Project of Auditing.

Sui Northern Gas Pipelines Limited.

Presented To:

Sir Adeel Akhtar.

Presented By:
Syed Ali Kamran Abidi. 50
Mirza Ali Raza. 90
Jafar Tayar. 48
Syed Hussain Zain ul Abideen. 85
 Introduction:
Sui Northern Gas Pipelines Limited (SNGPL), is the
largest integrated gas company serving more than 2.5
million consumers in North Central Pakistan through an
extensive network in Punjab and NWFP. The Company
has over 42 years of experience in operation and
maintenance of high-pressure gas transmission and
distribution systems.
SNGPL was incorporated as a private limited Company in
1963 and converted into a public limited company in
January 1964 under the Companies Act 1913, now
Companies Ordinance 1984, and is listed on all the three
Stock Exchanges of the Country.
  SNGPL transmission system extends from Sui in
. Balochistan to Peshawar in North West Frontier Province
(NWFP) comprising over 6121 KM of Transmission
System(Main lines & Loop lines). The distribution
activities covering 142 main towns along with adjoining
villages in Punjab & NWFP are organized through 8
regional offices.

 SNGPL has 2,536,700 consumers comprising Domestic,

Commercial, General Industry, Fertilizer, Power
Generation, Cement Sectors & CNG.
 The company’s objectives:
 Quality Consumer Services.

 Clean, Efficient and Reliable Gas Delivery.

 Healthy and Safe Working Conditions.

 Fair Return to Shareholders.

 Optimal usage of its resources.

 Quality management
Vision:

 To be the leading integrated natural gas

provider in the region seeking to improve
the quality of life of our customers and
achieve maximum benefit by for our
stakeholders by providing an uninterrupted
and environment friendly energy resource.
Mission Statement:

 A commitment to deliver natural gas to all

doorsteps in our chosen areas through continuous
expansion of our network, by optimally
employing technological, human and
organizational resources, best practices and high
ethical standards.
Departments of SNGPL:

 Administration.
 Sales.
 Distribution.
 Accounts.
 Metering.
 Purchase and store
Auditing Rules of SNGPL:

 There are two types of audit carried out by the

company:
1)Pre audit.
2)Post audit.
Pre audit:
Pre audit as the name specifies is
carried out before an activity or transaction.
Post audit:
Post audit is carried after the activity
or transaction.
Areas of Pre Audit:

 Medical.
 Local Purchase requisitions.
 Transport.
 POL bills.
 Electricity.
 TA/THA.
Audit Programme For The Year 2004-2005 – Multan Region
Sr. Department/Section Period to be Audit schedule Report
# Covered- From To Draft Final
2004-05
1 Accounts 01.10.04 10.11.04 25.11.04 26.12.04
Jan. to June 04
2 Admin

3 Purchase & Stores 26.11.04 15.12.04 31.12.04 31.01.05

4 Sales

5 Building 01.01.05 05.02.05 20.02.05 20.03.05

6 Metering
July to Dec. 04
7 Distribution Dev. 21.02.05 05.03.05 20.03.05 20.04.05

8 Accounts 21.03.05 20.04.05 05.05.05 05.06.05

9 Admin

10 Purchase & Store 06.05.05 25.05.05 10.06.05 10.07.05

11 Sales

12 Building Jan. to June 05 11.06.05 15.08.05 31.08.05 30.09.05

13 Metering

14 Distribution Dev.
Operations of the Administration
are:
 Admin dept. is responsible for the
security, attendance of employees, leave,
maintenance of office building, hiring of
building in sub areas, to contact with local
management, transport operations, hiring
of vehicles, protocol to officers and
executives.
1)Administration:
Audit checks are:
i) ATTENDENCE REGISTER/ SHEETS:

a) Checks daily attendance is marked in sheet.

b) Check in case of new appointments, the letter of
appointment etc.
c) Check various type of leave, late, from relevant record
under audit.

ii) VEHICLE RETURN/ LOG BOOK.

a) Obtain a list of vehicles operating with the area

and verify with the vehicle return.
b) Check monthly vehicle return in all respect.
c) Check monthly vehicles return is sent to HO in
time. d) Check
private usage of vehicle has been informed to
iii) ELECTRICITY REGISTER:
 Check electricity consumed in offices, repeator
station, company owned/ rented bungalows from
the electricity bills. Also compare it with two
month previous bills and find out if any variation
is there.
 Check sequences of meter reading and their
particular.
 Check that authorized authority has pass the bill
for payment.
Budget provision:
 Check actual expenditure up to date within
the budget provisions.

 ii) Check proper sanction are obtained for
over runs as against the budget provision.
 iii) If sanction not obtained, reasons
therefore.
Miscellaneous:
 Check rent/lease paid for offices/ residential
building if taken on rent/lease.
 ii) Check medical/conveyance/ expense paid.
 iii) Check temporary/casual staff appointed is not
on roll for over 3 months.
 iv) Check any other statement required to be
maintained per law is prescribed.
 Evaluative the adequacy of internal check and
control as per procedure.
Operations of Sales:
 New connections, applications, surveys,
draw house line plans, to issue demand
notices and security deposits.
Consumer Master Card:
2)Sales:
Audit checks are:
 i) Gas Sales contracts:
 Check with applications of the customers.
 Check with survey report.
 Check security deposit receipt and the
signatures of both the parties.
ii) Securities Obtained:
 Check that securities obtained are
according to the company policy.
 Check with actual billing of three months
and note down if exceeding the security.
 Check what actions have been taken by
area sales in case where securities are
lower than billing.
iii) Meter Rentals:
 a) Check the meter rentals are according
to the type of meters installed, report if
variations found.
 Gas sales contracts.
 Consumer master cards.
 Gas sales bills.
iv) Consumer’s Disconnected:
 Obtain a list of all disconnected
consumers.
 Check the action taken by area sales.
v) Serving the Consumer Premises:
 Check that consumer premises have been
surveyed.
 Check the record of drawings is kept.
 Check from test reports house line is in
accordance with the drawings.
vi) Budgetary Control:
 Check that the expenditures are within the
budget provisions.
 Check proper sanctions are obtained for
budget provisions.
vii) Internal Check & Control:
• Give brief report on internal check and
control.
Operations of Distribution:
 To provide physical connection, Lay down
service lines, pipe fitting, coat and wrap
materials and provide consumer meter
station.
 3) Distribution:
Audit checks are:
i) Estimation Of Materials:
a) Check the variations between actual and estimates of pipe,
fitting, coat & wrap material.
ii) Construction of Main Service Lines:
a) Check that the quantities not vary more than 10% with
FPC.
b) Check the daily report of pipe coating and wrapping.
c) Check the excavation has been done as per company
standards.
d) Check the CMC received from sales and entered into the
register as per procedure.
iii) Main Services Lines:
 Industrial.
 commercial.
 Domestic.
 *There connection, disconnection and
reconnection must be under the procedures.
iv) Miscellaneous:
 Check 10% inventory items physically.
 Check record of stationary items.
v) Budgetary Control:
 Check actual expenditures with budget
provisions.
 Check the sanctions for over-runs in
budget.
vi) Internal Control:
 Check adequacy of internal control
enforced by management.
Operations of Accounts:
 To prepare accounts, to maintain cash
book and to reconcile it daily, payment of
bills, prepare advance register, to check
payments and receipts
 4) Accounts:
Audit checks are:
i) Cash & Revenue Stamps:
a) Check cash physically.
b) Check Revenue stamps.
c) Check and agree the physical balance with Imprest
cash book.
d) Check cash book is completed and reconciled daily.
e) Check that the keys of safe are kept separately by
cashier and executive.
 2)Imprest Cash Book:

i) Check lodgments from pay –in-slips and bank

advices.
ii) Check payment vouchers , duly approved , with
relevant supports and expenses head charged and
period to which the expenditure is related as per
procedure.
iii) Check that previous cash book has been sent to HO
for reconciliation.
iv) Check that cash/cheques received are deposited for
reimbursement.
v) Check bank reconciliation statements for the period.
 2) Unclaimed Wages Register:

i) Check entries in the register with Imprest cash book

‘Receipt side’
ii) Check payment entries in the register with Imprest cash
book
(Payment Side)
iii) Analyze old unclaimed wages outstanding.
iv) Check proper return is sent to HO on prescribed date.
ii) Advance Register:
 a) Check entries with the advances forms
and verify with the vouchers.
 b) Check that the advances are approved
by the competent authority.
 c) Check the monthly list is extracted and
reminders are to the persons who did not
render accounts.
 TA / HA Exp. Control Register:

i) Check entries in TA /HA from the TA/HA bills are properly

made.
ii) Check journey tickets arranged by company are fully shown
reference of payment etc.

Bills Payment Control Register:

i) Checks the bills paid to the suppliers are routed

through register.
ii) Check reference of payment i.e. purchase
order and receiving statement.
iv) Cheque Book Register:
 a) Check relevant entries of Cheque books
i.e. date of receipt, Sr. No. etc are made in
the register.
 b) Check that any checks canceled are
indicated in the register.
 c) Check Cheque books received, utilized
and in hand physically.
v) Receipt Book Register:
 Check relevant entries of receipt book.
 Check receipt books are received, utilized
and in hand physically
Check Dishonored Register:

 i) Check this register has been maintained.

 ii) Check relevant entries in respect of cheques
dishonored have been made and re-lodged per
banker’s instructions.
 iii) Check such cash have been controlled verify
entries into this register ,collection cash book etc.
 iv) Check and verify , if not collected into bank
reconciliation statement of account till it is
collected.
Over Times Claims:

i) Check over times claims in respect of columns are properly

filled in calculations, verification of section/ department
Incharge etc. Also verify the over time permission slips
are attached with the claims as per instruction issued from
HO time to time.
ii) Check over time claims in comparison to daily progress
report.
iii) Check over time claims with attendance record.
iv) Check over time drivers/ field staff with the Log sheets of
Vehicle construction equipment & gate register.
v) Check summaries of over time forms and see these been
sent to HO in time.
vi) Collection Section Area:
 Check bank statement of each collection account.
 Check revenue summary report and ensure credit
against collected fund.
 Check monthly collection reconciliation and
compare it with bank statements.
 Check and verify record pertaining to less/excess
punching with collection register.
 Checks the amounts of connection securities,
cost sharing charges etc.
Cost Sharing Register:

i) Check cost sharing register and report cases

of defaulters.
vii) Budgetary Control:
 Check actual expenditures are within the
budget provisions.
 Check paper sanctions are obtained for
over runs of budget provisions
viii) Internal check & Control:
 a) Evaluate the adequacy and effectiveness
of internal control.
Operations of Metering:
 Maintenance, meters, valves, filters,
Defective meters, Tools/equipment and
inventory items.
5) Metering:
Audit checks are:
 i) Maintenance:
a) Obtain copy of program of checking, inspecting, flow
proving of meters installed at meter stations, and check
a record maintained for detailed below:
Meter stations.
Meters.
Valves.
Filters.
Meter Stations:

i) Check all the flow , pressure, and temperature recorders calibrated over per
procedure.

3) Meters:

i) Check that industrial, commercial and domestic meters are flow proved and
reconditioned as per company procedure.

4) Valves:

i) Check that valves of all types are inspected and lubricant as per company’s
procedure.

5) River crossing Valves:

i) Check the automatic valves installed at different river crossing are operated and
lubricated as per company’s procedure to ensure satisfactory working.
Filters:
i) Check all the filters are installed and major meter
stations are opened for inspection and removal of
dirt/dusty as per company procedure.
Defective Meters:
i) Check the record of all defective and broken meters.
ii) Check that defects notified are removed within
reasonable time.
Meter Regulation and Valve record:
i) Whether new or repaired check proper record of
defective meters, regulators and valves is kept. Also
check stock in hand of new, repairable and repaired
meters regulators and valves.
ii) Tools/Equipment:
 a) Check record of tools use in this section.
 b) Check physically these tools and
equipment on random basis and report
variations.
iii) Inventory items:
 a) Check the record of inventory items
relating to this section.
 b) Check all items are painted with Asset
code numbers.
iv) Stationary Items:
 a) Check receipts and balance of stationary
items.
 b) Check record is kept as per company’s
procedure.
 c) Assess usage of stationary items in
comparison to the volume of works.
Operations of Purchase and
store:
 Purchase orders, import orders, quantity of
materials and the storing of the received
material.
6) Purchase and store:
Audit checks are:
1) Physical checking:
i) Physically items of the stores at random.
ii) Record the detail of such checking on
stores checking sheets.
iii) Work out shortages/excesses, if any,
and obtain the signature of concerned
ASO.
Purchase orders (local):
 Check compliance of purchase & store procedure:
 i) Check with indent/LPR and verify the enquiry letters
sent to suppliers.
 ii) Check with quotation received from suppliers and
verify them with comparative statement.
 iii) Check order signed by ASO is within his financial
powers.
 iv) Check that purchase order is properly prepared giving
therein the necessary terms and conditions.
 v) Check that purchase order has been executed fully and
within the time allowed.
4) Receiving statements for local
stores:
 i) check description of stores, quantity required to
replenish stock from indent/LPR. Also verify these
particulars from order, supplier invoice.
 ii) check correct index number, unit code number is
given.
 iii) check it is signed by the concerned ASO.
 iv) check posting into index..
 v) check it is prepared within 24Hrs from the time of
receipt of material in stores (verify from challans).
 vi) check that copies of R/S has been distributed
according to procedure.
5) Import orders :
 i) check with indents and verify the enquiry
letters sent to foreign suppliers.
 ii) check with quotations received and
verify them with comparative statements.
 iii) check order signed by the concerned
authority is within his financial powers.
 iv) check the job for which order is placed
is provided for in budget.
*Inventory Register
*Petrol lubricants register
*Stationery register
*Budgetary provision
 External audit repot of Sui Northern Gas Pipeline Limited

We have audited the annexed balance sheet of Sui Northern Gas

Pipelines Limited as at Jun 30,2004 and the related profit and loss
account, 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 responsibility of the company’s 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 accounts have been kept by
the company as required by the companies 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 books of accounts and are
further in accordance with accounting policies consistently applied
during the year;
ii) the expenditure incurred during the year was for the purpose of the
company’s 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 give to us, the balance sheet, profit
and loss account, cash flow
Without qualifying our opinion, we draw attention to Note 2.18 to the
financial statements which explains the provisions of an agreement
with World bank for a loan, under which the company is required to
earn minimum annual return before taxation, interest and other
changes on debit of 17.5% per annum of the net average operating
fixed assets for the year, excluding interest, dividends and other non-
operating income. During the year ended Jun30, 2004, the company’s
return before taxation, interest and other changes on debts was less
than minimum required return.

November 25, 2004 RIAZ AHMED&CO.

Lahore Chartered Accountants