ACCOUNTING FLIGHTS OF FUNDS
CASE 3: FLIGHT OF FUNDS
A. Problems
Mr. Idris bin Junid appointed as the new Chief Executive Officer of Travel Investment Holdings Bhd. (TIH) on 1 April 2010. TIH suffered major losses due to the global economic downturn in 2009. As the CEO, Idris had to identify the cause of the major losses, he had to focus on the bottom line and cash flow of the organization. Idris has noticed that there had been an investment made by a subsidiary Malaysia Travels Sdn. Bhd. (MTSB) in 2006 which had shown no movement since. In addition, the senior management team could not provide the necessary information pertaining of the investment made by MTSB.
[MTSB is the subsidiary company of Travel Investment Holding Sdn. Bhd. (TIH)]
B. Issues
1. Norehan, ex-Human Personal of Malaysian Turkistan Travels Sdn. Bhd. (MTT) found out the following;
i. that the setup of subsidiary company under fraudulent circumstances
ii. staff morale had been low
iii. company being short of funds
iv. the staff not being paid their salaries
2. Investigation by CFO, Ms. Goh had realized as per following;
i. MTT only has provided annual audited financial report and there had been no other information revealed; and
ii. No position or portfolio that catered to the monitoring of MTT or any of MTSB’s other subsidiaries.
3. Agoos Bagoos, a consultant from a Big Four accounting firm findings as per following;
i. No relevant documents on MTT’s investment since the beginning
ii. Suppose on 1 May 2006, MTSB paid RM8 per share for 100,000 units, represent 40% shareholding in MTT (equivalent to RM800,000)
iii. Further check led to paid up capital for MTT increasing from RM2 to RM250,000 on 1 July 2006 (difference of RM550,000)
iv. No audited accounts (financial report) had been issued to the shareholders
v. No filing made with the Companies Commission of Malaysia
4. Issues from Idris bin Junid;
i. Where money went, who is responsible and anything left that can salvage; and
ii. He has to report to
A. Problems
Mr. Idris bin Junid appointed as the new Chief Executive Officer of Travel Investment Holdings Bhd. (TIH) on 1 April 2010. TIH suffered major losses due to the global economic downturn in 2009. As the CEO, Idris had to identify the cause of the major losses, he had to focus on the bottom line and cash flow of the organization. Idris has noticed that there had been an investment made by a subsidiary Malaysia Travels Sdn. Bhd. (MTSB) in 2006 which had shown no movement since. In addition, the senior management team could not provide the necessary information pertaining of the investment made by MTSB.
[MTSB is the subsidiary company of Travel Investment Holding Sdn. Bhd. (TIH)]
B. Issues
1. Norehan, ex-Human Personal of Malaysian Turkistan Travels Sdn. Bhd. (MTT) found out the following;
i. that the setup of subsidiary company under fraudulent circumstances
ii. staff morale had been low
iii. company being short of funds
iv. the staff not being paid their salaries
2. Investigation by CFO, Ms. Goh had realized as per following;
i. MTT only has provided annual audited financial report and there had been no other information revealed; and
ii. No position or portfolio that catered to the monitoring of MTT or any of MTSB’s other subsidiaries.
3. Agoos Bagoos, a consultant from a Big Four accounting firm findings as per following;
i. No relevant documents on MTT’s investment since the beginning
ii. Suppose on 1 May 2006, MTSB paid RM8 per share for 100,000 units, represent 40% shareholding in MTT (equivalent to RM800,000)
iii. Further check led to paid up capital for MTT increasing from RM2 to RM250,000 on 1 July 2006 (difference of RM550,000)
iv. No audited accounts (financial report) had been issued to the shareholders
v. No filing made with the Companies Commission of Malaysia
4. Issues from Idris bin Junid;
i. Where money went, who is responsible and anything left that can salvage; and
ii. He has to report to