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Auditing project on Unilever

Pakistan

PROJECT REPORT
SUBMITTED TO:
MR. Sohail
Department of Commerce

Prepared by:
Syed Ashir Riaz 04
Junaid 40
Nadir 24
Hamza zafar 25
Zaman malik 37

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Balance sheet:
Assets:
Non- Current Assets:
1-Property, plant and equipment:
In 2015-14 there is a difference between Property, plant and equipment is 1515540. And the
difference between is 114334 in 2014-13.

Reason:
Price increase because we purchased new assets.
Updated technology.
Maintenance and normal repairs
Major renewals and improvements.

2-Intangible Assets:
In 2015-14 there is a difference between Intangible assets is (108395) which we cant less softwares purchased in
2015 as compared to 2014 And the difference between is (97778) which we cant less softwares purchased in 2014-
13.

Reason:
Price increase because we purchased new softwares.
Useful life in 2015 is 5, 2014 is 6, 2013 7.

3-Long Term Investment:


In 2015-14 there is a no difference in Long term investment between 2015-14-13.
Investment (2015-14-13):
Same Investment in subsidiary company.
Same Unlisted Company.
Same Derivate securities.
Same Recorded investment with fair value.

4-Long Term Loan:


In 2015-14 there is a difference between Long term loan is 7882 as compared to 2014 and the
difference between is (14244) which means we give more loans in 2013 we in 2014-13.

Reasons:
Loan to executive and employees
Loan to employees for hoses and car.

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Recoverable loan duration is 3-5 years.

5-Long term deposits and prepayment:


In 2015-14 there is a difference between Long term loan is (283167) as compared to 2014 and the difference
between is 710895 which means in 2014-13 which is hire ratio as compared to 2013.

Reasons:
Security deposits.
Prepaid rent.

6-Staff retirement benefits:


In 2015-14 there is a no difference between Staff retirement funds. We only give staff retirement
funds in 2013.

Reasons:
We give more pension fund.
Non Management Staff Gratuity Fund
Medical plan.

7- Stores and spares:


In 2015-14 there is a difference between Stores and spares is (511996) as compared to 2014 and
the difference between in 2014-13 39110 which is less as compared to 2014.

Reasons:
Spare ratio is high because we purchased more material and spares and higher ratio of
storage.

8-Stock in trade:
In 2015-14 there is a difference between Stock and trade is (462786) as compared to 2014. And
the difference between in 2014-13 676949 which is less as compared to 2013.

Reasons:
Raw and packing materials.
Stock in trade held by third party.

9- Trade Debts:
In 2015-14 there is a difference between Trade debts is 351111 as compared to 2014. And the
difference between in 2014-13 116634 which is high as compared to 2013.

Reasons:

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Considered good for credit basis.

10-Short term prepayments:


There is difference between 2015-14 is (70840) which is less as compared to 2014. As well as
there is difference between 2014-13 are (62679) whichever is high as compared to 2013.

Reasons:
More Rent.
Cost of Advertisement is high.
Others.

11- Cash and Bank balance:


There is difference between 2015-14 is 1380484 which is high as compared to 2014. As well as
there is difference between 2014-13 is 3371606 whichever is high as compared to 2013.

Reasons:
current accounts
Saving account.

Equity and Liabilities:


Share capital and reserves:
1-Share capital:
There is no difference between 2015-14-13 in share capital.

Reasons:
Un-appropriate profit OR save for future contingency.

2-Resaves:
There is difference between 2015-14 is 472263 which is high as compared to 2014. As well as
there is difference between 2014-13 is 148588whichever is high as compared to 2013.

Reasons:
We cannot distribute all dividends.
We retained for future contingency.

Liabilities:
Non- current liabilities:

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3- Deferred tax:
There is difference between 2015-14 is 112695 which is high as compared to 2014. As well as
there is difference between 2014-13 are (45697) whichever less as compared to 2013.

Reasons:
Taxable income is less than the income shown in the income statement.
The cost of depreciation is the main reason for the difference in the profit as per
management income statement and taxable income statement.

4- Staff retirement payables:


There is difference between 2015-14 is (24326) which is less as compared to 2014. As well as
there is difference between 2014-13 are (90930) whichever less as compared to 2013.

Reasons:
Give high ratio of benefit to employees in 2013. The Company operates various post-
employment schemes, including both defined benefit and defined contribution plans.

5-Trade and other payables:


There is difference between 2015-14 is 1208644 which is high as compared to 2014. As well as
there is difference between 2014-13 are (96207164) whichever less as compared to 2013.

Reasons:
Pay height amount to creditors
More bank payables.

6- Short term borrowing:


There is no short term borrowing in 2015 and 2014 but has and 375,401 borrowing in 2013.
Short term borrowing usually for 3months.

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Income statement:
1- Sale:
There is difference between 2015-14 is 4270808 which is high as compared to 2014. As well as
there is difference between 2014-13 is 5169586 whichever is higher as compared to 2013.
Sales to domestic customers in Pakistan are 99.60% (2013: 99.63%) and to customers outside
Pakistan
is 0.40% (2013: 0.37%) of the revenue during the year.

Reasons:
Sale products
Sales products on credit
Cost increases

2- Cost of Sales:
There is difference between 2015-14 is 1245753 which is high as compared to 2014. As well as
there is difference between 2014-13 are 3167340 whichever is higher as compared to 2013.

Reasons:
Raw and packing materials consumed
Staff costs
Utilities
Depreciation
Rent, rates and taxes
Travelling and entertainment
Expenses on information technology
Other expenses
Staff costs.

3- Distribution Cost:
There is difference between 2015-14 is 855135 which is high as compared to 2014. As well as
there is difference between 2014-13 is 1927814whichever is higher as compared to 2013.

Reasons:
Advertisement and sales promotion
technical fee
Utilities

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Depreciation
Repairs and maintenance
Rent, rates and taxes
Stationery and office expenses.

4- Administrative Expenses:
There is difference between 2015-14 is (59581) which is low as compared to 2014. As well as
there is difference between 2014-13 are (204550) whichever is low as compared to 2013.

Reasons:
Raw and packing materials consumed
Staff costs
Utilities
Depreciation
Rent, rates and taxes
Travelling and entertainment
Expenses on information technology
Other expenses
Staff costs.
Auditor remuneration

5-Other operating expenses:


There is difference between 2015-14 is (430518) which is high as compared to 2014. As well as
there is difference between 2014-13 are 620483 whichever is high as compared to 2013.

Reasons:
Donation
Worker welfare fund
Worker participation fund

6-Other income:
There is difference between 2015-14 is (68366) which is less as compared to 2014. As well as
there is difference between 2014-13 are 519180 whichever is high as compared to 2013.

Reasons:
Dividend income
Return on saving account
Sale scrap
Profit on disposal of property, plant and equipment

7- Finance cost:

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There is difference between 2015-14 is 5168 which is more as compared to 2014. As well as
there is difference between 2014-13 are 63365 whichever is high as compared to 2013.

Reasons:
Short term borrowings
Bank charges
Exchange loss

8- Taxation:
There is difference between 2015-14 is 1122809which is more as compared to 2014. As well as
there is difference between 2014-13 are (71053) whichever less as compared to 2013.

Reasons:
Deferred tax

Cash flow Statement:


1-Cash Flow from Operating Activities:
1-Profit before tax:
There is difference between 2015-14 is 2586485 which is high as compared to 2014. As well as
there is difference between 2014-13 are 114314whichever high as compared to 2013.

Reasons:
Due to more interest received.
More sales and high cost
Using indirect method

2-Depreciation:
There is difference between 2015-14 is 176012 which is high as compared to 2014. As well as
there is difference between 2014-13 are 125732whichever high as compared to 2013.

Reasons:
Due to change in depreciation method
Addition in fixed assets

3- Amortization of intangible assets:


There is difference between 2015-14 is (672) which is low as compared to 2014. As well as there
is difference between 2014-13 are (75019) whichever low as compared to 2013.

Reasons:

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Sale of computers softwares
Change in technology

4- Loss/ gain on disposal of property, plant and equipment:


There is difference between 2015-14 is 181555which is high as compared to 2014. As well as
there is difference between 2014-13 are 15739 whichever high as compared to 2013.

Reasons:
Due to change any part of PPE
Sale of PPE on profit

5-Dividend Income:
There is no change in 2015-14-13.

6- Markup on Short term borrowing:


There is difference between 2015-14 is 13812 which is high as compared to 2014. As well as
there is difference between 2014-13 are 20078 whichever high as compared to 2013.

Reasons:
Due to more Short term borrowing and investing marketable securities
As a result, received more makeup.

7- Provision of Written-off:
There is difference between 2015-14 is (90131) which is less as compared to 2014. As well as
there is difference between 2014-13 are 82067 whichever high as compared to 2013.

Reasons:
Due to sale of fixed assets in 2015
Due to purchase of assets in 2014.

8-Provision of Staff benefits:


There is difference between 2015-14 is 7667 which is highs compared to 2014. As well as there
is difference between 2014-13 are (916572) whichever less as compared to 2013

Reasons:
The ratio of benefit is high in 2015 because of give high retirement, future plan benefits.
Employment Scheme

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In 2014 the ratio of benefit is low because of not employee is retired or less employment
scheme.

9-Return on saving account:


There is difference between 2015-14 is (212208) which is less as compared to 2014. As well as
there is difference between 2014-13 are 4246621 whichever high as compared to 2013

Reasons:
We deposited less amount in 2015on saving account because of low interest.
We deposited high amount in 2014 for 10 years on saving account because of High interest.

10-Increase or decrease in current assets:


10.1 Store and spares:
There is difference between 2015-14 is (25014) which is less as compared to 2014. As well as
there is difference between 2014-13 are (67445) whichever less as compared to 2013

Reasons:
The value of sale of stores is reduced because out of fashion.
Due to sale of stores and spares.

11- Stock in trade:


There is difference between 2015-14 is (214163) which is less as compared to 2014. As well as
there is difference between 2014-13 are (1231945) whichever less as compared to 2013

Reasons:
Stock in trade is reduced because of low demand
Out of fashion

12- Trade debts:


There is difference between 2015-14 is 234477 which is high as compared to 2014. As well as
there is difference between 2014-13 are (46156) whichever less as compared to 2013

Reasons:
Increase in trade debts because Sale of assets on credit 2015
Decrease in trade Debts because of cash is received from debtors.

13- Sale tax receivables:

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There is difference between 2015-14 is (82053) which is high as compared to 2014. No change
in 204-13.

Reasons:
Increase in accumulated sales tax receivables

14-Loans and advances:


There is difference between 2015-14 is 69046 which is high as compared to 2014. As well as
there is difference between 2014-13 are 79360 whichever high as compared to 2013

Reasons:
Take more loan in 2015-14
Take more advances from commercial banks 2015-14-13

15-short term prepayment:


There is difference between 2015-14 is 8161 which is high as compared to 2014. As well as there
is difference between 2014-13 are (376923) whichever less as compared to 2013

Reasons:
Trade and margin deposits Prepayments, Rent, Advertisement, Others.

16- Other receivables:


There is difference between 2015-14 is 67992 which is high as compared to 2014. As well as
there is difference between 2014-13 are 21440 whichever high as compared to 2013

Reasons:
Receivable from related parties:
Defined contribution plans
Defined benefit plans
Associated undertakings

Increase/ decrease in current liabilities:


17-Trade and other payables:
There is difference between 2015-14 is 67992 which is high as compared to 2014. As well as
there is difference between 2014-13 are 21440 whichever high as compared to 2013

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Reasons:
Creditors
Bills payable
Forward foreign exchange contract
Accrued liabilities
Dividend payable.

18- Markup On short term borrowing:


There is difference between 2015-14 is 12861which is high as compared to 2014. As well as
there is difference between 2014-13 are 14977 whichever high as compared to 2013

Reasons:
We take more borrowing
As a result give more interest

19- Income tax paid:


There is difference between 2015-14 is 73125which is high as compared to 2014. As well as
there is difference between 2014-13 are 734471 whichever high as compared to 2013

Reasons:
The company receive more cash as a result give more tax.

20- Staff Retirement benefits:


There is difference between 2015-14 is 8530 which is high as compared to 2014. As well as there
is difference between 2014-13 are 8292 whichever high as compared to 2013

Reasons:
We give more pension fund.
Non Management Staff Gratuity Fund
Medical plan.

21- Increase or decrease in Long term loans:


There is difference between 2015-14 is (6362) which is less as compared to 2014. As well as
there is difference between 2014-13 are 5436 whichever high as compared to 2013

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Reasons:
Take loan with a specific amount of interest in 2015 as compared to 2014
Take more loans in 2014 as compared to 2013.

2-Cash flow From Investing Activities:

1-Purchase of property, plant and equipment:


There is difference between 2015-14 is 91968 which is high as compared to 2014. As well as
there is difference between 2014-13 are 916312 whichever high as compared to 2013

Reasons:
Purchased more Purchase of property, plant and equipment in 2015-14

2- Proceeds on disposal of property, plant and equipment:


There is difference between 2015-14 is 184168 which is high as compared to 2014. As well as
there is difference between 2014-13 are (10925) whichever high as compared to 2013

Reasons:
Profit for selling the of property, plant and equipment in 2015
But loss on sale of property, plant and equipment in 2014.
3-Purchase of intangibles assets:
There is no difference between 2015-14. As well as there is a purchased of intangible assets in
2014 is 9944.

4- Return on saving account:


There is difference between 2015-14 is (31517) which is less as compared to 2014. As well as
there is difference between 2014-13 are 3499447 whichever high as compared to 2013

Reasons:
We deposit fewer amounts in 2015 as compared to 2014.
We deposit more amount in 2014 as compared to 2014
As a result is increase or decrease in 2015-14 and 2013.

3-Cash flow from financing Activities:


1-Dividend paid:

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There is difference between 2015-14 is 2125277which is high as compared to 2014. As well as
there is difference between 2014-13 are (1826428) whichever less as compared to 2013

Reasons:
We issued more shares in 2015 as a result paid more dividends in 2015 as compared to 2014
and 2013.

2-Net increase in cash and cash equivalents:


There is difference between 2015-14 is (2366523) which is less as compared to 2014. As well as
there is difference between 2014-13 are 240723 whichever high as compared to 2013

Reasons:
We make less cash in 2015 as compared to 2014
But we make more cash in 2014 as compared to 2013.

3- Ending cash and cash equivalents:


There is difference between 2015-14 5127491 is which is high as compared to 2014. As well as
there is difference between 2014-13 are 3747007 whichever high as compared to 2013

Reasons:
High current accounts
savings accounts
deposit account
High Short term borrowings

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Statement of Change in equity:

Statement of Change in Share capital Share capital Share capital


equity: Issued, subscribed and Issued, subscribed and Issued,
paid in capital paid in capital subscribed and
(RS) (RS) paid in capital
(RS)
Share capitals 669477 669477 669477
(Include both ordinary and preference
shares)
Dividend
1-Cummulative Preference 5% ------------------------ ------------------------- ----------------------
2-Final dividend 116.09 ------------------------ ------------------------ --
----------------------
--

Dividend
First interim dividend on ordinary
shares ------------------------ ------------------------ ----------------------
@ Rs. 51.24 per share 2015-14-13 --
- Second interim dividend on ordinary ------------------------ ------------------------
shares ----------------------
@ Rs. 123.25 per share --
- Third interim dividend on ordinary
------------------------ ------------------------
shares
@ Rs. 165.90 per share
----------------------
--

Total 669477 669477 669477

1-Share capital:
1.1. Issued, subscribed and paid in capital (RS):

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Reasons:
The balance of 2015-14-13 should be same.

1.2. Arising under schemes of arrangements for amalgamations:


Reasons:
The balance of 2015-14-13 should be same.

Amalgamation: 2015 2014 2013


(RS) (RS) (RS)

Amount 70929 70929 70929


Total 70929 70929 70929

1.3. Contingency:
Reasons:
The balance of 2015-14-13 should be same.

1.4. Dividend:

Dividend 2015 2014 2013


(RS) (RS) (RS)

1-Cumulative Preference The rate is 5% The rate is 5% The rate is 5%


Not give dividend Not give dividend Not give
2-Final dividend The rate is The rate is dividend
@127.28 @116.09 The rate is
@283

This shows that we give high dividend rate in 2015 then 2014 but give high dividend in 2013
and ratios should be same

1.5-Interim dividend:
Interim dividend 2015 2014 2013
(RS) (RS) (RS)

1-First interim dividend @346.00 per @346 per share @51.24 per
ordinary shares share share
@nil

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2-2nd interim dividend ordinary @nil @123.25
shares @nil
@nil @165.90
rd
3-3 interim dividend ordinary
shares

1.6- Contingency:
CONTIGENCY 2015 2014 2013
(RS) (RS) (RS)

Amount 321471 321471 321471


Total 321471 321471 70929

There is no change in Contingency but we save for future investment: 2015-14-13.

1.7-UN- appropriate profits:


There should be same UN- appropriate profits in 2015-14-13.
Un-appropriate profit 2015 2014 2013
(RS) (RS) (RS)

Profit 7765777 6302101 4215120

In- last

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The market price of 2015 is high because it give more ratio of dividend as result their profit
is high as compared 2014-13

Auditors' Report to the Members:


Management Responsibility:
It is the responsibility of the Companys management to establish and maintain a system of
internal control, and prepare Statement according to companys ordinance 2016 and our opinion
is to give independent opinion with our best knowledge.

Auditor Responsibility:
We conducted our audit in accordance with the auditing standards in Pakistan. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in the above said
statements. An audit also includes assessing the accounting policies and significant estimates
made by management, as well as, evaluating the overall
presentation of the above said statements.

Opinion:
In our opinion and to the best of our information and according to the explanations given to
us. So, manager are required to give true and fair view (Unqualified Report)

Signature:

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Taseer Hadi & Co.
Chartered Accountants
Mohammad Mahmood Hussain
Karachi
Dated: March 4, 2016

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