DELIMA ENTERPRISE SDN. BHD.
1. Encik Zayed- Principal shareholders- Managing Director
2. Puan Hashimah- Principal shareholders-Chief Operating Officer
3. Puan Balqis- Operations Manager
4. Encik Salam- Human Resource and Administration Manager
5. Cik Amy- Finance Executive (from May 2006)-no working experience
6. External Auditor- Auditor Aziz & Co- to perform statuary audit (2003-2006)
2.0OVERVIEW OF THE PROBLEMS:
❖ May 2006-they secured contract worth RM 750,000 to be implemented over 6 months. Due to shortage of funds, they applied loan from banks. The banks required Audited financial statement for the last 2 years, but they do not have any.
❖ July 2006-1st audit experience
❖ Auditors want to qualify audit because due to several unresolved issues.
❖ He wants to terminate the auditors’ appointment and hire a ‘new friendly party’ auditor.
❖ They are not familiar with FRS n companies act
❖ Employed family members who are not qualified
3.0BACKGROUND OF THE COMPANY
❖ Founded in 1981.
• Conducted trading and supplying related products and man powers to the oil and gas industries.
• Provision of engineering services.
❖ Mission: to become a leading service contractor and provide quality products and excellent services.
❖ Revenue: 2004-RM 1 million, 2005-RM 1.7 million
4.0ACCOUNTING SYSTEMS, INFORMATION AND RECORDS
❖ Types of accounts:
• HR-pay workers in cash on a weekly basis
• Accounts payable (AP)
• Accounts Receivables (AR)
➢ Collection via cheques and cash
• Cash Book (CB)
• General Ledger(GL)
• Purchase Order (PO)-manually prepared and not re-numbered
• Trade Creditors (TC)
• Trade Debtors (TR)
5.0AUDIT FINDINGS AND RECOMMENDATIONS
❖ The Auditor had difficulties to complete the audit because:
• Incomplete information and records
• SOP is not in place
• Records are not organized and field accordingly:
➢ Several assets purchased by the company were not recorded
➢ Several overpayment made to Trade Creditors
➢ Several collection from Trade Debtors were long outstanding
➢ Several personal withdrawals and expenses were charged to the company
➢ Several unrecorded cash withdrawals and Cash/banks balances were not reconciled
❖ The Auditors noted several findings:
|No. |Findings |Recommendations |Cik Amy’s analysis | |1. |No SOP & all decisions made by En Zayed or Pn |Prepare SOP and implemented | | | |Hashimah | | | |2. |No reconciliation was performed for AP, AR, |The amount be provided in the P&L Accounts |AP: | | |Cash Book and Balances. | |RM 150 00 (2004) was actually Cash | | |2004-RM 150 000 , | |Advance | | |2005-RM 250 000 | |AR: | | | | |Balance was not a continuous list and | | | |...