Audit Final Project presentation....pptx

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1. Gadoon Textiles LTD Presented by: Sapna Fayaz Taha Mansoor Mahin Hussain Shah Shehryar Chishti Talha Hussain

2. Company overview 2 Gadoon Textile Mills Limited (GTML) was started in 1988. It is one of the biggest spinning companies in Pakistan. GTML makes and processes all types of cotton and man-made (artificial) fibers. The company has modern factories in Karachi ( Sindh ) and Amazai (KPK).

3. Audit Committee 3 Mr. Shabbar zaidi Chairman Mr. Moin M Member Mr. M Ali Tabba Member Mr. Jawed Y Tabba Member The committee held four (4) meetings during the year

4. Committee Observations 4 Annual Report is fair and balanced No whistleblowing incidents Reviewed Key Audit Matters & Management Letter Recommended reappointment of auditors ( Yousuf Adil )

5. Key Audit Matter – Capital Expenditure 5 Capital Expenditure of Rs . 5,584 million incurred in FY 2023-24 . Establishment of dyeing processes Installation of solar plant Purchase of technologically advanced machinery Why It’s a Key Audit Matter Significant amount involved . High risk of misstatement due to size and complexity.

6. Capital Expenditure Analysis – FY2024 (YoY Decline) 6

7. Assessment by Auditor Assessment of all Capital Expenditure Sample Transactions Approved Budgets and valid Justifications 7

8. Auditor’s Opinion 8 Firm: Yousuf Adil , Chartered Accountants (Deloitte) Partner: Arif Nazeer Location/Date: Karachi, August 22, 2024 Opinion Type: Unqualified (Clean) "True and fair view of the Company’s affairs"

9. Slide 27 Self Constructed Audit Matter GTML reported net revenue of PKR 72.72 billion for the year ended June 30, 2024 . Revenue is a key performance indicator of the company . There is a risk of misstatement — revenue might be recorded incorrectly to meet targets or expectations . That’s why revenue recognition was identified as a Key Audit Matter (KAM) by the auditors .

10. 10 Audit Procedure Understood how the company records revenue and tested key controls . Checked sample sales with related documents (invoices, delivery notes, etc .). Verified year-end sales were recorded in the correct period . Confirmed that revenue policy follows IFRS 15 rules

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12. Slide 27 Opinion We have audited the annexed financial statements of Gadoon Textile Mills Limited (“the Company”), which comprise the statement of financial position as at 30 June 2024, and the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity, and the statement of cash flows for the year then ended, along with a summary of significant accounting policies and other explanatory notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 30 June 2024, and its financial performance and cash flows for the year then ended, in accordance with the accounting and reporting standards as applicable in Pakistan.

13. 13 Internal Control System – Gadoon Textile Mills Limited Governance-Level Controls : Oversight by Board of Directors and Audit Committee (headed by Mr. Shabbar Zaidi ). Dedicated risk management and compliance teams . Operational & Process-Level Controls : Duties are clearly separated in key areas (e.g. finance, production ). ERP-based control over purchase orders, payments, and inventory.

14. 14 Internal Audit Function Independent Internal Audit Department reports to Audit Committee . Reviews areas like procurement, inventory, and revenue recognition. Conducts regular audits and special investigations if needed . Has full access to all systems and employees .

15. 15 Compliance & Ethical Policies Follows PSX & SECP governance codes . Complies with IFRS & Companies Act 2017 . Policies include : Whistleblower protection Conflict of interest declarations AML & anti-bribery rules Also aligns with environmental and labor laws.

16. 16 Manufacturing Process 1) Raw Material Procurement: Cotton: Local (Punjab/Sindh) & imported Man-made fibers: Imported (e.g., China ) Contracts + spot buying based on demand 2) Storage & Handling Stored in moisture-controlled warehouses ERP & barcoding ensure FIFO inventory movement

17. Slide 27 3) Blow Room – Initial Opening and Cleaning Opens cotton bales & removes impurities Blends different cotton types for quality 4) Carding Process – Fiber Individualization Fibers aligned & cleaned Removes short fibers Output: Sliver (soft rope)

18. Slide 27 5) Drawing / Doubling Multiple slivers are drawn together to enhance: • Evenness • Parallelization • Uniform blending 6) Combing (For Fine Yarns Only ) This is an optional process, used for: • Compact yarns • High-count fine yarns Removes short fibers and neps (knots), improving smoothness. Output: High-quality combed sliver with improved strength and texture.

19. Slide 27 7) Roving (Speed Frame / Simplex) What happens: The sliver (a rope-like strand of fibers) is stretched and given a slight twist to make it stronger and more manageable . Output : Roving is stored in bobbins, which are cylindrical containers, for further processing . 8 ) Spinning – Yarn Formation What happens: The roving is drawn out and twisted into yarn. This process involves stretching and twisting the fibers to create a continuous thread . Types of spinning: There are different methods, such as ring spinning, compact spinning, and open-end spinning, each producing different types of yarn . Output : Finished yarn is wound onto bobbins .

20. 20 9) Yarn Testing & Quality Control What happens: The yarn is tested for various properties, such as: Count strength: How strong the yarn is. Evenness : How uniform the yarn is in terms of thickness. Hairiness : How many loose fibers are on the yarn's surface. Tenacity and elongation: How much stress the yarn can withstand and how much it can stretch . Purpose: To ensure the yarn meets quality standards and is suitable for its intended use.

21. 21 10) Winding & Packaging Yarn is wound into cones or packages using auto-winders. Defects like slubs or knots are removed by electronic yarn clearers. Packages are labeled and packed according to customer specifications.

22. “Question Session”…

23. Thank you