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1 An Internship Report with regard to J.B. Rajbhandary & DiBins Submitted by Sajesh Maharjan Roll no: 10450124 PU Registration Number: 2009-2-45-0066 An Internship Report Submitted to Ace Institute of Management Faculty of Management Pokhara University Submitted for the degree of Bachelor of Bus...

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An Internship Report with regard to J.B. Rajbhandary & DiBins

Submitted by Sajesh Maharjan Roll no: 10450124 PU Registration Number: 2009-2-45-0066

An Internship Report Submitted to Ace Institute of Management Faculty of Management

Pokhara University

Submitted for the degree of Bachelor of Business Administration in Banking and Insurance (BBA-BI)

Kathmandu April, 2013

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Acknowledgements

This is a matter of pleasure for me to acknowledge my deep sense of gratitude to Pokhara University and my college, Ace Institute of Management for giving me an opportunity to explore my abilities via this internship programme. I would like to express my sincere gratitude to our Principal, Mr. Ashish Tiwari and our Program Director, Mr Vijaya Anand Sharma Timilsina for this opportunity.I also wish to express my gratitude to my internship supervisors Kumar Thapa and SharmilaMaharjan, for their valuable guidance and advice in completing this project. I would like to record my sincere appreciation and gratitude towards all the officials and employees of J.B. Rajbhandary & DiBins, Durbarmarg, Kathmandu, without whose kind assistance, my internship program would not have succeeded. The facts and other vital information provided by them have contributed towards making this project as comprehensive as possible. I am indeed thankful to them. I am also very thankful and grateful towards my seniors, colleagues and authorities of Ace Institute of Management for their support, encouragement, and valuable suggestions for the completion of this project as well as for their generosity and cooperation. Last but not the least, I would like to express my sincere thanks to all my family members, friends and well-wishers for their immense support and best wishes throughout the internship duration and the preparation of this report. I believe that this report will be a valuable asset not only for academic institution, but will also be useful for all those who are interested to learn about internship experiences in auditing and consulting firm.

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List of Tables and Figures

List of Tables: 1. Major Customers

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2. Fines and Penalty on Failure to submit advance tax and tax return

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3. Gratuity Rate and Calculation

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4. Gratuity Liability Calculation

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5. Gratuity Fund Calculation

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List of Figures: 1. Organizational Structure

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Table of Contents Chapter I Organization Profile 1.1 Background:

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1.2 Mission, vision, values and objectives

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1.3 Major Markets and Customers:

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1.4 Products and Services:

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1.5 Organization Design and Structure:

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1.6 Financial structure:

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1.7 Organization Performance:

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Chapter II Job Profile and Activities Performed 2.1 Job Profile and Activities Performed:

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2.2 Problems Solved:

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2.3 Key Observation:

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Chapter III Lessons Learnt and Feedback 3.1 Key Skill and Attitudes Learnt:

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3.2 Feedback to the organization:

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3.3 Feedback to the College/ University:

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References

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Annexure

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Chapter I Organization Profile 1.1 Background: After the end of 6th semester, we were entitled to indulge in Internship Programme as per the schedule of BBA-BI course of Pokhara University. Most of my colleagues joined banks, especially “A class” licensed financial institutions for their internship. Everyone was eager to have first hand experience in banking sector because we were doing BBA-BI course. But unlike others, I wanted to do something different, something not just limited to single sector and also that would go hand in hand with my under going degree simultaneously. I chose J.B. Rajbhandary & DiBins for my internship programme because I wanted to have general ideas on audit firms and their activities. I joined J.B. Rajbhandary & DiBins to get exposed to the real world of accounting and to have first hand experience on the same since I am a student of Management faculty. I wanted to know how business firms do accounting and what role does it play in the growth and development of business activities. J.B. Rajbhandary & Dibins is a partnership firm established in 1994 A.D. The firm provides auditing, due diligence, account outsourcing, project management and consulting services. The firm specializes in consulting services in areas of: Country Strategic Papers, Restructuring policies and Internal Control System Development, Mergers/Demergers, Financial Controller/ Due Diligence Review/Special Review of various Infrastructure projects on behalf of commercial banks; Forensic Audits, etc. The firm is situated at Second Floor, North Wing, Sherpa Mall, Durbar Marg, Kathmandu that occupies around 1600 sq ft of office premise.

1.2 Mission, vision, values and objectives Mission - J.B. Rajbhandary & Dibins exists to provide complete, reliable and high quality auditing and consulting services to individuals and institutions, be it

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manufacturing, trading, tourism, financial, governmental, non- governmental, medical, hydro power, hotels, and any other sectors. Vision - The firm's vision is to be the premier auditing, accounting, tax and business consulting firm by every measure that matters. Values The values of the organization are as follows: Valuing People We believe that our success depends first and foremost on people. By respecting people in everything we do, we will develop and maintain high quality, mutually beneficial relationships with our clients, professional colleagues, referral sources, vendors, community members and each other. Building Client Relationships We seek to earn long-term client loyalty by developing a deep understanding of each client's business and personal goals, by demonstrating unwavering reliability and integrity in our work and by acting as an independent and objective advisor to our clients. Upholding Quality and Integrity We will maintain an environment where a commitment to quality, honesty, respect, fairness and professional ethics governs the actions and decisions of everyone within our firm. Keys to Success The keys to success for J.B. Rajbhandary & Dibins are: Developing visibility to generate new business leads. Relationships with clients (developing loyal, respectful, and intensive contact with both clients and potential clients). Marketing/strategy and networking with other professionals. Responsiveness to clients (fast response time for special problems). Quality (especially in reporting information). Excellence in fulfilling the promise. Openness: languages and willpower for creating interregional and international contacts.

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Objectives: The objectives of J.B. Rajbhandary & Dibins are: The overall objective is to focus the activities towards its specialized services (auditing, accounting, tax and business consulting) and to become a leader in this niche in the country. Growth - To expand the business at a rate that is both challenging and manageable, serving the market with innovation and adaptability.

1.3 Major Markets and Customers: The market for J. B. Rajbhandary & DiBins is not limited to some particular type of business or any particular sector. Rather the businesses, enterprises and institutions whether small, medium or big related to any sector (Education, Financial Institutions, Trading, Hydro-power, Hospitals, Hotels, NGOs, INGOs, Business Enterprises, Manufacturing, etc) whether located inside or outside the Kathmandu Valley are the major markets for the various services provided by the organization. The firm has provided consulting and auditing services to major Banks and Financial Institutions in Nepal including Nepal Rastra Bank (NRB) and Rural Micro Finance Development Center (RMDC). Firm has also involved in advisory works, auditing and as a counterpart with local consultancy and also in the capacity of independent expert for donor agencies like Danida, UNDP, Action Aid Nepal, ADB, CIDA, etc. The list of major customers of the organization is long; however to name the few, they are categorized as follows: Table 1: Major Customers

Financial Institutions Nepal Rastra Bank Global Bank Ltd. Nabil Bank Ltd. Rastriya Banijya Bank Kumari Bank Ltd. Nepal Bank Ltd. Agriculture Dev. Bank Ltd.

Government Institutions Nepal Water Supply Corp Employees Provident Fund Nepal Drugs Ltd. National Trading Ltd Hetauda Cement Industry National Trust for Nature Conservation Chilime Hydro Power Co.

Other Institutions Butwal Power Co. Ltd. Himal Media Pvt. Ltd. Everest Express Travels Rato Bungala School Siddhartha Vanasthali School TEWA Soaltee Hotel Ltd.

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Ltd. Citizens Investment Trust DCBL Bank Ltd. Ace Development Bank Vibor Development Bank Bhaju Ratna Finance Co.

Professional Dev Bank

Diyalo Bikash Bank Nepal Clearing House Ltd. Nepal Banking Training Institute Lumbini General Insurance Sagarmatha Insurance Neco Insurance Ltd. Nepal Investment Bank Ltd.

Hotel Grand Pvt. Ltd. Shangri-La Energies Ltd., Khudi Power Ltd. Hotel De’l Annapurna Pvt. Ltd. Upper Chaku “A” Hydro Power Project (22.2 MW) Lower Modi 1 Hydropower Project (10.0 MW) ServingMinds Pvt. Ltd. World Learning Inc. Pvt. Ltd. Machhapuchhre Herbal Pvt Ltd. DANIDA UNDP ADB

1.4 Products and Services: The major products and services provided by the firm are auditing, due diligence, account

outsourcing, project management and consulting services which are as follows: Audit Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. The various types of auditing services provided by the organization are Statutory Audit, Due Diligence Audit, Internal Audit, External Audit, Financial Audit, Forensic Audit etc. The most common types of audit are briefly explained below: Financial Audits: In a financial audit, the assertions about which the auditor seeks objective evidence relate to the reliability and integrity of financial and, occasionally, operating information. This type of audit usually covers the basic set

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of financial statements (Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Changes in Equity and notes to the financial statements) Statutory Audit: A legally required review of the accuracy of a company's or governments’ financial records is what termed as Statutory Audit. The purpose of a statutory audit is same as the purpose of any other audit - to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions. Due Diligence Audit: Due Diligence is an extensive look at a company in order to make the best informed business decision about a company. Due Diligence Audit is that audit which is carried out in order to find/estimate the actual financial position of the organization before a large decision is about to take place like mergers and acquisitions, loan agreement, or when the company's financials are going to be presented to the public. Due diligence audit includes thorough investigations of the books and records that can range from asset appraisals to day to day transactions. A thorough understanding of internal controls and its effectiveness also become necessary to ensure the risk for the business is as low as possible. Internal Audit: Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's governance, risk management and management controls over: efficiency/effectiveness of operations (including safeguarding of assets), the reliability of financial and management reporting, and compliance with laws and regulations. Compliance Audit: A compliance audit determines the extent to which rules, policies, laws covenants, or governmental regulations are followed by the entity being audited. For example examination of tax returns of individuals and companies by the Internal Revenue Department for compliance with the tax laws.

Account Outsourcing: Outsourcing is gaining popularity as a way to reduce financial and operational risks by making them easier to manage. Keeping this in mind, the firm provides accounting services to various organizations. Business organizations can alleviate the burden of

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staying on top of frequent changes to tax codes and accounting regulations and provide increased levels of information transparency, visibility of controls and clarity of accountability by outsourcing of accounting system. Company Establishment: The firm also extends its services towards establishment of organizations and corporation. The firm helps in registration in company registrar office as per the company act 2063, acquiring of certificate of commencement of business, etc. Tax Management: The firm also helps in tax management for organizations. Organizations can acquire services like calculation of income tax, management of Value Added Tax (VAT), Tax Deducted at Source, timely filing and payment of tax to Inland Revenue Department, etc. Consultancy and Training The firm also offers advising and counseling services on matters relating to accounting system, tax procedures, company establishment, and numerous other financial matters. The firm provides consultancy services in areas of Country Strategic Papers, Restructuring policies and Internal Control System Development, Mergers/Demergers, Financial Controller/ Due Diligence Review/Special Review of various Infrastructure projects on behalf of commercial banks; Forensic Audits, etc.

1.5 Organization Design and Structure: The firm has around 51 staffs which includes 5 full time chartered accountants besides 2 partners who are also chartered accountants. Firm has 2 full time ACCAs, 2 MBAs and 36 staff which includes senior managers, CA Finalists, article trainees and four secretarial staff. The firm’s organizational structure is more of a functional organization structure. The two senior partners are in the top most level. There are two junior associates who fall just below the senior partners. Under junior associates are the senior managers who command the junior managers and article ships trainees. The different senior managers are assigned various functions/services offered to the clients. There is no such thing like departments and division. The whole organization can be viewed as a

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single department and the work processes are done through creation of teams/unit for particular work and service. The senior managers create a team comprising of junior managers and Articleships/trainees. The size and duration of team depends upon the nature of service offered and the requirement of the clients. The orders, command and decisions flows from top to bottom while the reporting is done through bottom to top. Figure 1: Organizational Structure

Senior Partners (2)

Junior Associates (2)

Senior Manager Audit

Senior Manager Finance

Senior Manager Project Management

Senior Manager Consulting

Junior Managers

Articleships/Trainees

1.6 Financial structure: Since, J.B. Rajbhandary & DiBins is a private partnership company, all the financial information and reports are kept strictly confidential and handled by the partners only. So, financial structure of the organization could not be identified since the organization denied providing any sorts of financial information.

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1.7 Organization Performance: From my viewpoint, to the best of my knowledge and ability, I found the overall performance of the organization above satisfactory level measured on following criteria. Financial: Since, the financial data and information were not accessible; I am unable to measure the actual financial performance of the organization. However, looking at the rush of work and the nature of the services all round the year and throughout the country, there is no doubt that the organization has sound financial performance. Moreover, the firm is the auditing and consulting firm run/managed by the chartered accountants who are experts in the field of finance. Hence, there is very less chance of the firm incurring losses. Learning and growth: During my internship period of 7 weeks, what I found is that the organization has very energetic and motivated employees. There are very few senior and junior managers above the age of 40 while most of the employees are Articleships and trainees who age falls between 24 and 30. I found good learning and sharing attitude not only in the young employees but also in the junior and senior managers. I got good opportunity of learning as during the work, the senior employees take time to teach their juniors about what is being done and why it is being done. I feel privileged for such kind of opportunity I obtained. Senior employees not only teach the juniors but also learn things from juniors and they don’t feel shy or shamed to learn new things that they were previously unaware of. There is great opportunity in growth and promotion of employees. As soon as they complete their final year and become qualified CAs and ACCAs, they get promoted in their job as well as their remunerations. Employees are not so highly satisfied with their jobs but they are not dissatisfied as well. I found high employee turnover ratio in the organization because most of the Articleships and trainees tend to opt for other alternatives after they become qualified chartered accountants (CAs).

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Customer: Wherever I was assigned to work, I found the customers there; mostly give priority to the quick delivery of the required services and reporting rather than the quality of work and reports. I must say that the delivery performance of the organization is better as they do not cross the estimated time period and most often the necessary work and reporting is completed before the prescheduled deadline. I feel that the quality of the work is good from the perspective of number of times the report gets checked and verified before the final report is handed over to the customer. Moreover, the quality of work not only depends upon the employees’ work performance but also depends upon the role played by the customers. Because of the quality of the work, delivery process and period, and the degree of customization provided as per the need of the customers, I found high degree of customer retention. Based on the customer retention rate and the delivery performance, I came to conclusion that the customers are fairly satisfied with the services they acquire. Internal business processes: Since the organization provides auditing and consulting services, it requires high degree of customer interaction and customization, internal business processes cannot be automated and the mass production cannot be achieved. The quality and speed of work not only depends upon the employees’ work performance but also depends upon the role played by the customers. Since there are no different departments, there is no duplication of activities across departments and there arises no questioning on process alignment.

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Chapter II Job Profile and Activi...