BAHRIA UNIVERSITY

Institute of Professional Psychology

MANAGEMENT LETTER
FOR THE YEAR ENDED JUNE 30, 2013

ILYAS SAEED & CO

CHARTERED ACCOUNTANTS

A Member firm of Midsnell Group International

Ref: Audit/IPP/12
March 09, 2014
The Chief Financial Officer,
Bahria University Karachi Campus,
13, National Stadium Road,
Karachi
Dear Sir,
Subject: AUDIT FOR THE FINANCIAL YEAR ENDED ON JUNE 30, 2013.
We are pleased to inform you that we have since completed the audit of Bahria University Institute of
Professional Psychology (IPP) Karachi Campus, for the year ended June 30, 2013.
We may inform you that our audit work involves evaluating only those systems and internal controls in
your organization upon which we rely for the purpose of determining our audit procedures. Accordingly
our audit may not have identified and the comments in this letter may not be a comprehensive record of
all the weaknesses that may exist.
The responsibility for maintenance of an adequate system of internal control as well as for the prevention
and detection of irregularities and fraud rests with the management, we are not required to search
specifically for frauds and irregularities and, therefore, our audit cannot be relied upon disclose such
matters. However, our audit was planned so that we would have a reasonable expectation of detecting
material misstatements resulting from fraud or error.
During the course of our audit certain weaknesses/ observations came to our notices which we discussed
in our draft Management Letter. These are stated below:

GENERAL OBSERVATIONS
1. Internal Audit Department
It was observed the Bahria University, IPP has not yet established any internal audit
department. It is not only a volition of Statutes, Academic Regulations and Financial
Rules of Bahria University but also treated as the possible reason behind all internal
control lapses. According to above referred rules of Bahria University, an internal auditor
should assign to fulfill some prime responsibilities of examining its organization internal
control structure and evaluate its adequacy and effectiveness of such controls for smooth
functionality of the organization.
(Ref to19.2 19.7 rules of Statutes, Academic Regulations and Financial Rules)

2. Accounting Software
It was observed that accounting software (Peach Tree), used by the Bahria University, IPP
has some critical flaws. It has a record editable option which provides an opportunity to
make changes in accounting record at back date without acknowledgement of relevant
authority and may cause a major financial misappropriation. It has also been observed

that in the absence of logical access control of this accounting software, management
created more than one head of accounts to treat same natured transactions that ultimately
leads to number of accounts with no movements. We can understand the importance of
accounting software for a well growing organization that not only fulfill its current
accounting needs but also has the capacity to tackle it future growth. Bahria University,
as a whole, have multiple accounting locations that forward their results to the
headquarter staff for consolidation. Thus closing process will be less efficient. The main
problem is that some locations will be less efficient than others, due to different policies,
procedures, training, staff availability, management skills, and so on. The result is that a
few locations will always be late in forwarding their results to the headquarters staff,
which delays the close.
3. FIXED ASSETS
a. During the course of audit, it was observed that there is no fixed asset register was
maintained by the management of Karachi Campus. The management provided us a
reason that fixed asset register is maintained at headquarter only.
(Refer to TR-6 issued by the Institute of Chartered Accountants of Pakistan)

b. No assessment regarding impairment of assets was made at reporting date.

(Refer : IAS 36 Impairment of Assets).

c. Residual values and useful lives of assets were not reviewed at financial year end.
(Refer : IAS 16Property, Plant and Equipment).

d. There is no capitalization policy of Fixed Assets; hence this result in small amounts of
fixed assets purchased was being capitalized. After inquiry from the management
capitalization policy of the campus mainly depends on judgment.
4. LOANS AND ADVANCES
There is no any procedure / requirements / policy relating to loans to be given to
employees. It is merely dependable on the discretion of the relevant director of the
constituent unit.
As per rule number 9.14 of finance rules, All advances paid by the Bahria University
shall be recorded in the advance register and the Director Finance and Finance
Manager and Audit Manager and shall watch their adjustment. However, at Karachi
Campus no such register is being maintained.
5. OTHER PAYABLE:
During the audit procedure it was observed that the different account payable opening
balances with no movement during the year are appearing in the balance sheet. Upon our
despite reminders the management fail to provided us the detail of these opening
balances. The details of unidentified liabilities are as follow:
GL Head Name

Balance as at June 30th, 2013.

Other Receipts
Salaries and Wages Payable
Other Payables
Total Liability Payable

181,607/239,739/324,282/745,628/-

It is recommended to the management to identify the above balances and make necessary
adjustment whatever is applicable.

6. OTHER PAYABLE:
During the audit procedure it was observed that the different account receivables opening
balances with no movement during the year are appearing in the balance sheet. Upon our
despite reminders the management fail to provided us the detail of these opening
balances. The details of unidentified assets are as follow:
GL Head
Advances to Employees
Advance for Expenses
Total Liability Payable

Balance as at June 30th, 2013.

49,425/321,066/370,491/-

It is recommended to the management to identify the above balances and make necessary
adjustment whatever is applicable.
During the audit procedure it was observed that the management is maintaining separate
account head for income tax deduction with respect to Payroll and Vender. However the
management is recording the transactions into book of accounts haphazardly. This make
impossible to reconcile the payable balance. An attempt was made to reconcile the
balance however the Income tax deduction in respect of Payroll tax remains unreconciled. As per our understanding the difference pertains to opening balance. In
number of instances it was observed that the over or under payment of tax has been
deposited by the management, which show negligence at the part of the management. It is
recommended to the management to reconcile the balance and to record the transactions
into relevant accounts so that the payable balance is reconcilable.
7. BANK BALANCE:
During the audit procedure it was identified that the management is maintaining two bank
accounts with the Allied Bank Limited. The same were confirmed from the direct
confirmation send to the banks. However the management is maintaining a single bank
account in it books of accounts to record the transactions and journal entries. The bank
balance as per ledger was in accordance with the external confirmation balance when
both of the banks accounts were added. This shows that the management is recording all
the transactions in the single bank account. It is recommended to the management to open
up separate ledger accounts for the both banks and record the relevant transaction in the
relevant bank account ledger.
Should you desire any further explanation on any of the matters stated here above, please do not hesitate
to contact us again.

In the end, we shall like to express our appreciation and thanks to all the officers and staff members of the
company who were all very cooperative and helpful to us in the smooth conduct of our audit.
Thanking you and with profound regards.
Very truly yours,

___________________
ILYAS SAEED & CO.
(Chartered Accountants)