Summary of Flat Cargo Bhd
FLAT CARGO BERHAD: AN AUDITOR’S CONUNDRUM
The case portrayed Flat Cargo Berhad (FCB), a public listed company which known as one of the largest air freight companies in Malaysia. FCB was registered as an investment holding company with several subsidiaries where the subsidiaries primarily provides air freight services and aircraft ground handling services. As the only Intra-Asian overnight express cargo operator based in Malaysia, FCB provides air freight transportation involving aircraft charter and leasing. Due to landing rights in Asia Pacific region, FCB has the opportunity to provide express air services to international integrators, freight forwarders and major airlines within the Asian region. Thus, secure its major landing rights throughout countries in Asia.
Moreover, FCB also has well-established customers and offers air freight forwarding services to its major shareholder, Cargo Malaysia Berhad and Bangor Berhad. Meanwhile, FCB was engaged with expansion plan to handle large shipments by expending freighter fleet size in order to cater customers demand. In 2005, FCB’s turnover is expected to be higher than year 2004 due to its expansion plan. However, FCB has higher gearing ratio and weak debt servicing ability. Besides, FCB has governance structure which adhered to the Malaysian Code of Corporate Governance in configuring its Board of Directors.
Based on the case, Mr. Chuah Mun Soong is identified as a protagonist where he is one of FCB’s audit team from Kencana & Associates. The main problem here is the dilemma of Mr. Chuah Mun Soong where he thinks that there is a possibility of fraud in FCB. This is because they have identified the suspicious findings during the routine financial audit. As an auditor, he needs to be skepticism and he tried to access the fraud by doing some research on the company. He decided to consult legal department for the advice. He is unwilling to risk his firm reputation by having client that has scandal. However he hopes
The case portrayed Flat Cargo Berhad (FCB), a public listed company which known as one of the largest air freight companies in Malaysia. FCB was registered as an investment holding company with several subsidiaries where the subsidiaries primarily provides air freight services and aircraft ground handling services. As the only Intra-Asian overnight express cargo operator based in Malaysia, FCB provides air freight transportation involving aircraft charter and leasing. Due to landing rights in Asia Pacific region, FCB has the opportunity to provide express air services to international integrators, freight forwarders and major airlines within the Asian region. Thus, secure its major landing rights throughout countries in Asia.
Moreover, FCB also has well-established customers and offers air freight forwarding services to its major shareholder, Cargo Malaysia Berhad and Bangor Berhad. Meanwhile, FCB was engaged with expansion plan to handle large shipments by expending freighter fleet size in order to cater customers demand. In 2005, FCB’s turnover is expected to be higher than year 2004 due to its expansion plan. However, FCB has higher gearing ratio and weak debt servicing ability. Besides, FCB has governance structure which adhered to the Malaysian Code of Corporate Governance in configuring its Board of Directors.
Based on the case, Mr. Chuah Mun Soong is identified as a protagonist where he is one of FCB’s audit team from Kencana & Associates. The main problem here is the dilemma of Mr. Chuah Mun Soong where he thinks that there is a possibility of fraud in FCB. This is because they have identified the suspicious findings during the routine financial audit. As an auditor, he needs to be skepticism and he tried to access the fraud by doing some research on the company. He decided to consult legal department for the advice. He is unwilling to risk his firm reputation by having client that has scandal. However he hopes