Financial Account receivables not being maintained properly Low in Operating Cash Flow Theft on the cash collection (En Munir) 1.
BOD didn’t take any legal actions towards En. Selamat.
There is a conflict of interest-Between En. Selamat and the Director of Gold Cold S/B which is En. Azman. There were best friends and Gold Cold S/B is one of the major customer.
Internal Control En. Selamat still continued to supply the chicken to Cold Gold S/B even though the customer credit limit has exceeded. The marketing department didn’t follow the procedure on credit sales term (to ensure the customer didn’t exceed the credit limit) Collection of payment from the customer (each payment must be documented) 3.
The employees The debtors & creditors Customer & the public Government
The BOD didn’t held any meeting to discuss about En Selamat actions. En. Selamat didn’t take any appropriate actions regarding the issues of low operating cashflow. (eg : expand and make variety of product from chicken based) Ms. Choy didn’t able to collect the unsettle amount due from the debtors. EPM S/B didn’t have a good communications link between each department.
Create variation of the product based on chicken. Chicken Nugget-from the chicken meat Fertilizer- came from the chicken poop Handcraft-from the chicken feathers Egg- lay by the chicken Sell chicks-sell to the potential buyer 1.
Effect on Financial • Gain new customers and directly will increase the sales and profit.
Provide or organized training to the new farmers or entrepreneurs that is interested to operates the business in chicken industry.
Effect on Financial • The training’s participant will pay fee to EPM Sdn Bhd and the training fee become one of the source of income for EPM Sdn Bhd
3. Become a hub/intermediate party to sell others farmer chicken (eg : FAMA)
EPM Sdn Bhd
Effect on Financial • EPM Sdn Bhd will buy chicken from local farmer with low and cheaper price. Then, EPM Sdn Bhd will sell the chicken with mark up price.
4. Applying loan from government institutions or others financial institutions.
Effect on Financial • EPM Sdn Bhd will have more fund to running their business of expanding their operation.
The a/c receivables should be control & supervise. Create the variety of chicken based product(chicken nugget) in order to increase cash flow. En. Munir didn’t record the received payment. He probably took the money for his own use. It should be supervise. The BOD should take the action towards En. Selamat
En Selamat can’t be the person in charge to deal with Cold Gold S/B. Decrease the amount of chicken supply to Cold Gold S/B. Marketing department should follow the procedure on credit sales terms. Make a proper documentation for the collection or payment received by customers. Outsource Internal Audit.
Step 1. Obtain the aged listing of trade receivables at balance sheet date.
•Agree last year’s figures to the previous year’s audit file and financial statements •Reconcile the total of the trade receivables list to the receivables control account and trial balance. Examine control account for the year and verify large and unusual items.
•Agree the figures carried forward to the financial statements.
Step 2. Review the aged listing and determine which trade receivables are to be the sample.
•The samples selected for circularization, stamp or affix an audit confirmation notice to statements, agree statement details to the aged listing, record sample details to the aged listing, record sample details and supervise mailing of the statements. •Mail the confirmation requests. Monitor responses and following up on any queries or disputes.
•Mail follow-up requests for unanswered confirmations.
•Complete the confirmation summary...
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