Question 1: Were there any abuse of power by the management and breach of fiduciary on the part of the directors?
Yes, there is abuse of power by the management and breach of fiduciary on the part of the directors by Encik Zayed and Puan Hashimah. Fiduciary duties require director act in the interest of company and free from conflict of interest However, the Chief Executive Officer (CEO) and Chief Operating Officer (COO) taking own interest from company. For example, the personal vehicle expense for Encik Zayed and Puan Hashimah totaling RM50, 150 were charged to the company during the year 2005. Encik Zayed intention to terminate the auditor’s appointment is the example of abuse of power.
Question 2: Who should be held responsible and accountable?
The main person that should held responsible and accountable are Encik Zayed and Puan Hashimah and follow by the company senior management, clerical assistant, vacant project supervisor and other employees. The major ...view middle of the document...
Auditor should qualify the Financial Statement due to several unresolved issues. A qualified report is issued when one of 2 types situation which do not comply with generally accepted accounting principles but the rest of financial statement are fairly presented.
Single deviation from GAAP- When 1 or more areas of financial statement not comply with GAAP but the financial statement is fairly presented. For example, EPF contribution for contract workers were not deducted and remitted to EPF. This action violated post employment benefit in MFRS 119.
Limitation of scope- It occur when auditor could not audit 1 or more areas of financial statement with the rest of financial statement was audit and comply with GAAP such as several pages of Accounts Receivables listing went missing.
Question 4: What should be done to improve the leadership and management of Delima Enterprise Sdn Bhd?
Document was not pre-numbered and improper record- Company should update”MYOB” software to process and automatically generated data between several modules and pre-number for all document to avoid missing and fraud. Besides that,, should immediately process and record the transaction after occur.
Manually record the time arrived and leaves- Company should a person who is responsible to supervisor employee attendance or using biometric time clocks to reduced buddy clocking or ghost employees.
No Standard Operating Procedure (SOP) - A standard Operation Procedure is a certain type of document that describes in step by step outline form how to perform a particular operation. Company should implement it in the company so that all staff follows same procedures to assure task is performed consistently and correctly. SOP also provide employee a reference to business practices and task with allow new employee perform operation without interrupt supervisor.
CEO and COO not familiar with Accounting Standards and Companies Act 1965- Encik Zayed and Puan Hashimah should refer to company secretary for every decision making to ensure compliance with relevant legislation and regulation and reminder top management of their legal responsibility. Since most of the top management is self made business owners with only secondary school background, they should attain a training to update their knowledge.