Awaz Foundation-CDS

Management Letter

Management Letter A Foundation - 30-6-2012

Table of Contents
1- General
Opening balances
2- Management accounts
Management accounts
3- Cash and bank balances
Time barred Cheques
4-Other income
Movement of balances in reserves

Management Letter A Foundation - 30-6-2012

1. GENERAL
Opening balances

Observation:
In the trial balance that was provided to us, we found that the opening balances of fixed assets
and accumulated depreciation didnt match with corresponding balances of previous audited
accounts.

Implication:
Adjustments relateting to fixed assets and accumulated depreciation were not recorded in
concerned ledgers.

Recommendation
Adjusting journal entries proposed during audit, should be posted at the end of audit in order
to update the ledgers, as well as to provide a true picture of the accounts in the trial.

Management Response:
Management agreed and posted the necessary entries.

2. MANAGEMENT ACCOUNTS
Management Accounts are not prepared

Observations:
Management accounts are not prepared and provided to auditors.

Implication:
Management cannot know the financial position and performance of the Foundation without
preparing the accounts.

Recommendations:
Management accounts should be prepared periodically to assess the performance of ongoing
projects and overall at the Foundation level.

Management Response:
Peachtree accounting software does not prepare accounts that reflect the financial
performance and position of overall projects and the Foundation. However the management is
agreed to prepare the management accounts on monthly basis in future.

Management Letter A Foundation - 30-6-2012

3. CASH AND BANK BALANCES

Time barred cheques

Observation
A number of cheques appearing in bank reconciliation statements have become time barred
and are not presented in the bank. Following are the cheques that have become time barred.
Bank

Faysal Bank
Burj Bank
Burj Bank
Burj Bank
MCB
MCB
MCB
MCB
MCB
MCB
MCB
MCB
MCB

Branch
Old Bahawalpur Road
Vehari Road Branch
Vehari Road Branch
Vehari Road Branch
Vehari Road Branch
Main Abdali Road
Main Abdali Road
Main Abdali Road
Main Abdali Road
Jam pur Branch
Jam pur Branch
Alipur
Alipur

Cheque
No
2262801
55698
5565814
55658
500810
500707
500942
5009846
500978
253374
253376
654367
6544072

Account
No
5255
82
82
82
171
154
154
154
154
3536-6
3536-6
3547-7
3547-7

Date
08-6-2012
26-6-2012
28-6-2012
28-6-2012
05-5-2012
01-4-2012
28-6-2012
28-6-2012
28-6-2012
28-6-2012
28-6-2012
28-6-2012
28-6-2012

Amount
5,000
5,200
3,000
15,000
5,000
10,000
3,000
667
9,167
22,501
19,167
10,667
7,500

Implications:
Cash and Bank Balances and accrued liabilities are understated by Rs. 1115,869.

Recommendation:
All the time barred cheques should be reversed and a liability should be booked.

Management Response:
Time barred cheques are basically salary cheques of employees which the employees have
not collected from the office yet. These are post dated cheques and the management changes
the date whenever the employees demand. After the amendments have been made, Chief
Executive also signed the cheque.

4. OTHER INCOME
Movement of balances in reserves

Observation:
Deductions from salaries and extra salary claims from donors of long term projects are
directly credited to staff benefit reserve account. According to IAS-1 movement of

Management Letter A Foundation - 30-6-2012

balances in reserve accounts should be made through P&L. (Paragraph 65&66

Framework)

Implication:
Other income is understated.

Recommendation:
We recommend that deductions from salaries and extra salary claims from donors should
be initially charged to other Income then to respective reserve accounts.

Management Response
Management agreed to move the balances from other income to reserve accounts.

______________________________________________

Management Letter A Foundation - 30-6-2012