ACCOUNTING SYSTEM OF RAJSHAHI SUGAR MILLS LIMITED, HARIAN, RAJSHAHI.
1.1 Introduction of Internship
Theoretical knowledge becomes fulfilled when it is applied in practical field. As such to apply the theoretical knowledge in practical field the department of accounting of Rajshahi University has introduced an internship program as a part of its MBA academic curriculum for its concerned students. Under this program each student has to take practical training in a specific organization for one month starting from 2nd February to 29th February so that they can know how the theoretical knowledge can be applied in practical field. After taking practical training he has to prepare a report. This report is a report that is required to fulfill my academic lessons. I shall be amply awarded if someone gets a little advantage from my report.
1.2 Definition of Internship
The part ‘Internship’ indicates practical training in any area. Stated in other word internship is practically training in any real field where theoretical knowledge is practically applied. In academic teaching student become aware of common rules and principles that should be followed in the typical situations due to various reasonable causes. The participants of practical training become acquainted with practical rules that in follow in practical situation. They also become aware of how practical practice deviate from theoretical principles. Thus internship program expands the knowledge and it fulfils the theoretical knowledge of the participants.
Therefore in single word it would be called that internship is a process by which the acquired knowledge if the participant become expanded by application of academic knowledge in practical field.
1.3 The Objectives of Internship
To give training to a worker to perform a works practically is called the internship. As a result the practical objectives of internship are reflected. The objectives of internship are given below:
1. To make the theoretical knowledge fruitful and timely.
2. To help the development of the relation between management and workers and to make it production oriented.
3. To know about the relation of owner and employees, the condition of appointment, law and order situation growth of production and other facilities.
4. To know about the method of correction of errors, formulation of co-operatives and control process.
5. Its one of the main objectives to give him probe knowledge if any internee is appointed in the administrational job he can perform the job with credit.
6. With a view build up and internee as an able worker.
1.4 The Significance of Internship
Modern period is the age of big and heavy industry. A comprehensive lesson is available in internship. All industries try to maximize its production and profit so skill labour and employee is essential. So to achieve the goal as a student of Accounting bound to take internship:
1. To improve theoretical knowledge
2. To increase production and improve the quality of production.
3. To identify the problem of the industry
4. To find out the technique and method for solving the problem of industry.
5. In order to enhance the relation between administration and labour.
2.1 Historical Background of Rajshahi Sugar Mills Ltd. (RSM)
Rajshahi Sugar Mills Ltd. was established during 1965-66 with a cane crushing capacity of 1016 MTs sugarcane per day. The project cost was Tk. 487.87 lac out of which foreign currency was Tk 390.69 lacs and local currency was Tk 97. 18 lacs.
In 1968-69 the cane crushing capacity was increased form 1016 MTs cane per day to 1524 MTs cane per day. Consequently, The crushing was increased from 1016 MTs cane per day to 1524 MTs cane per day with a cost of Tk. 230.46.
Considering the potentiality and availability of enough sugarcane in and around mills zone BMRE scheme, in two component, namely agricultural component and mills rehabilitation was taken up with an estimated cost of Tk. 2541. 34 lacs out of which foreign currency was 1112.04 lacs. BMRE for agricultural component was started in 1983 and compelled in 1987 under. I.D.A credit. The BMRE of milling component was started in 1991 with credit from bank through Project Equipment Corporation of India. Total expenditure for this BMRE till date is Tk 2516.126 lacs.
Rajshahi Sugar Mills Ltd. contributed national exchequer from the date of liberation to date the tune of Tk. 7520.69 lacs by way of direct and indirect taxes viz. income tax, excise duty VAT etc. on top it Tk. 651.82 lacs was spent for development of socio- economic infrastructure of the mills area in the form of road development construction of bridges and culverts, approach feeder road etc and also for economic well- being of the cane growers of the locality. Since liberation, the mill has not far earned a profit of Tk 3872.62 lacs in 17 crushing seasons and incurred a loss of Tk 2648.03 lacs in 8 crushing seasons the mills was profitable up to 1990-1991 year. Unfortunately the mills thereafter has sustained loss for the consecutive three years of 1991-92, 1992-93 and 1993-94 mainly becomes the selling price of sugar was net commensurate to the cost of production and cost of sugarcane. The BMRE works had to spread over a period of three years and the BMRE works and crushing of sugarcane unit on simultaneously as a result of which both BMRE works as well as the rate of crushing suffered. BMRE works completed last year (2002–2003) and the mills produced 23,009.00 MTs of sugarcane with a marginal profit of Tk. 17.86 lacs.
2.2 Location
Rajshahi Sugar Mills Ltd. located at Horian which is 10 kilo meters away from Rajshahi town and left side of Rajshahi Natore High way. It is the eastern side of Rajshahi University. It is situated over 99.40 Acre of land.
2.3 At a Glance of Rajshahi Sugar Mills Ltd
A unit of Bangladesh Sugar and Food. Industries Corporation (BSFIC).
1) Name of the Institution: Rajshahi Sugar Mills Ltd.
2) Establishment Period: Construction start- 1963 Finished- 1965.
3) Head office BSFIC: Admazee court 115-20 Motijheel commercial area Dhaka- 1000.
4) Post Address: Post: Horian, Rajshahi.
5) Expansion: First time- 1968 and Second time- 1972.
6) Daily crushing power: Initially - 1096 MTs later- 1524 MTs present- 2000 MTs
7) Yearly production capacity: Present 200000 MTs.
8) Machinery supplier institution:
a) Initially, Marlin & Watson Co. Ltd. Scotland.
b) Extension: Project equipment co- operation India and Frature & Watson Co Ltd.
9) Investment:
a) Original cost- 257.41 lacs Taka.
b) Expansion- 230. 46 Lacs Taka.
Total= 487. 87 Lacs Taka.
10) Land: (Area):
a) Factory & Colony- 71,44 Acre.
b) Cane purchansing center- 22.47 Acre
c) Experimental firm- 128.00 Acre
d) Total land of Mills- 231.91 Acre
e) Area of Sugar cane cultivation 200 Squire Mills.
11) Factory time: 24 hours worked in seasonal time.
12) Shift: In the season workers and other employees work in 3
shifts.
13) Shift time: 8 hours x 3 shifts= 24 hours
14) Method of Accounting: Integrated system of cost and
financial accounting.
15) Method of Depreciation: Straight line.
16) Audit System: Internal & External audit.
17) Capital:
Authorized capital – Tk 500,00,000.00
Issued capital- Tk. 150,00,000.00
Paid up capital- Tk. 130, 00, 000.00
18) Trade Union: There is a labor organization. This organization was founded on 10th October, 1967 by the name of Rajshahi Sugar Mills Ltd. Production trade union law of 1965.
19) Control: The mills operated and controlled by B.S.F.I.C under the Ministry of Industry.
20) Education Facilities:
a) High school- 1
b) Number of total students- 634
c) Total number of class- 11
d) No of total teacher- 19
21) Residential Area:
a) Guesthouse- 1.
b) Bachelor officers hostel- 1.
Summary
| Type | Accommodation | Accommodation | House/ Room |
| Employee/ workers | Family | 11.70% | 224 |
| Bachelor | 10.52% | 33 | |
| Officers | Family | 33.00% | 42 |
| Bachelor | 8.00% | 12 |
22) Medical Facilities:
a) Number of Doctor-
b) Number of beds-
23) Enjoyment Facilities
a) One general club for workers
b) Officer-
24) Canteen- 1
25) Training Facilities of Rajshahi Sugar Mills Ltd. has a training complex, where officer and cultivators are trained by mills authority.
26) Bank: 1 (Agroni Bank).
27) Warehouse: 2
28) Mosque: 1
29) Product:
a) Main product- Sugar
b) By product
i) Molasses.
ii) Baggage.
iii) Pas-mud.
30) No. of Transport:
| Name of transport | Quantity | Users | Unsure |
| Truck | 8 | 8 | - |
| Tractor | 114 | 69 | 45 |
| Troly | 395 | 355 | 40 |
| Jeep | 8 | 5 | 3 |
| Ambulance | 2 | 1 | 1 |
31) Staff salary of production: 29.11.65
32) No. of sugarcane purchase center- 51
33) Main Raw material – Sugarcane
34) Cost of installation Tk. 18.779 Millions.
35) Current ownership Government of the peoples republic of Bangladesh.
36) Sources of Monetary fund:
a) Sales of produced sugar
b) Financial Assistances by Government of Bangladesh.
3.1 Meaning of Methodology
We can say easily that methodology is a way to systematically solve the research problem. Broadly says that methodology is the undertaking and rules of organization of a philosophical system of inquire procedure.
Identify the relevant sources of data application of appropriate data collection method and use of proper statistical test and techniques for analysis the collected data etc. are concerning methodology of the study.
3.2 Method of collecting Information
To make the papers of practical training one can collect the information in many ways like sending the question paper by the investigator, taking personal interviews, review and survey etc. I have implied the following two sources to collect information from Rajshahi Sugar Mills Ltd.
Primary sources
At first I made questionnaire and handed over supplied them to the senior administrative officer, accounts officer, production officer of the Mills. Then I asked them my question and collected information in this regard.
Secondary source
The secondary data were collected form various document of the Mills. The document are as follows:
(i) Daily summary statements
(ii) Monthly summary statements
(iii) Sample of ledger book
(iv) Trial balance
(v) Profit & loss appropriation account
(vi) Cash flow statement
(vii) Balance sheet etc.
3.3 Objectives of the Study
The main objectives of the study are as follows:
i. To study the accounting auditing and reporting practices followed by the industry.
ii. To study the legal framework regarding accounts audits and report.
iii. To suggest the better way for improving existing accounting and reporting practice of the sugar mills.
iv. To study the organizational set-up of the accounts department.
v. To evaluate the accounting and reporting practices followed by the mills.
3.4 Limitation of the Study
The study suffers from some problems as below:
(i) Reluctance of Rajshahi Sugar Mills in providing data on the plea of secrecy hampered concrete analysis of accounting system and reporting practices in same cases.
(ii) There are needed enormous time to accomplish this internship program successfully, but the allocated time one month.
(iii) Problems for lack of may knowledge about research work.
(iv) Data selection was not sufficient.
4.1 Definition of Accounting
Accounting in a practical matter. Accounting is a process by which overall result and financial condition are unidentified and reviewed through recording the financial transaction of a company and provided data to its users. The main purpose of accounting is to identify and review the result and impact of economic activities of an organization. There are many definition of accounting one of them AICPA (American Institute of Certified Public Accountants) definition is discussed bellow:
“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are in part at least, of financial character and interpreting the result thereof.”
4.2 Accounting System
The accounting system is the major quantitative in formation system in almost every organization. In other word, Accounting system, may be defined as the collection, compilation and systematic record of business transaction in terms of money, the preparation of financial reports, the analysis and interpretation of these reports and the use of these reports for the information and guidance of management.
Accounting system is a principal means for facilitating the management process of planning and controlling. Accounting system records activities as they occur and provides the feedback that is so essential to any information system. Mainly two types of accounting system:
1. Separate Accounting system.
2. Integrated Accounting system.
4.3 Objectives of Accounting System
Accounting system means some rules and regulation of accounting. The optimal accounting system has same objectives, which are mentioned bellow:
i) Internal reporting to mangers, for use in planning and controlling the current operations.
ii) Internal reporting to managers, for use in strategic planning that is the making of special decisions and in the formulating of over-all policies and long range plans.
iii) External reporting to shareholders, government and other outside parties.
iv) To publish report within a short time for the concern people.
v) To provide a high degree of accuracy.
vi) To maximize the possibility of risk.
4.4 Nature of Accounting System
Accounting system is a form of an organization which record report closely and provide facilitated to the business management through determining some information.
i) A given period of profit/loss amount
ii) The assets & liabilities and net worth of the business at any time.
iii) Information which is must be provided to the government.
4.5 Meaning of Integrated Accounting System
When cost and financial accounts are maintain separately, it is necessary to reconcile the profit shown by one set of books with that show by other than. An alternative accounting system which would avoiate the need for reconciling the financial and cost accounts is known as integrated or integral accounting system. In the other word, a single book-keeping system which contains both financial and cost accounts is knows as an integrated or integral accounting system.
4.6 Advantages of Integrated Accounting System
An integrated accounting system has the following advantage:
a) There is no problem of reconciliation as there will only be one profit amount.
b) This system is economical and easy to understand. Duplication of work and labour are avoided.
c) Cost data can be presented promptly and regularly.
d) All cost data and accounts are automatically checked and thus cost figures are accurate.
4.7 Integrated Accounting for Rajshahi Sugar Mills
In July, 1967, the first integrated system for Rajshahi Sugar Mills was introduced after a study of the then existing systems (i.e. separate system). It tried to correct four basic options which were discovered in the old system namely non- uniformity of accounting methods and reports, absence of a reliable method to determine the unit cost of sugar. The treatment of the seasonal nature of the industry , and the need for effective budgetary control.
This latest revision of the original integrated system comes about because of the development and extension of responsibility accounting and budgetary control. By Planning, Production and Costs month by month for a financial year, by ascertaining the responsibility for those costs and caling for explanations of variance from plan, and by employing a uniform code of accounts together with uniform monthly report forms, the system outlined in the following pages is based firmly on the original integrated system. New emphasis is placed on responsibility accounting. The role of cost centres in controlling seasonal and non- seasonal expenditure is being underlined.
Accounting Cycle
Accounting cycle may be defined as the cycle that carries the complete sequences of accounting process which are repeated in the same order during each accounting period.
As soon as transactions take place they are recorded in journal and so the Accounting cycle begins with the journalizing and concludes with the post closing trial balance. In its cyclic path it performs other accounting procedures such as classification of business transactions, summarization of those transaction followed by the interpretation and analysis of prepared statement. This periodic repetition of the accounting process or system is referred to as accounting cycle.
Organizational Setup of the Finance and Accounting Department
Finance and accounts department is under the supervision of member (Finance) who is a qualified person. The department is headed by a chief finance and accounts officer is also a qualified person.
5.1 Organization of Finance and Accounts Department
The organizational structure of the fiancé and accounts department is given in the following:
Member (Finance)
|
Finance and Accounts => Internal audit and inspection
|
Chief finance and accounts officer
|
Deputy chief finance accounts officer => Senior finance officer => Senior
finance officer
|
Finance officer (1) Finance officer (2)
|
Accounts officer Budget, bill receivable revenue etc.
|
Accounts officer salary, wages, capital expenditure etc. revenue etc.
5.2 Functions of Finance and Accounts Department
The function of finance and account department are summarized below:
v To maintain books of accounts and record therein by day to day transaction of the mills.
v Preparation of annual income and expenditure statement and Balance sheet.
v Preparation of periodical financial statement of industry.
v To carry out pay fixation, prepare payroll and arrange payment of salaries and wages.
v To process bill for payment.
v To furnish various data to management for financial control.
v Preparation of budget and funds flow statement.
v Maintenance of capital account and revenue account.
v Maintenance of related accounts of fund of mills.
v Maintenance of fixed and current assets and loans and related accounts.
v Preparation of the accounts related to provident fund, gratuity, poor fund group insurance and benevolent fund.
v Maintenance of accounts related to collection of charges on accounts of electricity.
v Maintenance of accounts related to granting loans and advance and its recovery or payment to staff/workers.
v Assistance to Internal and external auditor with supporting documents.
5.3 Section of Finance and Accounts Department
The finance and accounts department has seven sections such as;
v Finance and Budget section.
v M.I.S Section.
v Bill Section.
v Sugar Account Section.
v Store Account Section.
v Sales Section.
v Audit Account Section.
5.4 Actual Manpower of Finance and Accounting Department of Rajshahi Sugar Mills Ltd.
| Sl. No. | Name of Officials and Staff | Number |
| 1. | Member of finance | 1 |
| 2. | Chief finance and accounts officer | 1 |
| 3. | Deputy chief finance and accounts officer | 1 |
| 4. | Senior account officer | 2 |
| 5. | Senior finance officer | 1 |
| 6. | Finance officer | 1 |
| 7. | Accounts officer | 1 |
| 8. | Assistant account officer | 2 |
| 9. | Accountant | 4 |
| 10. | Senior clark | 2 |
| 11. | Junior clark | 2 |
| 12. | Bill chequer | 2 |
| 13. | Typist | 2 |
| 14. | Bearer | 2 |
| 15. | Peon | 4 |
| 16. | Total | 28 |
6.1 Accounting Practice of Rajshahi Sugar Mills Ltd.
The industry is a product and service oriented organization. Here accounting practice is necessary not only for recording of transaction but also for managerial planning and control. It is also necessary for compliance with legal requirements. The industry follows the double entry systems of recording transactions.
6.2 Maintenance of Necessary Books
It maintenance the following books for the purpose of recording transactions and facilitating the preparation of financial statements:
(i) Cash Book or Bank Book
(ii) Journal
(iii) General ledger
(iv) Personal Ledger
(v) Expenditure ledger
(vi) Income ledger
(vii) Fixed Assets register
(viii) Capital work in progress register.
A brief discussion of various book are given below-
(i) Cash Book or Bank Book:
In the industry there is no cash transaction for receipts and expenditure. All receipts and expenditure are made through Bank. So it is one of the important books of accounts and record of receipts and expenditure.
(ii) Journal:
Journal is used for recording transaction with different users and principals. Entries relating to dealings with them are passed on the basis of accounts submitted by them (user). Besides opening, closing adjustment and rectifying entries are passed though journal.
(iii) General Ledger:
It contains the accounts of assets and liabilities other than fixed assets capital work- in process and those of personal ledger. The chart of account for general ledger contains as many one hundred and thirty eight account. Under this head investments stores, trade debtors, sundry debtors advances deposit, prepayments, cash in hand, cash at bank, capital accounts, capital reserve, revenue reserve, long term loans, government loan, creditors advance and deposits received, collection on agent, accrued interest due, other accrued expenses and provision and sundry credit balance and the like.
(iv) Personal ledger:
It contains the personal accounts in respect of Sugar cane purchases, handling labour, revenue and capital expenditure.
(v) Expenditure ledger:
It records revenue expenditure analyzed by cost centers-
Example: Over Profit Bonus, leave pay and gratuity, employee contribution to provident found etc.
(vi) Income ledger:
It contains all accounts of income of the mills.
Example: Sales of sugar, sales of bagasse and molasses.
(vii) Fixed Assets Register:
This register is maintained for recording control and subsidiary accounts of all fixed assets owned by the mill, control accounts are maintained for trial balance preparation.
(viii) Capital Work In Process Register:
The register is maintained for recording expenditure incurred in respect of going projects. Control Accounts are maintained for keeping projectwise accounts while subsidiary accounts are kept for detailed regarding of individual assets. Besides the above principal book the mills maintains a good number of subsidiary books for facilitating their preparation.
6.3 Preparation of Trail Balance
After the preparation of above journal and ledger books the mill prepare trial balance at the end of accounting year.
6.4 Preparation of Financial Statements
When trial Balance is prepared then the mill prepare the following financial statement:
(a) Manufacturing Trading Account and Profit & Loss Account:
This account is prepared with the balances of the income ledger and expenditure ledger. Income are classified according to the chart of accounts while the expenditures are classified by cost centers. The Manufacturing Trading and Profit & Loss Account shows the net surplus or deficit during the accounting period.
(b) Balance Sheet:
The balance sheet is prepared with the balance of general ledger, personal ledger, Fixed assets register, capital, work-in-process resister and cash book classification of investment. Current assets and current liabilities are made in accordance with the chart of accounts for general ledger. The balance sheet shown fixed assets, Net current Assets, assets employed and the mode of financing the assets i.e. financing by long term loan by capital and other funds.
6.5 Coding System Used
For the purpose of the manual system the mills have to establish the following code for different Head of Accounts, which is shown below:
The Rajshahi Sugar Mills Ltd.
Coding plant for Control Accounts
| Class and Accounts title | Code (Five digit code) |
| Balance Sheet: | |
| Share capital and reserves | 12,000 to 15, 900 |
| Loan capital | 16,000 to 16, 900 |
| Current liabilities | 18,000 to 26, 000 |
| | |
| Balance sheet items | |
| Fixed Assets and Depreciation | 20,000 to 35, 600 |
| Current Assets | 35,000 to 45, 500 |
| Income Accounts | 46,000 to 50, 500 |
| Cost of production Accounts | 51,000 to 58, 600 |
| Expenditure | 59,000 to 98, 500 |
6.6 Cost Center Code
The new cost centre code is designed to place greater emphasis on responsibility accounting. Upto 30th June 1974, ten cost centre were is use. These have now been extended to thirteen and reordered so that their sequence corresponds to the production process The code numbers given to each cost centre conform to a pattern which, it is hoped, will eventually apply uniformly throughout the nationalized industries of Bangladesh. Broadly, the Pattern is-
v Manufacturing, Packing and Storing take the digits 00-39.
v Ancillary Services to the mills take the digits- 70-78.
v Administration takes the digits- 79-99.
Applying this broad pattern to the Sugar industry given the following cost centers and code should be used from the 18 July 1964:
| Cost Centre | Code |
| Cane procurement | 01 |
| Transport | 02 |
| Crushing and Mechanical maintenance | 05 |
| Sugar processing and chemical control | 06 |
| Sales and Distribution | 35 |
| Steam Generation | 40 |
| Power Generation | 41 |
| Electrical Maintenance | 44 |
| Civil Maintenance | 45 |
| Cane Development | 63 |
| Experimental farm | 64 |
| Machine Cultivate | 66 |
| Accounts | 69 |
| Administration | 82 |
6.6 Accounting Principles
The structure of accounting system has developed over the countries through a set of principles, which is preparing convention. In the accounting process the mills follows the following General Accepted Accounting Principles, (GAAP):
a) Entity principle
b) Double entry principle
c) Money Measurement principle
d) Objective evidence principle
e) Historical cost principle
f) Going concern principle
g) Accounting period principle
h) Accrual principle
i) Matching principle
j) Consistency convention
k) Conservatism convention.
l) Materiality convention.
m) Disclosure convention
6.8. Accounting Standard
Accounting standard may be defined as the method of accounting, their applications in practice and their disclosures in the financial statement set by professional or governmental bodies as recommendations or regulation after appropriate studies, consultation and tests.
The Institute of Cost and Management Accounts of Bangladesh (ICMAB) and the Institute of Charted Accounts of Bangladesh (ICAB) the two wings of accountancy profession in Bangladesh. Both ICMAB and ICAB are member of the International Accounting Standards Committee (IASC) and has adopted 16 I.A.S which is named once as Accounting Standard in Bangladesh. Rajshahi Sugar Mills Ltd. follows the following standards:
AS- 1: Disclosure of accounting principle – IAS-I
AS- 2: Information to be disclosed in financial statement –IAS-5
AS- 3: Accounting for property plant and equipment- IAS- 16
AS- 4: Depreciation Accounting – IAS-4
AS- 6: Statement of charges in financial position – IAS-6
AS- 12: Revenue Recognition –IAS-12
AS- 16: Related party disclosure- IAS-24
7.1 Reporting Practices of Rajshahi Sugar Mills Ltd.
The reporting practices of Rajshahi Sugar Mills Ltd. is of two kinds. i.e. Internal and Annual reporting, they are described below:
7.2 Internal Report
Internal reporting is very much important for managerial decision. For the purpose of managerial decision accounting data and information are supplied on monthly and quarterly basis to the officials.
a) Monthly MIS statement
b) Monthly operating result statement
c) Monthly statement showing budget and cost center.
d) Monthly sales.
7.3 Annual Report
The mills authority is under legal obligation to submit an annual report to the corporation offer the end of every financial year. A scamming of the annual report of the mills shows that it contains the following:
a) A report on the performance of the mills
b) Auditors reports
c) Balance sheet
d) Manufacturing and profit & loss account
e) Cash flow statement
f) MIS report
g) Statement showing budget and actual expenditure with variance.
h) Monitoring scale.
A) No. of performance report:
The performance report contains a description of the activities of the mills during the financial year the following head:
a) Quantity of the product during the year
b) Sales performance
c) Labour force
d) Gross profit and expenditure
e) Profit performance
f) Liquidity ratios
g) Capital structure
B) Auditors report:
The annual report of the mills contains auditors report. It is prepared in accordance with the sugar mills corporation ordinance- 1972. The auditors submitted an unqualified report which is shown below:
Auditors Report to the Share holders of
Rajshahi Sugar Mills Ltd.
We have audited the accompanying balance sheet of the RAJSHAHI SUGAR MILLS LTD. as of 30 June 2001 and the related profit & loss account and cash flows for the year ended. The preparation of these financial statement is the responsibility of the company’s management. Our responsibility is to express and independent opinion on these financial statement based on our audit.
We conducted our auditor in accordance with Bangladesh Accounting Standard. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures the financial statement made by presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, these financial statements, prepared in accordance with Bangladesh Accounting Standard given a true and fair view of the state of the company’s affairs as of 30 June 2001 and of the results of its operations and its cash flow for the year then ended and comply with the company’s act 1994 and other applicable laws and regulations.
We also report that
a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit made due verification thereof:
b) In our opinion, proper books of accounts as required by law have been kept by the company so for as it appeared from our examination of those books.
c) The company’s balance sheet and profit and loss accounts dealt with the report are in agreement with the books of account.
| Toha Khan Zaman & Company | | Toha Khan Zaman & Company |
| Chartered Accounts | | Chartered Accounts |
| Dated- Dhaka | | Dated- Dhaka |
| June, 30, 2002 | | June, 30, 2002 |
C) Balance Sheet
Balance sheet of the mills is drown up in vertical form shows the figure of the current year and previous year. The Balance sheet is presented is the following Pattern:
RAJSHAHI SUGAR MILLS LTD. HARIAN RAJSHAHI.
BALANCE SHEET A ON 30, JUNE 2002
| Particular | Current Year | Previous Year |
| Fixed Assets | * * * * | * * * * |
| Current Assets | * * * * | * * * * |
| Inventories | * * * * | * * * * |
| Sundry debtors | * * * * | * * * * |
| Loans, Advances Deposits & Pre- payment | * * * * | * * * * |
| Inter project Current Account | * * * * | * * * * |
| Current Account with BEFIC | * * * * | * * * * |
| Loans to Setabgonj Sugar Mills Ltd. | * * * * | * * * * |
| Advance payment of tax | * * * * | * * * * |
| Cash &Bank balance | * * * * | * * * * |
| Total Current Asset. | * * * * | * * * * |
| Current Liability | * * * * | * * * * |
| Trade creditors | * * * * | * * * * |
| Liabilities for goods & supplied | * * * * | * * * * |
| Liabilities for other finance | * * * * | * * * * |
| Inter project Current Account | * * * * | * * * * |
| Current Account with BSFIC | * * * * | * * * * |
| Provision for Income Tax | * * * * | * * * * |
| Loans from RJSM provident fund | * * * * | * * * * |
| Leave pay Gratuity | * * * * | * * * * |
| Cash Credit | * * * * | * * * * |
| Total Current liabilities | * * * * | * * * * |
| Net Current liabilities | * * * * | * * * * |
| Net Assets/ Liabilities | * * * * | * * * * |
| Differed Expenditure | * * * * | * * * * |
| Finance By: | * * * * | * * * * |
| Authorizes capital: | | |
| authorize capital: 5,000,000 ordinary share@Tk.10 | * * * * | * * * * |
| Issued capital: | | |
| 15,00,000 ordinary share@Tk.10 | * * * * | * * * * |
| Subscrib & Paid up capital: | | |
| 13,00,000 ordinary share@Tk.10 | * * * * | * * * * |
| Government equity fund: | * * * * | * * * * |
| Reserve & Surplus: | * * * * | * * * * |
| Government Grant: | * * * * | * * * * |
| Accumulated losses | * * * * | * * * * |
| Loan Capital: | * * * * | * * * * |
| | * * * * | * * * * |
d) Manufacturing trading account and profit & loss Account:
The manufacturing trading and profit & loss account figures of the current is also prepared in the vertical form and shows the figures of the current year. The previous year. The manufacturing trading account and profit and loss account is prepared in the following manner.
| Particular | Current Year | Previous Year |
| Sales: Sugar Molasses | | |
| Cost of goods sold: | * * * * | * * * * |
| Cost of production | * * * * | * * * * |
| Direct expenses | * * * * | * * * * |
| Cost of cane | * * * * | * * * * |
| Cane incidental | * * * * | * * * * |
| Other product materials | * * * * | * * * * |
| Factory salaries and wages | * * * * | * * * * |
| Insurance | * * * * | * * * * |
| Repair and maintenance | * * * * | * * * * |
| Power and fuel | * * * * | * * * * |
| Deprecation | * * * * | * * * * |
| Other factory of overhead | * * * * | * * * * |
| Sugar cane expenses | * * * * | * * * * |
| Opening work- in- process | * * * * | * * * * |
| Closing work- in process | * * * * | * * * * |
| Cost of production | * * * * | * * * * |
| Opening stock of finished goods | * * * * | * * * * |
| Closing stock of finished goods | * * * * | * * * * |
| Cost of Goods sold | * * * * | * * * * |
| Gross profit/losses | * * * * | * * * * |
| Sale of imported Sugar by BSFIC | * * * * | * * * * |
| Misscellaneous Income | | |
| Expenditure: | * * * * | * * * * |
| Administrative expenses | * * * * | * * * * |
| Financial changes | * * * * | * * * * |
| Insurance | * * * * | * * * * |
| Depreciation | * * * * | * * * * |
| Selling expenses Cost of Imported sugar by BSFIC | * * * * | * * * * |
| Net Losses of experimental farm | * * * * | * * * * |
| Net profit/ losses | * * * * | * * * * |
| Accumulated (Losses) Brought | * * * * | * * * * |
| Previous years adjustment | * * * * | * * * * |
| Accumulated (Losses) carried forward. | * * * * | * * * * |
C. Rajshahi Sugar Mills Ltd.
Cash flow statement
For the year ended 30 June 2002
| Particular | Current Year | Previous Year |
| Sources of Cash: | TK | TK |
| Depreciation | * * * * | * * * * |
| Decrease in sundry debtors | * * * * | * * * * |
| Decrease in lone of SSM Ltd. | * * * * | * * * * |
| Increase in liabilities for goods supplied | * * * * | * * * * |
| Increase in Liabilities for other finance | * * * * | * * * * |
| Increase in inter project current account | * * * * | * * * * |
| Increase in loan from RJSMP.F Fund | * * * * | * * * * |
| Decrease in stock and stores | * * * * | * * * * |
| Decrease in inter project current A/c | * * * * | * * * * |
| Increase in level pay gratuity | * * * * | * * * * |
| Increase in cash credit | * * * * | * * * * |
| APPLICATION OF CASH: | | |
| Net losses | * * * * | * * * * |
| Prior year Adjustments | * * * * | * * * * |
| Decrease in Govt. Grant | * * * * | * * * * |
| Decrease in loan capital | * * * * | * * * * |
| Addition to fixed Assets | * * * * | * * * * |
| Increase in loan and advance | * * * * | * * * * |
| Increase in Investors | * * * * | * * * * |
| Increase in Advance Payment of Tax | * * * * | * * * * |
| Increase in inter project current A/consumers | * * * * | * * * * |
| Increase in current Account with BSFIC | * * * * | * * * * |
| Decrease in Trade creditors | * * * * | * * * * |
| Decrease in liabilities for expression | * * * * | * * * * |
| Increase/Decrease in cash & Bank Balance | * * * * | * * * * |
7.4 Users and uses of financial reporting of Rajshahi Sugar Mills Ltd.
In Bangladesh no other organization, so much demand of so many bodies lies as on seventeen sugar mills is one. Being an autonomous product oriented organization. The user and uses of financial reporting of the mills are very wide. The users and uses of financial reporting of Rajshahi Sugar Mills are summarized in the following:
2 Chairman of the BSFIC: Chairman of the corporation uses the financial reporting for the purpose of major decision like; asset build up, replacement of assets, acquisition, evaluation of performance and the like.
2 Member finance: Finance and accounting department is under the control of member finance financial reporting of the authority is mostly used by the member finance for performance evaluation and managerial decision.
2 Chief Auditor: Chief auditor is responsible for the audit programme of the authority. He used report future course of action.
2Chief finance and accounts officer: Chief finance and accounts officer used the financial report for performance evaluation and decision making
2 Government (Ministry of industry): Government is the external user of financial reports. Ministry of Bangladesh government uses the financial reports of the mills for the purpose of development budget, loan sanctioning and other decisions.
2 Trade union: For the purpose of salary. Wages increment and other benefits trade union uses financial reports.
7.5 Recommendation
Form the preceding discussion it is clear that accounting system has over the years and has now taken a concert shape. The authority has put in efforts to modernizes the accounting the accounting system.
At the moment the annual reports are prepare in Bengali. But English should be included with Bengali. So that the interested parties can have a better understanding about the activities of the mills and its financial position. The Bengali rendering of the report will increase its usefulness.
To make the reporting more comprehensives a statement of cost analysis should be attached with the financial statement showing the constituent element of expenditure of each unit.