Case Study Dilema
A DILEMA ENTERPRISE
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. The company activities had expanded into provision of engineering services as part of their business diversification and expansions plan. 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. However, due to lack of knowledge about corporate administration, there are issues arose that need to be settle by them.
Furthering the discussion, there are some highlighted problems and issues that arise such as Encik Zayed and Puan Hashimah who are the Directors of the organization were not familiar with Accounting Standards and the provisions of the Companies Act 1965 and their roles and duties as company directors. Besides than that, all the employees did not have the necessary job experiences and good background of studies and most of them are among the family members of the directors. In addition to that, all the records are not organized and filed accordingly. For example like the sales invoices and purchase order are manually prepared and not pre-numbered. There were long outstanding collections from trade debtors as the Monthly Statements of Accounts was not sent to customers on monthly basis. In fact, the standard operating procedure was not in place. Several assets purchased by the company were not recorded and overpayments
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. The company activities had expanded into provision of engineering services as part of their business diversification and expansions plan. 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. However, due to lack of knowledge about corporate administration, there are issues arose that need to be settle by them.
Furthering the discussion, there are some highlighted problems and issues that arise such as Encik Zayed and Puan Hashimah who are the Directors of the organization were not familiar with Accounting Standards and the provisions of the Companies Act 1965 and their roles and duties as company directors. Besides than that, all the employees did not have the necessary job experiences and good background of studies and most of them are among the family members of the directors. In addition to that, all the records are not organized and filed accordingly. For example like the sales invoices and purchase order are manually prepared and not pre-numbered. There were long outstanding collections from trade debtors as the Monthly Statements of Accounts was not sent to customers on monthly basis. In fact, the standard operating procedure was not in place. Several assets purchased by the company were not recorded and overpayments