Professional Documents
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Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal Islamic Bank of Bahrain and then in 1995 as a locally incorporated Pakistani bank under the present name of Faysal Bank Limited. On January 1, 2002, Al Faysal Investment Bank Limited, another group entity in Pakistan, merged into Faysal Bank Limited which resulted in a larger, stronger and much more versatile institution. In fact it has the highest share capital amongst private banks in Pakistan and is amongst the largest in terms of equity. Faysal Bank Limited is a full service banking institution offering consumer, corporate and investment banking facilities to its customers. The Banks widespread and growing network of branches in the four provinces of the country and Azad Kashmir, together with its corporate offices in major cities, provides efficient services in an effective manner. The strength and stability of Faysal Bank Limited is evident through the Credit Rating assigned by JCR-VIS Credit Rating Company Limited of AA (Double A) for long to medium term and A-1+ (A One Plus) for short term. The majority share holding of Faysal Bank Limited is held by Ithmaar Bank B.S.C an investment bank listed in Bahrain.
MISSION STATEMENT
To excel in providing innovative, value based banking solutions to meet changing needs of customers and to strengthen the image of trust and reliability.
SERVICES
Travellers Cheques
You may purchase American Express, US Dollar and Pound Sterling Travellers Cheques at selected branches of Faysal Bank.
Transfer of Funds
You can deposit and withdraw cash from any branch of Faysal Bank, regardless of which branch your account is in. You need only to carry your chequebook!
Customers of Faysal Bank can now easily and speedily transfer funds in foreign currency through the SWIFT system installed at the Bank.
PRODUCTS
Faysal Sahulat (Pak Rupee Current Account)
Faysal Sahulat is a transactional account specially designed for individuals or business customers who want instant access to their funds with no restrictions on the number of transaction. Features: Account can be opened with an initial deposit of Rs. 5,000. Unlimited transaction facilities. On maintaining an average balance of Rs. 300,000 following additional facilities are provided. 1. Unlimited cash deposit facility 2. One small locker and one ATM free. 3. 365 Pay orders, 365 Demand Drafts, 365 cheque leaves per year free. Access to account through on-line banking at all Faysal Bank branches across Pakistan
As per SBP prudential communicated via BPD circular No.30, Faysal Bank has introduced the Basic Banking Account (BBA) to cater the needs of low income groups having the following features. Features: Account can be opened with Rs. 1000/. No requirement for maintaining a minimum balance Maximum of two free deposits and withdrawals are allowed in a month. Free of charge statement of account for customers once a year. In case more statements are required than standard charges would be applicable. Free ATM transactions on Faysal Bank ATM machines. However charges would apply on non Faysal Bank ATM machines as per SOC.
Faysal Savings
Faysal Savings is specially designed to cater to your hard earned savings. Features: Account can be opened with an initial deposit of Rs. 10,000/. No restriction on the number of transactions. Profit is calculated on monthly average balance. Profit payment on six monthly basis. Access to account through on-line banking at all Faysal Bank branches across Pakistan
Account can be opened with an initial deposit of Rs. 100,000/ for individuals and Rs. 500,000/ for corporate customers. Profit is calculated on monthly average balance. Profit payment on monthly basis. Tiered profit structure providing an incentive to save more. Access to account through on-line banking at all Faysal Bank branches across Pakistan.
Faysal Premium:
Faysal Premium is a savings account specially designed for high value deposits with attractive profit rates having the following features. Features: Account can be opened with an initial deposit of Rs. 5 million Profit is calculated on monthly average balance. Profit payment on monthly basis. Tiered profit structure providing an incentive to save more. Access to account through on-line banking at all Faysal Bank branches across Pakistan.
Faysal Izafa
At Faysal Bank we realize that every customers financial needs are different. As a result, the Faysal Izafa Term Deposit is designed to provide individuals and corporate customers an opportunity to grow their money securely and earn attractive profits. Features: Account can be opened with an investment as low as Rs. 25,000/. Tenure from one year to five years. Annual and monthly option available. Financing facility of up to 90% of invested amount. No annual fee for the ATM/ Debit card for the entire tenure. First cheque book on investment of Rs. 300,000/ or more.
Current Account With Mahfooz Sarmaya Account, you become eligible for Pak Rupee financing facility of up to 75 percent of the deposit in your account at very competitive financing rate. With Mahfooz Sarmaya Account, you automatically qualify for special rates for car and home financing
I.O.Us. in hand. If there are any I.O.Us which represent cash advanced for expenditure, such expenditures should be brought into books and if they represent any authorized loan, it should be carried to the personal account of the borrower. If there are cheques and drafts in hand, the auditor should see that a receipt from them has already been issued. Where a small balance of cash in hand is held by a director or a responsible official, an acknowledgement by them should be obtained. Another method for verification of cash in hand is to ask his client to deposit the whole of the cash in hand, including petty cash, etc, into the bank on the closing day and then drawing a cheque on the following for expense, etc, to reopen the cash books with cash drawn from the bank. In this way the whole of the cash in hand will be automatically counted and the auditor will be saved from the cumbersome task of counting the cash in hand.
2) CASH AT BANK:
To verify cash at bank, the auditor should examine the Bank Pass Book and compare it with the balance sheet as shown by the bank column of the cash book. As some of the cheques sent out for collection might not have been encashed and some of the cheques issued though recorded in the cash book might not have been presented for the payment at bank and so on. Therefore, for the purpose of comparison the auditor should prepare bank reconciliation statement. The auditor should also see that the cheques outstanding and cheques not yet collected are genuine and not made up in order to conceal the deficiency. If some of these cheques are more than 6 months old, he should make inquiries. Cash on fixed deposits with the bank can be certified by examining the deposit receipt, or getting a certificate from the banker. Incae the audit is undertaken after the financial year is over, the auditor should pay particular attention to the date mentioned in the deposit receipt as it is possible that the receipt may be relating to the current year and not to the previous year. If there are more than one bank account such as Dividend account, charity account etc, all such accounts should be checked and the balances should be verified up to the same date.
3) ACCOUNTS RECEIVABLE:
LOANS and ADVANCES;
Loans against Security of Land and Property; The auditor has not only to examine the loan account in the ledger, but he has to examine the documents relating to the security, viz., promissory note or bond, acknowledgements by the parties etc. If the land or property has been mortgaged; the auditor should examine the mortgage deed and find out whether the mortgage is properly executed in favor of his client. If it is a second mortgage, he should see that the first mortgage has been duly informed of the creation of the second mortgage. He should also examine the title deeds relating to the property. Incase of the second mortgage the title deeds will be with the first mortgagee, in which case the auditor should ask the first mortgagee whether he has got the title deeds relating to the property. The amount of the loan and the date should be inquired into. The amount advanced should not be more than two-thirds of the value of the property. If he thinks that the margin is small or if he is not satisfied with the security he should report accordingly. To find out the value and sufficiency of the security, the auditor should examine the valuers certificate. He should inquire the rate of interest and the date on which it is payable. If the loan has been outstanding for the long time, he should make inquiry, especially when the interest has not been paid and has been added to the principal amount. If after adding the interest, the margin between the loan and the security has become very small, further security must be demanded. If further security is not given, sufficient provision for doubtful or bad debts may be made. He should also see that the property is insured against fire and examine the last receipt for the premium paid. If the property is not insured, the danger is that if the property is destroyed by the fire, the loan becomes unsecured and the lender might loose the money. Incase of loan on mortgage of leasehold land the auditor should see that the ground rent has been regularly paid by the borrower (lessee) on the due dates and therefore, the last receipt for the payment of ground rent paid should be examined. He should see whether the mortgager has the power to mortgage the property and borrow money. He should see that the mortgage is duly registered. There has been cases where part of the loan has been repaid but the prepayment has not accounted for in the books of account. Therefore, the auditor should get the amount of the loan confirmed by the borrower. Loans against Security of Stock and Shares;
The auditor should get a list of such stock and shares which have been held as security. He should see that such shares, etc, are transferred to his client. He should inspect such shares, etc, and see that they do not belong to his client. The auditor should get a written acknowledgement from the borrower regarding the amount of loan on the date of the balance sheet or examine the agreement. Partly paid shares should not be generally accepted as security because as soon as they are transferred to a person, such a person will have to pay a uncalled amount whenever the company makes a call. He should check the valuation of the securities and find out the margin between the loan and the present value of the security. If he finds that the margin is small, he should ask his client to demand more security. Loans against Security of Goods; Where loan has been advanced against a Godown-Keepers receipt; such a receipt should be examined. If the goods are at docks or in a bonded warehouse, the dock warrant or the warehouse receipt duly endorsed in favor of his client should be examined. In case the dock warrant or the warehouse receipt has not been issued, delivery note in favor of his client should be examined. He should see that the warehouse rent has been paid by the borrower; and incase it has not been paid, the amount should be added to the loan and the margin between the security and the loan should be ascertained. If the margin has become small, more security must be demanded. Where it has been advanced against goods in transit railway receipt or bills of lading together with letter of hypothecation, insurance policy and invoices, as the case may be, duly endorsed in favor of his client, should be inspected. The value of the goods may ascertained from market quotations, invoices, etc, in order to find out the value of the security. He should examine the inspectors report from time to time regarding the quantity of goods. If the goods are of perishable nature, he should examine the turnover of the stock. Loans against Insurance Policy; Last receipt for the payment of the premium paid should be examined. If the premium has been paid by his client to prevent the policy lapsing, the auditor should see that the amount has been debited to the loan account.
The auditor should see that the notice of assignment of the policy has been given to the insurance company. The value of this form of security should not be taken as the assured sum but the surrender value of the policy which value can be ascertained from the insurance company should be taken as the value of the security. The reason is that if the borrower does not pay the premium, the policy will lapse and the amount payable by the company at that time will be only the surrender value as the assured sum is payable only at the death of the policy-holder or when the policy matures.
Loans against Personal Security; Incase the loan has been granted against the personal security, the auditor should make an inquiry regarding the financial position of the surety as the value of such a security depends on his financial position. He should also see that no change in the terms of the loan has been made as such a course will discharge the surety and the client loses that security.
4) PREPAID ACCOUNTS:
Obtain a schedule and check it with demand notes, bills, vouchers etc., noting carefully the period for which the prepayments are involved. Scrutinize their subsequent adjustments. Examine necessary correspondence in this respect. Compare amount with the previous year and note major fluctuations. Enquire into usual financing by the client.
5) FIXED ASSETS:
Buildings: When erected by the Client: Verify that the direct materials, direct labor costs and a fair attributable over heads have correctly been capitalized. Obtain engineers certificate stating that the construction work was completed on or before the date of the balance sheet, otherwise the cost incurred till the date of accounts should be shown as capital work in progress.
When erected by a Contractor: Verify the cost with reference to the terms of the contract. Vouch the contractors bill duly certified by responsible official. Examine the construction completion certificate. When Purchased: examine the sale deed for the purchase. Study the title deeds and verify the consideration involved in the purchase of building. See that all acquisition expenses are capitalized. Vouch the vendors bills and verify items with the title deeds. If there is a consolidated purchase of land and building, ascertain that it is reasonably allocated in the accounts and separated under proper heads for balance sheet purposes. In this respect, boards resolution should be seen. All additions and deletions from the building should be vouched with supporting evidence. Proper authorization in this respect should be examined. Enquire whether the building is suffering from a charge. If so, it must be stated in the balance sheet. Ensure that adequate depreciation with consistent basis as compared to that of the previous year has been provided in the accounts. Furniture and Fixture: Obtain a schedule of closing balances. Check it with the asset register or with the assets cards and agree with control account. Verify casts of schedule. Check valuation with supporting evidence of invoices and vouchers. Ascertain that there is an effective check on the physical existence of the items included under furniture and fittings. All expenses of repairs should be charged to revenue. See that adequate depreciation calculated on a consistent basis as that of last year is provided in books. Confirm that the basis of charging depreciation is consistent with that of the previous year. Vouch all additions to and deletions from the account, with supporting evidence and examine authorizations in this respect. For sale of furniture, adjustment of accumulated depreciation included in the depreciation reserve should be made in the book. Vehicles: Obtain a certified inventory of all vehicles preferably indicating the following particulars; Registration number Description of vehicles Engine number Chassis number Amount Examine registration books and see that token tax for the year has either been paid or provided in accounts. Inspect the insurance policies also. Check the log books to verify the existence and use of the vehicle. See that it is adequately depreciated on a consistent basis as compared to that of the previous year.
6) INTANGIBLE ASSETS:
Intangible assets are those assets which cannot be seen or touched, for example, goodwill, copyright, patents, trade marks. In the examination of such assets, the auditor should determine the following; The basis on which such assets were originally valued. The reasonableness and adequacy of the amortization programme or the write off procedure. Fair and adequate balance sheet presentation. The accuracy, completeness and proper control of the income arising from the ownership of such an asset as leasehold and patents. He must also determine whether such assets represent some benefit or privilege at the date of the balance sheet. He should see that such assets are recorded on a basis consistent with generally accurate accounting principles. He must see that such assets are shown properly and fairly in the financial statements. They should be shown separately.
7) LIABILITIES:
O CAPITAL; The step to be taken for verifying the share capital of the bank covering several phases are enumerated as under: Check the Authorized share capital with the relevant clause of the Memorandum of Association. Obtain a list of shareholder check with the register of member and verify the control account. Obtain a schedule showing the movement during the year in the above account. Verify entries in respect of the additions on account of issue of new shares.(call fresh issue, right, share bonus.)
The following work in this respect should be carried out. See that the allotment of the shares has been made complying with legal provision. See that the issued capital does not exceed the authorized capital. Where permission is necessary from any source, see that it has been obtained and the prescribe condition are fully complied
with. Verify the terms of consent order with the article of association. Check the share application with that application and allotment book to establish that the shares allotted were actually applied for. Examine resolution of the board in respect of allotment of the share. Vouch of monies received on application and allotment with the counterfoil of the receipt book, bank statement and advice or their relevant available evidence. If any calls were made, see the minutes of board of meeting. Verify the total cash received on account of share capital with the amount credited to the account after deducting any debit balance of the allotment and share call accounts, if any indicated in the financial ledger. In a case where the share were allotted for consideration other than cash, examine the contract constituting the allottees title to the share and the directors minutes. The contract is required to be filed with the registrar along with the return of allotment. if the contract is not in writing see that the particular of the contract duly stamped are filed. If the shares are issued at premium see that the premium is shown separately and not under the share capital. If the shares are issued at a discount, the auditor should satisfy himself in respect of the matters given below. The issue of the share at a discount was authorized by a resolution passed in a general meeting of the company and was sanctioned. The resolution stated the maximum rate of the discount at which share were issued. Not less than one year must at date of issue, have elapsed since the date on which the company was entitled to the commence business: and The shares to be issued at a discount must be issued within six month after the date on which the issue is sanctioned by the court or within such extended time as court may allow. In the case of forfeiture of shares the auditor should satisfy himself on the following point. The procedure as laid down in the Article of Association relating to forfeiture of share was followed.
Examine the entries in the book of account for the forfeiture of share, and ensure that the necessary adjustment were made in the register of member. Where the forfeited share were sold or re issued see that the issue of such share was authorized by the director and the amount of discount didnt exceed the amount already received thereon from the defaulting shareholder. Any capital profit on re issue of forfeited share should be transferred to capital reserve. If the share were allotted to the foreign nationals examine the permission given by the state bank of Pakistan for such allotment. Where the bank has issued redeemable preference shares verify the terms on which they were issued with prospectus. Examine the right attaching to the various types of share in the articles of association of the company. Obtain a schedule summarizing the various rights in respect of each type of share. Where the company has reduce its share capital the auditor should work on the following line. Refer article of association. See that the fact of such reduction is clearly indicated on the balance sheet with the word and reduced for such a period as is required under the courts order. Note market quotations of share of the client at the year end and enquire into the major fluctuation. O BILLS PAYABLE; The auditor should verify this item from bills payable book and the bills payable account. The bill payable already paid should be checked from the Cash Book and examine the return bills payable. To see the genuineness of the bills payable in hand on the date of the balance sheet, the auditor should check the cash book of the succeeding year as to whether any payment has been made in respect of such bills. Incase of suspicion he should ask for the confirmation from the drawers of the bills. If any charge has been created on any asset of the concern by accepting the bill, the fact should be disclosed in the balance sheet.
8)
BANK LOANS:
Reference may be made to the agreement and correspondence for getting the loan. If interest on the loan has not been paid, he should see that it is shown as a liability. If loan has been secured by mortgaging any property, it should be indicated in the balance sheet. The auditor should get a confirmatory letter from the party who have
advanced the loan regarding the amount of the loan, interest due and the security offered, if any. Incase of bank overdraft, the agreement with the bank and security offered should be examined.
per the certificate given by the departmental manager. The auditor should also examine cost sheets. The term work in progress is used in connection with the contract work which has not been completed at the date of the balance sheet. Finished Goods; The cost price of the finished goods which have been purchased is the purchase price i.e. the invoice price and the direct expenditure, for example, carriage inwards, custom duty, dock charges etc. The goods which have been manufactured by the concern, are valued like the semi-manufactured goods i.e. the cost of raw materials and proportionate expenses of manufacture. The auditor should refer to the cost accounts if they are maintained. He should also see that such finished goods are not valued at a high price than the price of such goods prevailing in the market. Sometimes it so happens that the cost of the manufacture is very high in the initial stages of the establishment of a factory and consequently the cost of production of such goods may be higher than the same kind of goods available in the market. Such goods must be valued at the lower price i.e. the market price. The overhead expenses on finished goods or semi-finished goods are apportioned according to the Direct Labor of either (a) the last month, (b) the time spent in the manufacture of the goods, (c) the average wages for the year, (d) the volume of production. Stores; There are goods, other than described above, which may be in hand at, the date of the balance sheet. Stores are not held for sale in the original form. Such goods are oil, tallow, grease, dyes, fuel etc. These stores must not be included in the list of the stock-in-hand. They should be shown separately and those stores which had been consumed during the process of manufacture must be put on the debit side of the manufacturing account of the particular period to arrive at the correct cost of production.
The auditor should study the case law and comply with the guideline laid down in the judicial pronouncement. Note undisclosed secret reserves. Note provisions in excess of requirement so as to constitute reserves. See that all reserve required under the tax laws have been created.
11) EXPENSES:
The auditor should get the certificate from a responsible official to see that all expenses for the current year are included and that the payment for each expenses such as interest, discounts, salaries, wages, legal expenses, which have been not been paid are included. Some of the expenses which ought to have been debited to the current year may be apparent, for example, rent of twelfth month or salaries payable or electricity charges for the last month etc.