Delima Enterprise Sdn Bhd

Synopsis

•Encik Zayed & Puan Hashimah who are the principal shareholder and controlling director of Delima Enterprise Sdn Bhd .

•They do not have any knowledge about the compliance of rule and regulation, including the roles and duties.

•Furthermore, the company had a lean organization and had employed own family members who do not have necessary job experience.

•The current system which used by the company was “MYOB” which do not integrated with several module.

•In 2016, they engaged the external Auditor Aziz & Co ( Chartered Accountant), to perform the statutory audit for the period 2003 to 2006.

•At the same time, they employed a fresh graduate – Cik Amy as their accountant with not working experience.

•The Auditor have qualified the financial statement due to a lot of unresolved issues, and

•This cause that Encik Sayed & Puan Hashanah plan to change the auditor, in order to appoint a “Friendly Auditor”.

Case analysis

STAGE 1

Issues

Explain the main issues underlying the case. Place extra attention on the what, why and when.

1. To get the bank facilities to performed a contract.

• There is shortage of fund to perform a contract.

1. Poor Internal Control and there is no Standard Operating Procedure on the Delima Enterprise Sdn Bhd.

• The Sales Invoices and Purchases order was manually produce with not pre-numbered.
• The employees’ attendance was manually prepared by themselves.
• There is no Standard Operating Procedure (SOP) been Implement.
• No Reconciliation was performed on the company’s account.
• There is a lot of overpayment to Trade Creditor.
• Overstated on cash book balance.
• The personal expenses were charged with the company account.

1. Poor Management information System to accumulate and report on financial information about the performance, financial position, and cash flows of a business.

• The current accounting system was not processed and generated automatically between several modules.

1. The abuses of power by the management

• The personal expenses had been charges in the company accounts.
• Employed their own family member as employees who did not have necessary knowledge and job experience, this causes a lean organization.
• Plan to terminate the auditor’s appointment who qualify the financial statement and appoint a new “friendly party”

Key players

Based on the issues identified above, determine the key players involved, their position/roles and the main decision that they have to make.