Chairman and Members of Audit
Committee
Husein Sugar Mills Limited
30-A E/1, Old CC, !ulberg-"""
LAHO#E
1$ %anuar& $01$
Our ref' H-1-1$0
(ear Sirs
HUSEIN SUGAR MILLS LIMITED MANAGEMENT LETTER 30
SEPTEMBER 2011
)lease refer to our letter *o+ !-1-1,-. dated 1, (e/ember $011 addressed to
the board of dire/tors along0ith audited 1nan/ial statements+ 2e no0 3resent
for &our /onsideration our obser4ations emanating from the audit 0hi/h are set
out in the su//eeding 3aragra3hs 0ith res3e/t to matters that /ome to our
attention during the /ourse of our e5amination+
$+ 6he 3rin/i3al 3ur3ose of our e5amination of the 1nan/ial statements of
H7SE"* S7!A# M"LLS L"M"6E( for the &ear ended 30 Se3tember $011 0as to
enable us to form an o3inion on su/h 1nan/ial statements+ "n this /onne/tion,
0e re4ie0ed the s&stems of a//ounting and internal /ontrol and made tests of
/om3lian/e there0ith to the e5tent 0e /onsidered ne/essar& for the 3ur3oses
of e4aluating the s&stems as re8uired b& the "nternational Standards on
Auditing+ Our tests did not ne/essaril& dis/lose all the irregularities in the
s&stem, 0hi/h might e5ist+
PROPERTY, PLANT AND EQUIPMENT
3+ i5ed assets register has not been maintained as re8uired b& Se/tion $30
of the Com3anies Ordinan/e, 19-.+ Moreo4er, identi1/ation /odes 0ere not
mentioned on 15ed assets+
.+ #e3orts of 3h&si/al 4eri1/ation of 15ed assets /ondu/ted, if an&, b& the
management 0ere not made a4ailable to us for our 4eri1/ation+
STORES, SPARES AND LOOSE TOOLS
:+ 6he management information s&stem used for in4entor& does not
3ro4ide fa/ilit& to determine minimum, ma5imum and reorder le4els and to
generate list of obsolete and slo0 mo4ing items+
LOANS AND ADVANCES
,+ ollo0ing dis/re3an/ies 0ere obser4ed in loans to gro0ers'
#ules, regulations and 3oli/ies regarding loans to gro0ers 0ere not
3ro4ided to us+
ollo0ing loans to gro0ers are outstanding sin/e long+ 2e
re/ommend that these loans should be 0ritten o; if no more
re/o4erable'
C#7SH"*! SEASO* #7)EES
$00.-$00: ,,,:<3
$003-$00. $,1,<00
$00$-$003 --,10.
$001-$00$ 1$,0<-
$000-$001 10,,993
1999-$000 $0,:00
199<-199- 3:,9,,
FINANCE LEASE
<+ #e4ised lease re3a&ment s/hedules of As=ari Leasing Limited 0ere not
3ro4ided to us+ Anne5 >A? sho0s di;eren/es bet0een 3resent 4alue as 3er lease
amorti@ation s/hedules and boo=s of a//ount+
LONG OUTSTANDING BALANCES
-+ Some 3a&ables and re/ei4ables are outstanding sin/e long+ 2e
re/ommend that these should be 0ritten-ba/= / 0ritten-o; if no more 3a&able
or re/ei4able res3e/ti4el&+ or instan/es, refer to Anne5 >A?+
SALES
9+ Sales /ontra/ts of sugar, molasses and baggasse e5/e3t sale of sugar
through selling agents 0ere not signed b& the bu&ers+
10+ As 3er sale agreement 0ith Sha=arganB ood )rodu/ts Limited, 100 C
sale 3ro/eeds 0ere to be re/ei4ed in ad4an/e+ Ho0e4er, an amount of #u3ees
1,1$<,3,1 0as re/ei4able as on 30 Se3tember $011+
11+ Anne5 >C? de3i/ts instan/es 0here 0eight sli3s of molasses and sugar
sold 0ere not signed b& (e3ut& Manager D!odo0nE+
SUGARCANE PURCHASE
1$+ Anne5 >(? de3i/ts the instan/es 0here una33ro4ed / banned 4ariet& of
Sugar/ane, S)E-$3-, 0as 3ur/hased+
13+ Anne5 >E? de3i/ts the instan/es 0here 3ermits for su33l& of sugar/ane
0ere not 3ro3erl& 1lled+
1.+ Anne5 >? de3i/ts the instan/es 0here sugar/ane 3ro/urement re/ei3ts
0ere not 3ro3erl& 1lled+
1:+ Anne5 >!? de3i/ts the instan/es 0here 0or= orders for trans3ortation of
sugar/ane 0ere not 3ro3erl& 1lled+
1,+ Anne5 >H? de3i/ts the instan/es 0here 4ariet& of sugar/ane mentioned
on /ane 3ro/urement re/ei3t 0as di;erent from 3ermit / indent+
1<+ Anne5 >"? de3i/ts the instan/es 0here di;eren/es 0ere obser4ed in
sugar/ane dis3at/hed from /entres and re/ei4ed at Mills+
1-+ #ule 1: of 6he Sugar a/tories Control #ules, 19:0 re8uires to 3re3are
/ane 3ro/urement re/ei3t DC)#E in tri3li/ate+ Ho0e4er, 0e obser4ed that /ane
3ro/urement re/ei3ts 0ere 3re3ared in du3li/ate+
19+ ollo0ing are the instan/es 0here /ash re/ei4ed sli3s DCash #e/ei3tsE
0ere not signed b& the Chief A//ountant / (e3ut& Chief A//ountant'
#e/ei3t *o+ #e/ei3t (ate #e/ei4ed rom #u3ees
-,< 10+03+$011 Mr+ Fousaf $.,3-:
:$, 03+0$+$011 Mr+ Shabbier :1,,,:
$<$ 03+01+$011 *a0a@ish Ali 9:,-,0
SALARIES, WAGES AND OTHER BENEFITS
$0+ "m3ortant do/uments 0ere missing from 3ersonal 1les of em3lo&ees+ or
instan/es, refer to Anne5 >%?+
$1+ Ser4i/e rules and 3oli/ies 0ere not 3ro4ided to us for 4eri1/ation+
$$+ ollo0ing dis/re3an/ies 0ere found regarding o4ertime'
Em3lo&ee /odes 0ere not mentioned on o4ertime sheets+
6ime in and out register 0as not maintained+
Columns 0ere not 3ro3erl& 1lled in o4ertime sheets+
7nauthori@ed /uttings and o4er0ritings 0ere obser4ed on
o4ertime sheets+
$3+ #e4enue stam3s 0ere not aG5ed on 0age sheets of dail& 0agers 0here
3a&ments of o4ertime and salaries 0ere made in /ash+
LAWS AND REGULATIONS
$.+ 6he name of the Com3an& 0as not 3ainted or aG5ed outside its
registered / Head oG/e in /ontra4ention of se/tion 1.3 of the Com3anies
Ordinan/e, 19-.+
$:+ *o orientation /ourses of dire/tors 0ere /ondu/ted during the &ear+
GENERAL
$,+ "nstan/es 0ere found 0here 4ou/hers 0ere not signed b& rele4ant
3ersonnel+ or instan/es, refer to Anne5 >H?+
$<+ inall&, 0e 0ish to e53ress our a33re/iation for the /o-o3eration and
/ourtes& e5tended to us b& the management and other sta; members in
a//om3lishing our tas=+
Ier& trul& &ours