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Alhamdulillah, first of all I would like to thank ALLAH as finally I am able to finish my
written report that have been given by Integrated Case Studys lecturer Dr Maheran to me.
This task had been done with all afford by the group members to finished the role play. Even
though we had faces a little bit problems to finish up this task, all the problems can be settle
down and we are able to adapt properly and wisely. Dr Maheran because of her guidance
and support, my group members and me can finished up the role play and this written report.
She had guides us to understand this task clearly and provide the format to settle down this
written report.
Finally, thank to my beloved group members that always stick together and work hard
to produce a good written report with all afford and responsibility. Hope that all afford will give
a lot of benefits to all of us. Millions thank also I wish to my classmate because they also
help in doing this task. They always give the ideas and comments on my group role play so
that we can improve our group in many ways.

Delima Enterprise was a company that conducted trading and supplying related
products to including manpower supplies to the oil and gas industries. It was set up by Encik
Zayed in 1981. The company then changed to Delima Enterprise Sdn Bhd in 2004. The
company was controlled by the family members. The shareholders of the company were
husband and wife, Encik Zayed and Puan Hashimah. They had no audit experience before
this. The problem was arised on September 2006 when Encik Zayed had applied for banking
facilities to implement several contracts the company had managed to secure. On that time,
Encik Zayed faced the difficulties to apply the banking facilities because they realized that
their company financial was not audited for several years and the bank requires the audited
financial statement to be issued before September 2006. Unfortunately, The Auditors Aziz &
Co expressed their intention to qualify the financial statement due to several unresolved
issues. Encik Zayed and Puan Hashimah tried to negotiate with the auditor to not qualify the
financial statement. Unluckily, they failed to do so and planned to terminate the auditor and
appointed a new auditor. In this case, both of them had not familiar with the accounting
standards and the provisions of companies act 1965. The company had maintained a very
lean organization and had employed their own family members as employees and some of
them did not have the necessary job experiences. En Zayed also had appointed new
employee, Cik Amy to analyse and provide required clarifications and documentations to
auditor. She is fresh graduate and had no experience in that field because she just finished
her studies before she was assigned to work in that company.

The director is the most important person in the company. Being the most important
person in the companys hierarchy, the duties and responsibilities of a director cannot be
taken lightly. There is many type of fiduciary duties that the directors must be responsible.
Examples of them are the duty to act for reasonable skill, care and diligence and act in good
faith and honesty on behalf of the company.
In this situation, the breach of the fiduciary duties can be seen on Encik Zayed as the
director of Delima Enterprise Sdn Bhd. The company does not perform the statutory audit for
the period 2003 to 2006. On July, 2006 is the first audit experience for Encik Zayed and
Puan Hashimah as the directors of the company. Next is Encik Zayed and Puan Hashimah
tried to negotiate with the auditor to not qualify the Financial Statements when the auditor
expressed their intention to qualify the Financial Statements due to the several unresolved
issues. This is because, on that time the Financial Statements is needed for Encik Zayed to
applied for banking facilities.
It clearly appears that the director does not understand about the Companies Act
1965.There is the breach of fiduciary duties by Encik Zayed. The directors required to be act
for reasonable skill, care and diligence. A director is responsible for the day-to-day activities
of the company and the management of companys business. As the proof, he does not care
about the financial statement of the company that had not been made for several years. He
must monitor all the activities related to the company from time to time. He also does not act
in good faith as the director on behalf of the company. He tries to commit the fraud. As an
example, he and his wife try to negotiate with the Auditor to not qualify the Financial
Statements, failing which Encik Zayed planned to terminate the Auditor and appoint new
friendly auditor. He should exercise his duty of good faith and honesty. According to Section
132(1) requires that the director of the company shall at all times exercise his power in good
faith for the best interest of the company. As the recommended solution, the directors must
get the information about the duties and responsibilities of the director by joining the
programme how to manage the company. The directors must enhance the knowledge about
the corporate governance.

Every company should assign the employees that competent in handling such a
company. All the person in the company should have the knowledge and competence in the
field of business to ensure they can manage the company in the right path. The employees
also must be trained to ensure the task can be performed smoothly.
In this situation, Zayed and Puan Hashimah does not had experienced in the audit.
They also were not familiar with the Accounting Standards and the provisions of the
Companies Act 1965, including their roles and duties as Company Directors. They also had
assigned their own family members to hold the big position and be the employees in that
company. Some of the family members did not have the knowledge and the necessary job
experiences. On the other hand, Encik Zayed also inducted such a new employee, Cik Amy
that had no experience and not competent to handle the accounting and financial matters of
the company. She is only fresh graduate from a local university with no relevant working
As the organization, there is a must to have the people that had the knowledge and
experience accordance with the standard in Companies Act 1965 in handling the company.
For this case, Encik Zayed as the director of the company should not appointed the person
that had no necessary experiences and not competent related to the business. This may
arise many problems in the future regarding the controlling of the company and produce
poor decision making. He must not easily assign the friendly party or his family members to
be the employees that unskilled to work in a company. He needs to appoint the employees
that have the qualification and skills. Before inducted the employees, the interview session is
necessary to choose the best one. Encik Zayed also should not easily appoint the fresh
graduate to be responsible in the accounting and financial matters. This is because the new
employee and inexperienced does not familiar with the task and cannot handle it properly.
She should be work under the senior accountant to supervise her work from time to time
since she is only the new inexperienced employee. For improving the knowledge among
employees, the directors should send the employees to have further training to enhanced
the understanding towards their position and responsibilities, also improve the skills and
performance of the employees.

All documents in the company should prepare properly. The data or record must be
documented and it is in pre numbered. It is important to ensure the documents are managed
and assembled accordingly.
There are manually produced on Sales invoices and purchase order. Unfortunately,
the manual sales invoices that had made to the customer were not pre-numbered. It states
that one copy of the sales invoices was attached to the delivery order and the copy was
remained as the records of the sale order. It same goes to the purchase order. It was not
documented properly and not in pre-numbered. The original PO was issued to the supplier
and a copy was retained for record.
Besides, the collections from customers were received via cheques and cash and not
all payments from customers were received in full. Another weakness is the monthly
Statement of Accountant was not sent to the customer on a monthly basis and it was done
after the payment had been made in long outstanding. This company also no prepare the
monthly reconciliation.
All the important records such as the sale invoices and purchase orders must be
properly prepared. When the information and records are produced using the system, it can
help to manage it in shorten time. If the records are prepared manually, it will take a longer
time to finish it. Furthermore, when the documents are prepared using the system and pre
numbered, it can ease everything in the future regarding the records. The employees can
easily find the right records when it is necessary. The company should use the latest edition
standard of software such as the MYOB, UBS or SAP. To make the documents easily
managed, it must be periodically prepared. The accountant must update the control
accounts from time to time to ensure the monthly statement of account was sent to the
customer. Other recommended solutions for these problems are Delima Enterprise Sdn.
Bhd. needs to appoint new finance manager to authorize and to supervise finance
department. Duties of staff need to be separated according to work position to enable a fluid
information flow and a more organized management operation. Here, the segregation of
duties is important to assigned different personnel for different duties.

There is important to had controlled power in the company. The purpose is to ensure
all the activities occur in that company are going smoothly and managed to recovered when
there is the constraints or difficulties.
In this case, it appear that the employees are preparing their own timesheets. They
record on their own when they are arrived at work and recorded the time when they leave
the office. The time arrived and leave were recorded manually. Then, Puan Hashimah will
approved the timesheets and paid the salaries to the employees referred to what had been
recorded in the timesheets.
The problem is the employees record their in and out time from the company
themselves. This provides a greater opportunity to commit fraud in the company among the
employees. They can manipulate the timesheet for their own benefit and interest. As solution
for this problem, the company should exercise the use of punch card or thumbprint to ensure
the a proper and valid confirmation of employees attendance. Another tool that can be used
to record the time in and out of the employees is using eyes recognition or time clock
machine. Apart from that, the company should hire another employee as in supervisor to
monitor the attendance of the staff.

Standard Operating Procedure is used in different variety contexts such as
healthcare, military, accounts, engineering, aviation, industry and also education. It is such
procedures are set of step by step instructions to achieve a predictable, standardized and
desired result often within the context of a longer overall process. SOP must be set up in one
of the company to make sure all the activities and records in the organization are organized
and filed accordingly.
Referred to this case, it appeared that there is no standard operating procedure that
had been set up in the company. Due to this matter, the auditors faced difficulties in order to
complete the information and records. The records about all the activities that involved in the
company were not managed and documented properly for easy reference. As an example,
several assets that had been purchased by the company were not recorded and there were
several over-payments made to Trade Creditors. Another proven that we can see in this
case, there is withdrawing of companys money made without proper documentation. The
Auditor is having a difficult time to monitor the transactions and asset movement since there
is no proper documentation, procedure and records due to absence of SOP. The companys
money withdrawal is also done without proper documentation and records.
If the company does not take the decision to place in the standard operating
procedure in order to managed the company, they will faced the problems and obstacles in
the future due to incomplete records. As a solution for these problems, Delima Enterprise
Sdn. Bhd should implement standard operating procedure to increase efficiency and
consistence in performing task and also to indicate the compliance in the entity requirement.
Every organization requires standard operating procedure to ensure an organize operation
and proper control in the operation and management. It will also help in being more efficient
in performing task. There is suggestion of standard operating procedure in terms of assets.
The company must assign the employee to be responsible in custody and recording of
assets. Any storage of assets must be kept by the person chosen and frequently review the
conditions of assets. The person who records and custody must be separated and he is to
ensure that the records on amount, types of assets, value of the assets and anything
regarding the assets must be properly kept and filed with proper coding.

As a conclusion, there are several issues that need to be addressed in Delima
Enterprise Sdn. Bhd. The main issue is abusing of power by Encik Zayed and Puan
Hashimah, the directors in the company. The abuses of the power can be clearly seen
through the character of the Encik Zayed and Puan Hashimah as the directors of the
company. They were simply employed their own family members to be the employee of the
company without considering the qualification needed to carry out the duties. It was worsely,
some of them did not have the necessary job experiences. Besides that, Encik Zayed and
Puan Hashimah do not understand about the terms of separate legal entity. Means, the
company has its own legal personality that apart from the persons who managed it. In this
case, the personal vehicle expenses for the directors totalling RM50,150 were charged to
the company during the year 2005. It is the proof that they had abuses their power as the
director of the company by claimed the personal expenses towards the company. They need
to be responsible and execute their authority on behalf of the company to ensure developing
of Delima Enterprise Sdn Bhd. Encik Zayed also had breach his fiduciary duty by attempting
to commit fraud in which he tried to negotiate with the present auditor to not qualified their
financial statement even though there are unresolved issues. This is a breach of law by
referring to relevant sections in Company Act 1965. Encik Zayed should not act in this way
as it will obey the law and as well as credibility of the company. The act is not in the best
interest of the company as a whole.
The directors and all the level of management should be held responsible and
accountable. Every individual should play their role in keeping the wellbeing of the company
and act on the behalf of the company. In Malaysian corporate law framework, the duties and
responsibilities of the company directors are clearly stated in the Malaysian Companies Act
1965 (Act). Besides,the audit can be completed soon without any qualification if En Zayed
and Pn Hashimah could settle down the outstanding matters objectively. They should
discussed with the auditors and be guided by the auditors to find the solutions. It was state
that there is the findings about several transactions with significant amount were wrongly
recorded and no reconciliation was performed. Everyone should cooperate and work
together with the auditor. In Delima case, Puan Hashimah is the person that is responsible to
work together with Cik Amy to handle the account matters. If the entire departments work
together, the audit report able to complete soon without the qualification.
Furthermore, what can be done do to improve the leadership and management of is
through the directors themselves and the management. They need to reorganize the
management and administration of the company. Encik Zayed and Puan Hashimah should

play role by acknowledging themselves with the duty as a director. They should hire people
with good experience and qualification to do the work in the company. Other options are to
send them for seminars and trainings to improve their competency and skills to carry out
their duty. As for accounting system in the company, they should implement new software
which is more reliable and integrated such as UBS Accounting system and documented the
records properly. The timesheet of the employees must be supervise and monitored wisely
to prevent they manipulate their own attendance. The most important thing that they must
implement in reorganizing and restructuring their company is to establish a Standard
Operating Procedure (SOP) in their company. Every organization needs SOP. The existence
of SOP will ensure a good administration and management, internal control and the
operation of the company as a whole.


Douglas Y. Park (2011). Fiduciary Duties of Company Director:The Basics. Retrieved

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Roy Cooper P.E. (2014). The Importance of Proper Documentation Procedures.

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Jody Shilan (2008). Importance of SOPs. Retrieved December 16, 2008 from,