Sukkur IBA University

Airport Road Sukkur, Sindh, Pakistan

SINDH RURAL SUPPORT ORGANIZATION (SRSO) SUKKUR, SINDH,

This case has been written by the students of BS (Accounting & Finance), Shankerji and Muhammad
Salman under the supervision of Sajjad Ahmed Mahesar ICMA faculty at Sukkur IBA University. The aim
of this case is to check the process of auditing and apply the analytical procedure to evaluate the results.
While, all the information in this case has been collected from the Sindh Rural Support Organization
(NGO) Sukkur.

Case Framework:

Mr. Mohammad Usama Rajput working as internal auditor in Sindh Rural Support Organization Sukkur
(SRSO), he is a very active and talented person who has just completed MBA finance. He is very happy
when he was appointed as Auditor and continuing his efforts in the field of Auditing at SRSO Sukkur. After
all greetings and introduction when he started knowing about the work environment of SRSO and start his
job with passion. In his mind have good image but after starting work all his passion go down. He faces
many problems in all departments like Accounting Department, IT Department, and Procurement
Department. The most important problem making issue was related to their IT Department. Two-year latter
they are using the manual work and no software work, but Mr. Usama take the initiative of IT software, but
the higher management was not satisfied they are arguing that this software is highly cost. The accounting
department also facing the problem related to the record keeping of daily basis operation, in this everyone
made the receipts and payments on his own choices. The employ is not as much qualified and skillful, and
they are selected through reference basis. Fraud was another major issue mostly in the field work.
FRAUD:

Mr. Usama is working as a internal auditor at the Sindh Rural Support Organization (SRSO) Sukkur, one
day he visit the field that SRSO projects are working. He is investigating the work that SRSO has done, from
this one of the project that SRSO donate the some amount up to 10,000 to the people some time in cash or
check and, in some case its refundable in some case it cannot take back. Another project also has SRSO that
is Prime Minster Interest Free Loan partnership with PPAF that is also going on. The field head Mr. Salman
has made his connection with communist member and take the CNIC of communities, and he misuse that
CNIC with connection of bank and communist member. So, Mr. Usama has asking with people about the
money you have received in this month or not some says yes but some says we cannot receive, but for
confirming he as from those who said yes. He asked you to have received the money in cash/check on that
point he identified that we issue check in this month, but they received in cash. As working more on it he
identified that Mr. Salman and communist member is connected with bank they take the CNIC from
communities for evidence purpose and use money for his own purpose. They give the original CNIC to the
banks for evidence purpose and withdraws the checks and divide with each other. The same with Prime
Minster Interest Free Loan issuing on that CNIC and give the other person on the interest and earn the
interest on it.

Now a days the higher authority of Sindh Rural Support Organization has made the policy more than 10,000
check signed by head, and more than twenty thousand then take approvals from the higher authority. If in
case of more than ten lack, then published the tender. But the SRSO facing the problem less than ten thousand
amounts. SRSO also facing problem with petty cash, and the daily basis expenditure incurred in the field
work. They provide fake evidence regarding the expenditure. (Exhibits 1A) That shows the costs and
expenditure that occurred on the trainings, directs cost, fixed cost and variable cost that occurred in the
current year.

According the policies of SRSO that all the receipts, payments, and vouchers. That all signed by higher
authority. There are thousands of receipts signing by one person, then he cannot check or verify each and
everything he just sign all those, from this there are some receipts that are incorrect, but this was also signed.
After this incident the SRSO is working on the empowering the departments head for the limited things. If
in case of huge amount, then confirm with higher authorities and concerned person.
INTRODUCTION SRSO:

This is Non-Profit organization and working as social mobilization incorporated in Pakistan in December
1982 starting in the Northern Areas. In July 2003, Sindh Rural Support Organization (SRSO) was
established, funded by Sindh Government with the provision of an endowment of Rs. 500 million, that was
raised to Rs. 1.0 billion in subsequent years. The Sindh Rural Support Organization has thus a history of 16
years. It started its activities initiated by National Rural Support Programme (NRSP) in District Sukkur.
NRSP had planned to cover only three Union Councils of District Sukkur. SRSO has since then expanded
its programmes up to 15 Districts.

Sindh Rural Support Organization (SRSO) was incorporated on May 29, 2003 as a not-for-profit
Organization and registered under section 42 of the Companies Ordinance, 1984. SRSO is funded by
government of Sindh to work in the designated districts of Sindh. Now a days the main goal of SRSO is to
empower the women, and through this made different policies that endorsed by government to achieve the
goals of poverty reduction through community empowerment, skills enhancement, capacity building and
development of community supported infrastructure projects. For this purpose, SRSO organizes the local
communities and develop their managerial and technical capacity. With the support of local people and the
government they fulfil their responsibilities.

Sindh Rural Support Organization is a Non-Government Organization that is working for many years for
the social welfare of residents of Sindh province. It has the head office in Sukkur and currently working in
districts Shikarpur, Kashmore, and Jacobobad. Currently SRSO Sukkur working on different projects
including, PM Interest Free Loan, Poverty Reduction Programme, SUCCESS, Programme for Improved
Nutrition in Sindh, Door-to-Door Survey, Promoting the Right of older people in Pakistan, Adolescent and
Adult learning and training programme, and Waseela-e-Taleem. All social welfares activities are done with
the help of different donors like Sindh Government, USAID, UNICEF, Federal Government, European
Union & Many other National & International Government and NGOs. The performance of some running
projects is decreasing because the field workers are not taking seriously.

Budget is not set by the Reginal Office to District Offices. However, on the monthly basis the budget
information provided to the regional office. But due to high volume of variable expenses the budget is in
Deficit. The more than ten thousand amounts will be transferred through Banks Account. (Exhibit 2A)
SRSO Structure:

The BOD is the core the Audit committee, HR committee, and Finance and Executive committee inform to
BOD. The BOD directs the instruction to CEO. And CEO direct the all Departments of Head office, and
then head to regional to districts offices. (Exhibit 3A)

SRSO Head Office and its Department:

The SRSO was establishment in May 29, 2003. The SRSO has the following departments that perform the
different function of SRSO, the SRSO has the Head Office in Sukkur that overhead the Sukkur region. These
are the departments:

 Administration Department
 Finance Department
 Audit Department
 IT Department
 HR Department
 Training Department
 Procurement Department

Current Issues That SRSO facing:

The current issue that SRSO facing now a days are Target achieving. They can not achieve the target fully
through this they use the shortcut and skipping the policy for achieving the targets. The SRSO also facing
the employees’ conflict of interest with higher management. According to the policy of SRSO for each and
everything take a approvals from the higher management. So, from this the higher management can not
check and verify each and everything through vouching and tracing they just sign all those, from this they
also facing issue. The SRSO can not permit or give authority to the Head of Department for taking any
decision. The most important issue that SRSO facing is regarding the project installment receiving, through
this they can not give the stipend to employee they strike on the roads. There are many other problems that
SRSO now a days facing related to the field work.
Budgeting:

As of Dec 2017, PKR: 1,192,543,596 has received from the different beneficiaries who received the
community’s investment fund (CIF) loans under the regular program in three districts, such as Shikarpur,
Kashmore, and Jacobabad. Besides the recovery teams also emphasis the beneficiaries to consider for group
lending in order to foster the maximum benefits by utilization the same amount with increment from the
seed money of LSOs.

Apart from recovery, the re-disbursement was given massive importance therefore as of April2017, PKR:
961,692,416 have been Re-disbursed in different beneficiaries who returned the amount. (Exhibits 4A and
4B)

According to the budget of 2018 and 2019 the budget ratio is increased, and they received some other
projects. From these projects they cannot achieved his full target, but in some projects, they achieve the full
target, but most of the projects cannot achieve fully. (Exhibits 5A and 5B) From the analysis of these
exhibits we have evaluated that some projects achieve a very low its targets.
Questions:

1. If you are appointed as an external auditor at SRSO Sukkur, and what is your suggestion for these
issues, and how you can tackle this problem?
2. What are the challenges that faced by Mr. Usama being an internal auditor? What are the

consequences for solving this problem?

3. Being an auditor Mr. Usama identified many things. What are the steps that taken by him for resisting

the future the fraud?

4. Evaluate the result from the exhibits 5a and 5b. and apply the analytical procedure and assertion?

5. What is the issue that currently SRSO suffering, and which steps are taken to tackle this issue?

6. Is SRSO follow the policies and accounting standards, if not then why?

7. The SRSO is Non-Profit organization, and it takes the many project. Is SRSO get return from any

projects? And where this profit will be distributed?

Exhibits 4B.
Exhibits 5A.
Exhibits 5B.