MANSOOR AHMED KHAN & CO.

Introduction: The firm was first established in 1972 with Mr. Mansoor Ahmad Khan as the sole proprietor of the firm. This firm commenced its business at the State Life Building and from here gradually expanded. The firm started with being the Legal Advisor to State Life Insurance Corporation. Mr. Mansoor Ahmad Khan was then directly involved in the Nationalization of the Life Insurance business of Private Insurance Companies. Then various Banking Companies engaged the firm for its outstanding performance. The firm was then made the Legal Advisor to the Federal Board of Revenue and continued as such for about ten (10) years. Subsequently, Mr. Anwar Mansoor Khan joined the firm, and then became its partner. Mr. Asim Mansoor Khan thereafter, joined the firm after he returned from England graduating in law. The firm has been engaged in Law making, especially Company Law, Taxation Laws and Banking Laws. The partners have been engaged in landmark cases in the High Court and the Supreme Court of Pakistan. Currently, its office is situated at F-2/3, Block-8 Kehkashan, KDA Scheme-5, Clifton Karachi-75600, Pakistan. Firm currently have three profit sharing partners namely: Name of Partners Anwar Mansoor Khan Asim Mansoor Khan Umaimah Anwar Khan Profit Sharing Ratio 50% 40% 10%

FACTS Number of Professional Staff: 5 Other Staff: 8 Sources of Revenue: Retainership income, Professional consultancy, Contest and defend of suits Nature of Major Expenses: Salaries and allowances, Car lease rentals, Utilities, Travelling expenses Accounting staff: Mr. Nadeem and Mr. Mustafa Accounting Software: QuickBooks (off the shelf software easily available on CD) Types of vouchers: BRV (Bank Receipt Voucher), BPV (Bank Payment Voucher) Voucher Preparer: Mr. Nadeem (also post the vouchers in the software) Reviewer: Mr. Anwar Ahmed Khan Approver: Ms. Umaimah Anwar Khan

Number of BPVs prepared in a month: 200 approximately Number of BRVs prepared in a month: 20 approximately Bank: Faysal Bank Limited Tax Consultant: Sohail Siddique and Associates Partners drawing: All the personal and household expenses of partners are routed through firms books of accounts which are not recorded in separate accounts, but subsequently at the time of filing income tax return; consultant has separated the drawing amounts from firms expenses. Higher number of payment voucher is made because of recording personal expenses in firms books of accounts. All monetary drawings are transacted after mutual consensus between partners. Tax is deducted @ 6% of billing amount..

ISSUE: The firm has been facing delay in filing of income tax return since Mr. Farooq Mansoor Khan left the firm in 1998 who used to oversee the accounting and tax matters of the firm. We have made inquiry from the accountant and the consultant for the reasons of the delay. Further, We have set forth our recommendations in the matter below Issues identified for delay in filing of tax return: Accountant (1) Income tax deduction challans are collected from clients at the time of filing of income tax return. (2) Accountant is only performing the role of cashier. (3) Accountant is overburden in respect of various clerical workloads. (4) Various changes are made to the financial information provided to the tax consultant on the advice of consultant. (5) Information regarding wealth statement is gathered by the accountant on the intimation by consultant. (6) Personal expenses of the partners are charged to the firms expenses when incurred and adjusted with the partners drawing account at the time of income tax return. Tax Consultant (1) No accountant in the firm to maintain proper books of accounts, Mr. Siddique told that he many times requested to the management of the firm to hire a competent accountant, as the both person responsible for managing books of accounts dont have expertise in it. (2) Information from the accountant is not received timely.

Our Recommendations 1) The firm must hire a competent person to manage its books of accounts. 2) Since, the volume of billing is not much, the accountant should collect the tax deduction challans from clients within one month of the payment received. 3) The partners details for wealth statements should be updated monthly.