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Flat Car

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Submitted By clognea
Words 1829
Pages 8
1.0 Introduction
Flat Cargo Berhad (FCB) was a listed company, focusing on air freight and aircraft ground handling services. It was established by Lim Loon Sim and Ali Bin Ahmad and successfully became one of the largest air cargo carriers in Malaysia, servicing not only the public but also the government linked companies.

FCB started its operation in year 1997 and being listed in Bursa Malaysia on 15 September 2001. It consists of five subsidiaries which are FC Spare Sdn Bhd, Cargo Management Sdn Bhd, FCB (SPV) Ltd, Cargo Air Services Sdn Bhd and Fc Air Ltd. Consequently, FCB fueled its expansion plans from year 2001 to 2004 by increasing the demand for express transportation services with intensive e-business activities.

However, its auditor, Kencana & Associates found several suspicious findings that presented possibility of fraud in year 2006.

2.0 Point 1 3.1 The problem
Firstly, the auditors were unable to verify the aircrafts claimed that have been purchased by FCB in 2005. Moreover, the audit team found a non-functional rundown aircraft barely worth RM231 million in a hangar.

3.2 The root causes of problem
This may be due to FCB did not keep or maintain a proper accounting record and financial transactions. Such action may be just a mere mistake done by FCB.
However, if this is intended, FCB posed the possibility of trying to over-state its asset value.

The reason for this act is FCB intended to show a healthier financial statement to gain the public confidence toward its company.

3.3 The possible solutions
If the problem is a simple mistake done by FCB due to improper accounting record, this can be solved by ensuring the proper accounting is done from time to time.

The accountants and auditors should have checked the company financial statement on time. To ensure the assets values, auditor should ensure

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