1 DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEMS BBA Program INTERNSHIP REPORT ON THE INTERNAL CONTROL SYSTEM OF TITAS GAS TRANSMISSION & DISTRIBUTION CO LTD. SUBMITTED TO Md. Safayat Hossain Lecturer Department of Accounting & Information Systems University of Dhaka SUBMITTED BY Alokananda Bhowmik ID No. 15061 Department of Accounting & Information systems University of Dhaka DATE OF SUBMISSION: 25 th February, 20
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DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEMS
BBA Program
INTERNSHIP REPORT ON
THE INTERNAL CONTROL SYSTEM OF
TITAS GAS TRANSMISSION & DISTRIBUTION CO LTD.
SUBMITTED TO
Md. Safayat Hossain
Lecturer
Department of Accounting & Information Systems
University of Dhaka
SUBMITTED BY
Alokananda Bhowmik
ID No. 15061
Department of Accounting & Information systems
University of Dhaka
DATE OF SUBMISSION: 25th February, 20
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LETTER OF TRANSMITTAL
Date: February 25, 2013
Md. Safayat Hossain
Lecturer
Department of Accounting & Information Systems
University of Dhaka.
Subject: Submission of Internship Report.
Respected Sir,
With great gratification, I am here with submitting my Internship Report on “The Internal Control System of Titas Gas T&D Co. Ltd.” that you have assigned me as an essential requirement of the internship program.
To prepare the report I collected what I believe to be most relevant information to make my report as analytical and reliable as possible. But it was an enormous task to present the data in the right way. I have concentrated my best effort to achieve the objectives of the report and hope that my endeavor will serve the purpose. I request you to excuse me for any mistake that may occur in the report despite of my best effort. I sincerely hope that you would consider my endeavor and will find this report satisfactory.
Thank you again for your support and patience.
Yours sincerely,
Alokananda Bhowmik
ID: 15061
Accounting & Information Systems
University of Dhaka.
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ACKNOWLEDGEMENT
Successful conclusion of any course requires support from various personnel and I was fortunate
to have that support, direction, and supervision in every aspect from my teacher, Titas officials
and friends.
First of all, I pay my gratitude to the omnipresent Almighty for enabling me to complete this
Internship Report within due course of time.
I am deeply indebted to my faculty Mr. Md. Safayat Hossain, Lecturer, Department of
Accounting & Information Systems, University of Dhaka for his whole-hearted supervision
during my organizational attachment period. My appreciation and gratefulness also goes to Mr.
Humayun Kabir Khan, manager of Accounts Section, as my organizational supervisor. It would
have been very difficult to prepare this report up to this mark without their guidance.
My gratitude goes to the entire Department of Accounting & Information systems of University
of Dhaka for arranging Internship Program that facilitates integration of theoretical knowledge
with real life situation.
I also show my utmost thankfulness to all the officials of Titas Gas T&D Co Ltd. The speed and
helpfulness of the officers really helped me in obtaining the necessary information in time. I
would also like to thank Mr. Md. Abdul Aziz khan, Managing Director of Titas Gas T&D Co.
Ltd. who made the door of Titas wide open for me and Mr. Sankar Kumar Das, Director
(Finance) for his kind concern and helpfulness during my stay at Titas.
And finally, words are very few to express my enormous humble thanks to my affectionate
parents for their prayers and supports that enabled me to conclude my internship program.
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EXECUTIVE SUMMARY
Titas Gas Transmission & Distribution Company Limited is the largest integrated natural gas
distributor in Bangladesh serving more than 15 million consumers in Dhaka and Mymensingh.
The company has more than 50 years of experience in operation and maintenance of gas
transmission and distribution system. Its activities also include planning, designing and
maintenance of pipelines for gas transmission. Titas operates in a region of the country that has a
rapidly growing demand for natural gas and power generation due to significant industrial
development.
Internal control systems is a topical issue following global fraudulent financial reporting and
accounting scandals in both developed and developing countries. A proactive preventive
approach to the problem requires a critical evaluation of existing internal control structures in
organizations to determine their capacity to ensure that the organization’s activities are carried
out in accordance with established goals, policies and procedures.
In this report, an attempt was made to know about the internal control system of Titas. There is
several global guidance setting bodies that provides general guideline to the professionals
regarding the internal control system. An endeavor was made to describe the internal control of
Titas according to those established guidelines and finally recommendations were made to the
inconsistencies that were noticed during the preparation of the report.
The report contains 4 chapters. In the introductory chapter, objectives, methodology and
limitations of the study were mentioned. The second chapter is based on literature review. It
contains the Internal Control frameworks recommended by various international guidance-
setting organizations like COSO and ICGN. In the third chapter, a historical overview of Titas
was given. Internal control system of Titas was also discussed in this chapter. In the fourth
chapter, an analytical evaluation was made regarding the presence of internal control in Titas and
various deficiencies therein were identified. Later recommendations for the remedial of the
problems identified were also given.
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TABLE OF CONTENTS
CHAPTERS TOPICS PAGE NO.
Chapter 1 Introduction
1.1 Background of the Report 1
1.2 Objectives of the Report 2
1.3 Methodology 3
1.4 Limitations 5
Chapter 2 Literature Review 6
2.1 Committee of Sponsoring
Organization (COSO)
7
2.2 ICGN Framework 12
Chapter 3 Titas & Its Internal Control
System
3.1 History of Titas 13
3.2 Description of Control
Established by Titas
15
3.3 Evaluation of Internal Control
established by Titas
23
Chapter 4 Discussion & Findings
4.0 Discussions & Findings 30
4.1 Weaknesses 34
Recommendations 36
Conclusion 38
Reference 39
Appendix 41
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Acronyms
BGFCL: Bangladesh Gas Field Company Ltd.
CBA: Collective Bargaining Agreements
CG: Corporate Governance
COSO: Committee for sponsoring Organization
ERP: Enterprise Resource Planning
GTCL: Gas Transmission Company Ltd.
ICGN: International Corporate Governance Network
IOC: International Oil Company
T&D: Transmission & Distribution
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CHAPTER 1
INTRODUCTION
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1.0. Introduction
1.1. Background of the report
Natural gas contributes the lion’s share in our total energy sector. Exploration by the public
companies along with the foreign companies (IOCs) has established the existence of a significant
gas sources. Still the amount of extractable reserve of natural gas is uncertain and yet to
determine. Titas Gas Transmission & Distribution Co. Ltd. (from now on Titas) is the country’s
largest integrated gas company meeting 63 per cent of the total gas demand, serves in two most
populated and industrially flourished region of the country.
Titas is a government owned company which off-loaded its 25 per cent ownership in the share
market just 4 years ago. Still its operation is hugely controlled by the government due to the fact
that it is mostly state owned and that it deals with public resource. Better management of overall
functionality will be hampered if good and efficient internal control system is not present in any
entity. Internal control system is implied in every organizations and their nature is the same. But
the objectives they are intended to achieve will be mostly dependent on the nature and objectives
of the organization. In line with the common practice all over the world, Titas has its own
internal control which ensures that good corporate governance does prevail in the company.
This report is an essential requirement of the internship program for successful completion of
BBA course. Practical experiences along with the class-room experience make our learning
sustainable and implementable. For that purpose, the university authority has attached me to
Titas Gas T&D Co. Ltd and my supervisor assigned me to work on internal control system of
that company.
Internal control systems are essential to the success and endurance of any organization. They
keep the organization on the rails. This report discusses the internal control system of Titas
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which attempts to identify various control mechanisms, the problems therein, the reasons for
such inconsistencies and finally some recommendations were made to overcome the short-
comings of the system.
During my six weeks time at Titas, I worked in the Accounts Department under the Finance
Division. The Accounts department has four sections and I got the opportunity to overview the
activities of all the four sections. Most of the time, I worked with accounting related issues and
get introduced with the existing internal control system through my day to day work. Besides,
discussion with management of Titas put light into the issue and helped me to identify the major
control mechanisms.
Efficiency of operation is increased if a sound accounting mechanism is in place. In my six week
time at Titas, I learned that Titas has its own internal control system which is directed towards
better operational management, financial reporting and compliance with the rules & regulations.
And all these things make Titas to some extent different from the other government and non-
government organizations.
1.2. Objectives of the Paper
This paper evaluates the existing internal control systems of Titas directed towards the
management of the organizations. Specifically, the paper:
Ascertains whether internal control exists in the organization to ensure that it is running
in the intended direction
Examines whether such control is effective or otherwise and whether such control
systems comply with globally-accepted internal control mechanisms or the international
standards
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Attempts to identify the shortfall of the control system and tries to recommend some
remedies.
The objectives raise a vital question whether or not the existing internal control systems in Titas
are effective. This includes the following minor but inter-related questions:
What role should internal control system play in the management of Titas? Does
management of the company appreciate, understand, and clearly respond to this role?
What internal control systems are currently in use? Do they include all the expected
elements of internal control systems?
To get the answer of the above questions certain methods were adopted for the investigation. In
the later part of the paper, discussions were made on the selected methods and tried to justify
such selection.
1.3. Methodology
As the report pertains to describe the internal control system of Titas which is pervasive but is
not a very easy task to rules out in paper , this study tried to discuss the internal control based on
two frameworks-
Framework of the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission &
The International Corporate Governance Network (ICGN) framework
In case of qualitative research, several research methods are available, such as- grounded theory,
ethnographic, phenomenology, case study etc. The study uses a case study method. The
justification is that the study investigates details of a real life phenomenon using multiple sources
of evidence. The sources of evidence are data collected through: interviews, observations, and
documentary analysis, extraction of data and information specific to an organization and use of
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confidential information tailored to suit the study. This method aims at the comprehensive
understanding of a single, distinctive case.
Earl Babbie (1998) supports the choice saying that whereas most research attempts to limit the
number of variables considered, the case study seeks to maximize them. Ultimately, the
researcher executing a case study typically seeks insights that will have a more generalized
applicability beyond a single case under study. In view of the fact that this study involves an
investigation of whether internal control systems established by Titas are effective, the case
study method is used.
Keeping the research approaches in mind, this study will go for deductive method where
relationships among different variables will be established and a structured method (in this case
the framework depicted in Figure 2) will be used.
To make this report more meaningful and presentable two sources of data were used widely. As-
Primary Data
Working in Titas as an internship student gave me the privilege of accessing different
organizational documents which is neither very much available on internet and different
publications nor people outside the organization could have access to them. Extensive
discussion with the managers and DGM of the accounts section opened up the broad way
of knowing their day to day operations as well as the details accounting procedure.
Secondary Data
The Annual reports of the company for the last five years and different publications of
Petrobangla and the Ministry of Finance made it possible to mention the latest data on
Titas. Besides, the publications of ICGN and the COSO framework served as the
principle secondary source of data.
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1.4. Limitations
Everything comes with a downside. This report is of no exception. While working on the report,
one thing that stood as an impediment is that there was absence of previous studies on the topic.
Though there are numbers of studies on the gas sector of the Bangladesh but no studies were
conducted on Titas. So, there was lack of scope of consulting the ideas of others.
Likewise, crucial information was collected directly from the company personnel. As there are
no publications from where necessary data could be obtained, interviewing and close group
discussions were often very painstaking. Use of subjective judgments while rating the control
variables can be counted as a limitation.
The study was based on my 6 weeks working experience at Titas. But six week time was not
enough for over viewing all the control activities of Titas. Another thing that could be counted as
a shortfall is that lack of experience of working in the related fields of this study.
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CHAPTER 2
LITERATURE REVIEW
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2.0. Literature Review
Internal control provides a means of assurance that corporate objectives are being achieved
(COSO framework, 2011). Though this report mainly focuses on the internal control system of
Titas but two other things must also be discussed along with this because internal control cannot
be well understood without understanding these two phenomenon.
The first thing is, Internal Audit function, which helps in evaluating the business processes and
procedures to assess the effectiveness of control systems and compliance thereof, highlights the
weaknesses in the internal control systems and recommends solutions to overcome the
weaknesses. It also enables the organization to improve operational efficiency and accuracy and
reliability of its financial data. Institute of Internal Auditors (IIA) is a guidance-setting body
which is audit profession's global voice, chief advocate, recognized authority, and principal
educator (Wikipedia).
The other thing is Corporate Governance which has become a buzz word in today’s corporate
world. Corporate governance (CG) is the system by which companies are directed and
controlled. In general, CG deals with laws, procedures, practices and implicit rules that
determine company’s ability to take managerial decisions vis-à-vis its claimants—in particular,
its shareholders, creditors, customers, the State and employees. However, a somewhat broader
definition would be to define CG as a set of mechanisms through which a single country or firms
within a country operates when ownership is separated from management ( Du, Hua, 2006).
Corporate governance therefore calls for three factors:
1. Transparency in decision-making;
2. Accountability which follows from transparency because responsibilities could be fixed
easily for actions taken or not taken, and;
3. The accountability is for the safeguarding the interests of the stakeholders and the
investors in the organization.
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The International Corporate Governance Network (ICGN) which was founded in 1995, is an
initiation of major institutional investors, represents investors, companies, financial
intermediaries, academics and other parties interested in the development of global corporate
governance practices.
2.1. Committee of Sponsoring Organization (COSO)
In response to widely publicized business failures in the USA in the late 1970s and mid-1980s,
the National Commission on Fraudulent Financial Reporting (the Treadway Commission) was
inaugurated to identify factors that caused fraudulent corporate financial reports and make
recommendations that resolve such issues. The recommendations directly addressed the
problems of weakness of internal controls and emphasized the importance of the control
environment, codes of ethical conduct, management reports on effectiveness of internal controls
and development of a common definition and framework of internal control. The evolutionary
process of developing a generally accepted definition and framework of internal control was
realized in 1992 with the publication of a landmark report on internal control: Internal Control -
Integrated Framework, referred to as “COSO” (Committee of Sponsoring Organization).
Hence, COSO provides the necessary guidelines for establishing internal control while IIA is a
guidance-setting body for internal audit professionals and ICGN is the global partner for
developing corporate governance practice around the world. In this section, the report will try to
describe the international standards of internal control which stand as a guide to the internal audit
professionals and corporate governance practice.
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The Institute of Internal Auditors defines internal control as follows:
“a process within an organization designed to provide reasonable assurance regarding the
following primary corporate objectives:
the reliability and integrity of information
compliance with policies, plans, procedures, laws and regulations
the safeguarding of assets
the economical and efficient use of resources
the accomplishment of established objectives and goals of operations or programs”
As mentioned before, COSO is a voluntary private sector organization established in USA. It is
dedicated to improving the quality of financial reporting through business ethics, effective
internal controls, and corporate governance. COSO was originally formed in 1985 to sponsor
the National Commission on Fraudulent Financial Reporting, an independent private sector
initiative. It is concerned with factors that can lead to fraudulent financial reporting. COSO has
developed principles of internal control. It defines internal control as follows:
Internal control is a process, affected by an entity’s board of directors, management and other
personnel, designed to provide reasonable assurance regarding the achievement of objectives in
the following categories:
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations
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It identifies the key concepts of internal control as follows:
Internal control is a process. It is a means to an end, not an end in itself.
Internal control is affected by people. It’s not merely policy manuals and forms, but
people at every level of an organization.
Internal control can be expected to provide only reasonable assurance, not absolute
assurance, to an entity’s management and board.
Internal control is geared to the achievement of objectives in one or more separate but
overlapping categories.
Components of internal control:
Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring Activities
A direct relation exists among the objectives, which are what an entity strive to achieve,
components, which represent what is needed to achieve the objectives and the operating, legal
and other structural units within the entity.
The essential elements of an effective internal control system must be present and functioning
effectively for any internal control system to achieve organization’s objectives. According to
COSO, the control elements have the following characteristics or principles-
Five Principles relating to control environment:
1. The organization demonstrates a commitment to integrity and ethical values
2. The board of directors demonstrates independent independence of management and
exercises oversight for the development and performance of internal control
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3. Management establishes, with board oversight, structures, reporting lines and appropriate
authorities and responsibilities in the pursuit of objectives
4. The organization demonstrates a commitment to attract, develop and retain competent
individuals in alignment with objectives
5. The organization holds individuals accountable for their internal control responsibilities
in the pursuit of objectives.
Four principles regarding Risk assessment-
1. The organization specifies objectives with sufficient clarity to enable the identification
and assessment of risks relating to objectives
2. The organization identifies risks to the achievement of its objectives across the entity and
analyzes risks as a basis for determining how the risks should be managed
3. The organizations consider the potential for fraud in assessing risks to the achievement of
objectives
4. The organization identifies and assesses changes that could significantly impact the
system of internal control.
Three principles relating to control activities-
1. The organization selects and develops control activities that contribute to the mitigation
of risks to the achievement of objectives to acceptable level
2. The organization selects and develops general control activities over technology to
support the achievement of objectives
3. The organization deploys control activities as manifested in policies that establish what is
expected and in relevant procedures to affect the policies.
Three principles relating to information and communication-
1. The organization obtains or generates and uses relevant, quality information to support
the functioning of other components of internal control
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2. The organization internally communicates information, including objectives and
responsibilities for internal control, necessary to support the functioning of other
components of internal control
3. The organization communicates with external parties regarding matters affecting the
functioning of other components of internal control
Two principles relating to monitoring activities-
1. The organization selects, develops and performs ongoing and/or separate evaluations
whether the components of internal control are present and functioning.
2. The organizations evaluates and communicates internal control deficiencies in a timely
manner to those parties responsible for taking corrective action, including senior
management and the board of directors, as appropriate.
The COSO framework may be relevant to larger organizations, but inappropriate for small ones
due to costs and operational complexity. Management of small organizations may not need
formal internal controls for the reliability of the records and other information, because of their
personal involvement in the operations of the organization.
Another weakness of the COSO mechanism is failure to recognize Information Technology (IT)
as one of the major control components. IT is crucial to an internal control framework. Today,
organizations use IT for initiation, authorization, recording and processing of transactions. IT
ensures effectiveness of internal controls. However, COSO’s failure to recognize IT as a control
component motivated other bodies to design and develop frameworks to remedy the omission.
One such framework is the Control Objectives for Information and Related Technology (COBIT
1996, 1998, 2000, 2005, 2007). In this report, along with the five elements of the COSO
framework, the IT element of the COBIT framework will be taken into consideration.
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2.2. ICGN Framework
ICGN statements on global corporate governance rules out the various principles for good
corporate governance such as-
The corporate objectives of the corporation should be to optimize over time to time the returns to
its shareholders and the board should develop and implement a strategy which will improve the
equity value over the long term. Corporations should disclose relevant and material information
concerning the corporation on a timely basis and along with the financial information;
disclosures should be made on the ownership and voting rights of the company. The ICGN
supports the development and harmonization of the highest-quality international accounting and
financial reporting standards. The audit should be undertaken by independent external auditors
which will also be approved by the board or the appropriate authority.
Besides the general guidelines, ICGN also provides some guidance on issues like shareholders’
ownership, responsibilities and voting rights and remedies all are aimed to better practice in the
corporation to enhance the corporate governance of the concerned corporations.
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CHAPTER 3
TITAS
&
its INTERNAL CONTROL SYSTEM
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3.0. Titas & Its Internal Control System
3.1. Overview of Titas
Titas Gas Transmission & Distribution Co. Ltd., country’s significant provider of natural gas,
was established on November 20, 1964 following a significant gas discovery at Titas Gas Field
in 1962. The company began its commercial operation with the commissioning of gas supply to
Siddhirganj Thermal Power Station on April 28, 1968 after construction of 14 inch dia 58 mile
long Titas-Demra gas pipeline by the then East Pakistan Industrial Development Corporation.
At the beginning, 90% of its shares belonged to the then Pakistan Government and Pakistan Shell
Oil Company owned the rest. Till the liberation of the country, Titas had been able to supply gas
to two power stations, one fertilizer factory and about 2000 customers in other categories. After
liberation of the country the company was nationalized under the Presidential Order No.
2711972 and its overall activities has been placed under the supervision of Bangladesh Oil, Gas
& Mineral Resources (Petrobangla). Under the Nationalization Order of 1972, all the
government owned shares of the company were vested in the Government of Bangladesh (GOB).
In accordance with an agreement signed between Shell Oil Company and GOB on August 9,
1975, the ownership of the remaining 10% shares was transferred to the GOB through
Petrobangla in exchange for a lump-sum payment of £100,000. After the independence of
Bangladesh in 1971, the company started its journey as a company of Petrobangla with the
authorized and paid up capital of Tk. 1.78 crore.
Subsequently, the company’s Board was vested with full autonomy & exercises all financial
powers as per Company’s Act 1994 as stated in the government gazette notification no. dated 5
November, 2002. Recently, the company has been listed with Dhaka Stock Exchange on June 9,
2008 & with Chittagong Stock Exchange on June 19, 2008 under the direct listing rules of
Securities and Exchange Commission to offload 25 per cent of its shares in the stock market.
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Table 1: Titas at a glance:
Date of Incorporation November 20, 1964 Corporation Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) Administrative Ministry Ministry of Power, Energy & Mineral Resources Franchise Area Greater Dhaka & greater Mymensingh Authorized Capital Tk. 2000 crore Paid up capital ( as of June 30, 2012)
Tk. 942.12 crore
Number of customers ( as on June 30, 2012)
Total 15,35,592
Market share in sales Sources of gas supply (fields) Manpower Listed with DSE Listed wiith CSE
63% Titas, Habiganj,Narsingdi, Kailashtila,Jalalabad,Bibiyana, Moulovi Bazar, Rashidpur,Bianibazar & Bangura gas field. 2,446 June 9, 2008 June 19, 2008
Babbie, Earl (1998) Survey Research Methods 2nd Edition. Wadsworth Publishing
Company
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APPENDIX
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Table 2: Rating criteria for internal Control Appendix
Rating criteria for internal control components as defined by the Benchmark
Control Components Criteria for a 1 rating
Maj
or in
depe
nden
t var
iabl
es
Control
Environment
Minor independent variables
Organizational structure does not adequately reflect chain of command
Segregation of duty is not properly done Human resource policies and procedures not documented &
updated Responsibilities are delegated and no follow up action is made to
get feedback on results of performance of tasks delegated Does not demonstrates a commitment to integrity & ethical
values Risk
Assessment Management has not specified the objectives with sufficient
clarity Management has not identified risks that affect achievement of
the objectives. Management does not have a criteria for ascertainment of which
risks are most critical. Management has not put in place mechanisms for mitigation of
critical operating risks that may arise.
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Control
Activities
Key control activities of the projects are not functioning as intended: Transactions are not authorized There is no segregation of duties. Verifications of transactions before making payments are not
done Zonal receipts are not recorded accurately on a timely basis Collections from the customers by the authorized banks are not
timely transferred to the mother accounts Key accounts records like bank, cashbooks, loans, accounts
payables etc are not reconciled on a regular basis. Bank guarantees are not checked for renewal There is no control over access to resources There is no accountability of funds advanced to the employees Management does not review operations Internal auditors are not present and where present there is
limitation in scope of their responsibilities by management. Procedures have not been documented/ regularly updated in
respective manual for example finance, staff rules and regulations and operations manuals
Staffs are not supervised while they carry out their schedule of duties.
Information
&
Communication
Key criteria for evaluating performance are not identified, collected and communicated.
Reports on Internal audit and Corporate Governance is not incorporated in the Annual Report
Employees do not understand their control responsibilities. Complaints and disputes by suppliers are not resolved in a
timely manner. Grievances of customers are not properly addressed
Monitoring
Activities There are no independent process checks or independent
evaluations of controls activities on ongoing basis. No interim financial statements are prepared
Information
Technology No IT system to monitor & supervise the zone offices and sales
centers across the franchise area. No restriction of personnel in accessing all levels of different
modules in computer No integrated computer system exists that encompasses the
whole company
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Table 3: Evaluation Process Appendix
Control comp. Benchmark for rating internal control when a problem exists
Assessments of functioning of internal control components
Ratings of internal control components
Major independent
variable Control
Environment
Minor indept. Variables Minor indept. Variables 0 1
(a) Organizational structure does not adequately reflect chain of command
(a) 0
(b) Segregation of duty is not properly done
(b) Segregation of duties at some level of management was found to be unclear which was due to lack of number of personnel in that specific area
(d) Responsibilities are delegated and no follow up action is made to get feedback on results of performance of tasks
(d) 0
58
delegated (e) Does not demonstrates a commitment to integrity & ethical values
(e)Complaint regarding unethical practices by the lower level employees often is heard but which are often outside the purview of the management.
(e) 1
Major
independent
variable Risk
assessment
(a) Management has not specified the objectives with sufficient clarity
(a) 0
(b) Management has not identified risks that affect achievement of the objectives.
(b)There may be disagreements between the intake metering of the supplier gas fields of Titas and those of Titas and due to technical shortfall the amount of gas transferred may not be known accurately
(b) 1
(c )Management does not have a criteria for ascertainment of which risks are most critical.
(c)Risk assessments are not undertaken
(c) 1
(d)Management has not put in place mechanisms for mitigation of critical operating risks that may arise.
(d) As Titas is the sole provider of gas in its franchise area & it is a govt. company, operational risks are not perceived as threats.
(d)Zonal receipts are not recorded accurately on a timely basis
(d)0
(e)Collections from the customers by the authorized banks are not timely transferred to the mother accounts
(e) 0
59
(f)Key accounts records like bank, cashbooks, loans, accounts payables etc are not reconciled on a regular basis.
(f) 0
(g)Bank guarantees are not checked for renewal
(g) 0
(h)There is no control over access to resources
(h) 0
(i)There is no accountability of funds advanced to the employees
(i) 0
(j)Management does not review operations
(j) 0
(k)Internal auditors are not present and where present there is limitation in scope of their responsibilities by management.
(k) 0
(l)Procedures have not been documented/ regularly updated in respective manual for example finance, staff rules and regulations and operations manuals
(l) 0
(m)Staffs are not supervised while they carry out their schedule of duties
(m) 0
Information & Communication
(a)Key criteria for evaluating performance are not identified, collected and communicated.
(a )0
(b)Reports on Internal audit and Corporate Governance is not incorporated in the Annual Report
(b)Though the annual reports provide for a sustainability report it does not provide Internal audit report or any report on Corporate Governance yet which the BSEC has asked for.
(a) 1
(c)Employees do not understand their control responsibilities.
(c ) 0
(d)Complaints and disputes by suppliers are not
(d ) 0
60
resolved in a timely manner. (e)Grievances of customers are not properly addressed
(e) 0
Monitoring
Activities
(a)There are no independent process checks or independent evaluations of controls activities on ongoing basis.
(a ) 0
(b)No interim financial statements are prepared
(b ) 0
Information
Technology
(IT)
(a)No IT system to monitor & supervise the zone offices and sales centers across the franchise area
(a) 1
(b)No restriction of personnel in accessing all levels of different modules in computer
(b ) 0
(c )No integrated computer system exists that encompasses the whole company