Delima Enterprise Sdn Bhd was founded in 1981 and owned by En Zayed. It conducted trading, supplying and provision of engineering services to the oil and gas industries. The principal shareholders and controlling directors were En Zayed himself and his wife, Pn Hashimah. Their family members were En Salam as Human Resource and Administration Manager, and Pn Balqis as Operation Manager. All of them (En Zayed, Pn Hashimah, En Salam, Pn Balqis) are only secondary school background. The company maintained a lean organization and employed their family members as employees. The company had employed Cik Amy, a young Accounting graduate with no working experience, as their Finance Executive and she will be responsible to maintain and prepare the accounting and financial matters and documentations. CASE SUMMARY
Recently, Delima Ent. Had secured a contract worth a large amount and due to shortage of funds, the company intend to ask for banking facilities from Malayan Banking Berhad and CIMB. The bank required Audited Financial Statements of the company for the last 2 years, but unfortunately the company had never performed the statutory audit since the directors were not familiar with the Accounting Standards and also the provisions of Companies Act 1965. So, En Zayed appoint Aziz & Co. to perform the audit for the company but later he planned to terminate the appointment because the auditor want to qualify the financial statements of the company and not as what En Zayed want which is unqualify the financial statements. Then, En Zayed planned to appoint a new “friendly-party” auditor that can help him and ask Cik Amy to prepare the documentation for the auditor. QUESTIONS AND ANSWERS
Were there any abuses of power by the management and breach of fiduciary on the part of the directors? Yes, there are abuses of power by the management and breach of fiduciary on the part of the directors. As you can notice, all issue arises...
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