Trade debt of Trading Corporation of Pakistan increased from Rs 16.21 billion of 2008-09 to Rs 31.3 billion during 2009-10, registering an increase of 93.13 percent. The Audit Report-2010-11 has pointed out that serious efforts are required for early recovery of the Corporation's dues in order to avoid the chances of their conversion into bad debts.
The Audit Report also revealed that during 2009-10, the sales decreased from Rs 64.16 billion of previous year to Rs 45.16 billion. Cost of sales also decreased from Rs 62 billion to Rs 43.87 billion in 2009-10. Resultantly, the gross profit also decreased from Rs 2.255 billion of previous year to Rs 1.29 billion during the year under review. The report says that efforts were required to increase sales in future.
The external auditors also expressed six qualification remarks on the accounts for the year 2009-10. The report says that according to external auditors, an amount of Rs 3.638 billion is included in the inventory, which represents financial charges on overdraft facilities and income tax on turnover and purchases. The amount should be included in dues from the government. There would be no effect on total assets of the company if the said adjustments are recorded.
The report further says that the mark-up on overdraft amounting to Rs 10.719 billion is included in the cost of sales instead of financial cost and the gross profit is reduced by Rs 10.719 billion. However, the net profit before tax remains the same if the said provision is recorded.
The report also says that income tax expense amounting to Rs 1.04 billion is included in the cost of sales instead of income tax expense. This results in decrease in gross profit by Rs 1.04 billion. However, the net profit after tax will remain the same. The audit report further says that provision for gratuity is not based on actuarial valuation as required by International Financial Reporting Standards.
The report says that a sum of Rs 541.284 billion has been shown as contingent liability which is a specific liability and should have been provided in books of account as Liverpool Cotton Association (LCA) has been given foreign award against the CEC (defunct) merged in TCP. The TCP has also filed appeal against the decision of Liverpool Cotton Association in the high Court of Sindh.