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Flat Cargo

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1.0 Introduction

Flat Cargo Berhad (FCB) is an air freight services and ground handling company. Its company’s operations cover Asian Pacific region including China, Japan, Thailand, Singapore and many more. Their main customers are United Parcel Services (UPS), City Link and Nationwide Express. The main shareholder for FCB is Bangor Sdn Bhd which is part of Miri Group represented by 26.5% of the company interest. Kencana & Associates is the auditor company that audit FCB’s account. The leader of the auditors is Mr Chuah Mun Soong. The auditing team found some irregularities in accounting record of FCB. There are two parties which Mr Chuah has to report, they are his superior, Mr Keong Chee Wah and FCB Audit Committee. However, Mr Chuah concerns that FCB might have a fraud due to the past experience such as Media Com and Blue Vital.

2.0 The Root Cause of the Problems

As per our discussion about this case study, we managed to find out several root cause of the problems.

2.1 Rising of Oil Price

The first root cause is the rising in oil price in the year 2005. In the year 2005, there was an international crisis occurred with the exceptional increase in oil prices. The hike started in mid-2004 at US$40 per barrel but eventually, the increase continued to stages of US$50, US$60, US$65, US$70 and US$80 per barrel. The price hike in fuel surcharges drastically affected the freight forwarding industry significantly because of its reliance on fuel for operations. This rising give huge impact on operation cost of FCB in 2005 which the highest within 2001 to 2005.

2.2 Ineffectiveness of the Management Team

The second root cause is the ineffectiveness of the management team. FCB unable to collect payments from the debtors because they fail to update their debtors’ data. Believing that, some of the debtors had changed their mailing address. Besides

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