INTERNAL AUDIT REPORT- FFHSS DAULTALA

(PRINCIPAL RETIREMENT AUDIT)

PERIOD COVERED: APR 2017 TO NOV 2018

INDEX
Ser Observations Page
No
1. Students admission and other related record
a. Student identification number not in use 3
b. Service certificates not updated 3
c. Discrepancies observed in student Attendance record 3
2. Students’ Security Deposits & Refunds
a. Security Deposits & Refunds balances do not tally with HO 4
b. Students’ security receipt and refund register not maintained 4
3. Fee and Funds
a. Monthly progress reports and fee reconciliation not maintained properly at 4
project
b. Class wise fee collection register not properly maintained 6
c. Less fee collected form students admitted during academic session 6
d. SOP regarding Brother/Sister Tuition fee concession not followed by project 6
e. List of outstanding fee of students not being maintained on monthly basis 7
f. Office order/Part II Order not issued in case of new admission / SLC /SOS 7
4. Canteen Rebate
System of monthly billing for canteen rebate not in practice 7
5. Fixed Assets
a. Reconciliation of School Inventories with Fixed Assets Ledger not prepared 8
b. Assets Code not marked on Fixed Assets 8
c. List of surplus items not prepared 8
d. Items appearing in Fixed Assets Ledgers not implicated with Assets Code 8
e. The Complete list of Project IDs, Department IDs and Assets Numbers not 9
available at school
f. Fixed Assets location not mentioned in ledger 9
6. Lab Store
a. Store purchased for consumption charged to expense before issuance 9
b. Issue register for chemical issued to perform practical not prepared 10
c. Preparation of Issue Voucher for consumption of chemical not in practice 10
in project
Page 1 of 12
7. Library Books
Control Ledger for Library Books not made by School 10
8. Schooling Management System
Modules and sub modules regarding fee and funds are not implemented in SMS 10
9. Employees Personnel Record
a. Service Contracts of employees have been expired 11
b. Pay & Allowances record not updated in Service Record Book of employees 12
c. Leave Application for leaves availed by employees were not available 12
10. Financial and Operational performance 12

Page 2 of 12
 INTERNAL AUDIT REPORT- FFHSS DAULTALA
(PRINCIPAL RETIREMENT AUDIT)
PERIOD COVERED: APR 2017 TO NOV 2018

1. Students admission and other related record

a. Student identification number not in use School has not allotted specific identification
number to the students for use in relevant registers and record for quick reference and
identification of the students due to which it is difficult to trace any student from
admission register to security register, fee register, fee slips, student attendance
register, other student record and vice versa.
Implications Weak internal controls.
Recommendation School should allot specific identification number (ideally the admission
registration number) to the students and it should be mentioned in all students’ related
record for better control and easy access to information.
b. Service certificates not updated Under the rules school administration is required to
obtain service certificates from the children of FF employees and the Army serving
personnel twice in a year. Our scrutiny in this regard revealed that school is not
properly complying with the SOP and in certain cases service certificates were not
updated. The following instances were observed:-
Name of Student Father’s Name Class Cat Service Letter submitted up to
Hamza Saeed VIII Ser Service certificate wef Feb-09
Talha Saeed Saeed Ahmed V Ser Service certificate not attached
Moiz Saeed II Ser Service certificate not attached
M. Ajwad Khan VIII FFO Service certificate not attached
Khalid Mehmood
Moeez Abdullah VI FFO Service certificate not attached
Momina Yasir VII FFO Service certificate not attached
Warda Zainab Yasir Mehmood III FFO Service certificate not attached
Abeeha Sameer Prep FFO Service certificate not attached
Hira Abrar Mirza Mirza Abrar Ahmed IX FFE Service certificate wef Apr-08
Danyal Tahir V FFE Service certificate wef Sep-16
Aleena Tahir Muhammad Tahir V FFE Service certificate wef Sep-16
Aleeza Tahir I FFE Service certificate wef Sep-16
Implications May result in loss to FF as students might be availing concessions for which
they are not admissible anymore.
Recommendation Project should complete all documents forthwith, eligibility of the
students studying in Ser/FFE categories should be ensured and recovery should be made
if required. In the future service certificate from employer of serving / FFE students should
be obtained on semi annually to ensure correct charging of fees.
c. Discrepancies observed in student Attendance record We noted following discrepancies
in attendance record:-
 Principal and Accounts clerk signature were missing on attendance register
 Attendance registers were not properly made in students’ category wise.
Page 3 of 12
  Student’s status in case of new admission, SOS or SLC along with date not mentioned
on most of the cases.
 In few cases the names of students were written with led pencil.
 Use of fluid and over writing is observed frequently.
Implication Weak internal controls.
Recommendation Above mentioned discrepancies should be addressed. Supervisory controls
should be strengthened to stop such instances in future.
2. Students’ Security Deposits & Refunds
a. Security Deposits & Refunds balances do not tally with HO We observed that security
deposit cum refundable/payable balance of HO. Wel (Edn) Finance do not tally with the
balance reflected in the school record as on 30 Sep 2018 as evident from details
appended below:-
As per HO trial As per School Excess booked in
Description
balance record project record
Security refundable balance 11,39,815 11,36,565 3,250
Implications Risk of financial loss due to weak internal controls.
Recommendation Reconciliation of security deposit, refund and balance payable should be
carried out by the school with HO, Wel (Edn).
b. Students’ security receipt and refund register not maintained As per SOP regarding
student’s security vide HO letter no.Wd/Edn/440/Policy/SA date 30 Jun 2011 para. 2 (b)
“Instrs regarding refund of security will also be included in prospectus to this effect that
Student leaving project with SLC will withdraw security simultaneously, failing which
project will wait for 3 x years and there after right of refund claim by students/their
guardian will be forfeited.” It was noted that the school has not maintained the student
security receipts and refund register as per SOP regarding students’ security forfeiting
prior to period of three years after leaving the school. School of the view that they did not
receive the above mentioned policy.
Implications SOP non compliance.
Recommendation A complete register regarding students’ security receipt / refund should be
maintained by project. A security payable balance should also be worked out on the basis of
FF policy. Wel Div Edn. May look into the matter and possibility of sending soft copy of all
SOPs should be looked into in order to avoid any ambiguity due to communication barrier.
3. Fee and Funds While scrutinizing Fee & Funds record we observed the following:-
a. Monthly progress reports and fee reconciliation not maintained properly at project During
scrutiny of fee record it was observed that although project is preparing progress reports
and its reconciliations but these were not being prepared properly. These manual
progress reports do not tally with SMS. Therefore it was difficult to ensure that all fee that
was required to be collected as per strength has been actually collected and deposited
Page 4 of 12
 intact into the bank and hence we could not verify completeness of amount of Rs. 11.028
million Figure approx as against fee and funds for the period from Apr 2018 to Nov 2018.
Detail of such differences is as under:-
Months Fee &Funds as per SMS Fee &Funds as per Cash Book Excess/Less
May-18 1,167,778 1,167,778 -
Jun-18 1,082,305 1,049,507 (32,798)
Jul-18 1,063,159 1,080,757 17,598
Aug-18 1,134,777 1,123,702 (11,075)
Sep-18 1,073,473 1,732,432 658,959
Oct-18 1,315,106 1,931,002 615,896
Nov-18 1,636,993 1,627,506 (9,487)
Total 9,642,709 11,028,294 1,385,585
Implications SOP non-compliance and risk of loss to FF resulting from weak internal controls
over fee and funds.
Recommendation It is recommended that :-
 The completeness of the fee collection (ie. Rs. 11.028 million approx.) should be ensured
by the project and recovery should be made where required. For this purpose complete
progress reports along with fee reconciliation from Apr 2018 to Nov 2018 should be made
by the project. Internal audit should be updated accordingly.
 Proper monthly progress reports should be prepared and reconcile with SMS by the
project in future to avoid such instances in future.
 Reconciliations of monthly progress report should be made with the fee actually deposited
into the bank in the format detailed below :-
(Rs.)
Fee & funds to be received as per strength (Format provided) (A) XXXXXX
Fee & funds deposited into bank during current month (B) XXXXXX
Less: Arrears of previous month(s) (C) (XXXXXX)
Less: Advance of next month(s) (D) (XXXXXX)
Add: Advance of this month collected in previous month(s) (E) XXXXXX
Add: Current month fee & fund dues not deposited(outstanding) (F) XXXXXX
Fee & fund reconciled with that as per strength (G = A) (G=B-C-D+E+F) XXXXXX
Wel Div Edn (Fin.) should adopt procedure to timely intimate any non compliance of furnishing
proper monthly progress reports / fee reconciliations to HO.
Internal audit should be furnished with the above mentioned documents for audit purpose in
order to complete the audit procedures and ensure the completeness of the fee and funds
collected by the project as per FF policies in vogue.
b. Class wise fee collection register not properly maintained We noted that project is not
maintaining the class wise fee collection record.
Implications Risk of loss to FF resulting from weak internal controls over fee and funds.
Recommendation Project should maintain class wise fee ledger. Class wise fee register and
Page 5 of 12
these be compared with the date wise total fee receipts for better controls. Fee collection
register as well as all other record of students like student attendance register should be
properly maintained for easy scrutiny and transparency of record.
c. Less fee collected form students admitted during academic session As per school
compendium para 48 b of Fee structure “Tuition fee and funds will however, be charged
with effect from the month the student admitted in FFMS. Dues pertaining to fore-running
period will not be charged if already paid to the previous school, may it be a Govt. or
private institution as endorsed in the school leaving certificate”. During the audit we noted
that the school has admitted the following student in between academic session and
school leaving certificate were not obtained but the fee pertaining to fore-running period
was not collected. Details are as under:-
Student Adm Class Cat Date of Fee paid in previous Academic Less fee Amount
Name # admission institution up to as per SLC Session recovered (Rs.)
(Months)
Gul-e- Apr-18 to
Rahne 1787 VIII Civ 01-May-18 Mar-18 1 (Apr 2018) 3,665
Mar-19

Implications Loss to FF resulting from SOP non-compliance and weak internal controls
over fee and funds.
Recommendation An amount of Rs.3,665 should be recovered. SOP regarding fee and
funds should be followed in true letter and spirit to avoid such instances in future.
d. SOP regarding Brother/Sister Tuition fee concession not followed by project CBOD has
approved brothers / sister fee concession in tuition fee applicable to all categories
students wef 01 Oct 2010 as under:-
S.No. Cat Fee concession Fee to be paid
a. First Child Full Fee No Concession
b. 2nd Child 25 % Concession 75 % Fee
c. 3rd Child 25 % Concession 75 % Fee
d. 4th and Subsequent Child Full Fee No Concession
However, we noted that project did not adhere the above mention policy in true spirit.
Project is in practice to provide fee concessions to only those students whose parents
apply for the same. Parents applied in writing to avail this concession. It was noted that the
project is not providing fee concession to most of the eligible students due to the parents
unaware of the policy.
Moreover, Brother / Sister Tuition fee concession list generated from SMS is also not
presenting true picture and complete data. The actual number of students availing fee
concessions do not reconcile with SMS generated fee concession list.
Implication SOP non-compliance.
Recommendation Project should allow the fee concession to all eligible students. A fresh
brother/sister concession list should be maintained for the new session 2018-19 and same
should be tallied with concessions granted as per fee SMS. The list should be reconciled with

Page 6 of 12
 nominal roll concessions accordingly. In future, Project should make available complete list of
Brother / Sister tuition fee concession granted to students which should be updated on regular
basis. The list pertaining to the relevant sessions should be kept handy along with other fee
record required to be maintained by the Project.
e. List of outstanding fee of students not being maintained on monthly basis Project has not
maintained proper record of outstanding fee of students on monthly basis, which hinders
quick / easy scrutiny of fee and carrying out reconciliations of fee collected as per strength
with the amount deposited into the bank. Moreover, outstanding fee list generated from
SMS is also not presenting true picture and complete data. The actual fee outstanding do
not reconcile with SMS generated fee paid /unpaid report.
Implications Risk of loss to FF resulting from weak internal controls over fee and funds.
Recommendation Project should properly maintain Outstanding fee list for the session 2018-
19 and tallied with outstanding fee as per SMS. Recovery should be made by the project if
required and IA should be updated accordingly. Project should maintain month wise list of
outstanding students duly signed by the project head for minimizing the risk of long
outstanding students’ fees for better controls and transparency purposes.
f. Office order/Part II Order not issued in case of new admission / SLC /SOS It was noted
that project is not in a practice to issue the office order in case of a new admission or
school leaving certificate etc.
Implication Loose internal controls.
Recommendation All the new admission / SLC / SOS should be covered with Office
order/Part II Order.
4. Canteen Rebate
System of monthly billing for canteen rebate not in practice It is noted that system of
monthly billing to canteen contractor stating the amount payable on account of Canteen
Rent, Electricity Charges, Gas Charges, canteen Rebate as per strength of student for the
month and due date for payment of dues not in practice at project.
Implication Non compliance of SOP may result in loss to FF.
Recommendation The project should make a System of monthly billing for canteen
contractor for payment of dues.
5. Fixed Assets
a. Reconciliation of School Inventories with Fixed Assets Ledger not prepared It is noted
that the inventories prepared by school and submitted to Head office Finance Section
(Edn) for Annual Stock Taking on 30 th Sep 2018 has not been reconciled with
Accounts Ledgers maintained at Finance Section (Edn) in welfare Division of FFHO.
Implication Weak internal control may result loss to FF.

Page 7 of 12
Recommendation Fixed Assets exhibited in Annual Accounts should be validated by
reconciling with inventories prepared and submitted by Schools to Finance Section (Edn)
in welfare Division of FFHO.
b. Assets Code not marked on Fixed Assets It is noted that the Fixed Assets Coding
System developed by IT & MIS department for universal adoption by Head Office and
all commercial, industrial and welfare projects and stated in Para 6 of the new policy
on “Fixed Assets” approved by CBOD, forwarded for compliance vide secretary CBOD
letter No 1652/Sectt. dated 4 Apr 2006 not in practice in school.
Implication SOP non compliance.
Recommendation Fixed Assets should be marked with the Codes developed by IT &MIS
department for universal adoption, better internal control and identification of the items of
Fixed Assets.
c. List of surplus items not prepared It is noted that the school is not in practice to
prepare List of surplus items not required by the school as stated in sub Para 2d of
Para 1 b of letter no FF/WA/6040 dated 03 Sep 2018.
Implication SOP non-compliance.
Recommendation List of surplus items not required by the school should be prepared and
submitted to FFHO as requested in sub Para 2d of Para 1 b of letter No FF/WA/6040 dt
13 Sep 2017 so that items could be transferred to other project where they are needed.
d. Items appearing in Fixed Assets Ledgers not implicated with Assets Code It is also
noted that the items appearing in the Fixed Assets Ledgers not implicated by the
Assets Codes developed by IT & MIS department, as stated in Para 6 (b) of the new
policy on “Fixed Assets” approved by CBOD, forwarded for compliance vide secretary
CBOD letter No 1652/Sectt dated 4 Apr 2006 not in practice in school.
Implication SOP noncompliance.
Recommendation The Fixed Assets Codes associated with the items appearing in Fixed
Assets Ledgers should be recorded in the Fixed Assets Ledgers on the page the items
appearing therein for identification of the items.
e. The Complete list of Project IDs, Department IDs and Assets Numbers not available at
school It is noted that the Para 6 (C) of the new policy on “Fixed Assets” effective
from 1 Oct 2005, forwarded for compliance vide secretary CBOD letter No. 1652/Sectt
dated 4 Apr 2006 state that “A complete list of project IDs, Department IDs and Assets
Numbers have been made available electronically by IT & MIS Department and will be
provided to the projects shortly” but as per school management the list along with 212
Assets Numbers electronically generated till Dec 2015, has not been provided to

Page 8 of 12
 school so far.
Implication SOP noncompliance.
Recommendation Project IDs, Department IDs and Assets Number electronically
generated hitherto by IT & MIS Department be provided to projects for mentioning the
Assets Codes on the items of Fixed Assets and thereafter when an asset’s number is
generated that should also be sent to the project for marking the item.
f. Fixed Assets location not mentioned in ledger It is noted that the locations of items
appearing in fixed assets ledger were not mentioned therein.
Implication Weak internal controls may result in loss to FF.
Recommendation Location of the asset should be mentioned in the ledger. Inventory
ledgers / inventory listing should be updated properly.
6. Lab Store
a. Store purchased for consumption charged to expense before issuance It is noted that
purchases of lab store were directly charged to expense instead of creating store
accounting for these which is against the policy stated in Para 153 k (1) of Education
Compendium. Few instances of purchase of lab store items directly charged to
expense are tabulated below:-
PV. No. Month Amount Nature of Items purchased
14 Feb-18 2,800 Lab store
37 Oct-17 400 Lab store
39 Mar-17 7050 Lab store
Implication SOP non-compliance.
Recommendation Project should expense out the lab store on actual consumption basis
instead of receipt basis in order to comply with the SOP for better controls and
transparency.
b. Issue register for chemical issued to perform practical not prepared It is noted that
chemicals and expendable issued to perform the practical were neither recorded in
issue register nor any token of receipt obtained from the Science Teacher to validate
the issuance.
Implication Loose internal controls.
Recommendation The project should prepare proper Issuance register of chemicals.
c. Preparation of Issue Voucher for consumption of chemical not in practice in project It is
noted that the school is not in practice to prepare issue vouchers for the chemical and
expendable items issued to students for performing experiments and submit it to
accounts and finance section in FFHO hence the consumption not charged off from the
accounts ledger maintained at FFHO.
Implication Non-compliance of SOP resulting in incorrect valuation of FF stocks stated in

Page 9 of 12
 annual accounts of FF.
Recommendation Issue vouchers for consumption of chemicals should be submitted to
Welfare Finance (Edn.) Section in FFHO.
7. Library Books
Control Ledger for Library Books not made by School It is noted that control ledger to
record the Receipt, Issue and Balance in hand quantity of books and amount thereof is not
made by school.
Implication Loose internal control may result in loss to FF.
Recommendation Project should maintain Control ledger to record receipt, issue and
balance of books, both quantity and amount wise.
8. Schooling Management System
Modules and sub modules regarding fee and funds are not implemented in SMS During SMS
audit we observed that most of the modules and sub modules are not fully implemented by the
project. Only fee slips are prepared through SMS at the project. Few of the problems/non
compliances are appended below :-
 Fee paid/unpaid report does not contain the correct data of outstanding fee.
 Brother / Sister Tuition fee concession list generated from SMS does not contain
correct data.
 Correct Fee reconciliation and monthly progress report could also not be generated
through SMS.
 Fee slips pertaining to dues of more than one month period could not be generated
through SMS.
 Absentee fine could not be generated through SMS.
 Staff members who are required perform their duties on SMS are not trained and are
performing their tasks through self-learning.
Implications Project has not justified cost of SMS with respect to cost/benefit analysis. For
instance:-
 Printing and stationary cost has not been reduced.
 Laborious work has not been reduced completely which if reduced may result in
reduction of employees (and hence salaries expenditure) as well.
 Transparency/fair presentation has not been achieved.
 Errors/mistakes/differences are still observed in reports of the project due to manual
maintenance of reports and not providing training to staff.
Recommendation In order to make FF projects as smart organization it is highly
recommennded that:-

Page 10 of 12
  Project should make serious effort to execute all modules especially fee and funds in
order to achieve transparency, better controls and cost effectiveness.
 Welfare (Education) Division should establish procedures to monitor the timely
implementation of SMS at project and disciplinary action should be taken against the
responsible personnel of the project in case of unjustified delay in implementation.
 Staff members that are required to work on SMS should receive proper training before
their posting at the project.
9. Employees Personnel Record
a. Service Contracts of employees have been expired It is noted that Service Contract
of given below employees have been expired but renewal of the same not submitted to
FFHO for approval:-
S. Date of Contract Renewal for the period
Name Designation
No Appointment Expired on not available
1 Irfan Shahzad Cptr Lab Asst 12-12-2013 11-12-2015 12-12-15 to 11-12-16
12-12-16 to 11-12-17
12-12-17 to 11-12-18
12-12-18 to 11-12-19
2 Allah Yar Khan PTI 04-11-2016 03-11-18 04-11-18 to 03-11-19
3 Mulazim Hussain Chowkidar 22-10-2012 21-10-14 22-10-14 to 21-10-15
22-10-15 to 21-10-16
22-10-16 to 21-10-17
22-10-17 to 21-10-18
Implication Non-compliance of SOP and weak internal controls.
Recommendation The project should get renewed service contracts of pointed out cases.
Supervisory controls should be implemented by project to ensure that service contracts
are renewed before expiry.
b. Pay & Allowances record not updated in Service Record Book of employees It is noted
that pay and allowances record not updated in Service Record Book of employees. Few
such instances observed on test check basis are given below:-
S.# Name Appt Date of Appt Remarks
1 Allah Yar Khan PTI 04-11-2016 Not updated since 19-06-2016
2 Walayat Ali Shah J/Clk 05-06-2015 Not updated since 04-11-2016
3 Ghazanfar Ali Chowkidar 20-11-2015 Not updated since induction on 20-11-2015
4 Babar Hussain D/Chowkidar 09-10-2013 Not updated since 31-10-2016
Implication Loose internal controls.
Recommendation Project should update the personal files of employees on regular basis so
that present pay of employees appearing in pay roll can be reconciled and verified from the
personal files of employees.
c. Leave Application for leaves availed by employees were not available It is noted that leave
application in respect of given below employees were not available in leave application file.
S. # Employee Name Designation Date Days
1 Muhammad Latif PTI 27-06-2018 01
2 Tahira Shaheen Aya 23-04-2018 01
3 Muhammad Zamurd Chowkidar 03-04-2018 01
Implication Non-compliance of SOP and weak internal controls. May result in loss to FF.
Page 11 of 12
 Recommendation Leave Application for earned leaves availed by employees should be
attached in personnel file.
10. Financial and Operational performance
Academia 2017-18 2016-17
1 GPA SSC 5.33 5.55
2 GPA HSSC 4.68 4.71
3 Number of Students promoted/passed 668 656
4 Classes with less than authorized students 0 0
Faculty  
1 Number of students per teacher 27 27
2 Percentage of full-time faculty 88% 100%
3 Faculty turnover percentage 13% 8%
Finances    
1 Income vs Expenses percentage / ratio 39% 37%
2 Cost per student - budgeted 60,4 61,22
3 Cost per Student - actual 54,8 57,97
4 Subsidy per student - budgeted -
5 Subsidy per student - actual 33,6 36,25
Educational/faculty pay & allowances as a percentage of total
6
expenditure 71% 64%
Audit    
Performance to be evaluated in terms of compliance with audit
 
observations.  
Technology    
1 Schooling management system efficiency and effectiveness 40%  
2 Reporting of SMS 10%  
Facilities    
1 Overall building condition Good
2 Overall furniture condition (ratio of old v/s new furniture) Good

Page 12 of 12