Alkhidmat Foundation Project Office (KHI)

Internal Audit Report

To: To: Respected Assistant Secretary General (Mr. Ijaz Ullah Khan) Comp-Ref No AC/11-20
Pres Visit Date: 16-Nov-2020
Report Date: 26-Apr-2021

Copied to: Manager Finance, (Muhammad Adnan Khan)

Contact: Audit & Compliance department

We would like to thanks management and staff of Alkhidmat Foundation Project Office KHI for their valuable time and co-
operation during the course of the internal audit.
Executive Summary
Assurance Level and Direction of Travel
Number of Actions by Key Risks
Critical High Medium Low Advisory

Background and Scope 01 02 03

The aim of audit is to provide assurance on key areas of financial management. The review covered all major
systems with the organization to ensure compliance of strong and weak areas.

The Scope of audit included assessment of following

a) Adequacy of accounting, financial and other controls.

In addition to the above, a review of the audit shows that self-assessment has been completed in line with
requirements.

Summary of Findings
Ref Areas Critical High Medium Low Advisory
No
1 Cash & Banks reconciliations 1

2 Advances / receivables 1

3 Fixed Assets & Inventories 1

4 Funds / Income Reconciliation 1

5 Commission 1

6 Book Keeping 1

As a part of audit we were able to give limited Assurance to organization, noting one critical, two high, three
medium priority issues as part of audit.
 Details of findings are as under;

S Findings Action Completed Risk Risk Action Required

1 Banks Balances / Petty Physical Cash in hand was There is a Risk: Critical In Future FAD is
Cash and Cash donation reconciled. For effective financial responsible for making
management monthly reconciliation of
Further, 34 receipt found Organization must be these heads
having multiple issues fully aware with In-
related to In-kind and Inflow / Outflow, Responsible Person
Banks that were also otherwise they will not
rectified and shared with be able to fulfill their Muhammad Adnan Khan
finance department. responsibilities. (Manger Finance)

Target Date
30th of each month
2 Advances / receivablesAdvances have been There is a Risk: Medium This is the responsibility of
& Prepayments: reconciled during audit If organization FAD to make aging reports
Further, requested to payments (Advances / of advances on quarterly
 Advance and other generate aging reports of Receivables are not basis and must have
receivables = 1.5 all advances / receivables evaluated on monthly / proper strong follow up to
million to see accurate picture of quarterly basis, then it is reduce and minimize
receivables (format also not possible to manage advances balances as its
 Tharparker Hospital shared with Adnan sb). or recover books of gets old, may be transfer
receivables = 15 accounts, results thefts, to bad debts.
million Bad debts, missing etc.

Responsible Person
 Deposits &
Muhammad Adnan Khan
Prepayments = 0.9
(Manger Finance)
million
Target Date
30th of each month
3 Fixed Assets & Fixed assets / Inventory There is a Risk: High This is the duty of FAD and
Inventory register was not If Fixed assets / admin department to
maintained, (Item / inventory register is not manage these things on
Valuation wise), during maintained on monthly immediate basis other-
audit Fixed assets have basis, then it will be wise organization assets
been reconciled and also difficult to analyze may not be evaluate on
shared sample template assets of organizations, accurate basis
to maintain fixed and
inventory register on If GRN and GDN system
monthly basis. is not working then
Inventory may not Responsible Person
GRN and GDN system handle on accurate
Introduced to keep basis. Muhammad Adnan Khan
record of inventory (Manger Finance)

Quarterly Basis
4 Restricted / Un- During audit we found There is a Risk: Medium This is responsibility of FAD
 Restricted Funds that funds were classified If funds are not to review complete cycle
(restricted / Un- reconciled on monthly / of funds movement on
Restricted Income Vs Restricted), but need to quarterly basis, it is not monthly or bimonthly
Expenses reconcile on monthly possible to have clear basis to avoid any
basis with (HO), understanding of Fund inconvenience, either
movement and fund funds receive by IBFT (HO)
Amanati Funds Further, Restricted position. or from local donors.
Income vs expenses were
Water Proj 2.8 million not part of Income
Qurbani 1.6 million statement, Shared clear
Aghosh 0.4 million instructions and guidance Further, For Project /
OFSP 1.4 million to complete this task administrative budget
Amanat 1.8 million before issuance of final and its monitoring is
accounts. only possible for right
fund management,
Regarding Un utilized results in failure may
funds (mentioned) that effect organization
falls in the category of wrong picture of funds Responsible Person
Amanati Funds must be and (surplus / deficit)
returned to AKFP on Muhammad Adnan Khan
immediate basis. (Manger Finance)

5 10 % Commission on Project Office KHI hired There is a Risk: High This is responsibility of FAD
Donation services of (Syed Whenever to review and get
(Syed Muhammad Ali) Muhammad Ali) in RMD organization / complete documentation
department on following Authorities hired or by signing from higher
terms and conditions. fired any member, it authorities / management.
must fulfill and follow
Salary = AKFP Polices / HR
50,000/= requirements to avoid
Travelling = any in-convenience,
10,000/= results in compliance of
Mobile exp = 5,000/= failure we were not able
Commission = 10 % to comply with policies
Rules/ regulations of
But we did not find any AKFP. Responsible Person
documentary evidence,
approved from Muhammad Adnan Khan
management or hiring (Manger Finance)
authority that may
compliance with AKFP
policies.
6 Book Keeping, Book keeping of financial There is a Risk: Medium FAD must ensure to keep
Accounting record HR record was good,We must have complete and maintain proper
Policies, compliance of vouchers were not signedand accurate record of record of each transaction
Labor laws from higher authorities,each transaction, that shows transparency in
Further, vouchers must vouchers must be all levels.
be stamped by posted. signed and filed in
proper way with
Payments if paid in supporting documents,
advance must be issued Checklist system was
in Cash advance payment not adopted, HR policies
 voucher rather than in and labor laws must be
(Parchi system), followed and implement
in proper way to make
HR Polices and labor Laws system streamline.
compliance must be
followed to avoid any in-
convenience.
So, please complete all Responsible Person
your data entry in E-
Accounting – 360 for the Muhammad Adnan Khan
financial year 2020-21. (Manger Finance)

Further you are again requested to please resolve these issues on your priority basis and also update us on bi-
monthly basis.

Your kind co-operation and quick reply in this regard will be highly obliged.

Thanks and Regards

Prepared By Checked and Reviewed By

Muhamad Irfan (Manager Audit) Ejaz Ali Nadeem (SMC)