GROUP ASSIGNMENT

Faculty of Business

Course : Advanced Auditing

Code : BBCA3173
Due Date : 17/8/2020
Lecturer : Faridah Hanum binti Amran
Total Marks : 100 (60%)

Name ID Number Course

DIVESHA A/P RAVI CHANDRAN 201705020031 BOSAF

TEBASHINI A/P ANNAHDURAI 201703020024 BOSAF

YOGES A/P KANEISEN 201704020029 BOSAF

KHARSHETA A/P MARIAH 201703020004 BOSAF

SITI KHADIJAH AHMAD MUHIBAH 201511020009 BOSAF

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PART 1

QUESTION 1

Critically analyze the control system in place in a business for the purpose of identification of fraud.

Each organization should need to prevent fraud from occurring against their company, and most
organizations won't promptly concede that their organizations might be defenseless against any
noteworthy extortion. Actually numerous people can submit misrepresentation against any association
with a clever understanding of the organization's inner controls structure. Fraud detection controls should
include strict processes and monitoring them. Fraud identification requires express activities to be done at
a value-based level all together for the organization to recognize peculiarities. The utilization of
innovation makes this procedure considerably more effective. VComply can deal with this issue by
helping the association to design its GRC structures on a single integrated platform.

Then, using physical and electronic asset tagging. This engages the organization to follow high worth
assets and the risk of which may truly prevent fraud, yet empowers the organization to recognize and
respond to fraud in case it occurs. Moreover, practices whistle-blower protections in the company.
Laborers are the essential wellspring of fraud identification and increasing. The cash work explicitly
expects a fundamental activity in looking over and watching out for blackmail threats and occasions,
given their position managing organization accounts and resources. Guided by their code and training,
they're in like manner masterminded to be mindful in recognizing and making the organization mindful of
fraud and debasement, and in a circumstance to challenge information that gives off an impression of
being questionable. Make a situation that supports making some noise and gives clear courses to tending
to any worries. Witness procedures and hotlines give laborers a straightforward strategy to give an
ordered insight.

Furthermore, they should conduct thorough investigation. They may need to utilize forensic accountants,
contingent upon the sort of fraud. Overview verification, lead gatherings and take statements from
witnesses and suspects. Moreover, keep up an assessment log that that incorporates all discovery excused
as minor or in any case not researched; this is a significant apparatus for managing, revealing and
evaluating practices learned. In addition, recover the misappropriated assets of the organization. The
burglary or abuse of advantages could join robbery of plant, stock or cash, false invoicing, accounts
receivable fraud and payroll fraud. Recovering the focal points as most perfect like a key development.

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Recovery may require legitimate movement and approval, this action transforms into a strong sign and
impediment to future fraudsters. Finally, report the fraud externally is one of the control system in an
organization. An arrangement to report the fraud to specialists is significant for consistence and lawful
issues. It might likewise be important to speak with partner. At that point, you give confirmation that the
organization is killing fraudulence in a successful way. Sadly, no organization is safe to
misrepresentation. In any case, associations approach the danger of fraud in a deliberate way with formal
frameworks. Systems can help identify and viably oversee fraud when it happens.

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QUESTION 2

Discuss the various methods that can be used for the purpose of identifying the fraudulent activities
below:

a. Audit trail

An audit trail is a register of every action, event, or activity a customer or a system did with your data. An
audit trail are the manual or electronic records that successively list events or frameworks to offer
assistance documentation and history that is used to affirm security and operational exercises, or soothe
troubles. This may mean payment invoices or sales contracts which record revenue. Different associations
use variations of audit trail to give an authentic record of development subject to a gathering of events.
These records give affirmation of consistence and operational reliability. A complete audit trail shows the
authenticity of details on the financial statements to investors or lenders, and satisfies the standards of
government record keeping for tax purposes. A review trail can in like manner recognize territories of
resistance by giving data to review examinations. One primary motivation behind an audit trail is to help
distinguish and prevent fraud. At the point when you have a path of archives that approve an accounting
transaction, you can demonstrate that your exchanges are legitimate. Notwithstanding demonstrating the
legitimacy of a transaction, having an audit trail set up for all business action limits the danger of
fraudulence. With stricter necessities, workers will realize that someone is monitoring and tracking their
work for fake movement and understand that fraud won't go unnoticed.

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b. Whistle blowing

Whistle blowing is an ethical movement. It keeps an eye on terrible conduct and allows value to show up
at the profundities of organizations that regardless may remain unexposed. Validity among laborers helps
with creating commitment towards the association's vital. Furthermore, straightforwardness empowers
clear and amazing business correspondence. These concerns may relate to characteristic bad behaviors,
noteworthy deficiencies in workplace security or real sorts of isolation or incitement, all issues that are
seen as potential whistle blowing cases. Removing these dangers suggests that workers can focus on more
critical issues, for instance, focus business needs and the affiliation's success. For a greater degree,
deception costs residents an over the top proportion of money every year. By propelling a whistle blowing
society we can quit fooling around about fraud and harassment this pointless loss of capital.

It 's important to understand the bigger picture when deciding whether to whistleblow. Although entering
can be a challenging task, priority must be provided to the greater good of the public at large. The
benefits, in general, outweigh the risks and it is the duty of all employees to be vigilant about corruption
and to behave accordingly. It is necessary to familiarise yourself with whistleblower rights and
obligations, as well as any employees. By developing and promoting a whistleblowing policy you will
foster a culture of whistleblowing in your organisation. In addition, raising consciousness about
whistleblowing is key to the adoption of an open culture. In-depth and daily whistleblower training will
help you arm yourself with the skills required to battle fraud and corruption in your work place.

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c. Internal audit

The job of internal audit is to give free confirmation that an organization’s risk management, governance
and internal control processes are working effectively The internal auditors bolster organizations in
recognizing key hazard factors. The internal auditor of a company performs a lot of the same kind of
work as the external auditor, but an internal auditor is concerned with all the fraud and not just the fraud
that affects the financial statements. As such, an internal auditor would possibly find such frauds as a
regular part of the internal audit job. This permits the organization to thwart expected future worries just
as recognizing current shortcomings. It likewise permits an organization to recognize procedures and
controls that are not working viably and empower a chance to enhance these. Standard internal audits
evaluate an organization's controls and help reveal proof of fraud, waste or misuse. The recurrence of
inner reviews will rely upon the division or procedure being analyzed. For instance, in assembling, day by
day reviews might be required, while for HR, a yearly survey might be adequate.

Internal audit operationally should have sufficient knowledge of the fraud to recognize red flags that may
have committed fraud, understand the features of the scam and the methods used to execute it fraud, and
the different methods and strategies for fraud, assess the indications of fraud and assess if further action is
necessary required or advised to conduct an investigation and assess the efficacy of tests for fraud
prevention or identification.

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d. Internal control system

Internal control system assumes a basic job in each organization's prosperity, yet numerous entrepreneurs
don't have an away from of what they are or why they are significant. Internal controls give sensible
affirmation about accomplishing goals in regards to adequacy and productivity of activities, dependability
of monetary detailing, shielding of benefits and consistence with pertinent laws and guidelines.
Segregation of duties (SOD) is an essential component of internal control. Internal controls including
legitimate Turf help to prevent misrepresentation. The rule of Turf is to share obligations in a key
procedure to such an extent that nobody individual ought to perform two of the three capacities such as
care, recording and approval. At the point when the three duties are appropriately segregated, fraud can be
adequately forestalled or recognized. For instance, when an accountant both gets and records cash, the
accountant could submit fraud without any problem. However, when the accountant gets money and
another bookkeeper records the money, submitting misrepresentation won't be that simple.
Simultaneously, the Accounting Manager surveys the cash records and compromise to recognize any
mistakes or fraud, which makes submitting fraud much harder.

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QUESTION 3

Discuss the audit planning on the basis of three factors such as:

Audit planning is a critical aspect of the audit process mainly at the outset of the audit process to ensure
that sufficient focus is paid to key areas, possible issues are detected quickly, research is done rapidly and
research is organized accordingly.

There are three factors to be discussed on the basis of audit planning such as scope, materiality and risk.
Below we will discuss all three above respectively.

a. Scope

Scope in audit planning is defined as the amount of time and documents that are included in auditing is a
significant aspect in any auditing in another manner. The scope in audit planning is the depth of an audit
performed. The audit is carried out for various purposes such as routine “check-ups” of company
documents or agreements, searching for internal irregularities, detecting fraud inside the company,
discovering fraud in another company or even detecting for revenue and other times against IRS law.

The scope of an audit is evaluating the set of activities to be carried out and the period of documents to be
subjected to an audit. There are a few categories for audit planning under the basis of scope. The
categories are legal requirements, entry aspects, reliable information, proper communication, evaluation,
test, comparison and judgements.

Following the requirements of legislation, regulations or relevant professional bodies, the auditor can
assess the scope of an audit of financial statements. The state could frame rules to decide the audit scope.
Technical organizations may also make guidelines to execute the audit in the same way.

The audit should be organized to cover all aspects of the entity in so far as it is relevant to the audited
financial statements. A business entity has many working areas. A small organization that have few
functions whereas there are many functions to a broad concern. The auditor must work through all of the
business’s functions. The auditor report will cover all activities in order to let the reader know about all of
a concern’s workings.

The auditor should be given fair confidence as to whether the information found in the underlying
accounting reports and other source data is reliable not appropriate as the basis for the financial
statements being prepared. The auditor will evaluate the validity of the data using different techniques.

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All auditors usually apply the compliance test and content check when performing the audit work. The
auditor can show the information in the report.

The auditor should decide whether there is proper communication of the relevant information in the
financial statements. Accounting is an information system so it is necessary to present facts and figures in
such a way that the reader is able to obtain information about the enterprise. In his report, the auditor
might notice this fact. The accounting rules can be applied when determining on the distribution of
financial information in the accounts.

The auditor examines the reliability not sufficiency of the information contained in the underlying
accounting records no other source data by implementing a study not assessment of accounting process
not internal controls to ascertain the type, scope and timing of other auditing procedures.

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 b. Materiality

The International Accounting Standards Board defines materiality as “information is material if its
misstatement could influence the economic decisions of users taken on the basis of the financial
statements. Materiality depends on the size of the item or error judged in the particular circumstances of
its omission or misstatement. Thus, materiality provides a threshold or cut-off point rather than being a
primary qualitative characteristic which information must have if it is to be useful”. When preparing
financial statements an entity must determine materiality and ensure its financial statements are materially
correct.

In auditing, materiality means not just a quantified amount, but the effect that amount will have in various
contexts. During the audit planning process, the auditor decides what the level of materiality will be,
taking into account the entity of the financial statements to be audited. Materiality relates to both the
content of the financial statements and the level and type of testing to be done. The decision is based on
judgements about the size, nature and particular circumstances of omission or misstatements that could
influence users of the financial reports. In addition, the decision is influenced by legislative and
regulatory requirements and public expectations.

Each organization has a few key processes that give them a competitive advantage or disadvantage. The
auditor should gather sufficient information to understand the key processes pf the industry factors
affecting key processes. The way how management monitors key processes and the potential operational
and financial effects associated with the key processes. Auditors should use the information about the
company’s key processes and risks to develop expectations about its account balances and performance.
These expectations should be developing independently of management, documented along with a
rationale for the expectations and communicated to all audit team members.

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 c. Risk

Risk is a pervasive concept. There are four critical components of risk that are relevant in conducting an
audit. The four risks are business risks, financial reporting risk, engagement risk and audit risk. Business
risk is a risk that affects the operations and potential outcomes of organizational activities. Financial
reporting risk is a risk that relates to the recording of transactions and the presentation of the financial
data in an organization’s financial statements. Engagement risk is a risk that auditors encounter by being
associated with a particular client, including loss of reputation, inability of the client to pay the auditor or
financial loss. The final one is audit risk which is a risk that the auditor may provide an unqualified
opinion on financial statements that are materially misstated. Auditors should recognize some level of
uncertainty in performing the audit function. An effective auditor recognizes that risks exist and deals
with those risks inappropriate manner. Responding to these risks properly is critical to achieving a high
quality audit.

Audit risk is the risk that an auditor may provide an unqualified opinion on materiality misstated financial
statements to reduce the audit risk to an acceptably low level means the auditor needs to be more than
certain that the financial statements are not materially misstated. This is reiterated by ISA 200, which
states, “the auditor should plan and perform the audit to reduce audit risk to an acceptably low level that
is consistent with the objective of an audit”. In addition, “inherent risk” as per ISA 400 is “the
susceptibility of an account balance or class of transaction to misstatements that could be material,
individuality or when aggregated with misstatements in other balances or classes, assuming that there are
no related internal controls”. Assessing audit risk and inherent risk is an essential part of audit planning
because it determines the quantity of evidence that will need to be gathered and the staff that need to be
assigned to the particular audit. If for example, there were valuation issues with property inherent risk
would then be assessed as high, therefore meaning more evidence would have to be gathered and staff
that are more experienced assigned to perform testing on this account.

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QUESTION 4

Discuss the audit process in an appropriate manner.

a. Letter the audit management

Auditing requirements allow the auditor and the company to decide the terms and conditions of the
contract. The accepted terms must be in writing, and a letter of agreement will be the normal sort. This is
in the interest of the company and auditor that the auditor sends a letter of agreement to help prevent
misunderstandings about the contract, hopefully before the agreement starts. Proper planning and clear
expectations will help minimize anxiety and frustration. The letter of engagement specifies and indicates
the approval of the engagement by the auditor, the intent and nature of the investigation, the extent of the
duties of the auditor against the company and the form of the findings. Issuance of the letter of
engagement is one of the procedures to be followed prior to the commencement of an audit and is in
response to the appointment for a new audit task. The letter of commitment shall be sent to the client by
the auditor after receipt of the communication concerning his appointment, but preferably before the
commencement of the appointment, specifying the scope of his responsibilities in order to avoid any
misunderstanding with regard to his commitment and documents and to confirm the acceptance of the
appointment. The investigation priorities and extent, the extent of duties and the type of reporting to be
sent to the company.

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 b. Prepare plan for audit

Audit preparation is a critical aspect of the audit performed mainly at the outset of the audit process to
ensure that sufficient focus is paid to key areas, possible issues are detected quickly, research is done
rapidly and research is organized appropriately. "Audit preparation" involves creating a general policy
and a comprehensive methodology for the form, timing and complexity of the audit anticipated. The
auditor plans to conduct the audit effectively and on time. The auditor will plan the audit properly. The
norm outlines the duties of the auditor to plan the audit properly. Planning the audit involves determining
the overall communication audit policy and designing an audit plan that contains, inter alia, planned risk
management protocols and planned responses to the risks of material error. Planning is not a secret phase
of an audit but rather a continuous and iterative cycle that may commence immediately after or in
conjunction with the completion of the previous audit and continue before the new audit is completed.

Maintain an open line of contact throughout the year between the company and the independent auditors,
rather than waiting until the audit begins reviewing new or irregular transactions. This will eliminate
complications and allow the company to make suitable preparations or appropriate modifications.
Consider also designating an auditors communication back-up point in case they may not obtain the
details they need in a timely manner and need to escalate an application.

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 c. Conduct meeting with management

The meeting is one of the most critical occasions in the context of our relations with new and current
clients and must therefore be conducted with the greatest accuracy as regards its behavior. This includes,
perhaps for the first time, real live employees of our company which should set the tone for the
prosecution and the possible encounters with the consumers. This is a great place to build a relaxed
atmosphere and provide the structure of the audit. Prepare an agenda or list of topics to discuss before the
conference. Recall that the first meeting is an occasion to assess the research you have already completed
while conducting the audit. The chairing of opening and closing meetings is your job as auditor. The first
meeting begins by inviting all members. Introduce the body which certifies and you. Give an overview of
your background including where you worked and your experience with the audit. It will convince the
auditee that you are able to audit their service. Note also to thank the consumer for deciding to use this
certifying tool. The Auditor will clarify the audit process at the opening meeting. If opening meeting
participants are new to the audit process, then it is prudent to clarify the purpose of an audit in clear
language. Explain that auditing is simply a comprehensive and unbiased evaluation of historical records
and current procedures in order to provide potential success estimates. The auditor will ensure that the
company has approved its processes and procedures. Evidence of validity is also based on business
guidelines or standards of conduct. Using the flow diagram of the audit in your food safety strategy to
more clearly relate about the audit while explaining the audit process.

You may wish to invite any questions regarding the certification process at this point. If the work
proposal has not yet been signed make sure it is signed before proceeding with the audit further. You are
likely to deal for organizations who have different views towards being audited. Highly seasoned, good
practice businesses typically accept an auditor's advice as an opportunity to look at what they are doing
from a new pair of eyes and to help the company and find ways they can enhance their performance.
Highly experienced companies can be skeptical of the procedure and uncertain about it. In an audit good
communication skills are critical. This is crucial that you encourage the members to ask questions at the
first meeting, and that you demonstrate curiosity in what you know from the organization. Also, auditors

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need skills to facilitate meetings and negotiate matters. In fostering good communication at the opening
meeting and also ensuring that a positive audit is undertaken, being able to involve participants and
encourage dialogue effectively is critical. As an inspector, you ought to make sure leaders are not left
upset or not spoken to. When they behave that way, otherwise they are less likely to comply with the
audit process. An essential part of handling every conference is to ensure that all actions that are taken are
properly recorded and ensure that follow-up action is taken. At the first meeting take care of the decisions
or actions.

d. Audit initiation

Audit initiation is to decide the extent and duration of the audit. The audit scope is focused on the needs
and audit criteria of the client, with respect to the management program elements and the organization's
activities. Some of the reasons for initiating quality audit are to verify by examination and evaluation of
objective evidence that the applicable elements of the quality system under review have been developed
and documented and are effectively implemented in accordance with the specified requirements, to
identify quality system non-conformities and deficiencies to ensure timely corrective actions, to verify
and ensure that the supplier’s quality system continues to meet specified requirements and is being
maintained and to evaluate an organization’s quality system against audit quality standard. The recurrence
of reviews might be chosen by considering determined or administrative necessities, its associations,
corporate strategies or innovation being used that could influence the quality framework.

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 e. Preparing audit report

The auditing of financial records is usually conducted by an impartial and professional accounting
company or firm. The accounting agency usually leads the certified public accountant by accounting
associates. Financial statements usually included annual reports and reporting to the board of directors
and all related customers. Preparation of audit report, at that point, is significant for any business,
enormous or little. Understanding the review report group is crucial, and can make the procedure much
smoother and fruitful for any business. An audit report is commonly distributed in an organization's
yearly report related to the fiscal reports, and as noted, "opines on whether an organization's budget
reports conform to GAAP," as per Investopedia, which further notes, "A reviewer's report is a composed
letter joined to an organization's fiscal reports that communicates its sentiment on an organization's
consistence with standard bookkeeping rehearses. The letter keeps a standard arrangement, as built up by
commonly acknowledged inspecting guidelines (GAAS)."

After receiving the formal management responses to recommendations, the auditor in charge checks them
and incorporates them in the audit report. Each response shall be displayed immediately after the
recommendation to which it relates. The auditor in charge shall prepare a final version of the audit report.
If the Director approves the final report, copies of the report are sent to the President, the Senior Vice
President for Administration and Finance, and to all officials involved in the Institute. The audit report
memorandum contains a distribution list, indicating the names of the individuals receiving copies.

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 f. Closure meeting with management

The formality of the closing meeting can vary considerably based on the audit method, audit priorities and
relationship with the audited. Internal process and program evaluation sessions can be less organized, in
general. It may also be called an exit meeting. The formalities of the Manufacturer or Second-Party audit
meeting may depend on the partnership and intent. The closing sessions with third-party investigations
appears to be formal. The degree of information provided at the closing meeting should be consistent with
the auditee 's experience with audit procedure. Further information may include evaluating the evidence
collection process, the procedure for assessing conclusions, how results are reported, auditing methods to
respond to conclusions, and requirements for follow-up. There will be minutes of meetings and a register
of attendance for more formal closing sessions. The closing meeting may be less structured for internal
investigations, and can consist exclusively of presenting the audit results and audit conclusions. A closing
meeting is the place the consequences of the output of the audit process are reported. Although a closing
meeting is required, the convention of the gathering fluctuates relying upon the kind of review and the
review targets or reason. The review group pioneer should introduce the outcomes in a powerful way.
Review results are contributions to the procedure for tending to discoveries and following up.

It's expected the team leader or lead auditor would organize the meeting. It is vital for the meeting room
to be large enough to accommodate those attending, for the meeting to be suitable for the environment
and for the necessary equipment and materials to be available. The lead auditor will want to check the
number planned to attend the auditee representative's closing meeting to prevent last-minute delays due to
lack of room or seating.

The formality of the closing meeting which vary greatly depending on the audit nature, audit goals and
relationship with the auditee. Internal process and system audit meetings can be less formal, in general.
The formalities of supplier or second-party audit meetings may rely on the relationship ( i.e., a partner, as

17
opposed to a more distant relationship) and intent (such as periodic inspection versus problem-solving).
Closing meetings with third-party audits appear to be formal.

The degree of detail provided at the closing meeting should be consistent with the auditee 's familiarity
with audit procedure. More information can include evaluating the evidence collection process, the
procedure for assessing results, how results are reported, auditing methods to respond to findings, and
expectations for follow-up.

There should be explained to the auditee, where appropriate, at the closing meeting such as notify that the
audit evidence gathered was based on a comparison of the knowledge the audit team has available, The
reporting process, such as oral report at the closing meeting, drafted or reported preliminary report and
the final report, The auditing organisation's method of addressing audit findings and potential
implications arising from audit findings or failure to resolve findings in a timely manner, Presentation of
the audit results and conclusions in such a way that the management of the auditee recognises and accepts
them and Any related or applicable post-audit activities ( e.g., carrying out corrective actions, managing
audit complaints, or appeals process)

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PART 2

QUESTION 1

In the business structure that form under public limited company, you are required to select ONE
(1) public listed company that is incorporated in Malaysia under the following industries.

From the public listed company, we have selected food and beverage industry. The industry we have
selected from this food and beverage industry is Eka Noodles Bhd.

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QUESTION 2

EKA NOODLES BHD

a. Report on the financial statement

We have inspected the budget reports of EKA NOODLES BERHAD, which involve the announcements
of money related situation as at 31 December 2019 of the Group and of the Company, and the
announcements of far reaching pay, explanations of changes in value and proclamations of incomes of the
Group and of the Company for the budgetary year at that point finished, and notes to the fiscal
summaries, including a rundown of huge bookkeeping approaches, as set out on pages 16 to 103.

As we would like to think, aside from the potential impacts of the issues depicted in the Basis for
Qualified Opinions area of our report, the going with fiscal reports give a valid and reasonable
perspective on the money related situation of the Group and of the Company as at 31 December 2019, and
of their budgetary presentation and their incomes for the year at that point finished as per Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the necessities of the
Companies Act 2016 in Malaysia.

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b. Basis for opinion

As revealed in Note 2(b) to the budget summaries, the fiscal reports of the Group and of the Company
have been set up on the presumption that the Group and the Company will proceed as going concern. The
utilization of the going concern premise depends on the suspicion that the Group and the Company will
have the option to understand their benefits and settle their liabilities in the ordinary course of business.

On 30 August 2016, the Company reported that it had been delegated an influenced recorded backer in
accordance with Paragraph 8.04 and Paragraph 2.1 (an) of Practice Note 17 ("PN17") under the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad. The Company is required to present
its regularization plan to the administrative specialists inside the specified time period under the Main
Market Listing Requirements.

On 28 August 2018, as unveiled in Note 26.1 to the budget summaries, the High Court of Malaya had
authorized the Debt Restructuring Scheme which was affirmed with adjustment by the EKA Group's plan
loan bosses at a court met meeting hung on 18 July 2018. The Debt Restructuring Scheme was endless
supply of the request for the Court, with the Registrar of Companies on 7 September 2018.

In line with the regularization plan, during the budgetary year, the Group and the Company have arranged
its fiscal summaries by applying the going concern suspicion, despite that the Group and the Company
acquired an overall deficit of RM2,793,445 and RM866,682 separately during the monetary year finished
31 December 2019, and as at that date, the Group's and the Company's present liabilities surpassed its
present resources by RM79,825,988 and RM69,447,297 individually. The Group and the Company had a
shortfall in investors' assets of RM33,462,498 and RM61,303,914 separately. Likewise, the Group and the
Company had defaulted its reimbursement of chief wholes and enthusiasm for regard of the rotating
acknowledge and term advances for an all-out conveying measure of RM75, 167,747 and RM69,445,899
individually.

After the fruitless execution of the said regularization plan on 30 April 2020 which was affirmed on 31
October 2018 because of the advancement as disclosed in Note 27 to the budget summaries, Bursa
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Securities had on 20 May 2020, allowed the Company an augmentation of time to 31 October 2020 to
present an overhauled regularization plan to the regulatory authorities.

The previously mentioned expansion of time is without partiality to Bursa Securities' privileges to
continue to suspend the exchanging of the protections of EKA and to de-list the Company if the Company
neglects to present a regularization plan to the administrative experts at the latest 31 October 2020; the
Company neglects to get the endorsement from any of the administrative specialists fundamental for the
execution of its regularization plan; or the Company neglects to actualize its regularization plan inside the
time span or broadened time periods specified by any of the administrative specialists.

Endless supply of any occasions set out above, Bursa Securities will suspend the exchanging of the
recorded protections of EKA on the sixth market day after the date of notice of suspension by Bursa
Securities and de-list the Company, yet subject to the Company's entitlement to claim against the
delisting. The overhauled regularization plan is pending for accommodation to Bursa Securities as at the
date of this report.

There exists material vulnerability on the result of the Group's lawful suit with the Plaintiff for claims as
unveiled in Note 26.2 to the budget summaries. As uncovered in Note 2(b) to the fiscal reports, the going
concern supposition that is exceptionally subject to: -

i) The Group and the Company accomplishing maintainable and feasible tasks;
ii) The Group and the Company creating satisfactory incomes for its working exercises and
reimbursement to its lenders;
iii) The timing and effective detailing and execution of the updated regularization plan;
iv) Court request for leave to assemble lenders' conference and limiting request isn't renounced
or conceded further augmentation of time; and
v) The result of the legitimate suits decreed for the Group.

The issues set above shows the presence of material vulnerabilities that may give occasion to feel qualms
about huge the capacity of the Group and of the Company to proceed as going concern and along these
lines, they might be not able to understand their benefits and release their liabilities in the ordinary course
of business.

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Should the going concern premise of setting up the fiscal reports be not, at this point proper, alterations
would need to be made to diminish the estimation of all resources for their assessed feasible qualities, and
to give additionally evaluated liabilities that may emerge, and to rename property, plant and gear and
other non-current resources and noncurrent liabilities as current resources and current liabilities
separately.

The budget summaries of the Group and of the Company do exclude any change and order identifying
with the recorded resources and liabilities that might be fundamental should the Group and the Company
be not able to proceed as going concern.

We directed our review as per affirmed norms on evaluating in Malaysia and International Standards on
Auditing. Our obligations under those principles are additionally portrayed in the Auditors'
Responsibilities for the Audit of the Financial Statements area of our examiners' report. We accept that
the review proof we have acquired is adequate and proper to give a premise to our certified conclusion.

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c. Independence and other ethical responsibilities

We are free of the Group and of the Company as per the By-Laws (on Professional Ethics, Conduct and
Practice) of the Malaysian Institute of Accountants ("By-Laws") and the International Ethics Standards
Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have
satisfied our other moral duties as per the By-Laws and the IESBA Code.

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d. Key audit matters

 Area

Key review matters are those issues that, in our expert judgment, were of most essentialness in our review
of the budget reports of the Group and of the Company for the current year. These issues were tended to
with regards to our review of the budget summaries of the Group and of the Company all in all, and in
framing our supposition consequently, and we don't give a different assessment on these issues.
Notwithstanding the issue portrayed in the Basis for Qualified Opinion segment, we have decided the
issues depicted underneath to be the key review matters to be conveyed in our report.

As at 31 December 2019, the conveying measures of the Group's property, plant and hardware ("PPE")
was adding up to RM41 which speaks to 74% of the Group's all out resources. The Group is required to
perform impedance test at whatever point there means that weakness, by looking at the conveying
measure of money creating unit ("CGU") with its recoverable sum. As needs be, the Group assessed the
recoverable sum utilizing esteem being used ("VIU") strategy.

The Group's evaluation of the VIU of PPE explicit to a CGU in plant, apparatus and gear included
noteworthy decisions and assessments on income development rate and gross net revenue according to
future outcomes, and rebate rate applied to income projections. We concentrated on the evaluation of
debilitation that necessary huge administration's decisions and gauges in deciding the recoverable
measure of the CGI-J.

25
 Auditor response

 We surveyed Group's distinguishing proof of the CGI-J which contained pointers of impedance as at
31 December 2019;

 We surveyed the income projections by checking the scientific precision of the basic estimations;

 We assessed the sensibility of income projections and looked at the anticipated income development
against chronicled information and exhibitions;

 We confirmed the rebate rate for the CGI-J by contrasting with showcase information and weighted
normal of capital of the Group;

 We assessed the sensibility of key suspicions and info utilized;

 We thought about the exactness and suitability of the exposures in the budget summaries; and

 We performed pressure tests and affectability investigation to survey the effects of those key
suppositions and contributions on the estimation of the recoverable sum.

 We have established that there is no key review matter in the review of the different fiscal summaries
of the Company to convey in our examiners' report.

26
e. Information other than the financial statements

The Directors of the Company are liable for the other data. The other data involves the data remembered
for the Annual Report, yet does exclude the fiscal summaries of the Group and of the Company and our
evaluators' report subsequently. Our feeling on the fiscal summaries of the Group and of the Company
doesn't cover the Annual Report and we don't communicate any type of affirmation end consequently.

Regarding our review of the budget summaries of the Group and of the Company, our obligation is to
peruse the Annual Report and, in doing as such, consider whether the Annual Report is substantially
conflicting with the fiscal reports of the Group and of the Company or our insight got in the review, or in
any case seems, by all accounts, to be physically misquoted. On the off chance that, in view of the work
we have performed, we reason that there is a material error of the Annual Report, we are required to
report that reality. We don't have anything to report in such manner.

27
f. Responsibilities of the directors for the financial statements

The Directors of the Company are liable for the planning of fiscal summaries of the Group and of the
Company that give a valid and reasonable view as per Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the prerequisites of the Companies Act 2016 in Malaysia.
The Directors are additionally answerable for such interior control as the Directors decide is important to
empower the arrangement of budget reports of the Group and of the Company that are liberated from
material misquote, regardless of whether because of extortion or mistake.

In setting up the fiscal reports of the Group and of the Company, the Directors are answerable for
evaluating the capacity of the Group and of the Company to proceed as a going concern, revealing, as
relevant, matters identified with going concern and utilizing the going concern premise of bookkeeping
except if the Directors either mean to exchange the Group or the Company or to stop tasks, or have no
reasonable other option however to do as such.

28
g. Auditor responsibility for the audit of the financial statements

Our targets are to acquire sensible affirmation about whether the fiscal reports of the Group and of the
Company overall are liberated from material misquote, regardless of whether because of
misrepresentation or mistake, and to give an evaluators' report that incorporates our assessment. Sensible
confirmation is an elevated level of affirmation, yet isn't an assurance that a review led as per endorsed
principles on inspecting in Malaysia and International Standards on Auditing will consistently identify a
material error when it exists. Misquotes can emerge from misrepresentation or mistake and are viewed as
material assuming, independently or in the total, they could sensibly be relied upon to impact the
monetary choices of clients assumed the premise of these fiscal reports.

As a major aspect of a review as per endorsed norms on inspecting in Malaysia and International
Standards on Auditing, we practice proficient judgment and keep up proficient distrust all through the
review. We also recognize and survey the dangers of material misquote of the budget summaries of the
Group and of the Company, regardless of whether because of misrepresentation or blunder, structure and
perform review strategies receptive to those dangers, and get review proof that is adequate and suitable to
give a premise to our feeling. The danger of not identifying a material misquote coming about because of
extortion is higher than for one coming about because of mistake, as extortion may include conspiracy,
imitation, deliberate exclusions, distortions, or the abrogate of inner control.

Get a comprehension of inner control applicable to the review so as to configuration review methodology
that are suitable in the conditions, yet not to communicate a sentiment on the adequacy of the inside
control of the Group and of the Company. Assess the propriety of bookkeeping approaches utilized and
the sensibility of bookkeeping gauges and related exposures made by the Directors.

Finish up on the suitability of the Directors' utilization of the going concern premise of bookkeeping and,
in light of the review proof got, regardless of whether a material vulnerability exists identified with

29
occasions or conditions that may provide reason to feel ambiguous about critical the capacity of the
Group or of the Company to proceed as a going concern.

On the off chance that we infer that a material vulnerability exists, we are required to attract consideration
our evaluators' report to the related divulgences in the budget summaries of the Group and of the
Company or, if such revelations are deficient, to alter our assessment. Our decisions depend on the review
proof got up to the date of our evaluators' report. In any case, future occasions or conditions may make
the Group or the Company stop to proceed as a going concern.

Assess the general introduction, structure and substance of the fiscal reports of the Group and of the
Company, including the divulgences, and whether the budget reports of the Group and of the Company
speak to the basic exchanges and occasions in a way that gives a valid and reasonable view. Acquire
adequate fitting review proof in regards to the money related data of the elements or business exercises
inside the Group to communicate a conclusion on the fiscal reports of the Group. We are liable for the
heading, oversight and execution of the group audit. We remain exclusively liable for our audit opinion.

We speak with the Directors in regards to, among different issues, the arranged extension and timing of
the review and noteworthy review discoveries, remembering any huge inadequacies for inner control that
we recognize during our audit. We additionally give the Directors an explanation that we have consented
to important moral necessities in regards to autonomy, and to speak with them all connections and
different issues that may sensibly be thought to manage on our freedom, and where relevant, related
protections.

From the issues spoke with the Directors, we decide those issues that were of most centrality in the
review of the budget reports of the Group and of the Company for the current time frame and are in this
manner the key review matters. We portray these issues in our examiners' report except if law or
guideline blocks open divulgence about the issue or when, in very uncommon conditions, we establish
that an issue ought not be conveyed in our inspectors' report in light of the fact that the antagonistic
outcomes of doing so would sensibly be required to exceed the open intrigue advantages of such
communication.

30
h. Report on other legal and regulatory requirements

As per the prerequisites of the Companies Act 2016 in Malaysia, we report that examiners' report on
fiscal reports of auxiliaries, as uncovered in Note 6 to the budget summaries, contained a certified
conclusion.

31
i. Other matters

This report is made exclusively to the individuals from the Company, as a body, as per Section 266 of the
Companies Act 2016 in Malaysia and for no other reason. We don't accept accountability to some other
individual for the substance of this report.

32
QUESTION 3

To explain the uses/reasons/purposes for including each of the extract information in (2 a - i).

The reason for Eka Noodles includes each of the extract information in the financial statement is because
to know the business future earning capacity, growth potential and securities of their holdings. Besides
that, to prove that there were no unusual items affecting assets, liabilities, equity, net income or cash
flows during the current quarter and financial year-to-date. Also, there were no unusual items affecting
assets, liabilities, equity, net income or cash flows during the current quarter and financial year-to-date.
Nevertheless, the company determine the government and other agencies are interested to know the
business activities to ensure efficient allocation for resources so as to improve their tax income.

33
APPENDIXES

34
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results/#:~:text=A%20closing%20meeting%20is%20where [Accessed 13 Aug. 2020].
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https://www.icaew.com/international-accounting-and-auditing/international-standards-
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https://strategiccfo.com/audit-scope/.
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