Chicken Run Case Study: En Selamat

Key assumptions

1. En Munir had conducted cash skimming in the company which leaded to his resignation.

2. En Selamat has personal benefit from the deal with Cold Gold Sdn Bhd. Therefore although CG did not pay within the credit term, En Selamat did not stop the marketing department to continue supply products to the company.

3. There is possibility that the irregularities in the account balances is due to illegal transferring of a particular debtor’s balances to another debtor.

1. Financial

• Cash flow not liquid.

• Financial ratio analysis.

• Apply for short term borrowings from bank and financial assistance → Skim Pembiayaan Perniagaan MARA, TEKUN.

• To increase sales (new market, fully utilized=sell chicken poop and bulu ayam) → not only sell the meats. 1. Meats 2. Eggs 3. Fertilizer (poop) 4. Livestock (sell the chicks/breeds to other farmer) 5. Feathers

• Improve marketing → use En Selamat’s skill in marketing.

• Send reminder to debtor.

• Give good credit term.

• Cut cost → feed and labour expenses (hire relative).

2. Leadership

• Autocratic → laissez faire.

• Recommendation: democratic.

3. Conflict of Interest

• En Selamat and En Azman (“personally benefit from the deal”).

• En Selamat and BOD.

Recommendations:

• Establish a clear set of policies and procedures within the company.

• Develop a whistle blowing policy.

• Ensure the independency of the management team.

• Conduct internal audit or investigation activities.

• Ms Choy: To persuade BOD that the issues in the company can lead to a deterioration of the company’s performance, esp. financially.

4. Internal control

• EncikSelamat

→ had responded to unrelated tasks to him.

→ approved the credit limit of CG without Ms. Choy’s authorization.

→ access to Ms. Choy information system.