors are on the approved vendor list
o Once cheques are signed they should not be returned to the
accounting staff

♦ Bank reconciliations:

o Bank statements should be given unopened to accounts

department, not to someone who prepares deposits or cheques
o Cheques will be reviewed for unusual items, including
unfamiliar vendors, unauthorized signatures and alterations to cheques
o Bank statement reconciliations should be reviewed by other
than accountant someone who does not prepare the reconciliation and
who does not have access to accounting software
o Examine unusual and old outstanding items

♦ Payroll:

o The payroll master file should be maintained by someone who

does not process payroll
o Requests for hiring new employee should be properly approved
o Notices for firing employees should be properly approved
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o Access to HR and payroll records should be limited

(passwords, locked file cabinets, etc.)
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o Timecards for drivers or other attendance records should be

signed by employees and supervisors
o Changes to timecards or attendance records should be approved
by the employee and their supervisor
o Detailed payroll reports will be reviewed before payroll cheques
are signed
o Pay cheques should be distributed by someone who does not
process payroll
o Someone in authority should ensure all payroll tax payments and
tax reports are timely made

♦ Assets

o Assets are recorded at fair market value and added to the

organization’s asset listing
o Only assets that have been authorized in the capital budget
should be purchased. Exceptions should be approved by the board of
directors
o Assets should be kept in a secure location.
o Proper lighting shall be arranged
o Assets should only be used for authorized purposes.
o A physical inventory inspection should be taken at least once in
six months of all tangible assets (equipment, vehicles, etc.). The physical
inventory should be compared to the asset listing
o Cars should be parked close to each other to avoid theft or
dismantling (stealing tires, equipment etc)
o Proper lighting in garage at night
o Night guard shifts should be changed

Our internal controls can only be affective if management is efficient and to hire such
management we should be careful as two or more persons in a department can plan
then conceal a fraud or embezzlement and it will not be detectable. Moreover, the
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audits should be conducted and tell them to let us aware about the weaknesses and
deficiencies in the internal control.
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Controls over Operations

Purchase of assets
o Purchase Requisition-
o Operational department will analyze the need for the purchase of the car.
o The request will be sent to the CEO by the COO. (If amount exceeds the
allocated budget )
o The CEO will contact the CFO to check the feasibility of the purchase of the
asset.
o After careful analyses, the finance department will give its decision about the
purchase of the car and will also describe the quantity that will be feasible for
the company.
o After the approval the operation department will send purchase representative to
the market for the quotations (minimum 10 quotations should be gathered).
o Prepare the comparative statement then recommend the best vendor.
o Send statement along with the quotations to the Account department.
o After verification the approval will be given to issue the purchase order.
o Seller would deliver the asset and an inspection team would check the asset
according to the purchase order and prepare an inspection report.
o All these documents along with the invoice are sent to purchaser and he’ll make
the payment request and sent to the Account department.
o After verification of the payment request, the Account department will record
the transaction and prepare the CPV.
o All documents along the CPV would be sent to the finance department for the
approval.
o All details are sent to finance department and finance department confirm that the
purchase has been charged to the appropriate GL account
o Financial Accounts add the new asset details. The asset is created and journal entries
generated to debit the appropriate balance sheet asset category account and credit
relevant account

*Chief Financial officer will be authorized to approve up to Rs.200, 000

*COO can approve up to Rs.100, 000
*Managers can approve up to Rs.20, 000
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Depreciation of assets

o Depreciation will be calculated on Financial Accounts

o Depreciation will be calculated annually
o We use straight line method for depreciation
o Accounting entries will be generated to post the depreciation charges, debit
depreciation expense account and credit the accumulated depreciation account.
o Departments must ensure sufficient money has been allocated to cover the full
cost of depreciation for the entire year.

Reimbursements Process:

o Any Employee who paid amount on behalf of the company out of his on pocket
can claim against those expenses.
o First he needs to fill an expense claim form along with the evidence that these
expenses actually occurred (receipts etc).
o Then submit the form to the accounts department where after verification,
voucher is made. If amount is under accounts departments’ limit then it would
be approved, otherwise all this is sent to the finance department.
o Finance department after verifying direct the cashier to pay
o Cashier after taking appropriate signature, reimburse the amount
o Similar is with the traveling expenses, fuel, medical etc.

Other Operations:

o Fuel usage is to be monitored

o The patrol pumps and CNG stations should be determined from where the fuel
is to be refilled.
o Use of smart cards
o Maintaining proper accounting records of patrol pumps and CNG stations
o Proper meter reading should be noted down by the garage incharge and the gate
keeper to determine the car mileage
o Entry and exit time should be noted by the garage incharge and the gate keeper
o Repairs and maintenance records
o Timely comparison of books of the garage incharge with the gate keeper’s
records
o Keep a log book for the cars (for reconciling fuel usage and car mileage).