CHAPTER # 1ORGANIZATION INTRODUCTION 1. Organization Introduction “The Zarai Taraqiati Bank Limited (ZTBL) formerly known as Agricultural Development Bank of Pakistan) is the largest public sector development bank with 31 zonal offices, 9 Audit zones and 357 branches in Pakistan”. (Wikipedia, 2012).Agriculture Development Finance Cooperation was created in 1952. In 1957 Agriculture Development Bank of Pakistan (ADBP) was established. In 1961 both these organizations were merged into Agriculture Development Bank of Pakistan in February 1961. On December 14, 2002 Federal Government of Pakistan converted (ADBP) into ZTBL (Zarai Taraqiati Bank Limited). The new corporate structure redefines the banks statue as a public limited company with an independent Board of Directors, which aims at ensuring good governance, autonomy, delivering high quality, viable and timely financial services to a greater number of clientele in the agricultural and rural segment of the country. (ZTBL, 2012) 1.1 Corporate Vision “Dedicated to serve the needs of the farming community, by delivering financial products and technical services on a competitive and sustainable basis, in a convenient, efficient and professional manner, leading to success of the Bank and the farmers”. (ZTBL, 2012) 1.2Corporate Mission “To play effective role in the promotion of economic growth, by enhancing the availability of credit to the agriculture sector, through reliable access to sustainable financing, special lending programs, technical assistance, and other products & services, and to promote career development opportunities for increasing professionalism and technical proficiencies of employees.” (ZTBL, 2012) 1.3 Nature of ZTBL’s Business; ZTBL provides credit facilities to the farmers e.g. hiring and renting of anything. ZTBL is basically a specialized non-commercial bank, for agricultural development in Pakistan which targets small and medium farmers and give loans on subsidize rate. ZTBL does not provide loan for more than one million PKR. (ZTBL, 2012) 1 CHAPTER # 2 ACCOUNTS & FINANCE DIVISION 2. Central Accounts Department The central account department of ZTBL formulates and maintains accounting policies and procedures manuals accounting standards to ensure dissemination and implementation across the bank. It formulates and prepares financial statements keeping in the view of the requirement of Bank. It also makes sure the proper accounting of Assets, liabilities, and Income and Expenditure. Following are the functions of central accounts department. For departmental hierarchy view, see annexure no. 1 Central accounting department issues instructions related to accounting policies and procedures. Central Accounts Department of ZTBL consists of five units like Policy Unit, Accounts Unit, Corporate Tax Unit, Fixed Asset unit, Prepayment Unit. (ZTBL HO A&F Manual, 2012) 2.1 Policy Unit Policy Unit plans accounting procedures of accounting in both head office and branches and coordinate with other departments within the head office on the different policy matters. It deals coordination of external auditors and arrange payment to them. It formulates bank charges schedules and circulates among the branches and submits to SBP on half yearly basis. It deals with management letter and executive summary and suggests guidelines for adjustment of suspense account. It performs administrative functions for the department such as sanction of leaves and budget preparation. This unit also provides guidelines to the branches regarding rectification of accounting errors and audit observation. (ZTBL HO A&F Manual, 2012) 2.2 Accounts Unit The Account unit of the Central Accounts Department coordinates with concerned departments for the timely production of statement of affairs. It prepares financial statements whiling compiling balances under relevant group of heads from trial balances. It makes the list of abnormal entries for rectification. It prepares quarterly, half yearly and yearly financial 2 statements for the audit committee. It prepares annual capital adequacy ratio statement for certification by external auditors. (ZTBL HO A&F Manual, 2012) 2.3 Tax Unit The Tax unit of the Central Accounts Department of the ZTBL provides guidelines of deduction of the tax under the ordinance of income tax 2001 and collects tax payment documentary evidences for tax deducted. It communicates and coordinates with tax consultant, SBP and income tax authorities and collects related to the tax refund case form consultant. It pays advance tax and prepares the statement along with tax related audit. It also calculates withholding tax which is paid by the bank in form of the utility bills.(ZTBL HO A&F Manual, 2012) 2.4 Fixed Assets Unit It sends out timely formats and procedures for the fixed assets to the Zones, Branches, and Head Office Department. It deals with collection of fixed assets schedules as well as other required documents from branches and head office department. It compiles and summarizes the fixed assets schedules on country level along with data maintenance. This unit on quarterly basis compiles the addition and deletion of fixed assets. It works to monitor and verify the disposal of fixed assets and depreciation charged by the departments and head office on quarterly basis. It calculates and accounts for the deferred tax assets and coordinates and cooperates with external and internal auditors on the different issues of the fixed assets of the bank. (ZTBL A&F HO Manual,2012) 2.5 Pre-payment Verification Unit Pre-payment unit of the ZTBL Bank is designed to verify all payment structures related to the Head Office. It checks availability and competence of sanction of the competent authority. It works to check procedural compliance and completeness of documents. Bills are verified by prepayment verification unit. (ZTBL HO A&F Manual, 2012) 2.6 HO Account Department 2.6.1Aims Expeditious processing of payments to build proper image of the bank in vendor 3 industry/community whilst upholding controls as well as welfare of employees through Trust fund. (ZTBL HO A&F Manual, 2012) 2.6.2 Objectives Disbursement relating to Head Office (Supplies/Services) Pay-out salaries and allowances to Head Office employees. Maintenance of Subsidiary Ledgers of House Building, Conveyance, Rain & Rent, Advances, Suspense Accounts, Sundry Deposit Account, and Items in Transit Accounts &Bank Reconciliation related to head office. Operations/investment of ten employees trusts funds and maintenance of book of account including finalization of Financial Statements. Reconciliation of inter-branch transactions in accordance with SBP Prudential Regulation No. 03 (ZTBL HO A&F Manual, 2012) 2.7 Payment Unit Overall supervision of the unit Daily processing of vouchers of account division Weekly/Monthly reports, Quarterly /Half yearly/ Yearly closing Merging of volumes/files Payments of different expenses e.g. Law charges, Sports expense etc. Payment of KSSL employees Maintenance of vouchers (ZTBL HO A&F Manual, 2012) 2.8 Payroll Unit Preparation and processing of payrolls of clerical staff posted in Head Office. Put up salary files Disbursement of salary according to grades Vouching and booking of department wise expense Reconciliation of payroll correction there of 4 Responding of credit advices originated by field offices on account of expenses of H.O Payment of loans e.g. car, motorcycle etc. Maintenance of Advances balances and mark-up there on Payment of overtime to employees Helps in preparation and processing of payroll Payments of different allowances Calculation of income tax on monthly salary, arrears of pay/increments etc. (ZTBL HO A&F Manual, 2012) 2.9 Inter Branch Reconciliation Unit Plan, manage & supervise daily reconciliation process Random view of matched items Persuasion to zonal offices for timely reconciliation of inter branch transaction Submission of reports to management when required Producing list of outstanding entries To assist computer section and other departments Maintain branch wise record Coordination with field offices for settlement of outstanding entries Producing list of outstanding entries (ZTBL HO A&F Manual, 2012) 2.10 Employees Funds Unit Investment of surplus funds Renewal of tax exemption certificates from commissioner Income Tax Annual audit of all trust accounts Entry/preparation of all trust accounts Maintenance of existing software Reconciliation of accounts with HO Branch and HBL To prepare Trial balances of all trust funds for audit service Responding to debit or credit advices of different regions 5 (ZTBL HO A&F Manual, 2012) 2.11 Budget and Fund Management Department 2.11.1 Aims and Objective The main function of Budget and Fund Management Department of ZTBL Bank is prepare the financial plane for the credit limits, fund review and to arrange additional resources for maintenance of additional liquidity for efficient distribution, timely discharge of liabilities and operations of Bank. (ZTBL HO A&F Manual, 2012) 2.11.2 Functions Budget and fund management department of ZTBL mainly develops the policies, procedures and standards for the budget planning and analysis. It coordinate and cooperate with administrative and government in order to resolve budget issues. It automates budget process and preserves the data and obtains approval from Board of Directors for annual budget. It gather the data of various departments and analysis that for their performance. Further it consists of four units as described below. (ZTBL HO A&F Manual, 2012) 1. Budget Planning Unit 2. Budget Analysis Unit 3. Treasury Unit 4. Fund Reconciliation Unit 2.12 Budget Planning Unit The Budget planning unit of the Budget and fund management department of the ZTBL develops departmental polices procedures and standards for the financial management and budget planning processes and parameters. It communicates with administrative and governance groups in order to resolve the budget issues. It compiles and process necessary information for the preparation of annual reports. It generally evaluates and review expenditures and submits to the audit committee. Its further role is to provide information and analysis for the purpose of the annual planning and effective efficient decision making. 6 (ZTBL HO A&F Manual, 2012) 2.13 Budget Analysis Unit It generally analyzes and monitors financial activities of departments which show their performance. On the basis its analyzed results performs the highly effective steps. It develops assumptions and strategies for future budget cycle. (ZTBL HO A&F Manual, 2012) 2.14 Treasury Unit Treasury Unit is engaged in the arrangement of the fund for the different purposes to the branches and maintains their records. It manages Banks accounts with SBP and commercial banks such as MCB, HBL, and UBL and so on. It checks out the appropriate balances in the branches if there are excess balances then its calls for and if there is less balances then it transfer the funds and also declare the deposit rates for the depositors. It performs the role of coordinator while performing the role of coordination with SBP, commercial, Internal and External auditors on the matters of treasury. It deals the matters of investment of surplus funds provided by the branches. It maintains check on the balances of different branches if any branch have high cash then relevant bank returns it to HO, Islamabad. They also maintain a record of different branches liquidity ratio. (ZTBL HO A&F Manual, 2012) 2.15 Funds Reconciliation Unit It mainly plays the role of reconciliation of Bank accounts with other commercial banks at Head Office Advices issued by branches are responded by Funds Reconciliation Department. It also monitors the reconciliation of bank accounts with other commercial banks. (ZTBL HO A&F Manual, 2012) 2.16 Regulatory Reporting Department The regulator gives instructions What to do, when to do and how to do as Government agencies and SBP, SECP etc. while reporting means perpetrations of the reports and submission of the reports to the regulators. That’s why this department reports certain information to the regulators and ensures it that bank has compiled accordingly. (ZTBL HO A&F Manual, 2012) 7 2.16.1Aims and objectives It aims to fulfill the statuary reporting requirements and provides financial reporting to the management for the specific purposes. Its objective is to provide and ensure the effectiveness in meeting statutory reporting obligations. It makes prompt and accurate analysis to aid effective decision making. In last it ensures the implementation of the Basal-II. (ZTBL HO A&F Manual, 2012) 2.16.2 Functions It reformulates and redesigns system of data capturing, its consolidation and subsequent reporting keeping in mind regulatory requirements. It ensures the implementation of updated reporting requirements, which are update time by time. It helps external as well as internal auditors Furthermore it performs the job suggested by the regulatory authority. (ZTBL HO A&F Manual, 2012) 2.17 Reporting Process There are mainly five steps in reporting process, which are defined bellow: 2.17.1 Data Capturing This is the step in which data is gathered from various sources such as field offices, deportments such as CAD and ISD and from financial reports such as Accounts, D/R Series etc. 2.17.2 Consolidation Data collected from various sources is consolidated here. 2.17.3Data verification In this step collected data is verified weather the collected data is valid and true or not, because the collected data is not all ways reliable. It needs very careful examination due to possible errors and mistakes, which are later rectified for report generation purpose. 2.17.4 Report generation On the basis of analyzed and verified data, it is injected in the form of reports which is provided by SBP. 2.17.5 Submission In this last step the complete formed reports are submitted to the regulatory authorities such as SBP. The main sources of submission are courier and online. (ZTBL HO A&F Manual, 2012) 8 CHAPTER # 3 3.1 Aims AUDIT DIVISION Appraisal of operations and control to determine whether policies and procedures are being followed carefully and all resources are used efficiently and judicially. For division’s structure view annexure no. 2 (ZTBL HO Audit Manual, 2012) 3.2 Objectives Review and appraise the soundness, adequacy, and application of accounting and financial control and promoting effective control at reasonable cost Ascertain the extent of compliance with established policies, plans and procedures. Ascertain to the extent to which the bank assets are accounted for and safeguarded from losses of all kinds Ascertain the quality of performance in carrying out assigned responsibilities Ascertain the reliability of management data developed within the bank Conduct/Arrange audit of H.O. departments & H.O. units in the field Recommend operational improvements (ZTBL HO Audit Manual, 2012) 3.3 Functions Carry out systematic examination of books of accounts and records maintained by the Zonal Offices/branches through Audit Zones in order to high-light deviations from rules and regulations. Over-see and exercise vigilance over Field operations of the Bank. 9 Check that financial powers are exercised judiciously by the competent authority. Appraise the quality of performance in carrying out assigned responsibilities. Recommend operational improvements. Ensure that systematic examination/audit of books of accounts, vouchers and other operations of the branch are carried out by the audit zones as per audit Manual/standing instructions and to high-light deviation from rules, regulations and procedures. Examine the SVP's reports of the branches, Management Audit reports of the zonal offices, Special Audit Reports and Project Audit reports and to take appropriate action. Identify scope of improvement in the operational efficiency of the Bank. Prepare memo for Audit Committee of DOD and for other meetings based on reports the Audit Zones. Issue circulars/circular letters on Audit Policy matters. Deal with administrative matters of Audit Dept. at HO/Field Audit Zones. Coordinate with Audit Zones and other departments at H.O. Prepare periodical Audit Report of the Bank. Conduct/arrange audit of H.O. departments and H.O. units in the Field. Audit the management, planning and organization of Information Systems Strategy. (ZTBL HO Audit Manual, 2012) 3.4 Corporate Audit Division 3.4.1Aims Thorough scrutiny of H.O. financial transactions to ensure efficient and judicious use of Bank's resources. To view department’s structure, see annexure no 3. (ZTBL HO Audit Manual, 2012) 10 3.4.2 Objectives Conduct periodical review of organizational set-up, changes if any introduced in the set up. Delegation of authority, policies and procedures, business plans and operational strategies devised by management, keeping in vies, the approved corporate mission. Conduct/arrange Annual Audit of H.O. Departments and H.0 units in the field Ensure that the expenditures are sanctioned as per the financial and administrative powers assigned within the budgetary provisions and bank’s rules are observed. Ensure that errors and omissions are promptly rectified. Ensure that payment is made to genuine payee, properly acknowledged, correctly classified and recorded. Arrange periodical verification of stock and depreciation charged thereon with a view to check its accuracy. Detect weaknesses in system and recommend remedial measures thereof based on audit reports in respect of H.O departments and audit units in the field. Perform administrative functions for the department such as sanctions of leaves, approval of tour programs, etc. (ZTBL HO Audit Manual, 2012) 3.4.3 Implementation and Coordination Unit Pursue the departments at H.O. and audit / H.O. units in the Field to ensure compliance of audit observations. Arrange settlement of audit paras. Keep updating of statistics of audit observations raised/settled and pending audit paras. Deal with administrative matters of the Department including preparation of budget, maintenance of leave record etc. and other miscellaneous administrative matters. Perform administrative functions for the Department such as sanction of leaves. Approval of tour programs, approval of travel allowance etc. 11 (ZTBL HO Audit Manual, 2012) 3.4.4 Post Audit Section Check the vouchers and ensure the booking of expenditure against the proper G Head. Ensure that the expenditures are properly sanctioned within the budgetary provision and to verify the authenticity of bills/receipts. Ensure that all pre-requisites of payment have been completed. Check the genuineness of payee and proper acknowledgement. Check that all the relevant documents are attached with the vouchers. Verify arithmetical accuracy and check that all procedural formalities have been completed. Ensure that vouchers/advices have been signed by the authorized officers. (ZTBL HO Audit Manual, 2012) 3.4.5Management Audit Team - I &II Conduct Annual Audit of the departments at H.O in the light of applicable rules, regulations, policies and procedures with a view to assess all functionaries are performing their duties efficiently and judiciously. Conduct the annual audit zones. Periodical verification of capital items and depreciation charged at H.O (ZTBL HO Audit Manual, 2012) 3.5 Field Audit Department 3.5.1 Aims Appraisal of operations and control to determine whether policies and procedures are being followed carefully and all resources are used efficiently and economically. To view department’s 12 structure, see annexure no 4. 3.5.2 Objectives From the internal audit perspective, document the internal control system designed and put in effect by the management. Understand and evaluate internal control at the entity level and at the process, transaction or application level on an ongoing basis. Keep track of changes vis-à-vis internal controls introduced by management from time to time and update audit working manual. Establish evaluation system of overall effectiveness of internal control system, identify areas of improvement and enforce suitable audit methodology. Prepare annual audit plan, keeping in view credit, operational, compliance and market risks etc. Coordination with concerned divisions and departments for assessments of risk profile of the bank and align the audit approach with the risk appetite and mitigation system implemented by management. (ZTBL HO Audit Manual, 2012) 3.6 Information System Audit Department 3.6.1 Aim Determine the adequacy of security and controls in the Information Systems environment by assessing technology practices, policies, procedures. Provide reasonable assurance that business objectives are reasonably achieved suggest measures with the objective that undesired events prevented or detected and correlated (ZTBL HO Audit Manual, 2012) 3.6.2Objectives Provide reasonable assurance that ZTBL’s IT infrastructure, control and governance process are adequate and functioning in a manner to ascertain quality out-put. Sufficiently evaluate control environments in computer application development, implementation and maintenance process. To view department’s structure, see annexure no 5. (ZTBL HO Audit Manual, 2012) 13 3.6.3 Functions Conduct periodical audit of IT infrastructure and operational practices to provide reasonable assurance for adequate functioning of Bank's IT infrastructure to ascertain: Risks are appropriately identified and managed. Important financial, managerial and operating information is framed as per Bank's rules/ regulations and standing instructions. User actions are compliant to the system and procedures prescribed for the purpose. IT resources are acquired economically, used efficiently and adequately protected. Programs, plans and objectives are achieved. Quality and continuous improvement are fostered in the control process. Sufficiently evaluate control environment in computer application development, implementation and maintenance process and database implementation/ administration covering areas like: Software development/acquisitions standards Database control procedures Change control procedures Source code and executable libraries Documentation SOPs Pre and post implementation reviews Determine whether network and associated components are securely placed into production, the network re-sources are appropriately monitored and adequate controls are in place to ensure the security and recoverability of the networks. 3.6.4 Database & Applications Audit Unit Conduct audit of information systems application development environment and of database designing & administration. Sufficiently evaluate control environments in computer application development, implementation and maintenance process and database administration. 14 Review user interface of systems, subsystems and software applications. Assess information technology control elements to mitigate information technology risks regarding the confidentiality, integrity and availability of business information by reviewing areas like: Software development standards Database security control Change control procedures Source code and executable libraries Documentation SOPs Pre and post implementation reviews Assess the utilization, integration, maintenance and enhancement of software applications. Prepare audit findings regarding the efficiency, accuracy and security of software programs and databases. Review the efficiency and effectiveness of basic operational areas e.g. Access Permission Security & Confidentiality Business Continuity Management Budget & Procurements Projects & Feasibilities Managing the change Process re-engineering Trainings Prepare audit reports in a timely manner. 3.7 Networks Communication Audit Unit Plan and manage network communication audits to determine whether network s and associated components are securely placed into production, the network's resources are 15 appropriately monitored, and adequate controls are in place to ensure the security and recoverability of the networks. Audit activities associated with a LAN/WAN/Internet. Review network design and installation, monitoring and analysis of existing hardware and software and evaluation of network security controls. Plan and manage network and communication audits covering areas like: LAN/WAN design/ topology Security architecture Firewalls IDS Routers performance of Audit the tuning and capacity planning activities associated with the network resources. Review operating systems and security software utilized on the network including the addition of new users to the network and the establishment of rights and privileges. Review the efficiency and effectiveness of basic operational areas e.g. Access Permission Security & Confidentiality Business Continuity Management Budget & Procurements Projects & Feasibilities Process re-engineering Trainings Managing the change Prepare audit reports in a timely manner. 3.8Policy, Coordination & Implementation Unit Deal with all administrative, financial, policy and miscellaneous matters of the Department. 16 Coordinate with other departments at Head Office to dispose of official matters. Evaluate/analyze audit reports received from Audit Teams. Pursue for arranging compliance of outstanding audit observations from the concerned offices. Prepare plan of audit teams and implementation thereof. 17 Chapter # 4 PERSONAL WORKING & LEARNING EXPERIENCE 4. Personal Experience ZTBL is one of the big name in the financial & banking sector of Pakistan, ZTBL is big organization with more than 342 branches spread all over Pakistan and the work force of ZTBL is more than 5000. Working in such a big and diverse organization was a very pleasant experience. 4.1 Joining and Experience at Accounts & Finance Division 4.1.2 Joining We applied for internship by QASMSs’ placement office which was in contact with the HR department of ZTBL. Our letters were sent to our addresses and we were called for interview at ZTBL Staff College. At Staff College we were interviewed by a VP coordinator. Then after some time joining letters were issued to us on which they mentioned our period of internship and requested concerned department for coordination. ZTBL is lucky to have very good place for training, they have Staff College located near main Murree Highway of Islamabad, which cover huge area and also purposeful buildings which help ZTBL to keep their employees up to date with the modern techniques and procedures. This shows that the ZTBL is having very strong concern for training and development of its employees. Nowadays big organizations spend millions and billions in training of their employees ZTBL also working on this reality. ZTBL is totally different from other public sector organizations and unlike other public sector organization they are working hard bringing change in the organization because they believe that surviving is not possible without change in this era of competition. We took our letters to the concerned departments they warmly welcomed us and provided us a schedule for internship which served as a reference for us. ZTBL internship program is very well designed and it seems that the internship program is very carefully designed by HR department of ZTBL but at the same time the students for internship are facing many problems e.g. there is no stipend for students who come for internship secondly there is not any specified person who can guide students during internship and can help students in difficult situations. 18 4.2 Accounts & Finance Division Accounts & Finance division of ZTBL is considered as to one of the busiest division at ZTBL. Learning experience at A&FD was very interesting and challenging currently ZTBL contains many ACCA internees which are working in different departments, ZTBL is listed in the prime organization of ACCA for article ship this is the main reason that the ACCA internees prefer ZTBL for their article ship. Accounts and Finance division is smartly divided into four major departments i.e. central account department, H.O accounts department, Regulatory & Reporting department and Budget and Funds management department, these departments are further divided into different units which are classified on the nature of work. Central Accounts department maintains accounting policies and procedures which ZTBL is going to imply on its whole structure. Which is very important and difficult task as well according to me ZTBL is having very good system for following accounting procedures. Policy unit which works under central accounts department work for developing new policies regarding to accounting procedures and it also communicates with other departments and also coordinate with external auditors. Accounts unit of the central accounts department mainly work of this department is to coordinate with other departments for the timely production of statement of affair. It makes financial statements and also makes listing of abnormal entries for rectification purpose. It also prepares financial statements on quarterly, semi-annually, annually basis for the audit committee. Tax unit of central accounts department provides general guidelines for deduction of taxes according to the income tax ordinance 2001. It coordinates with different authorities and tax consultants for relates issues and it also calculates withholding tax paid by the bank through utility bills. Fixed assets units job is to maintain record of fixed assets of the bank which include recording new fixed assets and deletion of fixed assets. It calculates depreciation on the assets on the quarterly basis. It also coordinates with internal as well as external auditors for different problems and quires. 19 Pre-payment verification unit verifies all payment structures related to H.O, it checks procedural compliance and completeness of documents and then it verifies the bills. H.O accounts department performs different functions related to accounts of H.O, it pay out salaries and advances for H.O employees, maintain related ledgers, reconciliation of inter branch transactions. Payment unit of H.O account department maintain vouchers, files it also works on payments of KSSL employees and other special charges e.g. law expense. It also prepares closing reports on weekly, monthly, quarterly and yearly basis. Payroll unit function is to prepare salary according to grades, maintaining salary files, it also prepares overtime payment for employees, payment of different allowances and calculation of taxes on the payroll and reconciliation of the payments. Inter-branch reconciliation unit of the H.O account supervise reconciliation process, maintain branch wise accounts, coordination with field offices for settlement of outstanding entries, producing list of outstanding entries and preparation of reports. Employees fund unit duty is to invest funds, renewal of tax exemption certificate, and preparation of all trust accounts and maintenance of existing software, maintenance of vouchers. The budget & fund management department of ZTBL prepares policies, procedures, standards for budget planning and analysis. It gather the data of various departments and analysis that for their performance. This department also communicates with government for related budget issues. Budget planning unit develops departmental polices procedures and standards for the financial management and budget planning processes. It also provides information and analysis for further decision making. Budget analysis unit of analyses the financial activities of departments which show their performance on the basis of these results it develops assumptions and strategies for future budget cycle. Treasury unit is busy in the arrangement of the fund for the different purposes to the branches and maintain their record it also manage their accounts with other commercial banks such as HBL, NBP etc. It check out appropriate amount of balances in the branches and provides funds if any branch lacks and calls back the amount in case of excess of cash. It also maintains record of 20 all branches liquidity ratio. Fund reconciliation unit reconcile the accounts of ZTBL with other commercial banks it also deals with the advices sent by other branches. Regulatory & Reporting department function is to implement the rules and regulations given by the government agencies such as SBP, SECP etc. This department also prepares reports which are given to concerned authorities. These reports are prepared by following five-step procedures. 4.3 Audit Division For an organization to compete and grow it requires a very good system of Audit, without a proper and transparent system of audit no company can run effectively, ZTBL consistent growth is the evidence that the ZTBL is having good system of both internal and external audit . During my internship at ZTBL head office audit division I found that there is very effective system of audit and the employees are very helpful to internal as well as external auditors. The internal audit division of ZTBL is further divided into three major departments i.e. corporate audit department, field audit department and Information System Audit Department. Corporate audit department function is to keep an eye on the use of banks resources to avoid the excess flow of expenses it also arranges annual audit of HO departments and units in the field. It ensures proper rectification of errors and omissions some of administrative tasks such as sanction of leaves and approval of tours is also done by this department. This department also identifies the weaknesses in the system and suggests remedial steps and it ensures that the payment is provided to the concerned person. Implementation and coordination unit peruse HO department in compliance in field in audit to ensure compliance of audit rules it also arrange settlement of audit paras. Post-audit section function is to record the expenses in the proper GL head it also ensure that the expenditures are properly sanctioned and all pre-requisites of payment have been completed and then it checks all the documents and other formalities. Management Audit Team I&II conduct audit of the departments at HO in the light of applicable rules it conducts annual audit zone and other HO departments in the field, this unit periodically verifies the capital items and depreciation charged at HO. 21 Field audit department aims to determine whether policies and procedures are being followed carefully and how resources are used this department establishes overall evaluating system of internal control and identifies areas for improvement. Field audit department also reviews the changes in the system suggested by the different development units and it prepares annual audit plan, keeping in view, Credit, Operational, Compliance and Market risks etc. Information system audit department keeps an eye on the information system of ZTBL by assessing technology, practices and policies. This department conduct periodical audit of IT infrastructure and operational practices to provide reasonable assurance for adequate functioning of Bank's IT infrastructure. This department audits the security and recovery status of banks networks and review user interface of systems, subsystems and software applications. Database and applications audit unit conduct audit of data base designing and administration it also works on maintenance, integration of software applications, it also prepares audit findings regarding the efficiency, accuracy and security of software programs and databases. Network and communication audit unit audits to determine whether network s and associated components are securely placed into production, the network's resources are appropriately monitored it also reviews the efficiency and effectiveness of basic operational areas and one other important function is that it review operating systems and security software utilized on the network and it also decides networks rights and privileges. Policy coordination and implementation unit deals with all administrative, financial, policy and miscellaneous matters of the department it also evaluate/analyze audit reports received from audit teams and it coordinates with other departments at Head Office regarding compliance to audit procedures and this unit also prepares audit terms and implementations. 22 Chapter # 5 ANALYSIS 5. SWOT Analysis ZTBL Bank is very large bank having 300 plus branches in different areas of Pakistan; it’s the only specialized bank for agriculture in Pakistan. ZTBL is having different strengths, weaknesses, opportunities and threats which are discussed below in SWOT analysis. 5.1 Strengths It is public bank and govt. supports ZTBL in difficult situations. Only specialised bank for Agricultural development Pakistan is having agricultural economy. Recently govt. announced to restructure the 80.4 billion loan of ZTBL. ZTBL is having good head office buildings at Zero Point, Islamabad. TBL has a staff college, which contains good training facilities. Data is kept & maintained by different computer software which makes data secure and easy to access. Audit zone is working very well for findings errors, mistakes & frauds. ZTBL’s board of directors are highly qualified and reputed personalities. See annexure no.7. 5.2 Weaknesses Employees are promoted after long period e.g. after 10-13 years Being public organization its environment is also weakness ZTBL runs many branches which are in loss. ZTBL customers are spread in different areas; which makes it difficult to reach their customers ZTBL is not allowed to consumer banking The operational expense of branches is very high All branches are not interconnected because some branches are in remote areas 23 Sometimes ZTBL has to give loans on political basis which increases the bad debt account of ZTBL There are many employees who are not highly or relevantly qualified but they are promoted to seniors positions, which affect performance of the bank. Long structure of organization employment level. See annexure no 6. 5.3 Opportunities ZTBL can expand its business to other agricultural economies ZTBL can increase its earnings by investing in better areas Bank can reduce expenses by laying-off non-performing employees. The bank can also start commercial banking to increase its profits. 5.4 Threats Many farmers are unable to pay their loans due to natural disasters e.g. flood of 2010. There is politics in the bank between employees which is also strong threat for working of the bank. There are many defaulters of bank which are also big threat for bank In Pakistan agriculture sector is damaged by floods, heavy rains etc., due to which poor farmers cannot re-pay their loans. Getting funds from government may be difficult due to poor economic conditions of the state. 24 Chapter # 6 FINDINGS, RECOMMENDATIONS & CONCLUSIONS During my six-week internship I found my things which are discussed below. 6. Findings Employees working on the same position are having different degrees e.g. MBA, BBA, IR, MSc Islamiat which some-times creates conflicts and devalue the professional degree holders. There is no facility for transportation of ZTBL & KSSL employees. Lack of training programmes conducted for employees Many high-qualified employees are not satisfied due to late promotions and routine work ZTBL have good security system. The assets and net income of ZTBL is increasing which is a good sign. 6.1 Recommendations ZTBL should start it business across other countries especially in South Asian region, it have good potential to became a multinational organization, ZTBL is performing very good job for Pakistani farmers but if ZTBL becomes multi-national entity it will provide ZTBL a status of international bank. The bank should invest in different Agriculture related research institutes e.g. ARID Agriculture University, for preparing our farmers to compete with modern era. The organization culture at ZTBL seems to be very friendly and training programmes conducted at Staff College are also very effective but I think bank should increase the number of training programmes and ZTBL should conduct communication skills programmes for employees, which will decrease the conflicts between employees and will create a perception of good organization in the visitors and customers. Communication skills trainings are now seems to be necessary for ZTBL as some on the employees does not use appropriate language in the office, which may create a bad image of bank outside. 25 6.2 Conclusion During my internship at ZTBL, I found that the bank’s environment is very friendly and it is equipped with all facilities of modern banking e.g. online data maintenance and online branch connections. ZTBL is growing at a very good pace as financials depicts, and it is very different from other public sector organizations. The employees of the bank are very positive towards the change because they believe in change as the necessity of modern businesses. The bank has good market, good buildings/offices, and highly qualified employees. ZTBL is very positively contributing to the economy of Pakistan as it pays huge amount of tax and consistently working for the welfare of poor farmers of Pakistan. 26 REFFERENCES Introduction, data retrieved on October 1, 2012 from http://en.wikipedia.org/wiki/Zarai_Taraqiati_Bank_Limited Corporate Vision, data retrieved on October 1, 2012 from http://www.ztbl.com.pk/briefOnZTBL.htm#ztblbrief Corporate Mission, data retrieved on October 1, 2012 from http://www.ztbl.com.pk/briefOnZTBL.htm#ztblbrief Board of Directors, data retrieved on October 1, 2012 from http://www.ztbl.com.pk/board_of_directors.html ZTBL HO A&F Manual, 2012 ZTBL HO Audit Manual, 2012 ZTBL HO HR Manual, 2012 27 ANNEXURES 28 1. Central Accounts Department ACCOUNTS & FINANCE DIVISION Central Accounts Department H.O. Accounts Department Budget & Funds Management Department Regulatory & Reporting Department Policy Unit Accounts unit Tax unit Fixed assets unit Pre-payment verification unit Pay Roll Unit IBR Unit Employees Funds Unit Budget Planning Unit Budget Analysis Unit Treasury Unit Funds Reconciliation Unit Regulatory & internal reporting unit Financial Management Information system unit (ZTBL HO A&F Manual, 2012) 29 2. Audit Division Internal Audit Division Corporate Audit Department Implementation &coordnation Unit Management Audit Team -I Management Audit Team-II Field Audit Department Planning & Coordination Unit Implementation Unit-I Information System Audit Dept. Policy Coordination & Implementation Unit Systems & Operations Audit Unit Databases & Applications Audit Unit Networks & Communication Audit Unit Implementation Unit -II Commercial Audit Unit (ZTBL HO Audit Manual, 2012) 3. Corporate Audit Department CORPORATE AUDIT DEPARTMENT Implementation & Coordination Unit Management Audit Team -I (ZTBL Management Audit Team -II (ZTBL HO Audit Manual, 2012) 30 4. Field Audit Department FIELD AUDIT DEPARTMENT Commercial Audit Unit Planning & Coordination Unit Implementation Unit-I Implementation Unit-II (ZTBL HO Audit Manual, 2012) 5. Information System Audit Department INFORMATION SYSTEMS AUDIT DEPARTMENT Policy Coor.& Implementation Unit Systems & Operations Audit Unit Databases & Applications Audit Unit Networks & Communication Audit Unit (ZTBL HO Audit Manual, 2012) 31 6. Weaknesses (SWOT Analysis) Grades of Employees SEVP EVP SVP VP AVP Grade-1 Grade-2 Grade-3 Assistants Non-clerical staff Clerical staff (ZTBL HO HR Manual, 2012) 32 7. Strengths (SWOT Analysis) President Chairman Board Ms. RoohiRaees Khan Director Mr. Sultan Ali Chaudary Director Mr. Abdul WaheedArien Director Ch. Muhammad Zaka Ashraf Director Mr. M. Iftikhar Khan Mohmand Director Mr. ZafarIqbal Director Dr. Khalid Ahmed Director Mr. YaqoobVardaq Director Dr. AmerMuammad Mr. Mahmood Nawaz Shah (ZTBL, 2012) 33 34