...INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA KULIYYAH OF ECONOMIC AND MANAGEMENT SCIENCE INTEGRATED 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...
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...1.0 INTRODUCTION 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. Encik Zayed and Puan Hashimah were not familiar with Accounting Standards and the provisions of the Companies Act 1965, including their roles and duties as Company Directors. The company had maintained a very lean organization and had employed their own family members as employees and some did not have the necessary job experiences. It was July 2006 when Encik Zayed engaged the External Auditor Aziz & Co ( Chartered Accountant), introduced by his friend to perform the statutory audit for the period 2003 to 2006. This was first audit experience for Encik Zayed and Puan Hashimah and it was a difficult learning experience. 1.1 SYNOPSIS/ SUMMARY Delima Enterprise Sdn Bhd faced a problem when they decided to take up loan from the commercial bank and realized that their company financial statement was not audited for quite a long time. However the real problem detected here is that the...
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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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...REPORT ON DELIMA SDN BHD CASE This 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 services. The company has limited financial sources. Therefore they are applying a loan but to apply loan they have to submit two years audited report which they never knew they had to. They had engaged Aziz & Co. as their auditor. Based on the audit finding the records were not properly kept and no procedure and financial system were in place and lacked internal control. The auditors were not able to express a True and Fair view on the accounts and recommended to qualify the Audited Accounts. As for that Encik Zayed planned to terminate the auditor’s appointment and appoint a new “friendly party” auditor. There are some questions to be answered in this case which are, whether there were any abuses of power by the management and breach of fiduciary on the part of the directors? Who should be held responsible and accountable? Could the Audit be completed soon without any qualification? And what should be done to improve the leadership and management of Delima Enterprise Sdn Bhd? The first issue is that the directors of the company, Encik Zayed and Puan Hashimah, both are not familiar with Accounting Standard, Provision of the Company Act 1965, and also their roles as directors of the...
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...INTEGRATED CASE STUDY (MAF 680) 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...
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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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...Summary A Delima case is about an enterprise founded by family members and later incorporated as Delima Sdn Bhd. The company principle is trading and supplying related products including manpower supplies to the oil and gas industries. The shareholders are En Zayed and Pn Hashimah which is husband and wife and the top organization of the company holds by their family members. Problem arise in year 2006 when they decided to take up loan from bank and realized that their company financial was not audited for several years and the bank requires audited financial statement to be issued before September 2006. However, their appointed Auditor Aziz & Co expressed their intention to qualify their Financial Statement due to some unresolved issues. As En Zayed and Puan Hashimah need the audited Financial Statement as soon as possible, they tried negotiating with the Auditor to not qualify their Financial Statement but failed to do so which lead them planning to terminate the auditor’s appointment and appoint a new “friendly party” auditor. En Zayed also had assigned Cik Amy (Finance Executives), a new inexperienced employee to analyse and provide required clarifications and documentations to the Auditors. Were there any abuses of power by the management and breach of fiduciary on the part of the director? Yes, there are abuses of power by the management and breach fiduciary on the part of the director. Under Section 132(1) of the Companies Act 1965 state that a director of a company...
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...SME access to capital markets funding 1. Why are we specifically focusing on SMEs? In July the FESE President met with Commissioner Barnier where it became clear that the Commissioner puts a strong political emphasis on SME finance. Commissioner Barnier confirmed during that meeting that he would like FESE to propose some concrete recommendations on how to improve SMEs’ access to capital markets. This information would be considered for their joint ‘action plan’ related to SMEs which DG Internal Market and DG Enterprise are currently working on and which will be finalised by end‐November. The Commissioner invited FESE to present these ideas during the meeting that was arranged for October, during this meeting the Commissioner advised that our recommendations (outlined below) included a request for financial support from the European Commission but he did not know what Exchanges have and are doing to support SMEs, it was therefore agreed that this would be the subject of our lunch with him on 21st November 2. Brief outline of FESE recommendations INCENTIVES • Positive tax incentives are needed. If Europe wants more investors to look at SMEs, incentives are needed, and tax incentives are among the most effective. • FESE urged the Commission to study this issue carefully as we believe that incentives on taxation for the smaller and most dynamic companies will be a key instrument. PUBLIC FUNDING: ...
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...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...
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...1. Delima Enterprise had practiced a poor management system and not well organized. There were abuses of power breach of directors’ fiduciary duties in the business itself. The definition of fiduciary duty is a legal obligation of one party to act in the best interest of another. The obligated party is typically a fiduciary that is someone entrusted with the care of money and property.. In this case, there are abuses of power by management and breach of fiduciary on the part of directors. A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. One of the two fiduciary duties categories are the duty to exercise power in good faith and interest of the company. These duties vary with different types of relationships between fiduciaries and their counter-parties. Encik Zayed was planned to terminate the auditor’s appointment and appoint a new ’friendly party’ auditor. Secondly, the duty of care states that duty to pay attention and to try to make good decisions. The duty of director to act for the proper purpose and should not misuse their power. The exercise of director power for an improper purpose is a breach of duty. In this case, the directors’ abuses of power happened when Encik Zayed and Puan Hashimah charged personal vehicle expenses totaling RM50,150 to company during the year 2005. In addition to that, several withdraws...
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...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 responsibility of are Encik Zayed and Puan Hashimah are determine company’s mission and vision and ensure effective organization planning and govern organization by policies and objectives. Company manager and executive ensure the company’s objective and goals are meet, employee are complete their jobs correctly with on time and directly involved in significant day to day operation that affect the business. Lower level employee need to perform the task state in job description and decision made by managers. Question...
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...Human Resource & Administration Manager (Encik Salam) Job specification: 1) Human Resource Manager 2) Administration Manager Issues 1: Manual employee timesheet/attendance – “the employees prepared their timesheets when they arrived at work and recorded the time they leave the office manually.” Effects: * The employee may intentional to make a fraud by prepare their timesheets wrongly. * The employee may claims payments more than they should be paid. * The HR Department cannot observe the effectiveness and efficiency of the employees. Recommendation: * The HR Department should provide or change from manually attendance to punch card system. This will decrease and avoid from employees being fraud and claims payments more than they should be paid. For instance, punch card system is automatically be punch and printed. The HR Department also can observe the employee attendance easily and accurately. * The HR Department may segregate the duties. Among of the employee there is a supervisor or head of employee for the month. The supervisor or the head of employee will observe the others employee and if there is any problem they will inform En. Salam the HR and Administration manager. Responsibility: * Issues 2: Approval and payment of salaries – “at the end of every week, the employee timesheets were sent to Pn. Hashimah for approval and payment salaries.” Effects: * The HR Department will hands-off their own roles and duties...
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...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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...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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...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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