CASE 1 : A DELIMA (SOURCE: ANSWERS FROM ALL GROUP PRESENTATION AC2208E MARCH-JULY 2012)
PROBLEM
- TIMESHEET ARE MANUALLY PREPARED BY
EMPLOYEES
• Employees record their time in & out
themselves.)
-DOCUMENTS ARE NOT PROPERLY PRE-
NUMBERED, RECORDED & DOCUMENTED
• Sales invoice are manually produces &
not pre-numbered
• Monthly statement of account not
periodically prepare – only prepare &
send to customer when payment had
been long outstanding.
-LACK OF AUTHORISATION OF BUSINESS
TRANSACTION
• No SOP – all decision were made &
authorised by either En Zayed or Pn
Hashimah.
• Personal vehicle expenses were charged
to company.
LACK OF TRAINING
Inadequate job training
 The company’s secretary is in the opinion
that Cik Amy is a fresh graduate from a
local university with no relevant working
experience to handle her job description
effectively as a Finance Executive. A
simple thing as accounting treatment was
unable to be solved by Cik Amy.
IMPROPER ORGANIZATION CHART
SOLUTION
• Use punch card
• Use eyes recognition
• Use time clock machine @ thumbprint.
• Supervise time in & out of the employees.
• Should hire an additional employee who
can monitor the attendance and
timesheet
-Documents (invoice, P.O, D.O etc) should be
properly pre-numbered.
-Use latest edition of standard financial software
(MYOB, UBS, SAP etc)
-Periodically prepare & update control accounts.
• All decision should follow SOP.
• Expenses should be authorised by at least
two persons.
• Personal expense cant be charged as
company’s expense.
• Segregation of duties btw persons who
approve & stamping the documents.
• Should be separated to general and
specific authorization
 Cik Amy should be send for further
training by the company’s top
management to further enhanced her
understanding in relation to her job
description and competency to perform
her job. The management should enrol
her to a short course designated to
improve work efficiency and effectiveness
in any local institutions such as UiTM,
Sunway University and others.
 It should be properly drawn with distinct
Improper Organisational Chart
 The organisational chart was improperly
drawn and too few positions had been
added to the chart. The chart does not
include distinct departments to show the
organisation by departmental functions.
SEGREGATION OF DUTIES
Segregation of Duties
 Encik Zayed does not exercise his duties
properly as to segregate management
duties equally among the employees of
the company that he may thinks fits to
perform such duties.
REMOVAL OF AUDITOR
• Removal of Auditor before the expiration
of his terms of office
VISSION AND MISSION
• The Company only has mission which is a
short term goal to achieve
• Company do not clearly stated their vision
as well as the objective of the Company
• It affects the performance of their
employee as they don’t know what to
achieve
LACK OF CONTROL
• Documents – not prenumbered &
missing
• Assets – not recorded
• No supervision
functional departments to show distinct
job description for each department and
several important positions should be
added to ensure effective and efficient
control.
 Segregation of duties is important in a
company’s management as to avoid any
task redundancy, fraud, negligence,
power abuse, inefficiency and work delay.
Moreover, it is to ensure the management
works efficiently and effectively. Cik Amy
is has been assigned to numerous
workloads and some of the works are not
within her job description as a Finance
Executive. Encik Zayed should segregate
Cik Amy’s workloads to other personnel
according to the relevant job descriptions.
For example, Account Payables and
Receivables should be assigned to
different personnel.
• Under Section 172 (4),(5),(6) CA 1965,
only the shareholders can remove the
auditor before the expiration of his terms
• Required the passing of ordinary
resolution at general meeting with special
notice of 28 days given to the auditor
• The mission, vission and objective of the
Company must be clearly stated
• It must be informed to employees so that
they know the Company’s goal
• Documents – serially numbered & kept
properly
• Assets – properly recorded & kept in a
locked room
• Supervision – done in regular and
continuing basis
• All recorded documents should be marked
“posted”

NO BUDGET PLANNING
• No budget planning was prepared
DIRECTOR’S DUTIES
• Directors do not understand about the
Companies Act 1965
APPOINTMENT OF AUDITOR
• Directors simply appoint auditor without
any proper procedure
CORPORATE GOVERNANCE
• Cik Amy do not have enough knowledge
and experience in her field of work.
NO STANDARD OPERATING PROCEDURE (SOP)
• Withdrawal of company’s money made
without proper documentation.
• Decision and authorization made by the
directors on its own without proper
documentation
• It will increase the risk of fraud and
inconsistency in performing task
• Give the auditor hard time to keep track of
the transaction and movement of asset.
LACK OF COMPETENCY
• Head of department leaded by
unqualified staff
• Management should review the adequacy
of internal control on regular basis
• Use to plan on the cost that will be
incurred
• To compare the budget cost and actual
cost to see any variance
• To help manager to make efficient
decision making
• All types of incorporated companies
• Enhance corporate governance
• Matters regarding powers of the:
 registrar of the company
 management and administration
of the company
 Officers of the company
 Accounting and auditing of the
company
• General rules
 Appoint an auditor at each Annual
General Meeting (sec 172(1))
 The auditor appointed holds
office until the conclusion of the
next AGM
• Company should provide guidance and
training to new employees.
• Management should hire someone that is
capable in doing his work.
Delima should implement standard operating
procedure (SOP) :
• Increase efficiency and consistence in
performing task
• Indicate compliance in the entity
requirements and can be used to train
others
• Spend more on training to equip
employee with proper knowledge
• Should hire qualified staff that have
 • Does not spend on training of staff
• Decrease company performance as a
whole
• Discredit the company reputation
• Employees manually prepared their
timesheets.
• No staff in charge and monitor employee
attendance.
• Staff take advantage over the slackness
• Decrease in company performance
•
5 C’S CREDITWORTHINESS
RECORDING
• Several assets purchased by the company
were not recorded
LEAN ORGANIZATION
• Lean organization with basic functional
position
ACADEMIC QUALIFICATION
• Did not meet academic qualification or
relevant experience that required by the
company
STATUTORY AUDIT
• Company did not perform the Statutory
Audit
AUDITOR’S DUTIES AND RESPONSIBILITIES
experience
• Install automated time attendance
The 5 key elements a borrower should have in
order to obtain credit :
1. Character à Integrity / a borrower’s
reputation
2. Capacity à company’s borrowing
history
3. Capital à Net worth
4. Collateral à Assets to secure the debt
5. Conditions à Of the borrower and the
overall economy
Eg. interest rate and amount of principal
• Every asset purchased must be recorded
manually and computerized.
• Assign person(s) to be responsible for the
company assets.
• Create an Asset Management Division.
• Propose the Asset Tagging System.
• Position & function should be clarified
clearly.
• Hire people that have good academic
qualifications & relevant experiences.
• Only legal to Public Listed Company. Not
compulsory for Private Company to
perform S.A
• Private Companies may need to do so
when applying for loans and etc from
Financial Institutions.
• Sec 174(2)
 • Encik Zayed tried to negotiate auditor to
make unqualify report
PROBLEM IN FINANCE DIVISION
• Invoice not pre-numbered
• Company did not send Statement of
Account(SOA) to client
• Not prepare monthly reconciliation
• Use company’s money for personal use
• No segregation of duties
ACCOUNTING SYSTEM
• MYOB Software not integrated
PROBLEM IN HUMAN RESOURCE DIVISION
• Pay wages weekly without employees
benefit
• Unqualified staff (lack of knowledge and
experience)
• Lack of employees and unbalance staff
allocation
Were there any abuses of power by management
and breach of fiduciary on the part of the
directors?
Who should be held responsible and
accountable?
Could the Audit be completed soon without any
qualification?
What should be done to improve the leadership
and management of Delima Enterprise Sdn Bhd?
Express opinion in report (duty to report
defects, irregularities in account)
• Sec 174(3)
Report particulars of deficiency, failure
and shortcoming
• Appoint new finance manager to
authorize and supervise finance
department
• Separate duties according to work
position
• Emphasize the separate legal entity
concept
• Purchase new software
• Eg: UBS, SAP Software, Ramcon
Engineering, Autocount,etc
• Pay wages in monthly basis including EPF
and Socso
• Provide training and seminar for staff
• Assign more staffs with qualification
• And re-organise chart
YES
NOT ONLY DIRECTOR, ALL MANAGEMENT
LEVEL SHOULD BE RESPONSIBLE AND
ACCOUNTABLE
• Yes, the audit report can be classified as
qualified opinion report due to several
unresolved issues. If the auditor audited
the rest of the financial statements and is
reasonably sure that they confirm with
Generally Accepted Accounting Priciples
(GAAP), then the auditor simply states
that the financial statements are fairly
presented, with the exception of the
issues which could not be audited.
SUME JAWAPAN DIATAS…