EPPA 4716 INTEGRATED CASE STUDY

SET 1 SEMESTER 2 SESSION 2019/2020

MAZA & CO. CHARTERED ACCOUNTANTS : THE ENIGMA WITHIN

LECTURER : PROF. MADYA DR. SITI FARIDAH BT. ABDUL JABBAR

PREPARED BY : BIG BOSS

Firza Amira Binti Mohd Raziff A157367

Wan Nur Adina Hanim bt Wan Ahmad Kamarul Ariffin A157983

Goh Kwong Leng A158197

Noor Anis Najwa Binti Abdullah A158440

Nur Syahirah Baharuddin A158474

Mohd Eizra bin Mazlan A158498

Chan Pui Yan A162222

 TABLE OF CONTENTS

NO CONTENT PAGES

1 Introduction 3

2 Question 1: Is there a need for a written agreement between the 4-7

partners in Maza & Co?

3 Question 2: Should Maza & Co. accept the offer by Raihan 8 - 13

Jalil?

4 Question 3: Do you think Maza & Co should expand its 14 - 19

business?

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INTRODUCTION

Maza & Co is a partnership firm that provides accounting and related services that was formed by
Mohd Amir and Zainal Ali. This firm was formed on the 11th January 2001 and has about 14 staffs
with an annual turnover of approximately RM900,000. Both partners have been professionally
trained in the same prominent public accounting firm. This partnership did not have any written
agreement to formally stipulate the arrangements between partners. However, they had informally
agreed upon agreements that the partners would be equally paid for its monthly salaries and
bonuses and had equal share of equity in the partnership. The services offered are accounting,
company secretarial, business advisory services, training and sale of accounting software.

Their motto was ‘To be different from other management services’ as they realised that it is
essential to differentiate itself in the market in order to survive due to the intense competition from
hundreds of accounting firms operating within the Klang Valley area. To ensure the client’s trust
and satisfaction, Maza & Co delivered its services in a very personal way. The firm will also assist
their clients in achieving their targets.

Maza & Co serves about 200 clients that were mainly bumiputera-owned businesses ranging
from sole proprietors to multi million ringgit companies. They also served 3 international firms
from Japan, Korea and India. Their client industries involve law firms, retailers, private clinics,
manufacturers, IT, oil and gas and services companies. The firm aimed to serve small companies
which lacked of proper accounting system and their philosophy is to grow as their client’s
businesses grew as their tag line was ‘We grow with you’.

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Question 1 : Is there a need for a written agreement between the partners in Maza & Co?

Maza & Co. needs a written agreement between the partners.

Maza & Co. should have a written agreement between partners because a partnership agreement
helps to avoid conflict which may arise between the partners. According to the Partnership Act
1961 Section 3(1), partnership is the relation which subsists between persons carrying on business
in common with a view of profit. It is highly recommended that the partners enter into a formal
written agreement to avoid any future conflicts or disputes. A partnership agreement is a legally
binding document between partners in a partnership which sets out the terms and conditions of the
relationship between the partners. It typically establishes the distribution of profits or losses among
the partners, the responsibilities of each partner, and proper procedures for changes to and
termination of the partnership. In the absence of a written agreement, disputes will often result in
costly legal proceedings and unnecessary financial loss for all parties.

Based on the case of Maza & Co, the division of total clients brought in by each partner is
in the ratio of 40:60 for Mohd Amir (MA) and Zainal Ali (ZA) respectively. According to ZA, he
and MA had agreed that each partner would service his own clients. Maza & Co definitely needs
a written agreement in this case to prevent any future disputes when any of the partners is
unsatisfied with the current distribution of profits. Based on the case, it clearly shows that ZA is
contributing more in terms of effort and time in servicing his clients which is relatively more as
compared to MA. Besides that, the workload will also be heavier if the clients are major clients of
the company such as those international clients which will also generate a higher revenue to the
firm. However, the revenue earned from these two separate services would be pooled as the firm’s
revenue and be divided equally between the partners. On top of that, the partners were paid equal
monthly salaries and bonuses and had an equal share of equity in the partnership. The current
distribution of profits definitely seems to be unfair to ZA which might create a conflict between
the partners when ZA gets unsatisfied in the future. Therefore, it is important to have a written
partnership agreement for both the partners to agree and clarify to the duties and remuneration as
a well-written partnership agreement will reduce the risk of misunderstandings and disputes
between the partners. By putting an agreement in place can reduce frautious disagreements later
by helping resolve disputes when they do arise. For example, the written agreement will help to

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resolve the disputes when ZA argues about the imbalance profit distribution and salaries among
them.

Besides that, a partnership agreement protects partners who want to share in the profits
without being actively involved in the operations or decision making and involving themselves in
legal issues. With a general partnership, each partner has the same liabilities and responsibilities
as the other. However, Maza & Co can choose to have a partnership agreement which states that
the investor or inactive partner may not be interested in taking higher percentage of the liability
since the other active partner is making all firm-related decisions and involve in daily operations.

A partnership agreement also acts as a safeguard that protects both the business venture
and each partner’s investment when it comes to dissolution. When one partner wants to end the
partnership, it can result in significant hardship on the other partner. Therefore, partnership
agreement is important as it lays out how the business can be dissolved or a partnership to be
transferred. For example, partners may put clauses into the contracts such as partner may not sell
his share to a third party without offering the existing partner an opportunity to buy back from the
selling partner or partners might need approval before they can sell to a particular party. Based on
the case study, MA & ZA seemed to be arguing on small matters and had created tension when
they could not agree on whether to accept the proposal of the work relationship offered by RJ.
Therefore, Maza & Co definitely needs a partnership agreement as there is a huge possibility that
the partnership might be dissolved when they can no longer come to a consent.

In accordance with the Partnership Act 1961 Section 35(1), every partnership is dissolved
as regards all the partners by the death or bankruptcy of any partner. Therefore, a partnership
agreement is essential to protect existing partners in the event of the death or bankruptcy of any
partner so that the firm can continue to operate. Maza & Co shall have a partnership agreement to
address the rights of heirs with some agreements allowing the remaining partners to buy the share
of the deceased partner’s interest, rather than allowing a spouse or child to become a partner.

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Maza & Co. does not need a written agreement between the partners.

Partnership can be formed with or without written agreement. Written agreement may not be as
important as it seems. By having a verbal agreement, it will have the same function as a written
agreement. The contract entered by Mohd Amir (MA) and Zainal Ali (ZA) was considered a valid
contract and legally binding as they fulfilled all the required elements to form a contract, which
consists of offer and acceptance, consideration or something of value that each of the parties agree
to give to exchange to complete the contract and intend to form a contract to achieve their
consensus. In accordance with the Partnership Act 1961 Section 26, it has stated that the interests
and duties of partners in relation to the partnership shall be determined subject to any agreement,
express or implied between the partners. In the absence of written agreement, by default all the
partners are entitled to share equally in the capital and profits of the business and must contribute
equally towards the losses. Therefore, MA and ZA do not necessarily need a written agreement as
the verbal agreement can still hold up in court if any argument happens in the future.

Furthermore, verbal agreement is more cost saving as compared to written agreement as it

includes legal expenses to create a legally binding agreement which is quite costly. To form a
written agreement, the partner needs a consultation from an attorney and discusses the content of
the agreement whether its reasonable, ensuring there is no breaching of the law and the agreement
is fair for both parties. It is important that the agreement is drafted by an attorney to avoid the risk
of drafting an agreement which contains confusing language. An agreement drafted by an attorney
will account for every possible scenario that could affect the firm. However, if Maza & Co wants
to have a written agreement, the firm needs to bear a high spending on the process which will
increase the burden of the firm.

Besides that, an additional cost will incur when there is a renegotiation or disagreement
between partners that lead to changes of the agreement that require both partners’ consent in
sealing the new agreement. However, by a verbal agreement, the negotiation can be done easily
because the relationship between partners is based on mutual trust. Since MA and ZA have known
each other for a very long time before forming the partnership, they should have a good
relationship and have good faith towards each other. Thus, a verbal agreement is good enough to
bind their relationship as business partners.

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 Verbal agreement is more efficient which the partners can benefit in both time and cost. If
Maza & Co needs a written agreement between the MA and ZA, it seems to be very time
consuming as they need to spend more time to discuss in order to get the final agreement from
both parties, time spending on consultation process done by certified lawyer to list out potential
scenarios that might occur in a partnership. Verbal agreement is more flexible and convenient as
the partners can always discuss together directly if any problem or conflict arises in the future. The
partner can discuss with each other if there are any changes to be made to their verbal agreement
instantly. The written agreement is less flexible and complicated because there are many
procedures to be done in order to come to mutual consent of the new agreement. Therefore, instead
of having a written agreement, it is easier for Maza & Co to have a verbal agreement because it
has shown that verbal agreement is easier to be amended at any time.

Furthermore, the partners have verbally agreed that the contribution in the partnership is
based on equal basis where every partner should involve in the management of the partnership.
For instance, both of them have agreed that each partner would serve their own clients. They have
also agreed on the distribution of profits and other benefits received such as monthly salaries,
bonuses and the share of equity with the ratio of 50:50. It should not be a problem as the terms
have been agreed since the beginning of the partnership and clearly in accordance with the
provision of the Partnership Act. On top of that, MA and ZA did not have any arguments on the
agreed terms up till date. Therefore, a verbal agreement seems to be working fine on both of them.

Last but not least, the structure of Maza & Co is quite simple which consist of only two
partners which are MA and ZA. The terms and negotiations such as distribution of profits , duties
and controls should be less complex compared to big companies. Therefore, it is not necessary for
the firm to get a written partnership agreement which will incur cost and time.

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Question 2: Should Maza & Co. accept the offer by Raihan Jalil?

Maza & Co should accept Raihan Jalil’s offer

Maza & Co should accept the offer by Raihan Jalil (RJ) from Raihan & Co. to establish the work
relationship where Maza & Co will perform audit work on behalf of Raihan & Co. while RJ would
still remain as the auditor who signs the audit reports. It is definitely beneficial to the firm as it
aims to become a one stop center for accounting related services. Therefore, Maza & Co. should
expand its business by providing the additional services such as auditing and taxation service to
gain the competitive advantage. If Maza & Co were to accept the offer from RJ, it would speed up
the process of Maza & Co in obtaining a quick presence and market share to enter the audit market
which already have existing competitors who are already well-known in this industry. By
performing audit work on behalf of Raihan & Co, the firm will be able to secure the existing
customers from Raihan & Co which RJ has agreed that Maza & Co would retain 50% of the audit
fees.

Besides that, Maza & Co has been offering only accounting, company secretarial, business
advisory services, training and sale of accounting software to its clients. The firm did not offer
taxation service or audit assurance service in the past. Therefore, the firm does not have the
experience nor license to conduct an audit if the firm did not accept the offer from RJ. Although
both partners were previously professionally trained in the same prominent public accounting
firms, they are not qualified for the audit license application to become an approved company
auditor as there are numerous requirements to be fulfilled. Both partners of Maza & Co have met
the requirement that the applicant must be a member of MIA and registered as a ‘Chartered
Accountant’. However, both the partners do not meet the requirement where applicant must have
at least 3 years out of the 5 years experience to be in audit practise and one year practice in audit
supervisory role. Therefore, it is advisable that Maza & Co starts off through the working
relationship with RJ to gain the relevant years of experience in order to obtain an audit license in
the future. This is definitely a great opportunity as a stepping stone for Maza & Co to expand its
new service into the auditing industry.

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 The firm will also enjoy a higher profit margin as the expenses can be reduced through the
work relationship. Standardization of applications is one of the keys to success in mergers and
acquisitions so that all work can be shared along with support, training and licensing costs. Firms
can avoid paying licenses for duplicative applications for tax research, fixed assets and multiple
years of accounting products outside of the firm standard. On top of that, the firm can also generate
higher revenue through the 50% of audit fees received from Raihan & Co for performing the audit
work.

Maza & Co can also benefit from the audit training opportunities provided by Raihan &
Co including technical and audit compliance advice. Maza & Co might not have experienced staff
in audit assurance as the firm did not provide audit services in the past. Therefore, it is definitely
beneficial to accept the offer from RJ as the firm can obtain relevant training or sharing of
technology from Raihan & Co. Maza & Co. does not need to invest in new audit softwares which
requires huge investment.

The potential impacts of technology on the accounting professional are enormous. Massive
technological change and shifting consumer trends demand a new approach to how the industry
creates value for clients. For example, basic accounting services have been largely automated
through the combinations of artificial intelligence, big data, and blockchain technology. Therefore,
it is essential for Maza & Co to plan for its future development to be able to sustain in the industry.
It is definitely a breakthrough for the firm to shift their focus to advisory services and value-added
strategic thinking which auditing could be the first attempt.

Mohd Amir, one of the partners of Maza & Co was concerned that the work relationship
arrangement with Raihan & Co would put Maza & Co in an ethical dilemma and the firm would
face the risk of legal action by the regulators. However, this concern could be resolved by
implementing the Chinese Wall in the firm. Chinese wall is the virtual barrier intended to block
the exchange of information between departments which might result in business activities that are
ethically or legally questionable. Under the new arrangement, clients’ accounts that were prepared
by Maza & Co would not be sent to Raihan & Co since all audit work would be done by Maza &
Co. This could definitely ensure the firm is always in compliance with the fundamental principles
of integrity and objectivity under the ‘International Ethics Standards Board of Accountants’

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(IESBA) Code of Ethics for professional accountants. Therefore, the formation of chinese wall
will prevent the firm from the objectivity threat or self-review threat as there will be two separate
departments in Maza & Co which clearly segregate both the audit and account department. This
strategy will allow the firm to avoid from the ethical dilemma as the firms will not violate the code
of ethics and regulations.

By accepting the offer of RJ to establish the work relationship, it will be easier for Maza
& Co to enter the auditing industry locally and also targeting the international market in future.
With a stronger and broader customer base, it is definitely an opportunity for Maza & Co to enter
the international market by developing network firms or forming international alliances with
global accounting firms in other countries. Since Maza & Co also served international companies,
it might be easier for it to join these international alliances which it will then benefit from the new
clients that were referred by the allied partners.

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Maza & Co should not accept Raihan Jalil’s offer

Maza & Co should not accept the offer by Raihan Jalil (RJ) to conduct the audit services in order
to reduce the firm’s operation cost. As Maza & Co did not provide audit services in the past, it will
definitely increases the operation cost such as salary for recruiting extra employees to conduct
audit service and administrative cost incurred for audit department. On top of that, if Maza & Co
were to accept the offer, the firm will definitely need to be expanded in size in order to cater the
new employees of audit department which will also create an additional cost to the firm.

Maza & Co should not accept the offer as it also increases the complexity of the firm’s
operation. During peak period, Maza & Co might face problems due to lack of manpower as the
existing employees are not equipped with the relevant experience nor knowledge to conduct an
audit. Meanwhile, the new employees are not familiar with the operations of the firm or might be
inexperience if they are fresh graduates. Therefore, the firm will need to allocate more time and
money to provide them with trainings before they are able to complete the job effectively and
efficiently. It will be a risky decision for Maza & Co if they were to accept the offer without proper
planning on their firm structures and capability.

By accepting the offer by RJ, Maza & Co will eventually face the negative consequences
from the clients. In the client's perspective towards the firm, Maza & Co is currently lack of
expertise since they did not performed audit services in the past and does not have an audit license.
Therefore, the clients might be afraid that it will affect the credibility of the audited report if Maza
& Co is not a qualified firm in providing audit service. Clients might take legal action towards
Maza & Co if they were to find out any professional negligence which it will affects the firm’s
reputation in the market.

Maza & Co should not accept the offer by RJ to perform audit service to their clients as the
firm might face independence and self-review threat. The primary purpose of an audit is to provide
independent opinion as to whether the annual report of the company reflects a true and fair view
of the client’s financial statements. Audit independence is important so that the auditor's opinion
is unbiased and free from any undue influence or conflict of interest which override the
professional judgement of the accountants. If Maza & Co were to accept the offer by RJ, they will

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carry out the audit work on behalf of Raihan & Co while RJ will remain as the auditor who signs
the audit report. Maza & Co will not seem to be independent in appearance due to the absence of
circumstances that would cause an informed third party, having knowledge of the relevant
information and to reasonably conclude that the integrity, objectivity or professional skepticism of
the audit firm or member of the audit team had been compromised. Under the new arrangement,
clients’ accounts that were prepared by Maza & Co would not be sent to Raihan & Co since all
audit work would be done by Maza & Co. However, the users of the audited report may raise
concern on the possibility that the firm might manipulate the account figures when Maza & Co
also prepares the financial statements of other rival companies which are from the same industry
although the companies that they provide accounting services are not under their audit portfolio.

Besides that, Maza & Co should not accept the offer by RJ as they are bound by the code
of ethics for professional accountants. Maza & Co might face the risk of incompliance to the
fundamental principles of the ethics code such as integrity and objectivity. If Maza & Co provides
both accounting and auditing services, the firm needs to strictly abide by the implementation of
Chinese Wall. However, the firm is in high risk to face the legal action by the regulators if there is
no proper and clear segregation between both the departments which their employees might have
overlooked. This is because a professional accountant should be honest and should prevent
themselves from undue influence of others such as their colleagues or clients to override their
professional judgements. The firm will face the risk of being blacklisted by Malaysian Institute of
Accountants (MIA) and also face the penalty under the Accountant Act 1967 Section 27, penalty
for misrepresentation by body corporate, on conviction, be liable to a fine not exceeding RM10,000
or to imprisonment for a term not exceeding one year and on a second or subsequent conviction to
a fine not exceeding RM20,000 or to imprisonment for a term not exceeding two years. This will
instantly damage the firm’s reputation. Thus, Maza & Co should not accept the offer by RJ to
avoid the risk that it might violates the code of ethics.

In accordance with the By-Laws (On Professional Ethics, Conduct and Practice) of the
Malaysian Institute of Accountants under Section 320 Professional Appointments, the acceptance
of a new client relationship or changes in an existing engagement might create a threat to
compliance with one or more of the fundamental principles. Professional accountants are required

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to comply with the fundamental principles and apply conceptual framework to identify, evaluate
and address threats such as self-review and familiarity threat. There is a huge possibility that the
employees of Maza & Co might face familiarity threat where they have close relationship with the
client. However, since the professional appointment is under Raihan & Co, the company might
deliberately overlook the relationship to avoid making known of the threat. Besides that, the
interest of clients might not be protected under the regulations as the signing auditor is Raihan &
Co. However, the firm that is performing the audit procedures and liasing with the clients to obtain
relevant information is Maza & Co. Therefore, if there is any leakage of client’s confidential
information by Maza & Co, they do not have the rights to claim from Maza & Co as they are not
the appointed company auditor during the annual general meeting.

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Question 3: Do you think Maza & Co should expand its business?

Maza & Co should expand its business.

Maza & Co should expand its business as the competition in accounting industry is getting more
intense. Most of the accounting firms are struggling to gain new business as it is easy for clients
to switch to a competitor. Therefore, it clearly shows that the current retention and acquisition
strategies are not working and it is definitely the right time to expand its business to gain a stronger
market share and competitive advantage. Business expansion is a stage where the business reaches
the point for growth and seeks out for additional options to generate more profit. Different forms
of business expansion include opening in another location, adding employees, increase in
marketing, adding franchisees, forming an alliance, offering new products or services, entering
new markets, merging with or acquiring another business and expanding globally.

Maza & Co should expand its business by providing additional new services to its clients as
it definitely increases the revenue of the firm. For example, Maza & Co should expand its business
by providing auditing or taxation service to its clients to enter into a new market. Accounting
industry is getting very saturated and it is definitely a great opportunity for Maza & Co to expand
its business to audit industry in conjunction with the offer from RJ. By expanding its business, it
can reduce the effect due to tight competition in the existing market. As stated in the case, there is
keen competition from hundreds of accounting firms operating within the Klang Valley area and
Maza & Co believed that the survival is dependent on the firms’ ability to differentiate itself in the
market. By providing additional services, Maza & Co can definitely build a stronger and broader
customer base through its competitive advantage.

Besides that, most of Maza & Co’s clients are loyal clients who had been with them since
the firm’s inception. It clearly shows that Maza & Co definitely has the ability to retain its existing
clients. However, it is important to develop a deeper relationship with the existing clients in order
to enhance the business expansion process as a loyal customer base is essential for the firm to
ensure stable and continuous profits. On top of that, they are one of the key factors to expand the
business as it is often difficult to obtain a bigger piece of the same pie in today’s competitive
environment. Therefore, existing clients are important to expand the business by developing new
client relationship. Word of mouth is a free form of advertisement shared by customers and

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triggered by an event that the customer experiences. Therefore, it is important to ensure the existing
customers have good service experience so that the firm has strong brand recognition and
reputation.

Maza & Co should also expand its business in terms of geographic expansion by expanding
into international market as it provides greater opportunity for market growth. For example,
international expansion offers a chance to conquer new territories and reach out to more big
multinational companies , thus increasing the firm’s revenue. One of the great opportunities for
Maza & Co to expand its business worldwide would be an international alliance of global
accounting firms such as PRAXITY. The strategic alliances are beneficial to the firm as they allow
the firm to retain its independent practices while benefiting from new clients that were referred to
them by allied partners. By joining the accounting alliances will definitely leads to huge business
opportunities. This opportunity would not only enable Maza & Co to expand its business but also
to prosper in new business territories and understand unique financial reporting of each client.

By expanding its business in many countries, it will definitely act as a great first move to
build a network firm of its own for Maza & Co. A network firm is an entity which is part of a
larger structure that is aimed at cooperation which is under a common control, ownership or
management. Therefore, by having network firms in other countries, it will be easier for Maza &
Co to expand its customer base to the international market as usually companies will prefer to liase
with firms located in their own country as it will be more convenient for them. For example, Maza
& Co also served 3 international companies, one each in Japan, Korea and India. It will definitely
be much easier for Maza & Co to serve its overseas clients with better service if it has a network
firm with resources in those particular countries. By having network firms worldwide, they can
also share the resources obtained for the purpose of training and development of the firm.

Maza & Co should also expand its business as operating in international markets allows the
firm to access to a larger and more diversified talent pool. Qualified and experienced workforce or
team members are important to the firm so that they could contribute to the company by giving a
good and creative idea for the benefit of future firm’s operation. International labours can offer
companies with unique advantages in terms of inreased productivity, advanced language skills,
diversed educational backgrounds and etc. Employees who speak different languages and

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understand different cultures enhance connections with a broader customer base. On top of that,
by having an international firm that is well reputed will attract top talents to the firm. Firm can
also structure global work teams in a way that allows for synergy in building a global brand. By
hiring new blood into the firm, Maza & Co can improve customer satisfaction through good quality
service and also increase productivity and efficiency of the firm which the firm can adapt those
cultures into the firm in Malaysia.

If Maza & Co were to expand its business internationally, it might also attract additional
investment opportunities that foreign market can offer. For instance, many firms are able to
develop new resources and forge important connections by operating in global markets. Therefore,
the firm can also benefit from lucrative investment opportunities that may not exist in its home
country. By having additional investment in capital, it will be easier for the firm to expand in terms
of market and service expansions. The firm can also invest in technology breakthrough or
advancements in audit and accounting softwares. Developments in artificial intelligence (AI), data
analytics and blockchain technologies are having a significant impact on audit and finance
industry. There are clear benefits that technology can bring from operational efficiency to financial
inclusion and greater insights. Therefore, it will be an opportunity for Maza & Co if they are able
to gain competitive advantage in this field as it is going beyond the confines of company data
which allows auditors to collect and analyse broader industry data sets that were previously
inaccessible. This enables auditors to better identify informational outliers and increases their
ability to generate business insights. Therefore, Maza & Co should expand its business to expose
itself to larger investment opportunities.

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Maza & Co should not expand its business.

In this globalisation era, small businesses are trying to gain a competitive advantage over industry
giants including Maza & Co. In our opinion, we suggest that Maza & Co should not expand its
business as the current situation of the firm is not suitable to expand internationally nor providing
additional services.

If Maza & Co expands its business, the partners’ focus might drift away from their existing
clients to the business expansion due to lack of manpower. According to the case given, Maza &
Co has only two partners which are MA and ZA and it will definitely be hectic as it increases their
workload if they were to expand their business. Currently, they are responsible for more than 200
clients and both the partners will need to serve their own clients. On top of that, the firm has only
14 permanent staffs and a number of student trainees. Therefore, it clearly shows that the firm is
not capable for expansion at the moment which might cause the productivity and quality of the
firm to be affected if the management and staff cannot cope with the extra work. The staff turnover
will also increase when they are given extra work which they cant cope with. This happens
especially when their morale drops and their productivity decreases and eventually leaves the firm.

Besides that, the biggest potential drawback for Maza & Co if they were to expand its
business is the potential loss of client’s trust. Some clients may be worried of any conflict of
interest if the accounting firm were to provide any non-accounting services to their clients. On top
of that, any accountant who decides to offer financial advices or auditing services to their client
will also have an obligation to be certified or educated in order to provide the relevant services
which acquiring this expertise may also cost considerable time and money. Incompetent staffs
might cause customer dissatisfaction which will encourage them to switch to other competitors.
Therefore, Maza & Co should not expand its business at this period as the firm is definitely not
capable in terms of experience nor the competency in providing additional services to its clients.

Maza & Co should not expand its business as it might face the risk of loss of control. Based
on the case, there are only two partners in Maza & Co and both of them are serving their own
clients. Both of them are responsible in overseeing and handling the firm while serving their
clients. Therefore, it is harder for them to maintain during times of quick growth and expansion if
they were to expand their business to different locations or even other countries. They will face

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difficulties in monitoring the operations as it will definitely increases their workloads. Therefore,
it is not advisable for Maza & Co to expand its business at the current stage unless they engage
themselves in proper succession planning. Before the business expansion strategy, Maza & Co
should create a succession plan to identify and develop talent to ensure that there is leadership
continuity exist for all key positions during expansions so that the operations can continue
smoothly.

Maza & Co should not expand its business as it might not be financial feasible. The firm
has just bought a new building for RM750,000 as the firm’s office and also another building at the
price of RM700,000 for investment purposes. The firm does not have the financial liquidity to be
spent on business expansion in near future. The firm might face liquidity risk when it has less
capital available for the firm’s operation if the firm were to invest money and resources on
expansion. Therefore, it is important for Maza & Co to consider the market potential for firm’s
expansion before investing as it will increase capital requirements for purchasing new facilities
and equipments.

Instead of expanding its business, Maza & Co should improve the firm’s operation such as
upgrading their billing system. From the past experiences, the firm faced difficulty in collecting
debt from walk-in clients. The firm applied two methods in billing its clients. For existing clients,
billings were made upon completion of jobs and billings were made as soon as the firm prepared
the draft final report for first time clients. The firm also employed a manager to update all billing
information that was not properly maintained by the partners because they were too busy with the
rapid expansion. However, the current billing system might cause complication in the future when
the number of clients increases as there is no standardization. The firm will be exposed to potential
risk due to leakage of confidential clients’ information if the manager did not manage the billing
well. Billing information should be kept confidential as it includes customer name, address, bank
account and etc. Thus, the firm should be focusing on how to improve the billing system such as
standardizing the billing method for existing clients or walk-in clients and purchasing new
software such as customer relationship management (CRM) that helps to enhance the billing
system. Eventually, the debt collection will be easier and able to minimize the bad debt problem
and relationships between clients could be well maintained. This is crucial for the future business

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operation. Therefore, Maza & Co should not rush for business expansion but focus on improving
the current firm’s operation.

Finally, MA and ZA had been arguing on small matters such as employees’ bonus, client’s
request, and business offer proposed. Both partners seem to be facing disagreements in making
decisions. If they were to expand their business, they will have greater responsibility over the firm
and they need to make a lot of decisions in the future. However, based on their current relationship,
more conflicts and disputes might arise in the future due to their communication problems. As for
MA himself, he experienced a non-cooperative and insincere partner in 2000. MA started to doubt
ZA as his partner in the firm because of the frequent arguments. If MA has lost his trust in ZA,
Maza & Co should not expand their business at the moment due to the immature relationship which
might eventually lead to dissolution of the partnership.

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