Financial Audit and Company
Delima Case Study
SYNOPSIS
Delima Enterprise Sdn Bhd (DESB) founded in 1981 by Encik Zayed. It conducted trading and supplying related products including manpower supplies to the oil and gas industries. The husband and wife which are Encik Zayed and Puan Hashimah were the two principal shareholders and controlling directors for the company. The company expands into provision of engineering services as part of their business diversification and expansion plans. The company had maintained a very lean organization with basic functional positions. DESB employed their own family members to work in the company with minimal education background and some of them did not have the necessary job experience.
In May 2006, the company had employed Cik Amy, a fresh graduate from local university since April 2006 and had no working experience to be their Finance Executive. At the same time, the company had secured a contract worth RM 750,000 to be implemented over a durations of six months. In order to secure the contract, Encik Zayed had applied for banking facilities due to the company’s shortage of funds, which required the Audited Financial Statements had to be issued to the bank at least by September 2006. Cik Amy was assigned to analyze and provide the Auditors with the necessary clarification and documentation, as Delima Enterprise Sdn Bhd (DEBS) had not performed the statutory audit.
It was July, 2006 when Encik Zayed engaged the external Auditor Aziz & Co, introduced by his friend to perform the statutory audit for the period of 2003 to 2006. That was the first audit experience for the couples and it was a difficult learning experience. The Auditors expressed their intention to qualify the Financial Statements due to several unresolved issues. However, Encik Zayed and Puan Hashimah tried to negotiate with the Auditor to not qualify the Financial Statements, failing which Encik Zayed planned to terminate the auditor’s appointment and appoint a new auditor which he
SYNOPSIS
Delima Enterprise Sdn Bhd (DESB) founded in 1981 by Encik Zayed. It conducted trading and supplying related products including manpower supplies to the oil and gas industries. The husband and wife which are Encik Zayed and Puan Hashimah were the two principal shareholders and controlling directors for the company. The company expands into provision of engineering services as part of their business diversification and expansion plans. The company had maintained a very lean organization with basic functional positions. DESB employed their own family members to work in the company with minimal education background and some of them did not have the necessary job experience.
In May 2006, the company had employed Cik Amy, a fresh graduate from local university since April 2006 and had no working experience to be their Finance Executive. At the same time, the company had secured a contract worth RM 750,000 to be implemented over a durations of six months. In order to secure the contract, Encik Zayed had applied for banking facilities due to the company’s shortage of funds, which required the Audited Financial Statements had to be issued to the bank at least by September 2006. Cik Amy was assigned to analyze and provide the Auditors with the necessary clarification and documentation, as Delima Enterprise Sdn Bhd (DEBS) had not performed the statutory audit.
It was July, 2006 when Encik Zayed engaged the external Auditor Aziz & Co, introduced by his friend to perform the statutory audit for the period of 2003 to 2006. That was the first audit experience for the couples and it was a difficult learning experience. The Auditors expressed their intention to qualify the Financial Statements due to several unresolved issues. However, Encik Zayed and Puan Hashimah tried to negotiate with the Auditor to not qualify the Financial Statements, failing which Encik Zayed planned to terminate the auditor’s appointment and appoint a new auditor which he
References: 1) Zubaidah Zainal Abidin, Corporate Secrataryship and Governance. 2) Wan Salbiah Bt Dato’ Hj Wan Thman/UiTMS, Company Law. 3) Wikipedia, the free encyclopaedia. 4) http://www.sopmd.com/blog/the-importance-of-standard-operating-procedures 5) http://www.readycompanies.com/Directors-Responsibility.htm 6) http://www.investopedia.com/terms/a/auditors-opinion.asp