1 ) Were there any maltreatments of power by direction and breach of fiducial on the portion of the managers?
2 ) Who should be held responsible and accountable?
3 ) Could the Audit be completed shortly without any making?
4 ) What should be done to better the leading and direction of Delima Enterprise Sdn. Bhd. ?
‘A Delima’ is a instance where it is happened in an endeavor called Delima Enterprise. founded by household members. Subsequently on. the endeavor was incorporated as Delima Enterprise Sendirian Berhad ( Sdn. Bhd. ) . Its stockholders were chiefly the managers. Encik Zayed and Puan Hashimah. which they were hubby and married woman. They were involved in the direction of the company. assisted by their ain household members. The company conducted trading and technology services to the oil and gas industries. Due to spread out company activities. the company had limited fiscal resources. To get proposed fiscal resources. audited fiscal statements were needed. Based on the audit findings. the company did non maintain their concern records decently. Furthermore. there were no proper direction processs and fiscal system. The direction itself eas lacked internal control. Subsequently. the hearers were non able to show a true and just position on the Delima Enterprise Sdn. Bhd. ’s histories and recommended to measure up the audited histories.
For the first inquiry. the reply is yes. there were maltreatments of power by direction and breach of fiducial on the portion of the managers. The direction itself was improperly segregated the responsibilities and maps. The internal control of the direction was lacked as blessing and mandate was merely upon them. For the managers. they were lacked understanding about Companies Act 1965. particularly affairs sing integrated companies and powers upon themselves and other parties. Harmonizing to Cieri. Sullivan and Lennox ( 1994 ) . the managers must hold all material information that can be obtained by them and so move with equal attention in transporting their responsibilities. So. they lacked the competences as the managers.
For the 2nd inquiry. the reply is managers and all direction degrees should be held responsible and accountable. The company entirely was lacked of every facet of proper direction. particularly affairs sing internal control and concern procedures. All the specifics will be explained in the reply of last inquiry. including betterment that can be done.
For the 3rd inquiry. the reply is no. the audit can non be completed shortly without making. But it can be completed shortly. with the audit study be classified as qualified sentiment study due to several unsolved issues. If the hearer audited the remainder of the fiscal statements and is moderately certain that they confirm with Generally Accepted Accounting Principles ( GAAP ) . so the hearer merely states that the fiscal statements are reasonably presented. with the exclusion of the issues which could non be audited. Finally. the last question’s reply will cover all degree of direction. For the footing of the direction. there was no proper organisational chart. It had few places the in chart and the chart besides non included distinguishable sections to demo the organisation by departmental maps.
The chart should be decently drawn with distinguishable functional sections to demo separate occupation description for each section and several of import places should be added to guarantee effectual and efficient control. The place and its maps should be clarified clearly as the company was a thin organisation with basic functional place. On the other manus. the company merely had missions which a short term end to accomplish. The company besides did non clearly province their vision every bit good as the nonsubjective itself. It really affected the public presentation of their employees as they did non cognize what to accomplish. The top direction should put and province clearly the company’s mission. vision and aims. All of these must be informed good to the employees so that they know the company’s true ends. so that they have a usher for their plants.
Within the direction itself. there was deficiency of control. This can be seen when the paperss were non pre-numbered and some of them were losing. The company’s assets were besides non recorded. Above all of these. there was no supervising. So. the paperss must be serially numbered and properly kept. Furthermore. all recorded paperss should be marked “posted” . The assets must be decently recorded and kept in a proper topographic point. All activities within the company must be supervised on a regular basis and on continuing footing. On top of that. the direction should reexamine the adequateness of its internal control on regular footing. An audit commission or internal hearer should be hired.
Harmonizing to Zhang. Zhou and Zhou ( 2004 ) . audit commission members that have expertise in fiscal affairs can execute their supervising functions in the fiscal coverage procedure such as happening stuff misstatements. So. audit commission or internal audit non merely can better the direction internal control. but besides provide aid to the company’s concern procedures. Then. for Encik Zayed. who did non exert his responsibilities decently as to segregate direction responsibilities every bit among the employees of the company that he may believe tantrum to execute such responsibilities. For a company. segregation of responsibilities is of import for the direction as to avoid any undertaking redundancy. fraud. carelessness. power maltreatment. inefficiency and work hold. Furthermore. it is to guarantee the direction works expeditiously and efficaciously.
Cik Amy had been assigned to legion work loads and some of the plants were non within her occupation description as a Finance Executive. Encik Zayed should segregate Cik Amy’s work loads to other forces harmonizing to the relevant occupation descriptions. For illustration. history payables and receivables should be assigned to different personal. A standard operating process ( SOP ) is required in a company to steer all its activities. But the company did non had SOP. It caused improper company’s money backdown. decision-making. hazard of fraud and incompatibility in completion of undertakings. Furthermore. it gave difficult clip to the hearer in making their occupations. A SOP should be implemented. so that efficiency and consistence can be maintained. Besides that. it indicates conformity with the company’s demands and can be used to develop the employees and direction itself.
In their concern. there was no budget planning. This may be the cause of deficient fiscal resources to run the company’s spread outing concern activities. A budget should be used to be after on the cost that will be incurred in a undertaking. When there is a budget. it can be compared to the existent cost to reexamine and analyse any discrepancy. The director himself can use efficient decision-making with the information gathered. For the company’s records. the paperss were non properly pre-numbered. recorded and documented. The sale bills were manually prepared and non pre-numbered. Besides that. there was no monthly statement of history prepared. The statement will be sent to the clients who had long outstanding payment. So. for overall. all the paperss such as bills and purchase orders should be decently pre-numbered. Furthermore. the company should utilize latest edition of standard fiscal package such as MYOB and UBS. The control accounts besides should be prepared and updated sporadically.
Harmonizing to Bushman and Smith ( 2001 ) . fiscal accounting information is a tool that provides information about fiscal place and public presentation public companies. For overall. the company should pattern proper accounting. so that equal information can be produced to ease all related parties to execute their occupations and responsibilities. Furthermore. the company should pattern 5 C’s creditworthiness. where outlines the five cardinal elements a borrower should hold in order to obtain recognition. First. Character which about borrower’s unity and repute. Second. Capacity that tells about borrower’s history Thirdly. Capital where describes about borrower’s net worth. Fourthly. Collateral which is the borrower’s plus that to procure the debt.
Last. Conditionss that is made between the company and borrower related to the debt such as involvement rate and sum of chief. In the company. there was deficiency of mandate of concern dealing. There was no standard operating process. where all determinations were made and authorized by either Encik Zayed or Puan Hashimah. Their personal vehicles’ disbursals were besides charged to the company’s history. So. all determination should follow a criterion operating process. Expenses should be authorized by at least two people. These disbursals should except personal disbursals. There should be segregation of responsibilities between people who O.K.ing and stomping the dealing paperss. The mandate should be separated to general and specific mandate. During the usual on the job period. the employees themselves record their clip in and out. It is inappropriate because they can take advantage. The company should utilize punch card. eyes acknowledgment. clip clock machine or thumbprint to verify their clip. Their clip in and out is besides needed to be supervised. so an extra employee should be hired who can supervise the attending and timesheets.
In the human resource division itself. there were jobs. They paid the employees’ rewards without any benefit. They besides hired unqualified staff and the company itself was deficiency of employees and had unbalanced staff allotment. The division should pay the rewards in monthly footing including benefits of Employees Provident Fund ( EPF ) and Social Security Organization ( SOCSO ) . They besides should supply preparation and seminar for the employees. engage more employees with equal makings and besides reorganise the division’s chart. For Cik Amy. she was a fresh alumnus from a local university with no relevant working experience to her occupation description efficaciously as a Finance Executive. Her occupation will be keeping the accounting and fiscal affairs including fixing the company’s histories. A simple thing as accounting intervention may non be able being solved by her.
So. Cik Amy should be sent for farther preparation by the company’s direction to heighten her apprehension in relation to her occupation description and competence to execute her occupation. Furthermore. the direction should inscribe her to a short class designated to better her work efficiency and effectivity in any local establishments such as UiTM and Sunway University. Furthermore. the company should supply continuation appropriate and sufficient counsel and preparation to the employees. particularly new 1s. The direction so should engage person that is capable in making his or her plants. Harmonizing to Section 172 ( 4 ) . ( 5 ) and ( 6 ) under Companies Act 1965. merely the stockholders can take the hearer before the termination of his footings. Furthermore. it is required to go through a ordinary declaration at a general meeting with particular notice of 28-day given to bing hearer. But for the company. the direction attempted to take the hearer before the termination of his footings of office. Before that. the direction merely appointed hearer without any proper process.
Harmonizing to Companies Act 1965. an hearer is appointed at each Annual General Meeting ( AGM ) and the hearer appointed holds office until the decision of the following AGM. On the other manus. it was the auditor’s responsibilities and duties to describe in specifics about the company lack. failure and defect. harmonizing Section 174 ( 3 ) of the Act. Then he must show sentiment in his study about defects and abnormalities in the company’s histories. harmonizing Section 174 ( 2 ) of the Act. But. the direction tried to negociate hearer to do unqualified study.
Cieri. R. M. . Sullivan. P. F. . & A ; Lennox. H. ( 1994 ) . The fiducial responsibilities of managers of financially troubled companies. Journal of Bankruptcy Law and Practice. 3 ( 4 ) . 405-422.
Zhang. Y. . Zhou. J. . & A ; Zhou. N. ( 2007 ) . Audit commission quality. hearer independency. and internal control failings. Journal of accounting and public policy. 26 ( 3 ) . 300-327.
Bushman. R. M. . & A ; Smith. A. J. ( 2001 ) . Fiscal accounting information and corporate administration. Journal of accounting and Economics. 32 ( 1 ) . 237-333.