Report Delima for Ics Subject

Topics: Audit, Financial audit, External auditor Pages: 8 (2774 words) Published: March 14, 2011
Case Summary
This case is about Delima Enterprise which wants to make banking facilities from Malayan Banking Berhad and CIMB Bank Berhad. The banks required company’s Audited Financial Statements for the last two years. From the requirement, Encik Zayed and Puan Hashimah realised that the company did not performed any statutory audit before. So, they engaged with the external Auditor Aziz & Co. (Chartered Accountant). The auditor need to performed statutory audit for the period 2003 to 2006. To resolve several issues, the auditors need to qualify the Financial Statements. But, Encik Zayed and Puan Hashimah tried to negotiate with the auditor to not qualify the Financial Statements. The auditor was not agreeing with the Encik Zayed negotiation and he planned to terminate the auditor appointment. Encik Zayed also want to appoint new “friendly party” auditor to make the audit. The company also have appointed Cik Amy to analyse and provide the auditors with necessary clarification and documentation. Cik Amy was a young accounting graduate from local university. She has no working experience to do the job. Besides they do not familiar with audit, they also did not familiar with Accounting Standards and the provisions of the Companies Act 1965, including their roles as Company Directors. This company also a family based company. The organization of the company was owned by Encik Zayed family. The company also consist from the non experiences staff of their job. From this case, we know the company (Delima Enterprise) do not show their independent for the audit process. The information also not completes and do not have filing system. So, the company show their weaknesses for the audit process.

Delima Enterprise was founded in 1981 by Encik Zayed. The business conducted trading and supplying related products including manpower supplies to the oil and gas trading. In 2004, the enterprise was incorporated as Delima Enterprise SdnBhd which is exempt private company. Encik Zayed and his wife, Puan Hashimah are principal shareholders and controlling directors. The company’s corporate mission was to become a leading service contractor and provide quality products and excellent service. Before Finance Executive’s appointment, Puan Hashimah responsible for all finance related matters. The company had not performed the statutory audit. In July 2006, Encik Zayed engaged the external Auditor Aziz & Co (Chartered Accountant) in order to fulfill banks requirement due to resolve shortage funds.


Duties of Director According Companies Act 1965
An entity in corporate under the Companies Act 1965 imposes specific obligations on the directors with respect to the preparation and presentation of the company’s financial statement. Section 169 of the Act requires the directors to present the financial statements of the company at every annual general meeting (AGM) of the company.Encik Zayed as director need to follow requirement of the Companies Act 1965 once enterprise was incorporated as company. He should ensure that all financial statement is complete. In order to ensure the financial statement completed, Encik Zayed should appoint experience Finance Executive. He also need to authorized and examine all work that have done by Finance Executive. Cik Amy, the Finance Executive who was newly appointed by the company is fresh graduate and no more working experience. So there are possible that Financial Statement wrongly present and prepare. The directors also have a duty to monitor management's performance and ensure that management work within their delegated power. Encik Zayed fails to monitor his management work because company had maintained a very lean organization and had employed their own family members as employees and some did not have the necessary job experience. Requirement to Perform Statutory Audit

Section 172 of the Companies Act 1965 requires a company to appoint a company...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • report a delima Essay
  • A Delima Essay
  • A Delima Essay
  • report ics case Essay
  • DElima Essay
  • Report Essay
  • Delima Essay

Become a StudyMode Member

Sign Up - It's Free