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

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.

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 companys 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

All decision should follow SOP.

Expenses should be
authorised by at least two
persons.
Personal expense cant be
charged as companys
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
companys top management to
further enhanced her
understanding in relation to
her job description and
competency to perform her
job. The management should

as a Finance Executive. A
simple thing as accounting
treatment was unable to be
solved by Cik Amy.

enrol her to a short course

designated to improve work
efficiency and effectiveness in
any local institutions such as
UiTM, Sunway University and
others.

IMPROPER ORGANIZATION CHART

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.

It should be properly drawn

with distinct 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
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.

Segregation of duties is
important in a companys
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 Amys
workloads to other personnel
according to the relevant job
descriptions. For example,
Account Payables and
Receivables should be
assigned to different
personnel.

REMOVAL OF AUDITOR
Removal of Auditor before the
expiration of his terms of
office

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

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 dont
know what to achieve

LACK OF CONTROL
Documents not
prenumbered & missing
Assets not recorded
No supervision

NO BUDGET PLANNING
No budget planning was
prepared

DIRECTORS DUTIES
Directors do not understand
about the Companies Act 1965

APPOINTMENT OF AUDITOR
Directors simply appoint
auditor without any proper
procedure

The mission, vission and

objective of the Company
must be clearly stated
It must be informed to
employees so that they know
the Companys 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
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
CORPORATE GOVERNANCE
Cik Amy do not have enough
knowledge and experience in
her field of work.

NO STANDARD OPERATING
PROCEDURE (SOP)
Withdrawal of companys
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.

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

LACK OF COMPETENCY
Head of department leaded by
unqualified staff
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

Company should provide

guidance and training to new
employees.
Management should hire
someone that is capable in
doing his work.

Spend more on training to

equip employee with proper
knowledge
Should hire qualified staff that
have experience

Install automated time

attendance

5 CS CREDITWORTHINESS

The 5 key elements a borrower

should have in order to obtain credit

:
1. Character Integrity / a
borrowers reputation
2. Capacity companys
borrowing history
3. Capital
Net worth
4. Collateral Assets to secure
the debt
5. Conditions Of the borrower
and the overall economy
Eg. interest rate and amount of
principal
RECORDING
Several assets purchased by
the company were not
recorded

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.

LEAN ORGANIZATION

Lean organization with basic

functional position

ACADEMIC QUALIFICATION

Did not meet academic

qualification or relevant
experience that required by
the company

Hire people that have good

academic qualifications &
relevant experiences.

STATUTORY AUDIT
Company did not perform the
Statutory Audit

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)
Express opinion in report
(duty to report defects,
irregularities in account)
Sec 174(3)
Report particulars of
deficiency, failure and

AUDITORS DUTIES AND

RESPONSIBILITIES
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 companys 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

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

Delima Enterprise Sdn Bhd?