You are on page 1of 19

Fixed Assets audit procedures by ACNABIN Chartered Accountants on the context of

Partex Star Group


Table of Contents
Abstract ...................................................................................................................................... 4

Chapter 1: Introduction .............................................................................................................. 5

1.1 Origin of the report .............................................................................................................. 5

1.2 Objective .............................................................................................................................. 6

Broad Objective...................................................................................................................... 6

Specific Objectives ................................................................................................................. 6

1.3 Methodology ........................................................................................................................ 6

Primary source........................................................................................................................ 6

Secondary source.................................................................................................................... 6

1.4 Scope .................................................................................................................................... 7

1.5 Limitation of the Report....................................................................................................... 7

Chapter 2: Company Overview ................................................................................................. 8

2.1 An overview of Partex star Group ....................................................................................... 8

2.2 Vision ................................................................................................................................... 8

2.3 Mission................................................................................................................................. 8

2.4 Core Values .......................................................................................................................... 9

2.5 Slogan .................................................................................................................................. 9

2.6 Product and Services ............................................................................................................ 9

Building Materials Division CX 1 (Partex)............................................................................ 9

Food Division CX 2 (Danish) .............................................................................................. 10

2.7 ACNABIN Chartered Accountants.................................................................................... 10

Chapter 3 Project Details ......................................................................................................... 11

3.1 Fixed Assets ....................................................................................................................... 11

3.2 Details about Identification, Verification, & Tagging of Fixed Assets ............................. 11

3.2.1 Preparing well formatted data capturing sheet ............................................................ 11

3.2.2 Identify fixed assets ..................................................................................................... 13


3.2.3 Visit the location and collect data ............................................................................... 13

3.2.4 Input the data into excel .............................................................................................. 13

3.2.5 Reconciliation of data ................................................................................................. 14

3.2.6 Use Microsoft Excel to generate tag ........................................................................... 14

3.2.7 Tagging of fixed assets ................................................................................................ 15

3.3 Why Identification, Verification, & Tagging of Fixed Assets........................................... 15

3.4 Fixed Assets Management of Partex Star Group ............................................................... 16

3.4.1 Fixed Assets Management Team ................................................................................ 16

3.4.2Treating Fixed Assets as Expense ................................................................................ 16

3.4.3 Physical verification of Fixed Assets .......................................................................... 16

Chapter 4 Findings, Recommendation, & Conclusion ............................................................ 17

4.1 Findings .......................................................................................................................... 17

4.2 Recommendation ............................................................................................................ 17

4.3 Conclusion...................................................................................................................... 18

Chapter 5 References & Bibliography ..................................................................................... 19

5.1 References ...................................................................................................................... 19

5.2 Bibliography ................................................................................................................... 19


Abstract
Partex Star Group is one of the biggest agglomerate in Bangladesh, founded in 1959 by M.A.
Hasem, one of the torchbearers of entrepreneur. PSG established with mission to introduce
new products and services that ensure quality and satisfy customers. Like several other
activities, acquisition, management, and disposal of fixed assets is a regular activity.
Company has the assets management policy to physically verify its fixed assets once in every
year.

To comply with MBA program requirement of three month internship program, I involved in
the identification, verification, and tagging of fixed assets of PSG. I came to ACNABIN
Chartered Accountants for my internship and they involved me in the team to work for PSG.
This job involve both physical and technical skill to complete. At first stage we met with the
fixed assets management team i.e. accounts department to plan how to proceed for the job.
After planning accounts department of PSG provided us information. As per information
provided by PSG we prepared data capturing sheet. With data capturing sheet we used to
went to respective branches and concern for physical counting. After counting us inputted
data into excel then sat again with asset management team for reconciliation. After
reconciliation we tagged the fixed assets. Some time we faced problem as all respective
person were not cooperative equally. Though PSG used modern technology for managing
their assets, database is not updated properly.
Chapter 1: Introduction

1.1 Origin of the report


This is an internship report prepared after completion of three months internship program
after MBA. It is a mandatory requirement for a student completing MBA from the
department of A&IS, DU. An internship program work as a job training for students. I have
learnt much theoretical knowledge through in my MBA program. But I need to apply
theoretical learning practically. That is why after completing MBA, students are sent to
different organizations to blend their theoretical knowledge with practical scenario. I have
been sent to ACNABIN Chartered Accountants (a renowned CA firm in Bangladesh) for
three months to complete my internship. After coming to ACNABIN I have been involved
with a team. The team was working Fixed Assets Identification, Verification, and Tagging of
Partex Star Group. When I informed my internship supervisor professor Md. Nazim Uddin
Buhiyan about my jobs, he asked me to prepare a report on Identification, Verification, and
Tagging of Fixed Assets of Partex Star Group. PSG is a leading and one of the biggest
conglomerate in the country established my legend M A Hasem. PSG has more than twenty
concerns. But we work only for five concerns namely Star Particle Board Mills Limited
(SPBML), Partex Furniture Industries Limited (PFIL), Partex Laminates Limited (PLL),
Partex PVC Industries Limited (PPIL), and Star Adhesives Limited (SAL).

During my internship I had the opportunity to visit all branches of above mentioned concerns
of PSG. But due to time limitation I only visited few branches in Dhaka and near Dhaka. My
task was to go to the offices and branches with fixed assets register, physically verify fixed
assets with register, document the Mitch match (short fall of more), come to head office for
reconciliation, then tag all fixed assets with new tag.
1.2 Objective

Broad Objective
The primary objective of the report is to identify fixed assets of Partex Star Group, reconcile
with fixed assets register of Oracle ERP maintained by PSG, tag fixed assets with fulfilling
the requirements of MBA program.

Specific Objectives
Getting introduced with fixed assets management system
Understanding the importance of fixed for a business organization.
Understanding the importance of fixed assets audit
Ensuring the assets visibility by physically being presents at the location.
Helping to identify the accurate calculated value of the fixed assets.
Matching the assets location as well as visibility of these assets with the register
Helping the PSG prepare the accurate financial statement of a particular branch as
well as the company

1.3 Methodology
Both primary and secondary sources of data have been used to prepare the report.

Primary source
Personal observation during three months internship program
Discussion with official of PSG
Discussion with official of ACNABIN Chartered Accounts
Discussion with ream member

Secondary source
Website of PSG
Annual report of PSG
Oracle fixed assets user guidelines
1.4 Scope
In this report I am going to describe the fixed assets audit of ACAs as well as fixed assets
management system of PSG.

1.5 Limitation of the Report


Without limitation you cant enjoy the joy of good working. During the internship period and
report preparation I have faced some difficulties. Such as

The work is not organized


Time limitation
All in formation is not disclosed by company
Chapter 2: Company Overview

2.1 An overview of Partex star Group

Partex Star Group is one of the largest Bangladeshi diversified private sector enterprises. The
Group, the then Partex Group, started its journey in 1962, with the torchbearer, Mr. M.A.
Hashem, the founder Chairman of the then Partex Group, an eminent industrialist of the
country.

Partex Star Group owns and successfully operates twenty manufacturing, service and trading
concerns delivering best values to customers through its products and services. Its business
primarily exists in two different areas consumer durables like different types of boards
(particle board, veneer board, melamine faced chip board, plywood, PVC sheet) doors and
door frames & furniture to FMCG like dairy products, cookies, spices, etc.

A motivated work force, management and committed board members led by the Partex Star
Group Chairperson and backed by a market oriented corporate strategy has been the
foundation of the groups success.

2.2 Vision
Transform PSG into a Business Enterprise of Global significance to deliver superior value to
our customers, shareholders, employees and society at large.

2.3 Mission
To be a leading conglomerate, to maximize shareholders value by achieving superior
performance, to foster long term confidence and respect, while generating sustainable growth
for all shareholders.

To introduce new and innovative products and technologies.


To assure quality products from advanced manufacturing facilities.
Continuous development of people competency.
To recognize individual contribution.
2.4 Core Values
Live up to our commitments.
Trust and respect to each other.
Work as a team.
Take initiative to exceed standards.
Transparent and fair in all our dealings.
Share social responsibility.

2.5 Slogan
Living a legacy, presenting a new face forward.

2.6 Product and Services


PSG has two main divisions 1. Building Materials Division CX 1 (Partex) 2. Food Division
CX 2 (Danish)

Building Materials Division CX 1 (Partex)


Star Particle Board Mills Limited
Partex Furniture Industries Limited
Partex Builders Limited
Partex Laminates Limited
Partex Agro Limited
Partex Housing Limited
Partex PVC Industries Limited
Star Adhesives Limited
New Lights Star Apparels Limited
Partex Aero marine Logistics Ltd.
Partex Cables Ltd.
Curve Maritime Co. Limited
Partex Limited
Food Division CX 2 (Danish)
Danish Condensed Milk BD Limited
Danish Condensed Milk BD Limited Unit 2 Drink / Juice
Danish Distribution Network Limited
Danish Foods Limited
Rubel Steel Mills Limited
Danish Milk Bangladesh Limited
Danish Dairy Farm Limited
Shubornobhumi Housing Limited
Voicetel Limited
Ferrotechnic Limited
Geometric Business Development Limited

2.7 ACNABIN Chartered Accountants


ACNABIN Chartered Accountants, one of the biggest chartered accountancy firms in the
country founded in 1985 by seven partners with the mission to add value continually by
helping client succeed. ACNABIN Chartered Accountants was named after taking one letter
from the of seven partners. Currently ACNABIN Chartered Accountants have ten partners.
The head office of ACNABIN Chartered Accountants is in BDBL Bhaban, level-13,
Kawranbazar, Dhaka.
Chapter 3 Project Details

3.1 Fixed Assets


Fixed assets are the assets purchased for long term (more than 1 year) and not likely to be
converted quickly into cash, such as Land, Buildings, Furniture, Plan and Machineries.

3.2 Details about Identification, Verification, & Tagging of Fixed


Assets
According to going concern Principles Company run its operation for a foreseeable period of
time. During its operation company purchase and dispose fixed assets continuously. A
company like PSG has lots of concerns and branches. All the purchase and dispose are not
updated in the ERP. So after 3 to 4 years company goes for contact with a chartered
accountancy firm for updating fixed assets.

When I came to ACNABIN Chartered Accountants for my internship, I had been involved to
a team those already were working for identification, verification, & tagging of fixed assets
for PSG. After details meeting with the head of accounts of PSG we started our job.

3.2.1 Preparing well formatted data capturing sheet


At first they provided us with information about their fixed assets. According to their
information and discussion we generate fixed assets data capturing sheet. The sheet was like
that
Fixed Assets' Data Capturing Sheet
Name of Concern: Partex Furniture Industries Limited.
Main Location: Dhaka, Monipuripara, Mkt Office

Sl. Location Condition


Existi Physic
No. Assets Assets Sub Go Damage
Brand/M ng al Us Sta
(FA (Main (Sub section/C Roo Good & od d but Obsolete/Impaired/ Remarks
odel Dept. Floor Tag Quant er nd
Reg Class) Class) ost m in use but Servicea Damage
no. ity by
.) Center idle ble
381 Furniture Marketin Marketi 4th
, Fixtures g Office ng & Floor
1
& Sales
Fittings
382 Furniture Marketin Marketi 4th
, Fixtures g Office ng & Floor
1
& Sales
Fittings
386 Furniture Office Marketi 4th
, Fixtures Decorati ng & Floor
& on, Sales 1
Fittings Marketin
g Office
930 I.T Compute Marketi 4th
Equipme r ng & Floor 1
nt Sales

Representative of
Representative of PSG (PFIL)
ACNABIN
Name: Name:

Signatu Signatu
re: re:
Date: Date:
3.2.2 Identify fixed assets
As we have discussed about fixed assets, now our job is to visit the location and identify
fixed assets. Usually we took the help of the concern person for identifying fixed assets. As
PSG has Furniture concern, some the furniture were used as fixed assets and some were
inventory. Sot there were problem of identifying fixed assets.

3.2.3 Visit the location and collect data


With this data capturing sheet we went respective concern and branch. ACNABIN Chartered
Accountants provided us necessary material for visiting to the location. The firms policy is
to pay travelling allowance in AC bus and daily allowance to 400 outside Dhaka. .After
going there we physically counted fixed assets the compared our sheet and reported any
mismatch. Most of the time there were some addition and deduction with the information
provided by head of accounts of PSG.

3.2.4 Input the data into excel


After capturing all data we had inputted all data into excel .Then we colored data capturing
sheet for different findings. Such as
Green color means the asset was found as it is in the register.
Red color means the asset was not found.
Blue color means the asset was found but Mismatch with register in case of quantities.
Yellow color means new addition.

3.2.5 Reconciliation of data


After that we went to head office for reconciliation. The reconciliation process had taken a
long time as there were mismatches.

3.2.6 Use Microsoft Excel to generate tag


Finishing the reconciliation, we generated final tags. For generating tags there are special
software but we used Microsoft Excel for generating tags. We used concatenate function for
generating tags. The tags were like that

Partex Star Group


SPBML-1488/Accounts/Finance & Accounts/
ITE/Computer A

Partex Star Group


SPBML-1488/Accounts/Finance & Accounts/
ITE/Computer -B

Partex Star Group


SPBML-1488/Accounts/Finance & Accounts/
ITE/Computer -C

At the top name of the group of company.


SPBML-1488 means this asset is owned by Star Particle Board Mill Limited and the
asset number in the ERP is 1488.
Accounts means the asset is under department Accounts.
Finance & Accounts is the cost center of Accounts department.
ITE means IT Equipment; it is the fixed assets main class.
Computer-A means this fixed asset is a computer for which serial number is A.
3.2.7 Tagging of fixed assets
After we generated final tag, we went respective concern and branch. At first we arranged our
tags according to our sheet. Then we met the concern person of the concerns and branches.
We asked for helping us. Most of the cases they had cooperated us. They provided us staffs.
With the help of the staff I along with my team completed the job of tagging.

3.3 Why Identification, Verification, & Tagging of Fixed Assets


When I had been involved to the team for identification, verification, & tagging of fixed
assets, I asked my manager of ACNABIN Chartered Accountants, what is the need for
identification, verification, & tagging of fixed assets? He told me some reason such as

To report actual amount of fixed assets: The major part of Balance Sheet is the Fixed
Assets. If the amount of fixed assets is misstated then the whole Balance Sheet is
misstated. So companies want to know the actual amount of fixed assets. As we stated
that fixed assets acquisition and disposal is a continuous matter. If you do not do such
type of work like identification, verification, & tagging of fixed assets, then it is not
possible to record amount in the Balance Sheet.
To calculate depreciation: If the amount of fixed assets is not accurate then the
depreciation will also be wrong. So to calculate accurate depreciation such work is
needed.
To avoid tax evasion: Depreciation is a tax deductible expense. If depreciation is
overstated then taxable income is understated and vice versa. So to avoid such over
and under estimation such type of work is needed.

Then I asked what is the need for contracting with a third party to do such type of work?
My manager told me some reason for contracting with a third party. Such as

Assurance: If you perform identification, verification, & tagging of fixed assets by


yourself, it lacks assurance. If a third party do it, assurance about the accuracy is
insured.
Expertise: Chartered Accountancy firms regularly do such type of work. So they
are very much expert for this type of work. At first I thought that the work is very
much simple. But when went to practical application then found that it is not so
easy. This job needs expertise.
Lack of scope for company personnel: Organization hire employee for their
regular activities. And the job identification, verification, & tagging of fixed assets
is not a regular activities. The employee of PSG dont have the opportunity to do
an additional work beside their regular work. So PSG went for contracting with
ACNABIN Chartered Accountants.

3.4 Fixed Assets Management of Partex Star Group


Fixed Assets management is a continuous and structured process of acquiring, using, and
operating fixed assets in a cost effective way. All the persons using fixed assets are
responsible for proper use of fixed assets and liable for any misuse or loss on fixed assets.

3.4.1 Fixed Assets Management Team


PSG has fixed assets management team formed with its personnel. The CFO is responsible
for overseeing management of fixed assets. He is also liable for providing guidelines for
effective and efficient management of fixed assets.

3.4.2Treating Fixed Assets as Expense


PSG has the policy to recognized fixed assets as expense with value from to 1000 to to
10000. They called it Low Value Assets.

3.4.3 Physical verification of Fixed Assets


PSG has the policy to verify fixed assets physically once in every year by assets management
team i.e. Accounts Department.
Chapter 4 Findings, Recommendation, & Conclusion

4.1 Findings
During my three months internship period, I have notice the following matters about fixed
assets management of PSG-

Previously I had no knowledge about such job continuous verification of fixed assets
as well as tagging of fixed assets. After three month internship program I have knew
about the verification and tagging of fixed assets.
Assets register is not updated properly. When went to different of concerns and
branches for physical verification, we noticed that there are many mismatch with ERP
quantity.
Some assets are issued to one concern but used by another concern.
Assets are not properly classified i.e. for some concern AC is classified as under
electrical equipment but for another under office equipment.
I had not have any concept about low value assets. PSG has the policy to treat assets
from to 1000 to to 10,000 as low value assets, shows them as expense.
Many of the in charge of concerns and branches are not knowledgeable about
identification, verification, & tagging of fixed assets.
Some concern persons had cooperated us much but some did not.

4.2 Recommendation
PSG is one of the biggest conglomerate in the country. It had good management system as
well as good fixed assets management policy and technology. Nevertheless, after my three
months involvement with PSG, I would like to suggest the following

When we went to for data collection, the staffs didnt care about us. They were busy
with their own job, killing our valuable time. I think PSG should command all
concerns, so that they cooperate with us.
Assets register should be updated regularly.
4.3 Conclusion
Partex Star Group one of biggest conglomerates having total assets 7.2 billion USD and 82
million USD net income in 2016, is a private limited company. PSG is run by effective and
efficient management team leading to achieve pick of success. After working three months in
PSG gather practical knowledge about fixed assets management procedures. When I came to
ACNABIN Chartered Accountants three months ago, I didnt have any practical knowledge
about fixed assets management. This three months internship program has enriched my
practical knowledge about fixed management. During this three months, I got involved with
top management as well as subordinate management personnel. PSG has modernized
management system. All works are done by computerized system. The job identification,
verification, & tagging of fixed assets is a new experience for me. Meeting with top
personnel, visiting different location for collecting data, inputting data into excel, coloring
data sheet for different findings, reconciling data with Accounts department, generating tags,
tagging assets all are new experience for me.
Chapter 5 References & Bibliography

5.1 References
Fixed Assets management policy provided by PSG.

Discussion with managers

Websites:

http://partexstargroup.com/

http://www.investopedia.com/

http://www.acnabin.com/firm-profile/

5.2 Bibliography
PSG = Partex Star Group