report ics case
2413003937000
INTEGRATED CASE STUDY
MAD4013
SEMESTER I (2014/2015)
INDIVIDUAL ASSIGNMENT:
REPORT OF CASE FLAT CARGO BERHAD: AN AUDITOR’S CONUNDRUM
Submitted To:
PROF. DATO’ DR. MUHAMAD MUDA
(28 OCTOBER 2014)
206819523749000
NOR NURUL IZZA BINTI AINUDDIN
1110927
TMB5
INTRODUCTION
Kencana & Associates served as Flat Kargo Berhad’s auditor, which is one of the largest air freight companies in Malaysia, servicing several government linked companies. In 2006, the auditors identified several suspicious findings that resulted in a delay in finalising the auditor’s report. It is involving the possibility of fraud in a financial audit engagement. On February 5 of 2006, Kencana & Associates had just been informed by his subordinates that there had been inconsistencies in the accounts of Flat Cargo Berhad (FCB), and they cannot deal with another client scandal. The team has to report to the audit committee of FCB in two weeks. Thus in order to do so, Mr Chuah has to work through the company’s information to assess the possibility of fraud to help him explain the situation to Mr.Keong which is the managing partner of Kencana & Associate.
ISSUES
This case is about some issues in auditing, especially when there was time which has been revealed in the audit working papers for 2006,that the auditors were unable to verify the aircrafts claimed to have been purchased by FCB in 2005 and the findings of obsolete aircraft worth 231 million. In this concern, it shows that there is no proper authorization done by this company. The authorization is one of the step addresses whether FCB’s management and staff follow proper internal control procedures when approving the purchase or disposal of aircraft. In this situation, FCB did not follow the proper internal control as there is an ability to do asset verification.
2002 (RM ‘000) 2003 (RM ‘000) 2004 (RM ‘000) 2005 (RM ‘000)
Land & buildings, plant & equipment
445,519 475,443 595,072 1,565,807
INTEGRATED CASE STUDY
MAD4013
SEMESTER I (2014/2015)
INDIVIDUAL ASSIGNMENT:
REPORT OF CASE FLAT CARGO BERHAD: AN AUDITOR’S CONUNDRUM
Submitted To:
PROF. DATO’ DR. MUHAMAD MUDA
(28 OCTOBER 2014)
206819523749000
NOR NURUL IZZA BINTI AINUDDIN
1110927
TMB5
INTRODUCTION
Kencana & Associates served as Flat Kargo Berhad’s auditor, which is one of the largest air freight companies in Malaysia, servicing several government linked companies. In 2006, the auditors identified several suspicious findings that resulted in a delay in finalising the auditor’s report. It is involving the possibility of fraud in a financial audit engagement. On February 5 of 2006, Kencana & Associates had just been informed by his subordinates that there had been inconsistencies in the accounts of Flat Cargo Berhad (FCB), and they cannot deal with another client scandal. The team has to report to the audit committee of FCB in two weeks. Thus in order to do so, Mr Chuah has to work through the company’s information to assess the possibility of fraud to help him explain the situation to Mr.Keong which is the managing partner of Kencana & Associate.
ISSUES
This case is about some issues in auditing, especially when there was time which has been revealed in the audit working papers for 2006,that the auditors were unable to verify the aircrafts claimed to have been purchased by FCB in 2005 and the findings of obsolete aircraft worth 231 million. In this concern, it shows that there is no proper authorization done by this company. The authorization is one of the step addresses whether FCB’s management and staff follow proper internal control procedures when approving the purchase or disposal of aircraft. In this situation, FCB did not follow the proper internal control as there is an ability to do asset verification.
2002 (RM ‘000) 2003 (RM ‘000) 2004 (RM ‘000) 2005 (RM ‘000)
Land & buildings, plant & equipment
445,519 475,443 595,072 1,565,807