...TABLE OF CONTENT Introduction 3 Stakeholders and their stakes 4 Case analysis -Issues, impacts and improvements 5 Conclusion 11 1. INTRODUCTION 1.1 CASE SUMMARY Delima Enterprise was founded in 1981 by En Zayed. The main business are trading and supplying related products including manpower supplies to the oil and gas industries. The enterprise was incorporated in 2004 as Delima Enterprise Sdn Bhd with En. Zayed and his wife, Puan Hashimah as the controlling directors and two principal shareholders. This case is about Delima Enterprise which wants to make banking facilities from Malayan Banking Berhad and CIMB Bank Berhad. The banks required company’s Audited Financial Statements for the last two years. From the requirement, Encik Zayed and Puan Hashimah realised that the company did not performed any statutory audit before. So, they engaged with the external Auditor Aziz & Co. (Chartered Accountant). The auditor need to performed statutory audit for the period 2003 to 2006. There are some mistakes happened during the last two years founded by the auditors. To resolve several issues, the auditors need to qualify the Financial Statements. However, Encik Zayed and Puan Hashimah tried to negotiate with the auditor to not qualify the Financial Statements. The auditor was not agreeing with the Encik Zayed negotiation and he planned to terminate the auditor appointment. Encik Zayed also...
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...CASE1: DELIMA Mustapha Kamal Mohd Razali Aini Aman Azbir Abu Bakar Yazmiza Long Case Synopsis The case is about an enterprise founded by family members and later was incorporated as Sdn Bhd. The shareholders were mainly the directors of husband and wife who were involved in the management of the company. The company involved in trading and engineering service3s. The company has limited financial resources. Based on the audit finding the records were not properly kept and no procedures and financial system were in place and lacked internal control. The auditors were not able to express a true & fair view on the accounts and recommended to qualify the audited accounts. Introduction It was July, 2006 when En Zayed engaged the external auditor Aziz & Co ( a Chartered Accountant), introduced by his friend to perform the statutory audit for the period of 2003 to 2006. This was the first audit experience for En. Zayed and Puan Hashimah and was a difficult learning experience faced by both. The Auditors expressed their intention to qualify the financial statements of the business due to several unresolved issues. However, En. Zayed and Puan Hashimah negotiated with the Auditor to not doing so. Failing to this negotiation, En Zayed and Puan Hashimah planned to terminate Aziz & Co appointment and to replace (appoint) with their new “friendly party” auditor. Interestingly, En Zayed and Puan Hashimah were not familiar with the Accounting Standards, provisions of the Companies...
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...CASE STUDY ACC 4291 SEMESTER 2 2012/2013 CASE REPORT CASE 1: A Delima PREPARED BY: AINI SALEHA BT MOHAMAD FAUZI 0826746 MUHAMMAD ASNAWI B RAPIE@SHAFEI 0918761 HARON BIN RASHID 0829181 PREPARED FOR: PROF DR SHAMSUL NAHAR ABDULLAH CASE SUMMARY Delima Enterprise is founded in 1981 by Encik Zayed. The main activity of Delima Enterprise is conducted trading and supplying related products including manpower supplies to the oil and gas industries. The company activities had expanded into provision of engineering services. Due to encouraging business growth in 2004, the Delima Enterprise was incorporated as Delima Enterprise Sdn Bhd. Since 2006, the company awarded with several engineering projects and its cumulative revenue for 2004 is RM1 million and RM1.7 million for 2005. The company is family based company and most of them only have secondary school background. They do not familiar with the audit. They also did not familiar with Accounting Standards and the provision of the Companies Act. The company also consists from the non experiences staff of their job. The protagonist or decision maker in this case is Encik Zayed. Encik Zayed is a principal shareholder and controlling director. Delima Enterprise Sdn Bhd wants to make banking facilities from Malayan Banking Berhad and CIMB Bank Bhd. The bank required company’s Audited Financial Statements for the last two years. From the...
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...SUMMARY Delima Enterprise is founded in 1981 by Encik Zayed. The main activity of Delima Enterprise is conducted trading and supplying related products including manpower supplies to the oil and gas industries. The company activities had expanded into provision of engineering services. Due to encouraging business growth in 2004, the Delima Enterprise was incorporated as Delima Enterprise Sdn Bhd. Since 2006, the company awarded with several engineering projects and its cumulative revenue for 2004 is RM1 million and RM1.7 million for 2005. The company is family based company and most of them only have secondary school background. They do not familiar with the audit. They also did not familiar with Accounting Standards and the provision of the Companies Act. The company also consists from the non experiences staff of their job. In May 2006, the company had employed Cik Amy graduated from a local university with no job experience. Encik Zayed is a principal shareholder and controlling director. In May 2006, the company had secured a contract worth RM 750,000 to be implemented over duration of six month. Due to shortage funds, Delima Enterprise Sdn Bhd wants to make banking facilities from Malayan Banking Berhad and CIMB Bank Bhd. The bank required company’s Audited Financial Statements for the last two years. From the requirements, Encik Zayed realized that company did not perform any statutory audit before. In July 2006, they engaged with the external Auditor Aziz & Co (Chartered...
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...A DELIMA ENTERPRISE SDN BHD REPORT Company background A Delima Enterprise Sdn Bhd Founded in 1981, by Encik Zayed that conducted trading and supplying related products including manpower supplies to the oil and gas industries. In 2004, the enterprise was incorporated as Delima Enterprise Sdn. Bhd. Two principle shareholders and controlling directors were Encik Zayed and Puan Hashimah who are husband and wife. They also hired their family members to work in the company that are Puan Balqis and Encik Salam as Operation manager , Human resources and Administration manager respectively. Summary of the case In May 2006, the company had secured a contract worth RM750,000 to be implemented over 6 months. Due to shortage of fund, company need to apply loan from Malayan Banking Berhad and CIMB Berhad totalling RM 1 million. In order to get the loan, they had to provide audited financial statements for the last two years. In July 2006, Encik Zayed engaged the external Auditor Aziz & Co. to perform the statutory audit for period 2003 to 2006. Based on the case we can conclude that there are several issue arise. That are ethical issue, accounting information issue, legislation issue, and also issue from the view of corporate governance. Ethical issue Ethic is define as the moral principles that govern a person’s or group’s behaviour and also the moral correctness of specified conduct. So based on this case we can see that the director of A Delima Ent. Sdn Bhd had breach the ethic...
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...1. Were there any abuses of power by the management and breach of fiduciary on the part of the directors? Yes, there are breached of fiduciary duties by the management or directors of Delima Enterprise Sdn Bhd. In general, directors take up a fiduciary position or relationship with the company. A fiduciary relationship is the relationship between a person in a position of trust in which the fiduciary and the person for whose benefit the fiduciary acts. In other words, a fiduciary’s powers are exercised on behalf of others who are being in a position of dependence. In this case, directors of Delima Enterprise Sdn Bhd have fiduciary duties to the shareholders and stakeholders of the company. In addition, they also control property in which others have an interest. According to Section 132(1) of Companies Act 1965, a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. The directors have the following duties as being in fiduciary position: a. Duty to exercise power in good faith and in the interest of the company. b. Duty to avoid conflict of interest. c. Duty to exercise power for the proper purpose. a. Duty to exercise power in good faith and in the interest of company The directors of a company must exercise their powers in good faith and in the best interest of the company as a whole. It means that, directors of the company must act in the interest of the shareholders as a collective group of...
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...Case Synopsis The case is about an enterprise founded by family members and later was incorporated as Sdn Bhd. The shareholders were mainly the directors of husband and wife who were involved in the management of the company. The company involved in trading and engineering service3s. The company has limited financial resources. Based on the audit finding the records were not properly kept and no procedures and financial system were in place and lacked internal control. The auditors were not able to express a true & fair view on the accounts and recommended to qualify the audited accounts. Introduction It was July, 2006 when En Zayed engaged the external auditor Aziz & Co ( a Chartered Accountant), introduced by his friend to perform the statutory audit for the period of 2003 to 2006. This was the first audit experience for En. Zayed and Puan Hashimah and was a difficult learning experience faced by both. The Auditors expressed their intention to qualify the financial statements of the business due to several unresolved issues. However, En. Zayed and Puan Hashimah negotiated with the Auditor to not doing so. Failing to this negotiation, En Zayed and Puan Hashimah planned to terminate Aziz & Co appointment and to replace (appoint) with their new “friendly party” auditor. Interestingly, En Zayed and Puan Hashimah were not familiar with the Accounting Standards, provisions of the Companies Act 1965 and the roles and duties as Company Directors. Besides, the company maintained...
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...INTRODUCTION Delima Enterprise Sdn. Bhd. was founded by En. Zayed in 1981. It conducted trading and supplying related products including manpower supplies to the oil and gas industries. The two principal shareholders and controlling directors were En. Zayed and Puan Hashimah. The company’s corporate mission was to become a leading service contractor and provide quality products and also excellent services. In this Delima case, the company had secured a contract worth RM 750,000 to be implemented over duration of 6 months in May 2006. Due to shortage of fund, the company needs to apply loan from Malayan Banking Berhad and CIMB totaling RM 1 million. In order to get the loan, they had to provide audited financial statement for the last two years. In July 2006, En. Zayed engaged the external auditor Aziz & Co. to perform the statutory audit for period 2003 to 2006. PROBLEMS AND RECOMMENDATION There are many problems in this Delima Enterprise Sdn. Bhd. case. The first problem is the documents were not properly pre-numbered, recorder and documented. Sales invoices were manually produced and not pre-numbered. Besides that, monthly statement of account was not periodically prepared but only set up and send to customer when payment had been long outstanding. The recommendations to this problems is the documents such as invoices, purchase order, delivery order and many more should be properly pre-numbered so that it is easy to trace if there were missing documents. Then, Delima Enterprise...
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...A Delima Company Background Delima Enterprise was founded in 1981 by En Zayed. It conducted trading and supplying related products including manpower supplies to the oil and gas industries. Subsequently in 2004, due to encouraging business growth, the enterprise was incorporated as Delima Enterprise Sdn Bhd. The two principal shareholders and controlling directors were Encik Zayed and Puan Hashimah which are husband and wife. Since 2006, the company has been awarded with several engineering project. In May 2006, the company had secured a contrct worth RM 750,000 to be implemented over a duration of 6 months. Due to shortage of funds, the company has submitted applications to Maybank and CIMB for banking facilities. The banks required the company’s Audited Financial Statements for the last two years. Encik Zayed just realised that the company had not performed the statutory audit . A friend has introduced Encik Zayed to an audit firm , Aziz & Co ( Chartered Accountant ) . Shortly, the audit firm was engaged to perform the audit. Issues Question 1 : Were the are abuses of power in management and breach of fiduciary on the part of directors ? Answer : Yes there are abuses of power by the management and breach of fiduciary duty of director. Fiduciary is an obligation to act in the best interest of another party. According to Section 132 (1A) Company Act stated that a director must act honestly at all times and used all reasonable diligence in the discharge of...
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...7 A Delima i\{ustapa Kamal Mohd Razali AiniAman Azbir Abu Bakar Yasmiza Long Zayed engaged the external Auditor Aziz & Co (Chartered introduced by his friend to perlorm the statutory audit fbr the period 2003 to Accountant), 2006. That rvas the first audit experience for Encik Zayed and Puan Hashimah and it rvas a dif&cult learning experience. The Auditors expressed their intention to qualify the Financial Statements due to several unresolved issues. Holvever, Encik Zayed and Puan Hashimah tried to negotiate with the Auditor to not qualify the Financial Stateinents, failing which Encik Zayed planned to terminate the auditor's appointment and appoint a new "friendly party" apditor. Encik Zayed and Puan Hashimah were not familiar with Accounting Standards and the provisions of the Companles Act 1965, including their roles and cluties as Company Directors. Thc uurrrpaiiy had uraintaineri a very lean organisation and had employed therr own iamily men:bers as employees and some did not have the necessary job experiences. lt was July, 2006 when Encik Time was the esse*ce and the Audited Financial Statements had to be issued to the bank at least by September 2006, as Encik Zayed had applied for banking facilities to implement severai contracts the company had managed to secure. Encik Zayed had assigneql the tasks to Cik Amy, the Finance Executive u,ho lvas nervly appointed by ihe company to anaiyse and provide the Auditors lvith the necessary clarification and docutnentalion...
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...DELIMA CASE Synopsis Delima Enterprise is one of the companies that trading and supplying related products including manpower supplies to the oil and gas industries. It was founded by Encik Zayed in1981.However in 2004, the enterprise was incorporated as Delima Enterprise Sdn Bhd due to encouraging business growth. The company activities had expanded into provision of engineering services as part of their business diversification and expansion plans. The two principal and shareholders and contolling directors were Encik Zayed and his wife, Puan Hashimah. The company had employed their own family members as employees and some did not have necessary job experiences. The company maintained with the basic functional position which Encik Zayed as the managing director and his wife as the chief operating officer. The other personnel were Puan Balqis as an operation manager and Encik Salam as Human resource and administration manager .In May 2006, the company had secured a contract due to shortage of fund. The requirement of the company’s Audited Financial Statements for the last two years by the bank, was when Encik Zayed realized that the company had not performed the statutory audit. In July, 2006 Encik Zayed engaged the external auditor Aziz & Co and the auditor expressed their intention to qualify the financial statement due to several unresolved issues. However Encik Zayed and his wife tried to negotiate with the auditor not to qualify the Financial Statement. Encik Zayed...
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... CASE 1: A DELIMA Acknowledgements Table of Content |No. |Particular |Page No. | |1 |Introduction : Company Background & Case Summary |3 | |2 |Identified Issues In DESB |4 - 8 | |3 |Questions & Answers |9-13 | |4 |Recommendations |14 - 17 | |5 |Conclusion |18 | |6 |Reference |19 | |7 |Appendix |20-26 | INTRODUCTION Company Background Delima Enterprise was set up by Encik Zayed in 1981. It engaged in trading and supplying related products including manpower supplies to the oil and gas industries. In 2004, the enterprise was incorporated as Delima Enterprise Sdn. Bhd. Both Encik Zayed...
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...Summary Delima Enterprise was founded in 1981 by Encik Zayed. It conducted trading and supplying related products including manpower supplies to the oil and gas industries. In 2004, the enterprise was incorporated as Delima Enterprise Sdn. Bhd. The two principal shareholders and controlling directors were Enci Zayed and Puan Hashimah(husband and wife). Their positions are Encik Zayed as the Managing Director and his wife Puan Hashimah as the Chief Operating Officer. They hired their own family members which are Puan Balqis as the Operation Manager and Encik Salam as the Human Resource and Administration Manager. Both of them have the same level of education like Encik Zayed and Puan Hashimah which is only at secondary school level. As the company was incorporated as Delima Enterprise Sdn. Bhd. the company expand their business operation into provision of engineering services. In May 2006, the company had employed Cik Amy as Finance Executive. She was responsible for maintenance of the accounting and financial matters, including the preparation of accounts. Previously, Puan Hashimah was the one who responsible for all finance related matter. Subsequently, in May 2006, the company had secured a contract worth RM 750,000 to be implemented a duration of six months. However, due to shortage of funds, the company had submitted applications to Maybank and CIMB Bank Berhad for banking facilities totaling RM 1 million. The banks required the company’s Audited Financial Statements for...
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...1. Directors Directors of the company (Encik Zayed and Puan Hashimah) are held responsible and accountable for the problem occurs in Delima Enterprise Sdn Bhd. As a director, they should be familiar with their roles and duties. In addition, they are responsible for keeping proper accounting records which disclose with reasonable accuracy of financial position of the company and ensure that the financial statements are comply with the Companies Act 1965 and approved accounting standards. Encik Zayed and Puan Hashimah tried to negotiate with the Auditor to not qualify the Financial Statements, so terminate the auditor’s appointment and appoint a new auditor that could issue an unqualified audited report, in order to obtain bank facilities. However, a director was prohibit to make improper use of their position to gain directly or indirectly, a benefit for themselves of for any person to cause detriment to the corporation under Section 132 (2) Companies Act 1965. Therefore, they should take initiatives to enhance their knowledge about the accounting standards, provision of the Companies Act 1965 and the operating performance of the company. 2. Finance Executive Prior to Cik Amy’s appointment as Finance Executive, Puan Hashimah was responsible for all finance related matters. Therefore, Puan Hashimah was accountable for the improper keeping of records, lack of internal control and no procedures and financial system were in place. She should administer and monitor the financial...
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...1) The important of separation of right and duty between shareholder and management. Delima Enterprise Sdn. Bhd. was a large company due to these reasons; the company had been awarded with several engineering projects and its cumulative revenue for 2004 and 2005 were nearly RM 1 million and RM 1.7 million respectively. By referring that reasons, we can say that it was a large company. As a large company, the shareholders are separated from Board of Director and management. However, in this case, there is no separation or segregations of rights and duties between shareholder and management. Segregation of right and duties means assign two or more competent and qualified individuals in a way that provides reasonable assurance comply with the standards. It means, at any time , no one person should be in position of doing the primary functions of authorizing, recording and taking care the custody of assets. Besides, shareholders and director have two completely different roles in company. Shareholders are owner of the company while director manage the company. From what we can see in this case, Encik Zayed is the shareholder of Delima Enterprise Sdn. Bhd., in the same time he act as Managing Director. Meanwhile Puan Hashimah is the shareholder of Delima Enterprise, in the same time she act as Chief Operating Officer. Before the company hire Cik Amy as Finance Executive, Puan Hashimah was responsible for all finance related matters. There is clearly stated that they do not have...
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