Client:XYZ LTD Preparedby:MR:A Date:DD-MM-YY Ref:

Yearend: 31 December 2014 Reviewedby:MR:S Date: DD-MM-YY PAF 1.1

BACKGROUND Information

Company name and trading name:

XYZ Ltd was incorporated in Bangladesh on the [Date Month Year] as a private Ltd company in
Bangladesh under companies Act 1994. This Company also obtained listing with Dhaka Stock
Exchange and Chittagong Stock Exchange on [Date Month Year]

The registered office of the Company is situated in Dhaka.

Company numbers etc.

Registration number: A-1234567
TIN number: 1111-2222
VAT number: 3333-4444
Accounting period: 30 JUNE, YYYY
VAT period: 30 JUNE YYYY
Tax period: 30 JUNE YYYY
Date of incorporation:24 January 1973
Date of commenced trading: DD-MM-YYYY

Business address:
1st Floor, ABC plaza, road no -1 house no -1, xxxxxx, Dhaka, Bangladesh.

Contact details:
Phone: 0088029876543
Fax: 0088029876542
E-mail:xyz@gmail.com
Website: WWW.XYZ.COM
LinkedIn: XYZ
Facebook: XYZ
Twitter: XYZ

Registered office address:

Dhaka, Bangladesh

Director’s name and area of responsibilities:

Chairman: MR. X
The principal role of the Chairman of the Board is to manage and to provide leadership to the Board
of Directors of the Company. The Chairman is accountable to the Board and acts as a direct liaison
between the Board and the management of the Company, through the Chief Executive Officer
(“CEO”).

Managing director: MR.Y

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He is responsible for managing the entity on a day to day basis. He is well respected in the local
business community. He has a dominant personality and likes to be seen to have the last word on
major decisions. He works full time in the business.

Director: MR. Z (Marketing &Sales)

The director of sales and marketing position is responsible for planning and implementing sales,
marketing and product development programs, both short and long range, targeted toward existing
and new markets by performing the following duties personally or through subordinates.

Director: MR. V (Finance, Operation & Planning)

Operations director plan, direct and coordinate the operations of an organization. The general
operations manager is responsible for ensuring and improving the performance, productivity,
efficiency and profitability of departmental and organizational operations through the provision of
effective methods and strategies.

Director: MS. P(Quality Assurance)

The Director of Quality Assurance position is responsible for establishing a corporate quality
assurance system and team that promotes customer satisfaction and that positively impacts the
financial performance of XYZ Limited. Champion continuous improvement efforts and defect
reduction initiatives to establish an effective Quality Management System (QMS).

Director: MS. Q(Logistic)

Logistics director is to be responsible for the overall supply chain management. he will organize and
monitor the storage and distribution of goods.The goal is to manage the entire order cycle so as to
enhance business development and ensure sustainability and customer satisfaction.

Director: MS. N(Corporate Affiars)

Corporate affairs director is responsible for the company's internal and external communications,
including public relations, government relations, public policy, corporate restructuring and
determination of employee attitudes in a company. Communication, both within a company's many
departments and among several outside entities, is the key skill needed for a corporate affairs
manager.

Independent Director: MR.W

IndependentDirector: MR.L
Independent Director: MR.M

Other key personnel and area of responsibilities:

Company secretary: MR. S
Chief financial officer: MR.T
Head of internal control: MR.U

Nature, goals and history of business:

XYZ limited is a public limited company incorporated in Bangladesh on DD-MM-YYYY.
The company is listed in Dhaka and Chittagong stock exchange.

The group is primarily involve in manufacturing Pharmaceuticals and marketing them along with
other animal and agriculture items.

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Key accounting policies and potential for fraud from their application:
There are no unusual accounting policies. There are some cash based income and expenditure which
itself creates an increased risk of fraud and error and potential issue regarding completeness of
income and expenditure. The property, plant and equipment are measured at cost or revaluation less
accumulated depreciation. The item were revalued at YYYY by the professional valuers on the basis
of fair market value. But the area could present opportunity for fraud and error as well if the valuer
was able to be influenced by someway or if they were simply incompetent. This represent a
significant risk for the client.

Accounting estimates
Identify and list the accounting estimates relevant for the audit:
 Revaluation Property, plant and equipment
 Depreciation
 Amortization
 Accruals
 Bad debts provision
 Inventory
 Employee benefit

Document how management identifies and make the accounting estimates noting the data on
which they are based eg, method, controls, assumption and use of an expert.
 Revaluation of property plant and equipment- professional valuer are employed by
management and used open market valuation system.
 Depreciation- based on rates used throughout the industry and on management’s assessment
of the estimated useful lives.
 Amortization- based on rates used throughout the industry and on management’s assessment
of the estimated useful lives, residual value and method.
 Accruals- typically contain audit fees, utility bills etc which have always appear reasonable.
 Bad debts provision- based on past experience and assessment of recoverability of items
older than six months a provision was made which seems reasonable.
 Inventory- based on the prior year levels and the level of inventory write off in both the
current year and previous year. The provision was made for the slow moving items.
 Employee benefit-The rate used to discount post-employment benefit obligations is
determined by reference to the rate stated in the actuarial report. Actuarial valuation of
gratuity scheme has been made in YYYY to assess the adequacy of the liabilities provided
for the schemes.

Have there any changes circumstances during the year that may give rise to new or the need to
review existing accounting estimation
 Revaluation of property plant and equipment
 Impairment trigger
 Amortization
 Actuarial valuation

New estimates – property revalued during the year. This has resulted in a material increase in value.
Property prices in “B” have increased significantly over the last 10 years until slowing around
20YY. They have now started to move upwards again slightly and management felt that it was
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appropriate now to bring the revaluation in. There will be a need for annual reviews for impairment
in future years.

Existing estimates – nothing new which would necessitate revision of the principal behind existing
estimates.

Review the accounting estimates in the prior and comment on their accuracy period
 Revaluation of property plant and equipment-this is the first time that a revaluation has been
performed so there is nothing to compare these against, however the directors are not
valuing the property themselves. An experienced valuer is being used.
 Depreciation rates – these have been in line with other clients and industry figures. There
have been no major profits or losses on disposal of assets and no fully depreciated assets are
still in use.
 Amortization- based on rates used throughout the industry and on management’s assessment
of the estimated useful lives, residual value and method.
 Accruals – based on known accruals from last year and previous years plus a review of
purchase invoices reviewed after the year-end.
 Bad debts provision –based on past experience and assessment of recoverability of items
older than six months a provision was made which seems reasonable.
 Inventory- based on the prior year levels and the level of inventory write off in both the
current year and previous year. The provision was made for the slow moving items.
 Employee benefit- The rate used to discount post-employment benefit obligations is
determined by reference to the rate stated in the actuarial report. Actuarial valuation of
gratuity scheme has been made in YYYY to assess the adequacy of the liabilities provided
for the schemes.

Document (if applicable), how management has assessed the effect on estimation uncertainty
associate with an accounting estimate.

There is estimation uncertainty associated with the potential liability that is employee benefit and to
reduce these the company used professional actuaries. There is also uncertainty with the bad debts
provision, but the company has an amount of older debts at the minute in any event. The use of an
external valuer should reduce the uncertainty in relation to the property revaluation.

Do any of the estimates constitute a significant accounting risk?

The revaluation of property constitutes a significant accounting risk because of its magnitude and the
impact that it has for the accounts. Our work elsewhere on the current file will look at the
competence, capabilities and objectivity of the valuers and also the appropriateness and
reasonableness of their work.

Reporting requirement and deadlines:

We need to ensure that the company has prepared their financial statements to comply with IFRS
and that all relevant company legislation has been followed. The financial reporting framework itself
is appropriate.

The company’s year-end is DD-MM-YYYY and the accounts must be filed to the RJSC by DD-
MM-YYYY and with the tax authorities by DD-MM-YYYY.

Economic and business performance

 Sales
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  Research and development
 Research and development as 1% of sales
 M&D costs
 M&D as % of sales
 Operating profit
 Operating profit margin
 Net financial income
 Net income
 Core earnings per share
 Operating free cash flow
 Operating free cash flow as % of sales
 Net assets
 Net debt
 Equity ratio

Creating value for our shareholders and investors

 Dividend per share
 Dividend
 Payout ratio (dividend per share divided by core EPS)
 Market capitalisation
 Total Shareholder Return (TSR) at the year end 20YY

Creating value to patients, payers, healthcare professionals and institutions

 Number of patients receiving treatment with innovative XYZ medicines
 Number of patients receiving XYZmedicines that are now off-patent
 Number of patients actively participating in clinical trials
 Number of clinical trials sites
 Number of major regulatory filings (Pharmaceuticals)
 Number of major regulatory approvals received (Pharmaceuticals)

Commitment to the employees

 Number of employees
 Total employees’ remuneration
 Total employees’ remuneration as 15 % of sales
 Percentage of eligible employees purchased shares through XYZ Connect
 Percentage of women in total workforce
 Percentage of women in key positions
 Percentage of women on the Board
 Percentage of women on the Corporate Executive Committee
 Employee total turnover rate fluctuation
 Average number of training hours per employee
 Business ethics incidents reported

Safety, health and environmental protection

 Number of work-related fatalities
 XYZ accident rate
 Occupational accidents
 Occupational illnesses
 Eco-efficiency Rate
 Eco-balance

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  Total energy consumption (TJ/year)
 Total energy consumption (TJ/year per BDT sales)
 Greenhouse gas emissions (tonnes CO2 equivalents)
 Greenhouse gas emissions (tonnes CO2 equivalents per BDT sales)
 NOx emission to air (t/year)
 SO2 emissions to air (t/year)
 Volatile organic compounds emission (VOCs) (t/year)
 Water consumption (million cubic meters per year)
 Water consumption (cubic meters per year per BDT sales)
 Organic matter discharged to water ways after treatment (t/year)
 Heavy metals discharged to water ways after treatment (kg/year)
 Chemical waste produced (t/year)
 General waste produced (t/year)

Contribution to society
 Income taxes
 Income taxes as % of sales
 Community support by area:
 Humanitarian and social projects
 Science and education
 Arts and culture
 Community involvement
 Contributions to healthcare institutions
 Education of patients and general public
 Education of healthcare professionals
 Research 42% 43% 52% Contributions to patient organisations
 Disease awareness and general education
 Treatment adherence projects
 Workshops, seminars and meetings
 Educational grants

Method of monitoring key performance indicator

Management review monthly management accounts which are prepared by accounts and finance
department from the computerized accounts system. The monitoring process also includes a
comparison with budgets which are prepared by the directors before the start of each financial year.

Key customers
 Goldmark Limited,
 Maine Road Inc and
 Explorana PLC

Key suppliers
AF Limited (typically 40% of total purchases)
BM Limited (typically 15% of total purchases)
TF (typically 10% of total purchases)
AF Limited
PP Limted
FGH Limited
The suppliers above make up in the region of 65% of the total purchases by the company during the
year. The remainders are with a range of smaller suppliers AF Limited PP Limted& FGH Limited
are a related party.
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Management style
The business is tightly controlled by the directors on a day to day basis. The directors hold formal
meetings every month to review the management accounts and to consider general matters
concerning the business. The directors have a veryhands on approach to management. As auditors
we are not involved in making any management decisions although the directors are receptive to any
advice that we provide them with. Management override is a risk that we are aware of and will
remain alert for throughout the audit. We have not encountered any instances of this in previous
year’s audits

Business advisor
Legal representative
Barrister R and associate
Dhaka, Bangladesh

Bank
SCB- with address
HSBC-with address

Disclaimer: Dummy audit working files have been prepared and published to improve
the quality of audit documentation of member firms providing audit services in
Bangladesh. Member firms providing audit services should not assume these dummy
working files as absolute benchmark for the purpose of preparing and keeping audit
documentation. Every audit client has unique characteristics and risks. International
Standards on Auditing (ISA) also requires to exercise engagement partner’s judgment
on a number of areas in conducting the audit of an entity. Therefore, member firms
should use their professional knowledge, skill, experiences along with these dummy
working files to keep adequate and appropriate working papers for each audit
engagement. The preparers do not assume any liability for drawing an inappropriate
audit opinion based on the working papers prepared on the basis of these dummy
working files.

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