AUDIT AND FINANCE
PSOPK
Submitted by MOHAMMAD SHAHID NOOR Submitted to [Link] Ahmed Khan PAKISTAN STATE OIL COMPANY LIMITED
Pakistan State Oil
Audit & Finance
Table of Content S no.
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Content
Executive summery Acknowledgement PSOCL step by step PSO History Overview of company PSO Network in Pakistan PSO Vision statement PSO Value statement Introduction to Finance department Treasury (Finance) General Banking Bank Reconciliation Work in 1st Week Work in 2nd Week Work in 3rd Week Work in 4th Week Work in 5th Week Work in 6th Week Recommendations Conclusion
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EXECUTIVE SUMMARY
This report sheds light upon the activities that I participated in during my internship at PSO. It elaborates the practical aspects of Audit and Finance and the work done by me. During my internship of 6 weeks, I M SHAHID NOOR (KUST) -2SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
was placed in the Audit department and Finance Department. In the Audit department I visited to COCO site and KTB (Karachi Terminal B) and also worked on Filing, Freight Pool, and made executive summary of COCO sites. Then after that on forth week I was being sent to the finance department and finance is all about money. Here I work a lot and learned much of things. My supervisor assigned a task of bank reconciliation which is to be done on SAP (System Application Program). In the start it was difficult but after some days I learned and doing very well. It was good experienced for me. This was my first internship and it proved to be a useful one for me. The initial part of this report contains authentic information and facts about the history of PSO and the corporate profile of the company. It also gives an overview of the audit department and the work done by me in it. The next stage gives a conceptual overview of the organizational structure, followed by a more detailed overview of the Finance department. The sub sections within the Finance Department include: General Accounts, Treasury, Freight Pool, Accounts Payable, Accounts Receivable, Loyalty cards and Credit Control.
ACKNOWLEDGMENT
M SHAHID NOOR (KUST)
-3-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
I would like to thank [Link] Ahmed Khan for his continuous support and guidance that enabled me to prepare this report for my summer internship 2009 I would like to extend my gratitude to Mr. Athar Ali (Audit). Mr. Mohammad Aasif (Audit). Mr. Naveed Baig (Audit). Mr. Ammad (Audit). Mr. Rahimullah (Audit). Mr. Aziz Hemani (Treasury, Finance) Mr. Javed Anees (Treasury, Finance) Mr. Majid Iqbal (Treasury, Finance) And Mr. M Ismail (Treasury, Finance)
For the support he provided in regard to the projects assigned to me during the internship. They assisted me in my tasks and were a source of guidance to me during internship. I would also like to thank Mr. Asadullah khan (LALA) for giving their precious time in assisting me and sharing the value information.
M SHAHID NOOR (KUST)
-4-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
M SHAHID NOOR (KUST)
-5-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSOPK
Planners & Marketing
Earnings members
Supporting members
Corporate Planners Retail Department Finance
Retail Planning
Aviation & Marine
Construction & Operations
Brand Management
Lubricants & Chemicals
Human Resources
Industrial Consumers
Information Systems
Power Projects
Special Projects
Lubes Sales & Agency Trade
Retail Facilities
LPG
Legal
M SHAHID NOOR (KUST)
-6-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSO HISTORY
The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL). Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO). After PSOs inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the companys major operations into independent activities supported by legal, financial, informative and other services. In order to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems. Human Resource Development became one of the main priorities on the companys agenda under this corporate reform. It is due to this effective implementation of corporate reform and consistent application of the best industrial practices and business development strategies, that PSO has been able to maintain its market leadership in a highly competitive business environment.
M SHAHID NOOR (KUST)
-7-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
OVERVIEW OF PSO
PSO is the market leader in Pakistans energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The companys current value of Rs. 75 billion, its 82.1% share in the black oil market and 61.2% share in the white oil market, alone speak volumes about its success. The companys astounding growth in terms of sales and turnover, combined with its status of being the first Pakistani Public Sector Company to become a member of the World Economic Forum (WEF), and winning the Karachi Stock Exchange Top Companies Award has made PSO a notable company world over PSO has the widest strategic oil distribution network. This network comprises of 29 storage depots and 9 installations, 860,000 MTs of capacity i.e. almost 81% of total national storage, numerous pipe lines network and equity partnership in White Oil Pipeline Project (WOPP) from Karachi to Mehmood Kot. PSO has the widest strategic oil distribution network. This network comprises of 29 storage depots and 9 installations, 860,000 MTs of capacity i.e. almost 81% of total national storage, numerous pipe lines network and equity partnership in White Oil Pipeline Project (WOPP) from Karachi to Mehmood Kot.
M SHAHID NOOR (KUST)
-8-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
A most efficient product movement system for its POL products facilitates the operations at PSO. This system includes a fleet of 6000 tank Lorries, tank wagons and pipelines. With the inception of white oil pipeline (WOPP) the pattern of supplies from Karachi has changed drastically as the entire white oil movement from Karachi has been switched over from tank lorries to pipelines. Moreover, to make this system more efficient and effective, new pilfer-proof tank Lorries equipped with satellite tracking system have been introduced. With its 3612 distribution outlets, PSO has the largest network in the country. Out of these, 1,610 outlets have been upgraded as per the New Vision Retail Program, with most modern facilities like electronic dispensing units, convenience stores, business centers, Easy Payment Centers and customer friendly staff to provide unmatched and diverse services to its customers, all of which are comparable to international practices. The fact that PSO serves 2.8 million retail customers on daily basis, along with 2000 industrial units and business houses, is indicative of its vast customer base. The company has also been meeting the fuel needs of various government entities, armed forces, railways, agriculture sector, IPPs and industrial units. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. In July 2002, PSO Loyalty Cards were introduced to reward the retail customers for their loyalty and patronage towards the company. In February 2003 PSO launched its Fleet Cards and Corporate Cards, which are fuel-based credit cards for the business entities. These cards along with the companys Prepaid Cards, provide convenience, flexibility and security to customers, while enabling them to earn redeemable loyalty points and avail attractive discounts on nonpetroleum products.
M SHAHID NOOR (KUST)
-9-
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSOs leading retail brands include Premier-XL (petrol with multi-functional additive), Green-XL (environment friendly diesel with an additive that provides more mileage, smooth running & less black smoke), Deo (diesel engine oil) and Carient (passenger car motor oil). In order to deliver the promised quality to its retail customers, PSO launched Mobile Quality Testing Networks (MQTU) in October 1998 which has now been extended to 21 units operating from 15 major cities of Pakistan. These units perform surprise visits to check the quality of the POL products at different retail outlets. The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL). Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO).
M SHAHID NOOR (KUST)
- 10 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSO NETWORK IN PAKISTAN
M SHAHID NOOR (KUST)
- 11 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSO VISION STATEMENT
To value the uniqueness and differences in each board member by Listening with an open mind to ideas and feedback Communicating clearly and honestly with kindness Elevating and maintaining principles (Mission) before personalities and Showing our genuine appreciation to each other and the school by working in a supportive and harmonious environment.
M SHAHID NOOR (KUST)
- 12 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
PSO MISSION STATEMENT
We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers, based on: Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development Lowest cost operations and assured access to longterm and cost effective supply sources Sustained growth in earnings in real terms Highly ethical, safe environment friendly socially responsible business practices and
PSO VALUES STATEMENT
M SHAHID NOOR (KUST)
- 13 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
Excellence
We believe that excellence in our core activities emerges from a passion for satisfying our customers' needs in terms of total quality management. Our foremost goal is to retain our corporate leadership.
Cohesiveness
We endeavor to achieve higher collective and individual goals through team. This is inculcated in the organization through effective communication.
Respect
We are an Equal Opportunity Employer attracting and recruiting the finest people from around the country. We value contribution of individuals and teams. Individual contributions are recognized through our reward and recognition program.
Integrity
We uphold our values and Business Ethics principles in every action and decision. Professional and personal honesty, dedication and commitment are the landmarks of our success. Open and transparent business practices are based on ethical values and respect for employees, communities and the environment.
Innovation
We are committed to continuous improvement, both in New Product and Processes as well as those existing already. We encourage Creative Ideas from all stakeholders.
INTRODUCTION DEPARTMENT
M SHAHID NOOR (KUST) - 14 -
OF
FINANCE
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
The finance department at PSOCL is headed by the Mr. Aziz Hemani General Manager Finance. Finance department at PSOCL is divided following sections according to their nature of work. General Accounts/payroll Accounts Payable Freight Pool Treasury, Banking and Imports Custom, Excise and Sales Tax Financial Reporting Shares and Taxation Confidential Salaries Payable & Credit Control. into
Some of the salient features of finance department are: Maintenance of Capital Expenditure database Preparation of monthly capital expenditure reports Accounting for capitalization and disposal of capital assets with reference to location and cost center. Accounting for store documents, imported capital.
M SHAHID NOOR (KUST)
- 15 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
Treasury
I have been posted to treasury department: the main features are of this department are as follows; This department is a centralized and one of the major sections of Finance. Its major functions are: General banking, Collection, Import/ foreign exchange, Insurance, Funds Management head office petty cash, Bank Reconciliation,
GENERAL BANKING: General banking is one of the section of treasury during orientation of finance department Mr. Javed Anees gave me brief introduction about this section. Activities Opening and closing of bank To fulfill formalities of signed by the company. To arrange all sort of bank the company. Verification and booking of bank charges mark up etc. Verification and booking of profit on PLS accounts. accounts financial
arrangements
guarantees required by bank debit advices fro bank credit advices for
M SHAHID NOOR (KUST)
- 16 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
BANK RECONCILAION DEPARTMENT:
Bank reconciliation is the department of treasury where I was posted for the whole intern periods. Bank reconciliation is a monthly activity and is centrally monitored at Treasury Department. Companys all main current accounts, collection accounts, deposit accounts / PLS accounts and dividend accounts are reconciled by Treasury Department. The respective departments reconcile the COCO site accounts and duty payment accounts. Majority of reconciliation activity is currently being done manually. However, efforts are being made to reconcile bank accounts through dedicated software/ bank solution, whereby, PSO shall obtain all banks statements online from a dedicated bank as per standard format and will download the bank ledger from information system. Objective is to prepare bank reconciliation for all banks accounts of the company to capture all the items responsible for difference between bank balance and book balance and to keep this reconciliation to minimum numbers. At PSO, data entry through multiple departments and variety of banks requirements complicates the process of reconciliation. To introduce more control the reconciliation section is moving from monthly reconciliation to weekly or even daily reconciliation. For improving the efficiency of this process bank reconciliation is made automated through introduction of SAP. With the introduction of SAP it is easy to automate a significant portion of this process. And eliminate most errors. In SAP bank reconciliation uses an extensive series of rules to match banks and financial system data. Activities Collection of all sorts of bank advices and bank statements from banks. Distribution of advices to peoples to whom they pertain for the purpose of verification and booking. Keep track of reconciliation items Follow up for the un-booked advices.
1st Week
M SHAHID NOOR (KUST) - 17 SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
1st week in PSO was so good and I enjoyed very much. I had a very good orientation session. The 1st two days was introductory days in which our respectable Sir Vaqqar Ahmad Khan introduced the whole PSO Company. Their objectives, mission and vision etc. On third day I was sent to Audit department to start my regular work and where I met many of my senior officers of audit department who are, SIR ATHAR ALI (Audit) SIR NAVEED BAIG (Audit) SIR ABDUR RAHIM (Audit) SIR M AISF (Audit) & SIR AMMAD (Audit)
Where Sir Naveed was assigned our supervisor and he gave us an orientation about Audit. On forth day I visited KTB( Karachi Terminal B). under supervision of senior Audit officer Sir Abdur Rahim, where I learned a lot of things about Audit and got an opportunity to climb on tanks of PSO products such as GP1, GP2, GP8, Carosine, Furnace, Diesels and Petrol etc. I inspected around 20 tanks. The task involved checking the volume, density and temperature of products through a process called dipping. The work was tough but it turned out to be a good learning experience for me. So we worked the whole day at KTB. The next day I came to the office where me and my supervisor worked in collaboration to prepare a report on KTB. This is how my first week passed by.
M SHAHID NOOR (KUST)
- 18 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
2nd week
In the 2nd week, my assignment was to make an executive summary of COCO(Company Owned and Company Operated) sites with respect to the observations of the audit officers regarding its malfunctions. The work was new for me but it was knowledgeable and I had a useful insight into it. It took me two days to complete this assignment. Then I was assigned filing of documents which concerned the audit of COCO sites, terminals and depots.
3rd week
I was then assigned a task in the freight pool section of audit. My work was based on the SAP software where I verified the transport charges given on the software with the manual data. It involved rectifying the errors related to these charges of which some were resolved but unfortunately some were not. The experience was really fantastic and I really learned a lot. Yes some tasks were really tedious and I learned not to waste time on useless things rather consume time on things which are of great benefit and are worth learning. This week was great. Now three weeks were passed in Audit department. I really came to know what practical life is all about and how the people who work in audit department are so concerned in the operations of the company. Their tasks are really tedious like they verify that the financial statements of the entity are not biased and do not reflect unfair information. That really is a hard job because auditing is a topic being taught to chartered accountants and they take much time and put a lot of effort to pass it. So it is a long procedure to verify the financial statements. It was a great experience.
M SHAHID NOOR (KUST)
- 19 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
4th and 5th week
Then after that on forth week I was being sent to the finance department and finance is all about money. It deals with the collection of money. It is further subdivided into many sections like bank reconciliation, treasury, accounts payable, accounts receivable and the naturally the head of sixth floor finance department is the general manager of the finance section. Here I met many of the officers who work here. Mr. Aziz Hemani Mr. Javed Anis Mr. Majid Abbasi Mr. Muhammad Ismail Mr. Asif Ladha Ms. Beenish
Where Sir Javed Anees was assigned our supervisor and he gave me an orientation about Treasury. Here I work a lot and learned much of things. He assigned a task of bank reconciliation which is to be done on SAP (System Application Program). In the started it was difficult but after some days I learned and doing very well. The whole week I worked on bank reconciliation. It was good experienced for me.
M SHAHID NOOR (KUST)
- 20 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
RECOMMENDATIONS
Internees should be rotated between different departments. There are many employees in PSO which are well experienced but are left behind. There should be in increase in stipend for internees There should be hostels for employees and internees coming from cities outsides from Karachi. . There should be SAP login ID for internees, to get the know how of it. The behavior of servant who serves tea is not good. There should be sports facilities for internees. There should be provided pick and drop facility for internees.
M SHAHID NOOR (KUST)
- 21 -
SUMMER INTERNSHIP 2009
Pakistan State Oil
Audit & Finance
CONCLUSION
My internship experience at this organization was nothing short of an extremely educational and productive exposure and experience to the corporate world. Since this was my first internship I was relatively unaware of the corporate practices and norms, but it can be proudly said that at the end of the internship I had gained and learned a lot from this giant petrochemical firm The internship program consisted of approximately 168 internees selected from a well-managed screening session. The internees were, after an educational orientation program, allocated to particular divisions and sub-divisions. After being allocated to particular sections, each intern was allotted a project or a number of tasks that were to be completed at the end of the internship project. It was my first internship. It was very valuable for me. I learnt a lot about audit and the processes involved in bank reconciliation. In audit department I learnt the work of filing, freight pool, audit of COCO sites and KTB (Karachi terminal B) and made executive summary on COCO sites. The work of freight pool is done trough SAP(System Application Program).so I got an opportunity to about SAP software. I also learnt how to communicate with employees of my department and how to adjust in office department.
M SHAHID NOOR (KUST)
- 22 -
SUMMER INTERNSHIP 2009