Audit report comparison and contrast between Beximco Pharmaceuticals

Limited and Sun Pharmaceuticals Limited (India)

ACN-403 | Section-01

Group name: Auditing Analyst

Prepared by
Mohammad Naveed Hussain 1411088

Ahammad Imtiaz 1330722

MD. Ajmol Islam 1330769

Sazzad-Nur-Sawan 1310141

Shahanaz Akter Shohana 1330431

Submitted To:
Mr. Ahmed Ataul Hakeem
Lecturer, School of Business
Independent University, Bangladesh
 Letter of Transmittal
To:
Mr. Ahmed Ataul Hakeem
Lecturer, School of Business
Independent University Bangladesh
Dhaka, Bangladesh
Date:

Subject: Submission of a report on Audit report analysis between Beximco Pharmaceuticals

and Sun Pharmaceuticals
Dear Sir,
This study paper entitled Audit Report Analysis: Compare and Contrast are prepared to
compare and contrasts the Audit report style, procedures, sampling method, Audit strength
used by the two different organizations. This report is prepared as the semester final term paper
for Auditing (ACN 403) course. For this paper, we took firm workmanship and sincerity to
gather knowledge about the traditional accounting system used for the financial department by
these firms. We collected secondary data and Audit reports through the Internet. As the paper
is a group work, it was genuinely done by all the members of the group and we hope that you
would evaluate fruit of our team work with the charity. We sincerely thank you for all your
kind support to accomplish the assigned report on due time.

Sincerely yours,

Mohammad Naveed Hussain

Ahammad Imtiaz

MD. Ajmol Islam

Sazzad-Nur-Sawan

Shahanaz Akter Shohana

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Introduction4

Objectives...4

Audit framework ...5

Responsibility ....6

Beximco Pharmaceuticals Limited overview ....7

Sun Pharmaceuticals Limited overview .....8

Similarities between the companies .9-10

Dissimilarities between the companies 11-12

Opinion and Conclusion .....13

References ....14-15

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 Introduction

The primary purpose of an Audit is to provide companys shareholders with an expert,

independent opinion as to whether the financial statements of the company reflect a true and
fair view of the financial position of the company and whether they can be relied on. Auditors
give reasonable assurance about the absence of material misstatements in financial
statements. All these are ensured because of the presence of independence, competent skills,
and ethics in Auditors which ensures task to be carried out in an objective manner, instead of
subjective. The Auditors Report is written in a standard format, as mandated by generally
accepted Auditing standards (GAAS). GAAS requires or allows certain variations in the
report, depending upon the circumstances of the Audit work that the Auditor engaged in. The
audit report is the final product or opinion of the financial statement.

Objectives

Objective of this study is to compare Audit report of one domestic company and another
foreign company of same industry. For this study, we selected Beximco Pharmaceuticals as
the domestic company. That is a private Limited Company of Bangladesh and another is Sun
Pharmaceuticals that is Indian Pharmaceuticals Company. We have analysed the Audit
reports for the year 2016 of both the companies. In Audit report, we looked carefully to find
out how Auditors conducted Audit, sampling method, Audit report style, accounting
principles, estimates, similarities, and dissimilarities etc. At the end of this assignment, we
have also given our opinion about the Audit reports.

To provide assurance on the adequacy, efficiency and effectiveness of the whole

control environment
Advise at an early stage in the implementation of any system developments,
amendments to processes, making recommendations in the formation of policies,
procedures and controls
Rules, laws and regulations are complied with in their letter and spirit.
To ensure that financial statements and other information are accurate and reliable
Wider anti-fraud and anti-corruption framework for a company

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 Audit Framework

1. Audit Strategy/ Audit Scope & Objective.

2. Creation of Risk Based Work Papers

3. Collection of basic reference materials (flow Charts, etc.)

4. Determination of tests needed

5. Sample Design

6. Preparation of meeting agendas

7. Follow-up on information gleaned/re-direction

8. Documentation of test results and conclusions.

9. Creation of Audit Point Sheets.

10. Audit Report

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 Responsibility

Provide annual assessment on the effectiveness of the companys controls in

managing all risks and activities. Identify and assess potential risks to the operations

during a particular year.

Review the adequacy of controls established to ensure compliance with policies,

plans, procedures, management guidelines, and business objectives.

Provide periodic information on the status of the annual audit plan and the sufficiency

of the Internal Audit Departments resources.

Present a periodic (say monthly/quarterly) report to the audit committee.

Assess the reliability and security of the information produced from financial,

management, and operations system of the company.

Assess the means of safeguarding assets and resources.

Review established procedures & systems and propose improvements.

Appraise the use of resources with regard to economy, efficiency and effectiveness.

Follow up recommendations to make sure that effective remedial action is taken.

Carry out appraisals, investigations, or reviews requested by the management.

CAE and staff of the Internal Audit Department, in the discharge of their duties.

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 Beximco Pharmaceuticals Limited

Beximco Pharmaceuticals Ltd (BPL) is a leading manufacturer of pharmaceutical formulations

and Active Pharmaceutical Ingredients (APIs) in Bangladesh. The company is the largest
exporter of pharmaceuticals in the country and its state-of-the-art manufacturing facilities are
certified by global regulatory bodies of Australia, Gulf nations, Brazil, among others. The
company is consistently building upon its portfolio and currently producing more than 400
products in different dosage forms covering broader therapeutic categories which include
antibiotics, antihypertensives, antidiabetics, antireretrovirals, anti asthma inhalers etc, among
many others. The company was incorporated in 1976 and commenced operations in 1980 with
the manufacturing and marketing of products of Bayer AG, Germany and Upjohn Inc., USA
under licensing arrangements.

In 2005 Beximco Infusions Ltd, the company that produces intravenous fluids, was
amalgamated with the parent company. In the same year it completed the state-of-the-art oral
solid dosage plant in compliance with the US FDA and UK MHRA standards, which has been
approved by major global regulatory bodies.

Today Beximco Pharma is the largest exporter of pharmaceuticals in the country and the only
company to win National Export Trophy (Gold), the highest national accolade for export, for
record three times. The company is the largest producer of Metered Dose Inhalers (MDIs) in
the country, and the first to produce CFC free inhalers. Located at Tongi, near the capital city
Dhaka, BPL s manufacturing site is spread over an area of 20 acres which houses a number of
self-contained production units including oral solids, metered dose inhalers, intravenous fluids,
liquids, ointments, creams, suppositories, ophthalmic drops, injectables, nebulizer solutions
etc. The bulk drug unit for producing paracetamol is also located within this site. Companys
penicillin API and formulation units are situated at Kaliakoir, a few kms from the main site.

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 Sun Pharmaceuticals Limited

Sun Pharmaceutical Industries Limited is an Indian multinational pharmaceutical company

headquartered in Mumbai, Maharashtra that manufactures and sells pharmaceutical
formulations and active pharmaceutical ingredients (APIs) primarily in India and the United
States. The company offers formulations in various therapeutic areas, such as cardiology,
psychiatry, neurology, gastroenterology and diabetology. It also provides APIs such as
warfarin, carbamazepine, etodolac, and clorazepate, as well as anticancers, steroids, peptides,
sex hormones, and controlled substances.

Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Vapi with five
products to treat psychiatry ailments. Cardiology products were introduced in 1987 followed
by gastroenterology products in 1989. Today it is the largest chronic prescription company in
India and a market leader in psychiatry, neurology, cardiology, orthopedics, ophthalmology,
gastroenterology and nephrology.

The 2014 acquisition of Ranbaxy has made the company the largest pharma company in
India, the largest Indian pharma company in the US, and the 5th largest specialty generic
company globally. Over 72% of Sun Pharma sales are from markets outside India, primarily
in the US. The US is the single largest market, accounting for about 50% turnover; in all,
formulations or finished dosage forms, account for 93% of the turnover. Manufacturing is
across 26 locations, including plants in the US, Canada, Brazil, Mexico and Israel. In the US,
the company markets a large basket of generics, with a strong pipeline awaiting approval
from the U.S. Food and Drug Administration (FDA).

Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times.
The founding family continues to hold a majority stake in the company. Today Sun Pharma is
the second largest and the most profitable pharmaceutical company in India, as well as the
largest pharmaceutical company by market capitalisation on the Indian exchanges.

The Indian pharmaceutical industry has become the third largest producer in the world in
terms of volumes and is poised to grow into an industry of $20 billion in 2015 from the
current turnover of $12 billion. In terms of value India still stands at number 14 in the world.

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 Audit report similarities between Beximco Pharmaceuticals and Sun
pharmaceuticals

Similarities between the companies are as follows:

Independent Auditors Reports: Both the audit reports are independent Auditors
reports which are tended to the shareholders and members of the board of directors.
All major financial statements: The Auditors have Audited Financial Statements
including Balance Sheet, Profit & Loss Account / Income Statement, Cash Flow
Statement, Statement of Changes in Equity.
Audit of internal Control: Both the auditing firms carried out an audit of internal
control to determine extent and degree of internal control, which led them to plan how
many samples to take.
Standards of Auditing: Both the Auditors followed the respective countrys Standard
of Auditing. Sun Pharmas Auditors Deloitte Haskins & Sells LLP followed Indian
Standard on Auditing and Beximco Pharmaceuticals Auditors M. J. Abedin &
Company. followed Bangladesh Standard on Auditing.
Criteria: Both the audit report states that the audited firm followed International
Financial reporting Standards (IFRS) and General Accepted Auditing Principles
(GAAP)
Auditors Responsibility: Both of the Auditors have the same responsibility to express
an opinion on these consolidated financial statements of the Group and the separate
financial statements of the textile based on their audit.
True and Fair: In both occasions, Financial Statements give a true & fair view in
accordance with the provisions of the respective countrys Act and Financial Reporting
Standards.
GAAP and GAAS: Both the firms followed GAAP to prepare financial statements and
both the auditing firms followed GAAS to prepare the audit report.
Ethical Requirements: Both countries Standard of Audit need to comply with ethical
requirements and plan and perform the Audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
Industry: These two reports, we have collected, both are from Pharmaceuticals
industries

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 Auditors Judgment: The procedures selected both of garments to depend on the
auditors judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements of the Group.
Sufficiency of Evidence: Both Auditors believe that the Audits evidence has been
obtained is sufficient and appropriate to provide a basis for their Audit opinion.
Expression of Opinion: As per respective countrys reporting standard and rules, act
both the Auditors expressed their opinion on the Financial Statement they have
audited.
Plan and Performance: Both Auditors responses show Audit involved planning and
performing procedures to obtain Audit evidence about the amounts and disclosures in
the financial statements.

Source: (Beximco Pharmaceuticals, Audit Report 2016) & (Sun Pharmaceuticals,

Audit Report 2016)

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 Audit report dissimilarities between Beximco Pharmaceuticals and Sun
pharmaceuticals

Dissimilarities between the companies are as follows:

Internal Control: Sun Pharma controls internal management strongly which

contributes to taking much information and also do auditing to gather huge evidence.
By contrast Beximco Pharma controls their internal management but not as strong as
Sun Pharma.
Maintenance of Internal Control: Beximco Pharma follows Companies Act 1994 to
maintain internal control but Sun Pharmas internal control based on criteria
established (Generally Accepted in India) Accounting standards specific under
section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
Assurance: In Sun Pharmas Audit report, Deloitte Haskins & Sells LLP has
provided reasonable assurance on the basis of:
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed Assets.
2. The inventories have been physically verified during the year by the
management and in our opinion, the frequency of verification is reasonable.
3. All the fixed assets have been physically verified by the management in a
phased periodical manner, which in our opinion is reasonable, having regard
to the size of the Company and nature of its assets. According to the
information and explanations are given to us, no material discrepancies were
noticed on such physical verification.
Expression of Opinion: M. J. Abedin & Co has given their opinion at first part of
the report and in the last part they discussed about Legal and Regulatory
Requirements but Deloitte Haskins & Sells LLP has also expressed their opinion at
the first part of the report and at the last part they have to describe on Legal and
Regulatory Requirements, but in the middle of the opinion they described Emphasis
of Matter.

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 Planning

Beximco Pharmaceuticals

Evaluating operations or programs to ascertain whether results are consistent with

established objectives and goals.
Maintaining and evaluating governance process.
Evaluating specific operations and process at the request of the board management.

Sun Pharmaceuticals

Evaluating the quality of performance of auditors and degree of coordination required

with audit work.
Performing consulting and advisory services related to governance, risk management
and control as appropriate for the company.
Reporting periodically on the internal audits purpose, authority, responsibility and
relative to its plan.

Risk

Beximco Pharmaceuticals

Sometimes they do not detect a misstatement that exist in an assertion that could be significant,
either individually or when aggregated with other misstatement. So, thats why they have to
face detection risk.

Sun Pharmaceuticals

In the audit report, Auditors discussed Emphasis of Matter which indicates that there might
be some problem with internal control and most importantly Sun Pharma is a very large
company. Therefore inherent risk and control risk will be higher.

Scope or Opportunity

Beximco Pharmaceuticals

Their scope or opportunity generally includes evaluating the reliability and integrity of
information and that means used to identify, measure, classify and report such information.

Sun Pharmaceuticals

They evaluate the systems established to ensure compliance with policies, plans, procedures,
laws and regulations which could have a significant impact on the organization.
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Opinion:

M. J. Abedin & CO audited the domestic company Beximco Pharmaceuticals Limited and
Deloitte Haskins & Sells LLP audited the foreign company Sun Pharmaceuticals Limited.
They audited the consolidated financial statements of the group and the separate financial
statements of the company which gives a true and fair view of the consolidated financial
position of the group and the separate financial position. M. J. Abedin & CO has given
standard unqualified opinion for the company Beximco Pharmaceuticals Limited. However, on
other hand Deloitte Haskins & Sells LLP has given unqualified opinion with explanatory
paragraph for the company Sun Pharmaceuticals Limited, therefore this is a bit concern for the
management and has the scope for the improvement.

Conclusion:

Finally, after comparing the audit report of both companies, we see both the audit reports have
some similarity which shows that sampling method, audit technique implemented by both the
auditors were indifferent. And contrasting, we see, these two reports have some differences as
well such as ease of usage of language, explanation etc. Beximco Pharmas Audit report is the
unqualified report and on other hand Sun Pharmas audit report is unqualified with explanatory
paragraph. But the management policy Audit rules and regulation, responsibility are not same
in a local and a foreign company. By using that perspective Auditors analysed the reports and
made their opinions.

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References:

http://profit.ndtv.com/stock/sun-pharmaceutical-industries-ltd_sunpharma/reports-auditor-
report

http://www.beximcopharma.com/images/stories/investor/pdf/audit-report-june-2016.pdf

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