An Internship Report On “Internal Audit & Control Practice of Garments Manufacturing Company - A Study on Lantabur Group”

Lantabur Group Corporate Office, Uttara, Dhaka.

DAFFODIL INTERNATIONAL UNIVERSITY

Faculty of Business Administration

An Internship Report

On

“Internal Audit & Control Practice of Garments Manufacturing

Company - A Study on Lantabur Group”

Prepared By:

Talukder Abdulla-Al-Mamun

ID No: 133-14-474

MBA Program

Daffodil International University

A report submitted in partial fulfillment of the requirements for the Professional

degree of Master’s of Business Administration (MBA) Major in Finance.

Supervised By:

Professor Dr. Md. Abul Hossain

Coordinator (MBA Program)



Date of Submission: 23rd May, 2015





On





Supervised By:

Professor Dr. Md. Abul Hossain









On





Prepared By:

Talukder Abdulla-Al-Mamun

ID No: 133-14-474

MBA Program




“Internal Audit & Control Practice of Garments Manufacturing Company - A Study on Lantabur Group”

I

LETTER OF TRANSMITTAL

April 08, 2015

Professors Dr. Md. Abul Hossain



Uttara Campus

Subject: Submission of Internship Report on an “Internal Audit & Control Practice of

Garments Manufacturing Company - A Study on Lantabur Group”

Dear Sir,

With profound respect and honor I would like to inform that, It’s my pleasure to submit the internship

report an “Internal Audit & Control Practice of Garments Manufacturing Company - A Study

on Lantabur Group” within due time. This report presented in partial fulfillment of the requirements

for the Degree of Master’s of Business Administration

It was a great opportunity for me to acquire practical knowledge & experience of empirical study.

During the preparation of my report, with the help of the company & my institution I tried my best to

bring up the need of Internal Audit & Control Practice of Garments Manufacturing Company &

utilization in our country. Under this paper I hope that you will find all the necessary information of

our procedures into our findings and analyses.

I would like to thank all the staff of Lantabur Group for their kind co-operation & making me familiar

with the environment. I would not have been so enjoyable there without their friendliness.

Now I am glad to submit my report to you. Your kind acceptance will be highly appreciated.

Yours Sincerely

(Talukder Abdulla-Al-Mamun)

ID No: 133-14-474

MBA Program, Major: Finance


Daffodil International University, Uttara Campus.



II

CERTIFICATE Of APPROVAL

I am enormously please to certify that Talukder Abdulla-Al-Mamun is a student of the

Department of Business Administration, 36th Batch, ID. No: 133-14-474, Daffodil

International University have been completed his Internship Program under my supervision.

He has completed his Internship Report is “Internal Audit & Control Practice of

Garments Manufacturing Company - A Study on Lantabur Group”. He exploded the

subject matter reviewed all the relevant literatures and examined the necessary sources for

collecting relevant information.

I therefore certify and convinced to allow Talukder Abdulla-Al-Mamun, to submit his

report as I am pleased to declare that this report is solely completed under my supervision and

has not been submitted elsewhere previously to any other institution.

I wish him all the success.

.............................................

(Professor Dr. Md. Abul Hossain)






III

ACKNOWLEDGEMENT

First of all I would like to express my gratitude to almighty Allah for his blessings that help

me to complete this report. This Internship Report has been prepared on the basis of four

months successful completion of Internship program at Lantabur Group, Corporate

Office: House #51/C, Road # 13/B, Sector # 03, Uttara, Dhaka with the help of large group

of companies.

I would like to express my profound gratitude to my supervisor Professor Dr. MD. Abul

Hossain (Coordinator, MBA Program), Department of Business Administration, for his

cooperation in a discipline manner & providing the best effort for preparing this report. I

would like to thank my internship supervisor & my honorable teacher for giving me the

chance to work on such a tremendously topic. Without his help it was quite difficult for me to

complete this report successfully in time.

This report is the outcome of my internship program, I am very much grateful to the entire

employees of Lantabur Group for helping me to complete this report successfully. They

always guided me to finish my task in a successful way. Without their help it was quite

impossible for me to finish this report properly in time.

I am also grateful to the HRD of the Lantabur Group for offering me the Internship training.

My special thanks to the Md, Mahbub Hossain, Sr. Executive (Audit) for his great co-

operation who has given me the practical knowledge about the internal audit and control

activities.

At the very outset, my cordial thanks to Md. Abu Baker Khan, Director (Audit) of

Lantabur Group who gave me necessary information and excellent guidance during working

time in Lantabur Group.

I would like to record my sincere gratitude to the authority of Daffodil International

University for their kind co-operation.

Finally, I would like to thank my family who has been with me not only these few weeks, but

during all my life. They have been extremely patient and always willing to sacrifice when it

came to my studies and now work.



IV

ABSTRACT

Internal audit and control practice has a pivotal role in ensuring sustenance of any industry

because it plays an important role in preventing and detecting fraud and protecting the

organization's resources. This study has found many factors that are relevant for internal

control practices in readymade garments (RMG) sector. These vary from maintenance of

employees’ job description to bonding employees with special access. In many variables

these companies are practicing acceptable level of internal control, while in some they are not

doing so good and have ample scope to improve that level. RMG sector is mainly populated

with sole proprietorship firms and they do not allocate much resource to such practice. Even

then the concern for internal control has to be implemented to ensure long lasting role in the

economy.

Lantabur Group is one of the largest private groups of company which is limited by shares

incorporated in Bangladesh 23 May, 2007 under the Companies Act 1994. It has established

business solely and started its functioning by opening full-fledged operation in garments

sector to provide the highest level of services in accordance with the principles of Islamic

thinking.

In this report, First Chapter is the introductory part as usual. In this part some discussion

about Introduction, Objectives, Scope, Methodology and Limitation of the report.

Second Chapter will show about History, Vision, Mission, Goal & Objectives, Various

Business Units, Major Product, Customer, Various Department & Section, Design Studio of

the Company, Management & Board of Member, Operation Activity, Company at a Glance

and SWOT Analysis of the Company.

Third Chapter shows the Concept of Auditing, Internal audit, Internal auditor, Basic

Requirements, Internal Audit Process, Common Audit Findings, Concept Internal Controls,

An internal control system , Role ,Objectives, Components, Process of Internal Control,

Audit evidence, Internal Audit and control practice of Lantabur group

Fourth Chapter shows the About Internal Audit Department, Organogram of Lantabur

Group, Duties and Responsibilities, Format of Daily Work Report, Promise to company

Fifth Chapter shows the Findings,

Sixth Chapter shows the Recommendation and Conclusive opinion of the company

Finally, I have shown the Bibliography.



V

TABLE OF CONTENTS

“Internal Audit & Control Practice of Garments Manufacturing Company

– A Study on Lantabur Group”

Letter of Transmittal I

Certificate of Approval II

Acknowledgement III

Abstract IV

Table of Content V –VI

List of Abbreviations VII

CHAPTER 01 INTRODUCTORY PART 1-7

1.0 Introductory Summary 1

1.1 Introduction 2

1.2 Background of the Study 3

1.3 Scope of the Study 4

1.4 Objective of the Study 5

1.5 Methodology of the Study 5-6

1.6 Limitation of the Study 7

CHAPTER 02 COMPANY PROFILE 8-23

2.0 Company Profile Summary 8

2.1 About Lantabur Group. 9

2.2 Corporate Logo 9

2.3 Vision, Mission Goal & Objectives 10

2.4 Different (Business Unit) of Lantabur Group 11

2.5 Nature of Business activities 11

2.6 Capital Structure of the Company 11

2.7 Major Customer (Buyer) 12

2.8 Major Products 13

2.9 Various Departments of Lantabur Group 13

2.10 Various Sections for production 14

2.11 Services of Lantabur Group 14-15

2.12 Design Studio of Lantabur Group 15-17

2.13 Members of the Board of Director and Management 18

2.14 Corporate Information at a glance 19

2.15 Corporate Culture 20

2.16 Management of Lantabur Group 20

2.17 Human resource management of Lantabur Group 20

2.18 Performance Analysis of Lantabur Group 21

2.19 Company SWOT Analysis 21-23



VI

CHAPTER 03 INTERNAL AUDIT & CONTROL OF LITERATURE

REVIEW

24-33

3.0 Internal Audit & Control of Literature review 24

3.1 Concept of Auditing 25

3.2 Defined Auditing 25

3.3 Concept of Internal Audit 25

3.4 Defined Internal Auditing 26

3.5 Defined Internal auditor 26

3.6 Why internal audits function 26

3.7 Internal Audits Activities 27

3.8 Internal Audit Process 28-29

3.9 Common Audit Findings 30

3.10 Concept of Internal Controls 31

3.11 Internal Controls Defined 31

3.12 An internal control system 31

3.13 Role in Internal Controls 32

3.14 Components of Internal Control 32

3.15 Internal Control Process Objectives 32-33

3.16 Audit evidence 33

CHAPTER 04 AUDIT DEPARTMENT OF LANTABUR GROUP 34-42

4.0 Audit Department of Lantabur Group 34

4.1 About Internal Audit Department 35

4.2 Internal Audit and control practice of Lantabur group 36

4.3 Organogram of Internal Audit Department 36

4.3.1 As an Employee My Duties and Responsibilities 37

4.3.2 The Daily Routine 37

4.4 Specific Duties / Responsibilities 37-38

4.5 Format of Daily Work Report 39

4.6 Promise to company 39

CHAPTER 05 FINDINGS 40-46

5.0 Findings Summary 40

5.1 Positive Findings 41

5.2 Negative Findings 42-43

CHAPTER 06 RECOMMENDATIONS & CONCLUSIVE OPINION 44-46

BIBLIOGRAPHY 47



VII

ABBREVIATION

RMG : Ready Made Garments.

BKMEA : Bangladesh Knitwear Manufacturer & Exporters Association.

BGMEA : Bangladesh Garments Manufacturer & Exporters Association.

BAS : Bangladesh Accounting Standards.

BFRS : Bangladesh Financial Reporting Standard.

ICAB : Institute of Chartered Accountants of Bangladesh.

NBR : National Board of Revenue

BTB L / C : Back to Back Letter of credit

LDBC : Local Document Bill Collection.

FDBP : Foreign Document Bill Purchase

IBP : Inland Bill Purchase.

EPB : Export Promotion Bureau.

GSP : Generalized System of Performance.

CO : Certificate of Origin.

PRC : Proceeds Realization Certificate.

IRC : Import Registration Certificate

ERC : Export Registration Certificate

IT : Income Tax.

AIT : Advance Income Tax.

FDB : Foreign Document Bill.

FDBP : Foreign Document Bill Collection.

B / L : Bill of Lading.

QC : Quality Controller.

PI : Pro-forma Invoice.

TIN : Tax Identification Number

PC : Packing Credit.

ERQ : Export Retention Quota.

UP / UD : Utilization Permission / Utilization of Declaration.

CI : Commercial Invoice.

C & F : Clearing & Forwarding.

C & F : Cost & Freight



VIII


“Internal Audit & Control Practice of Garments Manufacturing Company - A Study on Lantabur Group” 1

1.1 Introduction

1.2 Background of the Study

1.3 Scope of the Study

1.4 Objective of the Study

1.5 Methodology of the Report

1.6 Limitation of the Study

1.1 Introduction

1.2 Background of the Study

1.3 Scope of the Study

1.4 Objective of the Study

1.5 Methodology of the Report

1.6 Limitation of the Study



1. INTRODUCTORY PART

1.1 Introduction:

The role of the Ready-Made Garments (RMG) industry in the economy of Bangladesh can

not be denied. Economic history shows that RMG sector provides the largest contribution to

the growing economy of this country. RMG is a success story so far for Bangladesh. The

industry has contributed to export earnings, foreign exchange earnings, employment creation,

poverty alleviation and empowerment of women. Thus, its sustainability is of much

importance for the development of the national economy. Internal audit &control is one of

the main ingredients to ensure the long term sustainability of any organization. It helps to

ensure the attainment of the organizational goals. Thus, the internal audit &control practices

pursued by the companies in the RMG sector are one of the key determining factors of the

sustainability of this sector. Recently, the pressure for increasing labor wages, both from

labor and regulatory bodies, has influence over this sector. The operating costs of RMG

companies are rising and placing profitability and sustainability at stake. The recent political

unrest & also for increasing labor wages has turned the situation more turbulent. All these

risk- factors call for a pioneering study on the control system of this sector, so that it may be

able to manage and control any likely adverse situation in future.

With the globalization and technological innovation in the RMG business has become

competitive. To cope up with this, any employee are facilitated to have vast practical or

empirical experience and professional knowledge to some extent. For the attainment of that

purpose, as a MBA student’s in Daffodil International University (DIU), with Major in

Finance, I feel that RMG sector is my destiny to gather the real practical knowledge.

I prefer my internship in RMG sector in this regard on the report entitled “Internal Audit &

Control Practice of Garments Manufacturing Company - A Study on Lantabur

Group”. Is the result of four months internship program from January up to April 2015 in

Lantabur Group, Corporate Office, which is a 100% Export Oriented Composite knit

Industry.For continuing the study of internshipis an integral part for the completion of MBA

Program under Department of Business Administration in Daffodil International University

(DIU), Uttara Campus, Dhaka - Bangladesh.



1.2 Background of the study

Bangladesh depends a lot on its RMG sector for export income. The main player in the

continual push for national development is the RMG sector; one could argue that RMG

industry is the sole credible player in the national economy. The sustainability of this highly

valuable sector is therefore, of much concern. This study focuses on the vigilance of internal

control system and policy of companies in the RMG sector

An Overview of RMG in BD:

The ready-made garment (RMG) industry of Bangladesh started in the late 1970s and become

a prominent player in the economy within a short period of time (Haider, 2007). He also

found that Bangladesh needs to improve the factory working environment and various social

issues related to RMG sector. Delahanty (1999) found that average garment manufacturing

labor cost in Bangladesh is $0.16 per hour in 1993, while the corresponding figures for India

and China were $0.27 and 0.25 respectively in the same year. But the recent raise in RMG

minimum wage has created a concern for this sector, which calls for greater control over cost

minimization in the same sector as this was the driver behind the success of this industry.

Moreover, according to Paul-Majumdar (2001) rented factory premises, narrow staircases,

low roofs, closed environments, absence of lunch rooms, unavailability of clean drinking

water and no separate toilets or common rooms for female workers are other concerns in the

garment factories of Bangladesh. These shortcomings in the physical infrastructure threaten

the development of this sector. Thus, previous research has shown that companies in the

RMG industries need to address several shortcomings to maintain their position in the global

market and continue contributing to the national economy. Feng et al (2009) found a positive

association between internal control and management forecast accuracy. They also found a

positive relationship between management ability and implementation of strong internal

controls, suggesting that internal controls may be one way to address these shortcomings. The

concepts of corporate governance also heavily rely on the necessity of internal controls.

Internal controls help ensure that processes operate as designed and that risk responses (risk

treatments) in risk management are carried out. In addition, there needs to be in place

circumstances ensuring that the aforementioned procedures will be performed as intended:

right attitudes, integrity and competence, and monitoring by managers. Yet, previous studies

have not reviewed the internal control practices in the RMG sector, neither internationally nor

locally. While there are some studies on physical problems in the RMG sector, lack of

attention to the system practices and development calls for pioneering research in this area.



1.3 Scope of the study

The report provides a brief idea about the Business Activities, Management System,

Organizational Structure, Internal audit & Control of Errors, Financial Performance as well as

financial position of the Export-Import RMG business of lantabur group in Bangladesh.

This report mainly focuses on the collection of funds from various Export order (sales

Contract) and Operation mechanism of these funds under investment processes.

The report highlighted the internal financial performance and over operational activities in

the sector of business and its impact overall economy of the country that means the report is

mainly concern with financial achievement of lantabur group as a RMG sectors business

The goal of this study is to obtain a concrete idea of the effectiveness of internal control

practices in the readymade garments sector in Bangladesh. The RMG sector contributes

considerably to the development of the national economy of Bangladesh. Majority of the

foreign export income comes from this sector, thus it has an enormous role on the economy.

The recent unrest in this sector suggests the need for purposeful evaluation of the

sustainability of this industry. The push for minimum wage increase and maintenance of a

safe working environment were the reasons for recent unrest. To avoid such problems and to

ensure the long lasting presence of this promising sector, the control system should be

strengthened. This study presents a picture of the present situation in this respect. This study

includes respondents from management only.

A future study including respondents from representatives of management, labor and

regulatory groups would discover if there is agreement between these stakeholders. No

relationship has been developed between the benefits derived from the internal control

practices and the costs involved. A cost benefit analysis could be done as well. Another

probable research area can be the relationship between organizational profitability and

effectiveness & efficiency of internal control in place in that organization to verify the

contribution of internal control to the profitability.

Focus on: After all, I would like to continue my reporting activities by the permission of

Honorable Managing Director (MD) as well as my respective superior Director (Audit).

Because, I believed that in togetherness with its customers (like Buyer), suppliers,

management, Bankers, as well as employees in its march on the road to growth & progress

with services of the company.



1.4 Objective of the study:

1.4.1 General Objective:

The General Objective is to prepare & submit a report on the topic “Internal Audit &

Control Practice of Garments Manufacturing Company - A Study on Lantabur

Group”.

1.4.2 Specific Objective:

To know the concept and overview of internal audit department of the company

To know about Internal Audit & Control Practice in garments sector in Bangladesh

To find the current scenario of internal audit & Control status of Lantabur Group.

To know internal audit department activities and functions of the company

To find the ways of improving the backward linkage of the internal audit & Control

status of Lantabur Group.

1.5 Methodology of the study

There are two types of sources for collecting data for this report such as-

Primary sources

Secondary sources

Primary sources

Primary sources of data collection from Lantabur Group are not available but I have tried to

collect information on internal control practices within the companies in the RMG sector, this

study used survey method. A questionnaire, consisting of various separate questions was

prepared. These questions were primarily close ended; additional questions captured

descriptive comments. With a view to getting an overview of the current situation of

garments sector in Bangladesh. The questions have been placed into five broad categories.

These are as follows:



1. Management philosophy and operating style.

2. Organization structure.

3. Assignment of Authority and responsibility.

4. Human resource policies and practices.

5. Cost Benefit Analysis.

Under each category, there are separate question(s) for the respondents. Respondents are the

members of top management of the company’s. This company has been chosen on a

convenience basis.

But the secondary sources are:

Various reporting data & printing materials of Lantabur Group.

Periodicals Manual published by the BKMEA, BTMEA, BGMEA, BB & NBR etc.

Different publications regarding Garments Business.

Audited Report by the Audit firm like Khan-Ayub & Co.

Browsing Internet.

Different kinds of ICAB books

www.lantaburbd.com.

www.bangladesh-bank.org

Techniques used in this report:

Financial performance analysis of this company by using liquidity ratio, operating

efficiency ratio and profitability ratio.

Comparison of performance of Lantabur Group. With other different private garments

companies by using total export sales, production capacity, employment opportunity,

capital utilization, loans and advances, total assets volume and total import and export

business.

Comparison of percentage of cost of production, price earnings ratio & return on

assets ratio, Asset turnover ratio & Inventory turnover ratio etc.



1.6 Limitation of the study:

This internship tenure far doing the work on such an important topic is not really sufficient.

Moreover this is an individual work where only as individual person need to undertake the

whole process done alone but the time frame work did not permit me and my work done in

my job station as a scientific manner and also it is very difficult for me to make a

comprehensive qualitative survey within a stipulated time. In all respect some limitation and

weakness remain within which I failed to escape by any means. These are follows:

To continue this report it requires a big deal in time. As an employee I have a very few

time to prepare this report, which is not enough

It requires lot of assistance from all level officers and staffs but as a garments sector

business everyone are so busy in doing their respective duties.

As an employee of Internal Auditor, it’s difficult to maintain report after completing daily

works & don’t have enough time to give the information elaborately.

Its needs to proper support & guideline from respective superior to make this effective

report.

In many cases the relevant authorities are not aware about internship report& they are

unwillingness to provide data due to confidentiality.

It is too much difficult to comment and suggest based on only supplied by the internal

audit report.

Web site of the organization wasn’t up to date to gather valuable information.

Due to high employee turnover rate and lack of good reporting practices in the factory,

problems with collecting data have been faced.

Lack of organizing chain of command

Lack of instruction book, and any change. They are following traditional business.



2.1. About Lantabur Group

2.2. Corporate Logo

2.3. Vision, Mission & Objectives

2.4. Different (Business Unit) of Lantabur Group

2.5. Nature of Business activities

2.6. Capital Structure of the Company

2.7. Major Customer (Buyer)

2.8. Major Products:

2.9. Various Departments of Lantabur Group

2.10. Various Sections for production:

2.11. Services of Lantabur Group

2.12. Design Studio of Lantabur Group

2.13. Members of the Board of Director and Management

2.14. Corporate Information at a glance:

2.15. Corporate Culture

2.16. Management of Lantabur Group

2.17. Human resource management of Lantabur Group

2.18. Performance Analysis of Lantabur Group

2.19. Company SWOT Analysis



2.1 About Lantabur Group

Lantabur Group of Industries is country’s one of the leading 100% export oriented group of

companies pertaining to garments sector. Its present position is the outcome of long journey

in the arena of Garments business. Started ready-made garments export business through

establishment of a 100% export oriented knit garments industry and gradually captivated own

position in export market of Bangladesh. Afterwards able to establish a number of export

oriented large industries in garments sector and continued contribution in the development

process of country through earning of valuable foreign currency. Yearly turnover of the group

is now more than US$ 300.00 million. The group has generated employment opportunities

for 22,000 people in its 12 (Twelve) units/industries. Mohammad Salman, Managing Director

of Lantabur Group of Industries got experience in garments export business and other related

fields.

Formation of Libas Knitwear Limited: Libas Knitwear Limited is a private company

limited by shares incorporated on 13 August, 2007 in Bangladesh under the Companies Act,

1994. Its Registration # is C-68065(6/6)/07. The Registered Office of the Company is

situated at Flat # 158 (1st floor), Road # 01, DOHS Baridhara, Dhaka-1212. The

manufacturing plant of the Company is located at Kewa, Boherarchala, Gila Beraeed,

Sreepur, Gazipur, Bangladesh.

Formation of Taqwa Fabric Limited: Taqwa Fabrics Limited is a private company limited

by shares incorporated on 23 May 2007 in Bangladesh under the Companies Act 1994. Its

Registration # is C-66963(4455)/07. The Registered Office of the Company is situated at

House # 51/C Road # 13/B Sector- 3 Uttara Model Town Dhaka. The manufacturing plant of

the Company is located at Kewa, Boherarchala Gila Beraeed, Sreepur, Gazipur Bangladesh.

2.2. Corporate Logo

Bangladesh Export Import Company (Lantabur Group) maintains this logo from the initial

stage of its business. They have a mission of taking Bangladesh to the world. So, with this

logo of Lantabur Group has taken its identity towards the people of the world.



2.3. Vision, Mission Goals & Objectives

Vision of the Company:

The gist of our vision is “Together towards Tomorrow”. It believes in togetherness with its

customers, in its march on the road to growth and progress with services. To achieve the

desired goal it should be vision of our group of companies, there will be pursuit of excellence

at all stage with a climate of continuous improvement its competitive edge of RMG industry.

Mission of the Company:

This report will be prepared in front of some mission statement of this company:

Provide quality service especially foreign trade.

Continue a contemporary technology based professional working environment

Maintain corporate & business ethics & transparency at all levels

Sound Capital Base

Ensure sustainable growth & establish full value to the honorable stakeholders

Fulfill its buyer commitment

Fulfill organizational & social commitment

To ensure job satisfaction at all level

Above all, to add positive contribution to the national economy

My point of view, all mission statement should be implemented by the management decision

because I believed that strength of a company depends on good strengths of the management

team.

Goals & Objectives of the Company:

To strive hard to optimize profit through conducting of transparent business

operations within the legal & social framework with all in respect of gender disparity,

caste, creed or religion or region.

To increase productivity.

To create more jobs with minimum investments.

To be competitive in the internal as well as external markets.

To maximize export earning with minimum imported in-puts.

To reduce the income gap between top & bottom categories of employees.

To promote corporate social responsibilities (CSR) amongst all.



2.4. Different Strategic Business Unit of Lantabur Group

Libas Knitwear Ld.

Taqwa Fabric Ltd.

Lantabur Apparels (Mirpur)

Lantabur Apparels (Dyeing Unit)

Alanna Apparels Ltd.

Taqwa Knitting Division

Lantabur Trading Garments (LTG) Ltd.

Lantabur Textile Ltd.

Lantabur Homes Ltd.

Uneek Clothing

S. Blue Label

Pacific Moon Trading

2.5. Nature of Business activities:

The principal activities of the Company shall be to carry on the business of Composite Knit

Textile & Garments Industry to produce Woven Fabrics and making of Clothing item for

Men, Women & Kids and export thereof.

2.6. Capital Structure of the Company:

The Authorized share Capital of in. Company is Tk. 47, 00, 00,000 (Taka Twenty Cores

only) divided into 47, 00,000 (Twenty Lac) ordinary share of Taka 100 each, with the right,

privileges and conditions attaching thereto as are provide by the regulations of the company

for the time being, with power to increase and reduce the capital of the Company and to

divide the shares in the capital for the time being into several classes and to attach thereto

respectively such preferment deferred, qualified or special rights regulations of the company.



2.7. Major Customer (Buyer)



2.8. Major Products:

a. Men's, (Polo Shirt, T-Shirt’s, Jacket’s, Hoodies etc)

b. Landis’s, (Polo Shirt, T-shirt’s,)

c. Moa Tank Top

d. Ladies Kart

e. Ladies Nighty

f. Children’s

g. Tops (formal & casual), Skirts, Jackets

h. Knitted tops & bottoms

2.9. Various Departments of Lantabur Group

Figure i: Organogram various department of Lantabur Group

HR & Administration Department

Maintenance Department

Marketing Department

Planning Department

Merchandising Department

Commercial Department

Accounts Department

Audit Department

Store Department

Production Department

DO Department

Research & Development Department



2.10. Various Sections for production:

Figure ii: Organogram different production sections of Lantabur Group

Lantabur Group is a fully vertical unit from Yarn Spinning to Apparel Manufacturing,

Dyeing, Cutting, Printing, Washing, Embroidery, Sewing, Quality, Finishing & Packaging

and they have different sections for all of these.

2.11. Services of Lantabur Group

Service is related with the product delivery. Lantabur produces products for the clients of

outer Bangladesh. So, here Lantabur represents Bangladesh with their quality and

capabilities. The manufacturing part is very much related with these services. Here it includes

the marketing, planning, designing, procurement departments. These departments are the pre

procedure or, aligned with the procedures of operations. The direct manufacturing part does

not stand alone without the support of these departments.

Knitting Section

Dyeing Section

Cutting Section

Printing Section

Embroidery Section

Sewing Section

Quality Section

Finishing Section



Speed to Market Opportunities

Supply chain model based on a relationship of trust and simple, short procedures

Marketing model based on affordable, quick change fashion.

Clear projection or commitment and firm booking of capacity.

Maximize design, product development capability of manufacturer, in collaborative

design process.

On-spot placement of order after reviewing of designs.

Focused product development. Higher adoption rate from collection.

Vertical facility enabling quick responses, which allow us to produce from Yarn to

Garment in fifty days and repeated orders in thirty days, leading to reduced

markdowns

2.12. Design Studio of Lantabur Group

To provide design and product development support from fiber to garments to leading

retailers and brands using integrated manufacturing resources, powerful CAD tools,

technology collaboration with major suppliers (like CIBA, DuPont etc.) and interface with

fashion forward customers, rapidly develop and bring trendy, innovative differentiated

products to our strategic partners every season. The Design Studio works to produce entire

collections with Indicted including women’s and men’s clothing, woven and knit tops, casual

and denim bottoms and jackets. They have now introduced a catalogue which will highlight

our concept of complete new looks, products and fabric swatches and we will be sending one

of these to all our key customers almost every eight weeks.



``





2.13. Members of the Board of Director and Management:

Board of Director

Mohammad Salman

Chairman & Managing Director

[Lantabur Group]

Khandker Mohammad Zobair

Vice Chairman

[Lantabur Group]

Maulana Ahmed Iqbal

Director (Production &

Operation)

[Lantabur Group]

Tasnim Saffana

Director

Maulana Abu Taher Mesbah

Director

Management Team

Mohammad Anis

Director (Logistics)

Md. Abu Baker Khan

Director, Audit

ATM Nazrul Islam

Director, Audit

Mohammad Arif-ur-Rahman

AGM, Adimin & Operation



2.14. Corporate Information at a Glance

Registered Name : LANTABUR GROUP

Address of the Registered

Office

:

Corporate Office:

House # 51/C, Road # 13/B, Sector -3

Uttara, Dhaka-1230, Bangladesh

Phone: +88-02-7913038-43, +88-0960650

Fax No: +88-02-8963905

Production Unit : 2. Factory & Head Office:

Lantabur Group (Taqwa Fabric Ltd,

Libas Knitwear Ltd, Lantabur Textile,

Lantabur Apparels, Allanna Apparels)

Kewa, Boherachala, Gila Beraeed ,

Sreepur, Gazipur-1740, Bangladesh

Phone: 0088-09606500435.

: 2. Factory (Lantabur Apparels):

142 Senanibas Road, safuraKhatun Market,

8t h

, 9t h

& 10t h

Floor, Mirpur 12,

Dhaka, Bangladesh

E-mail: : [email protected]

Web site : www.lantaburbd.com

Date of incorporation : 13th August 2007

Authorized Capital : Tk.47 Core

Paid up capital : Tk.20 Core

Total Export : $ 2,92,31,132.92

Total Import : $ 1,90,47,585.65

Total Investment : TK 2,04,08000.00

Total Liabilities : TK 107, 43,49,989.00

Number of Unit : 12

Total Number of Employee : 3601

Vice Chairman : KHANDKER MOHAMMAD ZOBAIR

Managing Director : MOHAMMAD SALMAN

Auditor : KHAN AYUB, FCA



2.15. Corporate Culture

During the last two decades Corporate Culture has become an important theme in business as

an intangible concept which clearly plays a meaningful role in corporations, affecting

employees and organizational operations. It is not only determinant of business success or

failure; a positive culture can be a significant competitive advantage over organizations with

which a firm competes. We, as an amenable this company, believe if the employees identify

with the culture, the work environment tends to be more enjoyable, which boosts morale and

leads to increased levels of teamwork, sharing of information, and openness to new ideas at

all levels.

2.16. Management of Lantabur Group

Management is the process of planning, organizing, leading and controlling the work of

organization members and of using all available organizational resources to reach stated

organizational goals. The strength of a company depends of the strength of its management

team. Lantabur Group is proud to have a team of highly motivated, well-educated and

experienced executives who have been contributing substantially to the continued progress of

the company.

2.17. Human resource management of Lantabur Group

Hunan resource is the fundamental asset of the organization. Human resource approach is

concerned with the growth and development of people toward higher level of competency,

creativity and fulfillment. Therefore, human resources development has been given its due

importance in an environment that values performance, teamwork, fairness and integrity, it

has both qualitative and quantitative dimension. The organization believes that the

professional competence company personnel and its commitment for accomplishing assigned

responsibilities are a first line of defense to prevent irregularities. The objectives of Human

Resource management of Lantabur Group are as follows:

Conducting job analysis

Planning employee needs and recruiting job candidates

Selecting of candidates

Orienting and training new employees

Managing wages and salaries (Compensating Employees) and benefits

Appraising performance

Communicating (interview, counseling, disciplining)

Building employee commitment



2.18. Performance Analysis of Lantabur Group:

Performance evaluation is an important pre-requisite for sustained growth and development

of any situation. It is customary in a company to evaluate the pre-determined goals and

objectives, with the changes goals and objectives, the criteria of revaluation have undergone

changes overtime. Regarding performance evaluation of the Garments Sector in Bangladesh

―Company Efficiency Model‖ has been taken into consideration.

Company Efficiency Model:

Company Efficiency Model (five efficiency test criteria) has been developed to measure the

efficiency of the company. These criteria are measures and expressed as follows:

1. Investment Opportunity Utilization Test

2. Profit Maximization Test

3. Project Efficacy Test

4. Loan Recovery Test

5. Test of Elasticity in Loan Financing

3.19. Company SWOT Analysis

SWOT Analysis means companies Qualitative performance Analysis, it must be considered

for evaluating company’s financial performance. SWOT Analysis means analyzing the

Strengths, Weaknesses, Opportunities and Threats of the organizations to know the

present conditions. This is very common analysis to determine the company’s capabilities of

doing effective business. SWOT Analysis of my own observations is:

Strengths:

1. Company has an interactive corporate culture; working environment is very friendly,

interactive and informal. There are no hidden barriers or boundaries while

communicate between the superior & the employees

2. Lantabur group ltd. has already establish a favorable reputation in RMG sector

industry of the country as well as abroad

3. It has the reputation of being the provider of good quality service to its potential buyer

like as H&M, C&A, MASCOT, INDOCHINE, PUMA, UNEEK, LIDL, BEST

CORPORATION, NEXT, PRENETAL etc.

4. Large scale of equity capital

5. Islamic based working environment



Weaknesses:

1. Poor Services quality has the major problem of a company like spot lot order,

shipment not done within due time, unrest party payment, delay to disburse liability,

improper utilization of working capital etc.

2. The main important thing is that the company has no clear mission statement &

strategic plan as well as company have no long-term strategies

3. The company failed to provide a strong quality recruitment policy in the lower &

some mid-level position

4. In terms of market promotion, company has to follow aggressive marketing

campaign. It should be progressive, it’s should be wealth maximization not profit

maximization.

5. Management has limited power of decision making. Only head of Management take

almost all decisions

6. Networking system does not maintain within all department as well as between head

office and factory

Opportunities:

1. In a competitive environment lantabur group must expand its product line to enhance

its sustainable competitive advantage.

2. In order to reduce the business risk. Lantbur group has to expand their business

portfolio through various business project of a group

3. All buyer get the same services

4. Free lunch facility

5. Good working Environment ( Air conditioning & sound free room)

6. Separate department with individual corridor

7. Mobile & Transport Allowance facility

8. Well known communication system like (internet, intercom, office transport facility)

Threats:

1. The default risk of all terms loan, time loan, PC loan, BBLC liability, force loan have

to minimize in order to sustain in competitive market.

2. The low compensation package of the employees from mid level to lower level

position that threats to the employee motivations. As a result, good quality employees

leave the organizations and its effects the organizations as a whole.



3. Because of competitive advantage buyer may switch to other companies

4. Because of political unrest company are bound to face unrest situation like Hartal,

Strike, firing attacked by the workers that’s why, company may looser

5. Because of worker unrest situation company may face unexpected digesters

6. To get high interest Loan

7. Less export, more investment as well as less profit.



3.1. Concept of Auditing

3.2. Defined Auditing

3.3. Concept of Internal audit

3.4. Defined Internal Auditing

3.5. Defined Internal auditor

3.6. Why internal audits function

3.7. Internal Audits Activities

3.8. Internal Audit Process

3.9. Common Audit Findings

3.10. Concept of Internal Controls

3.11. Internal Controls Defined

3.12. An internal control system

3.13. Role in Internal Controls

3.14. Components of Internal Control

3.15. Internal Control Process Objectives

3.16. Audit evidence



3.1. Concept of Auditing

During the 1960’s and 1970’s, audit professionals in many countries independently

developed theories of auditing that could be applied to examination of many different areas,

including financial statements. While practitioners may have differences of opinion as to the

application of certain of the underlying concepts, the basic framework is generally accepted

by auditors and the public. This framework has been codified in many countries around the

world and is often called Generally Accepted Auditing Standards (―GAAS‖).

3.2. Defined Auditing

Auditing is a systematic examination of books, accounts, documents and vouchers of an

organization to ascertain how far the financial statements present a true and fair view of the

concern. It also ensures that the books of accounts are properly maintained by the concern as

required by law.

Auditing is defined as a systematic and independent examination of data, statements, records,

operations and performances (financial or otherwise) of an enterprise for a stated purpose. In

any auditing the auditor perceives and recognizes the propositions before him/her for

examination, collects evidence, evaluates the same and on this basis formulates his/her

judgment which is communicated through his/her audit report

3.3. Concept of Internal audit

Internal auditing is an independent, objective assurance and consulting activity designed to

add value and improve an organization's operations. It helps an organization accomplish its

objectives by bringing a systematic, disciplined approach to evaluate and improve the

effectiveness of risk management, control, and governance processes. Professionals called

internal auditors are employed by organizations to perform the internal auditing activity.

"Develop and maintain a system of internal controls and internal audits comprising methods

and procedures to be adopted by each organization that will safeguard its assets, check the

accuracy and reliability of its accounting data, promote operational efficiency, and encourage

adherence to prescribed managerial policies for accounting and financial controls.‖



3.4. Defined Internal Auditing

Internal audit is an independent appraisal or monitoring activity established within an

organization for the review of operations as a service to management. Internal auditors

examine, evaluate the planning, organizing, and reporting to management and the directors

on the adequacy and effectiveness of components of the accounting and internal control

system.

All systems, processes, operations, functions, and activities within an organization are subject

to evaluations by internal auditors.

a. Internal audit is generally a feature of large companies. It is a function, provided

either by employees of the company or sourced from an external organization to assist

management in achieving corporate objectives.

b. Internal audit exists to assist management in achieving corporate objectives and these

will vary from company to company, and will be found, for example, in company’s

mission statements and strategic plans.

c. In principle, all companies will want good management, and internal audit is

recognized way of ensuring good corporate governance.

3.5. Defined Internal auditor

An auditor who is an employee of the company whose records are audited and who provides

information to the management and board of directors.

Internal auditor is an employee of a company charged with providing independent and

objective evaluations of the company's financial and operational business activities, including

its corporate governance. Internal auditors also provide evaluations of operational efficiencies

and will usually report to the highest levels of management on how to improve the overall

structure and practices of the company.

3.6. Why internal audits function

An internal audit function aids management by improving the quality of the control

environment. These internal auditing policies should provide company’s directors, internal

control officers, internal auditors, and other organizational staff with a background and

approach toward the establishment, as appropriate, of an effective internal audit function.



3.7. Internal Audits Activities

The Internal Audit Department performs a wide range of audit services to the company

including: financial audits, compliance audits, operational audits, information technology

audits, consulting/advisory services, and special investigations. Should you have any

questions or concerns regarding specific policies and procedures employed by your

department, we encourage you to contact us.

Financial Audits A financial audit evaluates the accuracy and correctness of

accounting transactions and reports. The purpose of this type of audit is to verify that

the financial activity of a unit is accurately reflected in financial reports and that

accounting records and financial documentation support the financial reports.

Compliance Audits determine the degree of adherence to laws, regulations, policies,

and procedures of the company, the garments industry in Bangladesh, the Federal

government of Bangladesh, and other regulatory agencies such as the BGMEA,

BKMEA, BTMEA, and NBR etc.

Operational Audits review the use of resources and procedures / practices in the

department being audited to determine if goals and objectives are being met in the

most effective and efficient manner. A key component of operational audits is to

assess the internal control environment of the unit to manage and mitigate inherent

risks.

Information Technology Audits evaluate system processing controls, data security,

physical security, systems development procedures, contingency planning, and

systems requirements.

Procurement Audits are designed to evaluate independence, objectivity and fairness

of Department procurements.

Consulting and Advisory Services are requested by management and encompass a

wide range of activities. Internal Audits can provide management with in-house

consultation and advice on internal control procedures, accounting systems, and issues

pertaining to employee improprieties. We are also available to consult on new system

implementations, process and system redesign initiatives, and policy changes.

Special Investigations are performed in response to allegations received by our

corporate office through the company's hotline or other internal and external sources.

Allegations are prioritized and investigated based on an assessment of potential risk to

the company.



3.8. Internal Audit Process

The most successful audit projects are those in which the audit client, and Internal Audit have

a constructive working relationship. Our objective is to have your continued involvement at

every stage, so you understand what we are doing and why, while trying to minimize

disruptions of your daily activities.

A typical audit is comprised of four stages: planning, fieldwork, reporting, and follow-up.

Planning

During the planning phase, we notify you of the audit through an announcement letter. An

auditor will contact you to set up an audit planning meeting. The purpose of the meeting is to

discuss the audit process and review the scope and objectives of the audit, discuss any

concerns or suggested scope items, and discuss risks inherent to the business unit.

Fieldwork

In this phase the auditor gathers relevant information about the unit in order to obtain a

general overview of operations and internal controls and performs transaction testing. It is

during this phase that the auditor determines whether the controls identified during the

preliminary review are operating properly and in the manner described by the client. These

procedures usually test the major internal controls and the accuracy and propriety of the

transactions.



As the fieldwork progresses, the auditor will discuss any significant findings with our audit

director. Hopefully, the audit director can offer insights and work with the auditor to

determine the best method of resolving the finding. Upon completion of the fieldwork, the

lead auditor will summarize the audit findings, conclusions, and recommendations and

review them with our audit purpose.

Reporting

Our principal product is the final report in which we express our opinions, present the audit

findings, and discuss recommendations for improvements. After the fieldwork is completed,

Internal Audit will meet with the management to discuss the findings, conclusions, and

recommendations. The auditor prepares a draft report, taking into account any revisions

resulting from the closing meeting and other discussions. The report consists of several

sections and includes: the distribution list, scope and objects, overall assessment, and our

findings and recommendations. We issue the draft report to management only, along with a

management memorandum detailing any less significant findings.

We request that management provide written responses to the draft report comments,

indicating how and when the recommendations will be implemented. Once the management

responses have been received, Internal Audit incorporates the responses into the draft report,

creating the final report. The final report is distributed to the reporting supervisor and other

appropriate members of the company's senior management. This report is primarily for

internal organization’s management use. All audit information should be treated as

confidential and is reported only to those within the company who need to know.

Finally, as part of Internal Audit's self-evaluation program, we ask clients to comment on

Internal Audit's performance. This feedback has proven to be very beneficial to us, and we

have made changes in our procedures as a result of clients' suggestions.

Audit Follow-Up

After approximately six months of the final report issuance, Internal Audit will perform a

follow-up review to verify the recommendations included in the final report have been

implemented.



3.9. Common Audit Findings

Findings usually identify a problem related to non-compliance with company policies and

procedures, governmental regulations, operating efficiencies or an improvement from an

overall business perspective. Common audit findings include:

Improper

Segregation of

Duties

Segregation of duties is a type of internal control created to prevent or

reduce the occurrence of omissive errors or fraud. No single employee

should have complete control over all components of a transaction.

This concept can be broken down into four categories: authorization,

custody, record keeping and reconciliation. A separate individual

should be in charge of each aspect of this process, eliminating

exclusive control over the asset.

Inadequate Review

of Procurement

Department

Procurement department are issued as an effort to reduce costs on large

volumes of purchases, reduce delivery time and eliminate order forms.

This policy prohibits the purchase of certain items such as alcohol,

weapons, hazardous materials, poor quality goods, false purchase,

unlawful purchase etc. It is essential that receipts are reconciled to

statements on a monthly basis by the procurement department.

Inadequate Cash

Controls

Because cash is a very liquid asset, strong controls are critical. Cash

should never be left unsecured, and only certain qualified individuals

should be granted access to registers, safes and cash boxes. Cash-on-

hand should be deposited on a daily basis when receipts exceed Tk

20000 or otherwise weekly.

Unallowable

Expenditures

As per Office Circular outlines, expenses that are allowable and

unallowable using funds from federal grants and contracts. Each

expenditure must be reasonable, allowable, allocable, and consistently

accounted for.

Untimely Cost

Transfer for

Sponsored Projects

Under company policy, cost transfers must be processed within ninety

days from the date of expenditure. If unallowable expenses exist, they

must be removed from the sponsored project regardless of

untimeliness.

Inadequate Security

of Electronic

Sensitive Data

Proper internal controls must be in place to safeguard all personally

identifiable data. Unnecessary sensitive data should be properly

destroyed regularly.



3.10. Concept of Internal Controls

A system of internal control consists of policies and procedures designed to provide

management with reasonable assurance that the organization achieves its objectives and

goals. These policies and procedures are often called controls, and collectively they comprise

an organization’s internal control. Traditionally referred to as ―hard controls,‖ these include

segregation of duties, limiting access to cash, management review and approval, and

reconciliations. Other types of internal controls include ―soft‖ controls such as management

―tone at the top,‖ performance evaluations, training programs, and maintaining established

policies, procedures, and standards of conduct.

3.11. Internal Controls Defined

Internal controls are broadly defined as processes, affected by the board of trustees,

management and other personnel, designed to provide reasonable assurance regarding the

achievement of objectives in the following categories:

1. Reliability and integrity of financial and operational information of the company.

2. Effectiveness and efficiency of operations and programs.

3. Safeguarding of assets.

4. Compliance with laws, regulations, policies, procedures, and contracts.

Internal Audit assists the company in maintaining effective controls by evaluating their

effectiveness and efficiency and by promoting continuous improvement as part our internal

3.12. An internal control system

An internal control system encompasses the policies, procedures, processes, tasks,

behaviors and other aspects of an organization that, taken together:

facilitate effective and efficient operations by enabling the organization to respond to

its significant risks;

assist in ensuring the quality of internal and external information and reporting;

assist in compliance with applicable laws, regulations and internal policies and

procedures; and

Provide management with the capability to monitor and assess the level of compliance

with organizational internal controls.



3.13. Role in Internal Controls

1. Establish the ―tone at the top‖ and promote an ethical business environment by

providing structure, feedback, and discipline.

2. Assess risks specific to our operations and develop a control system to address risks

that could prevent achieving established goals.

3. Establish and maintain control activities such as reconciliations, approvals, and

review of operating activities.

4. Ensure appropriate access to and use of company information and systems.

5. Monitor control system and activities to identify and correct breakdowns timely.

3.14. Components of Internal Control

Types of Internal Controls:

Detective controls are designed to detect errors or irregularities that may have

occurred.

Corrective controls are designed to correct errors or irregularities that have

been detected.

Preventive controls are designed to keep errors or irregularities from occurring

in the first place.

Types of Control Activities:

Approvals

Authorizations

Verifications

Reconciliations

Review of operating performance

Security of assets

3.15. Internal Control Process

A well-designed process with appropriate internal controls should meet most if not all of the

system’s control objectives. A system of internal control can be evaluated by assessing its

ability to achieve seven commonly accepted control objectives:

Authorization: All transactions are pre-approved by responsible personnel.

Completeness: All valid transactions are included in the accounting records.

Accuracy: All valid transactions are accurate, consistent with the originating

transaction data, and information is recorded in a timely manner.



Validity: All recorded transactions fairly represent the economic events that actually

occurred, are lawful in nature, and have been executed in accordance with

management’s general authorization.

Physical Safeguards and Security: Access to physical assets and information systems

are controlled and properly restricted to authorized personnel.

Error Handling: Errors detected at any stage of processing receive prompt corrective

action and are reported to the appropriate level of management.

Segregation of Duties: Duties are assigned to individuals in a manner that ensures

that no one individual can control both the recording function and the procedures

relative to processing a transaction.

3.16. Audit evidence:

Audit evidence consists of the documents you use during an audit to substantiate your audit

opinion. While working on an audit, you encounter many different types of evidence (written,

oral, and so on). Documents can be prepared by employees of the client or by outside parties.

To properly evaluate the strength of evidence you gather, you have to understand the four

concepts of evidence:

Nature: The form of the evidence — for example, oral, visual, or written.

Appropriateness: The quality, relevancy, and reliability of the evidence.

Sufficiency: The quantity of audit evidence — enough evidence to evaluate the audit

client’s management assertions.

Evaluation: A decision on whether the evidence is compelling enough to allow you

to form an opinion.



4.1. About Internal Audit Department

4.2. Internal Audit & control practice of Lantabur group

4.3. Organogram of Internal Audit Department at Lantabur Group

4.4. As an Employee My Duties and Responsibilities

4.5. Format of Daily Work Report

4.5. Promise to company



4.1. About Internal Audit Department

The Internal Audit Department was created as part the work being conducted within the

Company to improve internal controls and audit, on the basis of the resolution adopted by the

Board of Directors of the issuer on 23.06.2011, by merging the Control and audit division

(created on 31.05.1999), the Internal audit division (created on 31.05.2007) and creating a

New Internal audit methodology division.

The main goals of the Internal Audit Department are:

Assessing the effectiveness of the Company’s internal control system at the corporate

level and the level of business-processes;

Controlling the effectiveness of investment projects being implemented by the

Company;

Conducting audits of business activities of the Company, its subsidiaries and

affiliates;

Assessing the effectiveness of risk management and developing recommendations on

how to improve the risk management processes;

Assessing the effectiveness of the management processes in the Company and

subsidiaries (affiliates) and developing recommendations on how to improve them.

The main functions of the Internal Audit Department are:

Interacting with the Company’s governance bodies, the Internal Audit commission

and the Company’s external auditors, Internal audit commissions (auditors) and the

auditors of the Company’s subsidiaries (affiliates);

Submitting reports to the Board of Directors’ Audit Committee on the Department’s

performance with the deadlines established by the Committee’s work plan;

Assessing the effectiveness of the risk management system and developing

recommendations on how to improve the risk management processes;

Assessing the effectiveness of the internal control system at the corporate level and

the level of business processes and consulting the Company’s management on the

matters concerning its effectiveness.



3.17. Internal Audit and control practice of lantabur group

The lantabur Group is a product and service oriented organization. Here internal audit &

control practice is necessary not only for checking and verifying internal documents of the

company but also necessary for managerial planning and control. It is also necessary for

compliance with legal requirements to fulfill the audit objectives. The company follows the

Generally Accepted Auditing Standards (―GAAS‖) and Institute of chartered Accountant of

Bangladesh (ICAB) Rules and policies.

4.2. Organogram of Internal Audit Department at Lantabur Group

Figure iii: Organogram internal audit department of Lantabur Group



4.3. As An Employee My Duties and Responsibilities

It was clearly mentioned in my joining letter that I supposed to regular attendance at

corporate office (House #51|C, Road # 13/8, Sector# 03, Uttara, Dhaka-1230) and report to

Director (Audit) for my responsibility & assignment where I would be depend to work on my

Department. As an employee I was supposed to perform the following works:

4.3.1. The Daily Routine

I have worked in the Audit Department of Lantbur Group. I have worked there 6 days in a

week. My office hour is 9 am to 7 pm. But sometime I had to stay more than working hour

for work. At the beginning of my employment they tell me about my duties and then they

introduce me about the whole system of audit department of Lantabur Group. They give me

primary data about the functions of the audit department and correspondence duties with

other department of the company. My job is to communicate with the whole business units of

the group of company and send e-mail as an employee of the organization. Sometimes I have

used to note down the problem when I get findings as well as I report to the management with

recommendation for solving and controlling this problem.

4.3.2. Specific Duties / Responsibilities:

A) To monitor, BBLC documents, PI Statements, Export LC documents, C&F

documents on the basis of Buyer sales contracts.

B) Checking of books records like: Cash Book, Ledgers, Subsidiary ledgers & store In &

Out register, challan, MRR, stock ledger, Gate pass, physical stock

C) Examine inventories and follow up production process, raw material consumptions.

D) Checking and verification of all Bills, Vouchers, petty cash and others.

E) Checking Salary sheet, Bonus sheet & personnel records & compliance with tax laws.

F) Factory and warehouse visit and report on all transactions.

G) Collect analyze data to detect deficient controls, duplicated effort, over-spending,

fraud, or non-compliance with laws, regulations, and management policies.

H) Market verification for different MPR for rate justification.

I) Fixed Assets verification.

J) Execute any other assignment, assigned by the top management time to time.

K) To maintain internal control of errors through cooperation with other departments.

L) To prepare draft of audit report.



a. Accomplishment work

Since of this point, I have maintain office working time, posting and checking lots of bills &

vouchers, & other documents, maintaining work order as buyer wise, monitoring L/C

document, assist to correct unwilling mistakes and dealing with various out party’s bills as a

thinking of my responsibility.

b. Special audit on physical verification of Stock

This audit has conducted at the direction of Director (Audit) to review the stocks of

Accessories, yarns, Grey Fabrics, Finished Fabrics, stock of Work-in Process and Finished

Goods physically.

c. Conducted work

Work has done by the audit team to meet the different store manager for trying to find gaping

between management thinking with physical stock. Finally, we have some problem and

prepared for this report.

d. Single special Meeting

Besides this, we are individual meeting with various departments for taking appropriate result

of our audit purpose.

e. Visited area

With Accessories stores we also visit Knitting, Dyeing, Embroidery, Yarn, Gray and Finish

Fabrics Stores.

f. Sharing corporate Thinking

We are already share with various formats about maintaining accessories items and running

store smoothly as a demand of management.

4.4. Format of Daily Work Report



Daily Work Report

By

Audit Department

Reporting Date: 25/01/2015

Reported by: Talukder Abdulla-Al-Mamun,

Executive, Audit

Lantabur Group

Reported by: Md. Abu Bakar Khan

Director (Audit)

Lantabur Group

Re: Today work report and observation.

Items checked/

Description of works.

Irregularities found

if any irregularities

or mention okay.

Steps taken for

regularization or

fulfillment as per

your requirement.

Remarks if

any

Daily Expenses:

Voucher:

Suppliers Bills:

Documents Against L/C:

Approval for Opening

BTB L/C:

Out of Audit Work:

4.5. Promise to company

I have done all the works to take the directions of our honorable Managing Director and

respecting superior, Directors (Audit) very sincerely and efficiently. I would like to give my

best effort as a demand of management to achieve the corporate goal and objectives.





5.1 . Summary of Audit Findings

We have support to our renowned organization on behalf of Audit Department at Lantabur

Group; have done our regular working activities very sincerely & efficiently.

By this time of work, we have found lots of findings which are following:

5.1.1. Positive Findings:

1. Lantabur Group has established its loyal employees. Among each and every employee

have more loyal punctuality with better relationship.

2. Management always full and free support to the audit department to audit works

smoothly.

3. Especially Audit Department is well-decorated and good working environment of the

company.

4. Audit department is established by effective and efficient manpower. So there is a

good opportunities to build up a suitable and better career.

5. Respectful job. Every person in bottom of their heart to assists us for controlling all

types of detects mistakes or errors.

6. As an auditor have right to access any door of the company as a demand of audit

purpose.

There have no hidden barrier between internal auditor and employer of the company. The

owners of the company want to survive the competitive market and to do business in long-run

and internal auditor helps to management to achieve the company’s goals and objectives.



5.1.2. Negative Findings:

1. Work order problem:

a) Work order have not found with most of the bill;

b) Although work order is given in some cases but not found rate, signature

and date.

c) Work order is sending to the party for Orders of Taqwa and Libas together.

d) Do not submit work order to the audit department for bill checking, every

types of work order are collecting from concern persons over phone after

submitting party’s bill.

e) Work order is sending to the supplier without name of concerning

merchandiser

f) Overwriting work order.

g) Work order rate is not matched with billing rate.

h) Work order has given without approved signature.

2. Tax is not deducting at source from all parties as per Rules of IT Ordinance-1984.

3. VAT is not deducting at source at the time of making payment.

4. Cash payment is doing by the company which is prohibited more than Tk. 50,000 by

ITO-1984.

5. Money receipts are not found from all parties.

6. Photocopy bill and challan is attached in the vouchers and also submit improper

supporting for bill checking.

7. Still now, supplier submit incomplete & inconsistency bill to the audit department

(concerning person did not appear such inconsistency, that’s why, we kill lots of time

of that bills)

8. Supplier supplied excess qty. but did not clear mention in any challan or any

documents in which we face lots of problem when suppliers submit excess qty. bill

9. Store given to Receive signature all challan of supplier’s that’s why party submits

double challan.

10. Some Receipts of Receiptable amount are not all remain in the vouchers of C & F

Expenses.

11. All Vouchers are not posting in the respective job wise.

12. Yarn store can’t provide clear received & delivery report due to ineffective software

systems.



13. Overwriting and fluid vouchers are getting in some of the cases.

14. Expense memo is not being clear description all time.

15. Not follow the purchase rule in timing of emergency (In such case, we purchase

goods at higher rate)

16. Even though it is not possible for the organization to pay the workers on schedule all

the time due to various reasons such as cancellation of shipment due to political

strikes or some technical errors, the workers do not want to leave the organization.

17. No evidence was found that the management process requires that audit findings are

summarized and reviewed at the corporate level, and that lesson learned and resulting

changes are communicated in the regions and taken in consideration for training.

Audit management systems have not been successful because of funding constraints:

1) Do not have sufficient manpower for audit department (For Corporate Office, Factory

Office as well as Mirpur Office)

2) Do not have sufficient power for implementing audit demand.

3) Do not fulfill sufficient format for posting voucher.

4) Lack of proper cooperation & coordination for implementing regular activities.

5) Want of sufficient information for taking Corrective Action Planned (CAP).

6) Do not have sufficient power for Implementing Corrective Action Planned (CAP).





RECOMMENDATIONS

We think that internal audit activity represents a significant investment of company’s

resources that tracks progress and records action taken in response to audit recommendations

reflecting better practices. We would like to give our best effort as a demand of management

to achieve the corporate goal and objectives effectively. We would like to offer some

recommendations to improve the performance of Lantabur Group regarding Internal Audit

activities.

1. Voucher should be posted as per proper head wise and respective job wise.

2. Overwriting and unclear voucher should be avoided fully

3. Cash payment will be done by the company Cheque which is more than Tk. 50,000 as

per Rules ITO-1984

4. Tax will be deducting at source from all parties as per Rules of IT Ordinance-1984.

5. VAT will be deducting at source at the time of making payment.

6. Work order must be issued favoring supplier in case of any purchase and unit price of

the items must be approved by the higher authority of the company (like Managing

Director or Director).

7. Main copy of bill & challan must be submitted to the audit department as per delivery

challan and order wise and Photocopy bill and challan should not be received from

suppliers.

8. Monthly Periodical Stock report must be submitted to the audit department for

checking.

9. Quarterly Accounts as well as Monthly Accounts must be provided to the audit

department for verifying the financial position of the company.

10. Before submitting Half-Yearly Accounts to the Bangladesh Bank; it must be checked

by the Internal as well as External auditor of the company.

11. Required have sufficient manpower for audit department (For Corporate Office as

well as Factory Office) in audit activities smoothly.

12. Implemented software should be developed as standard based in which all department

keeps their update records by using this software and company reach their targets



CONCLUSION

The goal of this study is to obtain a concrete idea of the effectiveness of internal audit and

control practices in the readymade garments sector in Bangladesh. The RMG sector

contributes considerably to the development of the national economy of Bangladesh.

Majority of the foreign export income comes from this sector, thus it has an enormous role on

the economy. The recent unrest in this sector suggests the need for purposeful evaluation of

the sustainability of this industry. The push for minimum wage increase and maintenance of a

safe working environment were the reasons for recent unrest. To avoid such problems and to

ensure the long lasting presence of this promising sector, the control system should be

strengthened. This study presents a picture of the present situation in this respect. The

responses to the eighteen questions asked to the respondents suggest that some improvements

need to be made. However, majority of the organization do have control systems in place.

Less than fifty percent of the respondents reported that –1. The institution is actually not

maintaining conservatism while choosing from alternative accounting policies, 2. There is no

proper separation program for employees who leave the firm and 3. Employees are not

bonded who have access to cash and negotiable instruments.

This study includes respondents from management only. A future study including

respondents from representatives of management, labor and regulatory groups would

discover if there is agreement between these Stakeholders. No relationship has been

developed between the benefits derived from the internal audit and control practices and the

costs involved. A cost benefit analysis could be done as well. Another probable research area

can be the relationship between organizational profitability and effectiveness & efficiency of

internal control in place in that organization to verify the contribution of internal control to

the profitability



BIBLIOGRAPHY

A. Books:

Study Mannual-Assurance, The Institute of Chartered Accountants in England and

Wailes, March, 2009

BAS (Bangladesh Accounting Standards) phase 1-37.

BFRS (Bangladesh Financial Reporting Standard)

Abdel-khalik, A., Snowball, S., & Wragge, J. (1983). The Effects of Certain Internal

Audit Variables on the Planning of External Audit Programs. The Accounting

Review, LVIII (2), 215-227.

Ramos, M. (2003). SAS No.99 introduces a new era in auditors’ requirements.

Auditors’ Responsibility for Fraud Detection. Journal of Accountancy, 195(1), 28-35.

Kizirian,T., Mayhew, B., & Sneathen, D. (2005). The Impact of Management Integrity

on Audit Planning and Evidence. Auditing: A Journal of Practice and Theory, 24(2),

49-67.

B. Journals:

Company’s Annual Audited Report; (2011, 2012, 2013 and 2014) by the Audit firm

like Khan-Ayub & Co. Ershadullah Patwary & Co. and M. A. Motin & Co.

Different documents Appraisal of Lantabur Group.

Different publications regarding Garments Business by the BKMEA, BTMEA,

BGMEA, BB & NBR etc.

Various written and verbal instructions of the company’s respective persons or

departments.

Different types of Vouchers’ of Lantabur Group

C. Websites:

www.lantaburbd.com/index.php/group-info

www.icab.org.bd

www.google.com

http://www.bangladeshinfo.com

http://www.bangladesh-bank.org