BKAR 3043 FINANCIAL ACCOUNTING AND REPORTING IV

MINI CASE 1 (2%)

A202
Due date: 4 April 2021

You are the newly recruited Audit Assistant in one of the prestigious audit firms in Kedah. The
Audit Partner Mr Goh assigns a case in order to assess the staff critical thinking and problem
solving skills. One of their main client plans to undergo expansion of its palm oil mill
manufacturing capabilities in Sabah through a joint arrangements with other leading corporate
company in the same sector. In accordance with MFRS 11 Joint Arrangements, a joint
arrangement is an arrangement of which two or more parties have joint control. The client
prefers to go under joint arrangement as both parties could share costs and risks for the palm oil
mill manufacturing expansion with access to new technology. However, the client is having
doubt whether joint operation would be the ideal choice in the joint arrangement between both
parties. The client had referred to the audit firm for the business advisory services. Thus, Mr Goh
requires you and other four newly recruited Audit Assistants to write a report based on their
critical findings whether joint operation will be suitable for the palm oil mill expansion. The
guide for the team is as follows: report maximum of 10 pages require to identify, analyze,
evaluate the problems in joint operation and make decision whether the joint operation is the
ideal choice in the joint arrangement between both parties.

Anda adalah Pembantu Audit yang baru direkrut di salah sebuah firma audit berprestij di Kedah.
Rakan Audit Encik Goh memberikan kes untuk menilai kemahiran berfikir kritis dan
menyelesaikan masalah kakitangan. Salah satu pelanggan utama mereka merancang untuk
menjalani pengembangan keupayaan pembuatan kilang kelapa sawitnya di Sabah melalui
perjanjian bersama dengan syarikat korporat terkemuka lain di sektor yang sama. Sesuai dengan
MFRS 11 Joint Arrangements, pengaturan bersama adalah pengaturan di mana dua atau lebih
pihak mempunyai kawalan bersama. Pelanggan lebih suka melakukan pengaturan bersama
kerana kedua-dua pihak dapat berkongsi kos dan risiko untuk pengembangan kilang kelapa sawit
dengan akses kepada teknologi baru. Namun, pelanggan merasa ragu sama ada operasi bersama
akan menjadi pilihan yang ideal dalam pengaturan bersama antara kedua-dua belah pihak.

1
Pelanggan telah merujuk kepada firma audit untuk mendapatkan khidmat nasihat perniagaan.
Oleh itu, Encik Goh meminta anda dan empat Pembantu Audit yang baru direkrut untuk menulis
laporan berdasarkan penemuan kritikal mereka sama ada operasi bersama akan sesuai untuk
pengembangan kilang kelapa sawit. Panduan untuk pasukan adalah seperti berikut: laporan
maksimum 10 halaman memerlukan untuk mengenal pasti, menganalisis, menilai masalah dalam
operasi bersama dan membuat keputusan sama ada operasi bersama adalah pilihan yang ideal
dalam pengaturan bersama antara kedua-dua belah pihak.

REPORT FORMAT
1. Group project: maximum 5 members in a team.
2. The report limit to 10 pages.
3. Line spacing: 2 & Font: Arial (size 12)
4. Soft-copy submissions upload to UUMOL.
5. To state the members name on the cover page of the report.
6. To include References at end of the report.
7. The marks will be given if sufficient details and explanations provided to justify the
answers.
8. Assessment Rubric: Critical Thinking and Problem Solving (CTPS)

Citations of the work in the paper should be by the name of the author(s) followed by the year of
publication using American Psychological Association (APA) style 5th edition and carefully
checked for completeness, accuracy and consistency. Please consult the Publication Manual
ISBN 1-55798-790-4 or http://www.apastyle.org/elecref.html for further style guidelines. Some
of the examples:

Journal article:
Stuart, F. I. (2006). Designing and executing memorable service experiences: Lights,
camera, experiment, integrate, action! Business Horizons, 49(2), 149-159.
Ketchen, D., & Hult, G. T. (2007). Bridging organization theory and supply chain
management: The case of best value supply chains. Journal of Operations
Management, 25(2), 573-580.
Book:
Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons
in competitive advantage from great family businesses. Boston: Harvard
Business School Press.

2
Cialdini, R. B. (2001). Influence: Science and practice (4th ed.). Boston: Allyn & Bacon.

Edited collection:
Pfeffer, J. (1998). Understanding organizations: Concepts and controversies. In D. Gilbert,
S. Fiske, & G. Lindzey (Eds.), Handbook of social psychology (pp. 733-777).
New York: McGraw-Hill.
Geis, G. (1982). The heavy electrical equipment anti-trust cases of 1961. In M. D. Ermann
& R. J. Lundman (Eds.), Corporate and governmental deviance (pp. 123-
143). New York: Oxford University Press.
Web: source:
Berry, L. L., & Seltman, K. D. (2007). Building a strong services brand:
Lessons from Mayo Clinic. Business Horizons, 50(3), 199-209. Retrieved
May 10, 2007, from http://www.sciencedirect.com.
Lewis, P. H. (2007). How Apple kept its iPhone secrets. Retrieved January 31, 2008, from
http://money.cnn.com/2007/01/10/commentary/lewis_fortune_iphone.fortune/
index.htm

1. Limited Flexibility

As we know, simultaneous work will be impossible when flexibility is accompanied by

a focus on several meticulous projects. In joint operations, the two companies must

contribute vehicles and not stack through separate vehicles. Participants must concentrate

on the products of joint operations at times like these, and each organization loses as a

result of the use of vehicles or joint operating properties. it also causes business

operations to be delayed and give bad results to the company’s economy, this is because

assets are very important to increase productivity and reduce costs. An example, if

another company requires technical assets for a joint venture, your company may provide

them. Simultaneously, if your company requires certain technological properties, certain

projects must be temporarily postponed for the time being. This means that concurrent

work is no longer possible, which suggests that it may be a risk because the consequences

of the delay may include losses for your company. In reality, both parties must agree to

3
 proceed, and no one can decide because joint control implies that neither party handles

the arrangement itself. Due to the concept of joint control and the inability to do

simultaneous work in joint operations, this will not result in immediate action.

2. The Liability and claims

This point will emphasize the importance of having a proper contract in place. It is

necessary to specify the assets and involvement of the participants in order to avoid

claims from other parties, even if they are working together. According to MFRS 11:17,

the contractual arrangement also describes the nature of the activities to be performed as

well as how the parties intend to carry them out. As an example, mutual parties may agree

to produce a product with each party responsible for a specific task, each using their own

assets and bearing their own responsibilities. Each joint operator can explain the assets it

uses and the liabilities it incurs in its financial statements for that task. Contractual

agreements also place a greater emphasis on determining how the parties will share joint

expenses and revenues, as well as how those revenues and expenses will be accounted

for. A party agreeing to share and operate a common asset, as described in MFRS 11:18,

is another example. The contractual agreement spells out the parties' rights to the jointly

operated assets, as well as how the output or income from those assets, as well as

operating expenses, will be split between them. In this case, each joint operator's financial

statements should reflect its agreed-upon share of joint assets, liabilities, output, revenue,

and expenses in accordance with the contractual agreement.

3. Impossible to have equal participation.

4
 Although a comparable salary may be paid, it is unlikely that all companies working

together will have the same level of involvement and responsibility. While sharing 50

percent of the profits is desirable, it is impossible to maintain a 50 percent share. As a

result, it's important to remember that, like any other partnership, working with other

organization can be challenging, and there will be times when you disagree. Other

companies, for example, schedule the manufacturing process while your firm handles the

actual production. Because no other companies will be involved in this development, the

burden will fall solely on your company. This will have an impact on your business

because stress causes your company to be stressed. Furthermore, culture can influence

unequal engagement because when cultures collide, cultural shocks occur, which can

negatively influence unequal engagement. Differences in each partner's approach to

management style in terms of decision making can negatively influence unequal

engagement because joint operations necessitate compatibility between partners and

communication is critical. The goal of communication is to clarify the goal and address

any issues that may arise. As previously stated, developing a successful relationship takes

time due to its complexity and the fact that each party has their own ideas and goals.

1. Butler, C. (2012, May 31). Joint ventures and partnerships. Retrieved April 02,
2021, from https://www.lexology.com/library/detail.aspx?g=ad2bc7e2-572c-4a3a-
906d-9883d49d2786
2. Joint ventures and business partnerships. (n.d.). Retrieved April 02, 2021, from
https://www.nibusinessinfo.co.uk/content/joint-venture-advantages-and-
disadvantages
3. Joint ventures and partnering. (n.d.). Retrieved April 02, 2021, from
https://www.infoentrepreneurs.org/en/guides/joint-ventures-and-partnering/

5
4. Reddy, C., & 12 years of Experience within the International BPO/ Operations
and Recruitment Areas. Extensive experience in Complete Recruitment Life
Cycle - Sourcing. (2020, January 13). Joint venture: Definition, types, advantages
& disadvantages. Retrieved April 02, 2021, from
https://content.wisestep.com/joint-venture-advantages-disadvantages/