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U N I V E R S I T Y O F C E N T R A L P U N J A B

2013FahadRasool

L1F11MCOM2043

Najam Ali

L1F11MCOM0001Presented By:

ADVANCE AUDIT

FINAL PROJECTMAM SHEEREN

AL-ABBAS CEMENT INDUSTRIES LIMITED


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ADVANCE AUDIT FINAL PROJECT 2013

ContentsAppointment letter ....................................................................................................................................... 2

AUDIT ENGAGEMENT LETTER ................................................................................................................ 3

Audit Procedures .......................................................................................................................................... 4

Adequacy of audit procedures ...................................................................................................................... 5

Copies Of Financial Statements to be Audited ............................................................................................. 6

Balance sheet ................................................................................................................................... 6

Profit &loss Statement ..................................................................................................................... 6

Cash Flows statement ...................................................................................................................... 6

Statement of Change in Equity ........................................................................................................ 6

Statement of Comprehensive income ............................................................................................. 6

Audit Committee of AL-ABBAS CEMENT INDUSTRIES LIMITED Pakistan ................................................... 12

Purpose ............................................................................................................................................. 12

Committee Membership .................................................................................................................... 12

Management Letter .................................................................................................................................... 14

Audit Evidences .......................................................................................................................................... 16

Bank Confirmation Letter....................................................................................................................... 16

Yours faithfully, ........................................................................................................................................... 16

Tax Confirmation Letter .................................................................................................................... 17

Management Representation Letter............................................................................................................ 19

Auditor Report to Members ....................................................................................................................... 22


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Appointment letter

To

KPMG taseer hadi &co

Chartered Accountant

Sheikh sultan trust building no.2

Karachi,75530 Pakistan

Subject: YoureAppointment as First Statutory Auditors of the Company

Sir

With reference to your consent letter and certificate under 224 (IB), we are pleased to appoint

you as the Statutory Auditors of the Company for the Financial Year (year of incorporation). The

following records are available to you for the audit of al-Abbas cement limited industry.

Invoices Minute books Balance sheet Profit and loss statement Statement of change in equity Cash flows statement Statement of comprehensive income

Kindly acknowledge the receipt of the same.

Thanking you


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AUDIT ENGAGEMENT LETTER

Board of directors

AL-ABBAS CEMENT INDUSTRIES LIMITED Pakistan

Subject matter: Audit engagement letter for the financial year 2013.

You have requested that we will audit the balance sheet of AL-ABBAS CEMENT INDUSTRIES

LIMITED Pakistan as on December 12, 2012. That includes financial statements such as cash

flow statements, statement of changes in equity. We will audit the accounts of your company

according to the international standards on Auditing. You are requested to have your financial

statements be prepared under IFRS (International Financial Reporting Standards). All the

documents supporting the transactions must be ready in order to save the time. Supporting

evidences could be checked. We will charge remuneration or audit fee 30 Lac rupees.

We will please to see a friendly and coordinated behavior from your staff and employees.

You are requested to attach the copy of this letter in return for acknowledging the conditions.

Very truly,


(Chartered Accountant)


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Audit Procedures1. We have gained an understanding of internal control system of AL-ABBAS CEMENT

INDUSTRIES LIMITED Pakistan. According to our observation the internal control system

in AL-ABBAS CEMENT INDUSTRIES LIMITED Pakistan is very strong. Therefore we have

decided to go for sampling instead of detailed checking. Because the auditing standards

state that the fundamental objective of the audit is to obtain reasonable assurance that

the financial report as a whole is free of material misstatement. Audit firms should

consider ways to further improve audit quality and significantly reduce the number of

instances where this assurance is not obtained. Following are major audit procedures

which we will apply for audit of AL-ABBAS CEMENT INDUSTRIES LIMITED Pakistan.

Physical Observation of inventory and other assets Checklist Price Testing Control Testing Confirmation of available cash from banks Foreign Currency Translation Reconciliation Testing Classification of expenses and income


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Adequacy of audit procedures1. Auditors are important gatekeepers in our financial system. The quality of an audit

supports high quality financial reports, informed investors and market confidence

2. The objective of our inspections is to work co-operatively with firms to improve andmaintain audit quality.

3. Australias audit regime is similar to the regimes in other major developed countries. We

understand that audit oversight regulators in a number of other countries have experienced

similar trends in audit quality.

4. There are some important areas where the firms need to focus their attention and make

improvements to ensure audit quality. While firms have indicated a commitment to improving

audit quality, they should increase their efforts to improve audit quality and the consistency of

audit execution.

5. Matters relevant to understanding our findings and the percentages reported above are

outlined in Table 1. The percentages reflect findings in the areas discussed later in this section.

6. The auditing standards state that the fundamental objective of the audit is to obtain

reasonable assurance that the financial report as a whole is free of material misstatement.

Audit firms should consider ways to further improve audit quality and significantly reduce the

number of instances where this assurance is not obtained.

7. There will be instances where auditors detect material misstatements during the auditprocess and these misstatements are corrected before a financial report is completed and

released. These instances are not measured in this report.


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Copies Of Financial Statements to be AuditedFollowing are the copies of financial statement that are audited during in our work of audit in

AL-Abbas Cement Industry Limited.

Balance sheetProfit &loss Statement

Cash Flows statement

Statement of Change in EquityStatement of Comprehensive income


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Audit Committee of AL-ABBAS CEMENT INDUSTRIES

LIMITED PakistanAves Cochinwala

Member/chairman

Nasim Beg

Member

Syed Salman Rasheed

Member

Muhammad Ejaz

Member

Purpose

The Audit Committee is appointed by the Board to: (1) assist the Board in monitoring (a) the

integrity of the financial reporting process, systems of internal controls and financial

statements and reports of the Company, (b) the performance of the Companys global internal

audit function, (c) the compliance by the Company with legal and regulatory requirements, and

(d) the qualifications, independence and performance of the Companys independent auditor

employed by the Company for the purpose of preparing or issuing an audit report or related

work (the Outside Auditor); and (2) be directly responsible for the appointment,

compensation and oversight of the Outside Auditor.

Committee Membership


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The Audit Committee should consist of no fewer than three members, as determined annually

by the Board on the recommendation of the Compensation, Nominating and Governance

Committee; provided, however, that the Committee may operate with fewer than three

members as long as such composition complies with applicable laws, rules, regulations, and

securities exchange listing standards. The members of the Audit Committee shall meet the

independence and expertise requirements of the New York Stock Exchange, any other

exchange on which the Company's securities are traded, Section 10A(m)(3) of the Securities

Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations of the

Securities and Exchange Commission (the "Commission"). Audit Committee members shall not

serve simultaneously on the audit committees of more than two other public companies

without the approval of the full Board. The members of the Audit Committee shall be

appointed annually by the Board on the recommendation of the Compensation, Nominating

and Governance Committee. Audit Committee members may be replaced by the Board at any

time. The Board shall designate the Chairman or Chairwoman (the "Chairperson") of the Audit

Committee. Committee members may resign by giving written notice to the Board. A

Committee member may resign Committee membership without resigning from the Board, but

a member shall cease automatically to be a member of the Committee upon either ceasing to

be a member of the Board or ceasing to be "independent" as required above.


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Management LetterJune-30-2012

Management of the AL-ABBAS CEMENT INDUSTRIES LIMITED

Dear Members of Management:

In planning and performing our audit of the financial statements of AL-ABBAS

CEMENT INDUSTRIES LIMITED of the Pakistan. as of and for the year ended june

30, 2012 in accordance with auditing standards generally accepted in the

Pakistan. Standards, issued by the Comptroller General of the Pakistan., and

Office of Management and Audit Requirements for Federal Financial Statements,

as amended, we considered the AL-ABBAS CEMENT INDUSTRIES LIMITED control

over financial reporting as a basis for designing audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the AL-ABBAS CEMENT INDUSTRIES LIMITED

internal control over financial reporting. Accordingly, we do not express an

opinion on the effectiveness of the AL-ABBAS CEMENT INDUSTRIES LIMITED

internal control over financial reporting. This report is based on our knowledge as

of the date of our report on the financial statements, obtained in performing our

audit thereof, and should be read with that understanding.

Our consideration of internal control over financial reporting was for the limited

purpose described in the preceding paragraph and was not designed to identify all

deficiencies in internal control over financial reporting. However, in connection

with our audit, we identified, and included in Section I, deficiencies related to the

AL-ABBAS CEMENT INDUSTRIES LIMITED internal control over financial reporting

and other matters as of JUNE-30-2012 , that we wish to bring to your attention.

Based on our audit work, we believe management adequately addressed the

significant deficiency, Report on Internal Control over Financial Reporting and On

Compliance and Other Matters Based upon the Audit Performed in Accordance

With Government Auditing Standards.

Although we have included managements written response to our comments in

Section I , such responses have not been subjected to the auditing procedures


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applied in our audit of the financial statements and, accordingly, we do not

express an opinion or provide any form of assurance on the appropriateness of

the responses or the effectiveness of any corrective actions described therein.

This report is intended solely for the information and use of management, the

Audit Committee, the Inspector General, and others within the organization and is

not intended to be, and should not be, used by anyone other than these specified

parties.

Yours truly,


Chartered Accountant

Karachi,75530 Pakistan


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Audit Evidences

Bank Confirmation LetterThe Chief Manager,

Our Ref: KPMG

Standard Chartered Bank Lahore

Dated: 30-06-2012

Dear Sir,

Subject: REQUEST FOR BANK REPORT I/R OF ANNUAL AUDIT OF

AL_ABBAS CEMENT INDUSTRIES LIMETED FOR THE YEAR

ENDED 30-06-2012.

In accordance with your above named customers instructions given here

below, pleased send Direct to us at the above address, as auditors of your

customer, the following information, relating to their affairs as at the close of

business as on 30-06-2012. Please state against each item in the space

provided any factors which may limit the completion of your reply. If there is

nothing to report please state NONE Where the space provided is not

sufficient please use additional sheets and reference the form appropriately. If

for some reason the format of this form is not suitable please return the white

copy with your reply anyway. It is understood that the reply you give is in strict

confidence for the purpose of audit only

Yours faithfully,




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Tax Confirmation LetterDate:30-06-2012

The Chief Manager,

Our Ref: KPMG

Standard Chartered Bank Lahore

Dated: 30-06-2012

Subject: REQUEST FOR BANK REPORT I/R OF ANNUAL AUDIT OF AL_ABBAS

CEMENT INDUSTRIES LIMETED FOR THE YEAR ENDED 30-06-2012.

Sir,

In connection with examination ofabove clients financial statements as at the above date, we

shall be grateful if you, in the capacity of their tax advisor furnish us the following information

to enable us to express an opinion on their financial statements:

1. Current status of tax assessments completed.2. Estimated tax liability for assessment not yet finalized.3. Details of appeals filed either by the company or by the department indicating details of

significant issued and quantum of amounts involved.

4. An evaluation of the likelihood of an unfavorable outcome and an estimate, if one can be made,of the amount or range of potential liability.

5. Any other matter, which you feel that we should be aware of.An early response in this regard would be highly appreciated.


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Yours truly,




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We have made available to you all books of account and supporting documentationand all minutes of meetings of shareholders and the board of directors (namely

those held on March 15, 2011 and September 30, 2011, respectively).

We confirm the completeness of the information provided regarding theidentification of related parties.

The financial statements are free of material misstatements, including omissions. The Company has complied with all aspects of contractual agreements that could

have a material effect on the financial statements in the event of noncompliance.

There has been no noncompliance with requirements of regulatory authorities that

could have a material effect on the financial statements in the event of

noncompliance.

The following have been properly recorded and, when appropriate, adequatelydisclosed in the financial statements:

o The identity of, and balances and transactions with, related parties.o Losses arising from sale and purchase commitments.o Agreements and options to buy back assets previously sold.o Assets pledged as collateral. We have no plans or intentions that may materially alter the carrying value or

classification of assets and liabilities reflected in the financial statements.

We have no plans to abandon lines of product or other plans or intentions that willresult in any excess or obsolete inventory, and no inventory is stated at an amount

in excess of net realizable value.


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Auditor Report to Members

We have audited the annexed balance sheet of Al-Abbas Cement Industries Limited (the

Company) as at 30 June 2012 and the related profit and loss account, statement of

comprehensive income, cash flow statement and statement of changes in equity together with

the notes forming part thereof, for the year then ended and we state that we have obtained all

the information and explanations which, to the best of our knowledge and belief, were

necessary for the purposes of our audit.

It is the responsibility of the Companys management to establish and maintain a system of

internal control, and prepare and present the above said statements in conformity with the

approved accounting standards and the requirements of the Companies Ordinance, 1984. Our

responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan.

These standards require that we plan and perform the audit to obtain reasonable assurance

about whether the above said statements are free of any material misstatement. 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. We believe that our audit provides a reasonable basis for our opinion and,

after due verification, we report that:

a) in our opinion, proper books of account have been kept by the Company as required by theCompanies Ordinance,1984;

b) in our opinion:

i) the balance sheet and profit and loss account together with the notes thereon have been

drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the

books of account and are further in accordance with accounting policies consistently applied;

ii) the expenditure incurred during the year was for the purpose of the Companys business;

and

iii) the business conducted, investments made and the expenditure incurred during the year

were in accordance with the objects of the Company;

c) in our opinion and to the best of our information and according to the explanations given to

us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow

statement and statement of changes in equity together with the notes forming part thereof


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conform with approved accounting standards as applicable in Pakistan and give the information

required by the Companies Ordinance, 1984, in the manner so required and respectively give a

true and fair view of the state of the Companys affairs as at 30 June 2012 and of the profit, its

cash flows and changes in equity for the year then ended; and

d) in our opinion, no Zakat was deductible at source under the Zakat and Usher Ordinance,

1980.

We draw attention to note 1.2 to the financial statements which describes that the

accumulated losses of the Company as at 30 June 2012 stand at Rs. 1,697.265 million and as

that date, its current liabilities exceed its current assets by Rs. 1,304.210 million.

These factors indicate the existence of a material uncertainty which may cast significant doubt

on the Companys ability to continue as a going concern and therefore it may not be able to

realize its assets and discharge its liabilities in the normal course of business. However, the

financial statements have been prepared on going concern basis, based on the financial and

operational measures taken by the management as more fully explained in note 1.2 of the

financial statements. Our opinion is not qualified in respect of this matter

Yours truly,


(Chartered Accountant.

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