A delima case

*A DELIMA CASE

MAF 680

In May 2006, the company had secured a contract worth RM750,000 to be implemented over a duration of 6 months. Due to the shortage of funds, the company had submitted applications to MBB and CIMB for banking facilities totaling RM 1 million.

*MALAYAN BANKING &CIMB BANK BERHAD

*OFFICE

*JULY 2006

*3 WEEKS LATER

*QUESTIONS Were they any

abuses of power by the management and breach of fiduciary on the part of director?

Who should be held

responsible and

accountable?

Could the Audit be

completed soon without

any qualification?

What should be done to improve the leadership

and management of

Delima Enterprise Sdn

Bhd?

Section 132 of the Act provides that a director of a company shall at all times exercise his powers for a proper purpose and in good faith in the best interest of the company.

(a)Duty to exercise power in good faith and in the interest of the company.

(b)Duty to act for the proper purpose (c)Duty to act with reasonable care, skill and

diligence.

* QUESTION 1

Negotiate with the Auditor to not qualify the Financial Statements

Appoint a new “friendly-party” to unqualified financial statement.

* DUTY TO EXERCISE POWER IN GOOD FAITH AND IN THE INTEREST OF THE COMPANY

Personal vehicle expenses were charged to the company.

Several withdrawal from the company were made without proper documentation.

Cash advance by the director.

*DUTY TO ACT FOR PROPER PURPOSE

Appoint family member.Not willing to commit and invest on

training to enhance employees.Incomplete information and record No standard operating procedure was

not in placed.

* DUTY TO ACT WITH REASONABLE CARE, SKILL AND DILIGENCE

*Director*Gain more knowledge *Hire more experienced and

knowledgeable employees*Reorganized business plan

i.e. prepare Standard of Operating Procedure (SOP)

*QUESTION 2

*Account Department*Have knowledge on accounting standard*Responsible to handle account of company*Update with the new current standard*Make proper filing of all documentation

*Human Resource and Administrative Manager*Prepare wages in monthly basis*Preparation of budget*Prepare time sheet

*Operational Manager*Responsible to implement Standard of Operating Procedure (SOP)*Updating the software*Authorization should be made by Board of Director

*QUESTION 3• Most matters have been

dealt with adequately, except for few issues.

• Arise when there is a limitation of scope in auditors work.

Qualified Audit

Report

• Clean report• All the matters have

been fully satisfy by the auditor

Unqualified Audit Report

*Yes,it can be completed soon without any qualificationRecommended that:a) All matters being arose during the audit fieldwork

need to clarify by all the department.b) All the department need to give full cooperation

during the fieldwork.c) If all the document being kept in pre-numbered and

proper filling.

*Question 4

•Advertising should include requirement for an experience and educated person

Appoint new staff

•A weekly training for existing worker will help them to gain knowledge

Provide training

•Encik Zayed cannot be a director as well as Chief Executive Officer(CEO)

Appoint new director